Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Executives

Richard E. T. Smith – Vice President, Investor Relations and Corporate Communications

P. Schaefer Price – Chief Executive Officer

M. Michelle Berrey – Chief Medical Officer

Michael D. Rogers – Chief Development Officer

Analysts

Rachel McMinn – Bank of America/Merrill Lynch

Thomas J. Russo – Robert W. Baird & Co.

Yaron Weber – Citigroup

David Friedman – Morgan Stanley

Geoff Meacham – JPMorgan

Matthew J Andrews – Wells Fargo Securities, Llc

Matthew Roden – UBS

Terence Flynn – Goldmann Sachs

Adam Cutler – Credit Suisse

Liisa Bayko – JMP Securities

Pharmasset Inc. (VRUS) Shareholder Analyst Call November 1, 2011 8:00 AM ET

Operator

Good day ladies and gentlemen and welcome to the Pharmasset Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, today’s conference call is being recorded.

I’d now like to turn the conference to your host Mr. Richard Smith.

Richard E. T. Smith

Thank you, Amy, and good morning everyone, and welcome to the Pharmasset conference call to discuss the initiation of the PSI-7977 Phase 3 clinical program for HCV.

On the call today, we have Schaefer Price, President and CEO; Michelle Berrey, Chief Medical Officer; and Mike Rogers, Chief Development Officer. Also on the call during the Q&A session will be Pat Higgins, Executive Vice President of Sales & Marketing.

Before we begin, let me review our Safe Harbor statement. Today’s discussion contains estimates and other statements that are forward-looking under the Private Securities Litigation Reform Act of 1995. Such estimates and statements are based on current expectations and assumptions that are subject to risks and uncertainties and involve a number of factors that could cause actual results to differ materially from projected results.

Additional information concerning these factors is contained in our filings with the SEC, which are available on the Investor Relations section of our website, www.pharmasset.com. While we may elect to update forward-looking statements in the future, we specifically disclaim any obligation to do so even if our estimates change. You should not rely on these forward-looking statements as representing our estimates as of or any subsequent date today.

Before we begin our prepared remarks, I would like to note that we have a set of prepared slides for this event, which can found in the Investor section of the Pharmasset website, clicking on Events & Presentations.

The agenda for today’s call is as follows. Schaefer will start with our prepared remarks. Michelle will then provide a background on the safety, efficacy, and resistance profile of PSI-7977 today. And Mike Rogers will describe the Phase 3 studies. Schaefer will then conclude. We will then opening up to the Q&A.

Let me now turn it over to Schaefer.

P. Schaefer Price

Thank you, Richard, and good morning, everyone. If you turn to slide number three, you will see that Pharmasset is focused on the development of (noble) HCV drugs and in particular Nucleoside and Nucleotide analog polymerase inhibitors. We currently have three Nucleoside, Nucleotide analog inhibitors of HCV in the clinic, PSI-7977, PSI-938 and (inaudible).

PSI-7977 is the most advanced Nucleotide in our pipeline and we are announcing today the start of its Phase 3 program evaluating in all oral interferon-free regimen base HCV. We are also investigating our second Nucleotide 938 in an interferon-free combination trial called the QUANTUM with PSI-7977.

Our third drug (inaudible) is our Nucleotide analog that is being developed by our partner Roche in the multiple Phase 3 trial. Michelle?

M. Michelle Berrey

Thanks, Schaefer. Turing to Slide 4, I would like to highlight the consistently higher response rate we've observed in our Phase 2 studies to-date. (Inaudible) earlier this year, we reported the first safety and efficacy data from the 12-week dozing of the PSI-7977 in PROTON. And patients with HCV genotypes 1, we confirmed the dose response with PSI-7977, 200 milligram or 400 milligram. This whole data set will be reviewed at our upcoming oral presentation at AASLD later this week.

For those to on-therapy consistency of risk volumes, as well as a very high SVR rate, we are striking in the independence from some of the traditional predictors have response such as IL28B genotype and high BMI.

As we've pointed out in the EASL presentation, there were non-responders in the 95 Genotype 1 patients who were randomized to PSI-7977 200 or 400 milligrams QD. The results were an open-label arm of PROTON presented at EASL by Dr J. Lalezari in which 25 patients with HCV Genotype 2 or Genotype 3 were treated with PSI-7977 400 milligrams with Peg-RBV for a total of 12 weeks. Although one patient was lost to follow-up after day one, the remaining 24 subjects completed all 12 weeks of therapy and went on to obtain SVR12 and SVR24. Again, there were no virologic breakthroughs and no rival resistance detected even in those patients it would have been predicted to have had very little response to interferon by traditional predictors.

The two trials that were inspired by these early data with PSI-7977 were ATOMIC and ELECTRON. The very high response rate of 91% or 43 of 47 subjects in patients with HCV Genotype 1 reflected three discontinuations in the first 12 weeks for interferon related AEs and additional week 10 discontinuation for an MR went on to achieve SVR.

With no viralogic breakthrough and no discontinuations due to 7977, the next step was to determine if a 12-week triple therapy regimen in Genotype 1 without 12-week peg as a follow-on would achieve the same high response rate. The ATOMIC study is currently evaluating a total of 12 weeks of therapy in patients with Genotype 1 and is also studying longer duration therapy in order to establish the safety database for PSI-7977 for up to 24 weeks of therapy.

The high response rates in Genotype 1 as well as the 94% to 100% response rates in patients with Genotype 2 or 3 led to the belief that only 12 weeks of total duration could be required across Genotype, but also the question of determining the role of interferon in these PSI-7977 regimen. Together with our advisors we designed ELECTRON to determine the impact of reducing the total number of injections of interferon that would be necessary to retain that same high SVR. Those data will be shared in detail later this week by Dr. Ed Gane. Emerging data from ELECTRON were shared with the health authorities and together with the response rates in this population supported the interferon regimen that we will be taking forward into registrational studies.

Turning to Slide 5, the very high potency of an antiviral even with a clinically high barrier to resist still does not achieve our goal since it has a complex dosing regimen or has tolerability or safety issues. And the growing safety database of over 300 individuals with HCV who has taken 7977 for 12 weeks and more we have not identified a safety signal for PSI-7977. Any discontinuations from studies to date have been related to interferon. We’ve tested higher doses up to 1200 milligrams and have not found any dose-limiting toxicity.

The clinical pharmacology program was conducted in order to conduct many key studies earlier in development to support potentially expedited registrational program, but also to make sure that we have data to include the patient population with HCV in the U.S. We will be presenting the Methadone and dedicated QT studies at AASLD later this week. These studies are particularly relevant of many individuals with HCV are also taking antidepressants and many patients are on stable Methadone therapy.

We’re conducting the clinical pharmacology studies necessary to support inclusion of patients with more advanced liver and kidney disease as well as drug interaction studies to allow individuals with HIV co-infection.

I would now like to turn the call over to Mike Rogers who will walk you through the three Phase 3 trials we’re planning to conduct that we believe will provide 7977 with an interferon-free label.

Michael D. Rogers

Thank you, Michelle. Turning to Slide 6, our first Phase 3 study is called FISSION and will evaluate 7977 plus ribavirin for 12 weeks in treatment naïve patients with HCV genotype 2 or 3. The control arm in this study will be 24 weeks of peg interferon and ribavirin, the current standard of care for genotype 2, 3 patients. The trial will enroll approximately 500 patients randomized equally between the two arms and will enroll patients with or without cirrhosis.

The primary endpoint of this study will be SVR12 and we anticipate starting to enroll patients by year-end. Because the SVR rate has traditionally been lower for patients with HCV genotype 3, we will enroll more genotype 3 patients into this trial in an effort to address this unmet medical need.

On Slide 7, our second Phase 3 trial is called POSITRON and will evaluate 12 weeks of PSI-7977 and ribavirin in approximately 225 patients with HCV genotype 2 or 3 who cannot take interferon. Because there is no accepted treatment for these patients, this trial will employ a placebo-control. Patients who receive placebo will be eligible to receive active therapy in another study after the completion of 12 weeks of placebo. The primary endpoint of trial will be SVR12. POSITRON is anticipated to start in early 2012.

Turning to slide eight, our third Phase 3 trial is called NEUTRINO and we will evaluate a 12 week regimen of 7977 and ribavirin. Like the POSITRON study, there is no accepted therapy for these individuals, who cannot take interferon. So that trial will be conducted with the placebo control.

At this time, we anticipate NEUTRINO will enroll approximately 280 patients, regardless of genotype with an anticipation of a large population being genotype one, the primary endpoint also being SVR12.

The final design of NEUTRINO will be based on emerging data from ELECTRON and QUANTUM. We’re announcing today that we have enrolled approximately 225 patients in the QUANTUM study, approximately half of the required patients.

As a reminder, we announced the initiation of QUANTUM in mid September and now anticipate having interim data in second quarter of 2012. The interim data from the first 225 subjects along with ELECTRON data is indented to support the initiation of NEUTRINO in mid 2012.

As you can see, we have developed a Phase 3 program that evaluates a 12 week interferon-free regimen of 7977 and ribavirin in multiple genotypes, in naïve subjects and those who cannot take interferon. We anticipate initiating all three Phase 3 studies between now and mid 2012, and planned to file from marketing approval in the second half of 2013.

I would like now to hand it back to Schaefer

P. Schaefer Price

Thanks Mike. As you can see, we have maintained our momentum in rapidly developing PSI-7977. On slide nine, I wanted to help provide some context to how much Phase 3 development will cost for us. Given that we intend to study an interferon-free 12 week regimens and that two of the studies are placebo controlled. The overall external clinical costs of the program we believe will be approximately $100 million.

We feel that given continued shareholder support that this is a manageable cost to get us to U.S. and European marketing submissions. Our current balance sheet is strong with $188 million in cash as of the end of June, and quarterly cash use of $22.6 million in that quarter. We see a number of catalysts ahead in early 2012, including data in genotype 1 subjects with 7977 and ribavirin from ELECTRON as well as interim data from QUANTUM and ATOMIC. Given the catalysts ahead and our strong balance sheet, we do not see a need to finance in the near term.

On Slide 10 in summary, we are announcing today the initiation of the first interferon-free Phase 3 program with PSI-7977. We are investigating a 12-week all-oral regimen in multiple genotypes. We anticipate submitting for marketing approval in the U.S. and Europe in the second half of 2013, by submitting data from three Phase 3 trials supported by multiple clinical pharmacology trials. In total, we anticipate a safety database of greater of 1,250 subjects and we hope to obtain a label that covers multiple genotypes in patients naive to therapy or who cannot take interferon.

Finally, we believe that physicians and patients want simple interferon-free treatment regimens that results in high SVRs. We continue to believe that PSI-7977 can provide this. I'd like to thank all involved in moving the 7977 program along so quickly. I am very proud of our team and their accomplishment.

With that, I would like to hand it back to Richard to moderate the Q&A.

Question-and-Answer Session

Richard E.T. Smith

So, thank you for your remark, I'd like to open it up for questions. Amy, are there any questions on the line?

Operator

(Operator Instructions) Our first question comes from Rachel McMinn of Bank of America. Your line is open.

Rachel McMinn – Bank of America/Merrill Lynch

Hi, thanks very much. I wanted to ask about, can you guys hear me okay, there is a huge echo on my end?

P. Schaefer Price

Yeah, we can hear you just fine.

Rachel McMinn – Bank of America/Merrill Lynch

Okay, I will try to ignore it. I wanted to ask about how you get the broader genotype 1 population, because it looks like at this point you are just focusing on interferon intolerance, so do you have plans longer-term to go broader? And then also if you could just help define specifically how in trials interferon intolerance going to be defined?

M. Michelle Berrey

Yes, good morning.

Rachel McMinn – Bank of America/Merrill Lynch

Good morning.

M. Michelle Berrey

It’s Michelle Berrey. Good morning. So patients who cannot take interferon could include a broad population including those who have demonstrated intolerance to interferon with previous exposure as well as those treatment naïve individuals who are not eligible for interferon, the specific requirements are under discussing with the health authorities, but again as emerging data continue to explore the broadened exclusion patients with all genotype, we do feel that the previously expected definitions of treatment naïve are really not as relevant as we move forward in interferon-free regimens.

So for example, treatment naïve really is just referring to their prior exposures to interferon. Our belief that a very high response rate we’ve seen to date has been that many of the patients who keep an SVR in the PROTON study would not have been refined had they received traditional peg and riba.

Rachel McMinn – Bank of America/Merrill Lynch

Michelle, just to clarify, when you go out and you have this label, specifically say that the patients were selected at interferon and tolerance, so will – from a payer perspective, will you – you have to check those various boxes right in order to get therapy?

Michelle Berrey

Yes. I think you did make a good point that it is important to make sure that we have addressed each of those different population and we are making sure that each of these different potential patient definitions are covered in our program. Again, I think that those, the health authorities we – and we have payers who will be redefining the way they think of patient population, again, not defining them on their ability to respond to interferon. So the inclusion of treatment naïve patients would certainly be included and our goal indication would be for all patients with HCV regardless of any definitions based on interferon.

Rachel McMinn – Bank of America/Merrill Lynch

So do you think that – just to wrap that up, do you think that requires another study after these first three or that your first three here would be all inclusive of that broad label?

Michelle Berrey

Yes, to support inclusion of all patients with all genotypes basically by the inclusion criteria that we’ve set out for these three studies. There are additional studies that would be – until these studies should address specific questions, however, these three studies at our core registrational program, we believe would deliver a very broad indication for all patients with HCV.

Rachel McMinn – Bank of America/Merrill Lynch

Okay, thanks very much.

Michelle Berrey

Thank you.

Operator

Thank you. Our next question comes from To Russo of Baird. Your line is open.

Thomas J. Russo – Robert W. Baird & Co.

Good morning. Michelle, maybe just following on that last question, how would you define non-responders, is it more than IL28B type or can you give us a little bit more on how we should think about entry criteria, such that it could be to the broadest possible patient population?

M. Michelle Berrey

Sure. Good morning, Tom. So patients who cannot take interferon again could include those patients who have demonstrated their intolerance with prior exposure to interferon. It would also include those patients who are not eligible for interferon therapy. We have again begun some of those discussions about how those patients are best defined. What we do understand is that a majority of individuals with HCV have not come into care because of the continued inclusion of interferon and regimens. So we do need to get more data around those patients and make sure that those specific individuals are being included. That is our goal. It is to bring them into care with an interferon-free or oral regimen.

Michael D. Rogers

Tom, if I can just follow on to Michelle’s statements here. I’ll remind everybody on the line that in a naïve population this study is for the registration of Pegasys and PegIntron showed that we should expect about 20% of those subjects to be no responders. So as you think about naïve studies, there is a broad range of interferon responders and non-responders in that naïve study.

When you look back to our efficacy success in the PROTON study, whether its genotypes 1, 2, or 3, 20% of those naïve subjects in theory had a genetic makeup or some predisposition to not respond to interferon and should have been considered to be no. We just didn’t know which individuals constitute that accepted 20%. So I think if we go into an interferon-free setting, we really have to think about leaving behind these prior definitions of interferon responsiveness. If you’re looking at commercializing interferon-free regimens, somebody’s predictive response to interferon is no longer relevant.

Thomas J. Russo – Robert W. Baird & Co.

Just to shift gears, you mentioned that looking at evaluating data from QUANTUM and ELECTRON in terms of NEUTRINO design, can you give a little bit more color on what you’re going to be looking at or what the range of possible design outcomes could be based on the data that you’re going to be evaluating?

M. Michelle Berrey

Sure. So again, this is our open-label studies and as was mentioned, we have seen very rapid enrollment with QUANTUM to-date. We are looking to see in these patient populations, what upside, what FBR rate could be accomplished in patients who really have no treatment options to-date. The, although our ELECTRON data will be shared again later on this week at AASLD and the top line data from PROTON showing the 91% SVR are very encouraging given that we included a broad range of patients high BMI, we did have a good number of patients with IL28B GT or CT genotype. So again, those patients who should not have responded. As we continue to see a very clean safety profile and high SVR rate, the risk benefit is such that a broader patient population could be recommended for these Phase III studies as we move forward. So we’re looking to see the initial response rate in this interim analysis coming out of QUANTUM as well as the emerging data coming from ELECTRON with additional cohorts of patients that have been added.

Thomas J. Russo – Robert W. Baird & Co.

Okay. Last one and I’ll hop aside. Just when you think, it may be for Pat, when you think about price down the road, what is the framework for that as, should it be for direct acting antiviral and interferon-free regimens? How do you think about that directionally, maybe compared to something like telaprevir as part of triple therapy or even that entire regimen price and setbacks?

Patrick T. Higgins

Well, I don’t think it would be appropriate at this time to actually discuss what our pricing would be. But I think the fact that you have an interferon-free regimen gives us a tremendous amount of pricing flexibility to not only provide a premium price to what is currently out there, but also because of the elimination of very costly part of the standard of care, the interferon component, we might also be able to even have some impact on the health system by reducing cost overall. So I’ll just leave it at that.

Thomas J. Russo – Robert W. Baird & Co.

Okay. Thank you very much.

Operator

Thank you. Our next question comes from Yaron Weber of Citi. Your line is open.

Yaron Weber – Citigroup

Okay, great. Thanks and congrats on the news. A few questions; number one, just help us understand a little bit in, I mean, how much data do you have in [cirrhosis] from your ongoing studies? And in any sense, I mean, you’ve noticed that the FISSION study is going to potentially enroll cirrhosis. What about POSITRON and NEUTRINO? And then I have a follow-up also.

M. Michelle Berrey

Okay. Good morning, Yaron. So in the prior studies, we have allowed patients with platelet counts down to 90,000. If there was evidence on cirrhosis on a biopsy specifically, we have included those patients in our early Phase II studies. However, we have been including patients with cirrhosis in QUANTUM enrollment. And we have also conducted an early clinical pharmacology study in patients with more advanced hepatic disease including Child-Pugh B. And we’re currently conducting a study in patients for Child-Pugh C. So that would then allow us to include those patients with much more advanced liver disease. One of the benefits of our nucleotide and particularly with our prodrug is that we do not require metabolism through any of the hepatic pathways. So through our mass balance study and other early clinical pharmacology studies, we’ve shown independent metabolism through any of the hepatic mechanism. So again, we anticipate seeing equivalent response rates in these more advanced patients as we move into, not just cirrhotic patients, but those with more advanced and potentially even decompensated liver failure.

Yaron Weber – Citigroup

That’s great. And then what about in terms of any plans to do III or IIIb studies (inaudible) to support a label?

M. Michelle Berrey

Yeah, so I think that we do have, again back to these definitions, I think what we’re hearing even publically from the regulatory authorities is that they’re very quickly moving away from these prior definitions. And defining patients by their ability to respond to interferon, I think is going to be something of the past, if not today, then hopefully in the very near future. We really don’t think as patients who are not able to respond to interferon any differently than any other patients as long as they are infested with a virus that’s capable of being shutdown by the use of chain terminator. That is the beauty of the nucleotide analogue is the nucleotide is able to chain terminate the HCV virus regardless of the patients ability of not to respond to interferon. So a patient that’s quote a null responder is one that has been exposed to interferon and didn’t respond. You could argue that many patients could fall in that category just based on the fact that they’ve established chronic hepatitis C infection and weren’t able to clear it at the time of their acute infection. So again, we believe these definitions, null response, partial responders, et cetera, are really antiquated as of today.

Yaron Weber – Citigroup

Okay. So final question and I apologize if I’m – just want to make sure I am very clear on this. So POSITRON and NEUTRINO theoretically can enroll patients who have actually have gotten a standard therapy before the first line and failed that and would be typically considered treatment-experienced now?

M. Michelle Berrey

So what we are looking for in POSITRON, and again, because we already have those data available and are already having those discussions with the health authorities, are patients who’ve demonstrated their inability to take interferon with intolerant. So that’s the reason to justify using the placebo control, these patients don’t have any treatment options. So that can include patients who’ve never been exposed to interferon, but are – they are inappropriate for interferon therapy and it could include patients who have had interferon exposure and were not able to tolerate that. Now how we define that specifically within the protocol is something that we are trying to make sure is very clear.

What I’d like to point out there, increasing number of studies that have shown that the majority of individuals living with HCV infection are in fact not appropriate candidates for interferon. There was a recent study from the VA Hospital that said that 88% of veterans who have HCV infection have not been treated. And again, a majority of those are because they are ineligible for interferon therapy. These are the very patients that we are targeting in our registrational program.

Yaron Weber – Citigroup

Okay, great. Thank you.

M. Michelle Berrey

Thank you.

Operator

Thank you. Our next question comes from David Friedman of Morgan Stanley. Your line is open.

David Friedman – Morgan Stanley

Hi, thanks for taking my question. It’s just around some of the other trials that you have ongoing. The combination studies with Bristol and Tibotec as well as the 938 parts of QUANTUM. So how do you think about incorporating those studies into your commercial strategy for the drug or are they taking a back seat at this point?

P. Schaefer Price

Hi David, Schaefer here. Excellent question. So the purpose originally for looking at combination studies with BMS’s NS5A or with Tibotec’s TMC435 are really to demonstrate the principle of 7977 in a two drug regimen for treating Hepatitis C. So as you think about what we’re embarking upon now is a two-drug regimen of 7977 with ribavirin. So what we’re trying to do is to teach the market two things. One, as long as, you should use 7977 in a two-drug regimen to treat HCV in an interferon-free modality.

Second point, physicians can choose whatever second drug they want to depending upon the characteristics they desire from that two-drug regimen. It can be ribavirin, it could be BMS’s NS5A, it could be Tibotec’s protease inhibitor or some other substitutes for those types of drugs. So it’s simply defining 7977’s inclusion in a two-drug regimen and saying it’s physician’s choice on that second drug.

David Friedman – Morgan Stanley

And thanks for that. Has there been any, or was there any discussion with any other regulatory groups as you were talking about these Phase III trials as to whether those could be incorporated onto a label or whether they would be just be sort of standalone support of studies?

Michael D. Rogers

This is Mike Rogers. We have discussed these studies with a health authorities and that’s something that we’ll continue to discuss. They will have some kind of influence on ultimate labeling, kind of depends on what the landscape, the regulatory and medical landscape is at the time. But they definitely will play a part in the ultimate labeling and regulatory impact of the drug.

David Friedman – Morgan Stanley

All right. Thank you.

Operator

Thank you. Our next question comes from Katherine Xu of William Blair. Your line is open.

Unidentified Analyst

Hi, good morning. This is [Phil Petty] in for Katherine. Thanks for taking my question. Just real quick, I just wanted to see if you can elaborate a little bit on the FISSION study and what your – I guess assumptions are on the peginterferon, ribavirin (Inaudible) in regards to cure rate given the 3 to 1 randomization for GT3 and GT2.

Michael D. Rogers

Right, as you, this is Mike Rogers again, as you state we are going to enroll genotypes in a 3 to 1 ratio. So the more difficult to treat genotype 3s will predominate, which makes it a higher bar for both treatment arms. We are thinking anywhere, as you know anywhere between 60% and 75% for the control arm and we are looking for a difference of 15%. Obviously that can vary quite a bit but we are looking at the active arm will be at least 15% over the control response.

Unidentified Analyst

Okay, very good. Thank you.

Operator

Thank you. Our next question comes from Geoff Meacham of JPMorgan. Your line is open.

Geoff Meacham – JPMorgan

Good morning, guys. Thanks for taking the question. Question for you on NEUTRINO. So, if larger study, larger population when you look beyond just genotype 2, 3 when you are looking at genotype 1 and down the road when you have patients that are, that can’t tolerate interferon and ribavirin. So, my question is are there any boxes you have to check in some of your bigger studies from a preclinical thought perspective based on your discussions with the regulatory authorities, FDA, EMA?

M. Michelle Berrey.

Good morning Geoff, this is Michelle. There are some preclinical perspective we have completed longer-term two species toxicology studies that support dosing as long as we feel necessary and in whatever populations we feel necessary. So there has been no restrictions on any population based on the data that we have available to-date. If I’m understanding your question correctly, so again the ration of therapy and the populations have not been limited by any of our preclinical studies. Was that your question?

Geoff Meacham – JPMorgan

Yeah. I mean. Go ahead, guys. Just in terms of next step beyond what you have here I’m just curious like what other boxes you have to check from a safety perspective because the next study is beyond these three are obviously going to be quite a lot larger.

Michael D. Rogers

So, let me just jump in, this is Mike Rogers. I think the answer is that we basically are done with our toxicology program. We have everything we need to launch all three studies. Is that your question?

Geoff Meacham – JPMorgan

Yes, yes. That’s it and then a follow-up here. When you look at the NEUTRINO and POSITRON study it does appear design, I’m curious here, if you’re looking for a 15% delta with those studies, is it – it looks like patients aren’t really getting anything. Is there a bail out or some sort of, what’s the criteria for patients that are not getting 7977 or ribavirin and then do in fact have a significant relapse?

Michael D. Rogers

Right. Well, so for the patients on placebo they would, patient would randomize of course to active or placebo and the patients on placebo we could really consider differed therapy when they complete their 12 weeks they would roll along to active therapy. Is that your question?

Geoff Meacham – JPMorgan

Yeah. And so what’s the delta that you’re looking for on those studies, on POSITRON and NEUTRINO?

Unidentified Company Representative

Well, obviously since we are controlling a highly active arm of 7977 ribavirin to placebo, we’re going to have a lot more power than we need to achieve our objective. This study design is really driven by the fact that these patients cannot take interferon. So the only control we’re going to have is placebo, but obviously showing a difference, and this is one of those examples that if you need a statistician, you are in trouble, we don’t need a statistician here. We’ll have a huge delta and a huge amount of power to show a difference.

Unidentified Company Representative

Geoff, I just might add. In one way of thinking about those studies is that what you are trying to do with the number of subjects you have enrolled in a study is to prove a point about a population. And so whether or not you are looking at a consistency of a response in that population or looking at the safety in that population that has more to do with the size than an actual efficacy outcome compared to a placebo control.

Geoff Meacham – JPMorgan

Right. No, I get that. I’m just curious about the enrollment, the appetite for enrollment, I mean when you’re looking at this at least you can offer a patient ribavirin as a competitor. I think that would be realistic, but the health authorities were comfortable with the POSITRON and NEUTRINO though?

Unidentified Company Representative

Yeah, just to address your point on a ribavirin control arm. There have been a number of studies done in Europe looking at ribavirin as a monotherapy regimen. What they typically find is about a one half log decline over a period of 28 days, which is transient is subsequently lost over the next couple of weeks. So whether it’s a ribavirin placebo or a placebo, placebo the efficacy response should be about the same.

Geoff Meacham – JPMorgan

Gotcha, okay. Thanks guys.

Operator

Thank you. Our next question comes from Brian Abrahams of Wells Fargo Securities. Your line is open.

Matthew J Andrews – Wells Fargo Securities, Llc

Good morning this is Matthew Andrews calling in for Brain. Thank you for taking the questions. As it relates to NEUTRINO, can you talk about whether you’ll be stratifying based on genotypes 1A and 1B, as well as IL28? And then also you noted that be a large genotypes 1 population in NEUTRINO, can you give us a little bit more colors relates to that’s 50%, 67% and the other five genotypes that will be in that study? Thank you.

Unidentified Company Representative

Sure, good morning. For in NEUTRINO really we are thinking about that study as an all comers, so the data we have available to-date are that all genotypes are responding the same to the chain terminator PSI-7977. So that does open up the possibility of not having to perform genotyping on patients, if we can show one regimen that is effective across all of the HCV genotype. So as far as any need for stratification, again with the majority of the patients going on to active again, our superiority design is really just there to demonstrate the safety of 7977 with ribavirin over controlled placebo blinded study and all those patients who are initially enrolled onto the placebo arm, as Mike mentioned would that go on to receive active, so it’s really deferred therapy. It’s a way to look very closely at the safety of 7977 with riba, so there’s no need to stratify based on IL28B or even based on genotype, we anticipate that patients with genotype 1 would make up a majority of the patient in this study although we’ve opened up our QUANTUM study to all genotypes and ATOMIC study again is allowing patients with genotype 4, 5, 6. And the U.S. at least we are continuing to see a predominance of genotype 1, again no need to stratify or differentiate 1A versus 1B. The antiviral effects that we are seeing with 7977 is basically superimposable regardless us HCV genotype or sub genotype 1A, 1B, 2, 3, 4 and 6 tested to-date with equivalent very rapid antiviral effects.

Unidentified Company Representative

Matt, I would just like to add that some of the data that we have that have led us to this conclusion about the design of our Phase III program is not yet in the public domain, so I would encourage you to follow closely the results presented at AASLD, and if you can’t physically be present, at least listen into the webcast that are IR events because we will try to explain two areas, where we know that we are going to need to educate our audience a bit. One is in the fact that, we do not believe at somebody’s theoretical predisposition to interferon should influence outcomes in regimens where you are not using interferon. And second of all your point that when you have a direct acting antiviral with the mechanism of action, which is independent of high affinity binding to some enzyme of that specific genotype virus. You should expect to see comparable activity or efficacy across all of the various genotypes. And it’s really the mechanism of action of a nucleoside or nucleotide, which allows that to take place. So I encourage you to listen to both of those points, further explanation with some of the data that we have been looking at to try and deliver that message at our IR event.

Matthew J Andrews – Wells Fargo Securities, Llc

Great, thank you.

Operator

Thank you. Our next question comes from Matt Roden of UBS. Your line is open.

Matthew Roden – UBS

Great, thanks for taking the question, and congrats on the early start. So guys, obviously ribavirin as a combo was not the end game here and you've talked about that even today. But I'm curious your thoughts on the gaining factors were moving forward with other regimens beyond the Phase 2 studies that we have and specifically, if you think about modifying the design of NEUTRINO based on QUANTUM, which we are going to see I guess by 2Q. Is there anything stopping you from moving forward with 7977, 938 combo Phase 3 at that point as well. And then, I have a follow up.

Unidentified Company Representative

I’d just like to remind you that the QUANTUM study is really for the development of 938. We started with NUCLEAR looking at the combination of 7977 and 938 and also 938 monotherapy and that same philosophy is now going into QUANTUM. It just still happens that QUANTUM being a pan-genotype naïve study also has included in it for competitor 7977 and ribavirin. So from QUANTUM alone looking for the 7977 plus ribavirin arm to support what we want to do in this, as we think about a follow-up to QUANTUM, we think about that as a registrational program for 938. And in 938 we can be thinking about the possibility of 938 by itself or 938 plus 7977, depending upon how those arms of QUANTUM behave relative to 7977 and ribavirin in that study.

Matthew Roden – UBS

Okay. And then can you comment on what other studies, as Jeff would put it, what are the boxes you have to check and move forward with 938 as well beyond the QUANTUM study, clinical talks on 938 et cetera?

P. Schaefer Price

QUANTUM is designed to be sufficiently large enough to test the idea that we could take into Phase 3 for 938. So we do not envision the need to conduct any other studies or large Phase 3 studies for 938 prior to initiating the pivotal program for 938. We have completed the six month tox into species we needed that in order to start QUANTUM. So there are other things that we need to do from a pre-clinical respective things like a reproductive toxicity to conclude our costogenicity studies those kinds of things. But in terms of the more traditional chronic toxic those are already out of the way.

Matthew Roden – UBS

Okay. And then just lastly on the interim analysis you guys have talked about QUANTUM in 2Q, is this going to included SVR data on the plan in order to move first 225 patients or we just talking about like end of therapy EVRs.

M. Michelle Berrey

No. We actually want to see some SVR information coming out of the first 225 subject in that study.

Matthew Roden – UBS

Okay, great. Thanks very much and congrats.

M. Michelle Berrey

Thanks.

P. Schaefer Price

Thanks.

Operator

Thank you. Our next question comes from Terence Flynn of Goldmann Sachs. Your line is open.

Terence Flynn – Goldmann Sachs

Hi. Thanks for taking the question and congrats on our early start as well. Beside from I guess cost considerations what would be the reason for not wanting to run head-to-head trial of let’s say 7977 and some kind of combination versus Protease interferon based regimen and then had a second question after that.

P. Schaefer Price

Yeah. Thanks for the question. It’s an obvious one and part of that is we keep thinking about what the market wants. What the market wants is an interference free treatment of course, which is very simple, which doesn’t allow for drug resistance or intolerability. And so if we wanted to study a first generation Protease Inhibitor with interferon and ribavirin that's actually taking a step backwards in our mind, we do see sufficient unmet medical need in the marketplace and that's what we're trying to address, its nothing to do with cost, it is simply looking at a paradigm shift in the way we’re thinking about the treatment of chronic hepatitis C.

Terence Flynn – Goldmann Sachs

Sorry, I guess I wasn't clear enough in my question, I just means an interferon-free regimen of 7977 versus a protease interferon based regimen, so truly go for the head to head, your interferon-free versus the protease interferon, why not do that study?

Unidentified Company Representative

We do think about that, but we don't think about it in the context of a pivotal study, we think about in the context of a 3b/4 health economic study.

Terence Flynn – Goldmann Sachs

Okay. And then, Michelle just on the fact you said it about reasons for [knowledgeability] to interferon, can you maybe just walk through the major reasons for knowledgeability interferon?

M. Michelle Berrey

Sure. So, even in the patients who are referred to a physician who specializes in hepatitis C therapy, still less than half of those patients end up going onto therapy. So we think the majority of patients are first not being tested for HCV, because of the impediment of interferon injections and the issues associated with this therapy impact on the ability to continue to work in other kind of morbidities et cetera.

They are clearly in the ageing HCV population and unfortunately all of us are ageing and as we continue to progress in other co-morbidities, it becomes even more difficult to tolerate interferon, but we do feel that aside from the comorbidities, it’s really the end unwillingness of patients to go on to this injectable regimen and we feel that with an all oral well tolerated therapy that can potentially provide very high cure rate. The proportion of individual to are considered ineligible or unwilling dramatically increases. So that's why we’ve really steered away from using words like contraindicated, because I think that’s a relative term based on the absolute benefit. So again, as we continue to see emerging data showing very high SVR rates, very high cure rates and a very clean safety and tolerability profile it really opens up the possibility of all individuals with HCV electing to go on to an interferon-free regimen.

Richard E. T. Smith

Hi, Amy this is, Richard. May be just take two more questions, because I think we’re coming up to the (inaudible)

Operator

Okay. Our next question comes from Adam Cutler of Credit Suisse. Your line is open.

Adam Cutler – Credit Suisse

Hi. Thanks a lot for taking the question. So, I think you’ve done a really good job of explaining that, this could be a very simple regimen that would address a very significant portion of population in the interferon ineligible population. But I guess, maybe can you talk a little bit more about the bar for success, because clearly any significant SVR rate in that population would be an improvement over what they have now, which is nothing. But as far as the competitive bar versus regimens that include interferon for the patients that are interferon eligible, how do you think about that in terms of the bar for success in the phase III study that you’ve outlined today?

Patrick T. Higgins

Adam this is, Pat. With respect to the competitiveness clearly an interferon-free regimen, any SVR is actually a significant improvement.

However it would be in comparison in essence to what is currently out there. I think one of the things that we are hoping and we’ll update at AASLD show where we expect the SVRs to possibly come in at, but the possibility exist competitively that there could be a SVR rate significantly enough, but it would make it difficult for other three and four drug regimens to compete with basically one drug plus ribavirin in an interferon-free world. So we do think it will be very competitive going forward.

Adam Cutler – Credit Suisse

So is there a scenario under which you might consider doing additional studies that include interferon, just a sort of check off that box to the extend that there might be an additional benefit?

P. Schaefer Price

Our goal is to get rid of interferon as a treatment regimen and I think that the Phase III program proves that we think that’s a possibility?

M. Michelle Berrey

And Adam I would just like to add also that as you look at the PROTON study with the 98% observe SVR in genotype I population that’s with a backbone of 24 weeks of interferon. In the ATOMIC study, we’re looking at a 12 week interferon regimen and 12 weeks of our drug and ribavirin. So that as you think about those studies in the public domain potentially being mentioned in our discussions or perhaps on our label instructing physicians to how to use our drug, if they want to use interferon. So I think what you’re looking at when you look at our Phase 2 studies, because our registrational studies were showing physicians how to treat using our drug for 12 weeks. We have 24 weeks of interferon, 12 weeks of interferon or no interferon and doing that across all of the genotypes.

Adam Cutler – Credit Suisse

Okay, thanks. One another question, I mean you note in your presentation that you don’t expect to finance any time soon, but maybe can you talk about your plans if any, for potential partnerships and other geographies, and how that might impact any need for a future financing at any point?

Patrick T. Higgins

Excellent question. So our last financing that we did, we had described our use of proceeds in that capital raise to get our shareholders to data from PROTON, from QUANTUM, and from ATOMIC. So, as you think about that, we provided some PROTON data we will have more at AASLD, QUANTAM data, ATOMIC data coming first half of next year. As we think about business developments or potential relationships for our drug to be marketed in territories where we do not desire to market ourselves that is one way of thinking about bringing additional capital into the company.

We have clearly stated that we want to build our own commercial infrastructure and which used to do so in the US and in Western Europe and we are still considering Japan. So, I think that is an excellent opportunity that we’ll have to be looking at in terms of raising funds to support our Phase III and to support our future to build the commercial infrastructure.

Adam Cutler – Credit Suisse

Great, thanks a lot.

Operator

Thank you. Our next question comes from Liisa Bayko of JMP Securities. Your line is open.

Liisa Bayko – JMP Securities

Hi. Good morning and congratulations on moving this forward so rapidly. I just wanted to ask about ribavirin. I think it’s interesting that all of your arms do include ribavirin. What is your belief or what happens you– that you actually need ribavirin in the regimen as opposed to going with 7977 without ribavirin. Is it kind of holding you to a twice-a-day regimen whereas you could possibly go at 7977 once-a-day and I guess in the context of the fact ribavirin sort of then consider the (inaudible) nuke why do you believe you need that in regimen, is there any plans may be to study 7977 in this population without ribavirin. And then do you think you know there is other – does the other macros could actually add something on top of ribavirin in your study in combination? Thank you very much.

P. Schaefer Price

Thanks Liisa. Ribavirin has been an interesting molecule in this field for quite sometime now. It is very clearly when used with interferon prevent relapse and it helps to obtain better SVRs. And as Bristol-Myers Squibb is recently shown in interferon-free study is that, there is nothing magical about it that without interferon without ribavirin you can provide a patient with an SVR as long as you can manage resistance.

So in terms of what is ribavirin doing for us; it’s really kind of an interesting phenomenon that we have to look at here. We do know that ribavirin does alter the native triphosphate pools. And so we need to look at ribavirin in the context of 7977, not ribavirin as in the context of other mechanisms of action, and there might be a difference. And as we think about it, there are things such as the transporters that facilitate transports of nukes into cells or facilitate them being excreted out of cells or to modulate the triphosphate pools inside of a cell and all those things are potentially very important for nucleoside therapy.

Liisa Bayko – JMP Securities

Okay, and are there any plans to test that in terms of looking at 7977 without ribavirin or I mean do you feel like ribavirin is really going to be necessary and you know those kind of holding you to twice a day. And then also would you have a consider, may be a fixed dose combination with ribavirin.

P. Schaefer Price

Again, a very interesting question. I think of that more commercially than scientifically which is, if ribavirin is going to dosed twice a day how can you base the need for that, so part of that is the quantum study. Looking at 938 monotherapy versus 7977 and riba or 938 and 7977 against 7977 and riba. What we have right now shows us or caused us to believe that 7977 ribavirin will be commercially very competitive, that we believe it’s an approvable regimen given the balance between the benefits to subjects and the risk profile of the drugs. So I think that what we’re trying to do right now is to create a very high competitive barrier to future market entrance in interferon-free while setting the stage for results coming out of quantum to support 938 in the market place.

Liisa Bayko – JMP Securities

Okay. Thanks a lot.

Operator

I’ll now turn the conference back over to management.

Richard E. T. Smith

All right. Thank you Amy, and thanks for everyone for joining us today. If you have any additional follow-up questions, please feel free to give us call to the office, otherwise have a good day and I am sure we’ll talk to you soon. Thank you.

Operator

Ladies and gentlemen, this does conclude today’s conference. Thank you for your participation and have a wonderful day. You may now disconnect.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Pharmasset's CEO Hosts Shareholder Analyst Call - Conference Call Transcript
This Transcript
All Transcripts