BioCryst Pharmaceuticals, Inc. (BCRX) CEO Jon Stonehouse on Q2 2016 Results - Earnings Call Transcript

BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX)

Q2 2016 Earnings Call

August 4, 2016 11:00 AM ET

Executives

Robert Bennett – Vice President-Investor Relations

Jon Stonehouse – Chief Executive Officer

Thomas Staab – Chief Financial Officer

William Sheridan – Chief Medical Officer

Analysts

Jessica Fye – JPMorgan

Brian Abrahams – Jefferies

Charles Duncan – Piper Jaffray

Tazeen Ahmad – Bank of America

Serge Belanger – Needham & Company

Liisa Bayko – JMP

Kumaraguru Raja – Noble Financial

Operator

Good day, ladies and gentlemen. Welcome to the BioCryst Second Quarter 2016 Conference Call. At this time, all participants are in a listen-only mode. Later, there will be a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, today's conference is being recorded.

I would now like to turn the conference over to Rob Bennett, Vice President-Investor Relations. Sir, you may begin.

Robert Bennett

Thank you, Shannon. Good morning, and welcome, everyone, for our second quarter 2016 corporate update and financial results conference call. Today's press release and accompanying slides for this call are available on our website at www.biocryst.com. This time, all participants are in a listen-only mode. Later, we'll open up the call for your questions and instructions for Q&A will be provided at that time.

Joining me on the call today are Jon Stonehouse, Chief Executive Officer; Tom Staab, Chief Financial Officer; Dr. Bill Sheridan, Chief Medical Officer.

Before we begin, I'll read our formal statement as shown on slide 2 regarding risk factors associated with today's call. Today's conference call will contain forward-looking statements, including statements regarding future results, unaudited and forward-looking financial information, and company performance or achievements. These statements are subject to known and unknown risks and uncertainties which may cause our actual results, performance or achievements to be materially different from any future results or performance expressed or implied in this presentation. You should not place undue reliance on the forward-looking statements.

For additional information, including the important risk factors, please refer to BioCryst's documents filed with the SEC, which can found on our company website.

With that, I will turn the call over to Jon.

Jon Stonehouse

Thanks, Rob. Good morning, and thanks for joining us today. Our focus over the last few months has been to continue advancement of our HAE programs, with the goal of bringing forward a conveniently dosed, highly effective oral drug to prevent HAE attacks. Our next clinical trial in HAE patients, APeX-1, is gearing up and we expect to dose the first patient soon. We have received regulatory approval to proceed with the trial in Canada and several European countries. We are now screening patients and Bill will provide details on the trial design in a moment.

This is an exciting step forward in our program as we are expecting that the high plasma concentrations we see with BCX7353, after daily administration, will translate into meaningful reductions in attack frequency in HAE patients. Our goal remains to report initial data from this study by year-end.

We also have nearly completed the PK study of the solid dosage form of Avoralstat. While we see drug levels that are multiple higher than the liquid gel capsules, we were unable to maintain drug levels at or above the target range during the twice daily dosing interval. For that reason, we have decided to stop further development of Avoralstat. Bill will provide more details on this as well.

Lastly, we continue to advance our broad spectrum antiviral program with funding from the federal government. We completed the Phase I i.m. formulation of BCX4430 and are moving into exploratory animal studies to better understand the dosing and effect of delayed treatment, and hope to have results from these studies next year.

That's it for my introduction. I will now pass it over to Bill, who will discuss the design of APeX-1 and results from both the i.m. formulation of 4430 and the solid dosage form of Avoralstat. Bill?

William Sheridan

Thanks, Jon. As already mentioned, we are pleased to report that the APeX-1 trial is now open for enrollment. I'd like to spend the next few minutes providing some details about this trial. Our main goals in this trial are efficacy and safety of the drug in eliminating or reducing the frequency of angioedema attacks in patients with hereditary angioedema and to reform dose selection for the pivotal trial program.

We decided to building flexibility in this trial by including an interim analysis. And to focus that on the top dose studied, 350 milligrams once daily, that's why the trial is divided into two parts and why most of the enrollment focuses on that dose. We also need to understand efficacy for lower doses, so we are doing that with 250 milligrams and 125 milligrams once a day in part two of the trial.

Now, I'd like to get into some of the details of the trial. This is a randomize-controlled trial, four weeks duration that tests our drug against placebo. Patients can continue to use this standard of treatments to manage acute attacks during the trial. You think is part one is proof of concept and will run an interim analyst once we have 24 subjects through trial day 28.

If we have what need with robust effects of 350 milligram once daily at that point, we'll move on to part two which looks at dose ranging. If interim analysis indicates it would be good to have more data on 350-milligram once a day, then we will keep part one open for up to an additional 12 subjects for a total of 36. The sacrifice was kept flexible in part one to cover our range of response options that would achieve 90% power with an alpha of 0.05 based on detecting a treatment effect of the drug of at least 70% and placebo response rate of about 30% with a standard deviation of about 0.45 attacks per week.

But, of course, we've done some in silico clinical trial simulations to support the design of the study including dose selection sample size pairing but also, to inform the key eligibility criterion for the trial that is the baseline attack rate. The qualifying attack rate for APeX-1 is two per month documented for, at least, three consecutive months within the six months prior to the screening visit.

Part two of the trial will test two lower doses with six subjects at each dose and two more placebos. The final analysis, naturally, will include all patients entered into to the study and pool of placebo subjects from both parts of the trial.

The primary efficacy endpoint of APeX-1 is the number of angioedema attacks and that will be described in a number of different ways including attack rate per week, variety of ways to counting the attacks, proportions of subjects with no attacks and number of attack-free days.

So, we will also evaluate efficacy over the entire dosing interval, as well as through study day 28. The reason for that is that it takes a few days for the drug to get to steady-state. So, the days – page 28 analysis gives us the best information as to how the drug widely can perform in the long term.

We've included a range of secondary efficacy endpoints to better inform us about the benefits of once a day BCX7353, just as we've done in our previous studies with avoralstat. Safety will be monitored with the usual tools and we will measure drug levels and the degree of kallikrein inhibition in PK and PD assays that we've discussed previously.

I'd now like to switch queues and provide some detail on the avoralstat formulation study. Our goal here was to see if we could achieve a PK profile that would support twice daily dosing for prophylactic treatment of hereditary angioedema. What we were aiming for was consistent exposure at or above four to eight times the EC50 of avoralstat for kallikrein inhibition maintained for at least 12 hours.

So, we test several different formulations in healthy volunteers with avoralstat doses ranging from 200 milligrams to 2,000 milligrams. And you'll recall from our previous discussions that we were unable to increase exposure leading from 400 milligrams to 800 milligrams in the Phase I study with the liquid formulation.

The 500 milligram dose of avoralstat, as a soft gel capsule, is included for comparison. And this is designed formulation that was used in August 2, and it's indicated in the red symbols on slide 4 and 5.

What we saw was that, once the tablet enter suspension formulations, some of these new formulations have certainly improved overall drug exposure. As Jon said, we had multiple of drug levels compared to the soft gel capsule formulation. And, in addition, we were able to dose to higher level, which we were unable to do, as I mentioned, earlier with the liquid formulation.

So, the exposure measured by period under the curve was up to about five-fold higher in some of these cohorts compared to 500 milligrams of the soft gel caps. Tolerability was very good. We had no significant adverse events in the 53 healthy volunteers who participated. However, although we did achieve significantly higher drug levels, these are not maintained , oral is not consistently maintained depending on the cohort in the target range through 12 hours after dosing.

So, this formulation work was not able to achieve what we were looking for, and we don't have an acceptable twice daily prophylactic of oral set formulation. So we're discontinuing this initiative. Instead, we are focusing our efforts in hereditary angioedema on BCX7353 as indicated on the slide. Its PK profile easily made all of our goals the coverage, the target enzyme.

My final update is on the antiviral program, BCX4430. I'd like to go over the Phase 1 clinical trial and provide a brief update on both clinical studies with Zika virus infection.

We've now completed all of the planned cohorts in the Phase I clinical pharmacology trial of 4430 administered by intramuscular injection. Now, the trial design is very standard, typical single and multiple outstanding dose on slide 7. We had 73 subjects receiving active drug and 18 receiving placebo.

The summary safety results shown on slide 8. I'm pleased to say is really not a lot to talk about here. The injections were generally safe and well tolerated. As you would expect when you give an intramuscular injection, there's some pain and we're able to reduce that by co-administration of a local anesthetic lidocaine. Laboratory safety profile was claimed.

Plasma drug levels through the time course on the first dosing on day seven and daily dosing as shown on slide 9. Drug exposure was dose proportional and very predictable which are very good features to have in a new [indiscernible] antiviral drug. It's important to note the accumulation. You can see that comparing the – for example the 24-hour post dosing levels on day one with the 24-hour close dose levels on day seven. And, clearly we could get to higher trough levels quicker if we gave a loading dose. This could be quite important in treatment of infections. So, that's what we're now studying in our non-clinical study program.

The long terminal half-life is not a good feature to have for an acute treatment of viral infection. That could lead to short course of the treatment. And we look forward to testing the loading dose regimens of this drug in Ebola virus disease models based on the results of the Phase I clinical trial.

This trial met all of its objectives. All of these results strongly support further development of this drug for acute treatment of emerging viral infections. All you need to do is reflect on the last few years and every year or two, there seems to be a new and important viral trend. So, having a broad-spectrum agent like BCX4430 successfully developed could be actually quite important for public health preparedness.

In our previous calls, we shared encouraging evidence of increased antiviral activity of 4430 in a Zika infection model in mice that led to interferon response change and were, therefore, immune-deficient. Since then, we have had the opportunity of collaborating with Dr. James Whitney at Ragon Institute of Massachusetts General Hospital, MIT, and Harvard Center for Virology and Vaccine Research, and Beth Israel Deaconess Medical Center.

Dr. Whitney tested 4430 in a Zika infection model in healthy non-human primates. Obviously, healthy non-human primates are far more similar to people than are immune-deficient mice. So, these experiments are very important. We tested a loading dose maintenance dose schedule and also, a single-dose schedule, with drug dosing starting the same day as the virus challenge in the first experiment.

Preliminary results, that 4430 treatment can eliminate viremia with no detectable virus in the blood compared to controls, who all had detectable virus in the blood and reduced the amount of virus shown in the different bodily fluids. This is quite encouraging and we are planning to pursue additional experiment in non-human primates and look forward to sharing more detailed results in a scientific publication or presentation.

So, that's it for the program updates. Tom will now address the financials.

Thomas Staab

Thank you, Bill, and good morning, everyone. I'm pleased to report details of our second quarter 2016 results. We closed the second quarter with approximately $64 million in cash and investments and have diligently focused our resources on our HAE program.

As we have mentioned previously, we expect our existing cash to fund our operations through mid-2017. On slide 11, you see revenue for the second quarter of 2016 decrease to $4.8 million compared to $25.8 million recorded in the second quarter of 2015. This decrease was primarily due to the onetime partial recognition of a large upfront payment from Seqirus associated with the June 2015 out licensing of RAPIVAB.

Furthermore, we also have lower development activity and thus, lower collaborative revenue associated with BCX4430 in the second quarter of 2016 as compared to 2015. Research and development expenses for the second quarter of 2016 decreased to $14.2 million from $16.5 million in the second quarter of 2015, primarily due to lower development cost associated with BCX4430.

The progression and pace of the 4430 program is largely dependent on BARDA and NIAID's authorization and development process as this program continues to be funded by the U.S. Government and other external sources.

General and administrative expenses for the second quarter of 2016 decreased to $2.7 million as compared to $3.5 million for the second quarter of 2015. The decrease was the result of a general reduction of administrative expenses throughout the company during the second quarter of 2016 as compared to the second quarter of 2015.

Moving below the operating line, we incurred $1.4 million of interest expense in the second quarter of 2016, and $1.3 million in the second quarter of 2015. We also reported a mark-to-market hedge loss of $3.7 million in the second quarter of 2016 as compared to a mark-to-market loss of $796,000 in 2015.

During the second quarters of 2016 and 2015, we also realized currency gains of $811,000 and $1.5 million respectively associated with the exercise of a U.S. dollar Japanese yen currency option within our foreign currency hedge. These gains reflect the exercise of in-the-money options within our currency hedge as contrasted to mark-to-market adjustments at the end of each quarter, which reflect quarterly changes in the yen-dollar exchange rate. The next loss for the second quarter of 2016 was $16.3 million, where a $0.22 loss per share compared to net income of $4.9 million or $0.06 of income per diluted share for the second quarter of 2015.

Slide 12 summarizes our six-month financial results. For the six-month ended June 30, 2016, total revenue decreased $9.6 million from $32.7 million in the first half of 2015. The decrease in revenue resulted from the recognition of approximately $21.7 million of collaborative revenue associated with RAPIVAB out-licensing transaction in June 2015. First half 2016 R&D expense increased slightly to $34.7 million from $33.6 million in the first half of 2015, primarily due to increase spending associated with our RAPIVAB program related at post approval commitments with the FDA in our ongoing regulatory filling responsibilities associated with the Seqirus out-licensing transaction, offset somewhat by reduced BCX4430 clinical development expense.

General and administrative expenses for the first half of 2016 decreased to $5.9 million compared to $7.6 million in 2015. This decrease was primarily due to lower unrestricted grants awarded to HAE patient advocacy groups in a general reduction of administrative expenses in the first half of 2016.

Moving below the operating line again, in the first half of 2016, we incurred $2.9 million of interest expense compared to $2.6 million in the first half of 2015. We also recorded a mark-to-market hedge loss of $6.4 million in the first half of 2016 as compared to the loss of $332,000 in 2015. In addition, we also realized currency gains at $811,000 and $1.5 million in the first half of 2016 and 2015, respectively associated with hedge option exercises in those periods.

Moving on slide 13, I'd like to discuss our cash balance and cash usage. We ended the second quarter of 2016 with cash and investments of $64.3 million, a decrease from the $101 million at the end of 2015. Based upon our current plans and expectations, we expect our existing cash to provide us liquidity through the first half of 2017.

Our operating cash usage for the second quarter of 2016 was $15.4 million as compared to $12 million in the second quarter of 2015, and a total of $37.9 million for the first half of 2016. As a reminder, our operating cash usage totals do not take into account any cash flows associated with a hedge or a RAPIACTA royalty monetization.

In regards to our 2016 forecasted results and consistent with our run rate guidance, we continue to expert to be within our previous guidance expectations, with our 2016 cash utilization in the range of $55 million to $75 million. And our 2016 operating expense guidance in the range of $78 million to $98 million. As a reminder, equity-based compensation expense is excluded from our operating expense guidance.

That completes my review of the second quarter. And we would now like to open the call up for your questions. Shannon?

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Our first question is from Jessica Fye with JPMorgan. You may begin.

Jessica Fye

Hey. Good morning. Thanks for taking my questions. I wanted to start out just clarifying what amount of data from the APeX study you'll disclose before year-end. Is it the interim, that first batch of patients on 350 mg? Will have time to run the next the 28 days at the lower doses should you want to do more kind of dose finding? And I just want to make sure I heard correctly, did you say you expect the baseline attack rate to be 0.45 per week or was that a standard deviation comment? Thank you.

Jon Stonehouse

So, taking – hi, Jessica. So, taking the last question first, that was the standard deviation, that number. So, what we intend to do is complete part one, that we will want to disclose. So, how many people are in that depends on what we see at the interim analysis.

Jessica Fye

Okay. Got it. And what's the baseline attack rate that you're expecting?

Jon Stonehouse

So, if you look at what we saw at two previous studies in hereditary angioedema, you always get an average attack rate on-study or baseline attack rate of the people coming on to the study that's higher than the minimum that you set for obvious reasons. So, in August 1, we set a minimum of one attack per week, patient-reported attacks, and the actual number was 1.5.

In August 2, we set essentially the same as what we're planning for APeX-1, two per month, and what we got was 0.93 per week, pretty close to 1 a week. And as you will recall, there was a placebo effect and on-study, it was around about 0.6 per week. So, you can expect on that basis that the attack rate – the baseline attack rate, obviously, will be higher than the minimum, so you can see, people will have a range of different attack rates. And our simulations that I mentioned on the call were pretty extensive. We're quite comfortable with the eligibility criterion we've set and that we'll have enough attacks on study to see a treatment effect.

I'd also like to add that, obviously, we're building flexibility because until you actual have people on study, you don't know what the average attack rate is going to be. Once we see what that is, that will play into the decision about whether to add additional subjects to part one.

Jessica Fye

Okay. And so, your minimum criteria for this one is two per month?

Jon Stonehouse

That's right.

Jessica Fye

Okay. So, we could look at something between, say, a half and one attack per week as a potential baseline?

Jon Stonehouse

That's probably a reasonable thing to think about. Yeah.

Jessica Fye

Okay. Thank you.

Jon Stonehouse

You're welcome.

Operator

Thank you. Our next question is from Brian Abrahams with Jefferies. You may begin.

Brian Abrahams

Hi. Thanks very much for taking my questions. I guess first question on the APeX-1 study. Is there a set criteria for moving this part 2 versus expanding out part 1, or is it really based on a look at the totality of the data and the baseline characteristics as well?

Jon Stonehouse

Yes. We'll look at everything. So, the goal of – the two goals of the study are to characterize the treatment effect well enough and to do dose ranging well enough to help us pick doses for pivotal studies. So, we'll look at the baseline characteristics. We will look at what's happening on study. We will look at the side of the treatment effect, standard deviation, everything.

Brian Abrahams

Got it. And then, just from a disclosure standpoint, I guess, just to follow up on the last question. So, I understand it correctly, if the interim suggests that you would expand part 1, you won't make any disclosures until you get the data from those additional 12 patients? But if the interim suggests you should move to part 2 and dose down then, at that point, you will disclose the attack rate and the quantitative data from the 24 patients within part 1.

Jon Stonehouse

That's right. And both of those, we expect to complete by the end of the year.

Brian Abrahams

Got it. And then it doesn't look there's any parameters in the study to increase the dose to 500 mg. Is that just related to the fact that in the Phase I portion, you don't really see any difference in kallikrein inhibition or are there other – is there other rationale for not incorporating a flex dose up portion?

William Sheridan

So, Brian, that's absolutely the reason. So, there is no appointing in giving additional drug if you don't have any additional effect on the enzyme. So, it plateaus out like it always does. So, the nature of enzyme inhibition is that with higher and higher concentrations, you get diminishing returns once you're at the bottom of the curve.

Jon Stonehouse

And, I think, when you look at the Phase I drug exposure graph that we have in the slide deck that Bill talked about, when you at the target range, and you can see that all the doses could potentially have a benefit to HAE patients, even the low dose. So, it will be interesting to see what these lower doses do as well.

Brian Abrahams

And then one last question if I may then I'll hop back in the queue. Any monitoring or specific monitoring or interim – safety analyses related to potential hypersensitivity and curious also what you're sense was from regulators and KOLs as to what would be an acceptable rate if this drug is ultimately the first efficacious oral drug in the prophylactic indication. Thanks.

Jon Stonehouse

Regulators have no comments on our safety monitoring. They approve the protocol. I think that the monitoring that we work out in collaboration and consultation with external experts on drug-infused rashes was completely supported by our investigators. And we described that before, obviously, as to what to look for is the drug in the protocol and we educate the sites about that. As I've mentioned previously, these sites we've had is that the cases we've seen for into the category of simple red rashes essentially erythema and in the fullness of time, what we're probably see is this is self-limited and go away within a few days and at a later date in the development program, we've got evidence of efficacy and perhaps in a long-term scientific study or something like that. We might be able to tip dosing through the rash because in essence, immune tolerance develops and many keep taking the drug. So, that's something we'll need to test later on.

William Sheridan

And in terms of what's an acceptable rate. I actually think it's higher than the rate we currently see. As I mentioned before, I've talked to patients and to physicians that when you ask if you had a nine and ten chance that you weren't going to get the rash and that you could take an oral drug one today, it really have an impact on your attack frequency, would you take it and there's a lot of enthusiasm for that.

So, right now, we're between 4% and 5% rate. We'll see if that stays that way after APeX-1 and we think as long as the efficacy is what we expected to be that this is very manageable.

Brian Abrahams

Thanks very much for the color and congrats on getting the study up and running.

William Sheridan

Thanks.

Operator

Thank you. Our next question is from Charles Duncan with Piper Jaffray. You may begin.

Charles Duncan

Hey, good morning, folks. Thanks for taking my questions. I just had a couple of questions on APex-1 trial design. In terms of the patients that you expect to enroll, are you tracking other patient characteristics or targeting other patient characteristics such as attack severity and their duration? In addition to frequency, also what about times since diagnosis?

William Sheridan

Charles, we're not including those variables for eligibility criteria. We do on the study measure attack duration and attack severity as standard part of understanding the patients that we have on the study and potentially the effect of the drug, but they are not included as attack criteria. The experience in individual patients can be quite variable. So, any individual patient with this illness who is getting frequent attacks might have a mix of abdominal attacks, peripheral attacks.

So, I think, trying to pick and choose which types of attacks or attack pattern to put in the study is probably not feasible. And what we're trying to show here is a very deep treatment effect with a drug that has very strong inhibition of plasma kallikrein sustained throughout the dosing interval. And the simple notion is that if we restore the normal phenotype of kallikrein inhibition, that should prevent the triggers of these attacks from having an effect, regardless of the type of attack.

Jon Stonehouse

Yeah. With regard to your question about newly-diagnosed patients, I mean, these patients have to – like the other studies, these patients have to have a documented history of attack frequency to enter the study. So, as long as they have that in the patient record, that's why we're going to European types primarily, that will cover that.

Charles Duncan

Okay. So, in the frequency will be through patient-reported or clinician-reported attack frequency, there's not a run-in period or anything in this study?

Jon Stonehouse

Right. My anticipation is that the vast majority of patients who enter the study will have medical records to support the documentation of the eligibility requirements.

Charles Duncan

Okay. That's helpful. And then, just checking on a couple of other previous questions. I'm just wondering, do you anticipate being able to press release if an update of some progress in APeX-1 yet this year?

William Sheridan

We'll press release when we dose to the first patient which is I said is soon, but between then and the result, you probably won't get any update.

Charles Duncan

And so, you don't anticipate an update yet this year in terms of progress.

William Sheridan

We'll have the results of Part 1 by the end of the year.

Charles Duncan

Okay. That's what I thought you said, Jon, but...

Jon Stonehouse

Yes. So, the next two press releases will be first patient dose and then the results of Part 1.

Charles Duncan

Okay. And then, just one quick thing, if you fast forward, call it a year from now, I know the development in regulatory strategy obviously depends on the outcome of APeX-1, but what are your thoughts on next steps? Where could you be in a year in terms of this program?

Jon Stonehouse

So, the logical mix that after a successful APeX-1 study would be to design the pivotal program and negotiate that with regulators. Obviously that would need an end of Phase II meeting with the FDA. And a year from now, you would harp that we would be in the starting-up phase of pivotal program.

Yeah. Remember that we've invested in this program with the idea that tox, making drug, all of that has been running parallel so that there are no major delays in starting up the next trial. So, as Bill says, [indiscernible] end of Phase II meeting with the regulators and then going into pivotal program.

Charles Duncan

Sounds like by the end of 2017 you could be pivotal.

Jon Stonehouse

Yeah.

Charles Duncan

Last question is could you remind us of the IP on 7353.

Jon Stonehouse

Yes. So, the IP takes the subset approximately 2035, so plenty of runway.

Charles Duncan

Okay. Cool. Good. Thanks for taking the questions.

Operator

Thank you. Our next question comes from Tazeen Ahmad with Bank of America. You may begin.

Tazeen Ahmad

Hey. Good morning. Thanks for taking my questions. Just one about frequency of dosing. Since you guys are no longer developing of [indiscernible], does it make sense to potentially think of 7353 as the ID maybe? Do you think that makes a meaningful difference? I know that originally the plan was to be 1-to-1 per day. But if you do have an oral option, does it make that much of a difference if you're doing one pill in the morning and one pill in the evening or something along those lines?

Jon Stonehouse

There really isn't a need, Tazeen. If you look at the PK chart, if you look at the target range, remember, we're trying to restore the normal phenotype. So, you can have all the triggers in the world and if you've got high enough kallikrein inhibition, you shouldn't have attacks. And so, if you look at the steady state in the single dose and the coverage over 24-hour period, there's no need.

William Sheridan

Yeah. Just add a couple of comments. The half-life of 7353 is in the range of 50 to 60 hours. That certainly supports once a day dosing. Theoretically, you could decide to give it three times a week but that's harder to remember to take a drug on Monday, Wednesday and Friday than you used to take a drug every day, so it's better to have once-a-day dosing even though the half-life is 50 to 60 hours. The second pharmacology comment is about a PK parameter called fluctuation ratio, which is how high is Cmax compared to Cmin? In other words at the peak of the drug concentration, what is that compared to the trough before the next dose?

If you space doses out too long – for a very long time, you'll get a higher fluctuation ratio and the fluctuation ratio that we saw is around about two fold which is quite small or less. In the healthy subjects, dose once a day. So, on that basis, there's no reason to give the drug more frequently.

Tazeen Ahmad

Okay. And then as far as a number of sites? Sorry if I missed it. How many sites are you using for APex?

William Sheridan

I didn't say. So, we're going to enough sites to get study done in the timeframe we made. And it'll be in several year paying countries plus Canada. So, there'll be quite a few more sites than we had in OPuS-1 study which was very restricted. That was only like three or four sites in Germany, one in the UK. This is quite a bit bigger than that. When you run studies in larger number of sites, then you can expect that for whatever reason, one or two sites might be unproductive. But on the other hand, one or two sites might be very productive and I'm very confident we'll be able to recruit the study. We're giving a best shot by having enough sites.

Tazeen Ahmad

And then are any of these sties here now also involved in the Phase III study that [indiscernible]?

William Sheridan

I wouldn't know. And it would be hard to conceive that our sites are [indiscernible].

Jon Stonehouse

Right. We don't know the sites.

William Sheridan

Yeah.

Jon Stonehouse

Right? So, I would expect active investigators in the field of hereditary angioedema to study all of the new drugs that get investigated.

Tazeen Ahmad

And then, lastly, can you remind me if you have something like half an attack a week or so. On the spectrum of severity, where would you define that, would that be moderate or would that be moving into severe?

William Sheridan

It's moderately frequent. So, I think, that the language here is quite important. This is not asthma where you can have a mild attack – people get classified as having mild asthma or moderate asthma or severe asthma on the basis of the pattern of their illness. Any single attack in hereditary angioedema can be very severe. And it can be life-threatening.

So, you might only have one this year and still have a life-threatening attack. So, it doesn't really give you a picture of the threat to your life or the disruption to your life. I think it's reasonable to say that people have less frequent attacks or more frequent attacks. The average in a number of publications is about one a month. So, two a month is moderately frequent, it's worse than one a month, obviously.

Tazeen Ahmad

Yeah. I asked the question because, as you already know, there is a significant number of HAE patients who choose not to take any prophylaxis currently. So, wanted to get a sense of where that would land in terms of people who are currently getting treatment with something like Cinryze if you have that data?

William Sheridan

Yeah. And I think a lot of that has do with what's the current therapy available. I think when you get an oral, I mean, the enthusiasm, I can't stress this enough. The enthusiasm for us is – by patients and physicians has been fantastic. And I think that's the other thing that differentiates us, that size, that may be participating in more than one trial is – at least, currently, this is the only oral trial that's going on with HAE patients. And so, there's a lot of patients waiting for it.

Tazeen Ahmad

All right. Thank you.

William Sheridan

You're welcome.

Operator

Thank you. And our next question comes from Serge Belanger with Needham & Company. You may begin.

Serge Belanger

Hi. Good morning. Just a couple of questions also on APeX-1. It sounds like the patients who'll be recruited or expected to have a documented attack rate. Just wanted to know what – how long the screening process is prior to the randomization in a four-week treatment and whether it will be a case-by-case patient basis or outpatients will go through the screening process.

Jon Stonehouse

Well, to be clear, the screening consists of making sure that the patient is eligible. That's what screening means. So, there are blood tests and so on, history and physical examination, and part of the history is review of the documentation of attacks. And as I mentioned before, the way you should think about it is most of the subject in this study are going to have to have solid medical records at the site that have – that already document their illness.

And many of these patients in the European sites and the Canadian sites that we're going to have been intending that those physicians at that site for a very long time have extensive medical records, will be focused on their current status. And in the last six months, what's the pattern of their illness, and in that period, is there a three-month period where they have at least two attacks a month documented in medical record? That's the essential feature.

So, how long the screening takes depends on people's schedules, people take vacations, they work. They've got other things going on. They [indiscernible] start screening and might have to be a follow-up appointment next week or the week after or the week after that. So it varies.

Serge Belanger

Okay. Thanks for the clarification. You talked a little bit about the powering assumptions for APeX-1. Are those based on just historical HAE studies? And then I guess what dropout rates are you assuming for part 1 of the study.

Jon Stonehouse

So, I didn't catch the first part, you said something exceptions in APeX. I didn't get the first part of your question.

Serge Belanger

Oh, I was talking about the powering assumptions for APeX.

Jon Stonehouse

Oh, powering.

Serge Belanger

Yeah. Powering. Sorry. What they were based on. Was it historical HAE trials and what's dropout rate where you assuming for part 1?

Jon Stonehouse

Probably the simplest way to think about the powering assumption is to look at our experience in OPuS-2. So, we're building in a placebo response rate of 30% which is what we saw in OPuS-2. Maybe it will be less than that, maybe more than that. So, that's why we got some flexibility and an interim analysis. That's one of the reasons. So, with regard to attack rate, again, in OPuS-2 we have [indiscernible] study of attack rate of about 0.63, maybe will be higher than it, maybe will be lower than that when we actually get to see the data in APeX-1, that's another reason to have some flexibility.

Serge Belanger

Okay. And then just one last question for Tom. The OpEx guidance has not changed since the start of the year. Just wanted to know how we can think about this 20 million delta that is still there?

Thomas Staab

And when you say that 20 million delta just to make sure that I understand that.

Serge Belanger

In the operating guidance that you've given. I think you said $78 million to $98 million for 2016.

Thomas Staab

Right. And so, when we gave that guidance, we obviously had clarity on our HAE program in regard to OPuS-2. And so, at the beginning of the year, I gave larger ranges and I choose not to adjust my ranges as we go throughout the year rather than to say that the range is either appropriate or if I have to revise it, then I'll revise it accordingly. But, I think, that as you look at our results, we've anticipated pretty well what's going on and continue to believe that those ranges are accurate. Is that sufficient answer to your question?

Serge Belanger

Yes. Thank you.

Operator

Thank you. Our next question is from Liisa Bayko with JMP. You may begin.

Liisa Bayko

Hi. Thanks for taking my questions. I just wanted to better understand the kind of decision points around expanding the first part of APeX-1 study. What criteria will you be looking for to increase that then?

Jon Stonehouse

So, the key for us is to get enough information to design a pivotal study. So, we'll look at the treatment effect size and the standard deviations, and is what we're seeing enough information to help design a pivotal study. So, I don't have specific numerical criteria written down right now, we're going to have to look at the data and evaluate it.

William Sheridan

But an example could be, let's say, that the placebo attack rate are much less than what we expected, right? Then, we can make adjustments based on that. We don't want to be caught by surprise on some things like that, that would cause us to not be able to have the flexibility to add more patients

Jon Stonehouse

It's a planned administrative interim analysis in a Phase II study. These things commonly done and the reason is to building flexibility so you can come out on the end of the study with the information you need to go to the next door.

Liisa Bayko

And what European countries are you going to be enrolling in?

Jon Stonehouse

Quite a few. For example, Germany, UK...

William Sheridan

Italy.

Jon Stonehouse

...Italy, several others.

William Sheridan

I think, that the major European countries.

Liisa Bayko

Are these all kind of Western European countries or what?

Jon Stonehouse

Yes.

William Sheridan

Yes. Yeah.

Liisa Bayko

Okay. All right. Okay. Great. Thank you very much.

Jon Stonehouse

You're welcome.

Operator

Thank you. [Operator Instructions] Our next question comes from Kumar Raja with Noble Financial. You may begin.

Kumaraguru Raja

Thanks for taking my question. So, in [indiscernible] trial they targeted greater than 90% reduction in the HAE attack and they also enrolled patients who had greater than two attacks in three months prior. So, how does the – your patient population compare and what are your thoughts on the 70% reduction in the attack rate you are targeting?

And for the pivotal trial, do you guys think that there will be a need for 12-week study before doing that or can you move directly to the pivotal trial?

Jon Stonehouse

Sorry. It was a little hard to hear all of your questions, but I think I got most of it. So, with regard to the comparing assumption and taking out, at least, 70% reduction in attack rate comparing assumption, that helps you plan the study but not necessarily the metric by which you judged the outcome. That's a different story.

William Sheridan

So, we're studying an oral drug, administered once a day. I don't know what the outcome of the study is going to be. We have to run the study and find out. It could be that we completely restore the normal phenotype in everybody, and nobody gets an attack. Well, that would be fantastic. It could be taking the other end of the book end. It could be let's say that 40% or 50% of the subjects have no attacks.

For an oral drug taken once a day, that's pretty interesting. And it would set up try this oral drug first before you go on to potentially administered therapies that you have to inject. So, there's [indiscernible] expensive way of pairing assumption. You have to start somewhere, it sounds like a reasonable thing to shoot for in terms of pairing study.

With regards to the [indiscernible] Phase 1b and the attack rates, I'm very comfortable with the attack rates we've chosen to study. And one of the reasons for building in an interim analysis and flexibility is to add more patients if we need to. I haven't mentioned that in the call, but obviously if you're running a Phase II experiment, if at some point you need to amend the study because you want to more patients than planned, well, you could do that. I mean, so, Phase II is designed to give you the information you need to run a pivotal trial. That's what it's about.

Jon Stonehouse

The key in the attack frequency is to make sure that people on placebo have attacks. Otherwise, you can't show a difference.

William Sheridan

Right.

Jon Stonehouse

And then your last question was around the pivotal program, and will it be 12 weeks, and the answer is yes, likely to be 12 weeks and then a long-term safety rollover.

Kumaraguru Raja

Okay. Great. And in terms of enrolling patients in the U.S., what are the plans for that?

Jon Stonehouse

That's likely to come in the pivotal program. Obviously, the U.S. is a really important market. We just had really good success with these Phase 2 studies and running them and getting them enroll quickly because of the concentration of patients in these European sites. It's much more diffused in the U.S. So, the U.S. will be, for sure, included in the pivotal program.

William Sheridan

Absolutely. And we look forward to bringing this program to the United States.

Kumaraguru Raja

Okay. Great. Thanks for taking my questions.

Jon Stonehouse

You're welcome.

Operator

Thank you. There are no further questions at this time. Ladies and gentlemen, this concludes today's conference. Thanks for your participation and have a wonderful day.

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