Vertex's Management Present at Deutsche Bank Securities, Inc. 37th Annual Health Care Conference (Transcript)

| About: Vertex Pharmaceuticals (VRTX)

Vertex Pharmaceuticals Incorporated. (NASDAQ:VRTX)

Deutsche Bank 37th Annual Health Care Conference

May 08, 2012 11:20 am ET


Ian Smith - EVP &CFO


Robyn Karnauskas - Deutsche Bank

Robyn Karnauskas - Deutsche Bank

Good afternoon. My name is Robyn Karnauskas. I am a Deutsche Bank Biotechnology Analyst. Next we have Vertex. Speaking for Vertex is Ian Smith, the Chief Financial Officer.

For those of you who have questions, who are listening to the webcast, and want to ask questions, you can go to a website and ask questions and we will read them, they show up anonymously.

With that, I will turn it over to Ian.

Ian Smith

Thank you, Robyn. Good morning to all of those people that are here and those that are tuning in via webcast. I am in this fortunate position today, the day after the releasing data that I hope most of you are aware of today. I am in this fortunate position to talk a little more about that this morning, but also broadly about what is happening back at Vertex inside the walls. So we appreciate the opportunity and thank you for tuning in.

Before I start the presentation, I would just like to refer you to our Safe Harbor statement and that there are risks involved in this business and they are more fully disclosed in our SEC filings.

So there is really three areas I would like to cover today. I would like to just talk quickly about the broader corporate aspect of Vertex, because we are let's say a changing company over the last year, two years specifically, I sometimes describe it as there has been a hair pin bend where this company has come from, gone around this hair pin bend probably faster than most companies do and we are still on the track. In fact we are now accelerating out of that hair pin bend and doing very, very nicely as exhibited by some of the data we discussed with you yesterday.

That hair pin bend is one that the company has gone through a development stage of investing to develop breakthrough drugs and fortunately, successfully developing those drugs and now launching them and turning the company into cash flow positive and earnings positive has been a thrilling two years. And as I say a hair pin bend that as we’ve taken a speed. We are still on the track and we are accelerating out right now.

So we are turning into a global business, and a globally profitable business. We launched INCIVEK for hepatitis C in May of 2011, just a few short months ago, we launched our second follow-on medicine and that’s KALYDECO for a different disease and that’s in cystic fibrosis. We are treating that disease in a way that no other drug has ever treated patient with cystic fibrosis and I will come back to that in a moment.

And behind these two drugs, we have a pipeline of opportunity to extend our presence in terms of longevity in hepatitis C. We can expand the number of patients we may treat for cystic fibrosis and I’ll talk about those drugs and a number of other disease areas which we’ll hopefully come to fruition of next year or so and touching on those diseases such as rheumatoid arthritis, flu, epilepsy and I am sure if we stood here this time next year there will be other drugs for breakthrough, or the breakthrough drugs for other diseases that come out of the Vertex labs and will be in our pipeline at this point next year.

So we are profitable. Significant earnings potential and the company as I say, is accelerating after this curve and it’s quite a good time inside the walls of Vertex.

So just talk about the two drugs that we have recently had approved in the last year. First one is INCIVEK that’s for hepatitis C; truly a treatment of paradigm shift for the treatment of hepatitis C.

In summary, having the opportunity to nearly double cure rates in a significant number of patients in half of the duration of treatment compared to those treatments that has existed for 10 plus years, really improving the treatment option to patients for tens of thousands of patients and that was shown with a drug launch last year in 2011 bringing significant cash flow to the company and continues this year in fact we set financial guidance back on February 2nd and reiterate that just a couple of weeks ago for INCIVEK and our revenue guidance there was $1.5 billion to $1.7 billion for 2012. So as you can see this is a significant drug as measured by any standard.

INCIVEK is also been launched in Europe under the brand name of INCIVO. We collect royalties from our partner J&J and those are growing because they are at the earlier stage of their launch and that also is going very nicely in Europe, where INCIVO has the dominant share of the direct antiviral market.

More recently, we launched KALYDECO into the area of cystic fibrosis. KALYDECO is indicated in label for patients with a G551 mutation, so it is a subset of the broader cystic fibrosis patient population. We anticipate that this could be around 3% or 4% of the 70,000 patients around the world, mainly in the US and Europe that KALYDECO is currently labeled with. We are engaged in other studies to expand the label for the use of KALYDECO and I’ll talk about those in a moment.

But the launch of KALYDECO is going extremely well and we announced that on our call just recently that we may already have 600 patients on treatment just two months following launch of an estimated 1,000 to 1,200 patients in the US alone. So that’s going very well as well. Just to mark that quality of the drug, the connection of this patient community and the physician awareness.

Before I move onto cystic fibrosis, just want to touch on hepatitis C. Too often we look into the future and we bypass the current opportunity, but we have a very important opportunity with INCIVEK; it’s very important cash flow opportunity; it’s a very important medical opportunity for patients and physicians and we expect that to continue for a number of years into the middle part or latter part of this decade.

But we are very familiar that the landscape is changing rapidly for hepatitis C patients and physicians and there is this view and this vision that it’s possible to create an all over regimen for hepatitis C; something that might treat patients for as short as 12 weeks. That’s hepatitis C genotype-1. It might treat patient as short as 12 weeks and maintain these high viral cures of close to 80% or more.

We too have that same goal and that same vision and towards the middle of this year we have some very important read outs of the trials that are ongoing, specifically with two nucleosides that are being studied in seven day viral kinetic studies and based on that data we have the potential to create combination studies or combinations of drug and study them starting in the second part of this year to advance with the goal of creating an all over regimen shorter than 12 weeks or 12 weeks or shorter with high viral cure. So this is our opportunity to extend our presence in hepatitis C. We will no later, more this year and we will be back to on that.

We are a broad company. We’ve moved quickly beyond hepatitis C and now we are also in cystic fibrosis with the launch of KALYDECO; just a few quick points on the launch of KALYDECO. It’s currently indicated for around 4% of the said patients around the globe of the 70,000, so may be 2,800 or 3,000 patients at this point in time of which we anticipate is around 1,200 in the U.S. We appear to have reached approximately 600 patients as of April 25th, and we continue to recruit new patients onto the therapy, and that launch is going very, very well. And the launch is really just a marker in this patient accumulation. It's just a marker of the importance of the drug in this disease.

Now, I feel like I have to explain to you the different populations in cystic fibrosis. It'll give you a better understanding of what we're about to talk to and the data that we provided yesterday. I'm going to oversimplify the disease but it will help you understand how we're addressing this disease.

When we first went into cystic fibrosis probably 14, 15 years ago, we wanted to address the underlying mechanism of the disease, what we believe was the defect of the -- within the body that causes the disease. Francis Collins was one of the founding scientists around this disease and it's called the CFTR protein.

We've targeted the CFTR protein and we think if we can correct the function and the activity of this protein, then we can address the disease. That's the founding science for cystic fibrosis for ourselves. Now, from there we categorize patients into effectively three groups.

Group one is of patients that do have this protein on the cell surface of the lung but it is closed. So the simplicity of that group of patients is you have to open up the channel by correcting the protein. Group two patients is very similar to group one, and that they also have channels on the cell surface of the lung.

So the simplicity, again, is if you can open up that channel by correcting the action of the protein, then again you will have a clinical benefit in the group two patients. Group three, very different challenge altogether. Group three patients, they don't have channels on the cell surface. So you have to traffic a channel to the cell surface of the lung of that patient.

However, if you're able to solve that problem, then you use the same drug that we use in group one and group two because there's now a channel on the cell surface and you open it up and help the patient breathe better.

Now we're currently indicated in what's called G551 patients. Those are the group one -- that is a mutation within the group one patients, and we're going along very, very successfully. We are now advancing into studies of mutations, patients with mutations in group two.

So again, the group two is very similar to group one. They just don't have the proliferation of the channels on the cell surface of the lung. However, we did tell you just recently on our conference call that we have advanced into these studies of the group two mutations.

And if we're successful in these studies, whether it's an R117H mutation, which is one of the mutations as the predominant mutation in group two. If successful in these studies, we have the opportunity to treat 8% to 10% of the 70,000 patients around the world with just KALYDECO monotherapy.

So the takeaway here is, even though I'm oversimplifying it, group one and group two mutations are similar and can be treated we believe with KALYDECO monotherapy. The drug is currently approved. And we have the potential to treat 8% to 10% of 70,000 patients around the world.

And we'll run the studies, we'll provide you with the data and, hopefully, we'll be successful to the patients' benefit and be in approximately 7,000 patients. And that could be middle of next year, second half of next year, depending on how the studies play out.

Now that group three mutation, just want to spend a moment here. I explained to you the group three set of patients. They have a very different challenge altogether. The way we're addressing the group three patients is that we're using combination therapy. And this goes to the data that we provided yesterday.

We have a drug, VX-809. It's called the corrector compound. The idea is -- and again, to simplify this, it acts like a trafficking mechanism that corrects the trafficking of the channel to the cell surface. So VX-809 is dosed in a patient to traffic the channel to the cell surface.

Once VX-809 has trafficked the channel to the cell surface, we then add on KALYDECO with the expectation that KALYDECO already works for channels that are on cell surface. They open up and the patient can breathe better at this point. So this is the challenge, the scientific challenge, and we're going about to be combination therapy.

It is the data that we provided yesterday from the study. So I'm quickly just going to review some of that data and I'm sure we'll have questions regarding this data following this presentation.

So the study was a Phase 2 for what's known as homozygous and heterozygous patients. Homozygous is that they have a certain mutation, Delta 508, on both alleles. Hetero is it's a 508 mutation on just one of the alleles. The data we provided yesterday was from an interim analysis regarding roughly 50% of the homozygous patients.

And what we showed yesterday was that we saw an improvement in FEV greater than 5% -- 46% of the patients reported had a greater than 5% improvement to FEV, measure of their breathing capacity; and 30% had an improvement of breather of more than 10% as measured by FEV.

Just to put these results in context, you may say well 5%, did that person just breathe harder on the test or did 10%, did they breathe harder on the test. To put this in context, drugs that have been pooled for cystic fibrosis in the past have generally been middle to lower single-digit FEV improvements on an absolute basis.

It's very important to understand that, absolute versus relative. These are absolute numbers. So this improvement is a dramatic improvement in the breathing capacity of these patients. It is an interim analysis. It's approximately 30 patients that we're reading out from a pooled analysis of patients in each dose group.

As you just probably saw on the previous slide, there are three different dose groups for VX-809. As you can also see, which is interesting, is the placebo group, there isn't a single patient that achieved 5% or more improvement in breathing capacity as measured by FEV.

We did report that these interim results from these patients reported, there was a statistical improvement compared to placebo with a p value of 0.002; that being a mark that there was a tight correlation of response for these patients that were reported. Also, within the study, we reported on sweat chloride responses. We've talked for a long time about sweat chloride being an important biomarker within this disease. We still believe it is an important biomarker.

We're still learning and understanding what the biomarker means within the disease, whether there's a correlation or whether you need to achieve a certain sweat chloride response as a threshold, which therefore would be a marker for clinical benefit. And as we accumulate more data, we'll have a better understanding about this. Sweat chloride is a biomarker.

It's not a clinical endpoint. We did see reductions in sweat chloride. We were happy about that. That is a marker that we are improving the activity of CFTR. So we did see a statistically significant reduction in sweat chloride between day zero and day 28, which is the period where we dosed 809, which is a mark that we are transferring protein to the cell surface of the lung. So we're very happy about that.

We are still learning and more to come I'm sure when we get the final data later this year. We anticipate that the complete dataset from the study will be available around middle of the year and we will report that in a top line press release and probably anticipate giving further data analysis later this year at North American Cystic Fibrosis Meeting. From a safety perspective, we really didn't see any difference between the placebo group and the combination drug groups, which is very confidence providing as you move into a Phase III setting.

Why did we disclose the data? It is a question that we have been asked a number of times through yesterday, this morning as we meet with different investors. This was a hard one and it did come as a surprise I know that. We always had an interim analysis, it is important that we have an interim analysis in this disease. If you get -- I have described it as a normal distribution of response and at both at fat and thin end of the curves. If we get a really negative response you really want to announce that, you know this is a disease where you're creating lots of hope for families and patients and you really want to announce having close down the study.

The very positive thin end of the curve of the normal distribution is that you get a response that is beyond your expectations and you want to accelerate the program and we are very fortunate that that's exactly what we saw in this interim analysis. We got a result that was beyond our expectations in terms of FEV and clinical activity as measured by FEV.

The safety finding was very strong and we want to accelerate the program into a Phase III setting. For us to do that we have to talk to regulators both in the US and Europe. We have to talk to trial investigators, patients are now blogging regarding the results and there was a corporate concern here about information getting out of the company and not being in a controlled environment. That is what drove us to the announcement, the acceleration of this program and the data being beyond our expectations to drive us quickly into a Phase III program with a confidence to run a Phase III program around an FEV endpoint, a very, very important result. So that's what we are planning on back in the company. There is lot of activity, people are being unblended, discussions with the FDA, discussions with the European authorities, it is a high priority for us. The opportunity to expand beyond maybe the 8% to 10% patients that we already think we have, an opportunity for KALYDECO, but to go the homozygote patients is a further -- potentially 50% of the 70,000 patients but to get to those patients as fast as possible with this combination therapy is an imperative for the company.

I think I have told you about the excitements and the connection to the foundation. Hepatitis C is a wonderful disease for us to be in and curing the disease, curing Hepatitis C and cystic fibrosis is just adding to the brand of Vertex of what we are doing for patients. I'm sure that many of you are either listening today or sitting here in front of me, many of you know some people with cystic fibrosis and to address this disease by potentially addressing the underlying mechanism, so effectively the patient may not have cystic fibrosis while on the drugs. It is just, it truly is breakthrough science and we are very happy that we've made great progress in this disease.

Now back to the broad pipeline. I have touched on Hepatitis C you know behind INCIVEK being launched and been a very successful commercially marketed drug for us and KALYDECO. We do believe that we can extend our longevity in Hepatitis C and more to come later this year and from cystic fibrosis about getting to more patients. But we have other drugs in other areas. Another favorite that investors like to ask us about and I think it is because of the topical situation with Pfizer. Pfizer currently has a JAK inhibitor that's going through the review process with the FDA.

We also have JAK inhibitor that is highly selective to the JAK-3 molecular target. We just recently started a study, a Phase II study of approximately 6 month long and it's on a background of methotrexate. And we are giving consideration to taking this drug into other diseases as well as other forms of patients with rheumatoid arthritis, a very exciting program for us. The early data suggest that we have strong clinical activity with this mechanism and potentially may have a nice safety profile even compared to other JAK mechanisms and this is something that we are going to push along with speed.

Also in the areas of epilepsy and flu and those drugs continue along in particular epilepsy and flu drugs are into two Phase II programs, with the flu drug leading out later this year. I am just going to close now by just touching on the financial area of the company. As I say we have come around this hair pin bend and we still got four wheels on the track and now we are accelerating away. Not only is it thrilling to have been involved in the creation of these drugs and these patient areas but I can say even as the financial officer I am happy to now say we have got a strong revenue line, we are creating cash flow on the bottom line and it's a cash flow and earnings of significance just to give you a review.

The Q1 results we recently provided, there is some aspect to this that I just wanted to draw upon. We reported approximately $440 million of revenues in Q1 just in three months. But there are a couple of lines are that are in here that certainly are growing because of the stage of launch, so KALYDECO is at the earlier stage of launch. It's a chronic therapy, we expect patients to be on the drug for a lifetime. So this is very important to access these patients and to maintain their therapy and it will bring important cash flow back to the company.

The royalties that we have are coming from Europe and that is launch in Hepatitis C of INCIVO, these will drive significant revenues within the company. Vertex is now moving beyond a single line revenue number of HCV and INCIVEK to multiple sources of revenues and revenues that are growing. When you combine that with the opportunity that is behind the current financial profile of the company with the development of the pipeline, the company as I say is around this hair pin bend and accelerating nicely. We are thrilled, we are very grateful, but we are very thrilled at company's position at this point and I thank you for listening and I will open up for questions.

Question-and-Answer Session

Robyn Karnauskas - Deutsche Bank

Are there any questions in the audience? A few anonymous questions. I'll start with first. Many analysts are assuming major price cuts to the combo 770 plus 809 if approved in the heterozygous population, can speculate on why this would be necessary. Wouldn’t it be possible to keep the price of 700 flat and essentially giveaway 809 for free?

Ian Smith

Well the first time we went through these kind of questions, the conceptual questions that we are getting was with Hepatitis C now. So I feel like I'm having a little bit of déjà vu which is well good news because it means we're going through it again.

But frankly it's too early to comment on pricing of a combination therapy in cystic fibrosis. We will need to understand the label. We will need to collect the data from a Phase III program. I will point out that there will be more measures. The primary measures will be safety and efficacy also measured by FEV, but there will be a lot more measure that will accumulate data to understand the value of this drug to this patient community.

As we accumulate that data, we will have a better understanding of how we make price for combination drugs, so that’s a little ways off for now and we’ll be happy to take questions when we have the data from Phase III and we are bringing the combination drug to market.

Robyn Karnauskas - Deutsche Bank

Another question is, how do you expect or do you expect heterozygous data to be as clear as the homozygous data whether it will be clearly positive or clearly negative and will there be a clear sign or not that will inform you for Phase III?

Ian Smith

So just to be clear, we reported on the homozygous data yesterday there is norm in the study that we reported on the heterozygous; pages there are approximately 20, heterozygous pages. We are still analyzing that data. We need to collect the full data from the Heterozygous that will be around 20 patients. We will have that in the middle of the year.

That data will inform us about the next steps. At this point, we are happy to communicate lets say we are committed to moving for Phase III as I described with the study in the homozygous patients. As far as the hetero, we’ll have to wait to get the data. Investors tend to ask us whether they should rule it out at this point, no, absolutely not. This will be data dependent and we should have that in a couple of short months and that will help us plan for a Phase III.

Robyn Karnauskas - Deutsche Bank

Maybe I’ll just ask another question about sweat chloride metric; what’s that from 28 days and from 28 to 56 it wasn’t. If you would look from zero to 56 do you think it might been statutory, because in the previous study in last June, it seemed like you had a same trend that sweat chloride reductions were significant over the first 20 days or so of the study?

Ian Smith

So I will just repeat the question just to make sure people hear that over the webcast. The question, I am sorry but to paraphrase it, the question was the statistical significance in the sweat chloride production between day zero and day 56 as well as day zero to day 28 as we reported on yesterday.

So at this point, we are reporting day zero to 28 where there was statistical significant reduction in sweat chloride that was informed from our perspective, because it shows that VX-809, that the periods of VX-809 doses monotherapy. We believe that's the market that we are creating CFTR activity.

From day 28 to day 56, we saw a trend that continued down. It wasn’t statistically significant. We are still trying to understand that and an early hypothesis might be that we just need to get to a certain threshold of sweat chloride reduction. It’s a market for CFTR activity and if we can get to a certain level of CFTR activity and then have KALYDECO as for the clinical benefit that we saw.

We are still working through that. I think when we have a complete data set from this study, we will have a better understanding, but we are happy to just see that there was CFTR activity as measured by sweat chloride during the study.

Robyn Karnauskas - Deutsche Bank

And people have been asking a lot why you didn't include the rest of the patients in the study. I know it was an interim analysis. Should we be reading anything into that or is efficacy in these patients or….

Ian Smith

I am sorry the…

Robyn Karnauskas - Deutsche Bank

For less than five patients? Under five patients?

Ian Smith

The study was not designed to include those patients of that age group. We've actually followed a path that's very similar to KALYDECO. We dose the older patients first and then move to the younger patients second, that’s a standard progress in terms of protecting the younger patients for safety events. So we follow down the normal path for that.

Robyn Karnauskas - Deutsche Bank

What are your expectations for KALYDECO label in the EU? Do you think it will be broader or narrow?

Ian Smith

The label in the EU, this question comes up -- and thanks for bringing it up, Robin. This question comes up frequently. In the U.S., we filed and received a label purely in the G551 mutation, as I've described earlier. In the EU, we have filed a little more broadly than we filed within this group one mutation setting. If you remember, as I described, cystic fibrosis used to be groups of mutations.

We've actually filed for G551 and other, what's known as gating mutations. We don't know how that will play out in the EU. It may be we just get 551 and it may be we get 551 and gating. They'll all be dependent. We do anticipate the approval in Q3 of this year and so we'll have a much better indication at that point in time as we go through these discussions with the European regulatory authorities.

Robyn Karnauskas - Deutsche Bank

Maybe a question on 661 and KALYDECO; I thought I heard on your quarterly call potentially you would read out in the second half of the year. But when we looked into the call yesterday, it seemed like it was -- you were considering going forward and you would kind of inform us later. Is the guidance still the second half of the year?

Ian Smith

Yeah. We -- if something was communicated on the call, and it was different than what we've previously said, then I don't think we intended to communicate anything different. So let me -- it's a good chance to outline one of the development pathways for VX-661. So VX-661 is a molecule. It's very similar frankly to VX-809, which we just read the study out.

There is some variations in the molecule, but predominantly it's a similar molecule. We have a combination study ongoing that is combining VX-661 with KALYDECO. That is due to read out later this year. We still expect that study to read out. The question we often get is given the appeared success for VX-809 and KALYDECO, will we now terminate the study in VX-661.

Well, first of all, we just got a green light yesterday. Green lights in all countries mean go. And so, we're going to go into Phase 3 with VX-809 and KALYDECO. We're still waiting on the data for VX-661 and KALYDECO. We're waiting to get that data. It may be that we have two drugs. But we're going to go with the green light today with VX-809. We may have two drugs that have the potential to work in this mutation, and we'll know better this year.

Well, that was the question this morning in one of the investor one-on-one's. And frankly, one of the things that we do say, if we do happen to see a good response in that study or even different responses, it can still inform us on how conducting a Phase 3 program. So we'll see how that data reads out and we're going to complete the study.

Robyn Karnauskas - Deutsche Bank

Any questions from the audience? Just a general question. So of the 70,000 CF patients that you mentioned, how many of them are genotypes? What percentage?

Ian Smith

So in this disease, cystic fibrosis, most patients know they have mutations, they've been genotyped. I'll give you an example. In the U.S., it is now state law for a newborn to be screened and genotyped for -- if they have cystic fibrosis in their foundation -- in their mutation.

So it is anticipated, there is a registry of these patients both in US and Europe and it is anticipated that those registries cover approximately 90% or more of the patients with cystic fibrosis. So they know their genotype and it's anticipated that 90% are covered in the registry, with all orphan diseases as you see though as effective therapies come through, there is still the need for screening and genotyping and frankly what happens is more patients tend to show up once there is more effective therapies. So 70,000 is in reference to approximately – the approximate number that are in registries that's probably more around the world than we still get to that kind of educate ourselves as we progress with effective therapies.

Robyn Karnauskas - Deutsche Bank

One another question on cystic fibrosis program. How comfortable are you with safety with (inaudible)?

Ian Smith

Well there is a couple of things regarding safety. First of all because it is a combination therapy one of the drugs within the combination is approved and on the market and we dose that drug over a 12 month period. So I got to refer to the individual drug before I refer to the combination. So we would have very nice safety results with KALYDECO as monotherapy in fact discontinuation rates or adverse events were more predominant in the placebo group than they were with KALYDECO. And this goes to how KALYDECO works which it affects on the whole body. It's not just you know it helps the patient breathe better, but it really by improving or opening the channel. It really helps the patient feel better all over and they put on weight, they have less (inaudible). And all of that helps with the health of the patient and so from the safety profile monotherapy is very, very strong with KALYDECO.

Now to the combination data. This is the longest period that we have dosed the combination in, four weeks of combination but we did take VX-809 up to a dose level of 600 mg daily. So the safety findings in this study well again were similar in between placebo and drug arms. We did really see any signs of significant adverse event. So we are progressing to the Phase III program and considering how we design that, with confidence based on the data that we have at this point in time.

Robyn Karnauskas - Deutsche Bank

Maybe I will switch a little bit to HCV and ask one question there strategically. Since you guys were certainly leaders in DAAs and I see that you're doing a collaborative effort now with the nucs, what have you learned from interacting with the prescribing community around the value of nucs or how your opinions changed or been informed by what we have seen going forward and your future collaboration with those?

Ian Smith

Well it's – thanks for the question, a force has evolved over the years frankly. And it starts with direct antivirals, direct antivirals in terms of blocking the replication of this virus were incredibly potent and I believe there is a way to get to a cure for this disease with short duration therapy by the combination of direct antiviral compounds.

Now there are a number of different combination ways to get there. The different mechanisms have different features, proteases, NS5A, inhibitors can be potent. A nuc can be potent but also have a high barrier to resistance. There is non-nucs, there is lots of different antivirals that can be combined as showed by the result that we have seen over the last year particularly. There is a lot of different ways to combine these drugs to get to short duration therapy with high viral cure. I think that's the biggest finding that we have seen and you know I know there has been recently surprising results that didn’t include the magical nuc type mechanism and there was a surprising result as well.

So we are learning as we go along. I think we have a great opportunity as a company to participate in the disease area in the latter part of this decade and on. It will be subject primarily to our data that we received regarding our nucs because we can build very effective regimens around them, but we already have proven mechanisms that have been in tens of thousands of patients that we can now combine as successful as our nuc profile. So there has been a lot of learning over the last few years. There is lots of different ways to get to the short duration, high viral cure, well-tolerated regimens.

Robyn Karnauskas - Deutsche Bank

One new question and last new question from (inaudible), so what is the hurdle with the nuc to advance them forward? Your comments seem to suggest you have already reached this hurdle as you say you will move forward in the combo studies in the second half?

Ian Smith

Well we always plan for success frankly. And that's the way that we do our business planning, so you are quite sure when you get great data you know referring again to yesterday's results. So we are planning for success and but how do we measure it. I mean it's a seven-day viral kinetic study separate studies in two of the nucs.

We will be measuring the viral load drops over the seven-day period. There is you know some safety data that will also get over that seven-day period. And we are doing the nucs of different doses. So we will look for a dose response as well and we will certainly look at exposure levels of the drug compared to those doses. So we will get a lot of data that will inform us on how to do combination studies in the latter part of this year and that's how we have progressed.

Robyn Karnauskas - Deutsche Bank

Great thank you.

Ian Smith

You thank you. Thank you once again.

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