Isis Pharmaceuticals' CEO Presents Update On Its Metabolic Franchise Conference Call (Transcript)

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ISIS Pharmaceuticals, Inc. (ISIS) Update On Its Metabolic Franchise Conference Call December 7, 2012 12:00 PM ET


Stanley Crooke - Chairman of the Board, President, Chief Executive Officer

Wade Walke - Executive Director, Corporate Communications and Investor Relations

Sanjay Bhanot - Vice President, Clinical Development and Translational Medicine

Lynne Parshall - Chief Financial Officer, Chief Operating Officer, Secretary, Director


Nicholas Bishop - Cowen and Company

Amol Pawar - Stifel Nicolaus

Steve Byrne - BofA Merrill Lynch


Welcome to Isis Pharmaceuticals' conference call to discuss its metabolic pipeline. Leading the call today from Isis is Dr. Stan Crook, Isis' Chairman and CEO. Dr. Crook, please begin.

Stanley Crooke

Thanks everyone for joining us on our conference call to discuss recent progress on our metabolic pipeline, specifically the progress we have had on drugs that may bring benefit to patients with Type 2 diabetes and other diseases. Joining on the call today are Lynne Parshall, COO and CFO, Richard Geary, Senior Vice President of Development, Sanjay Bhanot, Vice President, Clinical Development and Translational Medicine and Wade Walke, Executive Director of Corporate Communications.

Wade, could you please read our forward-looking language statement?

Wade Walke

Sure, Stan. As a reminder to everyone this webcast includes forward-looking statements regarding Isis' business and the therapeutic and commercial potential of Isis' technologies and products in development. Any statement describing Isis' goals, expectations, financial or other projections, intentions or beliefs including the planned commercialization of KYNAMRO is a forward-looking statement and should be considered an at-risk statement.

Such statements are subject to certain risks and uncertainties, particularly those inherent in the process of discovering, developing and commercializing drugs that are safe and effective for use as human therapeutics, and in the endeavor of building the business around such drugs. Isis' forward-looking statements also involve assumptions that, if they never materialize or prove correct, could cause its results to differ materially from those expressed or implied by such forward-looking statements.

Although Isis' forward-looking statements reflect the good faith judgment of its management, these statements are based only on facts and factors currently known by Isis. As a result, you are cautioned not to rely on these forward-looking statements.

These and other risks concerning Isis programs are described in additional detail in Isis' Annual Report on Form 10-K for the year ended December 31, 2011, and it’s most recent quarterly report on Form 10-Q which are on file with the SEC. Copies of these and other documents are available from the company.

Thank you for your attention. With that, I will turn the call back over to Stan.

Stanley Crooke

Thanks, Wade. The objectives of this call are to review results of recent Phase 1 studies for three of our metabolic drugs, place the performance of each of these drugs in an appropriate context, help define for you the potential importance of these drugs in patients with Type 2 diabetes and other diseases and then finally show how these drugs fit into our pipeline and overall strategy.

To achieve these objectives, in fact, first, I will discuss why these drugs are potentially important, how they fit in our strategic plan and our pipeline. Sanjay will then discuss the data from each of the drugs, compare the observations from these studies on our drugs through the performance of relevant competitive drugs and even though these drugs are, of course, still very early in development, Sanjay will briefly discuss the potential profile of these drugs so that you can begin to understand their potential value.

Sanjay will provide our take on where each of these drugs may fit in the treatment for patients with Type 2 diabetes and finally, Sanjay will finish by discussing the next steps we plan to take in the development of these drugs and the specific signals that we will be looking for in the patient's progress. I will then close with a very brief summary and then we will open it up, as usual, for questions.

There are four main points that we hope to take away from this call. First, each of these drugs has a unique and potentially exciting profile. Each drug will be used in combination with other drugs to fill the specific niche in the treatment of relatively advanced Type 2 diabetes and then potentially other diseases.

Second, while it is still early, we believe the data from the normal volunteer studies suggest that we have drugs that will deliver the desired profiles. Obviously, we will touch these hypotheses in Phase 2 trials.

Third, the performance of these drugs demonstrates, again, the value of enhanced screening methods that we have implemented. All three are more potent and better tolerated than the second generation as these drugs we created just a few years ago.

Fourth, for each of these drugs, we have a focused development and partnering plan that we believe will maximize their potential value while limiting the risk to Isis. As an introduction, then let me put these drugs in a strategic context for you.

As we prepare for Genzyme's planned commercialization of KYNAMRO, our focus is shifting to the rest of the pipeline. We have five novel drugs that we think of introducing in the market in the next five years. These include OGX-011, ISIS-TTRRx, EXC-001, ISIS-APOCIIIRx and ISIS-SMNRx.

Beyond these five drugs, we have several drugs that we expect to be able to partner after we complete focused Phase 2 progress. These include ISIS-CRPRx, ISIS-FXIRx, and the three metabolic drugs that we will be discussing today. You should think of these drugs as relatively short-term revenue generating opportunities.

Obviously the value of each of these drugs will be defined by their performance in Phase 2 trials. The results that we are reporting today enhance our confidence that these metabolic drugs are likely to be attractive licensing candidates within the next 12 to 24 months.

There are several reasons for us to focus on metabolic drugs. First, there is an undeniably very large medical need. Type 2 diabetes is perhaps the most pressing therapeutic challenge of our time. It's an epidemic affecting more than 300 million people worldwide and is continuing to increase at an alarming rate, especially due to the tremendous increase in obesity.

While existing therapy can treat diabetes, usually when used in combination more than 60% of diabetic patients remain inadequately controlled and suffer from many side effects. There is therefore a critical need for new drugs that are more effective and safer and specifically drugs that can be used in combination with existing drugs to improve outcomes in patients with diabetes.

Second, some of the important drugs on the market have either been withdrawn or their use has been severely limited due to safety concerns. For example, the glitazones, where it has shown increase to risk to cardiovascular disease and osteoporosis as well as cause fluid retention and weight gain leading to much more limited use.

In addition, the development of several other drugs such as the human GLP-1 analogue and dual PPAR agonist were halted in late stages or were not approved. All of this leads to a big void and a significant clinical need in diabetes patients.

Third, due to the heightened concerns by the FDA that revolve around cardiovascular risk associated with Type 2 diabetes and the desire to have heart safe drugs, or those that provide cardiovascular benefit, drugs that provide a broad efficacy profile that includes reduction in lipids, in addition to glucose are very desirable.

Our metabolic drugs are uniquely positioned not only to fill the critical voids in diabetes therapy but also to provide more therapeutic effects including improvements in hypolipidemia and obesity in diabetic patients.

We have exploited the target and tissue specific action of our drugs to generate drugs that are highly efficacious with a low potential for side effects. Three of these drugs have shown encouraging safety and efficacy data in Phase 1 studies and are positioned to act via distinct mechanisms of action to improve insulin sensitivity or reduce excessive glucose production in the liver thereby causing robust glucose lowering effects.

Our therapeutic strategy for our metabolic program is to create a portfolio of unique first in class medicines to treat diabetes in different ways through different mechanisms such that they compliment one another as well as complimenting drugs currently available to patients. Our drugs can offer excellent therapeutic single agents but our primary goal is to develop them as adjuncts to existing diabetes therapies during the step therapy approach to the treatment of diabetes.

Before I turn the call over to Sanjay, I do want to remind everyone that the data we are discussing today are from Phase 1 studies in normal volunteers that were not designed to provide specifically significant results on efficacy measures. These data however when taken together do provide encouraging evidence that each one of these drugs may be used in specific therapeutic settings and in specific patient populations to meet a significant medical need in patients with diabetes.

So Sanjay will discuss first our novel and insulin sensitizer PTP1BRx, a drug that we hope can fill the void left by the decline in use of the glitazones, our glucagon receptor antagonist next, a dual acting agent for use primarily in very advanced and difficult to treat diabetics and finally our glucocorticoid receptor drug which we believe can safely lower glucose, lipids and weight without the side effects seen with other glucocorticoid receptor antagonists. I am particularly excited about this program because we believe there are rare disease type opportunities in addition to Type 2 diabetes for that drug.

So with that, I will turn the call over to Sanjay to talk about these drugs and our metabolic pipeline.

Sanjay Bhanot

Thanks, Stan. As Stan mentioned, our overall strategy is to develop multiple drugs for Type 2 diabetes, each of which has a unique and complimentary mechanism of action with the potential to provide significant and broad therapeutic benefit to diabetic patients.

The first drug in our pipeline, an antisense inhibitor of protein tyrosine phosphatase-1B represents a new generation of very attractive and safe insulin sensitizers. The need for an effective and safe insulin sensitizer is both urgent and unmet. This is a growing market. 50% of diabetic patients will eventually need insulin therapy but unfortunately insulin becomes ineffective in a large proportion of these patients.

A drug that could increase the patient's sensitivity to insulin would go a long way in helping with this disease. The only class of true insulin sensitizers in the market today is the B4 agonist, also know as the glitazones. PPARs work by altering transcription of a large number of genes resulting in increased sensitivity to insulin in muscle, fat and liver. As a result, they are effective at lowering glucose but are also associated with many unwanted and potentially serious side effects, including fluid retention, cardiotoxicity and bone loss.

The side effects with PPARs have severely limited their use providing us with an excellent opportunity to fill this considerable medical need. Our drug targets PTP1B, a brake on insulin signaling that inactivates the insulin receptor. PTP1B is an excellent target for antisense drugs because it is expressed in liver and fat tissues where our drugs distribute well. Because PTP1B is a member of a large family of closely related proteins.

Specificity is key to selectively inhibit this target. For this reason, companies who are developing small molecule inhibitors of PTP1B have experienced insurmountable challenges and most efforts be the industry in the past decade have failed to yield a specific molecule for a therapeutic use.

We have demonstrated in animal studies and in two Phase 2 clinical trials that antisense inhibition of PTP1B has the potential to have a very broad and superior target profile. In our studies we have observed the reduction in blood glucose levels as well as a reduction in LDL-cholesterol and the potential to reduce weight. In contrast to many other metabolic drugs, including the PPAR agonist that cause weight gain. This makes our approach particularly well-suited as a combination therapy with insulin since insulin itself causes weight gain in diabetic patients, a majority of whom are already obese.

In addition, a reduction in LDL-cholesterol is a significant benefit in this population of diabetic patients who are at high cardiovascular risk. Furthermore ISIS-PTP1BRx did not cause hypoglycemia, a key side effect of many therapies including insulin. Finally we do not expect to have any problem with cardiotoxicity, drugs or interactions or any contraindications such as suggestive heart failure that have plagued PPARs.

Our previous PTP1B drug allowed us to validate PTP1B as an important therapeutic target in humans for the very first time. Although this earlier PTP1B Inhibitor demonstrated significant therapeutic potential with a favorable safety profile, we felt that a more potent inhibitor would significantly enhance the program. Improvements in our technology and screening procedures have allowed us to identify more potent inhibitors to a number of targets.

So we applied this technology to PTP1B and identified ISIS PTP1BRx, a drug that is significantly more potent with up to a five fold rate of potency than our previous PTP 1B inhibitor and one that would also offer a significantly longer patent life. This is a drug that we have moved forward into development.

In order to evaluate ISIS-PTP1BRx, we conducted a Phase 1 study in obese healthy volunteers. The primary objective of the study was to evaluate safety. So we only administered the drug for four weeks. We also evaluated biomarkers of therapeutic activity that we selected based on our previous experience with our previous PTP1B inhibitor.

Frankly, given that the drug is designed to enhance insulin sensitivity, the short timeframe and the small number of subjects in this study, we did not expect to see any evidence of activity. We certainly did not expect the evidence of reduced insulin levels or an improvement in insulin sensitivity in these normal volunteer who were treated for just four weeks. However, as you can see, we did observe a dose-dependent increase in high molecular weight Adiponectin, an important metabolic hormone secreted from fat tissue that is associated with weight loss.

We also observed the reduction in plasma insulin levels and an improvement in insulin sensitivity as measured by HOMA-IR, a widely used index of insulin resistance that is based on a calculated ratio of plasma insulin to fasting plasma glucose levels. Both indices suggest that ISIS PTP1BRx improved insulin sensitivity in these normal glycemic subjects.

This table summarizes the encouraging therapeutic activity and safety profile we have observed from our PTP1B inhibitors in preclinical and clinical studies. Data from our Phase 1 study demonstrate that ISIS PTP1BRx was safe, well tolerated and importantly did not produce hypoglycemia and was not associated with weight gain. It is important to note that in the Phase 1 study with ISIS PTP1BRx, the activity we observed was consistent with studies of our previous inhibitor and occurred at doses lower than 200 milligrams indicating that ISIS PTP1BRx is more potent than the previous PTP1B drug.

Here we have mapped out the progression of Type 2 diabetes. On the far left side, we have Type 2 diabetic patients who are beginning to fail oral antidiabetic therapies. These patients then progress to failing both oral and GLP-1 therapies and eventually progress to even becoming intensive to insulin. We believe that our PTP1B drug has very broad applicability across all of these distinct disease stages, particularly with the unique profile of PTP1B inhibition where we have seen reductions in lipids and body weight as well.

We believe that our drug will be especially beneficial for patients who are obese and are being treated with insulin. Our drug also has the potential to be an excellent combination therapy with GLP 1 agonist.

So, in summary, our main goal is to demonstrate that ISIS PTP1BRx has a considerably more attractive therapeutic profile than the glitazones and can provide significant therapeutic benefit to patients on insulin as well as on oral antidiabetic drugs.

We are now progressing ISIS-PTP1BRx in to longer term clinical study in diabetic patients in which we hope to confirm the broad efficacy and favorable safety profile we predict and of course we expect this drug to continue to demonstrate greater potency as compared to our previous PTP1B inhibitor. With these data in hand, we believe that we will be in a good position to realize the potential value from this program with a partner.

The second drug in our pipeline is our glucagon receptor inhibitor. Glucagon is a hormone that opposes the action of insulin. In patients with advanced diabetes, uncontrolled glucagon action leads to excessive glucose production by the liver and significant increases in blood glucose levels. Historically, small molecule efforts to target the glucagon receptor were largely unsuccessful. In recent years, a few small molecule inhibitors have been identified and shown to be effective in lowering blood glucose levels in diabetic patients, further validating the target for Type 2 diabetes.

However these small molecules have been associated with significant side effects, including about a 16% increase in LDL-cholesterol as well as an increase in blood pressure. The precise reasons underlying these side effects are unknown but have resulted in termination of development efforts in some instances.

To evaluate ISIS-GCGRRx we conducted a phase 1 study in healthy volunteers. Although this was a safety study, we were hoping to confirm our preclinical results and to observe increases in total and active GLP-1 levels with no increases in blood lipids or blood pressure in this study. In this study, ISIS-GCGRRx was well tolerated and not associated with any changes in vital signs, hematology or serum biochemistry.

We observed no hypoglycemia and no clinically significant increases in triglycerides, total cholesterol, LDL-cholesterol or blood pressure. The favorable safety profile observed in this study suggest that this drug should not have the limitations of the small molecule GCGR inhibitors.

Here we show the changes in GLP-1 levels from our Phase 1 study. We saw an increase in both total and active GLP-1 levels, a finding that is consistent with the known mechanism of action of our drug. This confirms our observations in preclinical studies and because small molecules do not increase active GLP-1 levels at therapeutic doses, we believe that our drug will have better efficacy.

Now let's look at where an effective and safe glucagon receptor drug would fit into the treatment paradigm for Type 2 diabetes. The dual mode of action with the increase in active GLP-1 levels which could lead to protection of the pancreas and potentially disease modification, suggests that our drug would be very effective at lowering glucose levels in severely diabetic patients who are failing or have failed all existing therapies including insulin, and would benefit from robust glucose lowering without any significant side effects. We will evaluate this possibility by conducting a study in Type 2 diabetic patients who are uncontrolled on metformin.

If the Phase 1 data are replicated and extended in the Phase 2 study, we will have a very potent compound with an excellent therapeutic index that is superior to the glucagon receptor small molecules. With these data in hand, we believe that we will have very compelling data package for this drug that would be of noted interest to our partners.

I will now discuss the third drug in our pipeline, the glucocorticoid receptor inhibitor. Glucocorticoids are critical hormones in the body that also come to regulate the glucoregulatory action of insulin leading to insulin resistance, increase in blood glucose as well as an increase in blood lipids and weight gain. Antagonism of glucocorticoid action could be an extremely attractive therapeutic approach for the treatment of diabetes.

However, many small molecule inhibitor programs focused on reducing glucocorticoid action have failed, primarily because these small molecules also reduce glucocorticoid action in tissues outside the liver and fat, particularly the brain which leads to an increased secretion of steroids and negative steroid related side effects.

In fact, Korlym, also known as RU-486 or the abortion pill, an inhibitor of the glucocorticoid receptor was shown to increase ACTH in patients with Cushing's disease, indicating an effect on the central nervous system. Due to the antagonism of glucocorticoid action systemically, Korlym also produced adrenal insufficiency and an electrolyte imbalance, two serious side effects.

In contrast, our drug inhibits the glucocorticoid receptor specifically in the liver and fat tissues without crossing the drug bearing barrier, which should provide a significant advantage over small molecule approaches. Although this study in healthy volunteers was principally focused on safety, we also wanted to confirm our preclinical findings and show that there were no effects on glucocorticoid action in tissues outside of liver and fat and no changes in blood pressure.

Because of the robust lowering of multiple lipid parameters that we observed in preclinical studies, we were also hoping to see this effect in the current Phase 1 study. In the Phase 1 study ISIS-GCGRRx was well tolerated and did not cause any changes in vital signs or mapped parameters, no hypoglycemia. Importantly, in contrast to data reported for small molecules we did not observe any change in plasma ACTH levels which indicates a lack of an effect on the brain.

We also did not observe any changes on other markers of systemic glucocorticoid action such as plasma renin, aldosterone and angiotensin II level. Even more encouraging were data showing lack of an effect on blood pressure and no orthostatic hypotension, two key side effects associated with antagonizing glucocorticoid action throughout the body. Interestingly, even though the healthy volunteers had normal lipid levels, we observed a decrease in multiple lipid parameters, including field triglycerides, LDL-cholesterol and total cholesterol. This is consistent with our expectations and the profile we have observed in our preclinical studies.

Furthermore, in this study, we also gave the subjects dexamethasone, a synthetic steroid for a period of two days which resulted in insulin resistance in the liver, as indicated by an increase in blood insulin levels. ISIS GCCRRx attenuated this dexamethasone induced insulin resistance, resulting in a reduction in plasma insulin levels in these patients. The promising therapeutic profile from this drug means that there are many distinct patient populations who could benefit from a glucocorticoid receptor inhibitor.

We plan to develop ISIS GCCR RX as an add-on therapy in combination with oral antidiabetic drugs or GLP-1 agonists in uncontrolled diabetic patients. Because the drug has been shown to reduce triglycerides and cholesterol, it could also be of significant benefit to patients with Type 2 diabetes who were also dyslipidemic. Of course there are patients with diabetes that have associated excessive glucocorticoid activity as these patients will also benefit tremendously from a selective glucocorticoid receptor inhibitor.

In our Phase 2 program, we hope to demonstrate a reduction in glucose and lipids, as well as body weight loss in Type 2 diabetic patients with a safety profile that is consistent with our preclinical studies and Phase 1 study. We will also evaluate the drug's affects on multiple short-term measures of glucose control.

While the program is focused on developing ISIS GCCRRx for the management of diabetes, there are several other very attractive therapeutic opportunities for the drug that are currently being explored. These include diseases in which there is glucocorticoid excess, such as Cushing's disease or conditions whether there is skewered and induced hyperglycemia such as patients with rheumatoid arthritis or Crohn's disease, for example, or high doses of synthetic steroids. An other attractive indication is weight management including weight gain caused by some antipsychotic drugs.

With that, I will turn the call back over to Stan.

Stanley Crooke

Thanks, Sanjay. There are of course just normal volunteer four week studies but we are very encouraged by the performance of the drugs in these studies and we are quite excited about our metabolic pipeline. We feel great. In summary, we believe that each of these three drugs has a unique profile and is potentially an exciting profile with the specific niche focused in the treatment of relatively advanced Type 2 diabetes and of course other diseases.

We believe the data we have shown today, while early, suggests that we really do have drugs that will deliver the desired profiles and, of course, we will be testing these hypotheses in the Phase 2 trials that are going to be getting underway. The enhanced potency of our drugs that we are talking about today demonstrates again, the value of enhanced screening methods that we have implemented.

Finally, for each of these drugs, we have a focused development and partnering plan that we believe will maximize their potential value while limiting the risk to Isis. In addition, of course we remain enthusiastic about our DGAT2 inhibitor for the treatment of nonalcoholic steatohepatitis and we are completing work on or FGFR4 inhibitor, our first peripherally acting anti-BCB agent and we will be telling you about the performance of those drugs in subsequent conversations.

So with that, I would like to thank all of you for joining us and Erin, if you set us up for questions, I appreciate it.

Question-and-Answer Session


(Operator Instructions) Your first question comes from the line of Salveen Richter from Canaccord Genuity. Please proceed.

Unidentified Analyst

Hi, it's Andrew on for Salveen. It’s a great data today, congratulations. Just one brief question. At the end there, you mentioned the obesity drug, the FGFR4. I was just wondering about the timeframe of when we will see data from that. Thanks.

Stanley Crooke

It is a very complicated study because we are looking at normal volunteers and trying to measure a variety of, particularly, FGF19, which is a difficult to measure substance. So the study has actually completed but the data analysis is taking quite a long time. Just to get all the information procedures, specialized assays. So it will be a little while. I could have just said, it will be a little while.

Unidentified Analyst

No, it's great. Thank you.

Stanley Crooke

It will be a little while. By the way, DGAT2 has an early clinical trials yet but we really are quite excited about it and we just need to get it into clinical trials and have that money to develop all these drugs and what's exciting about it in particular, is the fact that we now know, thanks to the work with KYNAMRO, that we can pretty easily measure pretty modest changes in liver fat over a short periods of time using MRIs. So that’s another drug that will populate our metabolic pipeline over the bit.


Your next question comes from the line of Nicholas Bishop from Cowen and Company. Please proceed.

Nicholas Bishop - Cowen and Company

Thanks for hosting the presentation. My question surrounds comments that Stan made earlier on the call on tolerability. As you think about these more mass-market type indications, clearly tolerability and ability to stay on the drug is important. So I am wondering if you can compare at this early stage, what these drugs look like in terms of tolerability, injection site reactions, flulike symptoms, and so forth relative to say, mipomersen in its comparable trials.

Stanley Crooke

Sanjay can give you more detail but I do want to respond to the question more generally. First, I strongly believe that the injection site reactions, flulike syndromes, dropout situations with KYNAMRO have been greatly misunderstood and greatly exaggerated to some extents because we significantly over reported all these events.

For example, flulike syndrome which was the finest essentially almost anything that make somebody feel bad for a little bit did occur in 30% of patients on our KYNAMRO but it occurred in more than 20% of the patients on placebo. Not statistically significant difference. That is not to say that KYNAMRO doesn’t cause flulike symptoms. It does but they are much more modest than I think is currently thought by Wall Street.

Similarly injection site reactions are much more modest and is the perception. Finally the dropout rates for KYNAMRO, if you look at the study, it is designed to keep patients in and not a study like CS6 which was not designed to ensure long-term participation, are very reasonable and within the range you would expect for subcutaneous drugs like KYNAMRO. So we are finding that all of the more reason second-generation drugs are more potent and also that it would behave in terms of these side effects but I really want to make sure that at least Wall Street understands that I don’t agree with current interpretation of the compliance and performance of KYNAMRO.

Sanjay, can you just comment on the ISRs and so on?

Sanjay Bhanot

Sure. I think as we alluded to in our discussion, with newer screening technologies and the newer screening procedures we have in place, we are actually coming up with compounds that will have a far lower incidence of ISRs than even compounds such as mipomersen that were discovered about four or five years ago. In fact that’s exactly the reason why even though we have really liked the targets for many years now, we have taken our time to get on and develop these more potent and safe compounds.

I think our Phase 1 data is an attestation to that. We have seen for lower incidence of injection site responses and virtually no flulike syndromes in our Phase 1 studies at the same dose ranges as we have tested with the previous drugs. So there is a very big improvement in terms of that which we completely understand is required for these big markets.

So these compounds have a very large therapeutic index compared to the ones we were looking at four or five years ago.

Stanley Crooke

Actually, if you look at these three plus TTRRx, APOCIIIRx, FXIRx, all six of those, I would say have an incidence of ISRs about one fifth or so incidence of and I think it is a little early to talk about dropout the use of as a result of ISRs of phase of KYNAMRO and I think it is a little early to talk about dropouts with these as a result of ISRs other than say, at this stage if we can compare to what we were seeing with KYNAMRO, again we have a much lower incidence of complaints. Not necessarily dropout but of ISRs somebody notices. So it is clear we are getting better potency and better performance on the nuisance local side effects.

Nicholas Bishop - Cowen and Company

Okay, it's helpful, thank you.

Lynne Parshall

And Nick, just to put it in context, you remember that with KYNAMRO, on average, we only saw an injection site reaction once every two and half months.

Stanley Crooke

About one out of ever 10 Injections and we are seeing something very significantly less than that with these ones.

Nicholas Bishop - Cowen and Company

Yes, that’s fine. It's great news.


Your next question comes from the line Stephen Willey from Stifel Nicolaus. Please proceed.

Amol Pawar - Stifel Nicolaus

Hi, this is actually Amol Pawar in for Steve today, and Stan, thanks very much for hosting the call. A couple of maybe preclinical questions, if I could. So have you done analysis on what the half-life is in the different types of tissues. So clearly most of these drugs are targeted to the liver but you also mentioned an affect in adipose tissues. So maybe, if there is difference, half-life here and there and have you seen any targeting to cardiac tissue? Thanks.

Stanley Crooke

Sure, of course we have done those studies for many years on all the drugs and the way to think of it is that the elimination half-life is roughly the same in every tissue. There are slight differences. Kidney may clear a little more slowly than the liver or vice versa, but on average the drugs that we presented today have an elimination half-life for the liver and fat and other tissues of about slightly more than two weeks. At doses that we are employing there is no activity in cardiac tissue and that is one of the reasons why we have never worried about any of the arrhythmia tests and other sorts of things that are pretty standard and have caused many other class of drugs to have significant difficulty.

So, these drugs will be administered once a week and will support once a week dosing perhaps a little less frequent dosing at the higher doses but once a week dosing and they will work just fine in liver and fat and the other tissues where they need to work for that at that dose schedule.

Sanjay Bhanot

I think that, in fact the data that we shared shows that because the increase in high molecular weight of adiponectin that is a hormone that comes from fat tissue and the fact that we have demonstrated increases in that hormone already indicates that we are having a very good pharmacodynamic effect in that tissue.

Stanley Crooke

Remember, these drugs don’t distribute the fat. They distribute the fat cells. So if you look at a brown or white fat pad, what you will see is drug in the fat cells no drug in the fat. So the right way to think about it is the total amount of fat cells not the total amount of fat. That is quite important because a good number of the people we will be treating will be obese and they have increases in fat cells but their biggest increase is fat.

Amol Pawar - Stifel Nicolaus

Okay, great. Stan, it's very helpful. Thank you.

Stanley Crooke

You bet.


(Operator Instructions) Your next question comes from the line of Steve Byrne from Bank of America. Please proceed.

Steve Byrne - BofA Merrill Lynch

Hi, I had a couple of questions about your glucocorticoid receptor product. You mentioned that it would only be effective in liver, in fat cells. Do you have a sense for the distribution of the glucocorticoid receptors throughout the body and what portion of the receptors would actually be in those tissues that your product would be effective in?

Stanley Crooke

Sure, it's well known that the glucocorticoid receptors are distributed throughout the body and that’s the problem. Small molecule drugs that block glucocorticoid receptors in a variety of tissues especially the hypothalamus, the pituitary, and the like, lead to compensatory changes glucocorticoid steroid regulating systems, ACTH and the like and that’s what leads to all the side effects.

The metabolic opportunity and the metabolic problems that we are trying to fix is a liver and fat problem. Certainly with glucocorticoid not typically thought of as a skeletal muscle problem but a liver and fat problem. So our distribution of our drugs which the principal thing you need to know is our drugs don’t cross the blood brain barrier. They don’t have an effect on hypothalamus. They don’t have an effect on brain walls and they don’t have an effect on the pituitary. That’s the main message.

That’s just a natural proper way of these drugs and as a consequence we can inhibit in the tissues where you really have a metabolic problem and not cause the rebound effects that have plagued glucocorticoid receptors for as long as I have been around and thinking about it. Sanjay, you may want to amplify on that or correct any mistakes I made.

Sanjay Bhanot

No, I think you said it. I just wanted to add that it's not the proportion of the receptors in different tissues that matters. I think its, like Stan said, how broad they are distributed and glucocorticoids are actually hormones that have an effect on almost every organ system in the body. So the brain, the adrenals are two systems that one has to be very careful about.

The other two things that already with Korlym, we have shown is that they have a very big effect on blood pressure. You get something that’s called orthostatic hypotension and we actually measured in our Phase 1 and showed that we don’t change it. As well as, you see a very detrimental effect on the skewered and abuse effects across the different major organ systems like the renal. You see electrolyte imbalances.

So when you give Korlym, for example, and you talk to a physician who is treating a patient, you got to keep them having them potassium all day because they have severe hypokalemia and we have shown no changes. So those are the major ones and that’s exactly why we feel it is going to be hard to come up with a small molecule that can just target the liver and fat tissue.

Stanley Crooke

By the way, if you look at the data, both from the mouse and the monkey and so on, it is very clear that our drug is producing profound effects based on its distribution and in the man, even in normal volunteers, we showed significant improvements in lipids, significant improvements in glucose and insulin sensitivity and the response to ACTH challenge. That’s the normal volunteers with four weeks of treatment.

So, there isn’t any question this drug is working. It is working exactly as we expected, exactly as the animal models predicted. Exactly as the performance and behavior of antisense drugs predict as well.

Steve Byrne - BofA Merrill Lynch

Okay, well the reason I ask is because you also suggest that it may have some applicability in Cushing's and if you are restricting the access to certain tissues, I can see the benefit of not having adverse effects on other tissues but, is in Cushing's, a result of having too much cortisol throughout all of these tissues and therefore might not have the same level of efficacy in something that has such a broad body wide effect?

Sanjay Bhanot

No, I think actually, I understand your question. So let me answer it simply. First of all, as opposed to some other molecules, like Korlym, the one that's recently approved for Cushing's, there is no effect of that molecule in every known type of Cushing's. In our case, what we are looking at is to improve the metabolic profile in patients with Cushing's disease which is primarily as a function of an increase in glucose, uncontrolled glucose, uncontrolled lipids in these patients and that is occurring because of excessive glucocorticoid action in the tissues that we go to, which is the liver and adipose tissue.

So there are other issues in Cushing's disease that you are referring to, in terms of these patients over time having bone loss and I think we could also have benefit because we do distribute to bone as well. But beyond that actually answer is exactly the opposite which is that some of the small molecules do not have an effect it certain kinds of Cuhiongoid patients because they act in a way where their side effects negates some of their benefits.

Stanley Crooke

Just one final point. The thing you have to avoid with glucocorticoid antagonists and this has been known for many, many, many years is the rebound increase in ACTH, which then basically counteracts any benefit that you get out of the drug and in many cases can make things worse. So in Cushing's and psychotropic induced lipodystrophies and obesity and in diabetes the effects of glucocorticoids are systemic. They are occurring in every tissue. What you need to do is to fix the tissues that are driving the metabolic consequences and not drive a compensatory change in ACTH that then leads to actually blunting or perhaps even making the situation worse.

And that’s what this drug is doing. It's doing it in mice. It's doing it in rats. It's doing it in monkeys. Now it's doing it in normal volunteers.

Steve Byrne - BofA Merrill Lynch

No, that’s very helpful. Just one further and that is, can you help me with the biological connection to how this corticoid receptor blocker might affect weight gain in the use of antipsychotics? I don’t understand that link there.

Stanley Crooke

The antipsychotics and the HIV drugs produce a lipodystrophy that’s tied directly to abnormal glucocorticoid secretion.

Sanjay Bhanot

I think there is two components to that. First of all, tissue specific glucocorticoid amplification has been shown to be critical for differentiation and increase an adiposity that results you to multiple therapeutic insults. So that’s an area of great research recently overall but for the atypical antipsychotic drugs, there is actually some evidence like Stan suggested, that glucocorticoid, increasing glucocorticoid action may actually even be involved.

The data is coming up. It is not extremely well established but the connections are coming up between glucocorticoid and weight loss. But our strategy is if you inhibit tissue specific amplification and you don’t differentiate fat cells then whatever therapeutic insults there would be you could improve that by decreasing adiposity. So that’s the hypotheses.

Now, have we tested it preclinically? What we have done is we have actually tested on animal models where adiposity is a result of glucocorticoid excess, such as the ob/ob mice. We have seen fantastic effects in the reduction of body fat mass in those animal models. So I think we actually have preclinical data that suggest that it could be quite effective in this patient population. It remains to be seen, of course, in the clinic, but we are excited about that opportunity.

Stanley Crooke

I think the connection to Cushing's and diabetes in unequivocal. I think there is a solid body of evidence that suggests that some HIV and some antipsychotic lipidystrophies will benefit from a reduced glucocorticoid responsiveness. We will find out.

Steve Byrne - BofA Merrill Lynch

It's pretty good, thank you very much.

Stanley Crooke

You bet. I think we are running pretty long. Erin, I think we will call it a day. I want to thank everyone for your participation and your attention. We appreciate the questions and stay tuned. We have much more exciting stuff going on that we will keep you abreast of over the next few weeks. Thanks, bye.


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