Isis Pharmaceuticals' CEO Discusses Strategic Alliance With AstraZeneca On RNA Therapeutics For Cancer Conference (Transcript)

| About: Ionis Pharmaceuticals, (IONS)

Isis Pharmaceuticals, Inc. (ISIS) Isis Pharmaceuticals And AstraZeneca Form Strategic Alliance On RNA Therapeutics For Cancer Conference Call December 11, 2012 8:30 AM ET


Stanley Crooke - Chairman & CEO

Lynne Parshall - COO & CFO

Brett Monia - SVP, Antisense Drug Discovery

Wade Walke - Executive Director, Corporate Communications & IR


Amol Pawar - Stifel Nicolaus

Salveen Richter - Canaccord Genuity

Nicholas Bishop - Cowen & Company

Andrew Goldsmith - Canaccord Genuity Securities


Welcome to the Isis Pharmaceuticals’ conference call to discuss its alliance with AstraZeneca. Leading the call today from Isis is Dr. Stanley Crooke, Isis’ Chairman and CEO. Dr. Crooke, please proceed.

Stanley Crooke

Good morning everyone. Thanks for joining us today. We have had a very busy week. Monday, yesterday we announced our third alliance with Biogen Idec. This most recent alliance broadens our drug discovery and development efforts in neurological diseases and expands productive relationship we have with Biogen Idec.

Today, we announced a new alliance with AstraZeneca that will enable us to expand our cancer efforts. We are obviously very pleased with these new partnerships and the new opportunities they bring to our drug discovery efforts.

So while the principal focus of the call today will be to discuss our strategic oncology alliance with AstraZeneca, we will also spend a little bit of time talking about the most recent expansion of our relationship with Biogen Idec about which we are also very excited.

Joining me on today's call are Lynne Parshall, COO and CFO; Richard Geary, Senior Vice President of Development; Brett Monia, Senior Vice President, Antisense Drug Discovery; Bruce Turner, Vice President of Corporate Development and Wade Walke, Executive Director of Corporate Communication and Investor Relations.

Now Wade will you read our forward-looking language statement please.

Wade Walke

Thanks Stan, good morning everyone. A reminder to everyone, this webcast includes forward-looking statements regarding Isis’ business including Isis’ strategic alliance with AstraZeneca and Isis’ research and development opportunities in cancer and our recent partnership expansion with Biogen Idec. Any statements 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 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 in human therapeutics, and in the endeavor of building a 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 its most recent quarterly report on Form 10Q which are on file with the SEC. Copies of these and other documents are available from the company.

Now, I'll turn the call back over to Stan.

Stanley Crooke

Thanks Wade. We are pleased to discuss our new alliance with AstraZeneca today and there are several features of this alliance that bring benefit to both Isis and to AstraZeneca that go well beyond the potential financial benefits to Isis of more than $1 billion plus double digit royalties.

First, AstraZeneca brings significant experience and broad collaborations that enable the identification of novel genetic and epigenetic targets for cancer. Second, AstraZeneca brings considerable expertise in developing anticancer drugs and will support the broad Phase II program for our STAT3 drug with additional clinical trials focused by novel genetic observations. Third, Isis brings power of antisense technology to validate and exploit targets. Isis also brings the benefit of Generation 2.5 technology which enhances the potency and effectiveness of antisense drugs to treat a number of different types of cancer.

Working with AstraZeneca allows us to broaden the development of our STAT3 drugs. We believe that our STAT3 drug has the potential to be of value in the treatment of patients with many different types of cancers. So this drug would benefit greatly from a comprehensive Phase II clinical program.

Additionally, AstraZeneca has already been instrumental in helping us focus on diffuse large cell B lymphomas, which could represent a rapid path to market for our STAT3 drug. Given that our STAT3 drug will benefit from both the broad Phase II clinical program and a focused effort in B-cell lymphoma, one of our goals this year was to find a partner that could provide the financial resources and clinical support for this promising but extensive clinical program. Additionally as we all know, Phase II trials in cancer are not just expensive and may not in fact be predictive of Phase III success and Phase III programs themselves are also very expensive, so it was a major goal for us to take this important step in risk reduction this year.

We are pleased today to have achieved all of our objectives. In AstraZeneca, we have a partner that will conduct an aggressive development program for our STAT3 drug and we have reduced our risk within our cancer franchise. Not only that, the opportunity to work with AstraZeneca also supports broadening our drug discovery anticancer efforts and we are looking forward to the identification of additional drugs from the research collaboration with AstraZeneca.

So now I am going to turn the call over to Lynne to highlight our most recent partnering successes and why we're so excited to be working with AstraZeneca and expanding our relationship with Biogen Idec. These new partnerships are good examples of how our strategic partnership strategy fits in to our overall business strategy.

Our goal is to create partnerships with knowledgeable partners for our earlier stage drugs that are in areas where risks and costs are high and Phase II studies are not always predictive of Phase III success. For the rest of the pipeline, we will wait to partner until we have obtained definitive Phase II proof-of-concept data, and if we believe that those studies can be completed cost effectively and there is a high probability that positive data will cause a significant inflection in value of the drug that we are developing.

So in those areas where Phase II costs are significant and Phase II experience does not necessarily lead to clear evidence of efficacy that could be translated to Phase III we want to partner relatively early and for those areas where we believe Phase II studies are often very dispositive and can lead to a significant inflection in value those we would want to hang on to and partner after we have completed definitive Phase II studies.

Now with that introduction to the strategy, I’ll turn the call over to Lynne and after Lynne’s remarks of course I will wrap up the call and open the call for questions.

Lynne Parshall

Thanks Stan and good morning everyone. Our business strategy allows us to stay small and remain innovation driven while providing us with a pipeline of promising new therapies and a strong balance sheet. Our technology feeds our pipeline continually creating new licensing and partnering opportunities. Partnering interest in our technology and products has always been high as evidenced by the number and quality of our partnerships. With the successes of the drugs in our pipeline and the broad and expanding therapeutic opportunities that are accessible to our antisense technology, today we have even more interest in our technology and drugs.

Today we announced a new strategic alliance with AstraZeneca, a leader in the global development and commercialization of oncology products. As Stan mentioned, this alliance is a great example of our partnering strategy. It supports an aggressive development path for ISIS STAT3Rx and allows us to expand and broaden our antisense drug discovery and development efforts to new oncology targets with a partner that will add tools, knowledge and financing. In this way together with AstraZeneca we can conduct aggressive and comprehensive clinical studies to make sure that we not only create unique new cancer drugs, but that we also identify the patient populations in which a particular anticancer drug will have the most profound effects.

Yesterday, we announced our newest collaboration with Biogen Idec. This is the third alliance we have established with Biogen Idec this year and underscores the productive synergy between Isis and Biogen Idec. In aggregate, we have earned over $70 million in upfront fees and have the potential to earn over $1.2 billion plus royalties from these three Biogen Idec collaborations.

Just as AstraZeneca is the perfect partner for oncology, Biogen Idec is the perfect partner for our neurologic disease efforts. Biogen Idec’s expertise in neurological diseases and their strong track record from moving new drugs to the market rapidly is the perfect complement to our strong drug discovery and early development capabilities.

Already this year, we will advance our drug to treat children with spinal muscular atrophy in the Phase II development based to our encouraging Phase I data. ISIS-SMNRx is a drug that we and Biogen Idec plan to move into Phase III development late next year. Together with Biogen Idec, we’ve also made progress towards identifying and treat patients with myotonic dystrophy. Now we have expanded our efforts with Biogen Idec with a collaboration to develop antisense drugs for three additional severe and rare neurological diseases.

So we have two partners who bring wealth and experience and expertise to the table in these diverse therapeutic areas and of course we benefit financially. For example, just from our alliances with Biogen Idec and AstraZeneca, we have the potential to earn more than $2.2 billion.

Last month, we also successfully completed an amendment to our collaboration with GlaxoSmithKline that provides the funding and resources to significantly accelerate the development of our TTR drug. This collaboration has been extremely successful. In just over two years we've been able to advance our TTR program from a research stage project to a drug in late stage clinical development. The amended terms of the agreement facilitate conducting a robust Phase 3 study on ISIS-TTRRx to support registration, and we plan to begin the study before the end of the year. These are just a few of our partnership successes this year.

Our business strategy allowed us to select the best partner for each of our programs and to partner with each program at the optimal time, thus setting all of our drugs up for success. It also allows us to collaborate with world leaders and diverse range of therapeutic areas like the personalized medicine group at AstraZeneca, who can add a wealth of experience and expertise to our programs.

Now I will highlight some of the reasons why we are so pleased with our new alliance with AstraZeneca. AstraZeneca has a long history of developing successful drugs for the treatment of cancer. These drugs include non (inaudible) hormone therapies for the treatment of breast or prostrate cancers, as well as genetically targeted therapies for the treatment of a number of malignancies including lung and thyroid cancers.

What's important for us is to find an oncology partner who could bring many different attributes to the table. AstraZeneca’s expertise and in-depth understanding of cancer biology, provides a solid foundation in basic cancer research and enables AstraZeneca to identify novel targets for new therapeutic approaches to cancer. We will benefit from this knowledge and will have the unique opportunity to apply our technology to target that may not have been available to us otherwise.

We work closely with AstraZeneca in all aspects of target discovery and validation, including utilizing AstraZeneca’s proprietary preclinical cancer models and screening systems. Already our colleagues at AstraZeneca have reproduced an extended the findings that we have with our STAT3 drug in animal models of cancer. In addition to cancer expertise, novel targets and drug discovery tools AstraZeneca brings to the table the economics of this collaboration are very favorable, valued at more than a $1 billion to Isis.

The collaboration includes the opportunity to conduct drug discovery research on four cancer targets and a license to our STAT3 drug. We will receive $31 million in upfront and near term payments, including a $25 million payment on signing followed by a $6 million payment in the second quarter of 2013, assuming the research program is continuing. We also have the potential to receive up to $75 million in milestone payments over the next two years, including the potential to receive upto a $50 million milestone payment associated with the successful completion of the ongoing ISIS-STAT3Rx study.

In addition we are eligible to receive license fees from drugs arising out of the research programs and milestone payments in double-digit royalties for all of the programs. As part of the collaboration we've provided AstraZeneca a license to ISIS-STAT3Rx. The role to STAT3 is a key factor critical for tumor cell growth and survival makes STAT3 a very interesting and potentially broad therapeutic target. We believe ISIS-STAT3Rx has the potential to be useful for both immunologic malignancies and solid tumors.

ISIS-STAT3Rx is the first drug to enter clinical development that incorporates our newest generation of chemistry known as Generation 2.5, which significantly increases potency over our Generation 2 drugs. The potential for Gen 2.5 for cancer was a significant component of AstraZeneca’s interest in Isis, and we are looking forward to applying this technology to new cancer targets. The potential of antisense drugs that incorporate our Generation 2.5 chemistry is evident in the early STAT3 data that we reported in October. This is an all comers trial on patients with advanced cancers, who are refracterated multiple prior chemotherapy treatments.

Remarkably in this study in both of the available patients who had very advanced treatment resistant to Diffuse Large B-Cell lymphoma, we observe durable partial responses. These are impressive responses given that these patients who were refractory in many prior treatments and were very advanced in their disease. What's particularly important from a technology standpoint is that we're seeing these responses from B-Cell lymphomas. This is a cancer cell type for Generation 2 antisense drugs, would not have been potent enough to produce these types of responses. We plan to report results from the phase 1 study in the medical meeting next year.

So based on the phase response data, we’ve advanced our STAT3 drug in to a phase 2 study and a focus patient population with refractory lymphomas. Upon successful completion of the ongoing ISIS-STAT3Rx study, we will receive a milestone payment based on the data, which can be up to $50 million. We and AstraZeneca have designed a right path to market for ISIS-STAT3Rx in our initial patient population. Although STAT3 innovation has brought therapeutic potential, our development plan will focus initially on a number of hematology malignancies that are associated with STAT3 activation.

AstraZeneca’s extensive experience in designing and developing biomarker assays will be important in identifying the appropriate patient groups in which to test ISIS-STAT3Rx. Importantly, in addition, AstraZeneca is planning to initiate a broad phase 2 program for ISIS-STAT3Rx with additional clinical trial, beginning next year. AstraZeneca brings wealth of knowledge to the oncology table due to its long standing collaboration with institutions and academic labs. These collaborations have enabled AstraZeneca to evaluate many different oncology targets and gain a significant amount of information on these targets.

AstraZeneca’s recently developed collaborations with Foundation Medicine and (inaudible) BioScience. These collaborations could also be a benefit to our alliance to the identification of newly discovered genetic targets. As such, in addition to our STAT3 program, we’ve agreed to work with AstraZeneca on four other cancer targets. While we are not disclosing these targets today the majority of these will be novel targets for which AstraZeneca has a proprietary position, and therefore would have been unavailable to us. These are targets for which AstraZeneca will lead only our Generation 2.5 antisense technology at a high probability of success.

I will close by reiterating how excited we are to work with AstraZeneca in our cancer franchise. We hope that combining the strength of our antisense drug discovery platform and development expertise, with AstraZeneca’s experience in developing personalized medicines, could result in a development of a number of promising new genetically targeted drugs to treat cancer patients. In cancer we have an exciting year ahead with our partnership at Biogen Idec and GSK as we advance drugs to treat severe and rare diseases in the later stage clinical trials.

The success of these alliances demonstrates the potential of our partnering strategy. By selecting partners who brings substantial experience and expertise to our partner programs, we are able to expand our pipeline and advance our drugs more broadly and rapidly that we would be able to do on our own. We retain the right to attract the licensing terms and maintain control over the early development of the drugs. We’ll also continue to benefit after licensing with the knowledgeable committed partner and substantial development and regulatory milestone payments and royalties on these drugs.

So with that I would like to turn the call back over to Stan.

Stanley Crooke

Thanks Lynne. Let’s just get back for a minute and consider our cancer franchise and the strategy that we are employing to broaden the opportunities to develop antisense drugs to treat cancer. First, we believe that our antisense technology is ideally suited for the treatment of cancer, and we are excited about the many opportunities that antisense technology offers for advancing the treatment of cancer. The day that we and our partners have reported show that our drugs work in humans with cancer.

With the advances we have made in creating Generation 2.5 chemistry. We now think, we have a new classes of antisense drugs that can work more broadly and even more effectively. Our approach is to create a portfolio novel drugs, advance our drugs and broaden our opportunities while limiting our risk. We think we have done just that. We have a cancer portfolio today and has wonder on Phase 3, three drugs in Phase 2, and number of pharmacy drugs discovery targets that we are evaluating; OncoGenex and Teva are evaluating OGX-011, an antisense cancer drug created with our technology in three phase 3 studies, and they remain on track to report phase 3 data in prostate cancer this next year.

OncoGenex is also evaluating another antisense drug that we licensed to them, OGX-427, in phase 2 studies in patients with prostate and metastatic bladder cancers. We are finishing the phase 2 evaluation of our EIF4E inhibitor in patients with lung and prostate cancers. We expect to report data from those studies next year. We believe that the advances we have made in our technology enable us to make even better drugs.

[Micro] STAT3 drug, now other partners with AstraZeneca, we will aggressively advance our STAT3 drug in a very broad (inaudible) program. And the second component of our AstraZeneca alliance allows us to move more aggressively on discovery side as well, to bring more anti-cancer drugs forward more rapidly then we would have been able to do with wrong resources.

So with that, I want to thank everyone for joining us today. And we will open call for questions.

Question-and-Answer Session


(Operator Instructions) And our first question will come from the line of Stephen Willey, Stifel Nicolaus.

Amol Pawar - Stifel Nicolaus

Hi, Stan it’s actually Amol Pawar in for Steve today. Thanks very much for hosting the call. Just a couple of questions on the other targets. I know you are not disclosing what they are but are you focusing or is AstraZeneca going to focus on orphan type diseases and also if you could sort of refresh our memories on the targeting of the Generation 2.5 antisense technology? Thanks.

Stanley Crooke

The AstraZeneca collaboration is focused on cancer and it’s focused broadly. Its not and so its principal focus is to make people with various kinds of cancer better and it is targeted genetically. It is and so a number of the targets are really quite novel we think. Most of them are at very early stage discovery and there is, since it is cancer there's not a direct focus on whether its severe or rare cancer. So that's the answer to that question.

Generation 2.5 chemistry it’s just like Generation 2 chemistry in terms of its distribution. We don't target our drugs to go somewhere. They go where they choose to go like most drugs and they distribute to liver, kidney, bone marrow, fat cells, spleen areas of inflammation, and areas where there are (inaudible) blood vessels like cancer. Generation 2.5 we think is going to work better in cancer because it is more potent principally. It’s about tenfold more potent in Generation 2 and as a consequence we can get better activity and some of the tissues like B-cell lymphomas where traditionally the amount of drug that we got wasn’t sufficient to produce the level of activity that we are seeing with Generation 2.5. Brett, do you want to add anything to that.

Brett Monia

No, this is Brett Monia, I just on the first question about the targets I would just add that all of the targets will have a strong genetic component to them whether they are on the rare side on the population side, or on larger side as Stan mentioned this would be a broad cancer discovery relationship involving many different types of indications but just to reiterate what I said these will all have strong genetic basis for selection of the targets and the patient populations.

Amol Pawar - Stifel Nicolaus

And just probably quick follow-up on to the financial terms of the deal. Lynne, I know you mentioned up to $50 million from the STAT3 trial. I missed it whether that was at the conclusion of the Phase 2 which is going to be run by AstraZeneca or whether that would come earlier than that? Thanks.

Lynne Parshall

That milestone payment is at the conclusion of the study that Isis is currently conducting.

Stanley Crooke

And that studies in patients with lymphoma. So and the milestone is graded depending on the performance of the drug in that study.


The next question comes from the line of Salveen Richter, Canaccord Genuity. And your line is open.

Salveen Richter - Canaccord Genuity

Well that’s constitutes the easiest question I have had this year.


(Operator Instructions) Your next question comes from the line of Nicholas Bishop, Cowen & Company.

Nicholas Bishop - Cowen & Company

Just a couple of questions about the specifics of the AstraZeneca deal. One is can you give us any guidance on what the royalties might look like, let's say, qualitatively compared, are they comparable to the Biogen SMA royalties or the GSK TTR or just how do we think about that?

The second question on the deal is, can you give us any guidance on what type of outcomes from the ongoing study would lead to sort of what grade of royalty or what are the thoughts there?

Lynne Parshall

So, Nick, this is Lynne. Let me answer the first question. The royalties in all of our collaborations are that we're doing now are double-digit royalties. So the royalties in this collaboration are very similar to the GSK and the spinal muscular atrophy and types of royalties that we talked with you about before and I'll let Stan talk about that.

Stanley Crooke

So the studies in progress is relatively small Phase 2 study that focuses on patients with lymphoma and advanced lymphoma especially diffused B-cell, large B-cell lymphomas and as we mentioned, we've already seen two very significant durable partial responses out of two people who were treated.

These were really remarkable responses that have impressed not just us but the investigators and the folks at AstraZeneca and other companies who were interested in this drug.

And so, the goal is to give this drug a chance to demonstrate in larger numbers of these patients that it really is as active as it appears to be. And the milestone is graduated depending on the number of responses we see in a very small in what constitutes a very small number of patients really.

So we think there is a very good probability that the drug will display very good activity here and that we will see this whole milestone and the study we believe could be completed we will get to the end point here pretty quickly.

Nicholas Bishop - Cowen & Company

Could you be a bit more specific about what pretty quickly means what would be the timing on that?

Stanley Crooke


Nicholas Bishop - Cowen & Company

Okay. And then just one…

Stanley Crooke

I mean it’s a… Lynne you want to add?

Lynne Parshall

Yeah, I would stay it will we are still at the beginning of enrolling patients, so it’s hard to predict but I would say lately or next year or early 2014.

Nicholas Bishop - Cowen & Company

Okay, great.

Stanley Crooke

It will take a long time.

Nicholas Bishop - Cowen & Company

Great, just one last one on broad strategy for probably Stan, you mentioned early in the presentation that you kind of put your opportunities into two different buckets with respect to potential for partnering early if they require lot of resources or may not provide early proof of concept or partnering a bit later if they can provide clear proof of concept in Phase 2.

And we have seen a couple of examples like TTR that I think arguably did show proof of concept in early trials and yet we are partner early in some I am wondering as you look at your pipeline now is there anything in particular that you might expect to hold on to until for the Phase 2 proof of concept?

Stanley Crooke

Well, first of all, the TTR was partner before we had those data. It’s easy in retrospect to say, you have got a great drug when you got positive data, but TTR was part of a relationship that was a discovery relationship and so we feel very, very good about the transaction we have.

Second, you are right. There are basically two buckets and what we try to do, just look at where we can generate the most value. If you look at what we have done, our major goals this year were to partner our neuro program, just severe neurological disease program and our cancer programs and the logic for that is one, while the risk in the neurological programs have gone down, has gone down some, but we started our partnering efforts of course we had zero experience giving antisense drugs intrathecally to patients and no experience in children 2 to 3, 4, 5 years old.

So we felt that the risk in that problem was quite high. It was an area that was very new to us clinically. We had very limited experience in developing drugs for severe neurological diseases.

And so what we wanted to do was to have a partner with lot of experience and we wanted to outflow some of that risk, and we wanted to be able to expand it because we knew that we had all kinds of opportunities in neurodegenerative disease that we couldn't afford to tackle.

Moreover, we knew that by and large, in these diseases at the end of Phase 2 the data would probably not for most of them be (inaudible), they wouldn't generate a giant inflexion value. So that was the goal there, and I think we've achieved it and we've done deals that retain a very significant portion of the backend while doing that. We think its remarkable success, and we've built a relationship with a great partner who really knows this area.

Cancer is very similar. In cancer, we think antisense is ideally suited to help in cancer and we have hundreds and hundreds of targets that we could work on and the cancer landscape is changing dramatically as people understand the genetics and (inaudible) genetics in cancer at a pace that's dizzying at what's being learned. On top of that, obviously a real Phase 2 program for a broadly acting anticancer drug is $30 million to $40 million to $50 million. And at the end of it unless you are really lucky and have a remarkable observation, the data maybe encouraging but they aren’t the sort of data that will generate a giant inflexion licensing value.

So once again we wanted to partner that area. Now the drugs that we are focused on in terms of 2013-2014 licensing opportunities are drugs that we think are going to be very valuable where the Phase 2 data showing efficacy will be compelling and where we will generate a giant increase in value just as we did with KYNAMRO and those drugs include the five metabolic drugs that we have in development. We discussed three of them Friday. They include CRP, which we are tremendously excited about. They include Factor 11, which we think is going to be a tremendously important drug for which we are finishing the total knee replacement study today and a number of others.

There is another drug that's apoC-III, where we are very confident this drug is going to work, and we think it’s targeted to a group of patients who have a severe lipid disorder where the Phase 2 data will be tremendously compelling, and that's an area where we have a lot of experience now thanks to KYNAMRO and other drugs. That drug we may hang on to even longer. We will weigh what sort of trends, what sort of interest we have and what an option might look like for that drug as we develop the Phase 2 package. But certainly that's a drug that we might hang on to even longer.

So it is a fairly simple set of strategic principles, partner early, high risk, low value inflexion point opportunities, partner after Phase 2, lower risk, high value inflexion opportunities like metabolics and a lot of the cardiovascular drugs and as our financial position and revenues from KYNAMRO roll in, we intend to keep a number of drugs longer even then perhaps at the end of Phase 2, so that we can get more lucrative deals. And we are executing flawlessly on that strategy. And I do refer people to keep track of when we partner before they judge the partnerships.


The next question comes from the line of Salveen Richter - Canaccord Genuity Securities.

Andrew Goldsmith - Canaccord Genuity Securities

This is Andrew Goldsmith from the line for Salveen. Just two questions. The AstraZeneca partnership milestone, the upfront I believe you split it into two parts, $25 million and then $6 million in the second quarter. I was just curious with the rationale is for the AstraZeneca if you see something in the next few months to make a decision. And the other is, I think I counted seven undisclosed targets from yesterday and today. Are we, would you just disclose if you move into Phase 1 or we might hear more about that later? Thanks.

Lynne Parshall

So, I will start with the first question. In terms of the upfront money, the money is just gated to meet each party's financial needs but (inaudible) is payable as long as the research is continuing. In the second quarter, there is very little that’s going to happen between now and the second quarter of next year. So, it's really just the result of negotiation and financial planning.

Stanley Crooke

There is a lot that’s going to happen in the next six months. There is very little that’s going to happen that would cause us to not get that $6 million. We're still working here. There is very little new data. And then on the seven of our targets, the ability to start featuring each of this target is defined by our partner as well as us and so that will be a joint decision about when we announce the targets.

Andrew Goldsmith - Canaccord Genuity Securities

So when you move into Phase 1 it will be their rationale time to discuss that?

Stanley Crooke



And that concludes the question and answer portion for today’s conference. I would like to turn the call back to Dr. Stanley Crooke for closing remarks.

Stanley Crooke

Well if there are no additional questions I want to thank everyone for their attention. What I hope we have accomplished today is to describe why we are so excited about the two deals that we have announced in the last two days and I hope we have tried and we certainly try to help everyone understand the partnering strategy what we are holding on to, why we are holding on to, what we are partnering early, why we are partnering early.

We think it makes a lot of sense and we are very pleased to have achieved essentially all of the objectives we set for our partnering program this year at this stage. Thanks so much.


And thank you ladies and gentlemen. This concludes today’s conference call. You may now disconnect and have a great day.

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