Medgenics' (MDGN) CEO Mike Cola on Q4 2015 Results - Earnings Call Transcript

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Medgenics (MDGN) Q4 2015 Earnings Conference Call February 17, 2016 8:30 AM ET


Michael F. Cola - President and Chief Executive Officer

Brian Piper - Chief Financial Officer

Garry A. Neil - Chief Scientific Officer


Edward Tenthoff - Piper Jaffray & Co.

Chad Messer - Needham & Company, LLC,

Michael King - JMP Securities LLC,

Brian Marckx - Zacks Investment Research. Inc.


Good morning ladies and gentlemen and welcome to the 2015 Year-end Results and Operations Update Conference Call. Today's call is being recorded and at this time, I would like to turn the meeting over to Mr. Brian Piper, CFO. Please go ahead, sir.

Brian Piper

Thank you, Kelly. Good morning, everyone and welcome to today's call. As a reminder, a copy of today's presentation can be found on the Medgenics’ website. Our participants on today's call are Chief Executive Officer, Mike Cola; Chief Scientific Officer, Garry Neil and myself Chief Financial Officer, Brian Piper.

Before we begin, I would like to direct your attention to Slide 2 and remind you that today's discussion will include statements about the company's future expectations, plans and prospects that constitute Forward-Looking Statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.

I would now like to turn the call over to Medgenics' CEO, Mike Cola.

Michael F. Cola

Thank you, Brian. Having with me, Brian Piper, our CFO and Garry Neil our CSO. Welcome to the conference call. We have relatively follow agenda on Slide 3 for those of you following on the internet. We are going to walk you through our 2015 recap, which is obviously a transformational year for us. I think it's worth spending some time on the business model update we are about a year into our relationship with CHOP. I think we are the stand much better today, have that will work going forward.

We're going to take you through the NFC-1 program at a very high level, the data associated with the great trial and some of the detailed science is actually in the appendix, we will have time at the end for Q&A where we can go over some of those slides if folks are interested. And then Brian will take you through the Q4 year-end results and our 2016 milestones and I'll finish up with the summary.

Slide 4. Obviously a very important year 2015 as we pivot towards our genomic medicine strategy. We were able to acquire our lead compound NFC-1 the first in our collaboration with CHOP, it was acquired via neuroFix and we are poised to begin multiple CNS sight trials in mGluR positive ADHD patients and 22q Deletion syndrome. We'll give you some detail on them, those have actually begun and are moving forward.

Very importantly we strengthened the company's balance sheet in the fourth quarter by raising $46 million in gross proceeds, given our current plan that gives us about 24 months of cash runway. That takes us out to the beginning of Q4 2017, obviously given the come out in the market over the last few months, we're happy we got that done, we feel fortunate, we have many potential transformational milestones to achieve over that time period.

And importantly we demonstrated the viability of TARGT in the CNS. So think of large molecules behind the blood-brain barrier. We've done this with our collaborators at Harvard, we're very excited by the pre-clinical proof-of-concept work that we've done to-date and we look forward to advancing that throughout the year and have a potential filing of an IND in 2017. We focused on cancer and enzyme replacement with that program.

At the end of last year, we licensed a potentially permanent AAV technology and GeneRide from Stanford University for ex-vivo use, as many you know the world is coming to the realization that AAV isn't necessarily permanent. Actually it fades overtime and so this is an opportunity to have a truly permanent AAV technology. Again, we don't have a lot of slides in the core deck on this, but in the Q&A session, Garry would be glad to answer the questions.

And then we successfully concluded our TARGT EPO program that really gave us a confidence to move forward in CNS, we were happy with the results, we still have patients that are out there approaching two-years who have not used the recombinant EPO. And we think we understand that technology really well, we understand the need for it, some incremental improvements, but we think that work well in the CNS. Just a great year overall.

Slide 5. Just a revivification of the vision for the company, this is something we set when we came into Medgenics a little over two-years ago. The hypothesis from [cell] (Ph) was that interesting technology but focused in many ways on two broader market and that if we focused on rare and orphan diseases, we could really utilize not only the technology, but have a much better business model for a small company.

So just let me walk you through this real quickly driven by our commitment to patients we strive to create the premier rare and orphan disease company by developing first-to-market or best-in-class therapies that are transformative not incremental to patients, suffering from life altering rare genetic diseases. We believe we are on the forefront of doing that with our collaborators at CHOP at Harvard and Stanford.

CHOP is bringing us the unparalleled understanding of the underlying science of these rare diseases from phenotype to genotype, we'll talk a little bit about the capabilities at CHOP, we understand them better today than we did a year-ago and we'll continue to push the boundaries of medicine. Again, our ex-vivo gene therapy program in CNS is really groundbreaking and we'll continue to push those barriers.

And we're just now beginning to work with patients’ families and advocacy groups to increase awareness and commitment to research, improve access to therapies. Particularly in the area of 22q, we've had over 250 meetings now with investors and others, it’s apparent that not a lot of people understand what 22q Deletion syndrome is and we're working hard to raise awareness of that disease and bring new therapies to those patients.

Slide 6. Just an overview of the collaboration, it's been in place since the end of 2014, we are a little over year into it and it has brought us the exclusive option to the genomic discoveries made by the Center of Applied Genomics at Children's Hospital in the area of rare and orphan diseases. And CAG is just been incredibly prolific in discovering novel genetic causes of disease.

Just a couple of weeks ago Hakon Hakonarson our key collaborator whose named by Thomson Reuters Top 1% of scientist globally there was only 3,000 scientist who received this award, it's a tremendous achievement. And that was based on the objective measure of the impact of his publications over the last few years. With over 450 publications, peer review publications over the last nine years, they have just been remarkably productive.

But translating these discoveries into therapies is not always been easy, this is our world, this is what we bring to the table with CHOP, it's to guide the translational process that matches those discoveries with potential therapies and accelerates them into the clinic. Steve Altschuler gave us the challenge of moving from genetic discovery to first in man in two-years and from genetic discovery to approved product and four-year, which is obviously a very high bar, but we think it's achievable.

But that is our role, the translational process with them, we don't do it for them, they are a big part of that translational process. Why this is important? Well it gives us proprietary insight into the underlying disease and it gives us novel genetically distinct target to go after. If you think of all the companies that have moved into the rare and orphan space, many of them are chasing the same targets.

What people don't realize is that there is 200 to 250 new rare diseases that are found every year and our job is to be on the forefront of the subpopulations to those new diseases and have genetically distinct population that we can focus on and own ourselves. So, we think that gives us a real advantage against other companies.

Why are we so excited about the CHOP capabilities? Well its really unique, it's a world's largest pediatric bio-bank and it starts with a highly enriched patient population. This is important, over 1.2 million patients visits per year, 10% of all rare and orphan disease patients in North America are treated a CHOP.

And it's important that you have this kind of raw material at the top of your funnel, because in order to find the genes’ ventures you need to get to scale, you need to have a certain number of cases to actually pull the genetics signal out of the noise.

It's also important that the population represents the most severe and early onset forms of common diseases. Why is this important? Because that gives you a much cleaner signal coming out of that patient, because those patients haven’t been exposed to environmental factors. The underlying genetic cause of the disease is 85%, 90% of the story in that case. So again, you should get a very, very clear signal out of this pediatric population, particularly since it’s so highly enriched rare and orphan variance.

It doesn’t mean you can’t find these genes in adults, it's just much more difficult, because they have been exposed to so many environmental variables. Over the last 10-years, CAG has built this highly scalable infrastructure, I’m not going to go into all the details of this, but fully automated robotic bio-repository that can handle tens of millions of samples. Just a huge dataset to begin to work with over 75,000 pediatric and 150,000 related adults that have been genotyped and have associated electronic medical records.

This link between the genotyping and the medical records is extremely important, it gives you the genotype and the phenotype and allows you to do the kind of data mining that has yielded so many discoveries. They have incredible end-to-end next gen sequencing capabilities and analytics to pull the signal out of the noise. And I think very importantly has 85% of the patients in the data base consented for longitudinal follow up, and the ability to call them back for future studies.

As you know that can be a real problem in orphan disease, it’s just finding the patients to study can be quite difficult. If you can call them back, if you can essentially do it as a registry it's a real advantage. This is how NFC-1 was studied in the GREAT trial this is how we’re going to do the signal finding trial 22q 11.2 Deletion syndrome.

Slide 8. What does this mean for our drug development strategy? Well we start with a gnomically validated target. These are not animal models. These are in some ways knockout humans. So that gives us a very good view into the mechanism of action that would be valid for that particular patient type. We do occasionally build animal models as well, but the reality is we don’t necessarily need them, particularly if we can start with a product that’s been in the clinic and has shown that it's safe.

We take that target. We do a search in the literature. We look at some proprietary databases. And we look through the 3,500 or so programs that have been abandoned both biologics and small molecules over the last five to seven years, and we see which programs out there could potentially hit this mechanism of action.

It's a very large slagheap that we’re pulling from, many of these molecules have had tens if not hundreds of millions of dollars of investment in them, and they failed. And the best situation for us is if they have failed based on a poor efficacy signal in a very heterogeneous patient population.

Good safety data, poor efficacy is where we have our sweet spot, because we can identify the patients that will respond to these drugs and that’s really our message when we go to the innovator company. The innovator companies in general have been very receptive to this message. The reality is we tell them about a cohort of children that have very severe disease and very poor prognosis.

Based on that, we always get a response. We don’t always like the response, because sometimes there are safety issues or tolerability issues that weren’t disclosed. But in general we get an audience and we get a view of the data, been able to build the pipeline of these opportunities based on the strategy.

Once we have a molecule we’ve acquired it or licensed it, we move into genomically guided product development which I’ll walk you through in a minute, we think it's much more efficient. It's a lower cost faster way of developing products. And obviously we should have a very targeted launch. Why it's targeted important, because we should be able to identify the bulk of our patients upfront via a predictive test.

Slide 9. Just a real high level view of the benefits of genomically guided drug development. This is not new. This has been used in oncology for the last 15-years. It’s been hard to translate that into other areas, because in fact the signals, the predictive biomarkers haven’t been as clean, but I think we’ve reached a point in our ability on the genomic side to have these predictive biomarkers. NFC-1 is really the first case that we’re bringing forward, but there will be others and other therapeutic areas.

So based on a predictive biomarker, you get greatly improved response rates in your initial clinical trials. That allows you to run smaller, faster pivotal trials, because you don’t need the large numbers of patients to power them for statistical significance. Based on an increased response rate, obviously you get a much higher probability of regulatory success and you also get a lot less off target issues, because in fact you don’t have to dose up to get an effect in those patients.

I mentioned targeted launch, again, we should be able to pre-identify majority of our patients either before launch or at the time of launch through a genetic biomarker. And like cancer we have the potential for label expansion based on adjacencies where the same genetic underlying genetic cause is found, but it has a different phenotypic expression. Again, this has been done many times in cancer and I think we can bring this to other therapy areas including CNS.

Slide 10. Again, just an evaluation of our business model, we started very much as ex-vivo gene therapy company with a target platform, we're still committed to that. As I mentioned at the beginning, we're very happy with the results of the Eco trial, we're very encouraged by what we're seeing in CNS and we do believe that we have something transformative with the gene rise therapy from Stanford.

We're in the midst of that second bar genomic drug development, obviously we are using a predictive biomarker with NFC-1 but our goal is to really instantiate genomic medicine where we have a companying diagnostic that’s launched with the molecule and really drives the therapy to a very targeted patient population.

Moving to Slide 11. Let's go through NFC-1 again at a very high level of details in the appendix, we can go back to the appendix in the Q&A session if folks are interested. But the summary is again, first program from CHOP, it's Phase II/III ready via our acquisition last fall. The program is highly de-risked, because we have this extensive database program, the initial program was in 1,000 patients with vascular dementia with a very well behaved molecule PK-PD characteristics. It looks very safe and tolerable, it just had a washed out efficacy signal.

In the right target population mGluR positive ADHD population showed a very strong signal in a 1b signal findings trial last year and we also think we have a potential rapid path to approval in 22q DS. Again, this is a very large orphan indication 75,000 to 150,000 in the U.S. this could likely be well in front of the ADHD indication. We have a compelling genetic hypothesis around RANBP1, which is a very important developmental gene that is leaded in these patients and we think effects the development of the mGluR network and we have a positive signal in one patient in the Great trial.

And obviously as I said, I think we have opportunity to move to many other neuro psych diseases, these genes are found in several other neuro psych diseases that are interest to us, we deprioritized them for now, but once we get a positive signal in these first two, we will come back to those other areas.

Our first trial is a non interventional trial, I mean not using a drug in mGluR positive ADHD, the objectives are which to take us 1,000 ADHD patients that have already been diagnosed and treated and genotyped them meaning they spit into a tube, the tube is sent to CHOP and they get a readout on there mGluR status using the DNA that’s in that spit coming from white blood cells.

We're focused on a broad age range in this trial six to 17 because we want to expedite the enrollment in all of our clinical trials going forward, we also hope to confirm the 20% to 30% prevalence of these genes in the ADHD population. One of the questions we do get is that the initial trial was done in intercity used at tertiary hospital and the reality is it was high enriched for African, American and Hispanics. In the broader population on a national level in a group of patients that are more representative of a true clinical setting what will that look like? we'll obviously get a read on that.

And we've got that started, I have to tell you, we had a unique experience over the last couple of months with this trial, we were able to enroll 25 sites over the holidays in a matter weeks, which generally doesn't happen anymore. We had our investigator meeting in January and it was just remarkable, I think the excitement around the approach around the genomic biomarker, the power of the initial data to treat some very severe patients really was compelling to these investigators.

This really is our first sale in the process, if you can’t get the investigator excited about a trial, you generally have a problem in the enrollment, but very excited, very motivated group. Obviously see the value in it and we hope to really work with them through the entire program not just this non-interventional trial to have a great performance in execution of these trails. And first patient was enrolled last week.

Also the interventional trial that will be happen this year, is in the mGluR positive adolescent ADHD population. Again, this was placebo controlled, the idea is to identify the optimal dose with NFC-1 and confirm enhance response in the mGluR positive patients. It is using primary endpoints that are standard for ADHD RS and CGI-I and its powered to serve as pivotal trial. We're thinking one-to-one randomization placebo to active and probably somewhere between 90 to 100 patients.

Top line data is anticipated second half of 2016, based on the response we've had from investigators we may be able to improve some of our performance, but we still have some critical path issues particularly around study supply and our juvenile tox that we need to get through. But again, we’re very encouraged by the initial response with our investigators and think this trial will move quite rapidly.

We do have obviously additional studies that we’ll need for approval. We’ll have a confirmatory Phase III trial we know we need to get the six to 12 age range in order to launch this drug. There are no drugs in the category without that kind of clinical data associated with the package and we’ll be able to do that hopefully in the second half of the year we can get started.

Slide 14. The market opportunity again large market in excess of $10 billion approximately 6 million pediatric patients or if you use the low end of our estimate at 20% about 1.2 million mGluR positive patients. Obviously, these genes are found in adults as well, but we’re going to start in the pediatric population. Dominated by stimulants nothing new there, they are effective but they have lots of black box warnings, there is tolerability issues. And although they are somewhat effective they are not optimal for many patients.

So our opportunity is to identify these patients with the mGluR positive mutations and really have a superior clinical profile for them, because we won’t be scheduled, this is not a stimulant, it's not a sedative, no CV risk. We should have potential to address a broad range of sentence including anxiety, which we saw on the Great trial, 40% of these ADHD patients suffer from anxiety. So we’re excited about that. And then obviously, we should have based on the high response and a great value proposition good reimbursement, premium pricing and an excellent profile for Europe.

Slide 15. Again, I talked a little bit about 22q 11.2 Deletion syndrome. This is one of the larger inherited CNS disorders. We’re moving very quickly with the 22q a new center and CHOP towards a signal finding study. This is the world’s largest cohort of patients in the 22q area. They have about 1,300 patients that are treated at CHOP. We submitted our IND at the end of last year. We received our clearance to move forwards at the end of January, very good job by our team. And we’ll study the major neuropsych areas of 22q.

Again, these kids have fairly severe dimorphic features that can be fixed via surgery, but they generally progress to very severe neuropsych issues around ADHD, anxiety, autism and eventually unfortunately for about 40% in their mid-teens psychosis and schizophrenia. We’re expecting data in the middle of 2016. Remember, this study starts as an open-label responder trial and then the second half of the trial as you take those responders and you withdraw them randomize withdraw to placebo. We will take that data and we’ll transition to a pivotal trial in one or more disorders and again should have a rapid path via an orphan designation.

And with that on Slide 16, I’ll turn it over to Brian.

Brian Piper

Thanks Mike. I’ll walk through the results of operations for quarter and the year-end 2015. Net R&D expenses for the fourth quarter were $4.3 million, increasing from $3.8 million for the same period in 2014 due to increased spending to support clinical activities for the NFC-1 programs and the CHOP collaboration.

G&A expenses for the fourth quarter were $2.1 million, decreasing slightly from $2.4 million from the same period in 2014, mainly due to a decrease in professional fees. Net R&D expenses for the year ended December 31, 2015 were $15.4 million this is an increase from $8.3 million in 2014. Again, due primarily to an increasing cost to support clinical activities for the NFC-1 programs as well as a spend on our CHOP collaboration.

Non-recurring R&D expenses for the year ended December 31, 2015 were $8.2 million due to the acquisition of NFC-1 in the third quarter. Included in the $8.2 million expense is $2 million an upfront cash payment, $6 million in a corporate milestone payments including $3.2 million non-cash payment in that and a little bit under $200,000 in reimbursed R&D cost.

G&A expenses for the year-ended December 31, 2015 were $13 million, this is an increase from $10.7 million in 2014 primarily due to increased stock based compensation expenses related to options granted to directors, G&A personnel, and consultants. We completed a fund raising in Q4 as Mike mentioned, gross proceeds of $46 million and importantly our cash balance as of December 31, 2015 was $53 million.

Now importantly as we look forward to our upcoming milestones as Mike mentioned, it's going to be a very active year in 2016 for the Company, just walk everybody through these very briefly. The IND for 22q was accepted and cleared and we are moving forward actively on initiation of that study, which will kick off this quarter and we do expect initial NFC-1 data readout in mid 2016 half line data from that study.

The mGluR mutation positive ADHD trial as Mike also alluded to we have initiated the non-interventional phenotype genotype study and we are moving actively toward gearing up for the start of the Phase II/III interventional trial in the first half with our initial top-line data readout expected in the second half of the year. And then importantly, we will be looking forward to having preclinical proof-of-concept data or target CNS similarly as we move towards the back half of 2016. So some important catalyst for the company this year and certainly with a high degree of operational activity

And with that I'll turn it back to Mike to conclude.

Michael F. Cola

Thank you, Brian. Slide 18. Just a quick summary, obviously 2015 was a very important year transformational for the company that transformation continues in 2016. As I said, we've got our trials underway with NFC-1, we anticipate really important data throughout the year on 22q and mGluR positive ADHD and we anticipate significant acceleration towards our genomic medicine goal. We have a number of potential deals in the pipeline, we're working on them and look forward to bringing them forward.

Again, our goal is to have one to two of these genomically driven programs per year, these will be in licenses where we position an existing molecule that is generally failed in the clinic and we are very excited by the Target CNS preclinical program. We will continue to have that move along in Israel, we think that's potentially transformational for patients to have a large molecules behind the blood-brain barrier.

And with that thank you for your attention. And I will turn it over to the moderator for questions.

Question-and-Answer Session


Thank you [Operator Instructions] we'll take our first question from Ted Tenthoff with Piper Jaffray.

Edward Tenthoff

Great, thanks guys for the updates. Congrats on a very successive and exciting year.

Michael F. Cola

Thanks Ted.

Edward Tenthoff

My first question has to do with the 22q population and again rapidly moving into POC study here. This data in the second half, how could you envision moving into a registration study. I know it’s a little early on sort of used as first clinical work to help to design and you informed that study, but give us a sense of what that transition looks like and maybe how large ultimately that theme of the study would be?

Michael F. Cola

Sure Ted, I'll start and let Garry follow-on. It sounds like you got the same cold I did last week. Well again the trail that we have designed right now actually is large and important enough and has good enough endpoints to my opinion to actually be registerable that things have been registered in the rare and orphan space on a left than this.

But the reality is there's more patients out there in this particular disease, we are picking our endpoints in this first trial and we think we will be require to do at least once we pick this endpoints, at least one additional trial in a multicenter fashion, because the reality is we can. There's enough patients with 75,000 to 150,000 in the U.S. to do that. And I'll turn it over to Garry.

Garry A. Neil

That's right Mike. And thanks for the question Ted. And I think we know and we're very interested in being able to also expand the population into younger kids in the six to 12 age range we'll be able to do that once we have the result of juvenile tox study later this year. We think that’s probably going to be an important data point for the FDA going forward to approval, but largely the program is going to depend a lot on the data that we generate.

We're looking at major domains of neuropsychiatric disability in these kids thus being as Mike said, ADHD, anxiety and also autism spectrum. And once we see the results and the treatment effect within those different domain it’s going to help us to design a really targeted trail that should lead to approval and we're also looking to see whether we can get a read through from those results. Even though this was a unique syndrome, there may be a read through that can also help us to design programs in mGluR positive kids that have those disorders on their own. Autism anxiety for example.

Edward Tenthoff

Thanks, very helpful. And if I may another quick question on target CNS, it's very interesting I mean to potentially be able to do gene therapy in the [indiscernible]. So what would be sort of the next steps in terms of getting that to the - and what would be some potential disease application that you could foresee especially with a potential for increased durability from a GeneRide technology?

Michael F. Cola

I'll let Gary take that.

Garry A. Neil

Yes, Ted, one of the big challenges in gene therapy in many CNS disease has been the fact that viral vectors, even those designed to get into the CNS that work so well in small animal frequently don’t generate the kinds of transduction efficiencies that you want in humans and that’s why it's important to come up with a different strategy like this. We’re also looking at safety always as a major concern.

So being able to do the transduction ex-vivo try to adjust the dose as we’ve done in the systematic TARGT EPO program, get that into the CSF, we think will give us a big advantage to address these disease. And as Mike said, the hope is the further application and refinement of the technology with GeneRide may really greatly improve our durability if not make it permanent.

So where do you want to go with that well we think there is a couple of areas that are very interesting and very high unmet need. Those are in the lysosomal storage diseases that we know are not - CNS issues are not addressed by systemic therapy and there is emerging evidence that being able to inject the missing proteins into the CSF may provide benefits. So we’re thinking that that’s a very good area for us.

And then there is metastatic brain cancer or primary brain cancers and here again they are in many cases genetically driven disease. We understand the mutations, we understand the targets very well, we understand specific monoclonal antibodies and as you know we’ve been successful at producing monoclonal antibodies on our platform. So we’re thinking that that is a expedited pathway proof-of-concept and good way to get into the market in a very high unmet need.

Edward Tenthoff

Thanks, excellent. Thanks for the update guys.

Michael F. Cola

Thank you Ted.


We’ll take our next question from Chad Messer with Needham & Company.

Chad Messer

Great, good morning. I really appreciate the way you took some time at the beginning of the call to kind of talk about your larger vision for developing genomic medicine. I think myself and probably a lot of other people when we first heard about NFC-1 kind of thinking of it more as a one-off, and I think it's a pretty exciting to think of that strategy being redeployed. You mentioned that you have a goal of one to two of these kinds of deals per year. I was wondering if it were possible to talk about that pipeline of opportunities and is there any areas that are kind of showing up as looking more likely or more possible. So more in the neuropsych or other areas that are showing up on your screens that we should look forward to?

Michael F. Cola

Yes, it’s a great question Chad. Thank you. We can’t obviously disclose anything that’s in an acquisition pipeline, but we can say that it's really a broad set of opportunities that ranges across a number of therapy areas. The easiest way to think of it in my simple mind is these genetic variance are either a loss of function or again a function and you have to knock something down or regulate something up. So it gives you a pretty broad opportunity in many therapy areas. And because we’re’ working with CHOP and it's a teaching hospital there obviously indication area agnostic they work across all therapy areas.

So the next ones are actually not CNS, they are a little simpler they are either single gene or family of genes, again loss or gain of function that we are regulating. The NFC story I think is amazing, but it is obviously a network story based on the mGluR network and it's a little harder to make that direct connection particularly when you are talking about CNS inside. The next couple should be a lot simpler cleaner from a mechanistic perspective, Garry, any?

Garry A. Neil

No, I think that’s right Mike and in many genetic disease that you see in children, cluster into neoplasms benign and malignant various types malformations and also autoimmune type diseases, inflammatory disease that sort of thing. So there is lots of things across the spectrum.

Chad Messer

All right great, you know obviously very excited to the progress this year with NFC-1, but also excited to hear what else you guys come up with.

Michael F. Cola

Thank you Chad.


And we’ll take our next question from Mike King with JMP Securities.

Michael King

Good morning guys, thanks for taking the question. A couple of quick ones as follow-ups here. I just wanted to understand a little bit better about TARGT EPO. Are we going to get any kind of closure on it, maybe I'm reading in too deeply into your formal remarks, but it sounds to me like it maybe deemphasized going forward and what will we see at some and in terms of presentation at an academic meeting or publication of some kind just the kind of wind things up with regard to that. I also recall that you had again worked with TARGT EPO and [data set] (Ph) do you expect to be moving forward with that and what will we see any data in that regard?

Michael F. Cola

Yes so Slide 36 actually has the kind of conclusion of TARGT EPO and again when we went into this, we knew the commercial part of the story was going to be difficult because of the existing therapies out there and new therapies on the way. But we had an opportunity to test the platform in the clinic and improve it greatly which we've done. So if you want to go through the details of the existing trial, we can do that but it was presented at ASN in November and we are pleased with what came out of that.

We are continuing on with the data set which definitely valid at CHOP, but again I think this was a relatively small collaboration compared to everything else we're doing, our internal resources, our group in Israel is mostly focused on the CNS applications, particularly the novel ability to produce monoclonal antibodies behind the blood-brain barrier and enzymes. So that's really our focus, I think from a commercial perspective we have a much better commercial opportunity in front of us with NFC-1 and the things that we have in the pipeline coming out of the CHOP collaboration.

Michael King

Okay. Thanks for clarifying that and just regarding the target CNS, will we see any the evidence - proof-of-concept data before end of the year?

Garry A. Neil

Yes, it's our plan to present our initial data at one of the upcoming gene therapy meetings. So, stay tuned for that and just to close out what with Mike said on the TARGT EPO program, we're starting those experiments now at CHOP with stuff and there is a manuscript in preparation that’s a pretty advanced stages of preparation on the clinical trials.

Michael King

All right, okay, thanks guys.

Michael F. Cola

Thank you Mike.


[Operator Instructions] And we'll take our next from Brian Marckx with Zacks Investment Research.

Brian Marckx

Good morning, guys. On the non-interventional study in ADHD, if the study indicates a prevalence that's lower than I guess what you might anticipate, does that potentially have any bearing on a decision of whether you moved into Phase II/III?

Michael F. Cola

No, I think it potentially could, but to be honest with your question is whether it's 20% or higher, we're fairly confident in that 20%. We have additional data that came out of the eMERGE database of study that was done by Hakon that hasn’t been published. So we know at a minimum its 20%, to me it's really sizing the opportunities and confirming for folks what that is on a national level.

Again, the patients we studied in the initial publication from 2012 and the GREAT study are highly enriched for African, American and Hispanics. We think there is a market no matter what if it's 15% or 20% but we would like to know what that number is, if it's closer to 30%, which is what Hakon thinks at the moment then that's great as well. I think odds of us not moving forward based on not being able to find the genes are extremely low.

Brian Marckx

Okay, great. In terms of confirmatory Phase III study, assuming it gets there, have you thought about the size of enrollment of a Phase III study?

Michael F. Cola

I'll let Garry take that I mean there is a well-worn path here and albeit traditional study where you have multiple doses and of course there is titration and a placebo arm, but we haven't actually talked about numbers, but can you give some more color Garry?

Garry A. Neil

Yes, I mean, obviously we've requested a meeting with FDA to talk about the overall development program and a lot of your power estimates are of course going to be driven by the treatment effect. But what I mean we know is, our present estimate say that this is not an orphan population, which means that you know we're going have to do more than one adequate well controlled trial. Even if we have the kinds of treatment effects that we saw in the GREAT study that would be great to do these small studies to prove efficacy, but we also know that FDA has some minimal standards that they stabled in the past for safety.

So you need to collect a large amount of safety database, we need to study younger kids and you may have the couple of other things that they want us to do. So taken altogether, I think you probably could look at previous ADHD drug that has been approved to get a rough estimate is what's involved, but we need to have those discussions with the agency.

Michael F. Cola

And I think there are some big variable here, so again we should have an unfair advantage if you will in the recruitment and being able to pre-identified patients to non-interventional trial, we should be able to move quickly there. Patient recruitment even for ADHD is surprisingly slow at least to most people. You are talking about 1.2 patients or 1.4 patients per site per month. Obviously, we should have an advantage there.

And then to Garry’s point depending what comes of this next trial, it could be powered very differently. It will be powered for significance, but depending on the effect size, we may not need huge numbers. We know there will be a minimum number from a safety perspective, but this drug looks pretty darn safe, we have data on a thousand patients. So that’s to be discussed with the agency.

Brian Marckx

Okay, great. Thanks guys.


And with no further questions in queue, I would like to turn it back to our speakers for any additional or closing remarks.

Michael F. Cola

Well I just want to thank everyone for their attention. Look forward to keeping you updated on a great 2016 and thank you.


That concludes today’s conference. We thank you for your participation.

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