Concert Pharmaceuticals' (CNCE) CEO Roger Tung on Q4 2017 Results - Earnings Call Transcript

Concert Pharmaceuticals, Inc. (NASDAQ:CNCE) Q4 2017 Earnings Conference Call March 1, 2018 8:30 AM ET

Executives

Justine Koenigsberg - VP, IR and Corporate Communications

Roger Tung - President and CEO

Marc Becker - CFO

Jim Cassella - Chief Development Officer

Nancy Stuart - Chief Operating Officer

Analysts

Difei Yang - Mizuho

Jeff Hung - UBS

Adam Walsh - Stifel

Michael King - JMP Securities

Operator

Good day, ladies and gentlemen, and welcome to the Concert 2017 Financial Results Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call may be recorded.

I'd now like to introduce your host for today’s conference Ms. Justine Koenigsberg. Ma’am you may begin.

Justine Koenigsberg

Thank you. Good morning, and welcome to Concert Pharmaceuticals’ fourth quarter 2017 investor update. Our press release announcing our financial results was issued earlier this morning and an electronic copy of our press releases is also available on our Web site at concertpharma.com.

Joining me this morning with prepared remarks are Roger Tung, our President and CEO; Jim Cassella, our Chief Development Officer; and Marc Becker, our new CFO. After our prepared remarks, we will open the call to questions where we will also be joined by Nancy Stuart, our Chief Operating Officer.

As a remainder, today’s discussion will include forward-looking statements about our future expectations, plans, and prospects. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected. A description of these risks can be found in our most recent 10-K filed with the SEC. Any forward-looking statements speak only as of today’s date and we assume no obligation to update any forward-looking statements made on today’s call.

With that, I'd now like to turn the call over to Roger.

Roger Tung

Good morning, and thank you for joining us today. Before I jump into our pipeline discussion, I’d like to welcome Marc Becker to Concert as our Chief Financial Officer. Marc joined us in early January and has hit the ground running. He is a great addition to our team and comes to Concert with more than 15 years of financial expertise within the biotechnology industry, including his 10-year at Genzyme, rEVO and most recently CRISPR Therapeutics. Also I’d like to recognize and thank Nancy Stuart, who ably assumes CFO responsibilities while we conducted a search for the role.

Moving on to pipeline, our team has worked diligently and creatively to expand our pipeline with a new clinical candidate. In our selection process, one of the important strategic considerations was -- for us was to balance the risk profile of our compounds in the pipeline by applying our deuterium technology to both branded and non-branded compounds.

Most recently, our proprietary pipeline is consisted deuterated analogs of branded compounds. CTP-692, our new development candidate announced last night differs in that is it a deuterated analog of D-serine, which is an endogenous amino acid neurotransmitter. CTP-692 is another great example of the versatility and advantage of our deuterium technology.

We’ve demonstrated in preclinical studies that we can significantly improve the safety profile of D-serine, thereby greatly enhancing its potential to provide significant patient benefits as an adjunctive treatment for schizophrenia. We will go into further details on CTP-692 later on this call. Let me say that we are very excited about our opportunity with this new pipeline candidate.

Now let me turn to our more advanced product candidates. I’d like to highlight some recent developments for CTP-543 or JAK inhibitor for alopecia areata and for AVP-786 in Alzheimer's agitation, which is being developed by Avanir. CTP-543 continues to advance in Phase 2. In January, the Patent Trial and Appeals Board made the decision not to Institute our PGR proceeding against Incyte. This decision does not impact our plans to develop CTP-543 for moderate severe alopecia areata.

In addition, PTAB's decision does not prohibit us from challenging the validity of Incyte's patent in Federal Court at a later time, and we continue to believe that we’ve strong arguments that Incyte's patents is invalid. As a reminder, the study is designed to sequentially evaluate two doses, 4 milligrams and 8 milligrams of CTP-543 twice-daily compared to placebo for 24 weeks.

An Independent Data Monitoring Committee completed its planned interim safety assessment after at least four weeks of dosing in the 4 milligram cohort. As we expected, the DMC recommended that we proceed as planned with the trial and enrollment of the 8 milligram cohort is underway bringing us an important step closer to reporting data on the 4 and 8 milligram cohorts by year-end 2018. We are actively moving the CTP-543 forward as a top priority for Concert.

Also I'm happy to say that the enthusiasm for this trial has been strong among the alopecia areata patient community. Another positive development for CTP-543 was that earlier this quarter, we announced it has been granted Fast-Track designation for moderate severe alopecia areata. Fast-track designation is reserved for new therapies for serious diseases in which there is mechanistic or clinical evidence supporting their potential to significantly improve on the existing standard of care.

It provides an opportunity for early and more frequent communications with FDA, facilitating the drug development and review process. We are very pleased that FDA agrees with our view that alopecia areata is a serious disease with a significant unmet need and we look forward to an active and productive process with FDA as we develop 543.

Turning to AVP-786, Avanir is currently evaluating AVP-786 in Phase 3 clinical trials for the treatment of agitation due to Alzheimer's dementia. Avanir has stated that the two ongoing U.S Phase 3 studies are intended to support registration and/or expected to be complete in April 2019 and December 2019, respectively. We are pleased that Avanir continues to invest in late stage clinical development of 786 and we’re further encouraged that they’re also conducting an additional Phase 3 outside the U.S that we believe will help support global registration. This is part of a robust development program that position 786 to realize its commercial potential.

It's very gratifying to provide an update for our growing portfolio of deuterium drug candidates, CTP-543 for alopecia areata, AVP-786 for Alzheimer's agitation with Avanir and our newest candidate CTP-692 for schizophrenia. But it's also important to step back and take a look at the bigger picture of how our deuterium platform creates value for us and in particular during this past year.

Our deal with Vertex Pharmaceuticals for CTP-656 was a prime example of the value we created in a remarkably short timeframe. A few weeks ago, we were excited to see that Vertex announced their plans to advance a triple combination cystic fibrosis treatment including CTP-656 now known as VX-561 into Phase 3 later this year pending additional data they will generate in the first half of 2018.

As you may recall, Concert has significant pre-commercial milestone potential based on Vertex's future development of 561. On the patent side, an important win for our proprietary approach was the PTAB's denial of Incyte’s petition challenging our CTP-543 patent last October.

Deuterium modification does not always improve drug properties. However, when it does provide an important benefit as with CTP-543, patent protection is warranted. The U.S PTO has awarded us over 100 patents on our deuterated drugs and it was satisfying to see PTAB approved the validity of our CTP-543 patent. These positive developments in the ongoing execution of our business as well as in our overall strategy have led to the exciting point we have [technical difficulty] today. They’ve allowed us to focus on identifying new clinical candidates for expanding our pipeline and that in turn has led us to our next candidate CTP-692.

692 fits our key criteria for our next development candidate. First, we wanted to explore deuterium modification of a well understood non-branded compound that has evidence of efficacy for an important medical need. Second, we wanted deuterium modification to provide important improvements supporting the compounds clinical performance.

We identified D-serine as a compound that has a substantial foundation of mechanistic preclinical and clinical proof-of-concept. But that has been encumbered by potential safety shortcomings which have limited dosing in human clinical studies. Our preclinical data strongly suggests that selective deuterium substitution imparts a greatly improved therapeutic window, which could be a game changer from the use of this compound.

At this point, let me turn the call over to Jim to discuss the CTP-692 program in more detail. And following that Marc will review our 2017 financial results before we open the call to questions.

Jim Cassella

Thank you, Roger. We see neuropsychiatry as one of the areas in which our team at Concert is well positioned to broaden and expand our pipeline and apply our deuterium chemistry to create innovative medicines. Additionally, for those not familiar with my background, I’m a neuroscientist by training and over the last 25 years I oversee many neuropsychiatric drug development programs. Consequently, I'm very excited about the prospect of bringing our new candidate CTP-692 into a therapeutic space I know and love.

CTP-692 represents a new and fundamentally different treatment option as a potential adoptive therapy for schizophrenia and is enabled by selective deuterium modification, addressing significant unmet needs. Schizophrenia is a chronic, severe and disabling mental illness that affects nearly 1% of the world's population. There is widespread belief that excessive dopaminergic neurotransmission and dysfunctional D2 receptor signaling play key pathophysiological roles in the disease.

Consequently, dopamine receptors, especially the D2 receptors have been the primary target for antipsychotic drugs for decades and all of today's typical and atypical antipsychotics, possess some level of D2 receptor antagonistic activity. These antipsychotic drugs have become the foundation in the standard of care for treating schizophrenia and these drugs are generally very effective in treating the positive symptoms associated with the disease, which include hallucinations, delusions and thought disorder.

It is generally believed that dopamine-based antipsychotic drugs used today exhibit little or marginal efficacy against negative symptoms and cognitive dysfunction associated with chronic schizophrenia. As a reminder, these negative symptoms include social withdrawal, flattened affect and poverty of speech. Cognitive dysfunction relates to diminished capacity for attention, working memory, and executive function.

These two aspects of the disease dramatically affect the lives of patients with schizophrenia and are associated with poor functional outcomes for these individuals. Therefore, targeting the dopamine receptor D2 activity alone is not enough if we are to address the comprehensive needs of patients with schizophrenia and to address all the major symptoms of the disease.

CTP-692 is a first in class drug that targets the NMDA mechanism which is believed to be very important in addressing the broader needs of the patient with schizophrenia. We intend to develop it as an adjunctive treatment with commonly used antipsychotics. There is an extensive body of evidence developed over the last two decades indicating that NMDA receptor hypofunction is also a key mechanism underlying core symptoms of schizophrenia.

The NMDA receptor requires a co-agonist in order for it to function. Clinical studies have shown that levels of D-serine measured in the plasma and CSF patients with schizophrenia are significantly lower than healthy controls. D-serine is the predominant co-agonist for synaptic transmission. CTP-692 is a selective deuterium-modified analog of D-serine.

It has been proposed for some time that increasing exposure to D-serine could benefit patients with schizophrenia. Importantly, there are a number of academic clinical studies showing benefit are negative symptoms in cognitive function as well as positive symptoms in patients with schizophrenia following high doses of D-serine added to standard antipsychotic therapies.

One of the limitations of using D-serine as an antipsychotic medication is that it has been shown in preclinical testing to cause nephrotoxicity. In addition, in some patients who received higher doses of D-serine in clinical studies, laboratory findings suggesting renal impairment were observed. The clinical development D-serine has been limited as a result of these renal safety concerns, despite its therapeutic potential.

We are excited about CTP-692, because in a recent preclinical evaluation we were able to demonstrate an improved pharmacokinetic profile and a substantially better renal safety profile compared to D-serine. As a result, we believe that we will be able to explore a wider exposure range to achieve optimal therapeutic levels in the clinic with a much lower risk of renal toxicity.

We also believe this unlocks the potential to restore an NMDA receptor activity in key areas of the brain to improve both positive and negative symptoms as well as cognitive dysfunction in patients with schizophrenia. We are progressing our ongoing preclinical evaluation of CTP-692 and we intend to advance this promising new drug candidate into clinical development as an adjunctive treatment for schizophrenia by year-end 2018, beginning with a Phase 1 single ascending dose study in healthy volunteers ex-U.S.

We expect to file our IND in the first half of 2019 with the multiple ascending dose Phase 1 study serving as our IND opening trial in advancing the program into Phase 2 later in 2019.

Let me pause here and turn the call over to Marc to discuss our financial results.

Marc Becker

Thanks, Jim. I’m very excited to be here today and be part of the Concert leadership team, and look forward to meeting many of you in the near future. As I walk through our fiscal 2017 financial results, please reference the financial tables found in today's press release.

Looking first at revenue. We recognized $143.9 million in 2017 related to the asset purchase agreement with Vertex. In July, the asset purchase agreement closed and Vertex paid us a $160 million in cash with $16 million being held in escrow until January 2019.

Research and development expenses were $30.2 million for 2017 compared to $37 million for 2016. The decrease was primarily due to the discontinuation of development of CTP-656 after Vertex acquired the asset.

General and administrative expenses were $21 million for 2017 compared to $14.4 million in 2016. The increase of $6.6 million in G&A expense was driven primarily by an increase in stock compensation, professional and legal fees in connection with the CTP-656 agreement, and intellectual property matters related to CTP-543.

Our net income was $95.6 million or $4.20 per share for 2017 due to the asset purchase agreement with Vertex. For 2016, we reported a net loss of $50.7 million or $2.28 per share. And lastly, we ended the fourth quarter 2017 with $203.2 million in cash and cash equivalents and investments. We anticipate our cash to be sufficient to fund the company into 2021 under our current operating plan.

This concludes our prepared remarks and we would be happy to address any questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Difei Yang with Mizuho. Your line is now open.

Difei Yang

Oh, hi. Good morning. Thanks for taking my question. Just a couple here. So the negative symptom associated with schizophrenia patients, how is that different from what we talk about as depression and as memory loss in Alzheimer's disease? Are they rooted from the same kind of receptors?

Jim Cassella

Hi, Difei. This is Jim. So I think the way to think about the negative symptoms associated with schizophrenia is a little different. It's not a blunt depression as you would see in major depressive disorder. However, it does reflect the type of social withdrawal, a lack of interaction that really affects the patients lives and really makes them less functional in a social environment.

Difei Yang

Okay. Thank you. And then -- so from competitive landscape perspective any one in the pipeline development that uses NMDA receptor for treating schizophrenia that you're aware of?

Roger Tung

Hi, Difei. At present there are no drugs on the market that address NMDA hypofunction. There are companies who are interested in pursuing that mechanism. One of them is SyneuRx, which is a Taiwanese company that is approaching it from a very different kind of approach using -- trying to reduce the breakdown of the amino acids including D-serine. But there's no one else who is actually directly using an agonist such as we’re that would be an orally active agent.

Difei Yang

Okay. So Roger, if I may just to add another question, so how do you see the D-serine product be different from Namenda, for example approve the drug?

Roger Tung

Right. Well, as Jim indicated, it's a fundamentally different mechanism. So Namenda is a compound that -- well actually Namenda is really a Alzheimer's disease drug and it does not have utility in schizophrenia. It is an NMDA modulator as you know, but it's actually an antagonist whereas what we have is something that improves the function. So it operates in the reverse direction. Namenda is not indicated and would clearly not be beneficial in the schizophrenia population.

Difei Yang

Okay. Thank you. That’s very helpful.

Roger Tung

Right.

Operator

Our next question comes from Jeff Hung with UBS. Your line is now open.

Jeff Hung

Thanks for taking the question. You mentioned that use of D-serine is limited by renal safety concerns. So can you talk a little bit about how D-serine is currently being used with antipsychotics versus schizophrenia? Like what proportion of patients or what subset of patients currently use D-serine?

Roger Tung

Our understanding, Jeff -- thanks very much for the question. Our understanding is that is not being used. There are very clear records of the renal toxicity that have been published multiple times showing preclinical toxicity. And as Jim indicated in his discussion, there are laboratory science that have been observed in patients taking D-serine that there may be renal impairment. Because of that we are aware that there is regulatory concern about the use of high doses and we don't think that -- frankly, it would be a good idea to be using D-serine as an off-label entity. The benefit that we have with deuteration is that we have seen really a remarkable reduction in apparent toxicity in our preclinical models. This is not a small thing. We are talking about many-fold reduction in toxicity, which is really in my recollection unprecedented.

Jeff Hung

Right.

Jim Cassella

Jeff, one of the things I'd comment on in regards to your question is that while D-serine is not used widely for various reasons, probably, most importantly, the renal side of things. There's been a lot of interest over the years in modulating the NMDA system in as an adjunctive to the dopamine approach to treating schizophrenia. The one very important thing to remember about the studies that have been done with D-serine to date is that not only do the studies showing that adding D-serine does help the symptoms of schizophrenia, but some of that work is derived from the fact that the other studies that have been done looking specifically at D-serine in patients with schizophrenia show that there is a reduced level of D-serine in patients with schizophrenia. And adding D-serine to those patients is something that does provide a benefit to those patient, so in some ways the way you might think about this is that in patients you have a deficit, that deficit is clearly there is a dopamine story there, but on the NMDA side on D-serine there is a deficit as well. And the studies that are supportive in looking at negative symptoms cognitive functioning and including positive symptoms shows that when you can restore these D-serine levels by adding D-serine you see a remarkable benefit to the patient. So this is a very nice story in a sense that it starts with a deficit and replacing or adding and also can bring improvement.

Jeff Hung

Thanks. That’s helpful. So it's been suggestive that antipsychotics like clozapine may increase D-serine levels and some studies have shown that after clozapine treatment, there was no significant difference in plasma D-serine between patients with schizophrenia and healthy controls. So how should we think about that in the context of the NMDA receptor hypofunction hypothesis than other studies that suggest increases in D-serine levels predict improvements in the positive, negative and cognitive symptoms?

Jim Cassella

Yes, so you raise a very, very good point. In fact, it's a pretty consistent finding in the literature that adding D-serine on to clozapine, in particular, does not have an added benefit. However, let me remind you that clozapine is a very unique drug in the treatment of schizophrenia, and that it was probably one of the first drugs and maybe one of the only drugs that has a broad spectrum of activity including our negative symptoms and cognitive functioning in patients with schizophrenia. So, of course, it's been a wide long search over the years to find another drug that acts like clozapine. What may be happening here is that clozapine brings back level of functioning by working through the NMDA system and maybe even through the D-serine itself, where you provide that benefit which is clearly seen in with clozapine. Adding to that with more D-serine may not work because you’ve already saturated out the system through the great benefit that you see with clozapine alone.

Roger Tung

Hi, Jeff. This is Roger. It's also possible that the amount of D-serine in those studies was relatively limited, again, because of concerns about toxicity. So it's clear that relatively lower dose of D-serine added to clozapine was not effective. But what hasn't been determined is whether a larger amount would be helpful. And it is apparent that there is a dose response relationship with D-serine that giving more of it has had greater benefit. So I think that there's still some exploration there that that stands to be done'. Clozapine, as Jim noted, it is probably the most effective of the current antipsychotic agents, but it's also a last line antipsychotic due to the risk of agranulocytosis with the drug. So what we would hope with the ability to use CTP-692 is to get greater benefits than our currently available with the first and second line drugs in a very safe manner.

Jeff Hung

Great. Thanks. And then last question is, you guys have hinted, but perhaps it's too early to have conversations with the FDA, but how should we think about the need particularly of the long-term safety study preapprovals given potential toxicity of D-serine with long-term use?

Jim Cassella

I think one of the very important findings that were finding with 692 with deuterated D-serine is that in our preclinical models we can reliably produce the nephrotoxicity in rats with D-serine and we have a significant advantage on the safety profile with doses of 692 in that very reliable models to the point where we have a dramatically improved safety profile. So I think we coming at this with preclinical evidence that we have through our deuterium a very positive effect on this very sensitive rat model showing that we might have a meaningful benefit on the nephrotoxicity side. I think that’s a very important piece to bring to the table when we have those discussions with the FDA.

Jeff Hung

Thank you.

Operator

[Operator Instructions] Our next question comes from Adam Walsh with Stifel. Your line is now open.

Adam Walsh

Hey, good morning. I have a follow-up on that last question. But I’m going to start with Marc, welcome to the team. Since you’re new, I will go ahead and ask you question first. In terms of the $16 million in escrow cash that you have from the Vertex transaction, is that -- you just remind us, is that included in the $203 million that you’re reporting today or is that something that that will show up later, in January?

Marc Becker

Yes, that will show up later. That’s held in escrow and it's not part of our cash balance today.

Adam Walsh

Okay. That’s perfect. And then, so as a follow-up on 692, can you help characterize for us, you talked about preclinical valuation, that you’ve seen improvement in safety. You know what exactly are you looking at? Are you looking at laboratory parameters, histology, can you just help us understand what gives you the confidence in terms of the preclinical assays that you’ve done, that have shown a better therapeutic window than D-serine itself?

Roger Tung

Sure. Well, with D-serine, the endogenous compounds, it's very well characterized that what occurs is tubular necrosis in the kidney and that necrosis occurs almost immediately resulting in high levels of leakage of molecules into the urine. And so you can track it by looking at creatinine levels and on urea nitrogen levels. So we can see very clearly and very consistently a dose-dependent toxicity that’s reflected in those levels. And what we observed with 692 is that a dramatically higher levels of administration we don't see that toxicity. So it's a really remarkable differentiation between the deuterated and non-deuterated compounds. And clearly we're going to be doing longer-term assessments for safety, but this is something again that’s very well-characterized. It has been reported in the literature since, I believe in the 1940s. So this is something that is well understood that we’ve made a very large change in.

Adam Walsh

Okay. That’s helpful. And then, just a quick one on -- just to get you on the record Roger, we get this question all the time from clients. Just a quick one on 543. Is the 8 milligram dose, do you believe that that's sufficient dose given your PK studies that you’ve done and looking at non-deuterated ruxolitinib in alopecia areata. Do you think that dose is going to be sufficient to show the response that we're looking for? And then if it's not, what will be the plan going forward?

Roger Tung

Sure. Great question, Adam. So we feel there is a high likelihood that we will see an efficacy signal with 8 milligram dose. We don't know as of right now whether that will be the top of the dose response curve. And we’ve consistently stated that we reserve the potential to go to a higher dose of 12 milligram dose at the end of this study. And so, what we’re going to do is assess the results from the 4 and 8 milligram doses and if appropriate potentially go to a 12 milligram dose. But we do not intend to go higher than that.

Adam Walsh

And would that be a protocol amendment, something you would be able to do quickly?

Jim Cassella

Yes. Adam, this is Jim. So, yes, exactly. That would be a protocol amendment that would be added on to the current protocol. So that’s the most efficient way to do this.

Adam Walsh

That’s helpful. Thank you.

Operator

Our next question comes from Mike King with JMP Securities. Your line is now open.

Michael King

Good morning, guys. Thanks for taking the question. Got a lot of questions answered, but I guess maybe press a little bit further on deuterated D-serine. Roger, I just want to ask if you can talk about the mechanism by which -- I know you said, cause of deterioration in the nephron [ph], but by what mechanism and how does deuterated D-serine avoid that? And I'm also wondering if there's a difference in kind of binding properties on the NMDA receptor? Can you talk a little bit about both of those properties?

Roger Tung

Right. Well, I will take the latter question first. As you’ve heard me say I think Mike before, we’ve never seen any differences in terms of receptor binding that are meaning or significant with our deuterated compounds versus non-deuterated compounds. And we do not expect there to be any change whatsoever in the pharmacology of 692 versus D-serine except for the fact that you have this greater exposure and what we anticipate being a significantly better therapeutic window. In terms of the mechanism of toxicity that's reasonably well-characterized in terms of D-serine and we’ve some suspicions of what's going on in terms of the mechanism of deuteration. But that’s something that we haven't tracked down to mechanistic level and will be the subject of future assessments.

Michael King

Okay. Thanks for taking my questions.

Roger Tung

Thanks, Mike.

Operator

And we have a follow-up question from Difei Yang with Mizuho. Your line is now open.

Difei Yang

Thanks. Thanks for taking my follow-up. So, Roger, just very quickly, slide 15, that I'm just curious if you’ve a sense of what might be the therapeutic window? What milligrams per kilo you are looking at?

Roger Tung

Well, I think trying to translate in the milligram per kilogram range between humans and rats is -- that would be a difficult translation. The -- I think the more salient point is that we know that in this model that it causes frank nephrotoxicity that we have -- as you can see had remarkable effect in reducing. And we also know that in humans at higher doses of where the drug appears to be or more effective that D-serine itself has caused in a number of studies of laboratory changes that maybe reflecting renal damage as well. So what we're trying to do is to use the fact that deuterium has reduced the toxicity of D-serine in the kidney tubule to produce a compound which we can explore at a wider range in humans to get to a optimal dosing and a better therapeutic window.

Difei Yang

Yes. That makes sense. So just -- maybe just educate me on how predictable are these rats model to humans, specifically the kidney function?

Roger Tung

Well, we think that there's probably a pretty good correlation of the -- again the mechanistic basis for this has been well described in the literature, and so we think that some of the same mechanism is taking place in the humans and rats since there's the same machinery there that’s responsible for the toxicity. So we think that this is a very good indicator of the likelihood of better tolerability in humans.

Difei Yang

Okay. And then, my last question is, so if we take a step back, this -- all these options for typical and atypical antipsychotic drug, and if, 692 is success, will eventually get approved. Where does it fit in the treatment algorithm?

Jim Cassella

So, Difei. Hi. This is Jim. So I think that if you think about the drugs that are out there today most of them are working in one way or another through the dopamine system. And the way we would perceive this drug is that -- and those dopamine drugs clearly have effects on positive symptoms. But I think its universally accepted that that they’re very weak if not effective on these positive symptom -- I’m sorry, on these negative symptoms and on the cognitive dysfunction. The way we would perceive this working in the marketplace is that our 692 could be an add on to all of those drugs whereby we could improve the overall symptomology of the patient where the dopamine drugs are currently falling short and primarily on the negative symptoms and on the cognitive dysfunction. So I could see this being added on to all of those drugs that are out there right now, that are working through the dopamine system.

Roger Tung

Difei, what’s really exciting about D-serine is that it's been studied pretty extensively in academic studies, and what is most consistent in terms of the response of patients with schizophrenia to D-serine is an improvement in the negative symptoms. So we're hoping for an overall symptomatic improvement, but to the extent that we can do something with those negative symptoms which are some of the most difficult in terms of reducing the function of schizophrenics in society. If we can help to address that, we think that we’ve got something that will be really meaningful.

Difei Yang

Okay. Thank you. That’s very helpful.

Operator

At this time, I’m showing no further questions. I’d like to turn the call back over to Ms. Justine Koenigsberg for closing remarks.

Justine Koenigsberg

Thank you everybody. Thank you everyone for joining us today, and we look forward to keeping you updated on our progress. We will be participating at the Cowen and Oppenheimer conference, later this month and at the Wainwright Conference in early April, and we hope to see many of you there. This concludes our call. Thanks again for joining us.

Operator

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone have a great day.