Dicerna Pharmaceuticals' (DRNA) CEO Douglas Fambrough on Q4 2017 Results - Earnings Call Transcript

Dicerna Pharmaceuticals, Inc. (DRNA) Q4 2017 Earnings Conference Call March 8, 2017 4:30 PM ET

Executives

Glen Gorma – Investor Relations

Douglas Fambrough – President and Chief Executive Officer

Jack Green – Chief Financial Officer

Ralf Rosskamp – Chief Medical Officer

Analysts

Umer Raffat – Evercore

Ed Arce – H.C. Wainwright

Operator

Good afternoon, ladies and gentlemen. And Welcome to the Q4 2017 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host Glen Gorma, Investor Relations. Please go ahead.

Glen Gorma

Thank you, Chris. Good afternoon and welcome to Dicerna's conference call to discuss the Company's 2017 fourth quarter and full year results.

For anyone who has not had a chance to review our results, we issued a press release after the close of market today, which is available under the investor and media tab on our website at www.Dicerna.com. You may also listen to the conference call via webcast on our website, which will be archived for 30 days beginning approximately two hours after the call has completed.

I'd like to remind listeners that management will be making forward-looking statements on the call today including, for example, expected timelines and plans for development of DCR-PHXC and other pipeline programs, expectations related to the collaboration with Boehringer Ingelheim, and guidance regarding cash usage.

Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the risk factors section of Dicerna’s latest Form 10-K filed with the SEC today. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so if our views change.

Now I’d like to turn the call over to Dr. Douglas Fambrough, Dicerna’s President and Chief Executive Officer. Doug?

Douglas Fambrough

Thank you, Glen. Good afternoon and thank you all for joining us today. With me are Jim Weissman, our Chief Business Officer; Jack Green, our Chief Financial Officer; and Ralf Rosskamp, our Chief Medical Officer.

The fourth quarter of 2017 cap – what was a truly transformational year for Dicerna and we are proud of the significant accomplishments we achieved. Dicerna has now successfully completed the transitioned from a development stage to a clinical stage company advancing novel drug candidates based on our proprietary GalXC subcutaneously administered RNAi technology, a journey we began back in mid-2016.

As evidence of this as many of you know during the fourth quarter we submitted a clinical trial application for our lead candidate, DCR-PHXC for the treatment of all forms of primary hyperoxaluria. And in December we announced dosing of the first healthy volunteer in our Phase 1 clinical trial. I’ll elaborate on this significant milestone in a moment.

In October we entered into our first GalXC platform research collaboration and license agreement with Boehringer Ingelheim to develop treatments for chronic liver disease, beginning with nonalcoholic steatohepatitis or NASH. NASH is caused by the buildup of fat in the liver, potentially leading to liver fibrosis and cirrhosis. It has an especially high prevalence among obese and diabetic patients, and is expected to soon become the most common cause of advanced liver disorders, often necessitating liver transplantation. There are currently no medicines approved to treat NASH. And as such it represents an area of high unmet medical need.

We covered many of the details of this exciting transaction on our third quarter call, but it’s worth repeating that the collaboration with BI is an important validation of our GalXC RNAi technology platform, to substantial intellectual property that surrounds it and the potential for the development of promising RNAi based therapeutics that are expected to result. It also provides a non-dilutive funding that we will use to advance our pipeline of rare disease therapeutic candidate.

Additionally, Boehringer has the option to add a second target gene. The triggering of that option would result in an exercise that came in to Dicerna, as well as additional success based development and commercialization milestones and royalty payments. Dicerna granted Boehringer a worldwide license to the product candidates in connection with the agreement. And they are primarily responsible for development activities after formal clinical candidate selection.

Switching gears to funding, during the fourth quarter we raised $46 million in gross proceeds through a follow-on public offering of common stock. With that we ended the year 2017 with approximately $113.7 million of cash and investments, which we expect will be sufficient to fund our development activities through 2019. These activities include advancing our lead program, DCR-PHXC through proof-of-concept clinical trials and into advanced clinical development, as well as advancing our HBV candidate, DCR-HBVS into proof-of-concept studies in HBV patients.

As part of the financing transaction all of the holders of the convertible preferred stock that was issued last April agreed to convert their shares into common stock. As a result, our capital structure is now comprised entirely of common stock and no convertible preferred shares remain. Jack will elaborate when he covers the financial in a moment.

Now digging a bit deeper into our pipeline development, I’ll begin with our lead candidate DCR-PHXC in development for all forms of primary hyperoxaluria or PH for short. For those on today’s call who may be newer to our story and to this disease state, PH is a group of severe, rare genetic liver disorders characterized by the over production of oxalate in the liver, which often causes significant and irreparable damage first to the kidneys and then to other organ systems. There are currently no approved treatments for this family of conditions.

In mid-October we filed our first clinical trial application or CTA with the medicines in healthcare products, regulatory agency in the United Kingdom. In December as noted earlier, we commenced a first-in-human, proof-of-concept Phase 1 trial. We have named this trial PHYOX, p h y o x. PHYOX is a randomized, single-blind, placebo-controlled, single-ascending dose study, enrolling up to 25 normal healthy volunteers and 12 to 16 patients with PH types 1 and 2. The primary objective of the study is to evaluate the safety and tolerability of single doses of DCR-PHXC, with participants being enrolled into as many as five sequential cohorts of increasing doses.

Secondary objectives include the pharmacokinetics of single doses of DCR-PHXC and its pharmacodynamic effects on biochemical biomarkers including but not limited to changes in urine oxalate concentrations. We will seek to move this program efficiently through clinical development. And to that end we expect to dose the first PH patient in our ongoing PHYOX Phase 1 clinical trial during the second quarter and to report topline proof-of-concept data in the second half of 2018. We have also filed CTAs in Germany, France and in Netherlands and plan to make additional filings in other countries this year. Based on our current development timeline we anticipate initiative a pivotal multi-dose Phase 2/3 clinical trial in first quarter of 2019, pending positive POC data and regulatory approvals.

As a reminder we firmly believe that we are developing a differentiated and potentially best-in-class approach to the treatment of this debilitating family of diseases, having indentified a novel target known as lactate dehydrogenase A or LDHA, that should allow us to treat all known forms of PH and not just PH type 1, which is what many of our peers are focused on. The rational for focusing on LDHA is clear. You may recall that back in July we presented new preclinical data at the 12th International PH Workshop in Tenerife, Spain, demonstrating that DCR-PHXC achieves durable and consistent knockdown of LDHA. And a reduction of oxalate production to normal or near normal levels in multiple animals of PH – animal models of PH, including type 1, type 2 and ethylene glycol-induced hyperoxaluria, which is a model for idiopathic PH.

We believe LDHA inhibition has this broad oxalate reducing activity because LDHA is the final common pathway by which the liver creates oxalate in PH. The data suggest a simple, direct and linear relationship between LDHA inhibition and oxalate production, which may translate into consistent therapeutic activity even in the event of a missed dose. In these non-GLP preclinical studies DCR-PHXC appear to be well-tolerated, specifically administration of multiple supra therapeutic doses of DCR-PHXC in rodents and non-human primates showed no observable adverse liver effects and minimal metabolic disruption. LDHA deficiency in humans is not associated with any liver dysfunction, which gives us increased conviction in the safety profile that we observed in these animal studies for this liver targeted therapy. Our formal long-term chronic animal toxicology studies are ongoing.

This year we expect to publish detailed data from our completed PHYOS study an international multi-center observational study in patients with a genetically confirmed diagnosis of PH type 1. Top line data from the study was presented at the Tenerife PH workshop in July last year. The purpose of the study was to collect data on key biochemical parameters, including changes in oxalate, glycolate and other metabolites, implicated in the pathogenesis of the disease. 20 patients were enrolled in the study with the median age at screening of 21 years and a range of 12 to 61.

Over the six-month observation period, the variability or coefficient of variation between 24-hour urine measurements of oxalate at different time points was 28%. Our observations allow us to better understand the baseline PH1 disease state and have been instrumental in designing DCR-PHXC clinical studies using 24-hour urinary oxalate excretion as a surrogate marker for clinical benefits.

Turning now to our HBV program, DCR-HBVS which targets HBV directly, this program continues to undergo formal IND-enabling activities. Our focus is on leveraging our GalXC technology to investigate the potential for a subcutaneously delivered experimental HBV targeted therapy that meaningfully reduces expression of the HBV surface antigen HBsAg and HBV DNA levels in the blood of HBV patients. As the ability to do so could potentially lead to a long-term immunological cure for this patient population, something that current treatments are rarely able to achieve.

As a reminder HBV is an extremely large market with approximately 250 million people globally currently living with the virus according to the World Health Organization. Left untreated HBV can lead to chronic disease, liver cancer and death.

Our pre-clinical data has been highly encouraging. In particular, in preclinical studies of mice carrying the HBV genome both by transient transfection and adeno-associated viral transfection, we have observed in approximately three log or greater reduction in viral S antigen expression after a single subcutaneous administration of our DCR-HBVS clinical candidate. We believe that these results compare favorably to other RNAi based approaches to HBV that have been tested in directly comparable experimental systems. We intend to file an IND or CTA for this program during the fourth quarter of 2018.

Regarding the next candidate in our GalXC-based pipeline, during the fourth quarter of 2017 we continue to advance IND-enabling activities for our second undisclosed rare disease candidate targeting a liver expressed gene evolved in a serious and rare disease. We are currently in discussions with potential risk sharing collaborators for this program and intend to file an IND or CTA with the collaborators in place. On the platform front, during 2017 we further optimized our GalXC technology platform, enabling the development of next generation GalXC molecules. Improvements to GalXC include modifications to the tetra loop end of the molecule which are independent of target gene sequence and thus can be applied to any target gene and program resulting in a substantially longer duration of action and higher potency in animal models. These modifications are unique to Dicerna’s GalXC molecules and again they are not gene specific, so they are easily applied to GalXC molecules targeting any gene. We believe this provides us with a key competitive advantage.

For our additional pipeline programs including for PCSK9 which targets the PCSK9 gene and is being evaluated for the treatment of statin-refractory patients with hypercholesterolemia, we are utilizing this next generation of our GalXC technology with higher potency and extended duration of action. Regarding our DCR-PCSK9 program we have previously disclosed that we've developed molecules satisfying our clinical candidate criteria with performance characteristics essentially identical to the RNAi-based treatment currently in development. By further optimizing this program with the enhanced potency and duration of action of our next gen GalXC technology we are now in the process of replacing our old clinical candidate with a newer, superior and differentiated molecule. We will continue to provide updates as this program advances.

Finally, we have developed a robust portfolio of additional targets and diseases that we plan to pursue either on our own or in collaboration with partners. We have applied our GalXC technology to multiple gene targets across our disease focus areas of chronic liver diseases, cardiovascular diseases and rare diseases. Pursuant to our strategy we are currently seeking collaborators to advance our program in the areas of chronic liver diseases and cardiovascular diseases and select opportunities in rare diseases both chronic liver diseases and cardiovascular diseases represent large and diverse patient populations requiring complex clinical development and commercialization paths that we believe can be more effectively be pursued in collaboration with larger pharmaceutical companies.

And now I'd like to turn the call over to our Chief Financial Officer, Jack Green for a review of the financials. Jack?

Jack Green

Thanks Doug. As Doug alluded to earlier, the key financial highlight for the fourth quarter was the follow-on offering of approximately 6.6 million shares of common stock, which priced on December 14, providing gross proceeds of $46 million.

Prior to pricing we entered into a letter of agreement with the holders of the outstanding shares of our redeemable convertible preferred stock in which the preferred holders agreed contingent upon completion of the following offering to convert their shares of redeemable convertible preferred stock into common stock. As a result our capital structure is now comprised solely of common stock and we ended the year with approximately 51.6 million shares outstanding. This figure reflects the conversion of the convertible preferred into common shares, as well as approximately 6.6 million newly issued shares from the follow-on offering.

I'll now briefly summarize the key financial results for the fourth quarter and year end and direct you to our Form 10-K filing for additional details. Net loss attributable to common stock holders was $22.8 million for the three months ended December 31, 2017, as compared to $14 million for the same period in 2016. Basic and diluted net loss per share attributable to common stockholders for the quarter was $0.90 versus $0.68 for the comparable period in 2016. Our reported net loss attributable to common stockholders in the fourth quarter includes $7.2 million of noncash dividends and deemed dividends related to and upon the conversion of a redeemable convertible preferred stock.

Net loss attributable to common stockholders for the 12 months ended December 31, 2017 was $80.1 million, as compared to $59.5 million for the same period in 2016. Basic and diluted net loss per share attributable to common stockholders for the year 2017 was $3.66 versus $2.87 for 2016. Our reported net loss attributable to common stockholders for the year 2017 included $20.1 million of noncash dividends and deemed dividends related to and upon the conversion of redeemable convertible preferred stock.

R&D expenses for the three months ended December 31, 2017 were $9.8 million, compared to $9.3 million for the same period in 2016. The increase was due to higher direct research and development expenses including drug substance, toxicology studies and manufacturing activities associated with our GalXC platform product candidates. R&D expenses for the 12 months ended December 31, 2017 were $37 million compared to $41.7 million for the full year 2016. The decrease was due primarily to lower spending in discovery and early development programs, as well as lower employee related expenses and non-cash stock based compensation costs due to a lower headcount in 2017 versus the prior year.

We expect our overall R&D expenses to increase in 2018, as compared to 2017 as we continue spending on our development programs and related resources including the continued advancement of our lead product candidate, DCR-PHXC through clinical trials.

Moving on, general and administrative expenses for the three months ended December 31, 2017 were $7.4 million compared to $4.9 million for the same period in 2016. The increase was largely due to high legal costs most notably those incurred in connection with litigation. G&A expenses for the 12 months ended December 31, 2017 were $25.9 million, versus $18.3 million for the full year 2016. The increase was primarily due to higher litigation costs in addition to higher salaries benefits and other employee related expenses.

We expect G&A expenses to decrease in 2018 as compared to 2017, largely a result of lower legal expenses. As of December 31, 2017 we had $113.7 million in cash, cash equivalents and held-to-maturity investments, compared to $45.9 million as of December 31, 2016. The increase was due to the $70 million private placement of redeemable, convertible, preferred stock that closed in April 11, 2017, plus the 46 million raised in the follow-on offering of common shares in December all net of cash used in operations. In addition we had $700,000 of restricted cash equivalents which reflects collateral securing our operating lease obligation.

We expect that our current cash balance is sufficient to fund our operations through 2019 which includes advancing DCR-PHXC through proof-of-concept clinical trials and into advanced clinical development, as well as advancing DCR-HBVS into proof-of-concept studies in HBV patients. This guidance assumes no additional funding for new collaboration agreements or from additional financing events.

We utilized $6 million of cash in operations during the fourth quarter of 2017, compared to $11.6 million during the same period in 2016. For the full year 2017 we utilized $45.3 million in operations compared to $48.7 million for the full year 2016.

With that I'd like to turn the call back to Doug for closing remarks.

Douglas Fambrough

Thanks Jack. In closing, I want to reiterate that we are very pleased with our accomplishments, not only those that occurred in the fourth quarter, but during the entire year of 2017. As I noted at the top of the call the milestones we achieved during Q4 complete our transition to a clinical stage biopharmaceutical company developing novel therapies based on our proprietary GalXC RNAi technology platform.

We are well financed and during 2018 we are seeking to achieve a steady cadence of clinical milestones. These include dosing the first PH patient in PHYOS, our ongoing Phase 1 trial of our lead candidate DCR-PHXC during the second quarter of 2018 announcing top line proof-of-concept data from our Phase 1 trial of candidate DCR-PHXC during the second half of 2018 and the filing of an IND or CTA for our Hepatitis B candidate, DCR-HBVS during the fourth quarter, filing IND and/or CRA for our second as yet undisclosed rare disease program after identifying a risk sharing partner. And we plan to have three GalXC product candidates in clinical development by early 2019.

We look forward to providing updates on future quarterly calls. With that let's open it up to questions. Operator?

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from Stephen Willey with Stifel. Your line is open.

Unidentified Analyst

Hi, this is [indiscernible] on for Steve. Thanks for taking the questions. So Doug question on your pivotal, not pivotal PH trial do you plan to enroll a specific number of PH 1 and PH 2 patients, because I assume your natural history study will probably provide a pool of patients PH 1 patients, but do you have a pool of PH 2 patients identified for the trial. And also are you along patients who are taking B6 in the trial? Are they enrolled in the trial? Thank you.

Douglas Fambrough

Hi, thanks for your question. We don't have a specific target for the number of PH 1 patients and the number of PH 2 patients in the Phase 1, but we are looking to get a mix that includes both. Our clinical trial sites have both PH 1 and PH 2 patients who appear to meet the eligibility criteria. So we are anticipating that we can have that good mix as I think I called it from the available pool of patients. You are correct that the PHYOS trial does provide a pool of patients who are eligible to enroll in a clinical study have PH 1. So the PH 2 patients are outside of PHYOS, but they are part of our clinical site pool of patients we can draw on.

So B6 question I'm going to pass to Ralf to address all the criteria.

Ralf Rosskamp

Yes patients with PH 1 was stable dose of [indiscernible] are included in our Phase 1 study.

Unidentified Analyst

Okay. And one more question on the PH program, so for Sanofi and Genzyme likely opt-in, will make a decision regarding their opt-in for their announced program some point this year. And the program will probably move into a pivotal trial later this year, early next year. Would that influence your – would that be a factor into your trial design or have any impact on your new program?

Ralf Rosskamp

We're not anticipating that their timing will have any significant impact on our program. We are moving this program forward aggressively. And I don't think any potential outcome from that OP10 decision will affect our plans. There are we believe a large enough number of sites and patients who meet the expected enrollment criteria of our advance trials that we do not anticipate that we would not be able to enroll our future studies. So obviously we think we have what is likely to be the better treatment option and certainly the more broadly applicable treatment option and we look forward to showing the oppressive performance of DCR-PHXC in the clinical trials.

Unidentified Analyst

Okay. And just lastly for your second rare disease program just curious why the decision to raise for the partner? What partner the program? Is it a function of you focusing your resources on the PH program or is it something else?

Ralf Rosskamp

It’s largely what you point out. We have mapped out a long-term development plan through NDA filing for DCR-PHXC. And we anticipate that Dicerna will carry out that plan in its entirety. And we are not in any plans at this point to talk with a partner about that program. We believe this could be a relatively rapid path to approval and the operational burden of that program as our first late stage development program is significant. We felt that pursuing a second rare disease program with that level of aggressiveness was going to be very challenging for the organization to do and increase the execution risk that we would bring to both the programs.

At the same time we're very interested in moving the HBV program through clinical proof-of-concept as we're very optimistic about the treatment modality. So we want to make sure that we have bandwidth to execute on that program. And we intend to take that through proof-of-concept in patients on our own as well. And we want to continue bringing new candidates forward. In light of all of those aspirations and plans a fully independently managed development program for the second rare disease looked a little too much to handle right now. So we are planning, we are in discussions with potential risk sharing partners. And by risk sharing what we mean is something where we would maintain a significant contribution to the program and significant influence over the program.

And we have a partner who is similarly committed to the program. In other words not a global out license like the Boehringer program, but a collaborative development plan where there are more resources brought to bear than just Dicerna.

Unidentified Analyst

Okay. Thank you for taking my questions.

Operator

Your next question comes from Umer Raffat with Evercore. Your line is open.

Umer Raffat

Hi guys, thanks so much for taking our questions. So John and I both wanted to ask questions, but I'll let John ask first since he has better questions and I will.

Unidentified Analyst

Well maybe more nerdy questions anyway. So I was curious about the tetraloop modifications with the new GalXC platform. Do you have IP on these modifications that keep them unique to you? Can you tell us a little bit more about the benefits you mentioned longer halfway, how is that arranged? And are you planning on modifying existing programs or is this strictly for unannounced programs?

Douglas Fambrough

So John thanks for dialing in. So as you know our RNAi molecules have an extended region which we understand to be unique to our RNAi platform compared to the other companies in the field. That gives us the opportunity to make modifications to the molecule that fall completely outside of the guide strand. We call that whole end of the molecule the tetra loop region, but includes the four bases of the tetra loop itself, as well as a short double stranded stem which is the passenger strand holding back on itself. We have found ways to essentially stabilize that end of the molecule further than we had before, it's already quite stable. And we're pleasantly surprised by the impact of that enhanced stabilization on the duration of effect of the molecules.

And I would put some of that data into our latest corporate presentation available on the web page showing enhanced duration of effect in rodents of our PCSK9 targeted molecules and really far longer duration of effect than we had seen for any of our server original configuration. There's also a notable increase in potency although prior molecules were really quite potent. But it gives us potentially increasing dose flexibility.

Now making those changes well they're only to the passenger strand. So you can take an identical guide strand to an existing program and apply a passenger strand that has these modifications. That is a new chemical entity that would require a completely independent development. So it is tempting to think about a program like a follow on HBV program with greater potency and greater duration of effect. And dream about one shot cures. That would be a separate program that would need to be developed independently afterwards. Given the already long duration of effect for RNAi GalXC molecules in general, I think that the competitive value of the even longer duration of effect varies a lot depending on the specifics of the disease. And will have to be evaluated on a case by case basis. Relating to the IP these are modifications that in our context provides new intellectual property and we are of course doing our filings to protect those.

Unidentified Analyst

Great that makes sense. Thanks, Umer.

Umer Raffat

And on my own and Doug what I meant to ask was primarily just focus on the ongoing PH trial and maybe two parts to that, one why is there no sites in the U.S. And I know you guys mentioned your expanding beyond UK, so maybe just some color on that as well like why you, I think, UK was the only site mention on clinical trial but you mentioned a few other European sites that are being added.

And secondly, perhaps going back to the target selection, it’s initial dynamic because the leading RNAi player currently Alnylam is not using the target you're using. And it makes me wonder have you learned anything on a blended basis an ongoing trial that makes you convinced that LDHA is the right target?

Douglas Fambrough

Well I'm going to pass to Ralph to talk about site selection. But we are very interested in pursuing development in the United States and the initial site selection is not a reflection on the importance of the U.S. Ralph?

Ralf Rosskamp

Yes, we are planning to open a U.S. site as well for the ongoing trial.

Douglas Fambrough

Many of the KOLs are based in Europe we've had very good relationships with those sites based on our prior program which did target the GO enzyme. At this point in our Phase 1 trial the data is blinded and I don't think there are any – anything that could be gleaned from it with respect to target superiority. Other than the fact that the GO target does lead to very large metabolic disruption with respect to the glycolate compound being present in the plasma and urine, and that is not in effect that we see with the LDHA target, was not observed in the animals. We're not observing it in any of the subjects in the Phase 1. We don't know who is on placebo and who's on drug obviously.

Umer Raffat

Thank you very much.

Operator

Your next question comes from Ed Arce with H.C. Wainwright. Your line is open.

Ed Arce

Hi guys taking my questions and congrats on the recent progress.

Douglas Fambrough

Thanks Ed.

Ed Arce

So a few questions, first one, perhaps may be a bit naïve here, but just wondering it seems as though this ongoing Phase 1 will not include a multiple ascending dose cohort. I’m just wondering why that is?

Douglas Fambrough

So I tend to turn that question around a little bit Ed and ask it in a different way which is okay so why should you do a multiple ascending dose before you move to the pivotal trial in this indication, with this mechanism of action. And I guess the answer is we have trouble coming to a good reason why we should insert that activity before we move to a pivotal trial. Ralf do you want to add anything to that?

Ralf Rosskamp

No I think you it’s out target population in this trial will be patients who have a mild to moderate renal deficiency and will be a pediatric population from six years and onwards. So we will get a lot of data PK data and PD data. And we believe that we started already working on the PK PD model from our animal data we will supplement this with the data from the normal healthy volunteer and then with our patient data including pediatric and patients with renal impairment and believe that this will allow us to go immediately into a Phase 2/3 study without having to do an additional spec in between in terms of a multiple dose study.

Ed Arce

I see, okay. That's helpful. Thank you. The next question is looking at the timeline from here you've got – you've guided to results of the PHYOS study in the second half of 2018 and then initiation of the Phase 2/3 in the first quarter of next year. I was wondering if you might be prepared at this point to discuss a little more detail around the proposed design of that Phase 2/3?

Douglas Fambrough

Ed we do we do have a model for what we want to do in quite a bit of detail. However, it is going to be contingent on that proof-of-concept data. So I would prefer at this time not to give any additional detail about what that plan may look like given what we anticipate the Phase 1 data to be.

Ed Arce

Okay great. Thanks guys. I appreciate it.

Operator

[Operator Instructions] Your next question comes from Keay Nakae with Chardan. Your line is open.

Keay Nakae

Hi, two questions for you. First with respect to the second rare disease asset are you actually ready to file and you're just waiting to have the partner to come on board or where do you stand in terms of other activities you may or may not need to complete before you’re ready to file.

Douglas Fambrough

So as we had previously disclosed we believe we will be prepared to file an IND or CTA in the second quarter. And that the IND-enabling study, CTA-enabling studies remain on track to meet that timeline. However, given some of the complexities around the disease we think the design of the Phase 1 trial and the submission of the regulatory filing should be done in conjunction with a collaborator. So the timing of actual filing is going to be linked to the collaboration.

Keay Nakae

Okay great. And then with respect to the litigation expense in 2017, can you tell us what that was for the full year or Q4?

Jack Green

The litigation expense, I don't think we've disclosed that specifically in our 10-K filing.

Keay Nakae

I’d be comfortable with an estimate.

Jack Green

For the year I believe it was approximately $9 million for the year.

Keay Nakae

Okay that's helpful. Alright that's all I had.

Operator

Your next question comes from Ed Arce with H.C. Wainwright. Your line is open.

Ed Arce

Hi guys thanks for the follow-up. Just wanted to know I assume there was no mention in the release about it so it’s probably nothing to say but are there any updates you can share with us on the ongoing patent litigation?

Douglas Fambrough

There really are no updates it is the litigation is around trade secrets and specifically an allocation of misappropriation of Merck trade secrets. We continue to believe and since it’s very deep into the case at this point. We continue to believe that the case lacks merit. We had disclosed that the judge has set a trial start date of April 23 and that has not changed.

Ed Arce

Okay. Thanks Doug.

Operator

I'm showing no further questions at this time. I would now like to turn the conference back to Doug Fambrough.

Douglas Fambrough

Alright thank you all again for joining us today. We look forward to speaking again soon.

Operator

And ladies and gentlemen this concludes today's conference. Thank you for your participation. And have a wonderful day. You may all disconnect.