Q3 2019 Earnings Call

Good afternoon, and walk into the Chemocentryx Jake water 2019 financial results Conference call. At this time, all participants I know there's an illegal.

Later, we will conduct a question answer session.

That's a real biter this conference call will be recorded.

I would only get turn the call all but then Mr. Bill sorry, a personal Cleveland Mr. Slattery. Please go ahead.

Thank you good afternoon, and welcome to the Chemocentryx third quarter 2019 financial results Conference call.

Earlier this afternoon the company issued a press release, providing an overview of its financial results for the third quarter ended September Thirtyth 2019. This press release, along with a few slides that you may find helpful. While you listen to this call are available on the Investor Relations section of the company's website.

Www Dot Chemocentryx dotcom.

Joining me on the call today is Dr., Thomas Schall, President and Chief Executive Officer, Chemocentryx, who will review the company's recent business and the clinical progress.

Following his notes Susan Kanaya Executive Vice President Chief financial and administrative officer at Chemocentryx will provide an overview of the Companys financial highlights for the third quarter 2019.

Turning the call back over to Tom for closing remarks.

During today's call, we will be making certain forward looking statements, which of those of you. Following the slides can see if you look at slide two.

These forward looking statements are based on current information assumptions and expectations that are subject to change and involve a number of risks and uncertainties that may cause actual results could differ materially from those contained in the forward looking statements.

These risks are described in the company's filings made with the Securities and Exchange Commission, including the company's annual report.

On Form 10-K filed on March 11, 2019.

You are cautioned not to place undue reliance on these forward looking statements and Chemocentryx disclaims any obligation to update such statements.

In addition, this conference call contains time sensitive information that is accurate only as of the date of this live broadcasts number for 2018.

Chemocentryx undertakes no obligation to revise or update any forward looking statements to reflect the events or circumstances. After the date of this lives conference call.

At this time it is my pleasure to turn the call over to Tom Joel.

Thank you Bill and good afternoon, everyone listening. Thank you for joining us on our third quarter 2019 conference call.

In the third quarter I adopted a new mantra that I, then called 456, which of those of you are following can see on slide three.

That is we had chemocentryx had four clinical programs, yielding five data readouts over the then next six quarters.

One quarter later, we are on track with this goal.

Today I will concentrate on the first topline data events for each of our first two drug candidates. The release of results from our pivotal phase three advocate trial of Avago pen in the treatment of Anca associated vasculitis in that mid to late Q4 that is this quarter.

And then I will touch upon two studies of CCX 140 for focal segmental Glomerulosclerosis RFS, yes in Illumina, one trial, which is expected to have topline data in the first half of 2020, followed by the aluminum two trial also next year.

Rounding out the last quarter's mantra of four or five six will be data that we project in 2020 from two more trials of Avago pen the Aurora trial, Lavaca pen and hydrant, Ida Supra, Teva or a jess and be accolade study of Avago pen in C. Glum area, along with the worst.

See three g.

So as you can see topline data will come fast and frequent as we enter the most exciting period, yet in our Retuned storied history here at Chemocentryx.

As most of you are aware on October 1st we were joined in New York by two of the world's leading Nephrologist Dr., David Jain of Cambridge, Cambridge University in England, and Dr., John Niles of Massachusetts General Hospital in Boston.

We hosted in R&D day, which into great depth on Anca vasculitis, and Fs, yes, and the unique mode of action of our targeting systems of the novel medicines, Avago pen and CCX 140, respectively.

This meeting also featured a fascinating and powerful session in which Dr. Jane interviewed and Anca vasculitis patient.

MS. Diane Shah spoke movingly above the difficulties of living with this rare, but ravaging disease, including how she and other patients attempt to cope with the devastating impact of the high doses of chronic steroids that are used in the current so called standard of care.

We know anca vasculitis to be a neutrophil driven disease, where complement fragments see fivei binds to the cfivea receptor or see Fivei, our which then drives neutrophils two in flame and ultimately destroy the body's blood vessels.

Avago pen intervenes to make the cfivea receptor pharmacologically, a nurse or inactive even at trough levels of the drug in the body.

Avago pen does so with exquisitely selectivity it does not inhibit.

The second and beneficial receptor foresee fivei another receptor called C. L. Two as Dr. Jane pointed out as a at our R&D day and as you can see from slide four.

This is important because the literature shows that C. L. Two has a beneficial impact on inflammatory health.

Indeed evidence required us to design Novakov pen and this was with considerable scientific effort to stifle the roles of the bad actors Cfivea receptor binding to see fivei, while allowing free rein for the good interactions of C. L. Two with Sci Fi Bay.

So maybe it was no surprise when our phase two clear randomized controlled clinical trial of Avago Pan demonstrated that Avago pan rapidly brought neutrophils to normal levels in inc. of patients.

While swiftly, bringing active vasculitis under control.

Also while showing benefits across the total burden of disease and Anca vasculitis that is with evidence of improving and stabilizing kidney function and even improving patient reported outcomes and validated quality of life assessments.

Avago patented all of this without the high doses of steroids that are currently use in the traditionally establish standard of care for Anca vasculitis, the phase two clear and the phase two classic trials provided the logical building blocks in laying the foundation for the pit.

A little advocate phase three double blind double dummied randomized controlled clinical trial.

We expect to have topline data from the advocate trial between the middle to the end of this current quarter.

So what should you look for in the U.S results to help US follow this please look at slide five.

First to the two primary endpoints in the advocate trial. The first primary endpoint occurs at week 26 and answers. The question can you effectively bring patients with an active vasculitis flare into a state of Vivacit remission.

As measured by the traditional but limited Birmingham vasculitis activity score.

We've asked for mission is defined defines as having a be best score of zero and being off steroids for the preceding four weeks.

There is much to say about be bass and I'll briefly explain the limitations of be best in a moment.

As we've discussed many times the statistical no hypothesis is one of statistical non inferiority avago pan therapy compared to chronic steroid containing standard of care in achieving this be vast remission.

Why is non inferiority the NOL hypothesis that is employed.

Mostly the answer is a pragmatic and arithmetic one.

It is simply not feasible to power a study for stupid statistical superiority in an orphan disease such as Anca.

The sample size or and would be too large for an orphan disease trial.

Regulatory agencies understand this so noninferiority with respect to the be bass endpoint is the only pragmatic option available to us.

In addition be bass only measures the ability to get through the active vasculitis crisis.

The steroid containing standard of care can get people through the initial crisis, but it does so at a great cost and these other costs are not captured in the be vast primary endpoint by its traditional design.

So patients with Anca vasculitis can still get into a so called Vivacit remission.

And still be quite unwell from the ongoing anca disease and from and May be especially from the illnesses that are caused by the steroid therapy itself. These steroid induced problems being largely not scored in the be vast assessment.

The second to primary endpoint is a similar comparison of statistical non inferiority of be Vaster mission at 52 weeks and is intended to answer. The question can you keep a patient in be vast remission following the acute crisis.

I will note for all of Us that Avago Penn has the same primary endpoint and all hypothesis that is statistical non inferiority for be vast permission as was use in the preceding rave study, which in fact was the sole basis for the approval of write checks and Matt.

Being offered as an alternative to cyclophosphamide both of course in combination still with the noxious steroids.

Rave in fact was the only other phase three pivotal trial that has led to an approval for a therapeutic entity in Anca vasculitis.

We plan to report both at 26, and 52 week primary Beavis endpoints in our topline data read out this quarter.

Make no mistake, we believe that achievement of the Noninferiority NOL hypothesis for be vast remission constitutes a victory.

But I'll admit I don't like the term noninferiority because it sounds lackluster a word that is completely at odds with our aim which is nothing less than to revolutionize the standard of care with a 21st century medicine that meets the desperate needs of anchor patients.

The second element that we plan to touch upon therefore in the topline data release features the total burden of disease as we aim to establish avago pen as a superior profile of therapy and Anca vasculitis.

As I mentioned the be best score itself is limited because it only measures active and acute vasculitis signs and symptoms.

It is not a true reflection of whether a patient as well and that is why our advocate trial aims to fill this gap by measuring a number of important secondary endpoints as shown on slide five.

We hope that these will show that Avago pen contributes to a meaningful benefit in other dimensions that are vital to patients and indeed, the health care system, including diminishing or arresting ongoing RV organ damage, particularly in the kidney damage that accumulates with the use.

Steroids.

Also eliminating therapy induced illness, and improving the patient's quality of life and the ability to function normally.

As you can see from slide six.

The current standard of care is simply not safe, it's not fast and it's not durable.

And it's not even in expensive as some individuals who are not particularly well versed in this area have suggested because the relatively low cost of purchasing steroids is usually sorry.

As to chronic high steroid therapy, there's a more prevailing an informed view.

That is the borrowing cost of steroids is dwarfed by the using cost of steroids that is the economic burden of steroid therapy.

Consider here the vast economic burden to the system of treating the profound side effects illnesses and dealing with the deaths caused by the use of steroids.

And I would submit that these economic burdens of steroid use vast as they are pale in the raw light of the human costs to patients their families and their daily lives.

So now turning to slide seven we know from our many discussions with patient advocacy groups with clinicians and with regulators that there is great interest beyond be best in alleviating the total burden of disease in Anca vasculitis.

Our previous results from our controlled phase two trials make us hopeful that we can do exactly that.

We are hopeful that the topline data from advocate will demonstrate as they did in the phase two trials with objective measures that avago pan improves organ function and quality of life with a favorable safety profile.

Before turning to our second drug candidate, let me say a quick worried about ivanka pens potential to become a pipeline in a drug shown on slide eight.

Before the end of next year 2020, we expect to release topline data of a backup and phase two trials into additional indications first in our accolade trial of of Ocho Pan for the rare kidney disease C. Glenn Merial apathy or see Threeg, a life threatening disease that Tim.

Typically strikes the young.

There is no approved therapy for see Threeg.

I'm very pleased to tell you that we recently received a 1 million dollar grants from the FDA to support the advancement of our accolade trial.

We will presented a poster on tobacco pen and see Threeg at the upcoming annual meeting of the American Society of Nephrology or Sn meeting this week.

Second our Aurora trial of of Banco pen in Hydro and I, just Super Utiba disfiguring skin disease that is thought to implicate. The cfivea receptor again, the unmet need here is very high and the commensurate commercial opportunity is significant.

Beyond that there could be many other indications for this versatile small molecule with its unique mode of action, but for now we are clearly focused on delivering our prime objective of topline data results.

Let me turn now to CCX 140, our orally administered inhibitor of the chemo kind receptor known as CCR too.

Please see slide nine where we describe to clinical trials lumina, one and lumina true to which are underway for CCX 140 in the treatment of another rare kidney disorder focal segmental glomerulosclerosis or fscs.

As Dr., John Niles for mass General discussed during our R&D day last month. There is no approved treatment for Fscs, However, steroids with their attendant toxicities are frequently used.

Our objective in alumina trials to studies is defined in terms of reduction of protein in the year end or proteinuria as the FDA has indicated that proteinuria lowering in fscs could potentially be a registration endpoint.

And some of you may recall that proteinuria lowering was the metric. We studied successfully in an earlier phase true truck to trial of CCX 140.

In that trial of several hundred patients with diabetic chronic kidney disease CCX one for all met its endpoint of a rapid and sustained reduction in proteinuria, while demonstrating a good safety profile.

That successful study provided the basis of our work now in the orphan disease of Fscs because of the significant unmet need owing to end owing to the facts that NFS Gs costs size and timeline for these kinds of studies are wholly tractable for a company of the scope and scale.

Stage of Chemocentryx.

As you will see in slide 10, we have been cleat, we have completed enrollment in our alumina one randomized placebo controlled trial of SS fscs patients with high levels of protein in the era.

The primary endpoint is reduction in proteinuria at 12 weeks, we expect to report out topline results during the first half of 2020 .

Our alumina two trial is a single arm open label study in patients with nephrotic levels of Proteinuria and primary Fscs, which is a rare condition. We expect topline results of this trial during 2020 .

Again at this month's Sn meeting there will be a scientific poster presented on the lunar Lumina, one trial and two posters on the novel role that Ccrtwo inhibition plays in renal diseases, such as Fscs.

In summary, we stand on the threshold of a remarkable period.

This gives us the potential for multibillion dollar commercial opportunities in the U.S. alone as you can see from slide 11.

When the advocate topline data are released we in the experts will be looking at whether advocate achieved statistical non inferiority in vivacit space remission compared to the standard of care at week 26.

And whether ever can sustain advocate avago pan rather sustains be best base remission at 52 weeks.

And also whether there are indicators that evanko pen reduces the total burden of disease in Anca vasculitis.

Following advocate, we look forward to reporting out topline data of Avago pen and C. D NHS.

During the course of the coming year.

Excitingly. This may just be the beginning of the of Ocho pen franchise.

And then we'll look forward to releasing topline data from both our alumina, one and limited to drive trials during 2020 as part of our other major program with CCX 140, NFS, Gs, where the lack of approved or effective treatment shows an urgent unmet need.

And so we move forward from last quarter's mantra of 4562 now to now what I call program 2020 fore sight that is after this quarter's topline readout from Abbott kit advocate, where I personally believe that we are well positioned for a positive read out propelling us to an end da.

And other regulatory filings, we look beyond as well for major data Readouts in 2020 or 2024 sites.

As we like to say and Chemocentryx, the future has never been closer or more exciting.

And what a compelling time it is for clinicians patients and shareholders alike. Now, let me turn the call over to Susan Kanaya, who will describe our strong financial position Susan.

Thank you Tom our third quarter 2019 financial results were included in our press release today and are summarized on slide 12.

Revenue was 10.6 million for third quarter compared to 9 million same period in 2018.

Revenue is recognized based on the proportion of cost incurred as a percentage of total budgeted cost to fulfill the performance obligations under our ivanka Pan and Ccxone hundred 40 commercialization agreements with by for pharma.

Research and development expenses were 18.1 million for the third quarter compared to 15.1 million in the same period in 2018.

Phase two clinical expenses increased in 2019, primarily due to patient enrollment in the ivanka upon a rural trial in patients with Hs ended two ccxone hundred 40, luminaire trials in patients with Fs Gms.

These increases were partially offset by lower expenses by the Ivanka pen add ticket sasy pivotal trial as a steady was fully enrolled in the second half of 2018.

General and administrative expenses were 6.1 million for the third quarter compared to 5.4 million in the same period in 2018.

The increase from 2018 to 2019 was primarily due to higher employee related expenses, including those associated with our launch readiness effort and higher professional fees.

We recorded a net loss for the third quarter of 2019 of 12.9 million compared to 10.9 million at the same period in 2018.

Total shares outstanding at September Thirtyth, 2019 were approximately 58.3 million shares.

Lastly, we ended the third quarter with 205.8 million in reported cash cash equivalents and investments and we expect to close the calendar year with more than 185 million in cash and investment Tom.

Thank you soon.

My final slide as slide 13, as you can tell we're well placed to deliver on our plan and our promise with six topline data readouts expected between now and the end of this coming year.

Consider this.

We have an excellent track record of program execution over many years.

We have a plan for bringing our new medicines to market with Chemocentryx owning the U.S. market entirely and are capable partner Vifor pharma preparing an ex us international launch with excellent economics for Chemocentryx.

We have a strong financial position so that we can run these multiple trials get the data read outs and submit our regulatory filings to the FDA and EMA, including those for positive data after advocate.

And after advocate, we look forward to the next year with 2024 sites.

For all these reasons and more I believe chemocentryx represents an enterprise value like few others in the industry.

I'll now turn the call back over to the operator, and we look forward to your questions operator.

Thank you, Sir ladies and gentlemen.

The question at this time. Please press Star then that number one on your Touchtone telephone if your question asked and answered or you'll be strategic movie. So from the Q. Please press the Becky.

Your first question is from Steve details from Raymond James.

Hi, guys. Good afternoon. Thank you look forward to data later this quarter, but first question is can you share the split or the rough split or qualify in some way how many patients would have received or puxin.

Or cyclophosphamide in advocate.

Even if it's on a blended basis or if not was there anything in the protocol to ensure a minimum number of patients on either of those regimens.

Steve more details to come of course, I don't have the exact details to give to you today I will say this that we modeled the rituximab cyclophosphamide usage pretty much how the geography, where the trial was going to be mapped out.

So approximately about 1.25 or 1.3 rituximab.

To every 0.6 or so cyclophosphamide, just given the global distribution and so I have no reason to believe that will be two variant from that but I just don't have the details at this moment.

Okay. That's that's still hopeful thanks, Tom and could you maybe also on the secondary endpoints speak to which of those.

On the entire list or whichever ones you might highlight our adequately powered to hit a nominal 0.05, and which may not be.

Powered for for that type of loan opioid even if.

The result favors of ACA pen numerically or are they all theoretically well powered.

I think the short answer is are all theoretically well powder powered rather and of course. The details are for example, and you have quality of life, you actually have several categories within quality of life.

And so the question is is there a way to talk about those in aggregate or do you talk about categories individually in phase two we talked about categories more or less individually. It was but it was very clear six of eight of those categories and that's up 36 by way of example was statistically P less than all five in advantage.

Two of Ocho Pan relative to the baseline readings and relative to the standard of care. So we're fairly optimistic that with the larger end and in the advocate trial will be able to show reasonable P values across a number of very important secondary endpoints and you know in short we tried to power the numbers so appropriately to.

At least shelf folks, where we thought we were seeing meaningful benefit and some of those areas.

Okay. Thank you and are there any milestones from your partner associated with phase three either hitting the primary endpoint or subsequently filing for approval or subsequently approval that we should be aware of.

Susan I'll, let you take that question sure Steve.

The milestones are not tied to clinical R&D tied to regulatory events.

Okay and are you able to disclose ranges or what those amounts would be.

No we haven't done so that I think the Cama gave you a guide at least for four when piece that.

Hi to approval would be then likely next one and then think about other territories that may trigger additional regulatory milestones.

Okay. Thank you very much for taking my questions.

Thank you Steve.

Thank you. The next question is from Michelle Gilson from Canaccord.

Okay.

Hi, Thanks for taking my question.

Can you just talk about given the.

Very well each new Holden.

Any kind of the lower Joe.

Good luck in that.

And the control arm could you just talk about.

Yeah expectation should be 20.

Around.

E.

The impact can also other.

Seasonally to talk.

Are there any.

Yes.

Keeping our eye on say.

Just like you want particularly.

Third thing.

Hi, and.

We can control on that one should expect.

Q coupon.

And then.

Could you.

And then.

Which of those talks.

Well the coin in that.

Contribute announced to the overall chief.

Not converting.

Wonderful questions Michelle Thank you so much.

When we think about glucocorticoid toxicities in these trials I think we have a couple of different things that inform our ideas and informed how we set up advocate. So number one we're using more or less the same steroid regimen that we used in clear. So we certainly have some experience.

With what I call them more modern practice of the GC regimens over six months, which is a little bit lower than what was used historically and incrementally lower than what was used in rave, but not you know again not to.

Too much lower but more modern practice I would say.

When we when we took in aggregate the normal serious adverse event categories related to GC use things like a incipient diabetes bone fractures weight gains psychiatric disorders and infections.

Maybe couple of others as well.

We and others have use that as a sort of basket of common glucocorticoid related.

As a ease and safety events over the history of this and other indications as we knew from clear overall, we had a significantly a significant fewer number of those events in aggregate with Avago Pan therapy versus the standard of care certain categories were were very interesting and.

Again, we'll just have to see what happens with a greater and so we'll use that same bucket of categories. That's been traditionally used and again I'm optimistic that we ought to be able to show in aggregate significantly fewer events with the vacco pan them with the standard of care. We're also using this fair.

The newly developed glucocorticoid toxicity index, which is very data rich indeed, there's lots of stuff that goes into it.

And it was developed by by.

John Stone and colleagues at mass General we are probably the first trial blinded trial of scale to really look at how that will read out so I won't make too many comments on it yet.

But I'm I'm very keen to look at how that might be a service to us and others as we truly look in detail an in depth that the effects of glucocorticoids. It is notable to in clinical trials.

That infections you know we're all we're all interested in infections you know Ray was interesting because as you probably know the average rate of serious infections and ray was about 11% across that study of 200 patients in two arms are both arms were getting the glucocorticoid regimen in the real World Peace.

People believe that serious infections are maybe double or even more than double that rate.

So I always like to remind people that in clinical trials patients are superbly well looked after Moreover, there taking they're taking a lot of note about their own health and so.

You know symptomatology that might go to a serious infection in real world practice will get caught earlier in clinical practice in a clinical trial and people will get therapy for those events a lot earlier, so it's not unusual to see diminished rates of infection.

In a clinical trial setting over what is known from real World evidence. Nevertheless, you know, we're very optimistic again that will be able to show we hope we'll be able to show as we look to those events that.

That there should be significance in difference in aggregate and may be trends in some of the individual categories with glucocorticoids.

Clearly economically to get I think to the final aspect of your question.

It's interesting, obviously hospitalizations or a huge burden on the health care system infections drive a lot of that infections and re hospitalization for infections is a big driver, but it's it's by no means the only driver and an aggregate may not even be the main driver.

When one also considers certain things that are not often talked about like fairly severe significant psychiatric issues that require care, usually quite urgent and acute care very expensive care and then there is the other on what I call the sleeper of glucocorticoid.

Use.

And this shows up in mostly in quality of life metrics, but it's been shown in looking at just GC use a little bit in a more focused way and that is a diminished sense of vitality. So if you look at SF 36, there is a category for vitality now that sounds like a very vague term but.

The largest part of the vitality score comes from chronic fatigue.

And that's important in a very broad economic way because that's what keeps people out of the workforce. So I get asked a lot about the vitality component of quality of life assessments, which in the clear trial, we had a significant improvement over 12 weeks in vitality in the faster.

Sept 36 from that trial and I'll remind everyone. It was a blinded trial. So we didnt know that resolved until the unwinding and it was a really quite remarkable the folks at follow that sort of stuff. So that is also a big economic feature and one that that will factor into discussions around.

You know this and other programs going forward.

Okay.

Yes.

Okay.

Yes.

No one day.

Okay.

Okay.

Yeah.

Sure.

Hi, Michelle with apologies I, you're cutting out so I'm not I only caught maybe every third were to your question.

Oh I'm sorry.

Sure.

Not really no [laughter].

Thank you.

Yes.

Okay. Thank you I do apologize that but we and others couldn't couldn't hear what you were asking.

Thank you. The next question is from.

From JP Morgan.

How long for taking my question I'm pretty happy from quite a difference how far along to honor pompano.

Two questions along funded on on for Paul.

On the wall.

Well I'm for potentially have more I will now long ball pension and what impact my boss.

On the results here coming quarter.

I think the as as we look at the big population of all anchor pop people.

It's pretty well known that ultimately overtime about 75% of folks will manifest renal dysfunction, and ultimately overtime fairly severe renal dysfunction. So again I would expect that we'll see we'll not be out of line with what we saw in the phase two programs.

And I and Anna and I wouldn't expect a big variance from that and I again, I won't quote a number since where we'll be releasing data.

This quarter, but let's put it this way frankly, I don't think it matters much whether its arenal dysfunctional pulmonary dysfunction and NT disorder. Our mechanism of action really speaks to the damage that has caused at the end of the process and arresting that day.

Image.

And putting the system back in a situation, where we don't have chronic inflammation.

And then eventually vascular necrosis I think David Jane actually brought this up very astutely at the R&D day, where professor Jane pointed out then in a strange way. The two major forms of Anca disease and for those that are not totally initiated yet they are so.

You can call GPR, MPV and they more or less relate to the kind one of two antibodies auto anti bodies that shows up anti pro DNA Sthree Oriente Milo per oxidise.

And in a strange way as the genetic level there are different diseases, because those antibody.

The production of those auto antibodies is caused by two different lesions, but the point is once the anti bodies are present, the neutrophils get primed and these auto antibodies also act as a kind of stimulator of chronic complement activation leading ultimately.

Good to see five day production, which then binds to see five a receptor on these prime neutrophils and that's really what what causes the damage. So the beauty of our approach is.

Because our motive action is very targeted and targeted at what actually causes the disease and the destruction I really don't care, but tempo or PR, three and I think that.

When we looked at our generally the features across the patient population from the phase two development program I think that that was born out admittedly numbers are fairly small from phase two.

But it's certainly supported the idea that our mode of action should be reasonably effective irrespective of whether the primary pathology seems renal or otherwise and so I'm I'm very optimistic that we're going to get a good effect I welcome kidney patients because I think.

There's a profound economic driver to the opportunity with renal involvement as ultimately renal involvement and its care and Anca vasculitis is staggeringly expensive. So if we can help those folks and we showed in phase II that the evidence suggested that we could allow.

In the context, so that development program I think that's a very powerful feature.

Great. Thanks, So much time I appreciate you taking my question.

Thank you Tessa.

Thank you for the next question just from based on.

SVB either.

Hey, good afternoon, guys. Thanks for taking my question Congrats on all the progress look very much forward to the advocate data this quarter.

So I guess just one question on the advocate Tom can you just remind us our patients stratified for their baseline steroid use coming into this study and perhaps as you're.

Thank you said in your prepared remarks, you're engaging in a lot of for commercialization efforts. So perhaps if you can speak to what you have found in terms of the major disconnect.

In the physician community or even in it.

Your community and then the second question is on.

It looks like the enrollment pieces picking up pace, 80% of sites activated 55% of patients enrolled so in light of shine data last year.

Just wondering can you perhaps talk about quantity over quality as you get these underway what efforts are put in place to avoid the unusually high placebo rate.

Those influx folks thanks.

Sure sure sure sure. So let me take 'em, let me take the Hs stuff first yes, we're probably as of today, even way beyond the 55% that you quoted so you're right enrollment has picked up considerably.

And we've taken great pains to make sure the quality stays high in this trial, we want a definitive resolved we don't want to non result, so among other things we've taken great care and site selection and in fact, I will just say, it's probably a matter of record in our filings.

We're we're actually a U.S. trial with a with the Aurora trial at this point and so we believe that some of the placebo response seen in other parts of the world at least we'll have some greater control up here.

More to the point and more importantly, however, we've done extensive training and we've tried to centralize a lot of the discussion around the primary endpoint the high score.

Everyone must get pass and you know the ability were at their they're trained before they are validated for the trial or the sites are activated for the trial. We have monthly training on high score we have very active outreach we have people in the sites all the time reminding them of what we need to do and high score.

And then if things come through in the blinded data on the scoring through successive assessments. There are actually alerts that our team go out and say, let's make sure we're using consistent criteria and let's make sure you're using the check the check listen the notes et cetera. So.

We believe that we'll be able to standardize that a lot more fundamentally. Moreover, we have not created the expectation I believe.

Based on randomization ratios that patients the majority of patients will get active drug or at least the dose of active drug that people. Most people think will be clinically active so other trials, probably predispose themselves to the expectation.

Again, leading to a higher placebo response I think some of the randomization is were.

I'm not remembering entirely but maybe four to one or five to one so the vast majority of folks were thinking they were going to get an active substance. We've got a very strict one to one to one randomization and in fact, one of the doses is a what we believed to be while clinically interesting.

Probably a sub optimal dose so that's another feature suffice it to say that these and other features.

Really we've been obsessive about making sure that to the extent possible, we will reduce the ability for the placebo response to confound us.

Being an orally active drug as well, we don't have the active infusion process and that that we know from other indications. Historically has contributed to placebo response I'm. So I think the variety of factors lead us to make sure that we won't be in the same situation, we should get a very definitive answer.

Last thing I'll mention is that our and this is bigger so that even a placebo response is higher than say the pioneer studies.

And should allow us to capture authentic dealt us. So we put a lot of time thought energy and training into this I'm pretty convinced that we won't have confounding features there.

Let me go back to the idea about GC use disconnects et cetera, you know, it's highly protocol eyes, what happens with GC expose your prior to randomization an advocate.

And the exclusion criteria are pretty severe most folks basically have to come into the trial in flare. So.

Our position, we don't have you know if they're on chronic GC, they're not eligible for the trial the only way they can come into the trial with a new flare either new diagnosis or a relapse.

Yes. It is true that many people not a majority interestingly, but many people may see gcs during work up prior to randomization.

We allowed for that and clear, we and we allow for with exactly the same rules and advocate and again, that's highly protocol lies and rules driven and it will not confound. Our result, we knew we knew that from the clear trial. So yeah. They have to get steroids that are in the case.

Yes, so they don't have discretion about whether they're getting steroids that are non kitted non protocol any other steroids that are supplied are recorded rigorously and essentially will determine whether those people are still in the protocol or not so I think we've got a very good set up it's consistent with what we did in.

Phase two it's consistent with all of the.

Best guidance from current Kale wells about what best practices now so that's why I think the advocate trials is again very tightly designed and designed to give us I think an important and Doug and clear result.

Oh, Yes, I will come back you said you ask question about disconnect. So interestingly, the disconnects or more with the casual observer.

I, probably get more of the question about you know aren't steroids cheapen effective.

From the investment World, then certainly the the clinician world with the clinician World I never get to get that kind of question from real experts, sometimes people on the periphery might to mention it.

In increasingly less frequently I have never ever in six years, and working and ask Anca vasculitis.

Never ever once heard that from a patient.

So I think the disconnect is one of perception and as you get more and more to the center of this disorder.

You don't hear it interestingly to payers are much more sophisticated.

On this question then I think the average person or industry gives them credit for payers. Appreciate the economics of steroid use and in fact, I I've I've really borrowed the statement of the use of buying pales in comparison to the use of actually using this steroids.

In the clinic the cost of the therapeutic burden, so I think that paradox.

Is now being resolved and the people that matter patients.

Clinicians and payers.

Really aren't disconnected as much as may be lay people or people that are not close to this field.

Great. Thanks for taking my questions.

Okay.

Thank you the next question today.

How about you Sir the next question is from 10 Hall from Piper Jaffray.

Okay.

Great. Thank you very much I'm excited for data to myself too and I really appreciate the detail.

Provide about differentiation between other studies in the.

Labor you put into retirement design advocate.

My question sort of arc remember since we've had so many on clinical programs kind of rule order little bit Im assuming positive data.

You mentioned there.

Yeah, Yeah, maybe one of things could come next year.

Hi, guys could become does for those go way beyond.

Clinical.

Customers.

And then even looking a little bit further.

What we're really starting to anticipate or early commercial preparation thanks to them.

Right, yes to the obviously that's the key question.

On our mind as well our key set of questions. You know we were we of course assume success I think we believe in success based on the data from the previous trials and all the blinded data in the preponderance of all the information we have so naturally we must plan for success and advocate and NT a filing in the United States is.

Quite a profound undertaking we understand that deeply we've assembled a regulatory team here at Chemocentryx now over the past couple of years, which is I believe one of the best in the industry. They have multiple in fact, among the team many dozens of Anda filings and launch.

Is under their belt, we have a raft of recent FDA personnel and the consultant roles.

And so I think we're moving along beautifully and putting together all of the necessary components of the future Anda filing and we're really well on track to do that once we have our our topline data again, we believe will be well within industry standards.

In terms of time from top line to the ability to file the NDA and of course, the NDA requires obviously a finalized clinical study report all your CMC has to be in shape insight et cetera et cetera.

We I must say for a small company I'm really proud to say that we anticipated a lot of these questions.

And I must say, we've had the benefit under the previous so called Prime designation in Europe of understanding what we needed to do to get in shape for a licensing application and so we had some.

A little bit early heads up with that and that was great. So we got to had a lot of the critical questions I won't go any any to the details today suffice it to say, we're very cognizant of CMC, we're very cognizant of drug supply, we're very cognizant of all those things beyond just clinical data that need to go.

On these applications and these have all gone really really well and we've had many discussions with a variety of regulators. So in the U.S. square in great shape, and we are building our commercial infrastructure as we speak so a big part of our growth plan, Ted and already our people on staff.

Doing all of the stuff that will go into how we market of ocho Pan in the United States, where as you know we own and 100%.

We are we have a great partner very capable partner and Vifor pharma and their partners Fresenius medical care and in fact.

Avago Pan will be marketed I believe through their joint company Vifor Fresenius medical care renal pharma.

In their strong spots throughout the world and then they sub license commercial rights two key saying this is all public information in Japan. So all the same to us they've got a great commercial infrastructure they've been doing a lots of work to sort of plug and play both avago Pan and eventually 140 into their come.

Commercial.

Field force ex us I'm very impressed with what they've done and it's great for us because the economics are really quite good or we will take down off topline aggregate cumulative sales in all of their territories royalties from the topline ranging from the teams the mid Twentys based on very.

He shallow sales tiers, so I'm, a big believer in Vifor Fresenius, Vifor Fresenius and key say getting every last dollar sales because it all goes to the topline and and potentially gets me to another tier that works out great and we have approval of five filing an approval milestones as well in those other territories. So ex.

Comically perfect for me and Chemocentryx and our shareholders.

So I think that this is going to be something that you'll all be impressed with as we start talking about more of these to sit details getting into the coming year 2020. So that we can anticipate a great launch right after PDUFA.

So more to come on the details, but I assure you. This takes up a huge amount of our time and effort here.

Well I agree with your sentiments other took some exciting permits company, which we will report data readout.

Thank you Ted.

Thank you. Your final question is from Ed away from H.C. Wainwright.

Hi, guys. Thanks for taking my question.

I think all my advocate questions were asked except for one.

You were talking previous for your product Pharmacoeconomic data and when you have an actual study.

For a publication around the advocate for you know the ended the Africa trial or where you have at least.

Pharmacoeconomic data in hand.

Once.

The drug is launched.

Oh, absolutely add I hope the answer is yes to both your questions and in fact already is in process. So.

We're doing a lot of work on the Pharmaco economic prospects for the drugs, there will be more data coming out from others as well as.

You know some of our own data coming out over the next year about the health economics surrounding Avago Pan and its opportunity naturally we plan on putting out not just one but a series of of papers in the referee journals talking about the data in some detail. So that plan is really well.

Stablex tier.

And I again, once we get through the topline read out I think you'll see.

Lots of information coming out and what I call a fast infrequent way when helps that will help you address all of these questions.

Thanks, Tom.

And then the other question I was just on.

C D.

With the accurately studies. So it's now 60% roles I think last time, we talked about it you said the first stratum was almost 100% gold is that fully enrolled now we can just assume that all the other patients are from the second are starting.

For instance.

Yeah, and I would say, it's nearly fully enrolled in the first stratum and you're right disproportionately we're getting more of that second stratum.

So we'll I'll have more to say about the details of our we're going to the trial conduct and while we plan to do in the coming quarter.

Okay, great. Thanks, Tom.

Thank you there are no. Thank you evidence at this time Sir.

Well with that I want to thank everyone for joining our call today and all the excellent questions for those of you will be at the American Society of Nephrology meeting, we look forward to seeing you and then subsequently updating you further in the near future as we make progress this quarter and beyond so you may now disconnect. Thank you.

Again.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

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