Q4 2020 DURECT Corp Earnings Call
[music].
Greetings and welcome to the direct Corporation fourth quarter and fiscal year 2020 earnings Conference call.
At this time all participants are in a listen only mode.
A question and answer session will follow the formal presentation if.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded it is now my pleasure to introduce your host Mike Amburgey Chief Financial Officer. Thank you you may begin good afternoon, and welcome to our fourth quarter 2020 earnings Conference call.
This is Mike Brian Bird, Chief Financial Officer of Durect Corporation.
I will provide a brief review of our financial results and then Jim Brown, our president and CEO will provide an update on our programs.
That open up the call for a question and answer session.
Before beginning I would like to remind you of our safe Harbor statement.
During the course of this call we may make forward looking statements regarding direct products in development expected benefits, our development plans future clinical trials or projected financial results.
These forward looking statements involve risks and uncertainties that can cause actual results to differ materially from those in such forward looking statements.
Further information regarding these and other risks can be found in our SEC filings, including our 10-K and 10 Qs under the heading risk factors.
Before I get into the financial results. It will be helpful. If I explained how the sale of the lifestyle product line is reflected on our financials.
We sold the product line to robotics for what we feel was an attractive price of $15 million in cash, resulting in a gain on the sale of approximately $12 8 million.
This gain is reflected in net income for the fourth quarter and net loss for the full year.
As of December 31, the $15 million as shown on the balance sheet as cash held in escrow and it was released after a few days on.
Operating results.
Related to go back to a product line have been excluded from our continuing operations and presented as discontinued operations and the relative to financial statements for all periods presented.
Yeah.
So total revenue in Q4, 2020 was $2 2 million.
Per to 9 million from Q4 2019.
Before 2019 included the recognition of $6 1 million in deferred revenue from upfront fees and milestone payments.
So excluding that the comparison to $2 2 million versus $2 9 million.
Product revenue largely from the ALS that pumps was $1 9 million from Q4 2020 as compared to $1 7 million from Q4 2019.
Our gross margin from product revenue was 78 per cent in Q4 2020.
Product revenue continues to be strongly cash flow positive.
R&D expense was $6 7 million in Q4 of 2020 compared to $9 3 million in Q4 2019.
I'm merely due to lower expenses for EUR 19, eight possibly related expenses.
SG&A expenses were $3 4 million in Q4, 2020, as compared to $3 7 million in Q4 2019.
Our underlying burn rate during the quarter was $7 9 million.
At December 31, 2020, we had cash cash in escrow and investments of $56 9 million as compared to $64 8 million at December 31, 2019 in Q1, 'twenty 'twenty, one we strengthened our balance sheet by raising net proceeds of $47 $8 million from an underwritten public offering on sales under our ATM program.
With that thanks again for joining our call and I will now turn the call over to Jim for an update on certain of our programs.
Thank you, Mike Hello, everyone and thank you for joining us today.
Just to start on the fourth quarter, we made tremendous progress.
Most importantly, we initiated patient dosing in our for our Phase <unk> study or do you are 19 eight in patients with severe a H.
We have been steadily adding clinical sites for our firm. We currently have more than it doesn't sites up and running with a plan to have 40 to 50 sites in total.
Okay.
The FDA granted you on <unk> fast track designation for the treatment of a H.
He presented biomarker data from our Nash trial at the a E. S. L. D meeting that further supports the potential of dealer and I to wait for this indication.
The FDA approved <unk> for post surgical analgesia for up to 72 hours after arthroscopic Subacromial decompression.
We appointed two highly successful and experienced biopharmaceutical executives to our board.
We sold the lack tell absorbable polymer product line, two we bought it for $15 million.
And in February we further strengthened our financial position from an equity offering that raised $47.8 million.
Now, let's move to our programs.
I'll begin with the opportunity for do you went on to aid in the treatment of alcohol associated hepatitis or H H.
You weren't HOA is an endogenous sulfate at oxy sterile that act as an epigenetic regulator that modulates the expression of multiple clusters. The master genes that are involved in many important cell signaling pathway.
EUR 928 up in Downregulates more than a thousand genes involving functions that include stabilizing mitochondria, reducing lipo toxicity regulation of inflammatory or stress responses and promoting cell survival.
We announced earlier this year that we are dosing patients in the affirmed trial.
Our firm is on a 300 patient phase <unk> efficacy and safety trial. It is a placebo controlled double blind multinational study.
The primary endpoint is 90 day survival.
There are over 122000 hospitalizations per year in the United States for a H.
There is no approved therapy for age.
We demonstrated 100% survival at 28 days and our D. You are 19, eight phase two a a H trial yeah.
The average historical 28 day mortality rate for a H <unk> 26 per cent and the 90 day mortality rate is 29 per cent.
Based on the results from the Phase Iia eight trial and the fact that survival as the primary endpoint for the affirmed trial, we're optimistic that if we were able to demonstrate a robust survival benefit in this trial. It may support an NDA filing.
Approval based on a single trial is not uncommon in fact, 37% on a new drug approvals between 2005 and 2012 based on a single pivotal trial.
And 42 per cent of the new drugs launched in the United States. In 2018 were approved based on just a single trial.
It is an acute form of alcoholic liver disease or a L D.
It is characterized by long term heavy intake of alcohol.
Recent period of increased alcohol consumption or been shrinking as well as jaundice fever, fatigue weakness nausea, or vomiting loss of appetite on the depressed or negative mental state.
While the majority of age patients are between 40, and 50 years old and also have liver cirrhosis approximately 20 per cent of the age population are in their twenties on 30 and may not have cirrhosis.
89% of hospitalized a H patients have insurance.
Unfortunately during the pandemic alcohol consumption in the United States has increased.
Our conversations with physicians, who treat this disease. They have told me the incidents of a H has also increased.
According to many of these doctors. They are also seeing a larger number of younger age patients.
But as I said earlier, there is no approved treatment for a H.
What physicians have been available to them today, primarily involves abstinence and supportive care, which includes nutrition and hydration.
And analysis of 77 studies published between 1971 in 2016, which included data from more than 8000 patients show. The average overall mortality for eight H was 26 per cent and 28 days and 29% at 90 days and 44% at six months.
Hi, one month mortality rate from the time of diagnosis is similar to some ferocious cancers, such as AML and advanced breast or pancreatic cancers.
According to the a S. L D guidance, you're right maybe used in certain patients with severe H.
However, steroids have shown on the minimal effect and may increase infection rates with a H patients.
And this drop a H trial, a study of more than a thousand a H patients steroids significantly increase the infection rate.
Scott H trial also convincingly demonstrated that steroids did not improve the survival rate over placebo at 90 days or one year.
Many age patients are not eligible for steroids in fact, according to one recent study less than half of severe a H patients are eligible for steroid use.
Hospitalization costs for a H on more than 50000 per patient in the first year.
Alcoholic liver disease is becoming a leading cause of liver transplant in the United States and the cost of a liver transplant exceeds $875000.
The average hospital stay for an H patient is approximately seven day, but many staying significantly longer.
And our D. You on Actuate Phase Iia trial 14 of the 19 patients were discharged in less than four days after receiving only one IV infusion of EUR 92 eight.
All of the 19 patients in our phase Iia trial survived the 28 day follow up period of that trial.
12 of the 19 patients were classified as severe based on the meld scores.
Also 15 of the 19 reclassified a severe based on a scoring system that is specific to a H called madres discriminant function score.
Prognostic scores, including Lille and meld as well as the other ribbon serum creatinine levels and INR were all improved in this phase Iia trial.
You weren't accurate was well tolerated by all of the patients at all doses that were evaluated in this trial, including and all of the severe a H patients there were no serious drug related adverse events reported in this trial.
To summarize the do you are 19 eight H program.
We have initiated dosing in your first trial for patients with severe a H.
Your friend trial is a 300 patient double blind randomized placebo controlled multinational trial.
Yeah from trial will evaluate three treatment arms, 30 milligrams and 90 milligrams, a day or two eight and a placebo arm.
As with the Phase Iia trial patients can be a free trial will receive an infusion or do you are 19, eight or a placebo on day, one and if they were still on the hospital on day four day will receive a second infusion.
The primary endpoint of that'd be affirmed trial will be 90 day survival.
We are more than dozen clinical sites actively recruiting patients.
We expect to have approximately 30 clinical sites in the United States and 20 sites in Europe and Australia.
In December we were granted fast track designation by the FDA for our a H program.
We expect that if we achieve our robust survival benefit. This study may support an NDA filing.
Next to COVID-19 today, we announced that we are discontinuing our clinical trial for D. O on actuate in critically ill COVID-19 patients.
Because of the rapidly evolving state of the pandemic, we were not able to expand beyond the original three clinical sites were enrolled a meaningful number of patients in this trial.
As a comparison, we have more than four times, the number of clinical sites up and running for our firm trial.
The people and resources that we're using to support COVID-19 trial are now being redirected to support the affirmed trial.
Next I will update on the day you are 19, eight Nash program.
In May of 2020, we reported positive top line results from our phase one B trial or do you are 19 weighted in Nash patients stage, one to three fibrosis.
This was a randomized open label Multicenter study do you on actuate in Nash patients conducted in the United States.
You on 19, eight dosed orally for 28 consecutive days at 50 milligrams or 150 milligrams once a day or 300 milligrams twice a day and followed up for an additional 28 days.
A total of 65 patients completed the study and there were at least 20 patients per dose group.
Key endpoints include safety, and pharmacokinetics clinical chemistry, and Biomarkers as well as liver fat content and liver stiffness by imaging. This includes both MRI P. D F N N fiber scan.
Do you on a two eight treatment in this trial resulted in reductions from baseline of liver enzymes liver fat liver stiffness as measured by imaging and serum lipid.
Many of these reductions were statistically significant.
A statistically significant 24% reduction in plasma triglycerides, well seen in 16 patients who had baseline triglyceride levels above 200 milligrams per deciliter.
43 per cent of the patients in this trial had at least 10 per cent reduction in liver fat as measured by MRI P. D F F.
In this group of patients liver fat liver stiffness liver enzymes and serum lipid were statistically significantly reduced from baseline.
You aren't actually eight was well tolerated all three doses evaluated.
No serious adverse events reported during the study.
Pharmacokinetic parameters after repeat dosing were comparable to those after a single dose from our prior Nash study, indicating no accumulation after repeat dosing.
Also drug exposure was dose dependent.
Opposed to reviewing additional data from this trial was presented at last November's, a a S. L D conference.
This poster showed reduction in biomarkers from baseline, including full and cleaved Cytokeratin 18 C reactive protein plasminogen activator inhibitor, one interleukin one beta if youre looking six interleukin 17, interleukin 18 tumor necrosis factor and how to protect it.
These biomarkers moved in concert with reduction of liver enzymes liver stiffness and serum lipid this.
This is particularly impressive when you consider the patients were only dose for four weeks.
These results together with the continued safety profile of <unk> 98.
Supports further evaluation of the U R actuate potential in Nash.
We are currently planning our next steps for Nash.
Next to the plasma program.
This quarter also marks the FDA approval of <unk>.
<unk> is a novel non opioid sustained release local analgesic that is approved to produce post surgical analgesia for up to 72 hours following arthroscopic some acromial decompression.
This approval provides an important new option towards the PD surgeons in their effort to minimize opioid use while managing acute pain for up to 72 hours. After this painful surgery.
We are in discussions with potential commercial partners where possible.
Plan is to use the proceeds from a partnership to help fund our epigenetic program and our flagship product do you on 19 wait for the treatment of alcohol associated hepatitis.
Awesome or is the only approved sustained release bupivacaine product indicated for up to 72 hours of post surgical analgesia from a single administration.
Infusion pumps with a free systems to enable sustained delivery of bupivacaine within the surgical wound to treat postoperative pain.
The infusion pump literature indicates that the minimal bupivacaine exposure needed to maintain sustained postoperative analgesia its approximately 10 milligrams per hour.
Based on this product would need to contain approximately 720 milligrams of bupivacaine hydrochloride in order to provide up to 72 hours of post surgical pain relief.
Plasma contains 660 milligrams of bupivacaine base, which is equivalent to 743 milligrams of bupivacaine hydrochloride we.
We believe this isn't that bupivacaine to provide sustained analgesia for up to three day without the need for a pump and catheter system.
And passenger was indeed approved for post surgical pain reduction for up to 72 hours following surgery.
Positive or contains more bupivacaine than any other approved single dose sustained release bupivacaine product. We believe this may be an important differentiator in the market.
Another potential differentiator for partner is the ease of application.
At the end of surgery pause on Berry's administered into the Subacromial space under direct arthroscopic visualization.
We're continuously releases bupivacaine for 72 hours or more.
Baltimore is applied directly into the surgical wound.
Mary source of post surgical pain.
Right.
The FDA approval is based on positive data from a randomized placebo controlled clinical trial in patients undergoing arthroscopic subacromial decompression surgery with an attack rotator cuff.
The primary outcome measures were mean pain intensity and total opioid rescue analgesia administered both evaluated over the first 72 hours after surgery versus placebo.
Possibly demonstrated a statistically significant improvement in both primary outcome measures.
A 1.3 point reduction in mean pain intensity on a zero to 10 point pain scale.
This represents a 20 per cent reduction in pain and its statistically significant net 0.01.
This trial also demonstrated a 67% reduction in IV morphine equivalent rescue opioid use from the median of 12 milligrams in the placebo group two four milligrams in deposits per group. This is also statistically significant to 0.01.
When we started the post operative pain control program that led to pause them or who did so because of the opioid epidemic.
Sorry for the families impacted by this epidemic on heartbreak.
Unfortunately, the opioid epidemic on our country has not improved over the years it has gotten much worse.
Good day in the United States, approximately 200 people die every day due to opioid abuse.
The objective of deposits per program is to give health care providers and it turned their patients on non opioid alternative for post operative pain control or at a minimum the way to reduce the amount of opioids required to reduce post surgical pain.
<unk> is a product that can provide up to 72 hours of pain relief and then the pivotal trial demonstrated a statistically significant reduction of both pain and the use of opioids.
That microbial decompression is a shoulder surgery used to treat impingement syndrome, a common repetitive use injury that causes pain when the arms raised over the head.
The procedure is typically performed arthroscopic Lee meaning to several smaller decisions are made in the skin and muscle of the shoulder to which our camera lens called on Arthroscope and surgical instruments alright surgery during surgery.
Arthroscopic Subacromial decompression is generally considered outpatient surgery and most patients go home within a few hours of surgery.
The recovery period may extend from weeks to months, but the most intense pain typically occurs during the first three days after surgery and is often manage with oral opioid.
There are over 600000 surgeries involving arthroscopic subacromial decompression performed each year in the United States.
We view Subacromial decompression as a beachhead to get possibly on the market and we believe the opportunity to expand the label to cover a broader group of surgical procedures represents significant upside.
To summarize we believe there are a number of product features that have the potential to differentiate passing them on the market.
Cosmos, the only sustained release bupivacaine product indicated for up to 72 hours of post surgical analgesia from a single application.
<unk> thousand per contains more bupivacaine than any other approved single dose sustained released bupivacaine product and according to investigators on a clinical study pause birth ease of application will be a welcome benefit.
In addition to these attractive features we believe there are a number of potential avenues available to expand the label to include more surgical indications going forward.
Regarding the business development process, we have multiple interested parties and the process is underway.
We are working to put a deal in place in time for a partner to launch in the second half of this year and expect that the deal would include an upfront license fee and royalty.
Moving on to other accomplishments.
This quarter, we also appointed two new members to our board of directors.
Gail Madeira M B, a and Mohammed a job M D Master of science in M. B a.
These two senior industry veterans bring extensive drug development.
Clinical research and medical Affairs experience.
Their addition to our board as part of the evolution of direct.
In summary, since our last quarter's call.
We initiated dosing in a firm our phase <unk> study of Dur nine to eight in patients with severe a H.
The FDA granted fast track designation for the use of deal on a two eight in the treatment of age.
Based on the results from the phase two a a H trials with survival as the primary endpoint for our firm. We are optimistic that if we were able to demonstrate a robust survival benefit in this trial. It may support an NDA filing.
We presented biomarker data from our Nash trial at day eight a S. L. D meeting that further supports the potential of D oar and had to wait for this indication.
Since coming on board in November our new CMO, Dr. Normally assessment and his team have greatly expanded the number of clinical sites with you from trial in United States and are on track to initiate sites in Europe. This year.
Yep, Yeah, poop husband for post surgical analgesia for up to 72 hours after arthroscopic Subacromial decompression.
We appointed two highly experienced biopharmaceutical board members.
We sold a lack tell absorbable polymer product line to a bionic for $15 million, which we believe was a very attractive price.
And in February we further strengthened our financial position by raising $47 $8 million on equity. So we now have a strong balance sheet as we focus on the affirmed trial.
With that we'd now like to take any questions that you may have.
Thank you ladies and gentlemen at this time, we will be conducting a question and answer session. If you'd like to ask a question you May press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the Q4 participants using speaker equipment, it may be necessary to pick.
Up your handset before pressing the star key.
Our first question comes from the line of French swap British Boys with Oppenheimer. Please proceed with your question.
Hey, congrats on the quarter. Thanks for taking my question My first.
And here was just you guys had mentioned in the past are submitting a manuscript for publication maybe to help us understand a little bit from mechanism of action of their nine to eight.
Just wondering any update on that and or which is obviously still waiting and can you share any color I guess on what to be expected on the mechanism or is this there's so many signaling pathways that might be expected here. So just any color there would be helpful. Thank you.
Sure and yeah, absolutely and Hello, So first off yes, we're getting close very close but.
Know what these things interest they have their own time.
So we're still waiting.
I do believe debt there'll be.
There'll be quite a bit of clarity by virtue of knowing what.
What we do know on what what's in the what's in the manga script, but as with any epigenetic.
Interactions there was a lot of information there there are a lot of.
On master switches involved in genes involved so it but it's it'll be I think a very interesting conversation with with you on with a number of other knowledgeable.
People on the area I don't know if weight. She would you add something to the till the time line Fortunately.
Sure.
Sure well actually we all felt oh.
Checking every day.
[laughter] in price. So it's a socket and then we are just waiting for animals and then to be impressed that's all it will show up on line, but then secondly on that right. So a couple of new articles out there yet at my Sky dying to answer on that as most of them all back.
Of course, that's all it takes a lot of manual scrap on what's.
Capping a socket and well eight.
Present, a lot of day tied to Michelle what genes and what pathway might be a pocket when they treat them into off line until eight just like on average that is no limitations on each Saturday. So when you open up that the loss per lateral well see what the non until eight accounts.
And on which parkway at what share target, but on balance more questions I'm sure you'll want to have on that thought that exact mechanism of action. So ultimately when you look at other function.
What does it do.
And patients on that that disease state.
Okay.
Thanks, Mike.
But just one other thing Francois I think the other piece of it all is there is a nice connection between the literature out there of what is this regulated and a H patients and in Nash patients and it makes the data that we see I think a much more logical.
On a a logical sequence to that I'm sorry.
Okay. Okay no great. That's helpful. And then in terms of a firm obviously you started dosing here, but.
Can you just remind us sometimes you've compared to help us with the timeline a little bit Ah you compared it to the Gilead trial.
Debt debt you know ran a few years ago and can you just help us kind of compare and contrast, the differences in the trial with Gilead and the time it took them to help us understand the punch line.
I think you know we're in a different environment now that will just come as we get through this this last wave hopefully of the pandemic. We think things will open up and we do have a number of sites and the number of sites actually up and running now and we're adding more all the time, but if one looks at that the.
P. S T. One inhibitor trial that that Gilead did they goes to 100 patients.
And and they are they involved that number of patients in about 18 months to finish the entire trial, but that was a six months follow up there you know from dosing till the end of the patients' involvement than ours would be three.
Three months. So one could then take three months off on that so instead of 18 months it would be 15 months.
And the other aspect of that is day required biopsy of all their patients and biopsy.
Typically the fact, it will restrict the number of patients available and enrollment rates just because it's a dangerous thing and a lot of patients don't want to do that and on top of that they also required.
All of their patients use corticosteroids and we know from the literature that only about 43 per cent of age patients are eligible for it.
For corticosteroids and and so you basically cut your patient population in half again. So you can look at that being able to add these multiple together and get a sense that oh debt, we have an opportunity to do hopefully.
More rapid enrollment than they have on the other side of it is.
We're now in the hospital, just coming out of being overwhelmed with Covid.
But the reality of it is COVID-19 also unfortunately dramatically increase the alcohol consumption and the incidence of HSV I'll, probably follow up with that from everything he's got kind of a position. So I think all of that points to probably yes.
On a more rapid enrollment.
But it will be in a better position to project.
Once we have some months under our belt here in a more normal society.
<unk>.
And just lastly here in order to try to figure out a little bit yeah, it's difficult, but it's our job to try to project things, sometimes and think about what's going to happen here, but on the positive side.
Can you help us understand the label you know the the Subacromial decompression in terms of percent interest as the surgeries in the U S.
And obviously some of the other drugs on the market Werent always you know approved for specific.
You know surgeries like this but I guess can you help us understand the size of the market of the Subacromial decompression space, Yeah, and why you know any news from the FDA or anything on why not include hernia in there.
Well I'll.
I'll take the first one person on the line anyway, so with regard to patient numbers there are.
Over 600000, Subacromial decompression surgeries, a year that we think for which pause from it could be used and so you've got that as a starting case, which is a very good number of patients and surgeries and we saw 67 per cent fewer narcotics taken 20% less pain, both statistically significant so we think that.
And quite easy to use you just simply scored in so it takes seconds of the surgeons time at the end of surgery.
And so all of those things, we think are going to be advantages in it.
The full 72 hours, which is what the surgeons are looking for when we first started the the pause from a program way back when we had meeting with Oh, It was more than a dozen surgeons in the room I remember, who sat on talking to them about how what kind of duration are you looking for because we can go kind of 'twenty, Florida hours to five days and they felt like the 72 hours three days was really wants.
They were looking for beyond three days a day.
Want to know whether or not a patient's in normal or has more pain than they expected and then they could be coming into some other other challenges and so that's why we designed it as we did for the three days and thankfully able to get that approval.
As far as you know why not hernia.
That's certainly is a regulatory question that debt debt will be answered as we go forward and we and or potential partner as well will be investigating that because we certainly got some really nice data from from.
The hernia trial that we reported on so we'll have to see what happens in the future on that.
Okay. Thank you very much.
Sure.
Our next question comes from the line of Christian Costco with Cantor Fitzgerald. Please proceed with your question.
Hi, everyone. Thanks for taking my question sure.
The first one I have here is thanks for your comments related to the increased alcohol liver disease hospitalizations, we've seen during this pandemic, but I wanted to ask based on your conversations with these centers and physicians, whether they might expect this trend to continue one.
The world starts to return to be a little bit more normal while patients may not be as isolated anymore, they're daily structures and jobs that is still might be unchanged. So anything you know you've heard about the long term outlook there and then.
Lee.
Is a large orphan market, but do you think from an awareness standpoint that that's grown as well, especially considering a lot of these hospitals are citing you know 30% to 50% increases in hospitalizations over the last year.
You know I think we're very fortunate.
To have a deal.
Dr Assessment on who recently left the clinic and can speak to that because he was working on a transplant center for almost 20 years. So no I'm and maybe you can address that question.
Yeah and things.
Oh can you hear me okay.
Perfectly yes.
Oh, great Okay.
So that is a very interesting question of course, we don't know what will happen.
We had seen a significant surge in alcohol.
Actually among young people, even before the pandemic. So there's been a lot of press on increasing a number of the lay press just had multiple articles on this so yes. It has been it has been more obvious but this really preceded the depend denike and I. It may.
Fall off a little it's impossible for us to say, but I there was such a need even before the pandemic.
And then Christian I'm, sorry, I forgot your second question.
The second question was just that given it is a large orphan market weather generally speaking from the increased hospitalizations since the pandemic from an awareness standpoint, if you're feeling that maybe physicians who in the past haven't seen as many of these patients are we're less familiar with the indication whether.
That knowledge base has grown in light of what we've seen this past year.
Yes, I think well the I can't point to any specific literature on that but.
All of the two most of these people I shouldn't say most a lot of these people end up at a transplant center, because if you're a very ill and Hugh you have liver failure for whatever reason, even if the other if the outside hospital doesn't recognize the cause they would prefer to have that.
Patient managed by an expert and most small hospitals don't have liver expert on on staff. So.
They ended up coming if possible they end up coming to transplant centers.
On the.
And I do think that there is also a growing awareness and a lot of our societies are reaching out to their to their membership and an encouraging conversations with community providers because of this this unrecognized.
Disease, many times they just stay on the patient is hepatitis and it turns out to be alcohol. So so I think there's generally a strong push by the professional societies to increase awareness. We are also participating in real estate, we the company, but also through.
Through several charitable organizations are trying to increase awareness through community outreach.
Okay. Thanks, and then my last question is as you noted that the demographics are starting to change a little bit, particularly more young people are developing E. H, so with that basis based off of different metabolisms and other factors and particularly we have seen the difference.
Green men and women and hence the number of drinks per person, but do you anticipate any changes.
With the drug or do you think there was like a patient population who might benefit more based off of kind of these understandings.
So that's excellent.
Excellent question.
I think.
I don't really know we know that there are certain populations is are these genetic aspects too why some people are more sensitive to is we there are obviously people who drink a lot and may have mild to moderate or severe fatty liver, but don't get a H and the actual.
The actual transition to from from just how do you.
H.
He is not is not really very well understood. Some recent work suggests an epigenetic regulators and as Jim mentioned some of those are on a possibly going to be reversed by the mechanism of action of D. On 98, So it's a lot of conjecture, but where we're getting people.
We're getting closer to finding the answer there is more interest in epigenetic regulation and we are certainly interested on the backend as a therapeutic.
Great. Thank you everybody for taking the questions.
Sure. Thank you welcome.
Our next question comes from the line of Martin Yank, Ma'am County, with B Riley FBR. Please proceed with your question.
Yeah.
Hi, Good afternoon. This is tahoe kazmi on their mind on thanks for taking our questions. Just a couple of other brief ones from us are noting that the focus seems to be on a H and you know look forward to incremental update there are we do.
See that you made the decision to discontinue the COVID-19 program and just wondering if there's any opportunities you're thinking about leveraging some of the data generated on acute organ injury. If there are other indications that might be pursued and maybe on the same train of thought if you could discuss you know kind of where we're.
Or else might pose a mere be applied and is that something that you know you aim to do with a partner in the future in terms of indications beyond the Subacromial depression, but thank.
Thank you.
Sure.
With regard to do on nitrates, we have done.
Huge number of studies in and modeling in in vivo modeling and we've shown potential in everything from from stroke to sepsis.
Titus acute pancreatitis or number of acute acute kidney injury a lot of interesting.
<unk> and <unk> and that's still certainly those opportunities are there we want to as a company focus on a H right now because it's.
It's such an important thing that on the.
You know to be able to help these people, it's a huge problem from a societal standpoint.
If you just go on from a medical system standpoint into these patient cost at a minimum kind of 50000 and if they need a transplant. They go up.
Rose to 900000 or more so it's a huge cost and bird toward health care system and of course the families. The patients' lives with a.
A three month mortality of almost 30%. So if we can make a difference there we want to make sure that we have a chance to be able to help those patients that that being said, though we are investigating.
Other opportunities for the use of <unk> to wait.
I've always said to you is.
If this molecule we're in the hands of a larger company, we'd probably have seven phase twos ongoing right now because there's just so much on a potential outside of where we are and once you see the mechanism of action you can start to investigate.
How that interplay with the various genes at various syndromes and you'll see that there are multiple potential opportunity. So.
That is definitely certainly an opportunity going forward as far as posture is concerned.
And as was mentioned earlier, we do have some growth.
On a nice data from hernia and so we would certainly hope at some point in time pause them or would would it actually be able to be approved for use in a general surgical way.
Certainly bupivacaine has applied that way this is.
Been shown.
Sure you know to have the potential as well so that is something we will be investigating with our commercial partner.
Great. Thank you and then maybe just one more brief corn could you give us a bit more color on how youre thinking about the enrollment mix for a firm in terms of the U S vs ex U S split.
Yeah, that's a great idea or a great question, sorry, right now we're expecting about 30 sites in the United States and then another 20 plus between Europe, and Europe would be then U K and the EU and also we're investigating Australia as well. So so we'll end up with you know.
Around 50 sites in total not quite a 50 50 split U S. Ex U S. We're pretty close to debt.
Great. Thanks for taking our questions and congrats on all the progress.
Thank you.
Our next question comes from the line of Michael Morabito with short on capital markets. Please proceed with your question.
Hi, James Thanks for taking my questions.
You mentioned that the current survival rate at 90 days is a 29% I believe you said.
The size of the affirms study how large of an improvement in that 90 day survival rates is the study powered to see and then I was hoping you could just give us a little bit of thoughts on how you expect R&D expense to grow throughout the year as affirmed opens more sites and how that might be countered by any opex savings that you get are getting from this.
Continuing the Covid trial.
Sure.
So I don't want to lose any of these things. So first of all the Cobra trial wasn't a particularly expensive trial, but maybe Mike you want to speak to that.
As you look at the at the calendar year budget wise with with affirm and adding more sites every month.
Sure I'll take that one first.
As you saw the Q4 number for for Dr and I'd say it was down a little bit.
I will start it will start ramping up as the enrollment ramps up.
Overall as you said, there's an offset there from stopping the COVID-19 trial and.
Overall, you know.
It's not going to be a huge change from from where we've been in terms of in terms of the overall burn rate when you mix everything together.
Yeah, we've we projected that the trials going on it's about a $30 million total external expense. So that'll just be enrolling as it goes and then as far as the power calculation. We certainly have worked out in in spades for sure.
Yes.
Normally the way Chi whoever wants to who spoke with the statisticians most recently [laughter].
Yeah 'cause it on every day.
Yeah Yeah.
So we without giving the exact calculation, where we're finalizing some of the non interest that we've given them a somewhat pessimistic view to the D var and.
And it's somewhat optimistic view to the controls. So that is we have under estimated deaths in the control of estimated we think from estimated in the day you are to give ourselves an 82% power.
Oh, sorry.
Power.
82% probability.
Yeah.
And that's with a 100 patients and just.
Just wanted to see and forgive me if you mentioned it and I missed it Nicola do you have any expectations for timing of when you may take the next step of Nash or when you might expect.
So it makes it announcements on post severe licensing.
Yeah of course from a licensing is something we're working on right now and our hope is that we would have a partnership in place to launch them. This.
This year, so that would mean.
You know that the deal would come prior to that so certainly that's something to be looking for as the months unfold.
As far as next steps for National you know, we're looking at it and it's an interesting.
A place where we are right now because we've got you know phase two phase excuse me one day data out there that are pretty impressive I mean, we've got everything moving in the same direction in a positive direction.
Got liver fat and liver stiffness in liver enzymes circulating enzymes and biomarkers of cell death on biomarkers of inflammation and other categories. All moving as you would expect and then there's clean profile that we've been fortunate to be able to have with 98 on.
On a safety standpoint, it certainly speaks well to something that can help in this patient population and then we see the Nash environment changing right and so it'll be interesting to see kind of where were.
We're trying to select.
Place to enter.
Where we can have the most impact and and learn from those who are on front of us who work on a out there on the water trying to swim across debt that channel.
So.
It didn't give you an answer yet because we're still doing the work.
We will be announcing it as we get closer.
Okay, all right. Thank you very much.
Sure.
Our next question comes from the line of Ed Arce with H C. Wainwright. Please proceed with your question.
Hi, Jim Thanks for taking my question on sure.
Sure.
Congrats on.
All of the progress recently, especially with the approval of the polymer.
Thanks.
So a few from me first question just wondering.
On a firm looks like in the U S. You know you just started a few months ago enrolling.
Yeah.
You know a pretty specific subgroup of severe age patients. It seems like enrollment in the U S. A with the sites from the number of.
Subjects is.
Going pretty well I know you've mentioned before how.
The particular dynamic of these severe patients in the hospital.
Actually sidesteps are largely a lot of the issues that other companies have.
With Covid.
I'm wondering if that dynamic has shifted at all lately and if youre seeing the same sort of perspective in Europe as well now that you're wrapping up enrollment there.
But we Havent started Titan Europe, yet, we're still going through all the paperwork and all the everything you have to do to get going there. So so Europe will be.
And there is a number of monks still away, but certainly.
Certainly in the U S.
We are signing up a good number of sites and and norm and the team are really cranking I don't know what would you would you say specifically to that.
I'm sorry could you would you just.
I'm not sure I understood exactly the question.
Sure so.
The enrollment of these severe age patients into the hospital amid.
Right.
Yep Yep.
In other sorts of trials involving a you know a hospital admittance, obviously theres been.
No trouble in getting getting patients are enrolled in these sorts of studies, but I think the dynamic that has been discussed previously.
Previously that's expected with wood and in many ways sidestep that issue I'm wondering if you know if you've had already a few patients enrolled if if you're seeing that or if there's anything different from what have you.
Yeah, that's it yes, I get it so.
So the dynamic.
Is you are correct in that they're competing for bed space to some extent with COVID-19 patients, but then that's true on very old patients.
The entire them on the entire enrollment process is patients already admitted with a certain level of severity.
We've chosen a range debt.
Debt is right.
To be sure that.
Yeah, we can differentiate between people in control and people who get therapy. So the trial is built on a model that says you have this level of illness you will.
This expected mortality and we are hoping to see a difference in debt and that outcome at 90 days.
On the the thing is these patients who are ill and so by and large.
If someone like that goes to a doctor's office, they're most likely going to be admitted.
And so.
When they're there.
So I think youre correct in that we don't expect a big change in the.
And the frequency we are very obviously being very strict on the entry criteria to keep the study clean.
Okay, great. Thank you.
That's helpful.
Next question is around a pause them or again, congrats on finally getting debt across the finish line.
I know, it's been a long time coming you mentioned the commercial partnership discussions that you're having and obviously you can't really talk about any of those details, but I was just wondering.
If you think that the prior Janssen commercialization.
Collaboration.
<unk> stands now as a good proxy for the scale of economics that you might expect from a new partner.
Well I think you know.
It's always.
You know every every deal on every time there is always good.
On place and time, so, but but the opportunity is still it is a very valuable one for sure and we are talking to you know as we put the deal in place I would expect it.
Debt there'll be.
A very very valuable deal for Durect and also a valuable deal for a partner and that's the I think we've been able to over the years of history of direct has been able to do.
We've been able to do good deals and and have a potential for both parties to do well and I would expect that would be the case here.
Without getting into any granularity.
Sure.
Understood.
And then final question again, you mentioned.
We're pursuing.
Potential next steps are with partners.
And moving forward with do you on 92 eight in Nash.
And again, there I realize that there is little that you can discuss about those until you know, there's something actually signed and done.
However, I'm wondering if.
You go through this.
The speedy process, if there is any specific criteria.
That you're considering.
Or perhaps any sorts of scenarios that you would outright exclude.
Well I think as we look at any business development opportunity, we always we we don't exclude it.
Anything unless something just is not unreasonable, but I think if we think about Nash right. Now we are in early days on Nash, we just have phase <unk> data were remarkable data, especially considering one month.
And the safety profile. So when you look at that you say, okay. There is something there, but I think what the industry is shrinking is trying to figure out is.
Hmm.
What is.
Where does Nash debt.
And.
How does it fit into the health care environment and system and what is the appropriate.
You know type of therapy to develop.
Because you've got on one side.
Oh.
You know things that simply just weight loss exercise diet and things like that things that assist with that can certainly help to the far side you've got.
Fibrosis cirrhosis.
People dying of liver failure, and maybe there's nothing that can help them and there's this gradation in between.
So the interesting thing about 19 weighted is it probably can help across the board probably greater potential to help the farther along you are in the disease process. So.
You know, it's it's it's exciting to me to think about but at this point in time, it's very early days on on all of it I do think eventually we will see 90 weighted out there helping helping.
People, who are damaged metabolically.
From a number of accounts, but.
Now, we're really focusing on a farm in on.
The first acute new switches in helping debates on say a H and then go on other.
Thank you miss opportunities to help patients with as well.
Got it thanks, Jim for your perspective.
Thank you.
There are no further questions in the queue I'd like to hand, the call back to CEO Jim Brown.
Okay, well with that I just want to thank you all for your time and if you do have any further questions. Please feel free to give us a call and take care.
You all later.
Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.