Q4 2023 DURECT Corp Earnings Call

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Operator: Greetings and welcome to the Direct Corporation Fourth Quarter and Full Year Earnings Conference Call. At this time, all participants are in a listen-only mode.

[music].

Yeah.

Speaker Change: Greetings and welcome to the direct Corporation fourth quarter and full year earnings Conference call.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: A brief question and answer session will follow the formal presentation.

Operator: A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star near zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tim Papp, Chief Financial Officer. Thank you, Tim. You may begin.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Speaker Change: A reminder, this conference is being recorded.

Speaker Change: It is now my pleasure to introduce your host Tim Pets, Chief Financial Officer. Thank you Chen you may begin.

Good afternoon, and welcome to Durect corporations fourth quarter 2023 earnings conference call.

Timothy M. Papp: Good afternoon, and welcome to DIRECT Corporation's 4th Quarter 2023 Earnings Conference Call. This is Tim Papp, Chief Financial Officer of DIRECT. Before we begin, 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's products and development, expected product benefits, our development plans, future clinical trials, or projected financial results. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements.

This is Tim <unk>, Chief Financial Officer of direct before we begin 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 and development expected product benefits, our development plans future clinical trials or projected financial results.

Tim Gray: 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.

Timothy M. Papp: 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-Back. To begin, I would like to review our fourth quarter and full year 2023 financial results. Total revenues in 2023 were $8.5 million compared to $19.3 million in 2022. 2023 revenues were lower primarily because 2022 revenues included $10 million of milestone payments related to our POSIMR agreement with IntiCal. For the fourth quarter of 2023, revenues were $2.7 million compared to $3.3 million for the prior year.

Tim: To begin I would like to review, our fourth quarter and full year 2023 financial results.

Tim: Total revenues in 2023 were eight and a half million compared to $19 3 million in 2022.

Tim: 2023 revenues were lower primarily because 2022 revenues included $10 million of milestone payments related to our parser Mercury met with in our call.

Tim: For the fourth quarter of 2023 revenues were $2 7 million compared to $3 3 million for the prior year.

Timothy M. Papp: This decrease is due to lower revenue from collaborations in 2023. R&D expense was $29.4 million in 2023, as compared to $36.9 million for the prior year and $5.6 million for the fourth quarter, compared with $10 million for the prior year. The decreases were primarily due to lower clinical trial related expenses as we substantially completed the AFIRM trial, lower contract manufacturing expenses, and lower employee-related costs. SG&A expenses were $14.4 million in 2023 as compared to $15.9 million for the prior year, and $2.7 million for the fourth quarter compared with $4.3 million for the prior year. These decreases were primarily due to lower patent expenses as well as lower employee expenses. As of December 31st, 2023, we had cash and investments of $29.8 million as compared to $43.6 million at December 31st, 2022. And our cash burn for 2023 was $38.1 million, excluding net proceeds from financing.

Tim: This decrease is due to lower revenue from collaborations in 2023.

Tim: R&D expense was $29 4 million in 2023 as compared to $36 9 million for the prior year and $5 6 million for the fourth quarter compared with 10 million for the prior year. The decreases were primarily due to lower clinical trial related expenses as we substantially completed the affirmed trial.

Tim: Lower contract manufacturing expenses and lower employee related costs SG&A expenses were $14 4 million in 2023 as compared to $15 9 million for the prior year and 2.7 million for the fourth quarter compared with $4 3 million for the prior year.

Tim: These decreases were primarily due to lower patent expenses as well as lower employee expenses.

As of December 31, 2023, we had cash and investments of $29 8 million as compared to $43 6 million at December 31, 2022, and our cash burn for 2023 was $38 1 million. Excluding net proceeds from financings. We believe our cash on hand is sufficient to fund operations through the end of 'twenty.

Timothy M. Papp: We believe our cash on hand is sufficient to fund operations through the end of 2024. Now, I would like to turn the call over to Jim Brown, our Chief Executive Officer, for a business update. Thank you, Tim. Hello, everyone.

Tim: 24 now.

Tim: Now I would like to turn the call over to Jim Brown, Our Chief Executive Officer for a business update.

James E. Brown: Thank you Tim Hello, everyone. Thank.

James E. Brown: Thank you for joining us today for our fourth quarter 2023 update. Last November, we announced top-line results from our Affirmed Phase 2b clinical trial, which evaluated glosucrosterol and alcohol-associated hepatitis. The key takeaway from these results is that patients treated with our sucrosterol, [inaudible] We're excited about the results and believe they show the potential for larsucosterol to provide a clinically meaningful survival benefit in these severe AH patients. To our knowledge, no previously controlled trial has demonstrated an improvement in mortality of this magnitude in this devastating disease. We also saw an encouraging safety profile for Leuciclosterol with a lower number of adverse events in the active arms as compared with placebo.

James E. Brown: Thank you for joining us today for our fourth quarter 2023 uptake.

James E. Brown: Last November we announced topline results from our first phase two b clinical trial, which evaluated sukkah sterile and alcohol associated hepatitis.

James E. Brown: The key takeaway from these results is that patients treated with our CECO sterile.

James E. Brown: Already at 90 days compared with patients that received placebo.

James E. Brown: We're excited about the results and believe they show the potential for <unk> to provide a clinically meaningful survival benefit.

James E. Brown: Severe a H patients.

James E. Brown: To our knowledge no previously controlled trial has demonstrated an improvement in mortality of this magnitude in this devastating disease.

James E. Brown: We also saw an encouraging safety profile from a similar scale with a lower number of adverse events for the active arms as compared to placebo.

James E. Brown: We are in ongoing communications with the FDA about the design for a potential confirmatory phase III trial that could serve as the basis for an NDA filing.

James E. Brown: We are in ongoing communications with the FDA about the design for a potential confirmatory phase 3 trial that could serve as the basis for an NDA filing. We expect to provide a further update in the second quarter. We continue to be encouraged by the overwhelming support of AH thought leaders and the broader hepatology community who have had no effective therapy for these patients. Our Phase 2b affirmed trial was a placebo-controlled, double-blind, multinational study with two active arms of 30 milligrams and 90 milligrams of leuciclosterol and a placebo arm of approximately 100 patients each. We allow physicians to utilize their standard practice for treating AIDS, which allows for the use of corticosteroids in addition to supportive care such as fluids and nutritional support as well as antibiotics for infection.

James E. Brown: Expect to provide a further update in the second quarter.

James E. Brown: We continue to be encouraged by the overwhelming support of a H thought leaders and the broader hepatology community, who have had no effective therapy for these patients.

James E. Brown: Our phase two be affirmed trial was a placebo controlled double blind multinational study with two active arms of 30 milligrams and 90 milligram, so flushed eco sterile and a placebo arm of approximately 100 patients each.

James E. Brown: We allowed physicians to utilize their standard practice for treating H.

James E. Brown: Which allowed for the use of corticosteroids. In addition to supportive care, such as fluids and nutritional support as well as antibiotics for infection.

James E. Brown: In total we randomized 307 patients with severe a H from a global network of clinical sites, including leading hospitals in the United States, Australia, the EU and the U K.

James E. Brown: In total, we randomized 307 patients with severe AAH from a global network of clinical sites, including leading hospitals in the United States, Australia, the EU, and the UK. Our sites included renowned liver centers, and we had the honor of working with some of the world's Preeminent Thought Leaders in A.H. The top-line results in the key secondary endpoint of mortality at 90 days showed a 41% reduction with a 30-milligram dose of Glexiglasterol and a 35% reduction with a 90-milligram dose of Glexiglasterol when compared with placebo. We also reported a numerical improvement in the primary endpoint of reduction in mortality or liver transplantation at 90 days. So neither the primary or key secondary endpoint results achieved statistical significance.

James E. Brown: Our sites included we now liver centers and we had the honor of working with some of the worlds.

James E. Brown: Preeminent thought leaders in a H.

James E. Brown: The topline results and the key secondary endpoint of mortality at 90 days showed a 41% reduction, but the 30 milligram dose that's actually both sterile and a 35% reduction, but the 90 milligram dose is Mexico sterile when compared with placebo.

James E. Brown: We also reported a numerical improvement in the primary endpoint of reduction in mortality or liver transplant at 90 days.

James E. Brown: Either the primary or key secondary end point results achieved statistical significance.

James E. Brown: Even more impressive results were observed in the U.S. population, which comprised three quarters of the total enrollment in the firm. That was 232 out of the 307 patients. In U.S. patients, we saw reductions in mortality of 57% and 58% for the 30 and 90 milligram arms, respectively, as compared with placebo. Although not part of the original statistical analysis plan, the p-values for these results were both approximately 0.01. Very importantly, Narcico Sterol exhibited an excellent safety profile with no serious adverse events in either arm and greater than 20% reductions in the number of treatment-emergent adverse events for both active arms in the severely ill patient.

James E. Brown: Even more impressive results were observed in the U S population, which comprised three quarters of the total enrollment and a firm that was 232 out of 307 patients.

In the U S patients, we saw reductions in mortality, a 57% and 58% with a 30 and 90 milligram arms, respectively as compared with placebo.

Although not part of the original statistical analysis plan. The P values for these results were both approximately 0.01.

James E. Brown: Very importantly, our CECO sterile exhibited an excellent safety profile with no serious adverse events in either arm and greater than 20% reductions in the number of treatment emergent adverse events for both active arms in the severely ill patients.

James E. Brown: Ultimately these clinically meaningful reductions in mortality, coupled with a reduction in adverse events in the severely ill patients reinforced a compelling risk reward proposition for luxury goods sterile.

James E. Brown: Ultimately, these clinically meaningful reductions in mortality, coupled with the reduction in adverse events in these severely ill patients, reinforce the compelling risk-reward proposition for larsiclosterol. We are in active communication with the FDA about the design of a confirmatory phase 3 trial in AH. We continue to believe that the affirmed data provide compelling evidence that larsicosterol could represent a safe and effective therapy with life-saving potential for AH patients. As a reminder, A.H. is the cause of more than 150,000 hospitalizations each year in the U.S. and, with a 90-day mortality rate of approximately 30 percent, is responsible for tens of thousands of deaths each year. There are no effective treatments for AH.

James E. Brown: We are in active communication with the FDA about the design of a confirmatory phase III trial in a H. We continue to believe that the affirm data provide compelling evidence that our CECO sterile could represent a safe and effective therapy with lifesaving potential for a H patients.

James E. Brown: As a reminder, a H is causing more than 150000 hospitalizations each year in the U S and with a 90 day mortality rate of approximately 30% is responsible for tens of thousands of deaths each year.

James E. Brown: There are no effective treatments for H <unk>.

James E. Brown: If Flucicosterol meets our expectations in Phase 3 and we are able to gain approval, it would likely be the first FDA-approved treatment for this disease. In addition to its high mortality rate, AH represents a significant cost to the U.S. healthcare system. Hospitalizations attributed to A.H. typically incur costs ranging from $60,000 to over $160,000.

James E. Brown: The flagship Costar, all meets our expectations and phase III and we are able to gain approval it would likely be the first FDA approved treatment for this disease.

James E. Brown: In addition to its high mortality rate a H represents a significant cost to the U S health care system.

James E. Brown: Hospitalizations attributed to a H <unk>.

James E. Brown: Typically incur costs ranging from 60 to over $160000.

James E. Brown: This results in a total cost to hospitals of approximately $10 billion annually. As a result, Larsicosterol represents a potential multi-billion dollar opportunity in the United States alone and could simultaneously provide overall cost savings to the healthcare system. We would now like to take any questions you may have. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the queue. You may press star 2 if you would like to remove your question from the queue.

This results in a total cost of hospitals of approximately $10 billion annually.

James E. Brown: As a result, our CECO sterile represents a potential multibillion dollar opportunity in the United States alone.

James E. Brown: Simultaneously provide overall cost savings to the health care system.

Speaker Change: We would now like to take any questions you may have.

Speaker Change: Thank you we will now be conducting a question and answer session.

Speaker Change: I would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Information tiny will indicate your line is in the queue.

Speaker Change: You bet, Chris Stace, if you like to remove your question from Nicky.

Speaker Change: All participants using speaker equipment, it may be necessary to pick up your handset before Christmas stockings.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Your first question comes from Prasar Brisebois with Open Homer & Co. Please go ahead. Hi, can you help us understand maybe a little more the timing of when the discussions with the FDA took place, how long, and maybe how long after that you intend on updating?

Chris Stace: Your first question comes from <unk> <unk>.

Oppenheimer: <unk> with Oppenheimer.

Speaker Change: Please go ahead.

Oppenheimer: Hi can you help us understand maybe a little more of the timing of when the discussions with the FDA took place how long and maybe how long after that you intend on updating the market. Thank you.

Frank: Hi, Frank.

James E. Brown: You know, right now, we're right in the middle of, communication, so I don't have a sense. I mean, I have some sense, but I really can't share much from where we are now. I think we'll have to wait for the process to complete, and then once we have clarity from them, we will communicate that in a very rapid fashion. Okay. And then can you help us understand maybe a little bit of the feedback you're getting? and obviously, the public cut of the data that you.

Speaker Change: You know right now we're right in the middle of it.

Speaker Change: Of the communication, so I don't have a sense I'm going to have some sense that I really can't share much from where we are now I think we'll have to wait for the for the process to complete and then once we have clarity from them then we will communicate that.

Speaker Change: A very rapid fashion.

Understood and then can you help us understand maybe a little bit of the feedback you're getting from physicians from the obviously the public cut of the data that you released.

Speaker Change: Yes, it's been extremely positive.

James E. Brown: Yes, it's been just extremely positive. You know, as we all know, this disease hasn't really had any major breakthrough as far as being able to help these patients out in more than 40 years. And in our US population, which was 232 out of 307 in the study, we had a 28% mortality rate, which fits right in with that 30% we've been talking about that's been in the literature. With 150,000 hospitalizations, we're talking 40-plus thousand people dying every year in the United States. That's about as many as die from breast cancer, and it's a horrible circumstance, and there's nothing out there.

Speaker Change: As we all know you know this.

Speaker Change: These havent had really any.

Speaker Change: Major breakthrough as far as being able to help these patients out in more than 40 years and at our.

Speaker Change: U S population, which was the 232 out of 370, we had a 28% mortality, which fits right in with that 30% we've been talking about that's been in the literature.

Speaker Change: It was 150000 hospitalizations, we're talking 40, plus thousand people die every year in the United States that's it.

Speaker Change: About as many as die from breast cancer, it's a horrible circumstance and theres nothing out there. So when they see these data and they see 40 50, 60% reduction in mortality and what appears to be a safer.

James E. Brown: So when they see these data, and they see 40, 50, 60 percent reduction in mortality, and what appears to be a safer alternative to what they're giving today, certainly we're not seeing anything in the way of increased side effects, and potentially fewer. That matters a lot to them. So we've got tremendous grassroots support from the physicians who treat these patients. And they are looking forward to getting the product out there, and a great number of them have volunteered to help out. I guess I would let Norman, maybe Norman, you know, what are you hearing from your colleagues with regard to that? Hello Frank.

Speaker Change: Alternative to what Theyre, giving today.

Speaker Change: Certainly we're not seeing anything in the way of increased heart attacks.

Speaker Change: Fewer.

Speaker Change: That backs that matters a lot to them. So we've got tremendous grassroots support from the physicians who treat these patients.

And they are looking forward to getting the product out there and have a great number of them have volunteered to help out I guess I would let Don and maybe.

Don: You know what what are you hearing from your colleagues with regard to that.

Don: Hello, Frank.

Don: It's yes.

Don: Overwhelmingly positive.

Don: One one of the I think.

Don: We were at.

Norman L. Sussman: It's overwhelmingly positive. You were at the big meeting in Boston, and one of the leaders who wrote one of the very first overall papers on AH, when I showed it to him, said, man, this is the first positive result in over 30 years. It gives you some idea of the level.

Don: You're at the Big meeting in Yeah in Boston and one of the leaders who are one of the very first overall papers from a H when I showed it to him.

Don: Man. This is the first this is soon as positive results in over 30 years. It gives you some idea of the level of enthusiasm.

James E. Brown: Great, thank you. And then maybe can you share how involved with the FDA communications are thought leaders or, Just, you know, anything about that process? Or can you not disclose it? Yeah, probably not.

Speaker Change: Great. Thank you and then maybe can you share how involved with the SBA communications.

Speaker Change: Leaders or Hum.

Speaker Change: Just you know anything about that process or can you not disclose that.

Speaker Change: Yeah, probably not I mean, typically the communication between the SBA is between the FDA and the company.

James E. Brown: I mean, typically, the communication between the FDA and the company is between the FDA and the company, excuse me, but we do involve the thought leaders to a large extent as we're looking at what the additional study would look like in the phase three trial, so they're involved heavily there. And we're also having people involved, thought leaders involved as we analyze the data because this is, We've heard a number of people say this is the most comprehensive study that's probably been done in AH. You know, we're talking about over 300 patients.

Speaker Change: Keeps me, but we do.

Speaker Change: Involved the thought leaders to a large extent as we're looking at what are in the right.

Speaker Change: The additional.

Speaker Change: Study would look like the phase III trial the.

Speaker Change: So they're involved heavily there and we're also having a.

Speaker Change: People involved thought leaders involved in as we analyze the data because this is.

Speaker Change: I've heard a number of people say this is the most comprehensive study.

Speaker Change: It's probably been done as you know we're talking over 300 patients were learning a lot about you know how this disease is diagnosed and treated globally as well as here in the United States and so as every.

James E. Brown: We're learning a lot about how this disease is diagnosed and treated globally as well as here in the United States. And so every... Week or so goes by, we end up learning more from this database and more about this disease and how to approach the disease. So it's really been just a wealth of information.

Speaker Change: Weak or so goes by we end up learning more from this database and more about this disease and how to approach the disease. So it's a it's really been just a wealth of information.

None: Thank you.

Operator: Thank you. Sure, thank you. Your next question comes from Carl Byrnes with Northland Capital Markets. Please go ahead.

None: Sure. Thank you.

None: Yeah.

None: The next question comes from Carl Byrnes with Northland Capital markets. Please go ahead.

Carl Edward Byrnes: Thanks for the question and congratulations on your progress here I'm wondering if this thing kind of on the heels of the price.

James E. Brown: Thanks for the question, and congratulations on your progress here. I'm wondering, and this is kind of on the heels of the prior questions, do you have any comments in terms of the FDA's enthusiasm considering the urgent medical need to treat A.H. and the compelling U.S. subject subgroup analysis for leucocereal along with the profound safety profile? And then I have a follow-up. Yeah, I wouldn't want to be, you know, trying to state what the FDA feels. I think they're, you know, they're very clinical in their approach and very logical and rational.

Carl Edward Byrnes: Your questions do you have any any comments in terms of the fda's enthusiasm.

Carl Edward Byrnes: During the urgent medical need to treat a H and the compelling use subject subgroup analysis for Lucas.

Carl Edward Byrnes: Cerro along with profound safety profile, and then I have a follow up as well thanks.

None: Yeah, no I wouldn't want to be.

None: You know trying to.

None: State what the FDA feel I think there you know they are very clear.

None: Clinical and their approach and very logical and rational and so there.

James E. Brown: And so they're, you know, they certainly there are, I know at least two physicians in this division that have treated liver patients, so I'm sure that this matters a lot to them, but I couldn't speak to anything beyond that. And then, do you have any comment on whether or not you continue to expect that Phase 3 would be a U.S.-only enrollment-type study? Has there been any change in terms of that thought process? No, I don't think so. I think we would still be looking to conduct it in the United States because of the homogeneity of health care provision in the United States. You know, we've got, you know, a large population; they're a huge problem here. And the disease is, although it certainly is a global disease, and it influences people, unfortunately, everywhere around the world where alcohol is consumed. And, but in the United States, we do have our population, I think we've talked about this, you know, generally speaking, they were a bit younger than the outside world. Also, we tend to have a number of metabolic issues from the diets that we have.

None: They they certainly there are.

None: I know at least two physicians in this division that have treated liver patients. So I'm sure that this matters a lot to them, but I.

None: You know I couldn't speak to anything beyond that.

None: Okay Fair enough and then do you have any comment on whether or not you continue to expect that the phase III would be a U S. Only enrollment type study or.

None: Has there been any change in terms of that thought process.

None: No I don't think so I think we would still be looking to conduct it and I'd say because of the homogeneity.

None: Homogeneity of of health care provision in the United States, We've got.

None: A large population Derek huge problem here and the disease is although it certainly is a global disease and it influences people. Unfortunately everywhere around the world where alcohol is consumed.

None: And but in the United States, we do have our population I think we've talked about this you know generally speaking there they were a bit younger than the outside.

All regions of the World also we tend to have a number.

None: Metabolic issues from from the bias that we have when you combine that with alcohol you end up with a with patients that I think are maybe a bit more predisposed to.

Operator: When you combine that with alcohol, you end up with patients that I think are maybe a bit more predisposed to this disease. But that being said, I do believe once this drug has a chance to be tested again, there'll be a good opportunity for it both inside the U.S. and outside the U.S. because this disease is a global problem. Excellent. Thanks so much. Thank you. Our next question is coming from Ed Arce with HC Wainwright. Please proceed with your question. Hi, good afternoon, everyone.

None: This disease, but that being said I.

None: I do believe once this drug has a chance to be tested again.

None: There'll be a nice opportunity for both inside the U S and outside the U S.

None: This disease is a global problem.

None: Excellent. Thanks, so much.

None: Okay.

None: Thank you. Our next question is coming from Ed Arce with H C. Wainwright. Please proceed with your question.

Antonio Eduardo Arce: Hi, good afternoon, everyone business, our comments, you're asking a couple of questions for Ed. Thank you for taking my questions.

James E. Brown: This is Thomas Yip asking a couple of questions for Ed. Thank you for taking our questions. So first, just to clarify that the communications that you're describing with the FDA, is this the end of phase two meeting, and also assume a path forward is identified from these meetings. Can you just talk about a rough timeline to be able to read out specifically how many months for the trial to begin and also how long the study will be, for example?

Antonio Eduardo Arce: First just to clarify.

Antonio Eduardo Arce: That.

Antonio Eduardo Arce: Communications data describing what the FDA is this the end of phase II meeting.

Antonio Eduardo Arce: And also are assuming a path for this identified from this meeting.

Questioner: Can you just talk about a rough timeline too because they do a statistically how many months for the trial to begin and also how long the study will be finished.

James E. Brown: Yeah, I wouldn't want to comment on that until we have finished our communication with them about the protocol. But certainly, what we're discussing is a path forward for phase three to obtain approval for this drug, and that much you can take home.

None: Yeah, I wouldn't want to comment on that until we have finished our communication with them around the protocol, but certainly what we're discussing as a path forward for phase III to obtain approval for this drug and that much you can take home, but beyond that I would wait until we.

James E. Brown: But beyond that, I would wait till we finish our communication. Understand? Then perhaps, as you are, you know, as you pointed out, you're in communications with the agency, can you share some preliminary thoughts, just internally, about what you will consider to be key elements of this pivotal study, specifically some key endpoints that you will focus on, and also how large you anticipate the study will be? Yeah, I would want to wait until we finish our dialogue with them, but it'll be, you know, similar, I I mean, if you look at the trial that we just had, you know, we looked at the 232 patients that we dosed within the United States, and we saw, you know, this near 60% reduction, statistics of, you know, below 0.01, 20% fewer adverse events, those kind of things. So, I think we've got a good basis to build from as we look for a phase three design, but I'm going to wait until But, you know, but I think if you consider that trial, you're not going to be in the ballpark.

None: We finished the communications.

None: Understood.

None: Perhaps.

None: You are so part of that here in communications with the agency.

None: Can you share some preliminary thoughts just internally.

None: What would you consider to be key elements.

None: This pivotal study.

None: Specifically.

None: Some key endpoints that you will focus on and also Oh, how large.

None: We anticipate the study will be.

None: Yeah, I would want to wait until we finished with our dialogue with them, but but it'll be similar I think to what we have seen I mean, if you look at the trial that we just had.

None: We looked at that.

None: The 232 patients that we've dosed within the United States that we saw this near 60% reduction statistics of Beloit below 0.01.

20% fewer adverse events those kinds of things. So I think we've got a good basis to build from as we look for a phase III design, but a little bit of wait till it's done before we talk about it but.

None: I think if you considered that.

None: That trial.

None: I think it would be in the ballpark.

James E. Brown: That's good. Perhaps one more question from us. This one regarding the LSAT agreement with Charles River Labs. I'm just wondering if you can share some financials and any licensing fees there and how the profit share structure between the two companies works.

None: Perhaps one more question from US this one regarding barrels that agreement with Charles River Labs.

None: Just wonder if you can share some financials that do you have any licensing theater in house.

None: Sure structure between the two companies.

James E. Brown: Yeah, I don't know how much we would share on the financials, but we have Keith Lui on the line. And Keith is our head of commercial and business development, and Alzette reports in through him. So I'll let him kind of speak to the relationship with Charles River and the excitement that we have for being able to work with them. Keith, please.

None: Yeah, I don't know how much we would share on that on the financials, but I would we have Keith Louie on although I think Keith as our head of commercial and business development and all of that reports into him. So I'll, let him kind of speak to the relationship with Charles River and the excitement that we have for being able to work with them. So cheaply.

Keith L. Lui: Yeah. Thanks, Tien I don't think we discuss the financials in particular, but this is the first ever.

Keith L. Lui: Yeah, thanks, Jim. I don't think we discussed the financials in particular, but this is the first ever. Sales and Marketing Collaboration for the LZ product line that we've had in the U.S. and Canada, so we are certainly excited about that and with that important collaboration with such a quality organization as Charles River, that is, a well-known organization worldwide, and partnering particularly with their research models and services group. They have a pretty robust sales force out there. It's a presence that we've never had in the U.S. or Canada for the Aldep product line.

Sales and marketing collaborations for deals that product line that we've had in the U S and Canada. So we are certainly excited about that and with that important collaboration with as quality of an organization as Charles River that is.

Keith L. Lui: Ah well known organization worldwide, and partnering particularly with our research models and services group. They have a pretty robust sales force out there. It's the presence that we've never had in U S or Canada for the all of that product line. So.

Keith L. Lui: So we are really looking forward to the partnership which kicked off just on January 1st. The sales force is trained, and I think we can report some of the positive findings from that relationship on subsequent calls. Got it. Thank you again for the questions. And we look forward to your conclusion of your discussions with the FDA. Absolutely, as do we.

Keith L. Lui: We are really looking forward to the partnership which kicked off.

And just on January 1st.

Keith L. Lui: Sales force is trained and I.

Keith L. Lui: I think we can report some of the.

Keith L. Lui: The positive findings from from that relationship.

Keith L. Lui: In subsequent calls.

None: Got it.

None: Thank you, Jeff with your questions and we look forward to your newer I've got that conclusion up your discussions there.

None: For the most of those barrels.

None: Absolutely as do we thank you so much.

James E. Brown: Thank you so much. Thank you. It appears we have no additional questions at this time, so I would like to pass the floor back over to Dr. Brown for any additional closing remarks. With that, I just want to thank you for your time, and, as always, if you have additional questions, please reach out to us, and we look forward to catching up. Thank you all. Ladies and gentlemen, this does conclude today's teleconference. Once again, we thank you for your participation, and you may disconnect your lines at this time.

None: Thank you. It appears we have no additional questions at this time, so I'd like to pass the floor back over to Dr. Brown for any additional closing remarks.

James E. Brown: With that I just want to thank you for your time and as always if you have additional questions. Please reach out to us and we look forward to catching up thank you all take care.

None: Ladies and gentlemen, this does conclude today's teleconference. Once again, we thank you for your participation and you may disconnect your lines at this time.

None: Hum.

None:

None: Uh-huh.

None: Hum.

None: Uh huh.

None: Hum.

None: Hum.

None: [music].

None: Yeah.

None: [music].

None: Hum.

None: Hum.

None: [music].

Operator: ... [inaudible] Bye! [inaudible] SEP> www.youtube.com.uk, [inaudible]