Acasti Pharma Inc.
Q2 2018 Earnings Call Transcript

Published: 14 Nov 2018

[Operator:]

Greetings and welcome to the Acasti Pharma Second Quarter 2019 Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to David Waldman with Investor Relations. Please go ahead.

[David Waldman:]

Thank you. Good morning everyone and welcome to Acasti Pharma second quarter conference call. On the call with us this morning are Jan D'Alvise, President and CEO, Pierre Lemieux, Chief Operating Officer, Chief Scientific Officer and Co-Founder, Brian Groach, Chief Commercial Officer and Jean-François Boily, Vice President, Finance. If you have any questions after the call or would like any additional information about the company please contact Crescendo Communications at 212-671-1020 . I'd also like to remind everyone that statements on this conference call that are not statements of historical or current fact constitute forward looking information within the meeting of the Canadian Securities Laws and forward looking statements within the meaning of U.S. Federal Securities Laws. Such forward looking statements involve known and unknown risks, uncertainties and other unknown factors that could cause the actual results of Acasti to be materially different from historical results or from any future results expressed or implied by such forward looking statements. In addition to statements which explicitly describes such risks and uncertainties listeners are urged to consider statements labeled with the terms belief, expects, intend, anticipate, potential, should, make, will, plans, continue or other similar expressions to be uncertain and forward looking listeners are cautioned not to place undue reliance on these forward looking statements which speak only as of the date of this conference call. Forward looking statements in this conference call include but are not limited to information or statements about Acasti's strategy, future operations, prospects and the plans of management. Acasti's ability to conduct all required clinical and non-clinical trials for CaPre including the timing and results of those trials the timing, the outcome of licensing negotiations CaPre's potentials to become best in class cardiovascular drugs for treating hypertriglyceridemia, Acasti's ability to commercially launch CaPre and Acasti's ability to fund its continued operations. The forward looking statements contained in this conference call expressly qualified in their entirety by this cautionary statement. The cautionary note regarding forward looking information section contains in Acasti's latest annual report on Form-20F and most recent management discussion and analysis which are available on SEDAR at www.sedar.com, on EDGAR at www.sec.gov/edgar/shtml and on the investor section of Acasti’s website at www.acastipharma.com. All forward-looking statements in this conference call are made as of the date of this conference call. Acasti does not undertake to update any such forward-looking statements whether as a result of new information, future events or otherwise, except as required by law. The forward-looking statements contained herein are also subject generally to assumptions and risks and uncertainties that are described from time to time in Acasti’s public securities filings with the Securities and Exchange Commission and the Canadian securities commissions, including Acasti’s latest annual report on Form 20-F and most recent MD&A. I would now like to turn the call over to Jan D'Alvise. Please go ahead, Jan.

[Jan D'Alvise:]

Okay. Thanks, David. I really appreciate it and thanks to everyone for joining us on our call today. Before I get started I want to just apologize up front I'm fighting a head cold and you may hear a frog in my voice and I hopefully will not be coughing in your ears. But again we're very excited to be hosting our first quarterly conference call today and we look forward to continuing these calls each quarter going forward. Given all of the exciting recent developments we thought this would be a really good time to kick off these calls providing everyone with a chance to hear directly from the management and giving you a chance to ask questions at the end of our prepared remarks. Let me start by saying this is been a very exciting year for Acasti, we've made a lot of progress on all fronts clinically, operationally, financially which we believe now positions us extremely well going forward. Not surprisingly on the heels of REDUCE-IT we have seen an increased interest in the Acasti and CapRe. Given this heightened interest we decided last month that it was an opportune time to proceed with a capital raise. As we reported in Q1 our cash reserves were getting low and it was critical to bring in more capital to keep our Phase 3 program going. Our goal was to avoid raising another small bridge but rather to ensure that what was raised would fully fund our trilogy program passed top line results. I'm very pleased to report that as a result of the two concurrent races in the United States and Canada as of November 1 we had over 52 million Canadian on hand which equates to about 40 million U.S. Based on our current projections we are now fully funded beyond the completion of our trilogy Phase 3 studies. This capital will also enable us to initiate work under a new drug application that we plan to submit to the FDA in the second half of 2020 assuming our trilogy Phase 3 trials are successful. It will also support the initiation of several critical commercial projects that must get underway early in 2019 in order to keep our planned U.S. commercial launch on schedule. Although we haven't disclosed the specific investor funds that participated in the recent offerings I think it's important to note that included in number of very highly regarded healthcare funds we believe the quality of the investors and the favorable deal structure without warrants further reinforces the progress we're making and the potential for CapRe. Having a strong balance sheet now also allows us to negotiate with potential partners from a position of more strength given the strong and growing interest in therapeutic omega-3s within the industry we are carefully weighing our strategic options in each geographic region. If and when we select a partner for a given country or region our goal is to choose the very best possible partner in order to maximize CapRe's commercial potential and long term value for our shareholders. Now I'd like to briefly update you on our Phase 3 progress and we'll review a few key differential points about our lead drug candidate CapRe since we may have some folks on the call who are not familiar with our previous studies. I plan to then turn it over to Pierre Lemieux, our COO and CFO to tell you more about the science behind CapRe and why we believe it has the potential to be the best in class. So let me start by providing you with a brief update on the status of our Phase 3 trials. I'm very pleased to report that our two trilogy Phase 3 studies remain right on schedule to complete enrollment this year. In fact as of October 31st we had surpassed 90% enrollment with more than 50% of patients randomized at 150 clinical sites across the United States, Canada and Mexico. We're very confident in saying that we continue to expect to complete these studies on schedule in the second half of calendar 2019 and we fully expect to report top line results before the end of next year. Prior to initiating our Phase 3 program CapRe had already been evaluated in a total of 773 patients in two separate Phase 1 and two Phase 2 clinical studies. In our Phase 2 clinical studies just as with our Phase 3 program the primary endpoint was triglyceride reduction which is very typical for a clinical study in hypertriglyceridemia In both of our Phase 2 studies CapRe achieved a statistically significant reduction of triglycerides and none HDL cholesterol levels in patients across the dyslipidemia spectrum from patients with mild to moderate hypertriglyceridemia and again as a reminder these are patients with triglycerides blood levels between 205 and 500 milligrams per deciliter to patients with severe hypertriglyceridemia and again these are patients with triglyceride levels above 500 milligrams per deciliter. In all of our studies CapRe showed no safety concerns, as a reminder we will be initially pursuing regulatory approval for patients with severe hypertriglyceridemia via the 505(b)(2) pathway which allows us to leverage the long term safety data from LOVAZA thereby reducing the overall time and cost of our Phase 3 program. Beyond triglycerides and very much unlike other omega-3 therapeutic products CapRe has shown in our Phase 2 studies the potential to actually reduce LDL or bad cholesterol as well as the potential to increase HDL or good cholesterol especially at the therapeutic dose of 4 grams a day, this is what we refer to as our trifecta effect and we believe it is due to the omega-3 fossil limpid composition that is totally unique to CapRe. The phospholipids are naturally very efficient carrier molecules for omega-3s and we source them along with our omega-3s from krill oil. Clinically the phospholipids may not only improve the absorption, distribution and metabolism omega-3s but they may also decrease the synthesis of LDL cholesterol in the liver, they may also impede or block cholesterol absorption and stimulate lipid secretion from bio. Furthermore because of the rapid absorption profile of CapRe it does not require a fatty meal to improve bioavailability unlike our fish oil competitors. This was well demonstrated in our earlier bridging study among subjects in the fasting state where CapRe showed significantly better bioavailability and absorption than LOVAZA as measured by blood levels of EPA and DHA. Moreover we know from our PK studies that the bioavailability of CapRe is not significantly reduced when taken with a low fat meal versus a high fat meal Hence we can say with confidence that CapRe has no food effect. Again we believe this is due to the fact that CapRece proprietary formulation combining both EPA and DHA delivered as a mixture of free fatty acids and bound to phospholipids makes them more readily absorbed by the body. As a result we believe that patients taking CapRe can remain on their physicians recommended low fat diet and still get full efficacy benefit. Finally but very importantly our Phase 2 data also showed a significant reduction of hemoglobin A1C at a 4 gram dose suggesting that CapRe again due to its unique omega-3 fossil lipid composition may actually improve long term glucose metabolism. This is a very exciting finding and something we are exploring and hope to confirm in our trilogy Phase 3 studies as we estimate that about 40% of the patients randomized in our two trials are expected to be diabetic as a result of all these benefits and based on our market research with key opinion leaders and high volume prescribers we believe CapRe addresses a critical market need for an effective safe and well absorbing omega-3 therapeutic that can make a positive impact on the major and relevant blood lipids associated with cardiovascular disease risk. In fact in our latest market research study physicians interviewed said they would switch approximately 68% of their patients to CapRe with triglyceride levels in the 200 to 500 range and fully an 82% of their severe hypertriglyceridemia patients they would switch to CapRe within two years of launch. So given this background on CapRe I would like now take a minute to briefly comment on the recent REDUCE-IT results reported by Amarin. By demonstrating a meaningful reduction in major adverse cardiovascular events in the intent to treat a patient population as compared to placebo this landmark trial would seem to answer the question that triglycerides do indeed matter as treatment with a prescription omega-3 in this case the [indiscernible] in combination with the statin reduce the residual relative risk of cardiovascular events by about 25%, this is great news for patients and treating physicians. The REDUCE-IT trial included over a 8000 patients and demonstrated an overall risk reduction that surpasses any available therapy when used in combination with the statin. We believe that these results further validate the importance of therapeutic omega-3 products for patients with elevated triglycerides and holds the potential to significantly expand the addressable market in the U.S. to the roughly 36 million patients with triglyceride levels between 200 and 500 milligrams per deciliter. In addition to reduce it, AstraZeneca is sponsoring an ongoing outcome trial called STRENGTH to evaluate whether their omega-3 drug called Epanova which is a combination of EPA and DHA when taken on top of the statin reduces cardiovascular events in approximately 13,000 patients with mild to moderate hypertriglyceridemia. We look forward to the results of this outcome trial towards the end of 2019 which may serve to further elucidate the mechanism of action and clinical benefit of therapeutic omega-3 products and support the potential for an expanded market opportunity. We had received some questions as to whether Acasti will be able to compete with Amarin and AstraZeneca without outcome data once CapRe is launched. We may ultimately need to conduct an outcome trial ourselves but if our Phase 3 results can replicate our trifecta effect as seen in Phase 2 we believe based on our discussions with key opinion leaders and high volume prescribers that CapRe could gain significant market traction and become the preferred omega-3 especially for patients with severe hypertriglyceridemia. We will have a better idea after STRENGTH and of course after our Phase 3 results are reported next year whether we will need to do an outcome trial and if so how we would want to design it so if and when you decide to conduct our own cardiovascular cardio-metabolic outcome trial we would expect to enroll clinical sites and patients from around the world and potentially run the study in collaboration with one or more of our strategic partners. Now just a few words about our expanding patent portfolio. I mentioned earlier that CapRe is a highly purified and omega-3 fossil lipid concentrate derived from krill oil, given its unique composition we recently received a notice of allowance from the U.S. Patent and Trademark Office on a composition of matter patent application for our proprietary formulation. The patent provides comprehensive coverage over a broad range of concentrated therapeutic and omega-3 fossil lipid compositions. For those of you unfamiliar with composition of matter patents this is the most important type of patent for a biopharmaceutical company conveying protection for any application and usage of the composition. This patent work significantly expands our IP protection but not only covering -- by not only covering the unique formulation but it also complements our existing protections on the method of use and follows similar composition of matter and method of use patents we have been granted in other countries. As a result we believe Acasti will be the only company offering a krill based prescription and omega-3 for the life of our patents which currently extends through 2030 and potentially beyond with new patents we've recently filed and are planning to file. We have also filed a number of provisional patents related to our unique manufacturing process for CapRe which could also significantly expand our exclusivity assuming they are eventually graded [ph] by the US Patent Office. So I'd like to wrap up my comments by commenting on some recent additions that we've added to or made to our senior management team. I'm very proud of the entire Acasti team. We are a small but very mighty group of pharma professionals who over the last three years have consistently achieved all of our milestones and we've done so without deviating from our timeline. I truly believe we have an outstanding team in place now, a team that's very well equipped to take the company through to commercial launch. Since this is our first conference call I would like to take this opportunity to introduce you to our executive team members and then I'll ask them to say a few words. First let me start with Pierre Lemieux, our Chief Operating Officer and Chief Scientific Officer. Pierre Lemieux has been with Acasti and has been a senior Manager a member of the team since 2010 previously he was CEO, Co-Founder and Chairman of BiolActis which he sold in 2009 to interest affiliated with the Nestle Multinational Group. Pierre has also held a number of Senior Executive positions in big pharma. Pierre has a PhD in Biochemistry from the University of Laval, hold 16 patents and has authored over 50 publications. Pierre is Acasti's technical and scientific leader and I want to thank him for his tremendous leadership and exceptional execution over the past two years. Without his leadership none of our recent accomplishments would have been possible. Earlier this year you may have seen the announcement on the appointment of Brian Groach as our Chief Commercial Officer, Brian brings over 25 years of senior experience in the healthcare and life science industries including experience in product commercialization, developing and executing global sales strategies as well as business development and operations. Most recently Brian served as Executive Vice President and Chief Commercial Officer at Veru where he was responsible for leading the development and execution of the company's long term commercial strategy. Brian's previous experience while at Merck include sales and marketing roles that supported this successful commercialization of [indiscernible]. In his short time since joining Acasti Brian has played an important role in an advancing our commercial strategy and cultivating relationships within the industry that could help accelerator our commercialization and launch plans and more recently we announced the appointment of Jean-François Boily as our Vice President of Finance as well as the planned retirement of Linda O'Keefe, Acasti's Former CFO. Prior to joining Acasti, Jean-François Boily held senior financial positions at a number of companies including at Innovaderm Research, a large North American CRO, where he was Director of Finance and Information Technology. He also served as Director of Finance at Teva Canada, a large generic drug manufacturer where he oversaw manufacturing and managed branded product launches as well as clinical R&D activities. Jean-François Boily brings extensive experience in accounting and pharma operations and commercial stage companies which will be very valuable as we advance CapRe towards launch. I'd also like to take this opportunity once again to thank Linda O'Keefe for all of her excellent work over the past few years and we wish her the very best as she begins her planned retirement. So to wrap up we are very encouraged by the strong clinical data we have reported to-date. Our trilogy Phase 3 program is progressing on schedule. We are in active discussions across the industry in a variety of geographies and we see enormous potential to expand the addressable market for CapRe based on the encouraging results of REDUCE-IT. We are well funded with a solid balance sheet and a relatively clean capital structure. As a result we are more confident than ever in the long term outlook for Acasti. So on that not I'll turn it over now to Pierre who will discuss some of the science behind CapRe and discuss our trilogy clinical program in more details. Pierre?

[Pierre Lemieux:]

Thank you, Jan and good morning everyone. So it goes without saying that we're very excited about the outlook for CapRe. We believe it addresses a critical market need for an effective, safe and well absorbing omega-3 therapeutic. I hope our expectation is that the current Phase 3 program will confirm that CapRe will offer patients and physicians the best in class effect on the major and relevant blood lipids. Specifically CapRe omega-3s principally EPA and DHA are either free or bound to [indiscernible] which allows for better absorption into the body. EPA and DHA are more efficiently and naturally transported by phospholipids sourced from krill oil and EPA and DHA contained in fish oil that are transported either by triglyceride that is found in dietary supplements or offered as [indiscernible] in other prescription omega-3 drugs which must undergo additional digestion from enzymes such as pancreatic lipase which required a consumption of a high fat meal to be secreted by the stomach before they can be ready for transport into the bloodstream. Clearly a diet high in fat should be contraindicated for hypertriglyceridemia patients. In addition to the EPA and DHA in CapRe phospholipids are also contributing to the efficiency by interfering with cholesterol synthesis and metabolism which would explain end part it's interesting and unique therapeutic profile. I'd like to take a moment to expand on the synergistic benefits associated with the combination of the DHA, EPA phospholipids found in the composition of CapRe. Here are some facts, first it is well known that DHA creases LDL cholesterol particle size that translate into fewer small VLD atherogenic particles which leads to heart disease. Second, DHA reduces blood pressure, a benefit in patients with cardiovascular disease and also at risk for stroke. Well EPA has shown no evidence of such benefits. Third, DHA increases HDL cholesterol whereas EPA alone has no effect or maybe even reduce HDL cholesterol as we have just shown REDUCE-IT trial. Next DHA has a strong inflammatory parties and finally circulating the DHA in the blood are typically several fold higher than EPA concentrations suggesting a natural and more significant role in reducing the cardiovascular risk. I'd like now to take a moment to expand on the benefit unique to the phospholipids found in krill oil which none of our competitors can actually claim. First phospholipids are very efficient carriers of omega-3s into the cells thereby improving absorption, distribution and metabolism. Second, phospholipids may impede cholesterol absorption by interfering with efficient [indiscernible] a prerequisite for [indiscernible] uptake of cholesterol which may explain why CapRe EPA plus the DHA composition in the presence of phospholipids reduce LDL cholesterol rather than increase it. In addition to the interference with cholesterol absorption some other mechanism have been implicated in the beneficial effects on cholesterol and/or triglycerides after phospholipids administration such as stimulation or secretion from bio, increased beta-oxidation and decreased synthesis of lipids in the liver. Additionally gene expression associated with cholesterol and lipid metabolism and glucose production have been shown to be positively impacted by phospholipids while fish oils have not shown this effect. Finally, data from our Phase 2 program indicated that the unique omega-3 phospholipids composition of CapRe may also potentially improve long term glucose metabolism in patients with diabetes when given at 4 grams per day. We will be certainly assessing this in more detail in our trilogy or Phase 3 program as it may contribute to further differentiating CapRe. I would like now to take a moment to discuss the trilogy trial design especially for those of you who are new to the company as well as provide an update on our progress in our timeline going forward. Trilogy, the double blind placebo control 262 [ph] trial Phase 3 clinical program designed to evaluate the safety and efficiency of CapRe in patients with severe hypertriglyceridemia. Trilogy 1 and 2 are running in parallel and it will randomized a total of roughly 500 patients. The program is being conducted in more than 150 sites across the U.S., Canada and Mexico. The primary endpoint of the two identical trials is to determine the efficacy of CapRe given at 4 grams daily compared to placebo in lowering triglyceride levels after 12 weeks of treatment in subjects with fasting triglyceride levels between 500 milligrams per deciliter and 1500 milligrams per deciliter. Here's just a brief note into placebo so for those of you who wonder so the place used in our Phase 3 program is just plain starch which is a well-known in [indiscernible]. The studies designed to provide at least 90% power to detect a difference of at least 20% reduction of triglyceride from baseline between patients taking CapRe versus those taking placebo and the P value that we're looking for is 0.5 -- below 0.5. The present sense of the effect of CapRe on triglycerides over 26 weeks of treatment will also be evaluated. Numerous secondary end points as you can imagine will also be assessed to assess the effect of CapRe on patients for broader lipid profile as well as certain exploratory metabolic, diabetic markers and also inflammatory and cardiovascular risk markers will also be evaluated of course. In summary prior to trilogy CapRe has been studied in 773 patients which is quite a substantial patient population relative to the other omega-3 trials and given the results from both our Phase 1 and Phase 2 clinical trials we are quite optimistic that CapRe will not only achieve its primary endpoint into trilogy studies but we will also be able to clinically demonstrate CapRe's traffic to effect on major and relevant blood lipids. Finally we have not only kept the trilogy clinical program in schedule but we have scaled up the production of CapRe and we have also manufactured all the clinical trial materials needed for a trilogy program. Furthermore we have further diversified our supply of rock krill oil by having completed the validation of several new suppliers. Our entire manufacturing process is obviously done under GMP and we believe that we have sufficient capacity to meet initial market demand in anticipation of the potential commercial launch of CapRe in the second half of 2021. Recently we've also completed the factory acceptance tests of our proprietary new [indiscernible] encapsulation machine designed by Acasti specifically for the commercial production of CapRe. I will now turn the call over to Jean-François Boily who will discuss the financials in more detail.

[Jean-François Boily:]

Thank you, Pierre. So turning to our financial results for the quarter. I'll start with R&D expenses that were 9.1 million for the quarter ended September 30, 2018 up from 3.3 million in the quarter ended September 2017. The 5.8 million increase was primarily attributable to a 6.4 million increase in clinical research contracts offset mainly by a decrease in other professional fees. The increased contract research expense primarily resulted from the planned increased patient enrollment and randomization activities combined with the contract manufacturing production activities to support a trilogy Phase 3 clinical program. General and administrative expenses were 1.3 million for the quarter ended September 2018 compared to 1 million for the quarter ended September 2017. Then an increase was many attributable to the expansion of business development and pre-commercialization activities and an increase in stock compensation expenses. Our loss from a operating activities for the second quarter ended September 30, 2018 was 10.4 million compared to a loss from operating activities of 4.4 million for the quarter September 2017, the increase in loss from operations was primarily due to the planned increase of approximately 6 million in research and development expenses for the trilogy Phase 3 program. Our net loss for the second quarter ended September 2018 was 22.7 million or $0.62 per share compared to a net loss of 4.5 million or $0.31 per share for the quarter ended in September 2017. The higher net loss of 18.2 million was primarily due to a 12.2 million increase in financial expenses due mostly to an increase in a loss related to the change in fair value of the warrant derivative liability as well as the aforementioned increase in R&D expenses for the trilogy Phase 3 program. On the balance sheet cash and cash equivalents totaled $6 million as of September 30, 2018 which increased by $600,000 compared to quarter ended in September 2017. The increase was generated from gross proceeds from the May 2018 on the written public offering in Canada with the full exercise of the overallotment option offset with the cash used in operating activities. As Jan mentioned earlier we were able to successfully raise capital in both the United State and Canada in October which resulted in gross proceed of over CAD52 million which equates to over $40 million. We believe again that the net proceeds from these public offerings together with existing cash will fully fund our operation beyond top line result of our trilogy Phase 3 clinical trials. We project that we will reach our peak spend on the trilogy program in the next fiscal quarter or current quarter Q3 which covered period from October to December 18. Clinical expenses will then steadily decline over next year with the study winding down by the end of calendar 2019. We also have a number of warrants outstanding from our earlier financing most of which have strike price between a $1.05 in $2.15 expiring at different times over the next five years. Should we hit our upcoming milestone there's a reasonable likelihood many of these others will exercise their warrant consequently which could bring considerable addition capital into the company. And on that Operator I will now turn back to question.

[Operator:]

[Operator Instructions]. Our first question is from the line of [indiscernible]. Please go ahead with your question.

[Unidentified Analyst:]

Congrats on the progress on your Phase 3 studies with CapRe and I have a couple of questions here. So the first is if you know since Amarin reported the data of it REDUCE-IT trial, there has been a concern that mineral oil which was used as a placebo in the control group for REDUCE-IT trial absorption in those patients of that group. I was wondering if you would be able to comment on these potential issue?

[Jan D'Alvise:]

I just wanted to clarify what Pierre said earlier that we're using cornstarch as our placebo in trilogy and again that's a commonly used placebo it's well known to be an inert recipient [ph] and regarding the REDUCE-IT while there was a slight response seen in the placebo group in REDUCE-IT we believe as do I think many key opinion leaders who have commented since the American Heart Association meeting that it was not enough to question the overall really strong 25% cardiovascular outcome benefits that were observed and also keep in mind that the FDA approved the REDUCE-IT protocol using mineral oil after they saw the same placebo effects with mineral oil in Amarin's marine and anchor studies and I think you know furthermore it's important to keep in mind the JEALOUS [ph] study which was conducted with output placebo just versus standard of care and yet there was a big benefit for the same popular population of patients that started the trial with elevated triglycerides. So Pierre I don't know if you want to add anything to that?

[Pierre Lemieux:]

Yes, I mean I was at the American Heart and heard the REDUCE-IT trial outcome presentation four times each time with a different key opinion leader presenting the data. None of them are concerned about this slight placebo effect. First of all that they've seen it before and not only with mineral oil but also with corn oil you know the same placebo has been used by other companies. So I mean it's part of the design of the trials that's why you're using a placebo to give you an idea of the natural variation in a population being followed for five years. So none of the key opinion leaders were actually bothered by that and like John said I mean even though there was a slight I would say effect on the placebo it would never explain that 25% reduction in cardiovascular risk. So I it might be slightly overestimated but you know not enough to explain this. So obviously Amarin is really I mean that they are positioning themselves is talk about the fact that EPA brings a variety of different benefits and so I think fortunately there's a background noise and it's been over I think there's an overreaction with regard to this placebo people effect and it will correct itself at some point so that that's what it is as we speak.

[Unidentified Analyst:]

And my second question is can you please update us on your global business development progress with CapRe and wouldn’t you expect to sign a definitive agreement for the patient [indiscernible] for CapRe which was just closed in November last year.

[Brian Groach:]

Thanks for the question. I think we certainly had a tremendous amount of interest in CapRe especially following REDUCE-IT. We continue to have very good discussions with potential partners across the globe and especially in China and you know we're moving forward with those discussions that you take quite a bit of time in the Chinese market but we're very confident that we're going to continue to move forward.

[Unidentified Analyst:]

Okay, and when do you expect to close that deal?

[Brian Groach:]

These take quite a bit of time so I don't think at this point we would be prudent to give any direction on that. We're continue to work and beyond that I really can't provide any additional comments.

[Operator:]

Next question is from the line of [indiscernible]. Please proceed with your question.

[Unidentified Analyst:]

My question, a couple of questions. So the REDUCE-IT study focused on EPA prior several studies that looked at specifically fish oil from DH and EPA have not shown beneficial results, is that a concern that CapRe uses both DHA and the EPA?

[Pierre Lemieux:]

No its not a concern. I think all the trials have been done with the EPA, DHA have been done either on the wrong population, been in cholesterol patients with high cholesterol not necessarily having high triglycerides and low HDL for instance which was the population studied in REDUCE-IT and also the dosage as well so dosage was extremely low in all those trials sometimes 500 milligrams to 1 gram even though that some of the trial those trials have used LOVAZA which is a prescription drug. So it's really about the dosage itself. So in our case the mixture doesn't change. Our hope for CapRe to be successful so we do have the right dosage of 4 grams of lipids, EPA, DHL in combining with phospholipids and also that we're testing our product in a population that have high levels of triglyceride from baseline above 500 milligrams per deciliter. So I know there was a lot of I would say concern about the DHA being increasing. LDL but again if we look at REDUCE-IT just happened last weekend even Amarin cannot deny that an EPA formulation does not raise LDL they do as well. So I think it's just again another false alarm trying to discredit the natural combination of EPA, DHA but the trick is to have the right population that needs the formulation and the right dosage. So we have no concern.

[Unidentified Analyst:]

And second question is around the IP. So both of these fish oils, the DHA and EPA are natural occurring I guess there's no patent you can put on them, all you can do is protect the process. Is there a concern that if the trial proves to be successful that the vitamin manufacture or other official manufacturers can simply increase the dose in their formulation or keep the dose the same but recommend the higher dose to consumers?

[Pierre Lemieux:]

Well our patent are very different than the fish oil so our patents are composition of matter patents not only manufacturing processes by the way so and we do cover our product itself, so it's a combination of the EPA, DHA plus the phospholipids so and I guess Amarin will be extremely adamant about defending its proprietary intellectual property on their [indiscernible]. So that's going to be their battle but for us again no concerns and we do have patents protecting our own drug formulation around CapRe.

[Operator:]

[Operator Instructions]. The next question is from the line of [indiscernible]. Please proceed with your question.

[Unidentified Analyst:]

Pierre, I just wanted to kind of continue on the theme on omega-3 pharmacology as it relates to CapRe. We weren't at DHA [ph] but we certainly read a lot of the commentary that emerged from it both from Amarin in the popular press with regard to some of the mechanistic things related to EPA and you know some of the commentary was certainly related to some of the secondary effects of omega-3s you know well known impact inflammation and oxidative stress and membrane stabilizing effects and so forth. So I just wanted to get a sense from your interviews and interviews and intel from the conferences whether the medical community is really starting to see a tight correlation between cardiovascular event risk and triglyceride lowering or some other mechanisms that the clinical community thinks are perhaps more important to its broad spectrum effects. So the reason why I'm asking is I'm just trying to get a sense as to whether if you had positive triglyceride lowering data in trilogy whether an outcome study truly would need to be funded by you if the link between triglyceride lowering and omega-3 was as tight as Amarin seems to suggest.

[Pierre Lemieux:]

It's a very good question. So I actually I was pleased to see Amarin is positioning there so I agreed that it's triglycerides are important and I think this trial has shown it and also that population still remaining high triglycerides levels and also low HDL. So I know Amarin is claiming that the triglyceride level doesn't matter but it does in a way so again above 200 milligram per deciliter and having HDL below 35 this is a population of that benefits more from the treatment and in terms of mechanism of action I'm not surprised. So that's why we've been claiming about this trifecta effect for a long time because we know that it has to go beyond a triglyceride lowering to have additional benefits. So in the case of Amarin yes I mean the speculations are very good and we're going to see I mean again this is typical in science so when you have an outcome trial like that it generates more question and answers and I think the next coming years are going to be very interesting to dig into the science so triglyceride lowering is I mean this is was a primary endpoint of that trial so they cannot deny the triglycerides is not important, it is but it might also have some collateral benefits and I truly agree that there might have some anti-thrombin effect, anti-inflammatory and that might be part of the mechanism, but it's all good. I think we've always knew that omega-3s have trifecta effects and Amarin is going to have to look at their data for a long time and it's going to be very interesting and us in this landscape will be playing the same we'll have the same I would say discussion so we know phospholipids have a pleiotropic effects on different genes as just mentioned again that when you compare fish oil and krill oil you don't see the same genes, actually you see a lot more genes being activated or inhibited that are part of the lipid and glucose management. So yes omega-3s have a different mechanisms and it's going to be very interesting to see all the subgroup analyses that these guys are going to be doing and us all this when -- the first thing we need to really do is to complete our Phase 3 trials, see what comes out of those trials and then again I suspect that we have a benefit for diabetic patients specifically with high HbA1c and that's going to dictate out how we might have to do a control if we need to. So that's very exciting time, again very happy about your question. Thank you.

[Operator:]

Thank you. At this time we have reached the end of our question and answer session. I would like to turn the floor back to management for closing remarks.

[Jan D'Alvise:]

Okay. Thank you and again I'd like to thank everyone for participating today on our first quarterly conference call. As I mentioned earlier we're really encouraged by the outlook for our business based on the strong clinical data we've reported to-date and our trilogy Phase 3 program is continuing to progress on schedule. We're in active discussions with a variety of potential partners and we're encouraged by results of REDUCE-IT which has the potential to significantly expand the addressable market for CapRe. We are well-funded now with a balance sheet of over $52 million in cash and as a result we're more confident than ever in the long term outlook for Acasti. So thank you again for joining us today and we look forward to providing further updates in the near future. So thank you all. Have a good day.

[Operator:]

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.