Arena Pharmaceuticals, Inc.
Q2 2018 Earnings Call Transcript

Published: 7 Aug 2018

[Operator:]

Good day, everyone, and welcome to Arena Pharmaceuticals' Second Quarter 2018 Financial Results and Corporate Update Conference Call. This call is being recorded. [Operator Instructions] I’ll now turn the call over to Kevin Lind, Chief Financial Officer of Arena. Please go ahead.

[Kevin Lind:]

Good afternoon, everyone, and thank you for joining us today. We hope you had a chance to review the news release we issued earlier today announcing our second quarter 2018 financial results. Joining me on today's call is Amit Munshi, our President and Chief Executive Officer; and Dr. Preston Klassen, our Chief Medical Officer. Before we begin, I would like to remind you that we'll make forward-looking statements that involve risks and uncertainties, including statements about our focus, plans, goals, strategy, expectations, clinical programs, R&D, regulatory activities and operations, and other statements that are not historical facts. These statements are made in the context of the risks and uncertainties that are discussed in our filings with the U.S. Securities and Exchange Commission, which can be found on the SEC website at www.sec.gov, and include risks related to the amount and allocation of our available financial and other resources, regulatory decisions and discussions, timing of the initiation of our trials, patient recruitment for our trials, which is competitive and challenging and may take longer than we project, data related to drugs and drug candidates and the timing of that data, which may not be as expected or sufficient for further development, regulatory approval, or commercialization, and collaborative activities. Our actual results may differ materially from our forward-looking statements. Now, I'd like to turn the call over to Amit.

[Amit Munshi:]

Thanks, Kevin. Good afternoon, everyone, and thanks for joining our call. During my comments today, I will provide the pipeline and corporate updates as we continue to advance our promising product development programs. Preston will provide updates to the Ralinepag, Phase 3 advance program; and then Kevin will provide a financial review of the second quarter 2018, and we will conclude as usual by taking questions. Looking forward, we expect a significant number of value driving catalyst over the next 12 months to 24 months. In the near term, we’re focused on initiating multiple Phase 3 study for ralinepag and the olorinab Phase 2 readout in September. In addition, following the exciting data for etrasimod, we are advancing toward a Phase 3 program in Ulcerative Colitis or UC, as well as the program in Crohn's disease focused on rapid time-to-market. So, let's start with etrasimod. As a reminder, etrasimod is a thoroughly characterized in-house developed once a day oral S1P modulator with improved receptor selectivity and rapid on and off pharmacodynamics. We believe it is the only next generation S1P modulator with the potential to be the preferred oral option for patients suffering from a broad range of T-lymphocyte mediated immune and inflammatory disorders, such as IBD. We've made substantial progress on the etrasimod program since March when we delivered outstanding Phase II results from the OASIS trial meeting all primary and secondary endpoints with statistical significance for patients receiving 2 milligram doses of etrasimod at 12 weeks. Approximately, one out of three of the patients achieved clinical remission and the three-domain male score at week 12 in a patient population where upwards of 40% of patients have previously received an anti-TNF or an integrin. We’re pleased to announce that we have developed a full and comprehensive registrational plan. We submitted our meeting request to the agencies and look forward to updating you on our Phase 3 program. Importantly, we've been accepted for podium presentation for the Phase II data at both the American College of Gastroenterology, Annual Scientific meeting in the U.S., and the United European Gastroenterology week meeting in Europe both taking place in October. We look forward to sharing our exciting clinical data with the physician and investment communities in October. Moving on to other indications for etrasimod. In light of the positive Phase 2 data in UC, we are also working through an aggressive development path in Crohn's disease. Crohn's disease is an inflammatory bowel disease that cause the inflammation of the digestive tract. Inflammation caused by Crohn's can involve different areas as the digestive tract in different people. We look forward to providing further details on this program as we continue to make rapid progress on our path forward. Finally, the primary biliary cholangitis study or PBC study is ongoing. As a reminder, PBC is a chronic liver disease were T-lymphocyte accumulate in liver resulting in the of destruction of bile ducts. To summarize etrasimod, the positive safety and efficacy data provides us with further conviction on the trial of etrasimod with a potential best-in-class S1P modulator with broad clinical utility. We’re excited to further value etrasimod in multiple indications going forward and believe that the product offers tremendous promise to patients as the only true first oral next generation S1P modulator with vastly improved pharmacology and pharmacodynamics, resulting in potentially improved safety and efficacy. So, with that, I like to turn the call over to Preston to discuss our recently initiated Phase 3 advanced program for ralinepag. Preston?

[Preston Klassen:]

Thanks Amit. As a reminder, last year we delivered unprecedented positive topline results from our Phase 2 study, with ralinepag for the treatment of WHO Group 1 pulmonary arterial hypertension or PAH in patient population with the majority of patients who are on dual background therapy. On the basis of that study and all prior pre-clinical and clinical work in its development program, ralinepag has a potential to be the first, once-daily, oral prostacyclin agonist and provides continuous receptor engagement and drives improved exercise capacity and clinical outcomes in PAH patients. The believe that ralinepag is a potential best in disease product, our Phase 3 program is designed to elucidate the benefits of ralinepag across the spectrum of PAH patients, including not just prevalent patients, but newly diagnosed or incident patients. We believe that PAH patients have received early treatment with prostacyclin therapy and ralinepag is the best therapy to meet that need because of its improved receptor potency and extended pharmacokinetics resulting in a profile closer to the ID prostacyclin’s than any other oral prostacyclin analog. We’re thrilled today to announce that we’ve initiated our ralinepag Phase 3 clinical program branded as the advanced program, and expect it to be the most comprehensive Phase 3 program ever conducted in PAH. Before I walk through the program, as a reminder, we developed this Phase 3 plan with a focus on four goals; speed to market, rest of label, physician experience, and differentiation data. We believe that the advanced program will address end facilities and point of goals. The ralinepag Phase 3 advanced program is designed to be wide range consisting of two main components. Firstly, a time to clinical events program, and secondly an exercise capacity program, each of which is designed to standalone for a registrational filing. We will also be conducting additional non-registrational trials to provide evidence of differentiation for healthcare providers and payers. We believe these trials maximize our speed to filing and provide a robust platform to demonstrate the benefits and appropriate use of ralinepag. A few more specific words on the two independent registrational pathways in the advanced program. The first pathway that’s anchored on a time to clinical events trial or the advanced outcomes trial. This study has recently initiated and will unroll approximately 700 patients, investigating ralinepag compared to placebo on top of standard of care therapy in prevalent PAH patients. The trial was sized to provide 90% at a significant level of 0.01. The second registrational pathway is focused on exercise capacity in patients who are newly diagnosed or incident, and it is intended to investigate the use of ralinepag to treat PAH patients as part of first-line therapy in combination with PD5 agonist and ERA antagonist therapy. We’re approaching this exercise capacity pathway with two separate trials focused on different methodologies. Cardiopulmonary exercise testing or CPET and six-minute walk. In our advance capacity trial, we will evaluate peak oxygen uptake or peak VO2 via CPET testing in approximately 140 recently diagnosed patients over a fixed treatment duration, and we will be initiating this trial in Q3 of this year. In a separate exercise capacity trial, advanced endurance, we will focus on measuring six-minute walk distance in approximately 280 recently diagnosed patients, again over a fixed treatment duration. We expect to initiate this trial in Q1 of next year. Each of these trials is sized to provide 90% power at a significant level of 0.05. The decision to split the exercise capacity program into two trials as a result of [indiscernible] favoring the use of PO2 as a primary end-point for CPET trial and the estimation that it is advantages to therefore focus on a smaller number of highly qualified CPET sites for the advanced capacity trial to drive a lower standard deviation for the primary endpoint, and at the same time enable a broader number of non-CPET types to participate in a six-minute walk study, the advance endurance trial. In addition to the two registrational pathways for ralinepag that I described, we believe it is important to generate data differentiating our compound from the competition. We will be providing more details in the fall about this differentiation aspect of the ralinepag program. I’m excited about the advanced clinical program, the foundation of this program is the advanced outcomes trial investigating clinical events in prevalent PAH patients and by adding the exercise capacity trials advanced capacity and advance endurance investigating the earlier use of oral prostacyclin therapy in incident or newly diagnosed patients. We have the opportunity to both a broadened ralinepag label by demonstrating the benefit with first-line use of ralinepag and increase our speed-to-market as these trials have a fixed duration of therapy and anticipated to read-out ahead of the advanced outcomes trial. I want to emphasize that Arena is taking a more rigorous and comprehensive approach to the ralinepag Phase 2 program than others have in previous PAH programs because we fundamentally believe ralinepag is the best in disease therapy. We’re confident that collectively, the studies I have outlined as advanced clinical program will elucidate the benefits of ralinepag, enabling a winning label to our appropriate use across a broad range of patients who suffer from PAH. We look forward to updating you as we continue to active [indiscernible] patients and we will provide more details on these studies and program timelines in October. And now, I will turn the call back over to Amit for the remainder of the pipeline. Amit?

[Amit Munshi:]

Thanks, Preston. Moving on to olorinab, formerly APD371, peripherally restricted, highly-selective, full agonist of the CB2 receptor. We believe the said product has a potential to be a significant advancement in the treatment of visceral pain. We’re excited to announce we have completed enrolment of the ongoing Phase 2 proof-of-concept study, and look forward to sharing topline study results in September. We look forward to seeing the data at the time and coming back to see what future plans for olorinab. Switching over to collaboration. In July, our partner Everest, submitted investigational new growth drug applications in China to the China Food and Drug Administration, the CFDA, to initiate Phase 1 clinical trial for etrasimod in UC, and ralinepag in PAH. Everest signed resubmissions to the CFDA demonstrating important milestone to global advancement of both etrasimod and ralinepag and further solidifies our confidence in their expertise and capabilities to navigate the regulatory environment in this difficult, but important and rapidly growing market. Also, in July, our partner Eisai reported positive topline data from the CAMELLIA kidney trial, a 12,000 patient cardiovascular outcomes program for the anti-obesity agent BELVIQ. We’re pleased to see yet another Arena discovered product achieved clinical success further supporting the potential quality and safety of our compounds. Moving on to the team. On July 10, we appointed Life Sciences industry veteran Kieran Gallahue to the Board of Directors. Mr. Gallahue most recently served as Chairman and Chief Executive Officer of CareFusion Corporation, a medical products company from 2011 until its acquisition by Becton, Dickinson and Company in 2015 for $12.3 billion. His extraordinary experience in billing and scaling enterprises will be valuable as we position the company for long-term sustainable growth. Kieran’s extensive expertise will be particularly important as we plan our path forward for the rapidly advancing multiproduct Phase 3 ready pipeline. So, with that, I like to turn the call over to Kevin for a quick update and the financial review.

[Kevin Lind:]

Thank you, Amit. I’ll provide a brief review of our second quarter 2018 financial results here, while more detailed results are discussed in our press release. For the second quarter, revenues were $4.0 million, consisting of $3.1 million in collaboration revenue and $0.9 million in royalty revenue. In terms of cost, research and development expenses totaled $26.8 million in Q2, general and administrative expenses totaled $10.4 million. We burned approximately $26 million in cash this quarter, excluding one-time items. At this juncture with uncertainty of timing and size of the Phase 3 trials for etrasimod it’s difficult to provide longer-term guidance. When we have additional feedback from regulatory agencies, we will come back with further information. Net loss for the quarter was $31.8 million or $0.65 per share. At June 30, 2018, cash, cash equivalents and investments balance was $592.4 million, and approximately 49.3 million shares of Arena common stock were outstanding. Amit?

[Amit Munshi:]

Thanks Kevin. In summary, our focus remains on working towards delivering our transformational medicine to patients and building a vibrant sustainable enterprise. We’re excited about the challenges ahead of us, including the Phase 3 program for etrasimod and ulcerative colitis, a development program for Crohn's disease, and initiating additional studies for our Phase 3 advanced program for ralinepag. And finally, delivering the Phase 2 data on olorinab in September. Finally, as we will soon have a number of late stage clinical trials ongoing, each with a substantial number of data catalysts. We anticipate hosting an R&D day on October 4 to provide further details on each of our core programs, as well as additional clinical programs, which we intend to progress. We’re excited to further highlight our robust, potentially best-in-class pipeline, and milestones later this year. We look forward to a busy remainder of 2018. I’ll now turn the call over to the operator to begin the Q&A session.

[Operator:]

Thank you, sir. [Operator Instructions] Our first question comes from Kennen MacKay of RBC Capital Markets. Please go ahead.

[Kennen MacKay:]

Hi, thanks for taking the question and congrats on the progress here. Maybe a quick one to start on the olorinab Crohn's data, wondering if you could just sort of break-out for us what would be data worthy of moving it forward here versus data, which is worthy being really excited about versus potentially not worth pursuing? And then I have a quick follow-up question on UC please.

[Amit Munshi:]

Hi Kennen, this is Amit. I’ll take the olorinab and then we will move to your UC question. In our preclinical models of olorinab, we saw both anti-inflammatory and analgesic activity and one of the things we're really looking out of the small pilot study is to really ascertain how much of the FX size is anti-inflammatory versus analgesic. So, we'll be looking at pain scores, but we’ll also be looking at some inflammatory markers. And the outcome of that we'll be able to determine where exactly to take this program. As a range of potential options from other visceral pain conditions like IBS pain to sticking something narrower like Crohn's. So, we will let the data speak for itself, but we should get some initial clues from this small pilot study as to where to go next. And you had a question on UC as well?

[Kennen MacKay:]

Yes, maybe just to rephrase that, do you have a sense of what kind of range of pain scores we should expect with placebo just to get a sense of what noise could look like there? And then the follow-up was in relation to something Kevin mentioned in terms of challenges in forecasting given several of the large Phase 3’s that will be ongoing and timing there, just wondering what can be done in the Phase 3 ulcerative colitis to, sort of speed development versus historical trials or maybe some of the headwinds that historical trials face that you may not be facing as you are enrolling etrasimod Phase 3? Thank you.

[Amit Munshi:]

Again, Kennen on the placebo response historically, this again, this is a multilevel trial, but we were confident given the consistency of placebo responses in visceral pain study is being about two-point change on a 10-point scale. So, we will be looking for something north of that on the scale. So, Kevin on the…

[Kevin Lind:]

Yes. So, the reason why we're not giving guidance for the latter half of the year in terms of burn is, largely around whether or not we can get the Phase 3 study for etrasimod starting this year, as well as how quickly the cash burn is for ralinepag around the Phase 3 programs. I want to pass it over to Amit for just how we can move etrasimod forward faster given some of the other challenges companies have had.

[Amit Munshi:]

Sure. So, Kennen, I think there was a couple of different variables to think about in terms of moving etrasimod forward more rapidly in ulcerative colitis. I think the first one is really self-explanatory from the Phase 2 data. As you recall 40% of our patients had failed in aggregate or anti-TNF. That's a higher rate than anyone else have seen out there in terms of background failures on biologics. So, it gives us great confidence in the ability to go broadly at clinical sites as opposed to trying to cherry pick patients who are naive to novel agents. So that’s number one. Number two is, as we look at the broader landscape, we see a slowing down of the number of studies and whereas in 2015 and 2016 we saw tremendous amount of new studies initiating both the Jak inhibitors, the integrins, the biosimilars et cetera, and we're seeing a lot of those studies conclude. So, that gives us a larger [indiscernible] of the patient going forward. So literally just a matter of market mining that begins to drive our ability to enroll faster. Number 3, and I don't want to comment too much further on this, but we have proposed some very interesting and exciting study design options through the agency and we will gauge their reaction and come back to you with details, but we think some of the more creative ideas that we’ve been able to put forward would also help accelerate this study. So, those are sort of the three-legs of the stool in terms of being able to move faster.

[Kennen MacKay:]

Got you. Thank you. I mean, Kevin, appreciate it. I’ll jump back in the queue.

[Amit Munshi:]

Great. Thank you.

[Operator:]

Thank you. Our next question comes from Martin Auster of Credit Suisse. Your question please.

[Martin Auster:]

Hi, everyone. Thanks for taking my questions. Appreciate it. I just had a couple on ralinepag and the advanced program. Congratulations on the progress there. I just wanted to first confirm that all three of those trials you detailed today are one-to-one randomized? Second, want to make sure and confirm that both 302 and 304 would need to be completed before you plan to conduct an NDA filing? And then third, just want to understand a little more about your thoughts on enrolment timing of 302 versus 304 and how much site overlap you would estimate between the two and how that might interplay? And I may have a follow-up? Thanks.

[Preston Klassen:]

It is Preston. For the first question, we’re going to stay with study design aspects and I gave more detail on program timelines to October 4 and R&D day, so I’ll address that in a couple of months. In terms of the second question related to filing, could you repeat that?

[Martin Auster:]

Just wanted to confirm that you would expect to complete both the capacity and endurance studies prior to NDA filing?

[Preston Klassen:]

Most likely. I mean, one of the things I really like about the program that we have is it really increases the flexibility. So, as we look to our estimates of [indiscernible] and we will talk more about those specifically on October, but as I mentioned, we anticipate that as a fixed duration treatment that the exercise capacity studies, advance [indiscernible] would read-out first. It’s clear from our end of Phase 2 discussion with the agency that a single study can stand alone if it has an appropriate P-value, which would typically be less than 0.1. And so, you can envision a number of different scenarios. Where one exercise capacity is ready for [indiscernible] that would technically be registrable. And so, and as we read-out the exercise capacity studies that could impact what is happening with the outcome studies also because as you know these longer-term times to event clinical outcomes trials, they typically involve planned interim analysis. And so that is just a number of ways that we can provide flexibility. Conventional wisdom is that we design both exercise capacity studies at the [indiscernible] level to have two robust [indiscernible] studies to suffice for it.

[Amit Munshi:]

Martin, I think you asked about randomization. Yes, they are all one-to-one randomization.

[Martin Auster:]

Okay. And then the last question was just kind of, again expanding the trial, splitting the trial from a single 250 patient trial to 400 patient experience across two different endpoints, that exposure makes a lot of sense. I just wanted to get a sense of home our site overlap you would expect and what may be – what you're thinking preliminarily about timelines for enrolment at this point and then maybe if I can just squeeze in a final one to Kevin if you want to comment on just the cause of the overall Phase 3 program that you laid out today?

[Kevin Lind:]

Yes, I was hit at a very high level, CPET sites are pretty specialized. We’re looking for the best of the best in terms of CPET sites, as I mentioned in my comments to drive that standard deviation down. And so those sites will be different from the others. There will be some overlap in terms of the advanced outcomes and advanced endurance studies. The main difference there being more of a prevalent patient population compared to newly diagnosed patients. And we will provide more details on our estimates, our assumptions behind everything in terms of the power and sample sizes, as well as more specific data on our expectations for timeline of these programs in October.

[Kevin Lind:]

Again Marty, around the cost, based on how we had planned for the original ralinepag studies there isn’t a significant change in the overall cost that we assume what the program. So, we – you know, no big change there.

[Martin Auster:]

Okay. Could you be more granular in terms of what the overall cost of the program is, or is that not something you're looking to comment on at this time?

[Kevin Lind:]

Not looking to comment on that specific number at this time.

[Martin Auster:]

That was a softball isn't it. Okay thanks guys. I appreciate your answers, and I look forward to October 4.

[Amit Munshi:]

Thanks Marty.

[Operator:]

Thank you. Our next question comes from Jessica Fye from JP Morgan. Please go ahead

[Jessica Fye:]

Hi, guys. Thanks for taking my question When did you request the FDA meetings to talk about the development plan for etrasimod? And do you expect to have minutes from back from that meeting prior to the Analyst Day? How much detail do you expect to be able to provide on that development plan at the Analyst Day? Thank you.

[Amit Munshi:]

Hi Jess. We don't provide details on the timing of [indiscernible], probably because the FDA is unpredictable in terms of how long it takes in different divisions on different level of impact in terms of change over, head count, etcetera. So, there is just too many variables there for us to put dates out there and everyone is waiting for dates. So, we even choose not to put those dates out there in terms of when we establish. We will in October have additional thoughts and consideration in terms of where we're going with the program. We may or may not have FDA feedback by that point, but we look forward to at least sharing with you our early thinking in terms of where these programs could potentially grow with all the caveats that, if we hadn't been to the FDA by that point it would be subject to change, but we will try to do what best we can, given that it’s out of our control.

[Jessica Fye:]

Okay, great. And maybe just one follow-up to make sure I understand the latest thinking on partnering in business development, is your goal to take both ralinepag and etrasimod all the way through Phase 3 independently?

[Amit Munshi:]

Yes, absolutely. So, as you know we did the China partnership looking at other geographies on a limited basis where we may be get some partnerships. As far as the major markets, we plan to keep those on encumbered and progress them ourselves.

[Jessica Fye:]

Great, thank you.

[Operator:]

Thank you. Our next question comes from Joseph Schwartz from Leerink Partners. Your question please.

[Joseph Schwartz:]

Hi, great, thanks very much. So, on ralinepag, will you be evaluating VE over VCO2 slope or is PV02 the only CPET metric that the FDA is interested in and what gives you confidence that decreases in PVR is likely to translate into increases in PV02?

[Preston Klassen:]

Thanks for the question. It is Preston. So, we had a good discussion [indiscernible] Phase 2 meeting with the FDA on both PV02, as well as the video release here to slope. Our kind of thought on the data was that we thought what was nice about the slope is that it provided a little bit lower standard deviation. Ultimately, the agency is most interested in PVO2. We'll [indiscernible]. There is a primary endpoint never was there that they thought that historically PP02 will start as a direct measure of exercise capacity and so therefore direct measure of patient functioned basically. And as the endpoint that they wanted to see in CPET study for primary endpoint. They are interested in slope and understanding more about it, but they wanted PP02 and we know that PP02 has slightly larger standard deviation. So that’s what drove our thinking around focusing on a small number of sites and then as it turned out as we guided into the planning where we realize that by [indiscernible] capacity into these two studies we could frankly enroll more rapidly we believe, and execute that aspect, the exercise capacity aspect of the overall advance clinical program, more quickly than we would have anticipated during – had we done the original design where we CPET and six-minute walk together. And did that answer your question or there are other questions in it?

[Joseph Schwartz:]

No, but I would like to follow-up, actually. I guess there haven't been that many studies done certainly in PAH, and in heart failure there have been more, but how are you surveying the landscape in order to get the information that you need in order to power these studies?

[Amit Munshi:]

Oh, yes. You are right and that we’re taking – I mean the short answer is both literature, as well as the clinical experts who are doing these cardiopulmonary exercise testing today, but we are looking at both the PAH appeal, as well as [indiscernible], there is been more work in the heart failure space that PAH. We are understanding the way to use the heart failure literature and discussion with those experts that we think can translate over to PAH. And it is not like PAH has devoid of prior experience. And so, putting all of that together, we’re confident that the anticipated Delta of statistical assumptions will give us a good degree of assurance in terms of 90% power et cetera to go to anticipate the positive outcome. And we're going to go through all of that in more detail in our [indiscernible] and spend time [indiscernible] background evidence relating to PDR changes to few exercise capacity with CPET, which we think already with direct read through, and so I look forward to having a robust discussion about that in person at R&D Day [ph].

[Joseph Schwartz:]

Okay. Right. And then historically you had spoken some about doing a head-to-head trial as well, has that thinking been de-emphasized now or is that still something that you’re contemplating?

[Preston Klassen:]

We are still contemplating a number of, I guess we call this the differentiation program. So, these are non-registrational studies that may potentially have application in terms of the inflection 14 within a label clinical studies section and that kind of thing, but regardless we will get out into the scientific and clinical community, appropriate information that helps to differentiate ralinepag from its competition. So, that means obviously [indiscernible] and also provide better evidence around in the compatibility if you will to the [indiscernible]. And so, I don't want to go too much in detail right now, but we certainly have contemplated head-to-head design. Again, none of this is like Phase 3 kind of registrational program not to do a head-to-head outcome study or head-to-head six-minute walk kind of study, but there are ways that you can think about taking a look at mechanistically, what’s happening with ralinepag compared to [indiscernible].

[Joseph Schwartz:]

Very helpful, thank you.

[Preston Klassen:]

And potentially other whole process cycle.

[Joseph Schwartz:]

Great. Thanks again. Appreciate for taking my questions.

[Amit Munshi:]

Thanks Joe.

[Operator:]

Thank you. Our next question comes from Joel Beatty from Citi. Your question please.

[Joel Beatty:]

Hi, thanks for taking the questions. The first one is, on ralinepag and studies 302 and 304, could you give a sense of the number of sites that you expect to have for those trials and some type of sense of timing that you would expect those trials to come online? Have those sites to come online?

[Preston Klassen:]

In terms of, as you mentioned, the 302 will start later – advanced capacity will start later this year, and endurance will start in the beginning of next year. In terms of overall number of sites, we’ll provide more of that information in October at R&D day, but suffice it to say it is a small number with the CPET compared to the larger – for the endurance day, larger number of sites, a six-minute walk and that’s just a matter of, well first of all take more patience, as you could tell by the numbers we provided in today's press release, approximately 280 under six-minute walk trial in approximately 144 for CPET. This is because CPET is a more specific sensitive measure of exercise capacity then a six-minute walk with a wider standard deviation, but the kind of caveat is, looking at that is, it is essentially more sites available, many more sites available to conduct six-minute walk studies compared to the more specialized cardiopulmonary exercise testing. So, we're really honing it down to a small number of sites that are the best of the best in terms of other experience with CPET, [indiscernible] down and we will provide more detail on overall site numbers, as well as expectations for bringing sites online. Again, from a timeline perspective in October.

[Joel Beatty:]

Got it. And a question on etrasimod for Crohn's disease, is there a potential to move straight into a Phase 3 trial and that setting – do expect that will require a Phase 2 program before moving into Phase 3?

[Kevin Lind:]

Yes. So, obviously it would be premature to provide specific detail prior to speaking with the agency, but suffice it to say that we believe the mechanistic rationale and the evidence that we’ve seen to date in ulcerative colitis makes us very excited about getting into Crohn's and our preference would be to not conduct a standalone Phase 2 program prior to going into Phase 3. So, there are a number of ways to do that. We’re exploring those now with our advisors. We will be putting together a plan to discuss with the agency and now move forward, but again it’s our intent to get into Phase 3, as quickly as possible and to do so without requiring a standalone Phase 2, that’s not to say that there wouldn't be some Phase 2 work that would like potential in combination. There are a number of ways to think about doing this, but that would be our preference.

[Joel Beatty:]

Great, thank you.

[Operator:]

Thank you. Our last question comes from Jim Birchenough from Wells Fargo. Please go ahead.

[Unidentified Analyst:]

Hi. Thank you for taking the questions. This is [indiscernible] in for Jim. So, first off on ralinepag, so would you mind sharing in your powering assumption what the placebo rate might be for the three advanced programs?

[Kevin Lind:]

Yes, we will be sharing some of those assumptions in October as we kind of go through all of those – essentially setting a lot of assumptions that lead to our estimates, 700 for the outcome study, 140 for CPET and – or [indiscernible] capacity and about 280 for [indiscernible]. So, it is kind of premature to do that on this call. We want to save that for the R&D day discussion.

[Unidentified Analyst:]

Got it. And then on etrasimod, just wondering, how would you anticipate that in the upcoming FDA meeting, how you might frame the first dose heart rate effect, how would you frame that in your discussions?

[Amit Munshi:]

I'm not sure, I fully understood the question, frame is from what perspective?

[Unidentified Analyst:]

Whether how the requirement, for example the requirement for not having to have to go through monitoring, same as that forward?

[Amit Munshi:]

Yes, but that’s not a traditional end of Phase 2 discussion. That’s mostly a post-filing of the NDA legal discussion. We will have some discussions around what’s required in Phase 3, what’s not required in Phase 3, just to recount most of our patients had, all of our patients had single-digit heart rate changes, which is substantially lower than other products, currently in development or in the market. I guess, we had cases of sinoatrial arrest. So, we see a very, very differentiated cardiovascular profile. So, I’m sure we will have those discussions with the FDA, but it’s far too early to contemplate eventual potential reading.

[Unidentified Analyst:]

Got it. Thank you very much.

[Amit Munshi:]

Thank you.

[Operator:]

Thank you. Our next question comes from Alan Carr of Needham. Please go ahead.

[Unidentified Analyst:]

Hi this is Joey [ph] on for Alan. Thanks for taking my question. Two quick ones here. One, on etrasimod, so the PBC trial that’s still ongoing, can you give us any quick update on timelines when we can expect data for that and maybe just on our general sense with some increased competition in the PBC space, how do you see etrasimod in that indication going forward? And the second question is, olorinab, is that an asset that you plan to keep in-house for where would you think about partnering that? Thanks

[Amit Munshi:]

Yes, thanks. So, let me talk about PBC first. So, you are actually correct. There is a lot of studies ongoing in PBC, which adds the complexity in terms of enrolling even smaller trials in the space. So, that’s mostly an enrolment issue for me. Eventual market competition perspective, we're looking completely in a different part of the pathway looking for upstream of all the [indiscernible] and all the bilateral. Just to remind you, PBC is actually an auto immune disease where [indiscernible] specifically the destruction of the [indiscernible]. So, we are uniquely positioned to catch the disease early and impact its progression and we hope that this will be seen in the clinical program. So, we haven't provided any guidance on timing and we won’t do so probably because it is a fairly competitive area to enroll patients. So that’s what we feel about long-term differentiation and focus more on near-term enrollment in the context of all of our other priorities, including UC and moving aggressively in clients.

[Unidentified Analyst:]

Great. Thanks. And a follow-up question was the pain asset, was that something that you would consider keeping in-house or would you think partnerships?

[Amit Munshi:]

We want to see the data first to see how much of the effects of [indiscernible]. We are excited about the overlap of the pain asset to our emerging GI franchise with etrasimod. So, we see things in Crohn's pain. And we think there is an application in IVS pain for example. And then the product sits nicely with our overall focus. If the drug has broader utility for multiple types of visceral pain indications, things like chronic prostatitis or endometriosis, which we are studying today, but we think there is broader applications that are definitely considering to think about whether there is way to maximize the value of that asset. So, a lot will depend on the data, and a lot will depend on what you see there in terms of the [indiscernible] for olorinab.

[Unidentified Analyst:]

Great, thank you.

[Operator:]

Thank you. I show no further questions in the queue at this time. I would like to turn the call back to Amit Munshi for closing remarks. Please go ahead.

[Amit Munshi:]

Thanks everyone for joining us today. We’re excited about the progress in the last quarter. We’re just excited about the next few quarters in terms of all the things on our plate to continue to move forward, and we look forward to updating you on this progress as we continue to execute on the opportunities ahead. And we are looking forward to October 4, our R&D day and sharing more details on all the programs we would see at that time, as well as some additional programs we think are super exciting. So, look forward to seeing you there and thank you again.

[Operator:]

Thank you, ladies and gentlemen, for attending today's conference. This concludes the program. You may all disconnect. Good day.