Dicerna Pharmaceuticals, Inc.
Q3 2019 Earnings Call Transcript

Published: 10 Nov 2019

[Operator:]

Ladies and gentlemen, thank you for standing by and welcome to the Quarter Three of 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Thank you.Now, I would like to hand the conference over to your first speaker today, Mr. Lauren Stival of Stern Investor Relations. Ma'am, you may begin.

[Lauren Stival:]

Thank you. Good afternoon, everyone, and thank you for joining us to review Dicerna's third quarter 2019 financial results and operational highlights. For anyone who has not had a chance to review our results, we issued a press release after the close of trading today, which is available under the Investors & Media tab on our website at dicerna.com. You may also listen to this conference call via webcast on our website, which will be archived for 30 days beginning approximately two hours after this call has been completed.Speaking on today's call will be our President and CEO, Doug Fambrough, who will discuss our corporate progress and key milestones and provide an update on clinical development and collaboration activities. Our CFO, Jack Green will then review our third quarter financial results. We also have Jim Weissman, our Chief Operating Officer; and Ralf Rosskamp, our Chief Medical Officer, who will be available to answer questions during Q&A. Following our remarks, we will open the line for questions.I'd like to remind listeners that management will be making forward-looking statements on today's call, including for example, plans and expected timeline for closing of the new Roche collaboration agreement; development of DCR-PHXC, DCR-HBVS, DCR-A1AT, and other pipeline programs; the timing of release of clinical data, alignment with FDA on regulatory approval requirements, the expansion of our programs into additional tissue types, expectations related to our collaborations with Roche, Lilly, Alexion, and Boehringer Ingelheim; expectations for discussions and possible opportunities with potential collaborators; and guidance regarding future collaboration revenue, operating expenses, and cash usage.Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those disclosed in the Risk Factors section of Dicerna's latest Forms 10-Q and 10-K filed with the SEC. We may elect to update these forward-looking statements at some point in the future. We specifically disclaim any obligation to do so if our views change.Now, I'd like to turn the call over to Doug, Dicerna's President and CEO. Doug?

[Doug Fambrough:]

Thank you, Lauren. Good afternoon, everyone, and thank you for joining us. What an exciting time it is for us here at Dicerna. We are proud of the work we have accomplished over the years and particularly over the last five quarters as we deliver on the strategic goals, we have set for ourselves. We have progressed from revealing initial proof-of-concept data in our DCR-PHXC program to starting dosing of our pivotal trial for that program. We have progressed two additional programs through clinical trial applications to initiate clinical development.We signed three major licensing deals with Roche, Lilly, and Alexion. These collaborations have or will generate on closing in excess of $300 million in upfront payments to enable us to advance our wholly owned lead rare disease programs, which are DCR-PHXC for the treatment of all forms of primary hyperoxaluria and DCR-A1AT for the treatment of alpha-1 antitrypsin deficiency associated liver disease.We also retain an opt-in for our DCR-HBVS program for the treatment of patients with chronic hepatitis B virus infection, an opt-in after proof-of-concept combination studies to co-fund pivotal development in exchange for the right to co-promote the product in the U.S. and obtain significant additional economic rights in the U.S.We believe our clinical data and corporate collaborations validate our GalXC platform technology, and we have only begun to scratch the surface of GalXC potential to successfully deliver RNAi therapies to both hepatic targets, as well as to new tissues and therapeutic targets outside the liver.Our corporate collaborations make us a stronger company. They are not opportunistic. Rather, they represent deliberate execution of our strategy for building a fully integrated biopharmaceutical company to generate exceptional value both for patients and shareholders.Key elements of our strategy include

[Jack Green:]

Thank you, Doug. I'd like to briefly walk through the key financial results and direct you to our 10-Q filing for additional details. Net loss for the third quarter ended September 30, 2019 was $30.8 million, or $0.45 per share, compared to $19 million, or $0.35 per share, for the same period in 2018. The increase in net loss was primarily driven by the increase in R&D expense period-over-period tied to increased spending across our clinical programs.R&D expenses were $30.1 million for the third quarter of 2019, compared to $11.7 million for the same period in 2018. The $18.4 million increase year-over-year was primarily due to increased manufacturing costs, clinical study costs, and employee-related expenses due to an increase in our headcount necessary to support our growth.We expect overall research and development expenses to increase throughout 2019 and into 2020 and for the foreseeable future as we ramp our clinical manufacturing activities, continue other activities associated with our three proprietary product candidates, and increase activities under the Lilly, Alexion, and BI agreements, and potentially under the Roche agreement if they choose to select additional targets.G&A expenses were $10.6 million for the third quarter 2019 compared to $5.4 million for the third quarter 2018. The increase is predominantly due to employee-related expenses as a result of increased stock-based compensation expense and headcount necessary to support our growth, as well as an increase in general and business development consulting expenses. We expect G&A expenses to increase in 2019 as compared to 2018, largely due to investments in staffing and market readiness activities.During the third quarter of 2019, we recognized $8 million in revenue from our collaborative agreements with Lilly, Alexion, and BI, compared to $1.5 million from the BI collaboration in the third quarter of 2018. As of September 30, 2019, we had $312.7 million in cash, cash equivalents, and held to maturity investments, compared to $302.6 million at December 31, 2018.In addition to that we will receive $200 million from the upfront payment upon closing of the Roche agreement. We believe that our cash our cash, cash equivalents, and held to maturity investments along with the upfront payment from Roche, which together totals approximately $0.5 billion, will be sufficient to fund our operating plan beyond 2021, which includes advancing DCR-PHXC through pivotal development, regulatory filing, and potential commercial launch; completing proof-of-concept studies for DCR-HBVS and participants with HBV; and advancing our DCR-A1AT program through the initial Phase 1/2 clinical study.With that, I will turn the call back over to Doug.

[Doug Fambrough:]

Thanks, Jack. We're fortunate in the strength of our balance sheet. With these resources, we will continue to drive our rare disease programs, work with our collaborators, and advance our early stage opportunities, as we also prepare to commercialize DCR-PHXC. It has been an eventful year to date for Dicerna, and we look forward to hitting some substantial milestones in coming quarters.These milestones include

[Operator:]

[Operator Instructions] Your first question will come from Mani Foroohar of SVB Leerink. Please proceed, sir.

[Mani Foroohar:]

Hi. Thanks for taking my call. Congratulations on the progress over the last quarter. A couple of quick ones. First, sort of a relatively sort of boring modeling question. When we think about potential announcement of first targets from Alexion, Lilly, etc. potentially next year, year after, about what scale should those – we expect those milestones to be in the early years just directionally? And then more of a development question. When we think about R&D Day around mid-next year, is that about the same time that we should expect the OLE for DCR-PHXC PHYOX3, or should we expect that OLE data before the Analyst Day?

[Doug Fambrough:]

Okay. So, on the milestone question, in general, the first milestone is an IND filing or first patient dosed milestone. And I think low double-digit million is the right descriptor. Those payments have – those milestones can't be disclosed quantitatively, I don't believe. For the R&D Day, certainly a fair question. When we're going to talk about open label data. To be perfectly honest, we have not fully planned our first half calendar.As an open label trial, we could take a data-cut at any time, but we are interested in sharing data when we think it's meaningful, which means getting a substantial number of patients through at least a good handful of doses, so we have a fair read on the multi-dose effect. So that's not – that's before mid-year and then the question is, is there a forum. And frankly, we just haven't looked at that closely enough to know if there is particular conference.So, we'll try and provide better guidance by JP Morgan and work that out, but it'll certainly be no later than the R&D Day. We had originally talked about on R&D Day for December with the primary purpose of which was to share an interim read from the Phase 1 trial in HBV. With this collaboration and in consultation with Roche, we thought it was, with that collaboration now signed, better to wait until data from all the cohorts is available. And so, we've reset the timing of the R&D Day based on that.

[Mani Foroohar:]

Alright, thanks. That's really helpful. I know we've got a lot of people on the queue, so I'll step back in.

[Operator:]

Your next question will come from Jonathan Miller of Evercore. Your line is open.

[Jonathan Miller:]

Hi, guys. Thanks so much for taking the question and congratulations again on all the progress during the quarter. I guess one thing I'm very curious about with the Roche HBV collaboration is that they've got several mechanisms in development, but they don't seem to have versions of some common approaches, most notably a NUC, but also a CAPs inhibitor. Which of their combination agents are most promising to you and do you think that NUC is not a necessary element to a potential combo in HBV?And then secondly, just a clarification on the PH2 endpoint alignment that you got with the FDA. Am I right in assuming that that endpoint will be parallel to the PH1 endpoint where urinary oxalate reduction will be an average of several months’ worth of 24-hour measurements?

[Doug Fambrough:]

Yeah, so let me handle those questions. First, with respect to Roche's portfolio of combination elements. I'm going to respectfully decline to pick favorites from the Roche portfolio. And I know that there are elements in that portfolio that have not been publicly disclosed. So, apologies for not being forthcoming there.With respect to NUC, it is certainly our expectations that all combinations will include a NUC as a foundation. NUCs are effective in reducing viral agents, and I don't see in the near-term efforts to build combinations that lack NUCs. That said, I'm not fully privy to Roche's long-term thinking on the – what will be in combos. And the next, what was the next question?

[Jonathan Miller:]

On the PH2 endpoint, are you taking an average – is it parallel to the PH1?

[Doug Fambrough:]

Yes, it's exactly parallel to the PH1, and it involves an area under the curve measurement for the month three, four, five, and six and comparing that to baseline oxalate. There's formula associated with that. And is the exact same analysis applied to PH1 and PH2 for judging whether full approval will be granted.

[Jonathan Miller:]

Great. Thank you very much. I'll hop back in the queue myself as well.

[Operator:]

The next question is from Yaron Werber of Cowen. Your line is open.

[Brendan Smith:]

Hi, everyone. This is Brendan on for Yaron. Thanks very much for taking the question. Congrats on a great quarter. My question is actually just in reference to the HBV program. I'm wondering if you could give us just a little bit of color on what you're expecting in terms of the S antigen reduction in the single dose versus the multiple dose cohorts? And conversely also would you – what levels of reduction would you expect to correlate with the antigen seroclearance and seroconversion? Thanks.

[Doug Fambrough:]

Yes. So, I'll say a few comments and then perhaps, Ralf, you want to add something to it. The function of the Group B, which is the single dose study in NUC-naïve patients, part of the motivation there is just to get the pharmacodynamic curve associated with a single dose that will facilitate our modeling and simulation efforts in setting dose regimens later. Most of our studies in animal models are done with multiple dose. Most of the comparative human clinical data from other approaches is multiple dose. And that means that we have less to base a speculation about what we'd see in a single dose in terms of S antigen reduction.But I would note that 3 milligrams per kilogram in the PH trial appears to be near saturating dose for response, and so we would expect to be fairly high up the dose response curve even with a single dose. As for expectations from the multiple-dose study, based on our preclinical work, we think we would be at least as good as comparable RNAi approaches from others with the potential based on our three gene hypothesis to perhaps be a little better and have a longer duration. But, of course, remains to be seen from the data. Ralf, do you want to add anything?

[Ralf Rosskamp:]

Thank you, Doug. I think you captured very well. Maybe I want to point out in the NUC-naive groups, to my knowledge, that's a first time that an RNAi drug is going into a NUC-naive group and actually keep them off NUCs. So, our protocol stipulates that NUCs will only be given to those patients after three months observation period. In other trials, it took NUC-naive patients, but combined them with the first dosing of the RNAi. I think that's really a difference and this will give us really an insight how the RNAi therapy works in patients who at least for three months are not on NUCs. And this goes back to the question, is it always in combination with NUCs. So, we're able to compare here the Group B, the NUC-naive patients with those with a background on NUCs. And I think very interesting scientific conclusions can be drawn from these data.

[Brendan Smith:]

Okay, great. Thanks.

[Operator:]

Thanks. Your next question will come from Stephen Willey of Stifel. Your line is open.

[Stephen Willey:]

Yes, thanks for taking the questions, and congratulations on the Roche collaboration. Just I guess a quick question of clarification regarding the feedback you received from FDA regarding endpoint alignment with PH2. So, did the data that the agency see then was that data from the PHYOX2 pivotal trial?

[Doug Fambrough:]

No. They have seen data from PHYOX1, of course, including the PH2 patients enrolled in PHYOX1. They also reviewed the latest natural history data. I believe there is a publication with that data in press. And some of that data was presented at the hyperoxaluria workshop in Boston back in June and some was presented by Sally Hulton at our 2018 R&D Day.

[Stephen Willey:]

Okay. I just – I think the press release is maybe ordered a little bit tricky there. With respect to ...

[Doug Fambrough:]

Apologies for that.

[Stephen Willey:]

Yes, no worries. My reading skills are also quite elementary. With respect to non-hepatic delivery. I know that this is something that you're working through with Lilly right now, but I guess to what extent would Dicerna independently pursue programs that involve targeting an RNAi payload to a non-hepatic tissue?

[Doug Fambrough:]

Steve, I absolutely expect that we are going to have non-hepatic programs. We are not at a point today where we feel that we have maximized or fully optimized any of the extrahepatic tissues, and we continue to develop the platform. Having said that, in certain tissue types, we have achieved a level of knock down where if that's as good as we can get, we would declare clinical candidates at that level of activity.I'm very pleased with the level of knock down we're getting both in neuronal tissue types as well as some non-neuronal tissue types. There are a lot of tissue types. There are a lot of ways we can play with the GalXC molecules, particularly given the freedom to practice medicinal chemistry in that extended handle region of the molecule. So, it is a very large space to explore, if you will, but it's been quite productive.You pointed our collaborative work with Lilly, which involves the nervous system. It also involves some cardiometabolic tissues. That is only a subset of our work on extrahepatic delivery, and there are purely Dicerna efforts proceeding in parallel. It's been a pretty active year. I know we didn't get out and present this data at any of the technical conferences, but I'm quite certain that in 2020 we'll show some of that data at technical conferences. Nonetheless, you could probably have picked up in my tone about extrahepatic delivery has become quite positive and that is based on results that we've been achieving in the labs.

[Stephen Willey:]

Okay, that's quite helpful. And then maybe just lastly, I guess, with completion of enrollment in PHYOX2, I guess seemingly [insight], how are you guys thinking about commercialization I guess both in the U.S. and maybe the question is a bit more directed toward ex-U.S. efforts? Thanks.

[Doug Fambrough:]

We are deep in an analysis of how we're going to deal with ex-U.S. As for U.S., we're only contemplating that we would do it ourselves.

[Stephen Willey:]

Okay. Thanks for taking the questions.

[Operator:]

The next question will come from Ed Arce of H.C. Wainwright. Your line is open.

[Thomas Yip:]

Hello, everyone. This is actually Thomas Yip asking a couple of questions on Ed's behalf as he is tied up. So, first, just wondering about the HBV deal with Roche, specifically the timing of the upfront payment. Just want to make sure that is contingent on when Roche formally starts the agreement after seeing your Phase 1 data and wondering if that amount correlates to the number of targets that are chosen by Roche.

[Jim Weissman:]

Hi, this is Jim. Thanks for your question. Of course, given the deal, its size, and scope, it has to go through HSR clearance, as you can imagine, and the payment would be expected soon after HSR is cleared. Regarding the number of targets, that has been explained to be up to five additional targets. Those are all research collaboration targets. Work on those targets has not begun. It may begin in the future.

[Doug Fambrough:]

Yes. Just so there is no confusion. The $200 million is committed. And assuming that the deal clears HSR, then it's a – that's a contractually committed payment, not contingent upon data or target selection, or any other condition.

[Thomas Yip:]

Okay. But specifically, regarding the timing, I suppose that would be available after the Phase 1 data is reported?

[Doug Fambrough:]

Well, at this point, we are not planning on reporting data publicly in that timeframe. It really will depend on when we get clearance from HSR, and I'm not certain, which would be available first. It's not relevant to the $200 million being owed to us. And generally, HSR is going to be at a minimum several weeks. I think we're all aware of another situation where it's going. A lot longer than that, but we don't expect that this particular transaction will receive special scrutiny.

[Thomas Yip:]

Okay, I understand that. Thank you for the clarification. Perhaps I'm going to switch gears and ask about the A1AT program. Can you remind us how healthy volunteers phase work and when should we expect the trial to move to patient dosing after the healthy volunteers?

[Doug Fambrough:]

Ralf, would you like to address that?

[Ralf Rosskamp:]

Yes. Thank you. It's similar to the healthy volunteer part what we did in our PHXC program. So, it's a dose escalation. So, you start off with a very low dose which is clinically not – pharmacologically not active. You start with a sentinel pair. After two weeks there is a safety review committee deciding whether the rest of the cohorts can be dosed. And then when all patients have been dosed then again there is a review to see whether we can go into the next dose cohort.And as Doug said, it will be up to six cohorts with a dose of 12 milligram per kilogram. So, we haven't guided especially when we start the healthy – when we start the patient part, but I think we will look at the amount of knockdown we're able to achieve after a single dose in healthy volunteers. And the first dose cohort in the patient part will be at a dose which will achieve a 60% knockdown of A1AT in the healthy volunteers, and then you can assume that the same level of knockdown will be seen in patients.And I'm sure that we will not have to wait to the highest dose of 12 milligram per kilogram until we see a 50% knockdown of the A1AT enzyme in the plasma. So, it really depends at what time we see that 50% reduction in alpha-1 antitrypsin deficiency and then we do a modeling and simulation to confirm that we see there is also at a multi-dose regimen. And once we have this dose established, we will then start the patient part. So, it's a little unknown even to us when this will be the case, and therefore, at this time, we haven't given any guidance when the patient part will start.

[Thomas Yip:]

Okay, understood. Thank you. Thank you very much for the additional information. Thank you for taking our questions and congratulations again on your latest partnership and a great quarter.

[Doug Fambrough:]

Thanks, Thomas.OperatorThe next question will come from Madhu Kumar of R.W. Baird. Your line is open.

[Madhu Kumar:]

Hi, guys. Thanks for taking our questions. So, I guess on a macro basis, my first question is, after the kind of torrid pace of deal making over the last 24 months, is deal time over now? Do you kind of view the notion that with your current balance sheet, you're going to push more things forward internally, both on a rare disease and non-rare disease basis?

[Doug Fambrough:]

Well, let me first start by responding to what I think was the implicit aspect of the question, which is that we're either doing one or the other. And we are trying and I believe succeeding in organizing our work such that there is the Dicerna part and there's the collaborative part. And so, our pace of putting programs in the clinic reflects a very careful analysis that we do about the targets that we choose to commit to. It's a multi-year, high opportunity cost, high dollar cost commitment, and we tend to be very thoughtful about that. That has led to us to make choices that are different than others, the analysis of where to target in HBV, the gene used to target the reduction in oxalate and PH to expand additional patients reflects the depth of that analysis.So, I don't see any trade-off or timing impact on our choices for our internal pipeline relative to whether we partner more or not in the liver. Now having said – having addressed that, I would say that – repeat what I said in the script, which is that we see strong potential for additional collaborative activity. And while I'm not going to provide any guidance beyond that, wouldn't be saying that if I thought we were going to enter a long period without new collaborative activity.

[Madhu Kumar:]

Okay. And then thinking about PHYOX2, so I'll first say, I don't think Steve read it wrong. It seems – I mean the press release is written a little bit strange, but is there a sense of how many PH2 patients in PHYOX2 would be necessary for base that's kind of recently announced regulatory alignment?

[Doug Fambrough:]

Ralf, would you please address that?

[Ralf Rosskamp:]

Our protocol, which we have discussed with the FDA and also with EMA does not specify a minimum number of PH2. And actually, the primary analysis will be all patients in the study. So, will be a combination of PH1 and PH2 patients. So, of course, you will then do a sensitivity analysis, and you will have to demonstrate that these results are not driven by the PH1 patients, and that no PH2 patients, for instance, has a response. So, for sure the FDA and the EMA will see this. But we don't specify a minimum number.So, our experience is in PHYOX that we had around 20% of patients with PH2. As you know, the prevalence in the PH population of PH2 is around 10% to 15%. So, I would assume that out of the 36 patients, which we're going to close that we will have something like four to seven PH2, which reflects the prevalence of the disease and which will enable us to separately show that the positive result in reduction is not only driven by the PH1, but is also seen the same way in the PH2 patients.

[Madhu Kumar:]

Okay. And then last question will be on A1AT. So, how do you think about the RNAi approach versus the kind of small molecule protein folding approaches that among others Vertex is kind of rolling out there into the clinic to go out – and their aim is to go after both lung and liver manifestations of PiZZ alpha-1 antitrypsin?

[Doug Fambrough:]

I certainly have some thoughts on that. Ralf, do you want to start or would you like me to go?

[Ralf Rosskamp:]

I can. Yes, I think you're referring I think to the Vertex approach. We know that if from a natural history that [now genotype]. So, the total knockout of alpha-1 antitrypsin deficiency that those patients instead of in the normal ZZ population start to show lung infestations in their early 20s and not [indiscernible] is the case in the ZZ population in their 40s and 50s.So, clearly if you maintain some level of alpha-1 antitrypsin in the circulation, this is of benefit to protect the lung. That's the reason why our first cohort only will attempt to have a 60% reduction in alpha-1 antitrypsin and the second cohort will be the maximal amount which will be around 94%, 95% reduction. And we want to see whether preserving some of the alpha-1 in the circulation, whether the effect in the liver is different.And as you see, there is also augmentation therapy, which has been shown to also raise the alpha-1 antitrypsin levels and to protect the lung. And therefore, I think that the theoretical approach which we are taking is really to explore whether you really need a full knockdown of the alpha-1 antitrypsin therapy or whether this liver disease progression can be stopped with not full knockdown of alpha-1 antitrypsin [indiscernible] disease.

[Doug Fambrough:]

Yes. What I would add to that is that the lung disease and the liver disease are separate and independent manifestations that are each both partially prevalent. They're treated by different physicians with a different set of standard-of-care associated with each. And we believe that whatever therapeutic approach is most effective in addressing the liver manifestation is going to be the therapy that is preferred by hepatologists and patients for treatment of the liver disease. And similarly, a choice will be made on the lung front versus standard-of-care there, which is augmentation.So, we don't really see synergy in applying a potential treatment for both aspects as the disease and its manifestations is actually treated. And so, we're very comfortable with power of RNAi to address the liver disease and believe that it is going to be highly competitive as a modality for the liver aspect – for the liver manifestation.

[Madhu Kumar:]

Alright. Thanks very much, guys.

[Operator:]

The next question will come from Mayank Mamtani of B Riley FBR. Your line is open.

[Unidentified Analyst:]

Hi, guys. This is [Wayne] on for Mayank and thank you for taking the questions. So, my first question is if you could perhaps comment on the assumption you may have on the placebo response in type 1 and type 2 patients for the PHYOX2 trial?

[Doug Fambrough:]

So, I would note that patients do not perceive their oxalate level, and we don't anticipate there to be any response in placebo patients, other than the standard variation observed when multiple measurements are taken from an individual patient. We did an observational study some time ago, and we have some quantification of that variation. But we don't see this as the type of disorder where knowledge that someone is on treatment leads to a change in the primary endpoint that's being assessed. Ralf, do you want to add anything?

[Ralf Rosskamp:]

Yes. I fully agree. So, the primary endpoint is urinary oxalate, which will be measured in a central lab. So, neither we nor the investigator will see this urinary oxalate value. So, we all – the patients [indiscernible]. So, we all remain unblinded and a patient might most likely over a period of six months will not be able to know whether they're on placebo or not. Of course, therefore, the longer-term study is an open-label because, yes, we would assume that in the long run patients have a less stone formation, less stone events, stabilization of their renal functions. But in the six-month trial, I don't think that will be really different. Therefore, the FDA has agreed for both PH1 and PH2 to use urinary oxalate as the surrogate endpoint

[Unidentified Analyst:]

Okay, thanks. And then would you able to share the kidney stone outcomes data as part of the multi-dose PHYOX3 study readout in the first quarter – first half of 2020?

[Ralf Rosskamp:]

Yes, we will report any adverse event, and this would be captured as adverse event or serious adverse event in any conversation around amount of urinary oxalate lowering. Again, these patients have pre-existing stones already. So, it might well be that over the first couple of months, if you see there, they have stony ones because they have pre-existing stones. Therefore, in addition to stony ones by ultrasound in adults by computer tomography, we are measuring whether they form new stones. And here you would most likely see a difference.Existing stones are there and they get either surgically removed or they spontaneously go away, but I think a measure – better measure is really the new stone formation rate. Again, this will not be something, which you'll be able to see over three to six months. This is something where it will take longer period, and therefore our long-term extension study will go for three years.

[Unidentified Analyst:]

Okay. And my last question is if you could clarify if Roche has looked at any of the clinical patient level data from the ongoing Phase 1 study? And are you able to comment on how many biopharma companies were part of the process? Thanks.

[Doug Fambrough:]

So, Roche did not look at any data from the trial. And we have not looked at any data from the trial as we haven't reached the planned interim read. I think all I can say is that it was a competitive process involving more companies than Roche, and I should leave it there.

[Unidentified Analyst:]

Okay, great.

[Ralf Rosskamp:]

And maybe, Doug, I want to add. Roche has seen clinical data first from the healthy volunteers. So, they have seen our healthy volunteer safety data, because there is no reduction, of course, for definition of S antigen and they've also seen the clinical safety data of the ongoing HBV study. They have not seen any – as we have not seen any efficacy data in terms of S antigen or other viral parameters, but they have looked at clinical data in terms of safety.

[Unidentified Analyst:]

Okay. Okay. Thank you so much, and congrats on the progress. Thanks.

[Operator:]

The next question is from Keay Nakae of Chardan. Your line is open.

[Keay Nakae:]

Thank you. Just two questions on HBV. One, with respect to how you recognize the $200 million upfront? We assume just a straight-line recognition of deferred over, say, three years?

[Jack Green:]

This is Jack. We haven't specifically worked out the timing of the revenue recognition. That's in process, and we certainly will be more clear on the next call. However, if you look at the way our current collaborations have been recognized, you can tell that on the balance sheet by looking at the amount that's current and the amount that's long-term in the deferred revenue. It's likely going to be very similar to those contracts. And it will be recognized over the term of the – over the term of the research collaboration. So, I think as a placeholder, as a model, it will be something along those lines, and we'll be – we'll clarify that as we go – as we complete our analysis.

[Keay Nakae:]

Okay. At any point of the opt-in after seeing [indiscernible] study, is there some defined level of efficacy in terms of being able to affect some sort of – some degree of a functional tier that's in place? Or how do you or how will you know what parameters cause you to go for with your opt-in or them to go forward with the program itself.

[Doug Fambrough:]

So, there are no criteria in the contract that constrains our ability to exercise the opt-in. When Roche and if Roche advances the program into pivotal development, we have the right to exercise the opt in. At this point, I think it's impossible to say what level of activity on what parameters we would require, in part because it's comparative to what's going on from others in the field and how competitive we think product will be.Obviously, we're optimistic about our own program, and think it likely will be highly competitive. But we need to see the data. And similarly, I'm sure there's a similar calculus within Roche that they'll make about what they'll – what they need to see to take it forward, but I cannot say what that might be.

[Keay Nakae:]

Okay, thank you.

[Doug Fambrough:]

Well, I want to thank you all for joining the call today as we reviewed our third quarter 2019 earnings results. We look forward to a successful fourth quarter and providing additional updates as they are appropriate.

[Operator:]

Ladies and gentlemen, that concludes today’s conference call. Thank you participating. You may now all disconnect and have a good day.