DURECT Corporation
Q1 2019 Earnings Call Transcript

Published: 9 May 2019

[Operator:]

Good day, and welcome to the DURECT Corporation First Quarter 2019 Earnings and Key Opinion Leader Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mike Arenberg, Chief Financial Officer of DURECT. Please go ahead.

[Michael Arenberg:]

Good morning. This is Mike Arenberg, Chief Financial Officer of DURECT Corporation. Welcome to our first quarter 2019 earnings conference call. During the call, in addition to financial results, we will be reporting preliminary data from our ongoing Phase IIa clinical trial of DUR-928 in patients with alcoholic hepatitis, which we refer to as AH. We are fortunate to be joined today by three key opinion leaders in alcoholic hepatitis, Dr. Paul Kwo from Stanford, Dr. Steven Flamm from Northwestern and Dr. Tarek Hassanein from the University of California at San Diego. I will provide a brief review of our financial results; and then Jim Brown, our President and CEO, will provide a business update on our programs; after which, we will turn things over to Dr. Kwo for an overview on AH. Jim will then present preliminary data from the ongoing DUR-928 AH clinical trial; and then Drs. Flamm and Hassanein will provide their insights as AH experts and investigators in the ongoing trial. We will then open up the call for a question-and-answer session. Before beginning, I would like to remind you of our safe harbor statement. During the course of the call, we may make forward-looking statements regarding DURECT's products in development, expected product benefits, our development plans, future clinical trials or projected financial results. These forward-looking statements involve risks and uncertainties that can cause actual results to differ materially from those in such forward-looking statements. Further information regarding these and other risks can be found in our SEC filings, including our 10-K and 10-Qs under the heading Risk Factors. Let me now turn to our financials. Total revenues were $4.1 million in the first quarter of 2019 compared to $3.5 million in the first quarter of 2018. Product revenue, largely from our sale of ALZET pumps and LACTEL Polymers, was $2.6 million in Q1 2019 compared to $2.4 million in Q1 2018. The gross margin for the combined ALZET and LACTEL product lines was 57% in Q1 2019. These product lines continue to be strongly cash flow positive. R&D expense was $6.3 million in Q1 2019 as compared to $7.0 million in Q1 2018, primarily due to lower R&D costs associated with POSIMIR, partially offset by higher costs for DUR-928 and our depot injectable programs, which are largely covered by revenue from feasibility partners. SG&A expenses were $3.5 million in Q1 2019 compared to $3.2 million in Q1 2018. At March 31, 2019, we had cash and investments of $28.8 million compared to $34.5 million at December 31, 2018. With that, thanks again for joining our call, and I will now turn the call over to Jim for an update on our programs.

[James Brown:]

Thank you, Mike, and good morning, everyone. This is an exciting day. Before we get into the alcoholic hepatitis trial, we will give a brief quarterly update. During the first quarter 2019, we announced that we had encouraging data from our AH trial. We initiated dosing in the NASH and psoriasis trials of DUR-928 and that we are planning to submit a response to the Complete Response Letter for POSIMIR. Today, we will discuss the impressive preliminary data from the 10 patients dosed with the DUR-928. We originally guided to present this data from the AH trial in the second half of this year. Following the quarterly update on our other programs, Dr. Kwo will give the current state of therapy for alcoholic hepatitis. I will review the clinical data from the Phase IIa AH trial, and Dr. Hassanein and Dr. Flamm will describe their experience treating patients with DUR-928. We will then follow with a Q&A. DUR-928 is the lead product candidate in our Epigenetic Regulator Program and is a naturally occurring small molecule that plays an important regulatory role in the vital functions of lipid homeostasis, inflammation and cell survival. This small molecule may have therapeutic benefits in several acute organ injuries, chronic hepatic diseases and inflammatory skin diseases. We are developing DUR-928 for 3 initial indications

[Paul Kwo:]

Thanks so much, and again, thanks so much for joining us this morning. I'd like to just begin by discussing alcoholic liver disease, which is a major cause of morbidity and mortality in United States. According to the NIAAA, it's been classified as an alcohol use disorder. And using these criteria, the prevalence in the U.S. and worldwide is actually quite significant. In United States, it's estimated that 15 million adults above the age of 18 have an alcohol use disorder, men more than women. And it's estimated that approximately 88,000 deaths annually are from alcohol-related causes. In the U.S., alcohol-related liver disease is the fourth-leading preventable cause of death in the United States. Some of you may have even seen today in the news, there was a letter this week in the Journal of Medical -- American Medical Association, or JAMA, that shows that severe alcohol-related liver disease was on the rise according to the National Health and Nutrition Examination Survey results from 34,000 individuals, and this was possibly due to binge drinking. So this is a considerable problem in the United States. It is a clinical histological disorder, that is, it encompasses hepatic steatohepatitis, or fatty liver, which is present in 90% of those who drink heavily. Alcoholic hepatitis occurs in 10% to 20% of heavy drinkers, with the subsequent sequela of alcoholic cirrhosis and hepatocellular cancer. And in the past several years, as I'm going to show you, alcohol-related liver disease has now passed hepatitis C infection as the most common indication for liver transplantation in the United States and it's a leading indication for transplant in Europe as well. I show here the spectrum of liver disease and the progression. Again, fatty liver is most common; 90% of individuals who drink develop steatosis or hepatic -- or alcoholic steatosis. Those that drink also are at risk for acute alcoholic hepatitis, which is a severe acute injury of the liver where individuals present with significant inflammation of liver, jaundice and acute liver failure. And again, this is the disorder that we see in younger individuals who present to their physicians in hospitals with acute liver disease. And over time, individuals develop cirrhosis, again, compensated or decompensated with portal hypertension, encephalopathy, ascites, all of the signs of symptoms of end-stage liver disease. The pathogenic mechanisms that have been postulated to meet hepatic injury are shown here. And again, there are multiple potential mechanisms demonstrated here. The precise mechanisms are not known, but it's obvious that we need novel therapies to help ameliorate this severe hepatic injury. And I just showed here over -- as a summary some of the postulated mechanisms that have been investigated over time, including mechanisms that include cytokines, also lipid peroxidation, protein aldehyde, adducts. There are variety of mechanisms that can lead to hepatic injury. How we assess alcoholic hepatitis and its severity has been historically attributed to 3 different risk scores. Classically, we talked about the Maddrey's discriminant function score, and this involves the hepatocellular assessment where we use the prothrombin time and the bilirubin in a score of above 32 has implied a poor prognosis and usually an indication for our standard therapy corticosteroids. A very helpful model that we're going to discuss is the Lille model, which incorporates these findings, and as well as the 7- or 4-day course of corticosteroids and provides a useful futility rule for those who are not going to respond to corticosteroid therapy. And the Model for End-Stage Liver Disease, or the MELD score, is a tool that we use to assess severity as well. The Lille model uses 6 variables to identify patients with severe alcoholic hepatitis, that is those with a discriminant function score above 32, and it's a very useful futility rule. It's calculated after 7 days of corticosteroids dependent upon the age, albumin, bilirubin, creatine and prothrombin time, we have the link here. But a score of greater than 0.45 is associated with a large decrease in 6-month survival. So when one initiates corticosteroids, one wants to see that the Lille score is below 0.45. And prognostically, this has been superior to other models that had been published in the literature. Graphically, this is what we are showing here; if the Lille score is less than 0.45, your survival is markedly improved compared to a Lille score of greater than 0.45. The MELD score, or Model For End-Stage Liver Disease, which we use to risk ratify for those who have cirrhosis and are waiting liver transplantation, is also beneficial. If the MELD score is above 21, that roughly is equivalent to a discriminant function score of greater than 32 for predicting poor prognosis, and that means, in this case, 20% mortality at 90 days. What are our current therapies? Well, abstinence is best. Corticosteroids, which are contraindicated in patients who have active infection, are the de facto standard of care now, and we certainly use these. Recent practice guidelines have endorsed this. The efficacy, as I will show you, is not as optimal as we would like it. And our recent surveys have suggested that there's low-level use in practicing hepatologists. There was a period where we used, and some physicians still use, pentoxifylline, although recent guidelines have removed this based on a large well-done randomized trial. We want to control craving, address nutritional needs, there are anti-inflammatory and, of course, novel therapies as well. This was the largest study that has evaluated the role of both prednisolone as well as pentoxifylline, the STOPAH trial that was published in the New England Journal of Medicine. And you can see the results here show that prednisolone and pentoxifylline, pentoxifylline and placebo and then the double placebo, there really weren't significant differences between these therapies. And you can see prednisolone compared to placebo did have a reduction in mortality that almost reached statistical significance but did not quite. Part of it was because the survival of the placebo group was actually quite good. And this does seem to suggest that we are better caring for these individuals. Nonetheless, as I'm going to show you, the problem is that we are -- we still have large numbers of young individuals who are presenting with this severe acute disorder. Liver transplantation was -- is a dramatic intervention, but it does offer a therapeutic option for these individuals. This was first shown in a small pilot study from France that showed that individuals with severe acute alcoholic hepatitis were [indiscernible] selected and did not respond to corticosteroids could benefit from transplant. And you can see here, at 3- to 5-year post-transplant, the survival was clearly better than those who were transplanted, though there were recidivism rates that ranged from 11% to 50%. This data has now also been investigated in the United States. And I show you here a outcome slide from the multicenter American Consortium for Early Liver Transplantation for Alcoholic Hepatitis or ACCELERATE. And again, you can see a 3-year survival here of 84% that survive. The follow-up right now is early. But you can see here, again, liver transplant is a viable option with -- for these selected individuals. We know now that the alcoholic liver disease, based on this very nice paper that was published last year, is now the highest risk factor for liver-related mortality. And many of you who follow chronic viral hepatitis C know that we have highly effective therapies now for hepatitis C. And we've seen the benefits of this where direct-acting antiviral agents that have been available since 2014 have now reduced HCD-related mortality considerably in the last 3 years. That has now led to, as I said earlier, alcoholic liver disease now being the highest and the leading cause of all-caused mortality and as well as the leading underlying cause of death in those with chronic liver disease and this is obviously an area where we need to have novel therapies. The liver transplant community is gradually accepting alcoholic liver disease and acute alcoholic hepatitis as an indication for liver transplant. And again, it is a therapeutic option. Obviously, it's a very aggressive option. And novel therapies that would address this and allow us to prevent liver transplants would obviously be desired. So in summary, the major causes of morbidity and mortality of alcoholic liver disease are considerable. Over 300,000 hospitalizations. It's now the leading indication for liver transplant. A paper published last year in The Lancet demonstrated that worldwide in young individuals, alcohol use is the leading risk factor for female deaths and male deaths. And so obviously, worldwide, having an option to treat alcoholic liver disease, that is acute alcoholic hepatitis, as well as the sequela of heavy drinking would be very important. And I'm going to turn this back over, but obviously, we all look forward to these novel therapies being introduced and evaluated to help this -- us reduce this tremendous disease burden.

[Michael Arenberg:]

Thank you so much, Dr. Kwo. We really appreciate it. It was a great, great overview. Well, today, we have an opportunity to review preliminary Phase IIa patient data for our DUR-928 to begin to better understand what this molecule might be able to do in these patients. These data fit with DRU-928's mechanism of action as an epigenetic regulator, modulating multiple nuclear receptors and many gene activities. These data are consistent with some of the in vitro and responses that we have observed in several animal disease models with 928. These data are also consistent with the Phase Ib data we have collected from NASH and chronic kidney disease patients. These data are impressive when compared against responses of historical control groups from other studies in AH patients that are treated with supportive care with or without corticosteroids. In a few minutes, you will also here from the perspectives of Dr. Hassanein and Dr. Flamm who have treated AH patients with DUR-928. I'll start with an update on our trial. We've completed dosing in all 8 patients at the 30-milligram level, four with moderate and 4 with severe alcoholic hepatitis. We've also dosed 2 patients with 90 milligrams of DUR-928, 1 moderate and 1 with severe alcoholic hepatitis. These 10 patients had initial MELD scores that range between 15 to 28. First of all, all of the AH patients in our trial survived through the trial period of 4 weeks. This last comment may seem strange, but it's very relevant to this patient population. We have data from an AH patient population from a separate trial being conducted by Dr. MacLean at the University of Louisville, or UL, in which she has -- excuse me, he has been evaluating an experimental therapy that is not DUR-928 as compared to the standard of care for AH patients, which is steroids and supportive therapy. The patients in this trial are similar in MELD scores and other criteria to the patients that are in our Phase IIa trial. Unfortunately, of the 15 patients we are comparing against from this UL trial, 5 did not survive 3 months and 2 did not survive 30 days. So the fact that all the patients who were dosed with DUR-928 in our trial survived is an encouraging sign. I'll review the patient responses for our trial using their bilirubin levels, MELD and Lille scores. It is our hope that data from the remaining patients in our trial continue as these patients have. If this is the case, it is our desire to present data from this completed trial at the American Association of the Study of Liver Disease meeting this fall. When considering the data generated in AH patients in this trial, one must consider the small number of patients, and that due to the lack of a placebo control, we have used historical controls from other AH studies for comparisons. I want to give a brief overview for -- on alcoholic hepatitis on Slide 3. This is actually very easy since Dr. Kwo recently just completed this one. But basically, we -- there are over 320,000 hospitalizations related to alcoholic hepatitis in the United States every year, with costs that range in the range of around $50,000 per patient. In the short term, mortality rate is somewhere in the 30% to 50% range for the severe patients. There are currently no approved treatments for this disease. And alcoholic liver disease itself is basically the leading cause to get on the list for transplantation in the United States, with the cost of liver transplant now exceeding, on average, over $800,000. So who are these patients? Well, they're basically our friends, our family, our neighbors. Their employment status, I mean, sometimes when people just take a cursory look at this disease state, they think of it as a homeless population. But in reality, that's not the case. The vast majority of these people are employed. The vast majority of these people are highly educated. So it's the people in the world around us. And the impact of this disease, alcoholic hepatitis is the leading cause -- or excuse me, is one of the lead -- not alcoholic hepatitis, but alcoholic liver disease itself is one of the leading causes for being on liver transplant list in the United States. And alcoholic hepatitis is a substantial unmet need with short-term mortality being in the range of some cancers. And I've listed out on the study on this slide here

[Tarek Hassanein:]

Okay. Good morning. Thank you for advising me to participate in this meeting. Just to give you an idea, Southern California Liver Centers is up to 7 centers in Southern California. We get our share of acute alcoholic hepatitis, alcoholic liver disease, and we tend to do a number of clinical trials in that area. We have been into the research of acute alcoholic hepatitis for quite some time, and we're actively seeking more clinical trials because the field is missing a treatment to manage these patients. It's a dramatic disease because patients drink, they don't know that they are getting into trouble until they turn yellow, and someone around them will tell them, "Oh, you're turning yellow. You'd better go and see a doctor." And they can come early in the face of the disease or they can come late when their liver is almost totally into failure. The sad story is none of these patients at this point is a candidate for liver transplant although they are presenting with liver failure because the transplant rules mandates at least documentation of 6 months of sobriety before these patients can get a liver transplant. These patients don't have the 6 months. And it's always sad because a majority of these patients tend to be young at age. So at this point, you already have heard the percentage of mortality and the limited access to any medication to have these patients. Steriods. We have been struggling with steroids for the last 40 years. So to a great extent, we keep recycling these studies with steroids. In my hands, when I get a lot of these patients, I rarely can use steroids. We estimate that our patients, when they come to our center with mostly moderately to severe alcoholic hepatitis and its complications, they tend not to be good candidates for steroids because they have infections, renal failure, you name it. When we get them to steroids, we might actually push them into faster death from sepsis, which is part of that disease. So steroids, although we talk about numbers, we have to talk about how many people really coming through to the center that are candidates for steroids, and that number is down to 20%, 25% in our center to be able to use steroids. Now once you use steroids, not everyone responds. And the Lille score, and we've heard about the Lille scores, it help us to decide very quickly, within 4 days, if the patient is responding or not. If we are worried about it, maybe we push it to 7 days. And if the steroids is not working, we stop. Okay, if we're going to stop the steroids -- or first, if the patient is a candidate for steroids, yes or no. Most of the patients are not candidates. If we start -- if the patient is a candidate, then we start steroids, and it fails, what do we have? We don't have anything. We used to put them on liver devices like liver type of dialysis. And the last trial that ended a few months ago showed it wasn't helpful to these patients to get them to recover. So to a certain extent, this is a field that's missing a lot of study. When you do a quick review of clinical trials in the [indiscernible] of the nation, you don't see much happening compared to hepatitis C or hepatitis B. Now hepatitis C study is not there anymore. But hepatitis B NASH studies, when you compare alcoholic hepatitis study, there is very limited number of studies. So that's our experience with these patients with our study, the DUR-928. We actually got impressed with the first 2 patients because these were patients that would have feel they will respond. And with one single injection in the study, because the study is a dose-finding study, can 1 infusion -- with 1 infusion, our first 2 patients have had response. And again, 2 patients doesn't mean much. But when we have patients that are dying every day from this disease, any patient who responds gets our attention to what we are doing. We have more than 2 patients. And we have consistently -- in my patients in the study, we have seen improvement. And you have seen the summary. Small numbers of patients but give us tremendous hope in this study drug. And the beautiful thing about it so far is the safety. We went from the 30-milligram dose to the 90, and we have -- we haven't seen any significant signals of any safety issues. And so far, every patient we've put in my group that had a response to the treatment. And the main response we see bilirubin improving. Once bilirubin improving, everything starts to change. The MELD score changes. The MELD rate changes. Whatever scoring system you use, bilirubin is a key element in this disease, and we have been seeing improvement in the bilirubin within the first few days. And you have seen the data. Actually, this is my first time to see the collected data together. So I'm very enthusiastic. I'm -- as a physician taking care of patients, I'm always trying to push to get more patients in the study and to expand the study and expand the criteria. And hopefully, we will have -- we might be getting into a drug that can help us tremendously in this diagnosis of acute alcoholic hepatitis where we don't have enough options out there except transplant. Thank you very much.

[James Brown:]

Thank you, Dr. Hassanein. Now Dr. Flamm?

[Steven Flamm:]

Hello, everybody. Can you hear me?

[James Brown:]

Yes.

[Steven Flamm:]

Great. I'm glad. I'd like to also thank DURECT and welcome all the attendees today to this call. I'm at Northwestern in Chicago. We have the biggest liver center in the third-biggest city in the United States. And where is the day that goes by that there is at least 1 or 2 patients in our hospital with moderate to severe alcoholic hepatitis. And I want to highlight a couple of points from the previous speakers that I think are pertinent for the attendees before we talk about DUR-928 and my experience. Alcoholic hepatitis is not just alcoholic liver disease. I'm sure everybody on this phone call knows people that drink alcohol and perhaps too much. This is a disease, a problem that affects everybody not just professionally but personally. It's common. Alcoholic hepatitis specifically, which is what the target is for this particular trial, is a specific subset of patients with alcoholic liver disease. These patients are typically very young, in their 30s or 40s. They were not sick before. They're drinking, but they were not sick. And then within about a month, they get extremely critically ill. And within the next month after that, which is when they're in the hospital, somewhere in the range of 20% to 40% of them die. So this is a major, major problem for young people. And these are not street people. These are regular people very frequently. They are people that are insured. They are of every class. This touches this problem everybody. These people have young children. And when they get sick, it's often the first time they've ever been sick with alcohol liver disease. They didn't even know they had a liver problem before. And they're willing to change often, they're willing to stop drinking, but they don't make it because they have a disease that really has no other therapy. And I want to point out one other thing. It's common. This is not uncommon. This is not a rare disorder. There are hundreds of thousands of people in the United States that have this, and tens of thousands die from it every year. It's not one that's discussed a lot. This is not one that people are proud of. If somebody passes away, a friend of yours, their spouse is not telling you, "My spouse died from alcoholic hepatitis." So -- and this kind of get swept under the rug a lot. We in the medical field know it's there, but it's not one that's discussed frequently. And I want to highlight one last point. There really are no therapies for this. There are no therapies for this. Corticosteroids, I'm not convinced they work at all actually. There was a recent randomized controlled trial that really did not show statistically significant benefit with this product. And it's been out for 40 years, and we rarely use it at all at Northwestern. And liver transplant, which is the other way you can save people who are on liver failure, these patients are in general contraindicated from liver transplant. So when these people come into the hospital, so the first time they've ever been sick with liver failure, 20% to 40% of them die. So this is a big market. There aren't any competitors. And it's a huge area of unmet medical need not only in the United States but all over the world, including the Western world where these patients are frequently observed. Now DUR-928, this is an early-stage trial. And in early-stage trials, of course, and everybody on this call knows this, you are looking for 2 things

[James Brown:]

Thank you so much, Dr. Flamm. So I want to give thanks to Dr. Kwo, Dr. Hassanein and Dr. Flamm for taking the time today from all of your busy schedules. One of the reasons we had this call so early our time is because all 3 of these people are in the clinic constantly, I mean constantly. And if you get sick with your liver, you want to be in a place where you can see one of these guys. They're really good. So thank for you taking your time. I also want to give special thanks to Dr. Craig McClain from the University of Louisville for allowing us to use the data from his ongoing trial as a way to compare the DUR-928 group. It's been a pleasure to be able to work with such dedicated physicians. So thank you to all 4 of you. In summary, the data from DUR-928, the AH trial, though preliminary, compelling. And the drug may be lifesaving in this disease state. The median Lille scores of 0.04 were compared to the 0.41 from the UL patients is most impressive. We look forward to completing the 90-milligram severe patient cohort and advancing the study into the 150-milligram cohort in these patients. Once the AH trial is completed, we plan to meet with the FDA to explore advancing this program into pivotal studies. We want -- we're very thankful for the strong support and encouragement from our expert advisers and our clinical investigators. We also look forward this year to the DUR-928 28-day NASH. It's a trial, a data which is on track to yield data by the end of the year. And as well unto our Phase II proof-of-concept psoriasis trial, we're looking forward to data by the end of the year. And just to wrap up, we're also looking forward to so many complete response for POSIMIR this quarter. And if successful, the NDA could to approved and could lead to a potential commercial partnership. With that, I'd like to turn it over to any questions that people might have.

[Operator:]

[Operator Instructions]. Our first question today comes from Adam Walsh of Stifel.

[Edwin Zhang:]

This is Edwin Zhang on for Adam. A few questions on NASH and AH. Maybe first on NASH. You have studied the Phase Ib study in NASH patients in March. We know you have conducted a similar Phase Ib study some years ago. Could you just remind us what are the key difference between these 2 studies other than dosing? And what do we expect to learn from this study? Also, what is your long-term plan on NASH? Do you intend to find a partner on this indication?

[James Brown:]

Thank you for the question on NASH. So we did a single-dose study in 50 milligrams and 200 milligrams. And what we saw is we saw statistically significant drops in CK-18, dramatic drops. These were down 30%, 40%, in some cases, greater than 50% at 12 hours after dosing. And then we also saw 30% reductions in bilirubin and a nice reduction in C-reactive protein, in IL-18. So we're very pleased with what we saw from the single-dose studies. And what we wanted to do there -- two things on this molecule. You've heard the physicians who were treating our AH patients talk about the safety profile. But that same kind of safety profile has been seen in the animals. We've not seen any toxicity to date. And so in order to dose longer durations, longer than a month, we actually had to scale up this product to commercial scale. We can now make it at commercial scale, 10 kgs per batch and more. And we had to do that in order to do the chronic tox because we had to give very, very high dose, at 20 kilograms a molecule, to test. And now those studies are nearing completion. They'll be completed by the end of this year. It's all relevant because going to the next stage in the NASH studies will require unlimited exposure as far as duration is concerned, and we'll have that by the end of the year. So we're doing this 28-day study to understand what the dose response might look like over a month and to see whether or not we can see changes that we saw. If we can -- what we're hoping to do is some replication of what we saw from a single dose over 28 days. And if we can see reductions in some of these markers of inflammation and survival and the like, and possibly, we're also going to have a look at -- through imaging at liver fat because we've seen some pretty dramatic changes in the animal model. So we'll have a good sense coming out of this Phase Ib study what the dose 2 response would look like. We're looking at SID once-a-day dosing. We're looking at twice-a-day dosing over the month. And we'll get some sense of that will set us up for doing a true fulsome Phase II trial in NASH patients. And our plan for that will be we'll kind of follow our nose here. We'll see how the data come out. And we'll see where the company is as far as whether or not we seek to partner that or whether we take that on our own. But as you can hear from everyone's enthusiastic and focused today, we're looking hard at each [indiscernible], where just 1 or 2 injections might be the difference in a patient's life. And so we're looking at 928 in alcoholic hepatitis. We've seen very interesting data preclinically in pancreatitis and other potential opportunities as well. So -- but we're starting with alcoholic hepatitis because there's more consistency in these patients than there are in the pancreatic patients and the like. So I hope that answers your question.

[Edwin Zhang:]

Yes. So AH, congrats on the new data. So my question is if Lille or MELD, M-E-L-D, score, approval endpoint for the AH trials and also -- yes. Go ahead.

[James Brown:]

No, go ahead, please. Finish your question.

[Edwin Zhang:]

And what are the baseline of Lille scores of those patients are high? I don't think I see it in the presentation. Or what is the change from the baseline for the Lille scores?

[James Brown:]

Okay. Got it. Let's start with that last one first. Lille score is at a point in time, and so it's not -- there's no baseline Lille score. What Lille has been designed to do is to look at the effective therapy. So you take a patient and you treat them, and then you look and say how do they look, how is the liver functioning, how is their body functioning a week after therapy. It's the most commonly used practice for determining Lille. And so that's why we didn't have an initial. And that's why we study with that initial MELD because that initial MELD allows you to stratify the patients across what's the general state of their livers coming in. If you look at the UL data, you'd see -- you can look across that x-axis. There you can see that those patients are distributed fairly equally, actually the same range of MELD scores. And the mean, the average MELD score was almost the exact same for our population and their population. And so you can see that both these populations started from a similar standpoint, right, but then we look and say how are they doing a week later. In the case of the 928-treated patients, you can see our median, excuse me, Lille score was 0.04, dramatically lower than the others, where it was 0.41. And then obviously, the survival speaks for itself. And then that leads into your question about what does it take for approval. I'm sure these prognostic scores will be helpful. And we had to sit down with the FDA to define that, but my guess is you'd have to look at survival would be my guess. But these prognostic indicators will be part of it all, but that will be defined with meeting with the FDA. That's why. But I put it in the cancer slide a death rate just to give people a sense of I think we're looking at an opportunity here to be able to save patients' lives. And as such, we'll take that approach with the agency rather than kind of what is chronic NASH things. Go ahead. So next question?

[Operator:]

We will now take a question from Ed Arce of H.C. Wainwright & Co.

[Antonio Arce:]

Congratulations on this really compelling or early data. It's -- it really does speak to how effective this is, that in just a few patients and just over a short amount of time, you can see these kind of results. So as you just said, it does seem that the path here for acute settings with 1 or 2 injections, and you can see definitive survival as opposed to something like a surrogate and allows you rapid path to market, this is really -- looks like your strategy is evolving to that. Perhaps you could just expand a bit as you look at these different ongoing studies where AH is very acute and severe as opposed to NASH, which is a very long and slow-progressing disease.

[James Brown:]

Yes. I think I really appreciate that. This -- I think you really hit the nail on the head. This is a game-changing moment for DURECT. To have a therapy where you can change a person's course of their life and possibly save their lives from just a single -- 1 or 2 injections is amazing. It's a once-in-a-lifetime kind of opportunity to be able to help patients. And that's what really gets us up and helps us go and do what we do at DURECT, and so we're really excited about that. It's not that we don't like the opportunity for NASH or we don't like the opportunity for psoriasis, but those are much longer time frame studies. I mean this trial, if this trial continues as it is, we'll complete it this year, and we'll meet with the FDA. And then our goal will be to start the pivotal trial next year. And I don't know whether it'll be 1 trial or 2 trials. That will be up to the FDA. But then post that, then we'll see where we go. But we're positioning ourselves to be able to submit the NDA as soon as we possibly can, as soon as we show a signal where we're making a difference in the outcome for these patients.

[Antonio Arce:]

Okay. Great. And then just a follow-up on that, obviously, it's still early in terms of the data, but certainly in terms of the registrational path at the agency. What do you know at this point? Obviously, this is subject to discussions, as you just mentioned...

[James Brown:]

Right.

[Antonio Arce:]

Later on in the year or early next year. But what do you know so far about any sort of explicit path? Just in the absence of any therapies for this disease, it does seem like you're going to be working closely with the agency to create something.

[James Brown:]

Yes. I think we will. And we're lucky to have the people that assisted us with the -- absolutely we'll be working closely with the agency. It might be something like a subpart H or where you have an opportunity to get out there much quicker. But we -- on this call alone, we have just really just amazing thought leaders, people who meet with the FDA and go with the guidelines for approval. And maybe I'll ask Dr. Kwo to speak to that. But Dr. McClain, who's not on the call, is actually -- both these two guys as well as Dr. Hassanein and Dr. Flamm are all key people. But Dr. Kwo, would you like to maybe speak to the regulatory strategies?

[Paul Kwo:]

Right, right. So again, this is all -- we'll have to see what data readouts are. And then what we'll need to do is sit down. Because this is an area of unmet need, I would just like to say that everyone involved in developing all of these novel therapies for alcoholic hepatitis are going to want to be able to try to get the therapy to these individuals particularly because they're so young when they present. Like Dr. Flamm and Dr. Hassanein did a great job of saying that. And then as far as endpoints go, there are multiple routes here. Survival clearly is most important, but there will be other aspects as well. And we'll just have to again see what the readout is from this dose ascending study. But I think Jim said it very nicely. This is going to be a negotiation, and it's just very encouraging as part of this therapy. And the preliminary dosing has proven to be not only efficacious but also appears to be well tolerated. So it's hard to predict the future but -- and again, we'll have to wait the final results of this study. But everybody hopes that this and other therapies move forward rapidly and are accessible to all of us who care for individuals with alcoholic hepatitis because I think that Dr. Hassanein and Dr. Flamm said we all see people whose lives are curtailed too quickly with this disorder, and it's a problem worldwide.

[James Brown:]

Absolutely. And I understand, Dr. Flamm, you'd like to make a statement on this?

[Steven Flamm:]

Yes, I just want to echo the same thing. I think the FDA will be very, very excited to have a product in this field that's presented to them and shows efficacy in this underserved patient population. I would be shocked if they didn't fast-track it because there are no other therapies and the outcomes are so terrible. So I think the path to get this product approved, when you look at NASH and all the other things that we do studies in, I mean those are years and years and years. If this product is tolerable and efficacious as it looks like early on, the track, in my mind, would be relatively quick.

[James Brown:]

Thank you so much.

[Operator:]

We will now take our next question from Len Yaffe of Stoc*Doc Partners.

[Len Yaffe:]

I had a question for Drs. Flamm and Hassanein. I know it's only a few patients that you've seen treated on DUR-928 and even in the [indiscernible]. But if you could give your overall personal experience of the patients who you have treated with the drug versus what you might have expected, and I know it's hard to make this comparison, had they been treated with prednisone or what differences you saw with this drug versus what you've seen historically with prednisone, I would very much appreciate it. And then secondly, given the mechanism of action of this drug or the fact that you mentioned that bilirubin improves quite rapidly, in your experience as hepatologists, could you comment please on if you see any reason why this drug might have efficacy in NASH given that NASH is such a very prevalent disease state, and the initial drugs, the ones most furthest along, seen as monotherapy, not to be sufficiently effective? So if you see a place for this drug, I know I'm asking you to project out in the future, either as combination therapy or [indiscernible] in NASH that look beneficial.

[James Brown:]

Thank you, Dr. So why don't we start with Dr. Hassanein, and then we'll have Dr. Flamm answer that.

[Tarek Hassanein:]

Okay. Look, this is a very, very important question. And I wouldn't compare alcoholic hepatitis to NASH. They are totally different diseases. And the acute alcoholic hepatitis patients, we have an acute disease that kills people in a very short period of time. And there's what we call cytokine storm that happens when the alcohol toxicity occurs. And there's a lot of acute inflammation, lots of cytokine and rapid progression of the disease. So when I say rapid progression means every day, the bilirubin is going up. So when I get the patient, for example, bilirubin of 20; the next day, it's 21 or 22; and within 7 days, it's 26, 27, 30. And these patients gets up to 50, and then they start dying because the all -- the organs start shutting down, kidney, lungs, brain. And the patient dies with what we call multi-organ failure. So when we have the drug that comes, and once we infuse it, we'll start to see it change in bilirubin within a day or 2. And the trending is down, this is a big thing for us. So if I start again with my patient with bilirubin of 20 or 25, and then I put them on that infusion, and the patient -- and I'm giving you 2 examples here -- bilirubin of 25; and over the next 2, 3 days, bilirubin now is down to 20; next 2, 3 days, it's down to 17, 15. This is -- for us is a big thing because we don't see this in steroids. When we start people on steroids, it takes 2, 3 days, and you should start to see a little bit improvement in bilirubin. And if you are lucky, this patient, if they respond to steroids, you will see 20%. We want to see 20% drop in bilirubin by day 7. And that's the Lille model issue. So what is exciting here that for the first time, we have a therapy that has a quick, fast impact on the -- in the patients who has severe inflammatory response that is really killing their organs one after the other. So that's the alcoholic model. The NASH is a totally different thing. The NASH is -- in my mind, is fibrosis that's going to kill the patient. If the patient never develops fibrosis, it will never die from the NASH. But it's a different long-term model, as we have heard. So that's the exciting thing about this molecule, that in these 6 patients, we haven't seen a safety signal. In these 6 patients in my group of patients, it's a small number of patients, but for me to have every patient responding, to me, this is big. I just finished a big study putting people on the DTI, ELAD machine, liver support systems to put to drop the bilirubin, and the whole study failed. After all these efforts, we couldn't get the bilirubin to improve. We do experimental trials with abdomen dialysis. We can improve the bilirubin. Once we stop it, it goes up again. Here, we have a molecule that every individual that we -- I used so far, although it's again a small number, the bilirubin trended down and continued to trend down with only one injection. And I'm very curious to see what would be the impact if we repeat that infusion. Then hopefully, in the future protocols, we'll have the ability to do that.

[James Brown:]

Thank you, Dr. Hassanein. Dr. Flamm?

[Steven Flamm:]

Yes. Just succinctly because I think there were a couple of questions in there, as far as bilirubin and alcoholic hepatitis, usually when the bilirubin goes down, I mean if it's a meaningful decrease, that's a sign that the patient is getting better. That's a pretty good surrogate marker for clinical outcomes. I mean there aren't that many patients that get better. We haven't had good products in the past that have actually worked so that we can compare those products to this, which is actually why this is so exciting. But generally, when patients' bilirubins decline meaningfully, then they get better, and that's exciting. As far as our individual experience, there we're talking literally than 10 patients in the trial. I've had a couple. It's hard to really make any good conclusions, I think, on that. Both of mine have survived and done well, but I'm not sure -- and their bilirubins have declined, and I've been very positive about it. Again, but only 2, so I'm not sure I could drive a conclusion for you there yet. But again, I think the cumulative experience that you saw today, again, it's first time I've seen the cumulative experience. We're not getting paid for this, at least I'm not. I volunteered to do this call today, and the reason I volunteered is because I'm very excited about this. This is a space, an unmet medical need and an exciting product, and that's why I want to talk about it this morning. As far as NASH goes, as you -- guys are all very sophisticated about NASH. There are dozens and dozens of companies. We're doing dozens of trials here at Northwestern. We are a fatty liver center here in Chicago. And I have a feeling, in the end, it's going to be quite a while before products are approved. Probably the combination therapy, because I think there are many different mechanisms that we don't fully understand at least to NASH, this product absolutely could be part of a regimen that works. I think mechanistically. It's a product that should be looked at in fatty liver NASH. And I know the company is planning to do that. And again, it would not be a surprise to me at all if this product were part of a regimen that's effective in that disorder. But again, it's complete speculation. And -- but the product, it's being used in psoriasis. It seems to have widespread effects and -- or it potentially has widespread effects in very many disease states. And that speaks well for additional disease states that are complicated like fatty liver.

[Operator:]

We will now take a question from Hans Bernstein of Kaplan Securities [ph].

[Unidentified Analyst:]

Congratulations on a very, very persuasive presentation. It occurs to me that DUR-928 and alcoholic hepatitis AH is the fastest path to market for this drug. And therefore, my question is, first, is the protocol call for, for this drug a one-and-done procedure? Or are there a number of injections that are required for the long-term success of this drug for AH?

[James Brown:]

Well, the first answer from that is we're testing right now 1 or 2 injections. And you heard the physicians speak to the cytokine storm and the short-term, desperate circumstances these patients are in. And the reason I referenced that one endotoxin or lipopolysaccharides paper that Dr. Ren put out was because of the multiple organ support that, that paper demonstrated. And when these patients get into a bad way, it's because their livers are shutting down; and in turn, the kidneys just can't take the toxins that are coming out of the liver and to chronic assault there; and then the lungs, unfortunately, also take a hit. And so you've got these 3 organs, and then you can also have the G.I. tract become leaky. And so all of these systems start to break down. And 928 has the potential to support those and I think help these patients. So it could well be that, that 1 or 2 injections get them over the really dangerous, scary component. And then if they've got enough reserve within their bodies, then they can pull themselves out.

[Unidentified Analyst:]

I see. And a follow-up to my question relates to the fact that you're involved in obviously NASH and psoriasis trials, which are long and costly. I encourage you to aggressively pursue partnerships especially with the AH indication since that is the clearest and fastest route to market.

[James Brown:]

Yes. With regard to POSIMIR, as an example, we'll be looking to find a commercial partner there. I think if the psoriasis trial turns out positive, we've already -- we've had a number of very substantial leaders in the field actually help us design the studies, so I think there's a good chance for a partnership there. NASH, there's obviously a lot of unmet need. We've seen a lot of struggling circumstances with the trials that have been recently read out to the negative, and so there's a lot of potential for partnerships there. AH, as you rightly point out, is the quickest opportunity to market, and it's the one where we're putting our shoulder to the wheel as hard as we can. And we're so fortunate to have the great thought leaders that we have helping us with regard to that.

[Operator:]

There are no questions at this point of time. I will now hand the call back to management for closing remarks.

[James Brown:]

Okay. Well, thank you, everyone. Especially to our expert advisers, really, really appreciate all of you sharing your thoughts and wisdom with us. And thanks to everyone for participating, and we look forward to talking to many of you soon.

[Steven Flamm:]

Thanks again.

[James Brown:]

Thanks, everybody.

[Paul Kwo:]

Thank you.

[Operator:]

This concludes today's call. Thank you for your participation. You may now disconnect.