Eloxx Pharmaceuticals, Inc.
Q4 2018 Earnings Call Transcript

Published: 8 Mar 2019

[Operator:]

Good morning, everyone, and welcome to Eloxx Pharmaceuticals' Fourth Quarter and Full Year 2018 Earnings Webcast and Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Barbara Ryan, Eloxx' Investor Relations Officer. Please begin.

[Barbara Ryan:]

Welcome, and thank you for joining us this morning for a review of Eloxx Pharmaceuticals' fourth quarter and full year 2018's financial results and business update. Joining me this morning are Robert Ward, Chairman and Chief Executive Officer of Eloxx Pharmaceuticals; Dr. Greg Williams, our Chief Operating Officer; David Snow, our Chief Business Officer; Greg Weaver, Chief Financial Officer; and Dr. Matthew Goddeeris, Director of Research. Before we begin, I'd like to remind you that any statements made during this call that are not historical are considered to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these statements as a result of various important factors, including those discussed in the risk factors section in our most recent annual report on Form 10-K filed with the Securities and Exchange Commission and our other reports filed with the SEC. Any forward-looking statements represent our views as of today March 8, 2019, only. A replay of this call will be available on the company's website, www.eloxxpharma.com. I would now like to turn the call over to Robert Ward, Chairman and Chief Executive Officer of Eloxx Pharmaceuticals.

[Robert Ward:]

Thank you, Barbara, and welcome to Eloxx' Fourth Quarter and Full Year 2018 Earnings Webcast and Conference Call. We've continued to make substantial progress at Eloxx and are pleased to have attracted experienced leaders who ensure that we advance our lead investigational compound, ELX-02, in cystic fibrosis, and our new inherited retinal disease program on budget and on time. Today, we're pleased to report broad progress in cystic fibrosis with new organoid data showing activity for ELX-02 in an expanded range of cystic fibrosis genotypes, provide a discussion of our participation in the cystic fibrosis foundation read-through workshop, share the latest on the European HIT-CF project as well as our plans to expand our clinical development activity to sites in the United States. Please recall that our clinical trial application for ELX-02 for cystic fibrosis has been approved by the Federal Agency for Medicines and Health Products in Belgium, and our Phase II program has been given a high-priority ranking by the European Cystic Fibrosis Society Clinical Trials Network. In January, the results of our single-ascending dose, or SAD study, were published in the Journal of Clinical Pharmacology, and we're pleased that there have been no dose-limiting toxicities or serious adverse events reported in the program to date. We've initiated the sixth cohort of our multiple-ascending dose study and plan to initiate the next and final cohort here in the U.S. We reported at the North American Cystic Fibrosis meeting last year that ELX showed a dose-proportional increase in Messenger RNA and cystic fibrosis patient-derived organoids are studied at the HUB. The consistency of the response of ELX-02 in cystic fibrosis patient-derived organoids has shaped our approach to clinical trial design, where we will focus initially on patients bearing 1 or 2 copies of the G542X nonsense mutation on the CFTR lials. We expect to initiate a Phase II clinical trial in cystic fibrosis patients with the G542X CFTR mutation, which is the second most common mutation globally and accounts for about 5% of the cystic fibrosis patients. We're on track to report top line data from Phase II in 2019. Today, I'm also pleased to announce that we've generated new data which extends the activity of ELX-02 to a range of additional genotypes. We believe that the cystic fibrosis patient-derived organoid translational research model provides key insights for both clinical trial design and for use in personalized medicine. Earlier this year, Eloxx participated in the U.S. Cystic Fibrosis Foundation-sponsored read-through workshop that brought together scientific leaders from around the world to discuss potential solutions for developing treatments for patients with nonsense mutations. We're pleased to be the most advanced company tackling the great challenge of developing new therapies for nonsense mutations. Last week, we announced our participation in HIT-CF, a European Union-funded preclinical and clinical research program, evaluating the efficacy and safety of several disease-modifying drug candidates in cystic fibrosis patients with rare genetic mutations. Our lead investigational drug candidate, ELX-02, will be evaluated in CF patients with nonsense mutations for whom there are few available treatment options. The goal of the HIT-CF European project is to investigate whether a positive response to therapies in patient-derived organoids can be predictive of clinical response in a controlled trial. We believe this project will expand the use of organoid response data to the drug approval, label expansion and both treatment and reimbursement decision-making processes. Later in the call, David Snow, our Chief Business Officer, will discuss HIT-CF in more detail. We're looking forward to the March 2019 European Cystic Fibrosis Basic Science meeting. Eloxx will be presenting for the first time important new data on ELX-02 activity in restoring the CFTR protein. We will be hosting a webcast to discuss this important new data after the scientific conference presentation has taken place. We continue to progress our ocular program and pleased to announce that we have expanded our senior leadership with the addition of Dr. Susan Schneider as our Senior Vice President and Global Leader in ophthalmology. In addition to leading the development team, Dr. Schneider will be responsible for strategic clinical oversight and the advancement of our inherited retinal disease programs across our library of eukaryotic ribosomal selective glycosides or ERSGs. She has extensive experience leading the clinical development and strategic planning efforts from a range of ocular indications at leading companies, including most recently serving as Chief Medical Officer at ThromboGenics; Vice President and Therapeutic Head, Glaucoma and Retina as well as wet AMD at Allergan; as well as leadership roles in ophthalmology at GlaxoSmithKline, Bausch & Lomb and Genentech. We've been advancing several new investigational product candidates from our library into IND-enabling studies in ophthalmology. The currently available data for several of our molecules is already demonstrated positive activity on nonsensitive mutations across different inherited retinal disorders as well as the favorable safety profile. The preservation of the electroretinogram wave function and retinal histology are important safety considerations, and the preclinical data today shows that our investigational agents have acceptable safety profiles. We believe that these data will support the use of these compounds for intravitreal injection, with an initial development focusing on Usher syndrome. On May 2, at the 2019 ARVO Meeting, Eloxx will present a new data on the activity of ELX-03. Late last year, we announced that we've entered into a wide-ranging partnership with Foundation Fighting Blindness. And just this past week, we have the opportunity to present as part of the FFB Investing in Cures Summit, an important meeting that brings together patients, advocates, researchers and treating physicians. Given the estimated 4,000 individuals in the U.S. alone with nonsense mutations as part of their underlying Usher syndrome, the Foundation Fighting Blindness recognizes the urgency in developing new treatments and specific ways that can support our efforts to accelerate these programs. We look forward to our continued engagement with FFB and appreciate their support. In our call today, our Chief Operating Officer, Dr. Greg Williams, will provide further updates on our clinical and manufacturing progress. We ended the year with $48.6 million in cash and cash equivalents, which does not include an additional net proceeds of $14.8 million from a debt financing in January. We're well funded to advance our clinical programs and deliver top line data in cystic fibrosis in 2019. Our talented and highly experienced team is committed to our mission of bringing safe and effective medicines to patients who need them as quickly as possible. You should expect that we'll continue to attract and add key talent to make sure we deliver on our clinical and corporate milestones. At this time, I'd like to ask Dr. Matt Goddeeris to discuss some new data that's been published in Cell Reports generated on patient-derived organoids at the HUB, showing the high correlation between FIS swelling and organoids and measures of FEV1 in the clinic for drugs already approved for use in the treatment of cystic fibrosis.

[Matt Goddeeris:]

Thank you, Bob. As we previously discussed, Eloxx has been collaborating with the HUB, a nonprofit organization associated with the Hubrecht Institute on a series of studies using CF patient-derived organoids in a swelling assay, which is broadly used in CF as a translational model in understanding how different cystic fibrosis mutations respond to ELX-02. As Bob mentioned, at the North American Cystic Fibrosis Conference in Denver last October, we shared new data in the organoid assay that demonstrated ELX-02-mediated dose-dependent increases in both CFTR function as measured by the FIS assay and an increase in CFTR Messenger RNA as measured by nanoString, restoring it levels equivalent to wild-type controls. This finding is consistent with the reduction in nonsense-mediated decay, which is anticipated to go hand-in-hand with translational read-through. ELX-02 is the first investigational compound to show these beneficial effects in organoids derived from cystic fibrosis patients with nonsense mutations. It is particularly important to highlight the recent publication in Cell Reports authored by the HUB in collaboration with leading academic experts in organoid technology, demonstrating the high correlation of patient-derived organoid FIS responses to both the sweat chloride and FEV1 change observed in the very same cystic fibrosis patients treated in a variety of pivotal trials. This data included trials of approved CF drugs, such as the potentiator ivacaftor alone or in combination with the corrector lumacaftor as well as genistein and curcumin. In the study, the authors demonstrate that a positive FIS response in organs above 2,000 significantly correlates to a positive improvement in FEV1. These data are just the latest report for why the organoid model system is actively being used to evaluate compound responses across the wide landscape of CF genotypes in order to pair the right patients with the best therapeutic for their genotype. When we consider the experimental results of ELX-02 across a variety of nonsense-bearing organoids, we are encouraged by the reproducible and concentration-dependent FIS response above 2,000 for the majority of the organoid data points collected thus far and an FIS response above 4,000 for nearly half the data sets. These data support the potential for ELX-02 to provide a meaningful change in sweat chloride in FEV1. Since our report at the North American Cystic Fibrosis meeting last fall, we have continued basic scientific research to support the ELX-02 program. Next month at the European Cystic Fibrosis Basic Science meeting, we will share our results on the ability of ELX-02 to restore production of this CFTR protein. We believe the consistency of the data demonstrating ELX-02-mediated increases in CFTR and RNA function in animal models and organoids and now the new protein data establish a solid scientific data set demonstrating the ability of ELX-02 to read through premature stop codons in patients with nonsense mutations to restore essential functional protein. After release of our data at the scientific conference, we will host a webcast to discuss these new findings. In identifying patient populations for clinical trial activity, organoids enable us to screen a variety of genotype 3 ELX-02 responsiveness. We are preparing manuscript that compiles our expanding organoid data set. These data follow the organoid response from a growing number of patient-derived organoids, which represent multiple nonsense mutations across a variety of genotypes. For example, today, we can share that we have recently collected promising new data, demonstrating a concentration-dependent response of R553X and E60X nonsense mutations. This is exciting to our team as the data expands our support for ELX-02 activity to the top 5 nonsense mutations in the CF population, which cover over 75% of nonsense-bearing CF patients. We believe that the totality of these data and the substantial response observed in the G542X cystic fibrosis patient organoids derisks our Phase II clinical trial design focusing on patients with G542X mutation and supports our expectation that additional CF nonsense genotype beyond G542X will be responsive to ELX-02. I would now like to turn the call back over to Bob.

[Robert Ward:]

Thank you, Dr. Goddeeris. I'd now like to ask Dr. Greg Williams to share an update on our clinical program for ELX-02 in cystic fibrosis and our inherited retinal disease development efforts.

[Gregory Williams:]

Thank you, Bob. I'm pleased to have the opportunity to provide you with an update on our development programs for ELX-02 and our pipeline. As Bob mentioned, the results of our completed Phase 1 SAD study were published in the Journal of Clinical Pharmacology in January, and the emerging profiles supports our continuing development program. We previously announced that we were adding additional cohorts to the MAD study to evaluate different drug concentrations. And I'm pleased to report that we've initiated the sixth cohort of the MAD study and expect to complete the final cohort here in the U.S. in the first half of this year. We will then submit the results for scientific presentation or publication in 2019. Following completion of the MAD study, we plan to initiate a Phase II clinical trial in cystic fibrosis and reach top line data this year. Our clinical trial application has been approved, and the ELX-02 has been granted orphan drug designation by the European Medicines Agency. In our phase II CF trial, we will be evaluating changes in sweat chloride at multiple-ascending doses of ELX-02, which is consistent with other successful Phase II programs for approved drugs as the traditional biomarker measuring CFTR activity. Our planned Phase II clinical trial in cystic fibrosis will enroll no more than 24 patients with the most prevalent nonsense CFTR mutation, G542X, on at least 1 lial. Protocol calls for multiple increasing doses of ELX-02 in order to identify an optimal dose to carry into further development, and the study will be posted on clinicaltrials.gov. We expect to report for Phase II top line clinical trial results in cystic fibrosis in 2019. To support our full Phase II clinical trial program, we have completed the manufacturing of our lyophilized clinical drug product. We've also identified a commercial manufacture and are engaged in the process development work to scale up activities required to support Phase III clinical development. Regarding our pipeline. We have 170 compounds in our library and have completed screening on 30 of the most active read-through agents in this series. Eloxx holds global rights and has extensive patent portfolio with long life on composition of matter and used for all these compounds. In the ocular program, we currently have multiple compounds progressing in our IND-enabling studies, and our data demonstrated positive activity on nonsense mutations in inherited retinal disorders with a favorable safety profile. It's important to note that data for 6 different molecules from our library have been published by academic labs and show activity in a variety of ocular disorders, and we are intending to focus on Usher syndrome. We are particularly pleased with the emerging tolerability profile of the Eloxx investigational agents, which have preserved the electroretinogram or ERG waveforms and retinal histology at concentrations where aminoglycosides commonly show ERG wave attenuation or ablation. The ERG measuring electrical activity associated with nerve function within the retina and preservation of the ERG waveform is an important safety consideration. Over the past several months, the scientific team at Eloxx has submitted five additional scientific articles for future publication in scientific journals and has received acceptance for two abstracts to be presented at upcoming scientific meetings. We've had our first ophthalmology abstract accepted for presentation at the Association for Research in Vision and Ophthalmology, or ARVO Meeting, which occurs from April 28 through May 2 in Vancouver. The abstract is titled

[Robert Ward:]

Thank you, Greg. I'd now like to ask David Snow, our Chief Business Officer, to provide an update on our patient advocacy and business development activities.

[David Snow:]

Thank you, Bob. We continue to expand our patient advocacy work across key program areas and just returned from the Foundation Fighting Blindness Investing in Cures Summit, where Bob presented in his session highlighting therapeutic innovation within inherited retinal diseases. We'll provide greater information about FFB collaboration activities and our Usher program after Dr. Schneider joins our team. Next week, I'll be presenting as part of the panel discussion on commercializing rare disease therapeutics at the upcoming Life Sciences Patient Congress in Philadelphia. We're also very pleased to have added Dr. Kristie Kapinas to our advocacy team. Kristie has deep experience in cystic fibrosis working as a medical science liaison and disease educator. We recently participated in a Cystic Fibrosis Foundation sponsored translational read-through workshop, and we're continuing to engage with CFF on our clinical programs. I look forward to providing additional updates on progress with key cystic fibrosis advocacy groups in the near future. We recently announced that Eloxx has joined the HIT-CF project, a European Union-funded preclinical and clinical research program evaluating the efficacy and safety of several disease-modifying drug candidates in cystic fibrosis patients with rare genetic mutations. The goal of the European HIT-CF project is to investigate whether a positive response to therapies in a patient-derived organoid can be predictive of clinical response in a controlled trial. The project represents a new era in cystic fibrosis treatment and personalized medicine as it has the potential to shift therapeutic trials from the patients to the laboratory. The organoid model could be extended to all patients with CF and other rare genetic diseases to identify appropriate therapeutic options. HIT-CF is already received a number of biopsies and will collect data from over 500 cystic fibrosis patients. Our participation means that CF patients with rare nonsense mutations, who often represent the most severe and underserved phenotypes, will also be included. We believe the results of HIT-CF may fundamentally change rare disease treatment by enabling the use of organoid response data as a regulatory path for drug approval or label expansion as well as for reimbursement decisions. Finally, we continue to be actively engaged in the business development discussions focused on expanding opportunities for our library of molecules in multiple areas of unmet need, where nonsense mutations play an important role. I'll now turn the call back over the Bob.

[Robert Ward:]

Thank you, David. I'd now like to ask Greg Weaver, our Chief Financial Officer, to provide an update of our financial results for the full year and fourth quarter of 2018.

[Gregory Weaver:]

Thanks, Bob. As of December 31, 2018, the company had total cash and equivalents of $48.6 million, which does not include $14.8 million in net proceeds received from a debt financing transaction completed in January of 2019. We expect the company's total cash and equivalents, including the net debt proceeds, will fund the company's operations through top line data in cystic fibrosis and into the second quarter of 2020 based on our current operating plans. For the year ended December 31, 2018, the company incurred a net loss of $47.2 million or $1.45 per share as compared to a net loss of $23.6 million or $4.75 per share for the year ended 2017. For your modeling purposes, total fully diluted shares outstanding at December 31, 2018, was 35.9 million. The increase in year-over-year net loss was driven largely by the effect of noncash stock-based compensation expense, which totaled $13.4 million in 2018. R&D expenses were $20.5 million for the year ended December 31, 2018, compared to $16.4 million for the year ended 2017 and an increase of $4.1 million, again, due primarily to noncash compensation of $1.7 million, along with growth in clinical development cost, CMC, preclinical development and R&D professional fees. General and administrative expenses were $27.1 million for the year ended December 31, 2018, compared to $4 million for the year ended 2017, an increase of $23.1 million. The increase in G&A expense was related to noncash stock comp of $11.6 million along with increases in G&A salaries, other personnel-related cost, professional services related to becoming publicly listed company. For the three months ended December 31, 2018, the company had a net loss of $14.0 million or $0.40 a share compared to $11.4 million or $0.52 a share for the fourth quarter of 2017. The year-over-year increase in net loss was driven by the effect of the noncash stock-based comp expense, which totaled $3.8 million in the 2018 period. Fourth quarter 2018 R&D expense totaled $6.5 million as compared to $8.2 million for the same period 2017, which includes $0.8 million in noncash stock comp for the 2018 period. Quarter-to-quarter fluctuations were due to normal timing of R&D activities. G&A expense for the fourth quarter 2018 was $7.6 million compared to $2.4 million for the same period 2017. G&A in the fourth quarter 2018 increased due primarily, again, to $2.9 million in noncash stock comp along with salary-related costs and other G&A professional fees. That concludes the financial commentary. I'll now turn the call back to Bob.

[Robert Ward:]

Thank you, Greg. 2018 was a highly productive year for Eloxx, where we built the base for a strong growth trajectory for the company. 2019 will be a critical year as we accelerate our clinical development efforts and initiate our Phase II clinical trial in cystic fibrosis in the U.S. and Europe and reach top line data this year. Our scientific teams have been very productive, and we anticipate a steady claim of scientific publications and presentations, as we move to the year. On our webcast later this month, we'll update you on our new data presented at the EU CF Basic Science meeting and our progress with the clinical program. We're pleased that our clinical trial application in Belgium for cystic fibrosis is approved and that ELX-02 has been granted an orphan drug designation by the European Medicines Agency. We remain very encouraged by the breadth and consistency of the data we've generated for ELX-02 and by the advance scientific understanding of the basis of its mechanism of action. ELX-02 is the first and only read-through agent to have demonstrated substantial activity in cystic fibrosis patient-derived organoids bearing nonsense mutations. The recent Cell Reports publication demonstrates the high correlation between the FIS swelling assay in organoids and increases in FEV1 shown in clinical trials for the drugs that are currently approved for use in treatment of CF. We believe that the consistency and the positive data we've generated in organoids with FIS swelling increases the Messenger RNA and the soon-to-be released protein data that we'll present at the European Basic Science meeting later this month meaningfully de-risks our planned Phase II studies. We're on track to report top line data from these planned studies in cystic fibrosis in the U.S. and Europe this year. We're pleased to have initiated a new program focusing on inherited retinal diseases and the favorable tolerability profile demonstrated by several compounds from our library. We're currently conducting IND studies with the focus on Usher syndrome in the U.S. this year. And with the addition of Dr. Susan Schneider, we intend to build a complete team supporting inherited retinal disorders and provide our time lines to clinic. We're gratified to have attracted new industry experts to lead the acceleration of these efforts and to partner with Foundation Fighting Blindness as we advance a novel molecule towards ocular clinical development. Monday, we'll be participating the 39th Annual Cowen Conference here in Boston as well as at the Barclays Global Healthcare Conference on Thursday in Miami. On March 20, we'll be in New York City at the Oppenheimer Healthcare Conference. We look forward to meeting you there for one-on-one meetings as well as presentation. Thank you for joining us for our full year and fourth quarter 2018 earnings call. We look forward to continuing to update you on our progress. Thank you very much. Operator, you may now open up the call for questions.

[Operator:]

[Operator Instructions]. And our first question comes from Ted Tenthoff from Piper Jaffray.

[Edward Tenthoff:]

Can you hear me okay?

[Robert Ward:]

Yes. We can, Ted.

[Edward Tenthoff:]

Two quick questions, if I may. So with respect to the completion of the Phase I multi-ascending dose study, what really needs to happen to kind of get the Phase II in cystic fibrosis up and running?

[Robert Ward:]

I think, Ted, we have a pretty solid plan in place for execution on time. We had guided previously that we changed the concentration of the drug that was -- the amount of the volume and the concentration of the drug in the injection in the MAD study. Now remember, the whole purpose of doing these early studies is to pick the drug formulation and dose range to take forward in development. And once we've landed on the drug concentration that we want to carry forward, we'll use that through the rest of the drug development program. So we want to make sure when we finish the Phase I studies that we're answering all the questions we want to answer. So as we move forward, it's focused on picking the right dose to carry forward in development. Now Dr. Williams...

[Edward Tenthoff:]

[Indiscernible].

[Robert Ward:]

Yes, we've got to say, Ted, if you'd like. I think Dr. Williams, maybe you want to provide a little highlight on where we are with Phase II in terms of protocol development and execution on the program.

[Gregory Williams:]

Sure. Thank you, Bob. And Thank you, Ted, for the question. So as you know, we received to the Phase II program a high-priority assessment by the ECFS-CTN, and we have an approved CTA. We're looking forward to getting started promptly with the completion of the MAD study in Europe. We are then hopeful that we will expand the program to include U.S. sites as well.

[Edward Tenthoff:]

And would that require an IND filing?

[Gregory Williams:]

It would. And as you also may know, we have an open -- we had an open IND for cystinosis in the U.S. The dose range, the CMC, the tox, it's all similar for CF. So while we'll be opening an IND in the U.S., we don't any -- anticipate any issues with the review of that application.

[Edward Tenthoff:]

Okay, good, helpful and two housekeeping for Greg, if I may. Greg, you said that year-end shares were 35.9 million. Did I hear you correctly?

[Robert Ward:]

That's right, Ted, 35.9 million outstanding shares at 12/31.

[Edward Tenthoff:]

And you also mentioned -- and I apologize for not getting this to end quickly. What was the R&D stock comp component?

[Robert Ward:]

The R&D stock component for the full year?

[Edward Tenthoff:]

Yes, sir.

[Robert Ward:]

Yes, it would have been -- that would have been...

[Edward Tenthoff:]

I don't need to hold up the call.

[Robert Ward:]

Yes, the full number is $13.4 million, and the R&D piece of that is relatively small, $1.7 million.

[Operator:]

And our next question comes from Joel Beatty from Citi.

[Shawn Egan:]

This is Shawn Egan calling in for Joel. Regarding the new CF data from R553X and I believe you said the E60X genotypes, do these also generate FIS swelling above 2,000? And will this be presented at ECFS this year?

[Robert Ward:]

Yes, we posted on our website our new corporate deck, which does include a graph of the response for those two genotypes. And Dr. Goddeeris, do you want to mention where we'll next be presenting that data as well.

[Matt Goddeeris:]

Yes. So the AUC values are above 2,000, and that data won't be a part of the next presentation, which is focused on our protein data. But we'll capture it in -- at our next meeting, which is later on in June.

[Robert Ward:]

The next major cystic fibrosis meeting will be the European cystic fibrosis general meeting, which would be in June, then the U.S. cystic fibrosis is later in the year, correct.

[Shawn Egan:]

Great. And then regarding the HIT-CF project, can you talk a little bit about how much input Eloxx has into this collaboration? And what types of endpoints will be used of any clinical study that's spun out of the organoid data?

[Robert Ward:]

Yes. So the HIT-CF program is available online. For anyone who's interested, a quick Google search will take you right to the website. The focus of HIT-CF is broader than just Eloxx and multiple companies are collaborating. And if you said the major focus is to engage with EMA on what role organoids more generally could play within the drug development process. Now specific to us, the EU has provided funding to run 3 clinical trials out of HIT-CF. We do anticipate that as drugs go forward in development and as the genotype response data is collected by HIT-CF, the intent is to shape a trial where there's sufficient individuals with rare disorders that respond to a drug to run the prospective trial. So if all goes according to plan, we would anticipate that we'd be part of running a prospective clinical trial, where individuals who had generated organoid data are then placed into a clinical trial setting that allows the sweat chloride and FEV1 to be collected on a prospective basis.

[Shawn Egan:]

And my final question. Can you provide a brief update on the cystinosis program as well?

[Robert Ward:]

Absolutely. In fact, Dr. Williams and Mr. Snow just returned from a conversation with Dr. Paul Goodyer this past week. And Dr. Williams, do you want to give some speed on the progress we've made with the cystinosis as well?

[Gregory Williams:]

Yes, so as we previously discussed, we've talked about having a 6-patient cystinosis trial. We are polishing the protocol with Dr. Goodyer. We're looking forward to moving forward with that trial starting in the second half of this year.

[Shawn Egan:]

And will data from that also be in 2019 still?

[Gregory Williams:]

Yes.

[Robert Ward:]

Yes, we have not changed our guide. We had guided before that we'd have top line data from cystinosis this year.

[Operator:]

Our next question comes from Edward Nash from SunTrust Robinson Humphrey.

[Fang-Ke Huang:]

This is Fang on for Edward Nash. It's really amazing, especially knowing that and the safety and tolerability of ELX-02 is allowing you to move into the next cohort. And just to confirm, so do you mention that the final cohort can be the seventh cohort?

[Robert Ward:]

That is correct. So the seventh and final cohort we expect to run here in the U.S.

[Fang-Ke Huang:]

Got it. And so besides measuring in the difficulty for HIT-CF safety data, do you have any visibility in terms of what the potential advocacy when you're looking at the MAD study?

[Robert Ward:]

No, the MAD study and the SAD study are both run in healthy volunteers, and they're focused on safety to establish a dose range that's acceptable for use that then what changes we move to Phase II is the lowest dose picked for Phase II is one that has some expectation of efficacy. Typically multiple doses are included so that we can go to higher doses where the expectation in the trial size -- the final selected dose is likely to be one of the higher doses. But in the Phase I part of the program, it's slightly different because it's safety, we start with very low doses as well to demonstrate that that's safe and then escalate up to what would be the highest dose one might be expected to use in the patient population. So we have a range of safety data. And then that's the basis for then taking a reduced range of doses into the patient population, where the lowest dose is expected to be efficacious and then as we move higher to ask the question of what's the lowest dose at which you achieve your desired efficacious activity, and then that would go into the pivotal trial. So our dose selection will happen in Phase II.

[Fang-Ke Huang:]

Got it, very helpful. And lastly, so you mentioned, you nominate ELX-03 for Usher syndrome. Can you just briefly talk about comparing 03 and 02, what are the differences?

[Robert Ward:]

We'll provide more information about the molecules. Remember, there's 4 different generations of molecules. And so all of them were built off of a molecular scaffold of either G418 or paromomycin and then are modified. All the molecules we work with are novel compounds. So they're all NCE compounds. If you said they have a general scaffold relationship, that would be true. And then there are 4 different generations, where different modifications were made and then screened for activity on the target and selectivity to identify molecules that were selective for the cytoplasmic ribosome, reduced affinity at the mitochondrial ribosome, and then we run a series of screening assays both in vitro screen as well as the cellular model and then usually select translational model as well to evaluate compounds for their activity profile. Now we do see differences in terms of activity of different molecules. So when we pick a molecule to carry forward in Usher syndrome, there's 10 different proteins that makeup Usher syndrome. And as you might imagine, each of those proteins has a constellation of genetic changes. So we look for a molecule that has the best activity across the cluster of related molecules. So the presentation at ARVO will be an update. We've screened multiple molecules on the relevant mutational footprint and then our screening molecules as well on the tolerability profile. And so at ARVO, we have opportunity to share that data with the scientific community.

[Operator:]

And our next question will come from Ben Shim from Canaccord Genuity.

[Eunshuk Shim:]

Can you hear me?

[Robert Ward:]

Yes, we can, Ben. Thanks for joining.

[Eunshuk Shim:]

Great. Many of my questions have been answered. But maybe Bob and Greg, maybe you can answer what are the conditions you'll need to fulfill to fund or drawdown on the term loan B that's available?

[Gregory Weaver:]

This is Greg. Thanks, Ben. That will be included in the filing. In the 10-K we'll have an exhibit of the loan agreement. I think in the 8-K, we don't detail that out. So at this point in time, I would just say that it's typical terms that you would see in a venture debt facility of this type.

[Robert Ward:]

Yes, that in order we are in advance of data. We thought it was a great way to bolster our balance sheet in a way that's nondilutive for our shareholders so that they're able to maximize their opportunity as we're ahead of data and look for an opportunity this year to bring out some new data on the program which we think will be compelling.

[Eunshuk Shim:]

Of course. Kind of thinking ahead, what is your philosophy, Bob, on maybe potentially partnering out some of these assets in your library since your focus will be on 2 or 3 candidates right now?

[Robert Ward:]

Yes, Ben, I think that's a great question because when you think about building program, each of them requires the same level of detail and attention. There is no program that's called the light touch program. And so when we think about driving multiple programs, particularly in a small company, we want to make sure that we have enough capability to drive them at the pace that drug development should move. I mean, when we go to patient advocacy meetings, I think the number one question that we're most often asked is how long is it going to take. So when we think about a number of indications that are very attractive in the sense that there's high unmet medical need, there's a large number of individuals affected whether that's primary ciliary dyskinesia or polycystic kidney disorder, we think there can be opportunities for us to identify ways to collaborate with other parties that will help us expand our capabilities at a faster pace. And so we do think that continuing to explore ways to ensure that we are maintaining pace with the programs we're driving and the same time are open to identifying ways to move faster on more programs through partnerships. So that's certainly an area of active expiration for us.

[Operator:]

And I'm showing no further questions at this time. I would now like to turn the conference back over to Robert Ward for any closing remarks.

[Robert Ward:]

Well, thank you. So today, on International Women's Day, we are very pleased to have announced the addition of 2 women leaders to the company as we continue to strengthen our capabilities. I wanted to thank everyone for joining us for the call today. And we look forward to seeing you at one of the upcoming investor meetings and keep you apprised on progress on our next call. Thanks so much.

[Operator:]

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect. Everyone, have a wonderful day.