GW Pharmaceuticals plc
Q3 2017 Earnings Call Transcript

Published: 7 Aug 2017

[Operator:]

Greetings and welcome to the GW Pharmaceuticals Third Quarter 2017 Financial Results Conference Call. At this time, All participants will be in listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. I would now like to turn the conference over to your host, Mr. Stephen Schultz. Thank you, Mr. Schultz. You may begin.

[Stephen Schultz:]

Welcome all of our and thank you for joining us today for our third quarter results call. Again, I'm Steve Schultz, Vice President of Investor Relations at GW. Today, I'm joined by Justin Gover, GW's Chief Executive Officer; Dr. Volker Knappertz, our new Chief Medical Officer; Scott Giacobello, our Chief Financial Officer; and Julian Gangolli, President of North America. We hope you've had a chance to review our press release and 6-K filing issued a short while ago. As a reminder, during today's call, we will be making certain forward-looking statements. These statements reflect GW's current expectations regarding future events, including, but not limited to statements regarding financial performance, clinical and regulatory activities, patent applications, timing of product launches, and statements relating to market acceptance and commercial potential. Forward-looking statements involve risks and uncertainties and actual events could differ materially from those projected herein. A list and description of risks and uncertainties associated with an investment in GW can be found in the company's filings with the U.S. Securities and Exchange Commission. These forward-looking statements speak only as of today's date, August 7, 2017. Finally, an archive of today's call will be posted to the GW web site in the Investor Relations section. I'll now turn the call over to Justin Gover, GW's Chief Executive Officer.

[Justin Gover:]

Thank you, Steve, and welcome to all those who are able to join us. On today's call, following my introduction, our new Chief Medical Officer, Dr. Volker Knappertz will provide a research and development update. Julian Gangolli will provide an update on our U.S. commercial operations, and Scott Giacobello will discuss our financial results. At the conclusion of our prepared remarks, we will open the line for questions. Let me begin by stating how pleased I am to report that the Epidiolex NDA submission process is now underway. Several elements of the submission are already with the FDA, and the full submission is expected to be complete in October. Although we had originally anticipate submission of the full NDA around now, we recently requested and obtained a permission from FDA, to make a rolling submission, in order to allow for the review to commence in the same timeframe, whilst we finalize completion of the CMC module. This final CMC section is expected to be submitted in October, and indeed, is already near completion. It primarily awaits data from final API validation batches, which are being manufactured this month. Data from these API batches will be available to us next month, following which they can be incorporated into the submission. Just over three years from IND to completion of the NDA submission, the Epidiolex program has been a rapid one, responding to the serious unmet need in Dravet syndrome and Lennox-Gastaut syndrome patient population. The last several months have been an intense period for our company, as we have finalized all elements of the NDA and brought new production facilities online, and I want to thank all of those patients, clinicians and employees that have made such a significant commitment to achieve this milestone. The recent publication of the Epidiolex Dravet syndrome study in the New England Journal of Medicine is testimony to the groundbreaking nature of this development program, and the need for additional treatment options in this patient population. We now look forward to completing a submission, acceptance of the filing and the FDA review process, which will be led by Dr. Volker Knappertz, our new Chief Medical Officer. With that, let me officially welcome Volker to his first GW quarterly results call. We look forward to introducing him to investors and analysts over the coming months. I will ask Volker to provide you with a brief overview of his background, why he chose to join GW and ask him to provide additional comments regarding the Epidiolex NDA and our pipeline. You will recall that last year, we announced Stephen Wright, our previous CMO, would retire in May of this year. This transition is now complete, and I am grateful for the contribution that Stephen has made, to ensure a smooth hand-off of this critical role. Stephen will continue to play an important role, as a senior medical advisor to GW, with dedicated focus on the NDA submission and European regulatory application. In addition to Volker's appointment, Professor Ben Whalley has been appointed to the newly created position as Head of Research. Previously, Ben was Professor of Neuropharmacology at the University of Reading School of Pharmacy in the U.K. Importantly, Ben has been GW's principal academic collaborator in the field of epilepsy preclinical research for the last decade, and is a leading authority on the effects of cannabinoids on the central nervous system. Another important recent addition to the team is Douglas Snyder, who joined us in the newly created position of Chief Legal Officer. Doug brings more than 20 years of experience providing counsel in the pharmaceutical industry at the FDA and in private practice. Prior to joining GW, he led the legal and compliance teams of Senior Vice President, General Counsel and Secretary for Actelion U.S. and held senior legal positions of Eisai and GlaxoSmithKline. Before joining the industry, he held the role of Associate General Counsel for the FDA, where he counseled the commissioner and appeared before Congress in key initiatives. We are very excited to have attracted these highly experienced individuals to our company. With that, let me hand the call over to Volker Knappertz.

[Volker Knappertz:]

Thank you, Justin, and good day everyone. My congratulations and appreciation also go out to Stephen, who I success [ph] as CMO at GW and his close support to me during the transition. I am honored to be carrying the R&D torch forward from here. By way of introduction, I am a neurologist, over 25 years of drug development experience, and it was indeed firsthand experience of the devastating effects of developmental encephalopathic epilepsy within my own family, that had inspired my career. My desire to join GW centered on the strength of the Epidiolex data and the opportunity to contribute directly to making this new treatment option available for those affected by these difficult epilepsy conditions. Being able to address the therapeutic area with such high unmet medical need is indeed an important responsibility and a privilege. I was also attracted by the vast potential of GW's cannabinoid platform to yield additional first-in-class medicines in neurology and other therapeutic areas. I firmly believe that GW has built a unique and compelling position at the forefront of one of the most promising areas of pharmaceutical science. Over my career, I have been focused on both clinical trial practice and pharmaceutical drug development. I come to GW from Teva Pharmaceuticals, where I led clinical development for multiple sclerosis, oncology, and biosimilar products. Over the past 20 years, I oversaw multiple regulatory submissions and approvals in the United States, Canada, Europe, as well as Japan. Importantly, over the years, I have gathered firsthand experience with the FDA neurology division, experience that will benefit us both for Epidiolex and the company pipeline. Shortly after my arrival at GW, the first Epidiolex phase-III trial in Dravet syndrome was published in the New England Journal of Medicine. This publication, together with the corresponding support of editorial, offer testimony to the importance of the safety and efficacy demonstrated in the Epidiolex clinical program and the breakthrough of the CBD medicine for the treatment of such notoriously difficult to treat types of epilepsy. We are now working on developing manuscripts for the two phase-III Lennox-Gastaut trials and hope to see one of these published before the end of this year. There is a wealth of data on Epidiolex, not only from the placebo-controlled trials, but also from the extensive expanded access program. Data from this EAP continues to provide important additional insights, and last month in the journal, Epilepsia, Rosenberg and his colleagues assessed the caregiver reported quality of life in childhood epilepsy instrument from 48 EAP patients. These patients experienced an improvement in quality of life and of the 60 subdomains in this instrument, those of significant improvement, included the domains of energy and fatigue, memory control and helplessness, cognitive function, social interactions, behavior, as well as global quality of life. Interestingly, quality of life improvements were not correlated to change in seizure frequency or adverse events, and the office conclude that CBD may have beneficial effects on patient quality of life, that are distinct from its seizure reducing effects. The size effect of CBD were similar to those previously reported in expanded access program publications. My initial priority at GW has of course been to perform a full review of the Epidiolex NDA and I consider it to be of high quality and a compelling application. In the last few months, since joining GW, I have not only conducted a full review myself, but also sought review from seasoned regulatory consultants. Although this is an orphan drug filing, I consider this submission to be very comprehensive and robust. The clinical data centers on three well-conducted, randomized, placebo-controlled trials, each of which met its primary endpoint and key secondary endpoints. The consistency of these positive data, is particularly reassuring. With regard to safety, the size of each of the phase-III studies, together with extensive long term data from the open label extension in the expanded access program, should provide FDA with a comprehensive and detailed understanding of what we believe to be a favorable safety profile. Of particular note, our NDA includes safety data on a total of 1,500 patients exposed to treatment, including over 400 patients with more than one year of continuous exposure. Having reviewed the related FDA correspondence, as well as the entire NDA package, I am confident that the NDA submission will enable FDA to accept to file and, although we cannot be certain until the review is underway, we do anticipate that FDA will grant the NDA priority review status. This should lead to a June 2018 PDUFA date. We are frequently asked about the likelihood of an advisory committee meeting. As you likely know, this is entirely up to the discretion of the FDA. At this time, I would say, there is a 50-50 chance. As you would expect, we are already in full preparation in the event that an ad com is convened. On the popular topic of Clobazam interaction, as you have heard from the company before, when looking at the pivotal data, there is evidence supporting efficacy in patients taking CBD that are not taken concommant in Clobazam, and evidence of somewhat enhanced effect in patients that are taking both CBD and Clobazam. After reviewing that data personally, I am confident that the interaction between CBD and Clobazam should not be an approvability issue, as with many AEDs, such drug-drug interactions are addressed in the appropriate sections of the label. I would also reiterate the positive primary and secondary outcomes in the phase-III studies, and that we have conducted appropriate drug interaction studies for the NDA, in accordance with FDA guidance. Looking ahead, you should expect to see additional data on this topic, both the expanded access program and pool data from our pivotal trials at the American Epilepsy Society annual meeting in Washington DC in December. Let me also bring to your attention, that Epidiolex was recently awarded rare pediatric disease designation, conditionally granted by FDA. This conditional designation is a precursor to the potential award of a rare pediatric disease priority review voucher, which if awarded, would be granted at the time of the NDA approval. Outside the United States, we continue to progress plans for a centralized European regulatory submission in the fourth quarter of this year. As a reminder, all of our phase-III trials included European sites. In the last couple of months, we have held a formal pre-submission meeting with the EMA, as well as a follow-up meeting with a designated 'rapporteur' regulatory authority, which I was able to attend in person. As a result of these positive meetings, it was agreed that GW can submit a single application for both the Dravet syndrome and LGS indications in Europe, and we will therefore be making this submission later this year, which will heavily draw on the content of the NDA submission. The potential of expanding the intended Epidiolex label beyond our first two indications of Dravet syndrome and LGS continues to advance, as we are currently recruiting phase-III trials for our third target indication of tuberous sclerosis complex and our fourth target indication of infantile spasms. Data from the tuberous sclerosis trial are expected in 2018. Beyond Epidiolex, GW is currently evaluating Cannabidivarin or CBDV in a phase-II double line randomized placebo controlled trial as add-on therapy in adult patients with inadequately controllable seizures. I am pleased to report that recruitment into the efficacy phase of this trial has very recently been completed with 162 patients randomized. Data from this part of the trial are expected at the end of 2017 or early 2018. We have also observed promising preclinical data on the effects of CBDV on cognition and behavior. As such, we are enthusiastic about the upcoming development of this molecule in the field of autism spectrum related disorders. A small, investigator led expanded access program trial in 10 patients with autism is just getting underway in the United States. In addition, we expect an investigative sponsored open label trial to commence. As well as a company sponsored phase-II placebo controlled trial for CBDV in the treatment of Rett syndrome, a condition for which GW has received orphan drug designation from the FDA. We have received scientific advice from both the FDA and the EMA on the phase-II study design. Of course, our recent positive results from the phase-II placebo controlled clinical study, of a combination of CBD and THC in patients with recurrent glioblastoma and aggressive form of brain cancer, represents a highly promising pipeline opportunity, and one, that we expect to move into a pivotal clinical development program in due course. Results from this study were presented at the ASCO annual meeting in June. Very recently, we have received updated survival data from this study and observed, that this survival trend continues. This data will be presented at the future medical conference. From a personal perspective, having researched my doctorate on factors predicting outcomes in glioblastoma, I have been very encouraged by this data and was very recently able to discuss details of this program, with a distinguished panel of glioblastoma treating oncologists. There truly is enthusiasm at the prospect of progressing a novel treatment option in this area of such high unmet medical need. Thank you, and I look forward to keeping you up-to-date on our future progress. Let me now ask Julian to provide some comments on the commercial preparations for Epidiolex.

[Julian Gangolli:]

Thank you, Volker, and welcome to the team. With our regulatory submission process now underway, the prospect and timing of an FDA approval and launch come into much clearer focus. Our U.S. pre-launch leadership team, now in place and made up of very experienced professionals, is rapidly putting into action the various elements necessary for a successful U.S. Epidiolex launch. Over the remainder of 2017, our key priorities include, completion of the U.S. team buildout, establishing the foundation for strong managed care and payor relationships, support for and outreach to the major epilepsy patient advocacy groups, and finally, continued high visibility at major U.S. medical congresses. With regards to the continued expansion of the U.S. organization, we are well on our way to establishing an experienced team, focusing on maximizing the commercial potential, once Epidiolex is approved. We continue to grow out our medical affairs team, which now comprises 13 medical science liaisons, and which we expect to increase to 15 before the end of this year. This group is an essential facet of the science led approach to our healthcare provider and epilepsy advocacy group interactions. We are also continuing to build out our managed markets and payor expertise. Payor education and readiness is a very important focus for us, as we move closer to an approval of Epidiolex. We are now hosting a number of individual, one-on-one and advisory board interactions, with some of the larger commercial state and federal payors, and without going into great detail on these interactions, I will say that we are comfortable with the direction of travel with these discussions. This activity, which allows us to open and be collaborative with our future managed care partners, is an essential facet of our commercial preparations. These payor initiatives also include, the development of a comprehensive pharmacoeconomic dossier to a system informed payor and formulary access and reimbursement decision-making. I am very pleased with the talent and experience we have in our growing U.S. team, and have great confidence in the ability of this team to execute on our plans. Finally, from a team buildout perspective, we anticipate hiring approximately 60 sales professionals to target approximately 4,000 to 5,000 U.S. physicians. I would not expect this hiring to commence until closer to our expected approval. Working with clinicians, the company expects to continue with high visibility activities at major epilepsy and neurology medical meetings, such as the Child Neurology Society Meeting in October and the American Epilepsy Society meeting in early December. We will continue the dissemination of important scientific data from the Epidiolex clinical program, and anticipate data presentations, which will reinforce awareness of GW and its subsidiary, Greenwich Biosciences, within the physician community and understanding of the Epidiolex data. One highlight of this initiative, was certainly the publication of the Dravet syndrome results in the New England Journal of Medicine. Looking ahead to the upcoming AES meeting in December, as Volker just mentioned, the company expects an array of new data to be presented from the placebo controlled trial, the long term open label extension study, and from independent investigators involved in the expanded access program. Investors should expect to see the following at AES. First, pooled efficacy and safety from phase-III trials. Second, long term safety and efficacy from the open label extension. Third, long term safety and efficacy from the expanded access program, the EAP program. Fourth, pooled efficacy and safety on and off Clobazam, and finally, numerous posters [ph] from independent investigator expanded access and state expanded access programs, including data on and off Clobazam. Beyond the U.S. commercial preparations, we are now also growing our European commercial team, which is being led by Chris Tovey, GW's Chief Operating Officer. This team now has in place, key staff in medical affairs, market access, and marketing disciplines and is rapidly advancing multiple areas of launch planning. We are establishing a contracted commercial infrastructure in the major European markets, meeting with reimbursement authorities to develop a robust market access strategy and also participating in a number of key European epilepsy related medical meetings. I thank you for your time today, and I now hand the call over to Scott Giacobello, to provide the financial review.

[Scott Giacobello:]

Thank you, Julian, and good afternoon. I will now provide some high level comments on GW's financial results for the three months and nine months ending June 30, 2017. A more detailed discussion of our results is provided in the 6-K filing, issued a short while ago. We present GW's results, in accordance with international financial reporting standards in British Pound sterling. For convenience purposes on this call, I will refer to U.S. dollar equivalents, using an indicative rate. Starting with revenue; total revenue for the quarter was in line with the prior year, at $3.1 million compared to $3 million in the third quarter of 2016. Moving to R&D spend, total research and development expense for the quarter increased to $36.3 million compared to $33.3 million in the third quarter of 2016. This increase reflects the ongoing Epidiolex development program, our other pipeline studies and additional costs relating to the scale-up of Epidiolex growing and manufacturing processes. Turning to SG&A, sales, general and administrative expenses increased to $15.3 million in the quarter from $7.3 million in the third quarter of 2016. This substantial increase is a result of the continued investment in our commercial operations and pre-launch activities. Foreign exchange volatility continues to have a significant impact on our results. During the third quarter, continued weakening of the U.S. dollar against the pound sterling, has resulted in a recognition of a net foreign exchange loss of $10.9 million. This loss is primarily due to the revaluation of the company's dollar denominated cash balances at the closing sterling exchange rate. This loss is in addition to the $5 million foreign exchange loss recognized in the second quarter. This is all resulted in a loss before tax for the third quarter of $60.6 million. For the nine month period ended June 30, 2017, a loss before tax amounted to $135.5 million. Moving to cash flow; capital expenditure for the nine months ended June 30, 2017, was $17.5 million compared to $8.6 million for the comparative period in 2016. This increase reflects ongoing planned upgrades to our cannabinoid growing and production facilities, including buildout of the new 45-acre glasshouse growing facility, which is now operational. Net cash outflow from operating activities for the nine months to June 30, 2017, was $98 million compared to $74.4 million for the comparative period in 2016, reflecting the increases in R&D expenditure and pre-launch costs, already mentioned. Total net cash outflow for the nine months ended June 30, 2017 amounted to $117.5 million. At June 30, we held closing cash equivalent to $369.5 million. Turning to guidance, we expect total cash outflow for 2017 to be in the range of GBP126 million to GBP134 million or $165 million to $175 million at current exchange rates. This is a slight increase to our previous guidance, which was approximately $150 million. The increase in our U.S. dollar guidance, is driven in large part by the weakening of the dollar against the pound sterling, and in fact, our projected cash expenditure in pound sterling is largely unchanged from previous expectations. Thank you. And I will now hand the call back to Justin.

[Justin Gover:]

Thank you, Scott. In closing, with our NDA submission underway and expected to be complete in October, together with our European filing expected in Q4, GW is now focused on ensuring that we deliver highly successful launches in both the U.S. and Europe, through a world class team and has extensive epilepsy, neurology and rare disease experience. Regarding production, the NDA submission includes data from commercial scale facilities to support launch and in which we continue to invest, in order to expand capacity to meet anticipated medium and long term demand. We will be ready to host the pre-approval GMP inspection from the FDA, and having operated the commercial GMP for over a decade, are confident in the positive outcome. We also continue to place great focus on maximizing the value of this opportunity, by applying significant effort towards lifecycle management and intellectual property. In addition to orphan exclusivity, GW has been seeking to protect Epidiolex through the expansion of its patent portfolio. This portfolio relating to the use of CBD in the treatment of epilepsy, includes 14 distinct patent families, which are either granted or filed. Most of these patent families claim the use of CBD and the treatment of particular childhood epilepsy syndromes or seizure subtypes. These medical -- and methods of treatment type patent families are supported by additional patent families claiming CBD formulations. We anticipate further patent filings, based on some of the most recent analyses of our clinical data. Over the last quarter, six patents have been published on the U.S. PTO site, claiming various methods of treatment, using CBD, including three that relate to the use of CBD in combination with other AEDs, and three that relate to the use of CBD, in the treatment of specific seizure types. All of these applications have been filed as Track One applications in March 2017, which means the U.S. PTO's objective is to make its final determination, as to whether to grant these applications by the end of March 2018. If these patents grant, we would expect them to be listed in the orange book at the time of the Epidiolex NDA. Regarding formulations, in addition to the initial launch formulation, GW continues to develop additional formulations of CBD as part of its lifecycle management plant, and which also benefit from intellectual property. A number of these formulations are already in phase-I in clinical trials, as well as developing improved liquid formulations, we are developing a solid dose form, to provide a convenient dose form, particularly for adults and other older children across our target indication, while sufficient range of both sizes will maintain the current flexibility for titrating and amending the total daily dose. An intravenous formulation is also under development, which is intended to provide short term replacement or emergency therapy for patients, unable to take the oral solution while hospitalized. As important as Epidiolex is to GW, we also continue to progress our pipeline across a range of therapeutic areas, and believe that GW is well positioned to remain at the forefront of cannabinoid drug discovery worldwide. With ongoing clinical development of CBDV in both seizures and autism, as well as CBD-THC in glioblastoma, our platform offers significant potential for upcoming use [indiscernible] and the development of pipeline assets that can deliver value for GW's investors well into the future. Thank you for your time today and for your interest in GW. And I would now like to open the call for a few questions.

[Operator:]

Thank you. Our first question comes from the line of Paul Matteis of Leerink Partners. Please proceed with your question.

[Jeffrey Lin:]

Hi guys. This is Jeffrey Lin on for Paul Matteis. Thanks a lot for taking our question. So I have three questions; two for the team and one for Dr. Volker. The first two questions are, why are you expecting a manufacturing inspection from the FDA in the first quarter of 2018, but this is specific communication from the FDA? And for the primary data necessary for the CMC for the NDA application, what sort of data is it? Is it like the stability data, and the question for Dr. Volker is, as you personally review the drug-drug Clobazam interaction, could you please give us your thought process in reviewing the data, and why it will be -- the drug-drug interaction is not an approvability issue?

[Justin Gover:]

Hello, can you hear us?

[Jeffrey Lin:]

Yes.

[Justin Gover:]

Great. So inspection guidance is really around looking at timing of acceptances of file, in our understanding is, when an inspection would be scheduled. In general, inspections are scheduled only after acceptance of the file. So that takes you from October through to December, and then our assumption is, at that point, that we are looking at a Q1 inspection. So it's our expectation, we just wanted to set that expectation upfront, which is consistent with the advice we have received from our regulatory consultants. In terms of your second question, in terms of the CMC data, to be a little more specific; essentially, we are currently manufacturing our final API validation batches, they are being manufactured this month. Data from those batches will be available next month, they will then be written and put into the submission. And in terms of what this really means, this API facility has already been used for the last several years, for our clinical trials manufacturer. The difference here is that, this API that's going to be manufactured this month, uses material from the extraction facility that has newly commissioned that we brought online. So it's essentially bridging between those two. We manufactured extract from our new facility numerous times now, all of the batches from the new facility have met specification. The API process is the one we have been using for several years. So it's really the final step, and that's why we have been pretty precise about the guidance.

[Volker Knappertz:]

Thank you, this is Volker Knappertz, for the question on Clobazam and why it's a labeling and not approvability issue, as I have said in my prepared statement. What becomes clear in reviewing the clinical trial data, the data that's available to us, is the fact that CBD is an anticonvulsant in its own right. And in my opinion, this is something that has clearly been demonstrated in both the preclinical models, where of course, there is no co-administration of any other drugs, let alone Clobazam, and in the clinical studies, where a substantial proportion of patients in each trial, will go for NADA on Clobazam. What's really important here to understand is that, CBD is not Stiripentol, I think Stiripentol, its interaction with Clobazam may have been confusing some of the issues in the past, and for Stiripentol, there was of course no data to support in independent effect, and it appeared to be a metabolic enhancer of the co-administration. But I think as Julian said in his statement, importantly, we are looking forward to sharing with the epilepsy community in Washington DC in December, data from clinical trials, but we will be showing pooled safety and efficacy data on and off Clobazam. And so should you. I think the data will speak for itself and make it clear, that whether it's an additive effect, which is a positive thing, for those stations that have both on Clobazam and CBD, there is clearly an antiepileptic effect of significant proportion in patients that have Clobazam.

[Jeffrey Lin:]

All right. Thank you for answering our question.

[Operator:]

Our next question comes from the line of Phil Nadeau of Cowen and Company. Please proceed with your question.

[Phil Nadeau:]

Good afternoon. Congratulations on the progress and thanks for taking my questions. Just a couple; first, Justin, you mentioned APIs being manufactured this month. Given however that in the past, you told you were going to complete your filing around mid-year? Seems like the API manufacture is happening somewhat later than you would have anticipated. I am curious, why is that, is it -- this extraction facility came online somewhat later than you anticipated, or did something else change?

[Justin Gover:]

Yeah thanks. It's true, I have put in my comments, I think we are a couple of months behind on the CMC front, and I don't think -- there is nothing major here. I mean, a number of incremental final steps taken together in the final qualification of our new extraction facility, which really has led to this situation. So taken together, that's led to this extension of the CMC section from midyear through to October. But that facility is now fully qualified, it is online, it is behind -- that and those issues are very much issues of -- which were not major, but were issues of the past, and had, as I said, why we have given the clear guidance is because, these final steps are now -- steps we are comfortable with, in terms of providing you with this level of guidance.

[Phil Nadeau:]

Okay, that's very clear. And then second, on the presentation of the Clobazam and non-Clobazam. Some said they did AES. That's also a bit of a change from the past, where in the past you had suggested we may or may not see the medical meeting and more likely would see it sometime later. What's it about that change of heart, is it simply Dr. Knappertz review of the data, or have you gained more clarity, based on continued analysis of the preparations [ph]?

[Justin Gover:]

I think we have been saying a couple of things. One in the past, which remained consistent. One is, we would not -- don't believe looking at subgroups of the -- and looking at these kind of analyses ahead of the NDA submission going in, was very important to us, because these analysis are -- there is many different analyses being done, and the idea of externalizing certain analyses before they have been finalized in QC for the FDA seem to us to be inappropriate. I think the second thing is, again, consistent with previous comments, is that we don't -- we are not showing data from single studies. It's very important for us that the -- we have said, that a single study which was not designed for subgroup analysis in terms of power calculations, would not be an appropriate way to show this data. So again, that indeed was a comment on the AES post to last year. So I think, as we move forward, I think we understand this is of great interest. I think frankly, it has been of greater interest to the investment community than others. But we want to listen to those issues, and I think we will try our best to address them and clearly, I am sure, there will always be more questions than we can answer in any one poster. But I think, as we go into the FDA review, I am certainly shedding some more light on this issue, seems to us to be something that we were hearing, that -- from investors that they wanted to see.

[Phil Nadeau:]

Great. And last question for me, there was some controversy around the failure of another formulation of CBD in the trial and adult focal epilepsies today. Just curious to get your perspective on the failure, that formulation, do you have any guesses to what it can be attributed to, and in particular, have you seen any efficacy in adult focal seizures in your expanded access program?

[Volker Knappertz:]

Hi, this is Volker. So we also of course review the press release by Zynerba this morning, and looked at the data, and just a few points from our perspective, although it's difficult for us to comment on competitor's products and not having had really anything other than what you are looking at, which is the press release, to go by. For us, this is clearly not a class effect or an effect for the active [indiscernible] cannabidiol CBD. This is something that is clearly related to the ACMI profile of this specific formulation, which is designed as a transdermal gel versus our PO oil solution formulation. And just a couple of thoughts; I mean, the dose and dosing regimen that's deployed here by Zynerba, is quite different from what we are doing, and from what I could see in the press release, they were using doses of 100 to 200 milligrams per day in adult patients. So if you look at that as a milligram by kilogram basis, that's about tenfold removed from the doses that we are using, which are 10 milligrams per kilogram and 20 milligrams per kilogram in our pivotal trials. And so, we really know what our absorption distribution metabolism profile is, and we have a pretty good idea of what the PK is. There is no such data available anywhere or we could gather from the Zynerba CBD gel formulation. So from what we know, you would really have to have almost 100% absorption through the skin, which seems implausible to reach similar levels on what we are seeing in our programs. That to me, a very significant finding. If you then look within their press release, the statement that it was very well tolerated and some of the adverse events that we were seeing, which are CBD related, are not being reported here. You would sort of think, that there is maybe lack of absorption and under-dosing that's going on. With regards to the patient population demographics, the partial seizure population is something that has been studied in some of our extended access programs with efficacy in patients, that were taking our CBD oil solutions. So clearly, we have those cases within the EAP of positive response, and I think there may be even super responders of people who have abrogation of their seizure activity, very large reduction in their seizure activity in those patients. And I think the other piece is, the clinical trials in epilepsy are, an issue of expertise and trial conduct. For example, we are using an electronic IVRS system with profound training of caregivers in patients on how to enter seizures. It appears that in this particular trial that was reported here today, they used the hand written daily diaries, which have been notoriously more difficult to show asset sensitivity.

[Phil Nadeau:]

That's very helpful. Thanks for taking my questions.

[Operator:]

[Operator Instructions]. Our next question comes from the line of Gabriel Wu of The Maxim Group. Please proceed with your question.

[Jason Kolbert:]

Hi guys. It's actually Jason Kolbert for Gabriel. But Gabriel and I were talking earlier about the heterogenic differences between the Zynerba product and your product, and I just wanted to get a sense from you, although I think you kind of answered it already; how much of a contribution do you think plant-based with somewhat of a mix versus the synthetic cannabidiol may have contributed to the Zynerba failure? And again, I am not asking you to speculate on Zynerba, I am just trying to understand product differences and product characterization differences. Thank you.

[Justin Gover:]

Thanks for your question. I think, anything what we say would be highly speculative at this point. I mean, we have never compared our own product with synthetic CBD in the same formulation. So I think, it'd be very difficult for me to answer your question, other than to say you know, yes, their product is synthetic, ours is plant-derived. But it is close to pure -- I mean, it is highly purified. Our product, it is almost entirely CBD. There are some other components there, we call them impurities. They are natural components of the plant. But I honestly think, at this stage your question is, I apologize, but I think your question is really impossible for us to answer at this point.

[Jason Kolbert:]

Okay. Thank you. I appreciate your time.

[Operator:]

There are no further questions at this time. I would like to turn the conference back over to management for closing remarks.

[Justin Gover:]

Well it's Justin here. Well it just leaves me to thank you for your time today. Obviously, next step for us, very much to focus on completion of the submission, and also, we look forward to, what should be a very AES in early December. We will be in a number of investor conferences in the September timeframe, so we look forward to catching up with you then. Many thanks for your time today.

[Operator:]

This concludes today's conference. Thank you for your participation. You may disconnect your lines at this time. Have a wonderful rest of your day.