XOMA Corporation
Q2 2013 Earnings Call Transcript

Published: 8 Aug 2013

[Operator:]

Good afternoon ladies and gentlemen and welcome to the XOMA Corporation’s Second Quarter 2013 Financial Results Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session, instructions following at that time. (Operator Instructions) And as a reminder this conference call is being recorded. And now I’d like to turn the conference over to your host for today, Ashleigh Barreto, Investor Relations at XOMA. You may begin.

[Ashleigh Barreto:]

Thank you, operator and good afternoon everyone. Joining us on the call today are John Varian, Chief Executive Officer; Paul Rubin, Senior Vice President- Research & Development, and Chief Medical Officer; and Fred Kurland, Vice President-Finance and Chief Financial Officer. Before we begin, I’d like to remind everyone that this conference call will contain forward-looking statements about the Company. These statements are subject to risks and uncertainties that could cause actual results to differ. Please note, these forward-looking statements reflect as opinions only as of the date of this presentation, and we undertake no obligation to revive and publicly released results of any revisions. These forward-looking statements in light of new information or future events. Factors that could cause actual results and outcome to differ materially from those expressed in or implied by such forward-looking statements are discussed in greater detail in our most recent filings of Form 10-K and other SEC filings. Now I’d like to turn the call over to John.

[John W. Varian:]

Hello everyone and thanks for joining us. It’s hard to believe that during the second quarter of last year we were managing just the acne proof-of concept study. At the end of that quarter, we announced the launch of the first of three EYEGUARD Phase 3 studies, and the Phase 2 proof-of concept trial in patients with inflammatory erosive osteoarthritis of the hand. In contrast, we ended the second quarter of this year with gevokizumab and six clinical trials that we are managing directly. The global Phase 3 EYEGUARD-A and EYEGUARD-C clinical trials in patients with acute and controlled non-anterior non-infectious uveitis are scheduled to enroll 600 patients collectively. The Phase 2 study in EOA patients, we have elevated CRP, has completed enrollment with those data to be delivered in October. We’ve initiated enrollment in our pilot study of pyoderma gangrenosum. In this quarter we launched a supplemental study in EOA patients who do not have elevated CRP. It will enroll 90 patients and is already two-thirds enrolled. In addition, our partner SERVIER has initiated or is about to initiate a number of complementary clinical trials in its proof-of-concept program. Paul will provide you with a detail of several other studies in which we are testing gevokizumab’s ability to modulate inflammatory diseases. Between SERVIER and XOMA, gevokizumab is currently being evaluated in over a dozen trials involving 10 different indications. The data reads from these studies have begun and will continue to rollout. This past January we announced very encouraging results in moderate to severe inflammatory acne. As we’ve shared our results with experts in the field, we become increasingly convinced that there is a clear development path going forward for gevokizumab in this most severe subset of acne. Our initial commercial analysis has also been positive. The dermatologists we surveyed see a need for a product that might be effective in patients with failed treatment with systemic antibiotics. This is the patient population we studied in our Phase 2 trial. The physician survey would like another option available to them before having to resort to Accutane for these patients. Our commercial assessment is ongoing and is directed to identifying the best positioning for gevokizumab enacting. Another important event on our path to choosing the next Phase 3 indication for gevokizumab will be the results from our Phase 2 study in erosive osteoarthritis of the hand. We anxiously wait these results, which we’ll have in October. Our commercial analysis of this indication is also underway, but I think we are already in a position to say the commercial potential for gevokizumab in EOA is clear and significant. With the results of the EOA study and the ongoing commercial analysis in acne and EOA, we will be in a position to choose the next indication for gevokizumab to follow the ongoing EYEGUARD studies into pivotal trials. Paul will provide you with a detailed update on the ongoing EYEGUARD studies. What you’ll here is the team here at XOMA has done a good job managing the piece of the global effort over which we have the most control, getting the centers for EYEGUARD-A and EYEGUARD-C open in U.S. On our first quarter call, we shared that 51 centers of our originally targeted 60 U.S. sites were up and running. As of today we have 63 sites opened, which reflects our plan to expand a number of U.S. sites to total of 70. Of the 63 open U.S. sites, 53 were opened after February 15 of this year. The increase in planned U.S. centers from 60 to 70 is in response to a couple of factors. First, we are not seeing the initial rate of enrollment and open new centers at the pace we would like. It is still early since as I said, 53 of the 63 sites have been opened for less than six months. It may be self correcting, but we are taking some additional steps beyond adding centers to accelerate the pace of enrollment, particularly through the use of social media, ongoing review of protocol requirements, exploring ways to streamline screening and reaching out to other investigators for referral. The bigger reason for our actions is that our partner SERVIER has not been able bring the countries and centers outside the U.S. online as quickly as they intended. Of the 19 countries of which SERVIER is responsible, only six are online for the EYEGUARD-A and EYEGUARD-C studies. This translates into 18 of the targeted 70 non-U.S. clinical sites being open for enrollment. The effort outside the U.S. is difficult and regulatory process is complex and more unpredictable and SERVIER hadn’t anticipated. We are seeing examples of countries taking six to 10 months longer than expected to get sites up in running. I can assure you that enrollment in the EYEGUARD program is the top priority for the company. We are working closely with SERVIER on strategies to accelerate site activation and SERVIER is committed to getting virtually all of its 19 countries and associate study online in the next couple of months. While we are leaving no stone unturned it is clear there will be a delay from our initial estimates for the readouts from the non-infectious uveitis studies. Until the SERVIER sites are all active enrolling the patients, we will not have the information on enrollment rates to give a precise prediction on when data from EYEGUARD-A and EYEGUARD-C will be available. We are confident that data from both will be available in 2014. But until the non-U.S. sites are up and running, it is difficult to be more exact as to when in 2014 the results of the studies will be known. We expect to be in a position to provide more clear guidance as we gain insight into the timing of these studies and their anticipated completion dates over the coming months. We will provide updates as we gain that clarity. In contrast, SERVIER has had a great success in the EYEGUARD-B study, which includes uveitis patients who have resift as an underlying disease. Of the 13 countries and 44 sites targeted for that study, eight countries and 27 sites are up and running. Enrollment in that study is brisk. The EYEGUARD-B study is an event-driven study such that when a prescribed number of events have occurred the data from the first phase of the study will be analyzed. The study is designed to enroll up to 110 patients, but based on the anticipated advance rate, the required enrollment could be substantially less. SERVIER has projected the results of the EYEGUARD-B study will be available in Q3 of 2014 if all 110 patients have to be enrolled. But based on their calculations, it is likely that pre-specified advance rate will be achieved with far fewer patients. If this is correct, the EYEGUARD-B’s results will readout much earlier in 2014. It is very possible that EYEGUARD-B will be the first of the pivotal studies to be completed. In light of SERVIER success in Behçet's uveitis and the less certain timing of the EYEGUARD-A and EYEGUARD-C studies, we have decided to proactively explore a strategy that could allow us to submit a BLA application specifically for Behçet's uveitis in the U.S. This strategy may require an analysis and submission of the data already generated from both XOMA’s and SERVIER’s very successful Phase 2 Behçet's uveitis study or possibly an additional supportive trial. We will confirm our plans with the agency prior to implementing this approach. We will have more to share with you as this strategy, on the strategy once we have received FDA guidance and have finalized our plan. SERVIER has agreed to our strategy and understands its importance to XOMA. They have accepted our proposal that we take the initiative on this evaluation and be responsible for its implementation. We believe adding another potential avenue to secure our first BLA is a prudent step to take as we were more about to face the worldwide EYEGUARD-A and EYEGUARD-C studies. We developed drugs to provide effective and safe treatments for patients who have few options. We’ve chosen to focus on those patients with the greatest need for new therapies and who are treated by the specialist prescriber. This gives us the ability to commercialize gevokizumab in the U.S. (inaudible). The patients who suffer from the disease as we are studying with everyday inflammatory conditions that are painful and have multiple long-term medical consequences. We also would like to applaud SERVIER for it’s commitment to pursuing gevokizumab potential in very rare diseases. While we would have preferred that all trials for progressing exactly as we predicted, we’ve initiated measures in an effort to mitigate risk and respond to information as it becomes known. These measures could result and are being able to file BLA in Behçet's uveitis at the end of 2014. The XOMA clinical team is focused on getting patients enrolled in the XOMA sponsored EYEGUARD-A and EYEGUARD-C studies. Completing these studies as quickly as possible is our top priority. Non-anterior non-infectious uveitis is an orphan disease that truly needs safe and effective treatment options and we are committed to working tirelessly to get gevokizumab to the patients who need it. There was a corporate development in the quarter, I’d also like to highlight. We announced to transfer the development and commercialization rights to ACEON in the perindopril franchise to Symplmed. XOMA has an ownership position in the new company, and we will receive up to double-digit royalties on sales of the fixed-dose combination containing perindopril arginine and amlodipine, if the FDA approves it for commercialization. Symplmed has assumed the U.S. marketing responsibilities for ACEON. Sales will continue to be handled through the distribution infrastructure we established last year. With this transaction XOMA’s exclusive focus on progressing gevokizumab towards the BLA filing and advancing the XMet platform to an IND filing. That is exactly where I wanted us to be. Before I turn the call to Paul, I think it’s important for you to hear this from me. I believe gevokizumab has extraordinary potential to offer patients living with debilitating diseases and new phase and effective treatment option. We have the right people in place to get gevokizumab to a BLA filing and available commercially, and I believe XOMA will succeed with it’s antibody. With that I’ll turn the call over to Paul.

[Paul D. Rubin:]

Thanks John and hello everyone. EYEGUARD-A is our global study targeting 300 patients, who are experiencing an acute non-infectious uveitis event. Now to be eligible their vitreous haze score must be equal to or greater than 2+ on a four-point National Eye Institute Behçet's uveitis SUN scale. That means they must be at the midpoint of scale or higher. What we are experiencing in the U.S. clinical setting is that no one in NIU patients have been treated aggressively before they reach that point. There are fewer eligible patients for our study. In addition, U.S. investigators tell us that when they do see patients with more severe disease the patients are not underlying medication. These presents an issue as the protocol mandates that patients can only be enrolled in the trial they exacerbate while on either corticosteroids or other immunosuppressants or a combination of both. As John indicated, we are increasing the number of U.S. sites and starting to see more screening activity. However, it is difficult to tell exactly where we are on the enrollment curve. Therefore, in addition to raising our target for U.S. sites we are making every attempt to work with SERVIER to expedite the initiation of non-U.S. sites. Ultimately, we will need a substantial number of patients from outside the U.S. to complete this study. EYEGUARD-C is our global study in 300 NIU patients who are controlled with corticosteroids and immunosuppressants. We launched the study with significant insight and input from the key opinion leaders in NIU. They urgently want to get their patients off corticosteroids not surprisingly given the enthusiasm from the physicians, our enrollment numbers in the EYEGUARD-C have recently surpassed the EYEGUARD-A despite the fact that this study has been open for less time than the acute study. Similarly to EYEGUARD-A, SERVIER is behind and are working diligently and is committed to get the necessary approvals in 19 countries in sites open each in the next couple of months. As a reminder, NIU is an orphan indication with the patient population estimated at 150,000 people in the U.S. We continue to increase our social media presence for each of the studies and we are working with the U.S. sites to be proactive in generating awareness both the EYEGUARD-A and EYEGUARD-C studies. As we consistently stated, the key to EYEGUARD-A and EYEGUARD-C is getting the sites up. We targeted 140 worldwide centers for each 300 patient study specifically because these patients are difficult to find. We now have 63 of our targeted 70 sites opened in the U.S. Once the targeted 70 sites are opened outside the U.S., we believe that the average of two patients per site per study can be achieved pretty quickly. And that is why this is our urgent focus. We said we are confident that both EYEGUARD-A and EYEGUARD-C will be completed in 2014. Our confidence comes from the fact that to-date EYEGUARD-C is enrolling at a rate of around two patients per site per year in the U.S. Nearly every patients screened can be enrolled in the EYEGUARD-C study. For the reasons I stated earlier, the screen failure rate in the U.S. is higher in the EYEGUARD-A study than in the EYEGUARD-C., as a result the U.S. enrollment (inaudible) to-date projects between 0.75 to 1.25 patients per site per year. Conversely the current ex-U.S. enrollment rate of EYEGUARD-A projects to greater than two patients per site per year, and again this emphasizes the need to get the non-U.S. sites up. In all our previous studies the enrollment pace has increased as the study has progressed, but even at the current rates, the study can be completed next year. Having the full complement of 140 sites up beginning in Q4 of this year, should allow us to achieve our goals. As John indicated it appears that the EYEGUARD-B study in as many as 110 patients outside of U.S. who have uveitis and underlying Behçet's disease may be the first study to deliver results. This is an event driven study that is enrolling pretty rapidly in the center SERVIER has opened. If the prescribed number of events occurred as quickly as SERVIER has calculated data from EYEGUARD-B maybe available fairly early in 2014. Importantly, Turkey has come online very recently and as the problems of Behçet's uveitis is higher than most countries, expectations for patient recruitment there is high. With the EYEGUARD-B study moving quickly, we are implementing plans that might allow Behçet's uveitis only BLA filing, and potentially their first approved indication. Again, we only will comment further once we have agreement with the Agency that is possible and what they will require. Importantly, based on our previous meeting with FDA any two positive EYEGUARD studies would support a successful BLA submission for non-anterior non-infectious uveitis. The FDA specifically agreed that EYEGUARD-B can be one of those two pivotal trials. Once either successful EYEGUARD-A or EYEGUARD-C study is completed, it will be coupled with the successful EYEGUARD-B study and the BLA for NIU can be submitted. We’re extremely excited to get results from our gevokizumab study in patients with erosive osteoarthritis of the hand. The week of July 12, we closed patients enrollment on our recently EOA study in patients with elevated CRP, study 160, when we reached our patient (inaudible). We anticipate receiving the top line 84-day off scan results in October. The patients will continue on 60 milligrams of gevokizumab for a total of six months. At this point, we’ll conduct a complete analysis to determine gevokizumab’s ability to reduce objective measures of joint involvement of effective patients. In addition to completing enrollment study 160, the XOMA EOA team and related clinical centers have been busy launching the supplemental EOA study. Those patients who meet all the criteria for our primary study except that they register CRP level of less than 2.5 micrograms per liter have been enrolling in our second 90-patient EOA study, study 162. In the 12-week since we opened the study we have dosed approximately two-thirds of total number of patients planned, besides continue to contact the patients who are not eligible for study 160 due to the elevated CRP requirement. As evidenced by the strong enrollment numbers we are seeing a very high interest. On the two-year open label EOA extension study we launched in the second quarter is [enrolling] particularly well. We hope we’ll continue to a see a high participation rate in this study. Remember that patients for randomized 221 to drug or placebo in study 160. Although we remained blinded we are pleased to offer the opportunity for patients from both the active and the placebo cohorts to receive gevokizumab. I’m now going to turn remarks to the studies we are conducting in very rare diseases. We are very pleased to launch our pyoderma gangrenosum or PG pilot study this quarter. After speaking with the experts and communicating with the FDA, we’ll open the pilot study in inflammatory PG, which is one of the multiple diseases classified as neutrophilic dermatosis. An inflammatory episode of PG is characterized as at least one active skin ulcer with an estimated area of greater than of equal to three centimeter square that was developed in the previous 30 days. The patients must also have an ulcer-related pain score greater than equal to 3 an 11-point Likert scale, which measures ulcer-related pain in the previous 24 hours. So we plan to enroll up to four patients who received gevokizumab 60 mg dose once monthly for three months. After this cohort is completed one dose we have the opportunity to review the data and decide whether to move to higher dosing regimen or go directly to FDA to discuss these three plans. We will assist patients to day 28 to determine the speed at which gevokizumab can control the acute inflammatory symptoms of PG, and again at day-84 to determine gevokizumab’s longer term effect and skin ulcers, the chronic symptom of PG. We also would be able to assess gevokizumab’s ability to prevent future acute inflammatory episodes. Both investigator and global assessments will be evaluated in this study. But if our pilot study returns the positive data we held for, we will leave with the FDA with the expectation that we can rapidly into a pivotal clinical program in this rare unmet therapeutic indication. Importantly, this trial is complementary to some of the work SERVIER is doing in very rare diseases. As we mentioned in the last quarter, there are certain single center clinical trials that are recommended to us by key opinion leaders that we will elect to pursue under our existing XOMA IND. The first study in this program is an inflammatory autoimmune inner ear disease or AIED. This 10 patient study will be run by Feinstein Institute for Medical Research Hearing and Speech Center at North Shore-Long Island Jewish Health System. In collaboration with and with funding from the National Institute on Deafness and Other Communication Disorders and the National Institute of Health. AIED falls under the umbrella of sensorineural hearing loss. Patients with AIED usually experienced multiple episodes of rapid hearing loss either concurrently or sequentially in both ears. Up to 30% of patients with AIED, they have a systemic autoimmune disease. Interestingly while 70% of patients are responsive to corticosteroids initially that number drops to 14% after 34 months. At that point these patients stop responding to steroids there are no therapies that are effective in preserving their hearing. The trial outcomes will include improved hearing threshold as defined by improvement in either the pure-tone average of greater than or equal to 5 decibels or a 12% improvement in word recognition score compared with their pre-gevokizumab treatment threshold at any period from day 28 to day 84. We look forward to working with the institute and seeing the result and data, at this indication could prove to be quite interesting. Turning to our preclinical pipeline, I am delighted to provide you with an update on our progress with XMet D or XOMA 247. Novel agents are needed for the treatment of hypoglycemia or low blood sugar, which results from the over secretion of insulin know as hyperinsulinism or an appropriate reaction to insulin. XOMA developed XOMA 247, fully human allosteric monoclonal antibody to deactivate the insulin receptor. XOMA 247 has been evaluated in mouse models of (inaudible) and rat models where an insulin pump was employed to prevent these animal hypoglycemic. These models emulate the glucose lowering seeing in patients with insulinoma in beta cell tumor that over secretes insulin and congenital hyperinsulinism or CHI, a hereditary disease resulting in lack of insulin regulation and profound hyperglycemia that can result in seizures and brain damage. In both cases, XOMA 247 is capable of restoring passive blood glucose to normal levels. The data obtained from our mouse model is recently presented and well received at 2013 meeting of the Endocrine Society. At the 2013 American Diabetes Association Meeting, (inaudible) MD and SCE assistant professor of pediatrics and a pediatric endocrinologist in the division of endocrine and diabetes at the Children’s Hospital, Philadelphia presented data in mice that have the genetic beta cell defect of CHI or congenital hyperinsulinism. This defect cause an excess insulin secretion in testing hypoglycemia. Administering XMetD or XOMA 247 to these mice normalize their testing hypoglycemia. These studies demonstrate therefore that allosteric monoclonal antibodies such as XMetD or 247 can antagonize INSR or insulin receptor signaling both in cultured cells and in diseased animals. They also suggest this molecule could be evaluated for conditions of severe hyperinsulinemic hypoglycemic such as insulinoma and congenital hyperinsulinism as well as other high insulin states. We continue our work and we anticipate filing an IND in 2014. I will echo what John said earlier. My team and I are working in an extraordinary capacity to get the EYEGUARD studies moving forward with the pace we originally anticipated. We all understand the importance of getting gevokizumab to of the patients who have very few treatment options beyond high dose corticosteroids. So with that, I will turn the call to Fred.

[Fred Kurland:]

Thank you, Paul and good afternoon everyone. For the second quarter ended June 30, 2013, XOMA reported total revenues of $7.2 million, compared with the $9.3 million in the same period last year, reflecting a reduction in license and collaborative fees. Research and development expenses for the second quarter of 2013 and 2012 were $17 million and $18.4 million respectively. XOMA's selling, general and administrative expenses were $4.1 million in the 2013 second quarter, compared to $3.6 million in the corresponding quarter of 2012. For the second quarter of 2013, XOMA had a net loss of $17.2 million or $0.21 per share. In the corresponding quarter of 2012 we had a net loss of $16.2 million over $0.24 per share. The net loss for both second quarters of 2013 and 2012 included a non-cash charge of $1.8 million or $0.02 a share and $2.2 million or $0.03 respectively. These charges were related to the revaluation of contingent warrant liabilities due primarily to the appreciation in XOMA’s stock price. Excluding these non-cash charges net loss in the quarters ended June 30, 2013 and 2012 were $15.3 million or $0.19 a share and $14 million or $0.21 a share respectively. We ended the second quarter of 2012 with cash, cash equivalents and short-term investments of $57.9 million. We believe we have enough cash, cash equivalents and short-term investments to fund our operations through 2014. XOMA ended December 31, 2012 with cash of $85.3 million. We are reaffirming how to release that anticipated cash used in ongoing operating activities in 2013 will be approximately $50 million. This primarily reflects the costs associated with conducting clinical and preclinical activities. We originally provided this guidance on March 12, 2013. I will turn the call back to John for his closing remarks.

[John W. Varian:]

Thanks Fred. As we move into the second quarter, we are looking forward to the EOA results in October. There is a very clear need for a new treatment for this indication and there is good evidence that an IL-1 beta modulator may have an impact on this disease. We have a great drug and we have a great partner, who is extremely committed to gevokizumab. Developing a new drug in an orphan indications like an IU is not easy, twists and turns occur which acquire adaptation. We are proactively doing so. But the fundamental question is really singular. Will gevokizumab work in the trials we are conducting? At the end of the day this is what matters. So while we and SERVIER will take every step to advance these studies as quickly as possible. We will not do anything to undermine the integrity of the studies or lessen our chances of ultimate success. As we said, we are confident we will have the data from EYEGUARD-A and EYEGUARD-C in 2014, and our cash runway goes through 2014. We will be more attracted to when we’ll have the data, once we have the non-U.S. sites up and running for a period of time. When I lay awake at night worrying about the pace of enrollment in such I remind myself of the couple 100 or so patients who are out in the world who are currently in the gevokizumab clinical trials. I remind myself of their thoughts and how they hope and pray that gevokizumab will make their life betters. We are doing something important here, no matter how hard it is, we need to and will keep driving toward our key purpose to get gevokizumab to the patients that it can help. At the same time we are driven to become a commercial company. We are working diligently with our partner to get gevokizumab beyond the clinical development phase and into the BLA review phase with the goal of seeing it approved. With that, I’ll ask the operator to open the call for questions. Operator?

[Operator:]

Thank you. (Operator Instructions) First question is from Simos Simeonidis of Cowen & Company. Your line is open.

[Simos Simeonidis:]

Hi, guys thank you for taking the questions. I know you don’t want to provide or you cannot provide guidance on the timing when A and C may read out. Can you tell us where enrollment roughly stands on this three trials, are they 50% enrolled, can you give us a percent as to where a number of patients are enrolled in each trial at this point.

[John W. Varian:]

So Simos, I think the most accurate and informative thing we can say is what we have said, which is the pace of enrollment that we’ve seen so both in the U.S. and outside the U.S. and there is a reason for that. We’re not being evasive at all. There is a reason for that. The centers, each of the centers have been opened for different number of days. And so if we start going through at a moment in time what the enrollment is at any spot in time and having to go through this description of how many centers are open, how many days they’ve been open et cetera and as I’ve said about 80% of our centers even U.S. have been open less than six months. So by giving you the calculation, which we did of the number of patients per site, per year that we’re getting in each of the sites, we really believe that that’s the most informative thing to say to you and with that said with those calculation, we will get both AMC done in 2014 and we want to be more specific once we know more particularly about that non-U.S. sites.

[Simos Simeonidis:]

The other thing that I wanted to understand, and if you can help us get some clarity on this is the following. Behçet's is a much more rare disease and I understand the difficulty in finding patients that meet the criteria for acute and controlled uveitis. But how is it that the B trial is enrolling faster, and I know it’s three times smaller of a trial but why is it that the trial on Behçet's is on pace and the other two are behind. Is there something that – some insights you can gain from looking at the free trials?

[John W. Varian:]

There is probably a few factors; one is SERVIER was able to get those centers for Behçet's up first up in running, and in fact the majority of Behçet's centers are running, and obviously we can’t enroll any patients until the sites are open. So that’s probably number one. Secondly, there are no competing trials for Behçet's uveitis right now. It’s the only one that’s going on. And thirdly, it’s been done in countries where the prevalence is actually probably in some cases equivalent to the non-infectious uveitis in the United States for example. So I think those are all the reasons that they were able to get these up in running and plus the factors we mentioned, the total numbers we require is less. And we are not looking for acute Behçet's either, we’re looking for controlled Behçet's which is also easier to find certainly compared to the EYEGUARD-A study, while EYEGUARD-A.

[Paul D. Rubin:]

Yeah, it’s possible that because EYEBUARD-B was the study that they are sponsoring and may have been a slightly higher priority for them. But I think it is also a practical issue that they’ve described to us. And just to say, I’ve had as you probably (inaudible) team, many conversations with us, our partnered survey about this issue. It’s important to us and it’s important to them. But also there is a practical issue and that that typically they’ve done studies everywhere in all these different countries where they’re the sole sponsor. With us being the sponsor of EYEGUARD-A and EYEGUARD-C, it actually has a slightly different process for them and different than what they have done in the past because things like not to get into menu shell, but things like insurance documents to be different and that’s part of the reasons for the unexpected delay in getting A and C up outside the U.S. With that said, the core question is, will they now get those up? And what I can tell you is that, just even last week, I had a personal conversation with one of the top members and management at SERVIER and really enlisted is help again to make sure that we get through these final issues and get these centers up. And part of it is the process has occurred and we are now at the point where there is very few issues left in each country, but also there is even a renewed emphasis from SERVIER’s top management to get these sites up and running. So, we have enrolled quicker and it’s partly because of those issues around that they’ve gotten those sites up better and they’re able to also get those sites up better because they had just little more quickly – they’ve just completed the Behçet's only Phase 2 study. So they have an ongoing interaction with those centers in those countries and they will slip them into this pivotal study, I think more quickly than they could start from scratch in EYEGUARD-A and EYEGUARD-C.

[Simos Simeonidis:]

Okay. And you mentioned your discussions with the FDA about potentially doing a BLA filing. Based on EYEGUARD-D and other study and would this other study that you said you professionally might start have to be a Phase 3 study and do you think that think that you can do in other potentially smaller study faster than – it will be faster than waiting for the data from EYEGUARD-A and EYEGUARD-C?

[Paul D. Rubin:]

Yeah, I think that and obviously as we have said earlier this has to be done in accordance with FDA's needs. But it’s our belief that we can present a smaller set of confirmatory data than a pivotal trial as we normally see. So that’s the whole advantage to pursuing that strategy.

[Simos Simeonidis:]

And your…

[John W. Varian:]

It’s kind of a two step approach where we will have a discussion with FDA about the data that’s already been generated and see if we can do an analysis of that.

[Paul D. Rubin:]

Yeah, it’s possible, because we – when you’re looking at these in supplemental studies often times they are in the range of 30 patients or so and we already have close to the cohort already available with data. So that’s one possibility that they will accept the Phase 2 as the confirmatory and obviously we will present that as an option and then short of that, we would try to design a relatively small study as supplemental to the pivotal trial. And it also depends on how solid the EYEGUARD-B data are. If the EYEGUARD-B data are currently positive then the needs for supportive information will be less.

[Simos Simeonidis:]

So you had – I believe you said you had already a discussion with FDA, did they say anything about this possibility, or it was very preliminary?

[John W. Varian:]

We never discussed supplemental or supportive data for Behçet's uveitis only study. What we did have the discussion was around the use of the Behçet's trail as one of our two pivotal studies for non-infectious uveitis. We have to still have a conversation with FDA to talk about this contingency strategy.

[Simos Simeonidis:]

Okay, one last one, I want to jump back in the queue. You’ve talked about the fact that you’re going to be able to make a decision on the next Phase 3 by year-end and right now you have the active data and you’re waiting for the OA data, if you take down the scenario where it’s not going to with, the EOA data is negative, you believe that you would do a Phase 3 trial or a Phase 3 program in acne?

[John W. Varian:]

So we don’t want to be specific on that until we actually have both the data from the EOA study and complete our commercial analysis particularly around acne, okay. So what we will have in spite the end of the year, we will have the acne data, we will have the EOA data from the study and then we will have both sets of commercial analysis that we’re doing on EOA and acne and that’s the point in time that we would be able to make a strong decision around what’s the next Phase 3 will be.

[Simos Simeonidis:]

Okay. Thank you for taking the questions.

[John W. Varian:]

Thank you Simon.

[Operator:]

Thank you. Your next question is from Adnan Butt of RBC Capital Markets.

[John W. Varian:]

Hi Adnan.

[Operator:]

Your line is open.

[Adnan Butt:]

Good afternoon everyone. First of all, again two questions on the enrollment of timeline. In terms of enrollment, do you at this time do you have a (inaudible) if it’s a function of number of centers. It’s the exclusion criteria or is that additional clouting by other companies that might be picking up demand. That’s the first question.

[John W. Varian:]

I think all three of those contribute to this. But the latitude that you mentioned we made a specific attempt to mitigate by having 140 centers. So, I think that having the centers up and running is the number one factor in getting these in. And the center was certainly a threshold that had to be surpassed especially get the centers ex-U.S. open, we believe we’re pretty close to that and we should get the majorities up in the relatively near future and then we think we can meet – that’s why we think we can meet our enrollment targets, because once the centers are up and running, we are approaching the numbers that we predicted to get this thing done.

[Adnan Butt:]

Okay, in terms of the other A and C studies, is that possible to prioritize enrollment in one versus the other, just figuring how data from two Phase 3 studies by third quarter and 2014?

[John W. Varian:]

Well, there are two – we have two completely different entry criteria. So it’s not that doctors are choosing two enroll patients in one over the other. So, in fact if a patient comes in theoretically if they are either active or controlled they can go into one of the other. So truly they’re presenting symptoms that dictate what study they go into, not priorities. We’re trying not to predict at this point, but what we are seeing even though it started later we did say this. The EYEGUARD-C study, because almost every patient we screen is enrolled in the study and there are lots more of those patients in that U.S. where again we have more control. It’s we’re directly running those sites. If you haven’t predict today, you’d say that maybe EYEGUARD-C will be the first two of the two. At the same time until we have more data, we don’t want to be specific about that.

[Adnan Butt:]

Okay. And I think you mentioned – well, at this time do you know what you might need, do you think that single Phase 3 study is sufficient to file the BLA? And I’m referring to…

[Paul D. Rubin:]

Behçet’s uveitis is…

[John W. Varian:]

For NIU?

[Paul D. Rubin:]

For NIU, I think we’ve heard directly from FDA that we need two trials. For Behçet’s you need a pivotal trial plus confirmatory data in a well controlled trial and there are many different definitions of well controlled trial including relatively. There are models where that second trial could be relatively small or depending on the strength of our Behçet’s file, we can even take the data that we’ve already done from this Phase 2 trial and use as a support. So there is a lot of options and obviously it really is dependent upon how strong the Behçet’s style is when we complete it. But there are possible scenarios there’d be relatively little additional data that have to be submitted in addition to the EYEGUARD-B.

[Adnan Butt:]

Okay. Thank you.

[Operator:]

Thank you. The next question is from Ritu Baral of Canaccord. Your line is open.

[Ritu Subhalaksmi Baral:]

Hi, guys. Thanks for taking the question. You have mentioned that you’re reviewing credit call adjustment in EYEGUARD-A and EYEGUARD-C. Have you made any adjustments or what are the likely adjustments that you would make?

[John W. Varian:]

Yeah, we have made a few adjustments. They don’t affect the integrity, but it loses criteria, for example, some weight descriptions that we had. We have loosened and [allowed] to get some patients in. It seems like that right now. Some of the baseline (inaudible) in visual acuity would liberalize a little bit that we think it enhance the enrollment, but not effect the integrity of the primary outcomes.

[Ritu Subhalaksmi Baral:]

And the primary outcome being [behaved] measure…

[John W. Varian:]

Correct.

[Ritu Subhalaksmi Baral:]

Lines of acuity. Got it. And as far as the ex-U.S. sites that are slow to come online is their particular geography of concern or country of concern or anything particular going on there?

[Paul D. Rubin:]

It really – different countries have their different issues as we go forward. There is no one specific country or there is no one specific issue that’s unique to a country. As I said, certain ones just have been slow and a lot of them is more operational than anything else. Sometimes it feels, as Charles suggested, with something as simple as getting an insurance documentation in place, at some point in time we could swap some, maybe in retrospect funny stories about this, but it’s…

[John W. Varian:]

They’re not funny.

[Paul D. Rubin:]

They’re not. But the good news I think is that we’ve – I think they’ve pretty much all over come.

[John W. Varian:]

Yeah, we know exactly what the issue is at each country along with our partners. Right, and I think each of them is within striking distance at this point in time, and we’ve got full support from top senior management at SERVIER to make sure those bond get knocked down. Yeah, so we think we can – it’s not going to be just again, when we talk here, we hope next time where it’s delayed again. We think within striking distance because we know what the issues are and there is a renewed in fact strong push from top management to get those things out of the way.

[John W. Varian:]

Yeah on the flip side, would you believe it, again ex-U.S. contribution is paramount for this, so that’s why…

[Paul D. Rubin:]

For A.

[Ritu Subhalaksmi Baral:]

So is the enrollment rate of the 0.75 to 1.25 per center about what you expected for the U.S. or are you discrete all your rates, higher than expected?

[Paul D. Rubin:]

I think it’s a little higher than expected.

[John W. Varian:]

Fairly rated.

[Ritu Subhalaksmi Baral:]

What is that telling you about the U.S. market that you may not have…

[Paul D. Rubin:]

That is a great question. I think it reflects the entry criteria, which in actuality is a point that patients are more severe than when doctors actually intervene. So the number of patients to be treated is probably exactly what we think. The issue is that get treated sooner than this two out of four criteria that is necessary for the enrollment. So I don't think if you are asking, do you think the market is smaller, no. We don't think that is the case. I think it really reflects treatment practices more than market size.

[Ritu Subhalaksmi Baral:]

And…

[Paul D. Rubin:]

It is really important.

[Ritu Subhalaksmi Baral:]

Most sort of impact, might that have for you label them if any?

[Paul D. Rubin:]

Well, ultimately if we get a label that is similar to remember this study was patterned after (inaudible). I think the label just says and could be wrong, is for the treatment of (inaudible) or non-anterior non-infectious uveitis.

[Ritu Subhalaksmi Baral:]

Okay.

[Paul D. Rubin:]

So in one effect, the label when you try to commercialize it, it’s just the study that’s required by FDA for this indication and that’s difficult and ultimately it doesn’t change our potential when it comes to selling the drug.

[Ritu Subhalaksmi Baral:]

Got it. And if I were two model a nine month delay – a six months to nine months delay in this study, how would that change the uveitis treatment landscape on which [GEVO] would potentially get approved versus the previous assumptions and where would you see the data…

[John W. Varian:]

That’s a good question Ritu. I think that we have always anticipated that if (inaudible) has successful trials that will be the other biologics that has the indication, but aside from that I don’t think the competitive landscape changes at all.

[Ritu Subhalaksmi Baral:]

Is there any reason to think that the two (inaudible) can work together or will they have redundant?

[Paul D. Rubin:]

Well, I mean mechanistically they might work together. The problem is, there are contradictions for the use of concurrent biologics that are kind of a class labeling.

[Ritu Subhalaksmi Baral:]

Got it, all right great. Thanks for taking the questions guys. I appreciate it.

[Operator:]

Thank you. The next question is from Jason Kantor of Credit Suisse. Your line is open.

[Unidentified Analyst:]

Hey, good afternoon. This is Jeremy filing in for Jason.

[John W. Varian:]

Hi, Jeremy.

[Unidentified Analyst:]

Thanks for taking the questions. You said, the shift study, the emission that the study can read out further than plan given the management based read out. Do you have plans to share your discussions with the FDA before actively results are available from the study?

[Paul D. Rubin:]

Yeah, we’ll initiate discussions before these results would come.

[John W. Varian:]

Very similar fact to get kind of their initial read. As Paul said, the results of the EYEGUARD-B study relatively their strength could effect what FDA really requires. So we will make plans for those contingencies, so that we can go down that path earlier rather than waiting and then talking to FDA later.

[Paul D. Rubin:]

So our intend is to as soon as we have really good clarity and we are very close to what we wish to propose, we will then request a meeting with the FDA.

[Unidentified Analyst:]

Okay. And do you plan to update the street on the discussions, and to sell one to – when likely those updates?

[John W. Varian:]

We do, but what we need to do is get the feedback from FDA process that and decide what we’re going to do and at that point in time we will talk about what our plans are. So it’s not in the next few weeks, but it’s in the next of couple few months.

[Unidentified Analyst:]

Then a question about your EOA study, you mentioned that you’re initiating the supplemental EOA study. Is that study designed, is it pretty much mirrors the first EOA study except that you have these adjustments to the CRP levels.

[Paul D. Rubin:]

It does. It mirrors the study with the exception of – we’re only capturing subjective endpoints on this. We’re not doing the six month radiographs and MRIs in that studies. We’re looking at AUSCAN global assessment join counts. So, it’s all the subjective component of both pain function and quality of life.

[Unidentified Analyst:]

So last question is, what’s your motivation to have this supplemental study? Was it just like a larger set of patients that you might be addressing?

[Paul D. Rubin:]

It’s also a really good question and I think we kind of explained it. When we went into this, we reviewed the medical literature and spoke with experts and in fact the literature suggested that elevated CRP is one of the hallmarks of the diagnosis. So as we were screening patients for our trial, we found that about two-thirds of the patients despite having the typical radiographic pattern of the disease did not have elevated CRP. So it spoke against what we have read in literature. So when we saw…

[John W. Varian:]

Our initial expectation was that the majority of the patients would have CRP, it turned up as majority didn’t. We thought it was very important to understand the response of low CRP patients to our drug.

[Fred Kurland:]

And in real simple level, we need to know when we launch Phase 3 study, should we have the same entrance criteria that they have to have elevated CRP or should we do all patients who have EOA regardless of their CRP level, so it’s an important question for deciding what the entry criteria will be for the Phase 3 study and it’s important to be able to tell the agency that the drug does or doesn’t work better on patients with elevated CRP.

[Unidentified Analyst:]

Thank you for taking questions.

[John W. Varian:]

Sure.

[Operator:]

Thank you. Our next question is from Bert Hazlett of Roth Capital. Your line is open.

[Bert Hazlett:]

Yes, thanks for taking the question. Most of my questions have been answered, and I realize the normal criteria of all A, B and C studies are different across geographies as well. But is there any possibility that if we does finish early, that those centres or the enrollment might be able to pickup as a result of utilization of those centres in some way, shape, or form?

[John W. Varian:]

Actually, I don’t think that they’ll have much of an effect only because it’s a completely different patient population.

[Bert Hazlett:]

Yeah, and it is piggybacking on Ritu’s question a little bit earlier. Again are there any other enrollment criteria or protocol adjustments that are being contemplated in the near-term, I know you talked about the restrictions and the visual acuity and issues like that, but is there anything that is being contemplated that might be more significant as the level that you can manipulate to help enrollment?

[Paul D. Rubin:]

There are certainly things that we can do that are more significant but again we really want to get these centers up and running in EYEGUARD-C how the full complement affects enrollment before we do anything more dramatic than what we’ve already applied to obviously, any larger criteria would require protocol amendments and things, we think its premature to entertain at this point.

[John W. Varian:]

And I said earlier we will not panic and damage these studies in anyway, any decisions we make will not harm the potential outcome of these studies, that’s crucial for us.

[Bert Hazlett:]

Yeah, thank you for the color. I appreciate it.

[Operator:]

Thank you. Our next question is from Matt Kaplan of Ladenburg Thalmann. Your line is open.

[Matthew L. Kaplan:]

Hi, thanks for taking my questions. I guess, now just getting in a little bit more into and equating with respect the trial enrollment, I guess these studies were all started between June and October of 2012. So we’re about a year into all three of these studies. And so in terms of enrolling patients, beyond the enrollment criteria, has there been pushback in terms of whether it’s for patients or centers with respect to other part of the study design. In terms of it to [indiscernible it is difficult getting patients even when you have a (inaudible) getting patients involved in the study and…?

[Paul D. Rubin:]

First of all keep in mind that all of the studies we are started about a year ago. The pace of site enrollment is really the majority of those have happened over the last six months. So it’s really a critical match wasn’t established until probably the last few months. So you can’t – the point I’m making, you can’t extrapolate a straight line from a year ago to make some interpretation as to what the enrollment would be. I think that would get you to the wrong place. We always felt, and it’s not our experience, it’s every company that’s done a uveitis study, this idea of having 2+ vitreous haze is a tough criteria, it’s a tough entry criteria, especially in the United States because the treatment of the patients happens when they are a bit about one. So it’s hard to find patients that have gone all the way to two before they present to the study. So it is a tough criteria and we knew that from the very beginning.

[John W. Varian:]

And then you talked one of the reasons that even in other people studies like this they got most of their patients from outside the U.S, right, which is why we really need those sites outside the U.S. for EYEGUARD-A. In contrast again EYEGUARD-C we can really I think drive that from the U.S. sites pretty strongly because that is the kind of treatment paradigm taken. Patients come in, they are up their right and the physician wants to take them off, so that actually matches the U.S. treatment paradigm very well.

[Paul D. Rubin:]

If we had any two of three positive trials to suffice for a BLA submission.

[Matthew L. Kaplan:]

I guess we were potentially expecting data as earlier as a way to hear from Ann, first quarter foresee, talk about the magnitude of the time and I know you have complete visibility to repeat that six to nine months, what are thoughts now?

[John W. Varian:]

Well, so Matt we can’t go further than what we said, because we did set our timelines a year and half ago. We believed even until just very recently, we had a good chance to hit those, because the key is, I will say it for the 15 time we said it, right. The key is getting 140 centers up, it’s pretty easy to believe that once you have the centers up, you can get a couple of patients per center, right. So we don’t want to be more specific than we have been until we actually have the centers up and we actually see more on the patient enrollment. So we’ve been pretty clear, we have been very clear that in 2014, we think even if the enrollment rates we’re seeing right now we can get the study done. We hope that once the studies were up and the study centers are up and the study continues to progress. We see a tick up in enrollment rate, which we’ve seen in every one of our other study, but we just don’t want to be more specific in that until we know more, so that we don’t end up in a position like we are right now, but we are having to reset what peoples expectations are on timeline, so we want to know more before we reset specifically.

[Matthew L. Kaplan:]

And just one more follow up on the ex-U.S. sites in terms of getting them going, you mentioned insurance issues. I think is there just a lack of awareness about the opportunity or lack of excitement from investigators out there as well on ex-U.S.?

[John W. Varian:]

No, I think it’s outside. The people on the other side of the sites are also frustrated, they can’t get started. I mean we can go through every country which we won’t try, but getting Turkey up is a real big one for all the studies, right, but it’s been really difficult because of geopolitical things that are going on in Turkey. In some of the countries they have actually kind of changed their laws about what you have to do, if you are going to do clinical trials in those countries like we have to supply drug for the patients rest of their life or take on full liability for any medical things that could happen ever. So we end up having to negotiate these things away, so those are examples okay, and each of the countries we know what the issues are. We know SERVIER is close to knocking those issues out of the way, and again because of personal effort by all of us on the team. I think we have HARP level management support to get those things taken care of SERVIER.

[Fred Kurland:]

It’s really nothing to do with desire to be in the trials, the investigators are calling us almost daily when will they have access to it. Now the excitement for the product and the ability to treat their patients in these trials as we know, which is a surprising in spite of the (inaudible).

[Matthew L. Kaplan:]

Well, thanks for taking the questions, John.

[John W. Varian:]

Thank you, Matt.

[Operator:]

Thank you. And the next question is from Graig Suvannavejh with MLV & Co. Your line is open.

[Graig Suvannavejh:]

Thank you very much. I have just a few questions, just following up on the EYEGUARD program. As you look to enroll more ex-U.S. patients, is there any risk at all that you won’t have enough U.S. patients to want a U.S. approval by the FDA?

[Paul D. Rubin:]

I don’t think so especially for these diseases where the patients are here to find the key is and that we’ve heard this from FDA. If you’re making the effort to get U.S. patients that generally suffices especially within the ophthalmology division.

[Graig Suvannavejh:]

Okay, great. Thank you for that. Also with the background and I appreciate before the greater clarification that even though the studies have been in place for almost a year, that’s really it’s only been the past six months with the trial centers being open that you know that the trials have been able to enroll, when did you realize that over the past several months that you needed to make some changes and did you have any preliminary signals of that as of our last quarterly earnings call?

[John W. Varian:]

So answer to that is, it has each quarterly, each call we have done, the year-end call and the first quarter call, we focus specifically on where we stood on getting centers up and so you will see in our communication then, we are very specific about how many sites we had up in the U.S. and how many sites we expect to get online very soon. On the U.S. we tracked exactly to what we said in the each of those calls. What caught us I think a little bit by surprise was SERVIER’s expectations where that they would move their sites online quicker, than they have been able to and it’s been frustrating for them, it’s been frustrating to us that they have not been able to the accurate in their predictions about when the non-U.S. sites would come up. So in each call because again the key to this study is getting the sites, we only need a couple of patients per site. We’ve been very clear about the U.S. new progress, and U.S. has been very good and very consistently comes to getting sites up. We’ve been disappointed as SERVIER that they have not been able to get the non-U.S. sites up as quickly as they predicted to us along these last couple of quarters.

[Graig Suvannavejh:]

Okay, great appreciate that.

[John W. Varian:]

Sure.

[John W. Varian:]

Just focusing on Behçet's, how should I think about the potential commercial opportunity if you were to just go after the Behçet's population and while this might be a bigger picture question that maybe you don’t have the answer for right now and how might that impact the way you think about pricing and productivity and it’s potential use in multiple indications?

[John W. Varian:]

Yeah, so we shouldn’t and can’t predict pricing right now, but at the same time, if the first launch is in Behçet's uveitis and again there is probably around 10,000 or 11,000 people in the U.S. we have Behçet's of which about 60% develop Behçet's uveitis. So it’s a very small, it’s lying ultra orphan indication. What you typically see is that when people launch an ultra orphan indication, they need to price fire and they would in a broader indication. So we can’t predict pricing today, but I think there would need to be more flexibility around pricing if you’re only treating a very small patient population than later on when you have a broader patient population to treat.

[Graig Suvannavejh:]

Okay. And have you been able to do any kind of preliminary market research on what payors might bear for Behçet's?

[John W. Varian:]

We’ve done quite a bit of work on non-infectious uveitis and from a payor standpoint, we have not done specific work on Behçet's uveitis at this point in time, but I – it’s pretty reasonable to assume that you have more flexibility when there is that few patients than you would and their patient population is broader.

[Graig Suvannavejh:]

Okay, great. That’s all I have. Thank you very much.

[Paul D. Rubin:]

Great, thanks.

[Operator:]

Thank you. There are no further questions at this time. I’d like to turn the call over to Mr. John Varian for your closing remarks.

[John W. Varian:]

Sure. Thank you operator and thank you everyone for joining this call today. We really appreciate the detailed questions and getting the chance to talk to you in detail about our efforts here. We go into the second quarter very excited about the EOA results, which again will have in October. We think it’s a great indication for gevokizumab, but our primary focus is on getting the non-infectious uveitis studies done, and we and our partners are really committed to that. We will not do anything in these efforts that will undermine the chances except for those studies because that is the crucial question. Our study is successful and we’re going to drive towards getting those done and hopefully have those three successful studies. So again thanks everyone for joining.

[Operator:]

Ladies and gentlemen, thank you for your participation in today’s conference. This concludes the program, you may now disconnect. Have a wonderful day.