Zogenix, Inc.
Q1 2015 Earnings Call Transcript

Published: 12 May 2015

[Operator:]

Good day, everyone, and welcome to the Zogenix First Quarter 2015 Financial Results Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Catherine O'Connor, Senior Director of Corporate Communications. Please go ahead.

[Catherine O'Connor:]

Thank you, operator, and thank you all for joining us this afternoon. With me on today's call are Chief Executive Officer, Dr. Stephen Farr; Chief Financial Officer, Ann Rhoads; and Chief Medical Officer, Dr. Brad Galer. This afternoon, Zogenix issued a news release announcing financial results and providing a business update for the first quarter ended March 31, 2015. Please note that certain information discussed on the call today is covered under the Safe Harbor provision of the Private Securities Litigation Reform Act. We caution listeners that during this call, Zogenix's management will be making forward-looking statements. Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business. These forward-looking statements are qualified by the cautionary statements contained in Zogenix’s news releases and SEC filings, including in the annual report on Form 10-K and subsequent filings. This conference call also contains time-sensitive information that is accurate only as of the date of this live broadcast, May 11, 2015. Zogenix undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call. Now, I'd like to turn the call over to Steve.

[Steve Farr:]

Thank you, Catherine, and good afternoon to everyone who is joining live on our call today. I'm pleased to be speaking with you on my first quarter Investor Call as a Company's CEO. 2015 promises to be a transformational year for Zogenix's, and I am very excited about where we are now and more importantly where we're headed. As you all aware the sale of Zohydro ER business last month allows the company to now place its emphasis on advancing our late stage CNS product development pipeline. Zogenix has a proven track record of developing and achieving regulatory approval of innovative CNS products during our relatively brief history as a Company. I look forward to continue to bring my drug development experience and more importantly about our team to pay on the exciting product opportunities that lie ahead for our company. Before I go any further, on behalf of Zogenix and the Board, I would like to thank Roger Hawley for his significant contributions to Zogenix over the years. He has played an important role in positioning us the future success and I am pleased that we will continue to benefit from Roger's counsel as a member of the Board. I truly believe our core strategic focus on late stage CNS product development pipeline is the right time for Zogenix and for all our stakeholders which include our investors. As I’ll discuss in greater detail shortly, we're on track to achieve several important near term milestones for our clinical development programs in both Dravet syndrome and in schizophrenia. Also we are now funded with non-dilutive capital to fully execute on our development plans which for ZX008 or 008 as we call it, include submitting for regulatory approval in the U.S and Europe at the end of 2016. While our current focus is clearly in drug development, our longer term strategy is to introduce these products with our own appropriate size commercial teams in the U.S and for 008 in Europe as well. We feel greatly in our missions here at Zogenix and are already executing on this new strategic direction. Before providing an update on our lead clinical programs, let me first review a few of the key details related to the recent sale of Zohydro ER pain franchise to Pernix. The deal closed on April 24, and provided us with $20 million in cash and approximately $1.68 million shares of Pernix common stock plus future regulatory and sales milestones that could total up to $283.5 million. This transaction significantly increases our cash position and allowed us to substantially reduce our ongoing operating expenses. We're continuing to aggressively transform and work towards a number of key inflection points for 008 and Relday that will occur over the next 18 months or so. These include, initiation of the Phase 3 efficacy trials for 008 in United States and Europe, scheduled to begin in the third quarter of this year with topline results available in mid-2016, and NDA and MAA regulatory submissions for 008 which are anticipated in late 2016, and achieving Phase 3 readiness for Relday at the end of this year before moving into an end of Phase 2 meeting with the FDA in the first quarter of 2016. We are very excited about the global potential of both of these product candidates and I'm pleased to now have the appropriate resources in place to continuing moving both programs ahead expeditiously. With respect to ZX008, we have already completed several critical product activities but now place is on track to begin Phase 3 clinical studies in the third quarter of 2015. As you know, 008 is a low dose-formulation of fenfluramine, which has the potential to be a transformational treatment for Dravet syndrome. Dravet syndrome is a rare and catastrophic form of epilepsy that begins in infancy and does not respond to the traditional epilepsy medications. There is currently no FDA approved treatment for Dravet. We previously received open drug as designation for this product in both United States and Europe. Our enthusiasm for potential of 008 is based upon the compelling long term data continuing to arise an ongoing study in Belgium. In this open label study conducted by two internationally recognized Dravet experts, a gentle treatment with ZX008 has resulted in a dramatic reduction infusions in Dravet syndrome patients. In the most recently completed analysis of this ongoing study which is conducted in June of 2014, the average length of treatment is now longer than 12 years. Impressively, two-thirds of patients 10 out of 15 with seizure free at the last assessment with the average seizure free previously in 5.5 years. 87% of patients had greater than a 75% reduction in seizure frequency of the last assessment. We believe these to be the longest duration most robust data for any drug studies in Dravet syndrome.In particular the extent of the seizure free response data sets ZX008 apart from other drugs been investigated in this severe refractory epilepsy syndrome. Since the acquisition of the product late last year, we have made significant progress with CMC, Chemistry Manufacturing Control's requirements including a new synthetic manufacturing route fenfluramine, a new oral liquid formulation and packaging specific for a pediatric population, and selection of both the clinical and commercial suppliers of drug substance and drug product. In addition we have conducted two key opinion leader advisory boards, one in U.S. and one recently in Europe, where the data from the ongoing open label study and a Phase 3 study designed in protocol were reviewed. It was encouraging to have these international experts, stay enthusiasm and support for our program for ZX008. Based on the efficacy and safety data from their Belgium colleagues, these experts believe that low-dose fenfluramine could potentially have a significant positive impact on treating patients with Dravet syndrome. We've also developed relationships with the patient advocacy groups in U.S. and Europe and are receiving positive feedback from them regarding our progress towards the clinic. We are now preparing for submission of an IND through 008 in U.S. and the CTA’s in Europe, in times the anticipated start of the Phase 3 program in the third quarter. The Phase 3 program will consist of two separate multicenter double blind power group placebo controlled studies of 008 as an adjunct therapy in Dravet syndrome. We were enrolled between towards 55 and 60 patients in each trial. The trials were randomized patients one to one between drug and placebo and were compared reduction in relative seizures during the 12 week treatment period compared to the four week baseline period. After completing the efficacy study, patients will have the opportunity to receive anti drug in an open label trial. Our goal is to report the results in mid 2016 and based on positive outcome from these studies, targeted NDA submission in U.S. and an MAA submission in Europe in the fourth quarter of 2016. I'm also pleased to report the updated confirming data from this ongoing open label protocol conducted in Belgium was accepted for presentation at the May, European pediatric neurology conference to be held later this month in Austria. Further 008 activities have centered on implementing our product protection strategy beyond orphan drug exclusivity which by itself provides seven years exclusivity in U.S. and 10 years in Europe. We have several pending patents application covering the method of treatment of Dravet syndrome and the elements of it's future Relday program for the drug, which if they issue would provide exclusivity through at least 2033. We are continuing to pursue other avenues to build an even stronger patent to state based on noble scientific and clinical finding, as well as drug product related inventions. Moving on to our Relday program, in March of this year we commenced dosing patients with schizophrenia in our Phase 1b multi-dose clinical study. This is a 20 week multi-dose clinical pharmacokinetic and safety trial involving 60 patients. They are divided into four separate groups to receive 60 milligrams, 90 milligrams, or 120 milligrams of once monthly Relday or twice monthly RISPERDAL CONSTA. Patients on RISPERDAL CONSTA will also receive daily oral risperidone supplementation for the first three weeks, which is consistent with it's approved product label. The study is progressing very well and the topline results are expected in the third quarter. These clinical data and the progress we are making on formulation manufacturing scale at work, will allow us to progress to end the Phase 2 meeting with the FDA. Just to remind you that Relday is a proprietary subcutaneous injected formulation of risperidone with dose once monthly and does not require reconstitution prior to injection. This formulation is designed to provide potentially significant improvements over current long acting IMO intramuscular injection treatments for schizophrenia. The potential clinical benefits include therapeutic levels on the first day or the first injection and its administration via the subcutaneous route which should result in better tolerability unless risk of inadvertent intramuscular injection. Previous studies have demonstrated Relday achieves dose dependent therapeutic plasma levels within 8 hours of initiating dosing, and therefore removes the requirement for supplementation with oral drugs or complicated dosing regiments typically associated with the currently approved long acting injections. So in conclusion, all of our R&D activities are progressing well and we look forward to run you with continued updates throughout the year. With that, I'll now turn the call over to Ann. Ann?

[Ann Rhoads:]

Thank you, Steve. As a result of our strategic decision to sell the Zohydro ER business and focus on our clinical development of ZX008 and Relday, our operations will now resemble those more similar to a development stage company on a go-forward basis. The other impact of the sales reflected in our P&L and balance sheet, as also Zohydro ER revenue and expenses have been excluded from continuing operations for all periods herein and reported as discontinued operations. Our prior period information has been recast to confirm to this presentation. Also the purposes of this call I'll be comparing the first quarter ended March 31, 2015 to the first quarter ended March 21, 2014 unless otherwise stated. Total revenue for the first quarter of 2015 totaled $4.6 million, and reflected $4.2 million of contract manufacturing revenue, $433,000 of service and other revenue, and zero net product revenue as a result of the sale of Zohydro ER business. This compares the total revenue of $7.4 million in the first quarter of 2014 and included $6.5 million of net product revenue and $904,000 of service and other revenue. The increase in contract manufacturing revenue and decrease in net product revenue in the first quarter of 2015 was due to the sale of the Sumavel DosePro business to Endo in May of 2014 and subsequent performance under the related supply agreement. First quarter 2015 research and development expenses totaled $5.2 million, that was up from $2.5 million a year ago, as we continued preparations for our two Phase 3 studies for ZX008, and a multi-dose clinical trial for Relday. First quarter selling, general and administrative expenses totaled $6.3 million that was down from $12.5 million a year ago as the company incurred selling expenses for Sumavel DosePro prior to its sale in May 2014. We reported a net loss from continuing operations of approximately $10.2 million for the first quarter of 2015 compared with $5 million a year ago. Total net loss, including discontinued operations for the first quarter of 2015 was $22.9 million or $0.15 per basic share and fully diluted, compared with $20.9 million, or $0.15 per basic share and $0.20 fully diluted for the first quarter a year ago. Cash and cash equivalents at the end of the quarter totaled $21.3 million. And note for you that this balance does not reflect the cash proceeds of $80 million which we received subsequent to the quarter's end related to the April 2015 sale of Zohydro ER to Pernix. Of the 80 million, 10 million of that will be placed in escrow for 12 months. Additionally, we continue to have restricted cash of $8.5 million which consist of the portion of the proceeds from the sale of Sumavel DosePro business to Endo which is required to be held in Escrow until May of 2015. We also expect to receive an additional $5 million from our waiver exchanged with Purdue Pharma in the third quarter of this year. We anticipate our current financial resources including those related to the Zohydro ER sale will provide us with sufficient cash to fund our operations through multiple key milestones including the U.S. and Europe Phase 3 studies for ZX008, a targeted NDA submission in the U.S and MAA submission in Europe for ZX008 which were both expected in the fourth quarter of 2016 and being ready for the end of Phase 2 meeting for Relday. Looking ahead to our financial expectations for the remainder of 2015, reflecting our continuing operation following with sale of Zohydro ER, our research and development expenses are expected to be in the range of $25 million to $28 million for the second, through the fourth quarters of 2015. Our G&A expenses are expected to be $21 million to $23 million for the second to the fourth quarter of 2015, and our contract manufacturing revenues from the supply of Sumavel DosePro to Endo will continue at a lower single digit markup over the cost of contract manufacturing. Finally the pretax net gain on the sale of Zohydro ER of approximately $90 million less the cost of discontinued operations will be recorded as discontinued operations in the second quarter. The company does not expect gain or loss from discontinued operations to be significant in the third or fourth quarter. I’ll now turn the call over to the operator to start the Q&A portion of the call. Operator, would you please provide the instructions.

[Operator:]

[Operator Instructions] We’ll take our first question from Paul Matteis from Leerink.

[Paul Matteis:]

Great. Thank you very much. My first question is on ZX008. I’m wondering can you elaborate a little bit on your IP strategy and your hope to get method of used IP around this. And I guess specifically, what kinds of claims are you hoping to get issued and how do you think you can get around the epilepsy publication which is some prior out there, that was what got you excited by this deal on the first place?

[Steve Farr:]

Hi Paul, this is Steve, I won't be able to address your question fully because of previously some [indiscernible] I need to be aware of. But we are very confident that we will be able to get some IP around the method of use. There is a grace period which allows inventors to be able to find out the public disclosure and those patterns were filed within that growth period. So some of the epilepsy payable will not be regardless prior of because of that. And also we're looking at other opportunities we are conducting some translation research activities currently within the same university and seems to really interesting results, will be the basis of other IP. So in short, we're pretty confident that we will be able to get some IP around method of use and also some IP that will sort of cover just methods of action and loss and other [indiscernible] same methods of action.

[Paul Matteis:]

Okay, interesting. Thanks, that’s helpful. And then one more question on the Relday study, I’m wondering what you think the Brabafen success is and what do you think you need to show in that study to get partners excited and step in and help fund the product in Phase 3?

[Steve Farr:]

I think for us its showing that we have the ability to dose patients and get to up to study state levels quickly without utilizing an oral supplementation which you need to do with RISPERDAL CONSTA. So that basically is going to be the important end point of the study, making sure that our pharmacokinetic profile is consistent with the literature data around what it needs to be for efficacy for results. But importantly we've avoided annual supplementation, so that's the primary reason for the study. But also as you might imagine looking at safety, I think safety is an important element that we are able to show, the product is well tolerated, will be an important end point as well.

[Paul Matteis:]

Okay. Great, that's helpful. Thanks for taking my questions.

[Steve Farr:]

Thank you.

[Operator:]

We’ll take our next question from Traver Davis with Piper Jaffray.

[Traver Davis:]

Hi, guys thanks for taking the questions. Just first on the confirming opportunity. I was wondering your more recent thoughts on potential competition from the CBD drug candidates within the Dravet indication, you have a competitor out there that, recently disclosed pretty compelling data in Dravet patients. I just want to try to get an idea of how you're thinking if there's any changes here you're thinking on the competition within the Dravet opportunity? Thanks

[Steve Farr:]

Well, I think first and foremost there's a long history of polypharmacy in the treatment of Dravet syndrome of all epilepsy, so we don't see a scenario whereby either one drug has approved and another doesn't. I think as we move forward in the course of time both are deemed to be safe and attractive, I think both products will be used and maybe [indiscernible] with the objectives clearly to try and move patients to a state of seizure freedom. One thing that's absolutely compelling about the ongoing data in Belgium or study in Belgium is that the seizure freedom data is been generated which as I said earlier, really sets all way to part from all other drugs been studied in Dravet syndrome, including CBD's where they're looking at a reduction in seizure frequency, there's been very little evidence of prolonged seizure freedom. So, if we are able to replicate the data that we've seen in the open label trial in our randomized control Phase 3, we think we'll have the really compelling market opportunity with 008 as quite different the other drugs which are being currently investigated.

[Traver Davis:]

Thanks. That's helpful. And just anything you can add on what are you guys thinking about potential sizing for Dravet product, I guess because bear in mind the fact that this is an population but also the fact that there could be potentially some competition in this phase by the time you guys hit the market?

[Steve Farr:]

It's pretty too premature for us right now to talk about pricing. We really need to focus in on Phase 3 and get the Phase 3 results because at the end of the day that's going to be, I think the best dataset upon which we can start to think about pricing.

[Traver Davis:]

Great, thanks.

[Operator:]

We'll take our next question from Annabel Samimy from Stifel.

[Annabel Samimy:]

Hi, thanks for taking my question. Just on the Phase 3 and Dravet syndrome, could you help us understand I guess some of the specifics around the Phase 3 design, is there any difference in dosing that they've used or any kind of background therapy that they've used in the open label study that you're changing for the Phase 3 that might make it difficult to replicate. And then regarding the Relday program, is it clear to point that you can move directly into Phase III trials with the multi-dose data that you have? Thanks.

[Steve Farr:]

Hi Annabel. I'll take the Relday part first and then I'll ask Brad to comment on the Phase 2 protocol for 008. We're very confident that the multi-dose trial is the last trial required before proceeding into Phase 3. And that confidence is based upon the pre-IND meeting that we had with the FDA which laid out the development program. So, we certainly believe that the results demonstrate success and give us enthusiasm to move forward, this will be the last study before Phase 3.

[Annabel Samimy:]

Why you’re talking about Relday, could you just describe what that Phase 3 is going to look like?

[Steve Farr:]

That's what I asked Brad to do after his talk about 008.

[Brad Galer:]

With regards to 008 the Phase 3, first with patients, the same patient, the same criteria against revenues in Belgium and with regards to the protocol, our patients will have a four week baseline with only to have a certain number of seizures in order to then enter a titration period. And immediately upon entering the titration period they are randomized, these that are one-to-one active placebo, and patients are high rated, the dosing is not milligram per kilogram but is based - we start at the lowest dose, 2.5 milligrams of [PID] [ph] for four weeks, and if they don't have at least 75% reduction in their compulsive seizures, the next four weeks they are increased to five milligrams PID again or placebo because validate for another four weeks, then reassess at that dose to see if they have a greater than 75% reduction in all seizures, if not and they get the higher dose for a month 10 milligram PID and then go into 12 week maintenance period. And then the primary is the change in the number of convulsive features at baseline works over the 12 week maintenance period on a per month average.

[Steve Farr:]

And then Brad, if I can just add to that. The 5 and 10 milligram doses were the doses demonstrated to be effective in the study in Belgium. We’ve added in a 2.5 milligram dose in order to evaluate – is the lower effective dose so that was the requirement the FDA asked us to look at in our studies.

[Brad Galer:]

In addition we’re not dosing per weight because based on the Belgium data today, there is no correlation with regards to the dose that ends up being cases related to weights or age of the patient.

[Annabel Samimy:]

Got it.

[Brad Galer:]

With regards to Relday we actually are currently revaluating our Phase 3 program. However, it looks as though right now we will be having two efficacy trials probably for Europe and down as periodic trial. But we have currently - we’re evaluating what we believe will be necessary for group.

[Annabel Samimy:]

Okay, great. And in terms of the cash position, do you feel that you're in a fine cash position that you don't have to consider partner right now for Relday?

[Steve Farr:]

Our strategy here is actually to find a partner for Relday. The reasons for that is there is a global opportunity and we really need a strong co developments commercialization in Europe. So that’s our preference is to really find a partner outside United States who can help us with U.S. development. And so that basically what our long term strategy is.

[Annabel Samimy:]

Okay, great. Thank you.

[Operator:]

We’ll take our next question from Akiva Felt from Oppenheimer.

[Akiva Felt:]

Thanks. Steve I wanted to ask you about the KOL meetings. It sound like it was pretty uniformly positive but I just wondering, what were the sources of push back or caution if there were any on 008 in the Phase 3 potential. Thank you.

[Steve Farr:]

I’ll ask Brad to take that. I was not at the meeting but Brad was there. So, go ahead Brad.

[Brad Galer:]

So as Steve mentioned we had two very successful meetings, one in the U.S, one in Europe, one in Europe actually just happened two weeks ago and both were with KOLs regardless of whether they were North American or European we're extremely enthusiastic. It really wasn’t any pushback, whatsoever with regards to anything, with regards to either the program or even we discussed the history of forming. But as always and as scientist and as clinicians data as we admitted dates on open label data but relatively to what else is out there and also particularly Europe, known that the data comes from colleague - they know very well and trust, they need to be validated in placebo-controlled trial but it wasn’t in a push back, it was great enthusiasm, wanting hopefully to see this on the market as soon as possible.

[Akiva Felt:]

Yes, thank you.

[Operator:]

We'll take our next question from Difei Yang from Brean Capital.

[Difei Yang:]

Thanks, good afternoon. So my first question is actually easier on Relday, if you do the Phase 3 trials are you expecting to get the data exclusivity, through your data exclusivity

[Steve Farr:]

Well, this will be a 505(b)(2) that will not require reference to another NDA other than the referenced protocols will be RISPERDAL CONSTA. So yes, we haven’t thought about that in any great detail but I think you're right, there is opportunity for us to get exclusivity based upon the protocol file that we will be presenting and the noble formulation being.

[Difei Yang:]

Okay. So moving on 008, just to clarify, I think I hear you saying the size of the trial where I get confused is that I hear the number between 55 to 60 patients, is that per trial or is that spread over two trials?

[Steve Farr:]

Per trial.

[Difei Yang:]

Okay. And then with regard to the details on how the trial is designed, I think I am a little confused over when you give the patient 2.5 milligram, if it doesn't work, you step up to five, the placebo will not work, right?

[Steve Farr:]

Go ahead, Brad.

[Brad Galer:]

As you know with regards to placebo in trials are known, who will respond and who will not, get a placebo response. Based on prior data, particular to our clinical data we assumed in this condition and what these patients, there will be low placebo rates. So, yes, more likely they're not the vast majority of patients placebo will not experience the greater than 75% reduction and therefore the placebo patients were expecting will be in the titration period for 12 weeks and then enter the maintenance space.

[Difei Yang:]

I think that's where I got confused. So in a way you could tell who's on the placebo or who's not?

[Brad Galer:]

Well, it's a blinded study with regards to any trial, if there is a low placebo rate and indeed you have a effective drug, it's not really unblinded but that's why you do the study. But indeed our placebo will be exactly the same with regards to color based as the active so it will be blinded.

[Difei Yang:]

Okay. And then with regards to the location of the trials, are the patients spread over between U.S. side, the European side, or - where are they?

[Brad Galer:]

One of the studies will be based in the U.S. and the other study will be based in Europe, and we right now are very close to choosing a COO and we are discussing the right selection with the COOs competition.

[Difei Yang:]

Okay, thanks. So my final question is actually just a quick financial question. With regards to the Zohydro ER revenue, I just wanted to make sure that number is incorporated into the income from discontinued operations, so that product revenue minus all the expenses?

[Ann Rhoads:]

That's correct.

[Difei Yang:]

Thank you, Ann.

[Ann Rhoads:]

Thank you.

[Operator:]

[Operator Instructions] We'll go next to Cathy Reese from Empire Asset Management.

[Cathy Reese:]

Hi, good afternoon. Thanks for taking my questions. First, just because of the limited patient population for Dravet, I just wanted to confirm that the Belgium patients, the product that they're on is identical to 008 and when the masked formula is available, will they be placed on that particular product? And because I know that at one point there was a chance that you had mentioned the Belgium patients trial product may run out, so I just wanted to be sure that the two formulations were the same and that they would then be switched over to the new masked Phase formulation or is that not been clarified yet?

[Steve Farr:]

Thanks Cathy, I think I understand which one. The drug is the same, will be manufactured by different pathways. But it basically passes all the various tests and monograms for fenfluramine as an active substance. In the old days, the investigators in Belgium are basically been sourcing [indiscernible] for where they could get it, and then that is being tested by an independent hospital pharmacy in Belgium and that pharmacy is transferred as drug substance into a capsule formulation that then the patients have taken, if they're too young to take a capsule then it's being opened and sprinkled into a drink. We are now actually supplying that open label trial with fenfluramine of emphasizing and it's actually identical that the product will be going into Phase 3. Because this is a pediatric indication, we wanted to basically have a formulation that was more appropriate for young person, so we decided to go directly with a more liquid formulation which - so it's oral liquid formulation fenfluramine rather than a capsule. What I will say, what I can - too scientific this is, fenfluramine is a drug that is very well absorbed, so changes in dosage form will not impact it's efficacy.

[Cathy Reese:]

That's very useful. Thank you. And then a question on R&D expenses for the remainder of 2015. Should we anticipate that most of those expenses will be in the third and the fourth quarter from the timing of the R&D events that are supposed to occur during the rest of the year? And in addition to that, the cost per each 008 trial, is that $10 million per trial or will you anticipate a $10 million cost for the entire program, Phase 3 program? Thank you.

[Ann Rhoads:]

So thanks Cathy. So the cost on the - let me take your second question first, the cost on the trials would be $10 million in total for both the U.S. and the European trial. We did last spoken about that we anticipate some additional expenses in the range of around $5 million that will be expenses incurred after the trials are complete in terms of preparing the regulatory submission. And then from a R&D perspective for the remainder of the year, I will tell you that it's going to be little bit more evenly distributed over the course of the remaining three quarters rather than backend weighted.

[Cathy Reese:]

Okay. Thank you. That's very helpful.

[Ann Rhoads:]

Okay. Thank you.

[Operator:]

We'll go next to Raju Prasad from William Blair.

[Raju Prasad:]

Thanks for taking my question. On ZX008, given that the CBD companies have recently increased their sample size as well, do you foresee any potential headwinds with the size selection and enrollment criteria? And then also - could you just tell me what the power and effect size is for your Phase 3 with ZX008?

[Steve Farr:]

Brad, you want to address those questions?

[Brad Galer:]

With regards to the potential headwinds or involvements, again as I mentioned we’re engaging 008, we're evaluating that we don't believe that being the case. Unfortunately as you know this is a very hard to treat condition and patients even if they may Epidiolex we don't expect them all to respond, as no patients seem to respond at any drugs. So we don't see any significant headwinds with regards to enrollment, so we are evaluating that at current. With regards to the [indiscernible] calculations, I don't have that at hand, we can send that information after the meeting.

[Raju Prasad:]

Great. And then just one more regarding Relday, are you guys just expecting non periodic with the actual competitor in solubility or given the subcutaneous injection and the reduced injection frequency, maybe you guys are expecting superiority, just a little bit of color on that would be great. Thanks.

[Steve Farr:]

You talked about the European study now I guess, we're still looking in that right now, but the usual way is to looking on periodic study. So I am sure that will be something that we will probably run if that's the convention to do so. I think you're right. I think with the product profile that we tie up with Relday, we think it could potentially be a superior product whether or not you be able to demonstrate on a clinical trial, I am not sure but certainly in a practical setting you basically avoid the use of supplementation, introducing patients to injections or even more of an issue where you have normal time patients who don't turn out for the normal injections what you do with those patients, you put them back on oral or not I think our product could definitely preparing lots of practical clinical setting.

[Raju Prasad:]

Great. Thank you.

[Operator:]

And at this time, I would like to turn the call back over to Steve Farr, for any additional or closing remarks.

[Steve Farr:]

Well, thanks everyone for being on the call today and particularly the questions. We are very excited where we're out right now, we think it's a really important time in the Company's history. We're very busy on demonstrating that to you and we certainly look forward to keeping you appraised of our progress throughout the year. So, thank you for joining us again and appreciate your interest in Zogenix.

[Operator:]

This does conclude today's conference. We thank you for your participation.