Zogenix, Inc.
Q4 2015 Earnings Call Transcript

Published: 11 Mar 2016

[Operator:]

Good day, and welcome to the Zogenix Incorporated Fourth Quarter and Full Year 2015 Financial Results Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Brian Ritchie of LifeSci Advisors. Please go ahead.

[Brian Ritchie:]

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; Chief Development Officer, Dr. Gail Farfel; and Chief Medical Officer, Brad Galer. This afternoon, Zogenix issued a news release announcing financial results and providing a business update for the fourth quarter and full year ended December 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, March 10, 2016. 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, Brian, and good afternoon to everyone who is joining us live on today's call. Zogenix has just completed a transformational year in 2015 and we are now in a extremely strong operating position. Our ZX008 Phase 3 program for Dravet syndrome is underway. We entered 2016 this year with a solid cost position that should take the company through to the end of 2017. As you know, we recently announced the initiation of the Phase 3 program for ZX008, an investigational proprietary pediatric formulation of low dose fenfluramine. Before we provide you with an update on our progress with the Phase 3 clinical trials, let me first begin with an overview of the new data for ZX008 that was presented at the 69th Annual American Epilepsy Society Meeting in December of last year. This new data which further support our confidence in a development program for ZX008 continue to demonstrate the sustained effectiveness and cardiovascular-related safety for Dravet patients, retreated with ZX008 as adjunctive therapy for control of seizures. The data presented highlight of the initial results from a new cohort of 7 Dravet syndrome patients who began add-on treatments with low dose fenfluramine 5 to 50 milligrams per day or approximately 0.2 to 0.7 milligrams per kilogram per day at various starting points between 2010 and 2015 with a median treatment duration of just under a year. During the 90-day baseline period prior to initiating treatment, the median frequency of tonic-clonic or TC seizures was three per month with a range of 0.4 to 39.7 seizures per month. At the six-month evaluation point following treatment, the median reduction in TC seizure and frequency from baseline was 73%. Over the entire period which range from 0.2 to 3.9 years of treatment, the median reduction in TC seizures compared with the baseline period was 84%. A separate poster reported on the safety results and these new patients treated with low dose fenfluramine during the same observation period from 2010 to 2015. The drug was generally well tolerated and did not result in any echocardiographic or clinical signs of cardiovascular abnormalities, pulmonary hypertension or any other cardiovascular abnormalities. There were no discontinuations in this new cohort of patients due to adverse events or lack of effect. In addition, a separate recently published study evaluated the mechanism-of-action of fenfluramine as a treatment for Dravet syndrome using a gene knockout zebrafish model. This study show that only certain 5-HT receptor subtypes appear to be involved in the mechanism-of-action of fenfluramine. Specifically, the elevation of serotonin levels and interaction with three specific 5-HT receptor subtypes, namely 1D, 2A and 2C, were found to be responsible for reducing both abnormal motor behavior and brain activity in this model of Dravet syndrome, which we believe differentiate fenfluramine from typical anti-epileptic drugs. Shortly after the AES Meeting in December, we were pleased to announce that the FDA had accepted the company's IND for ZX008, that's the Phase 3 program in Dravet syndrome. The approval to begin our clinical trials was combination of discussions between Zogenix and FDA during the fourth quarter of 2015 which concerned them the monitoring of cardiac safety in the Phase 3 program. In their review our clinical protocol FDA asked us to specify the echocardiogram normative ranges or normal values against which subject echos would be measured in the safety monitoring plan to assess any adverse events on cardiac valves. The agency further required, we include into the protocol an echo after six weeks of study treatment and to follow up echo three to six months after patients discontinue treatment with ZX008. Following our responses to these enquiries, the IND Acceptance was granted by the FDA allowing us to move forward with our Phase 3 program for ZX008. As you can tell, a significant amount of planning and preparation on part of both FDA and Zogenix was involved in shaping the ZX008 Phase 3 clinical program. As I stated earlier, the Phase 3 program is now commenced. With Study 1501, the first safety and efficacy trial underway in United States and the multinational trial which we call Study 1502 expected to begin in Europe in the coming weeks. I'll let Gail to provide you with an update on where we stand with the Phase 3 program shortly. Before I move on though I’d like to point out that shortly after the Phase 3 program was initiated, we received Fast Track designation for ZX008 in Dravet syndrome from the FDA. As you know, Fast Track designation provides the opportunity for more frequent interactions with the FDA during clinical development and are eligible for accelerated approval and/or priority review if certain relevant criteria are met. Additionally, companies that received Fast Track designation are allowed to submit completed sections of their NDA for the drug on the rolling basis, resulting in the potential for an expedited FDA review process. As I said previously, we’re also exploring opportunities to evaluate ZX008 efficacy in other orphan pediatric seizure disorders for potential new indications. To this end, a Phase 2 investigation initiated study of ZX008 in Lennox Gastaut syndrome, a drug resistant, electroclinical epilepsy syndrome, is expected to be initiated prior to the end of this month. This open labeled dose finding Phase 2 study will be conducted by Lieven Lagae, M.D., Ph.D. Professor at the University of Leuven Belgium. Data from this study are expected to be available prior to the end of 2016. Let me now move on to Relday, a proprietary once monthly, subcutaneous investigational formulation of risperidone for the treatment of schizophrenia. We are conducting a process aimed at identifying the most attractive development and commercialization partner for Relday. This process is continuing with discussions ongoing with a focus list of potential partners. The [ideal client] [ph] is one with the resources, experience, and development infrastructure to successfully advance the program to Phase 3 clinical studies as expeditiously as possible in 2016. Finally, I’d like to turn my focus to the strong cash position I referenced at the beginning of the call. We entered 2016 with $155.3 million in cash and continue to expect that our cash runway extends through 2017. To reiterate during this time, we anticipate multiple key inflection points for the ZX008 including the investigation of study 1502, the multinational Phase 3 efficacy and safety trial which we expect to initiate in the next several weeks. Top line safety and efficacy results from studying 1501, the North America Phase 3 safety and efficacy trial which we are targeting for the end of 2016. With results for study 1502 approximately a quarter later. Potential U.S. and European submissions for market organization for ZX008 and Dravet syndrome which we currently expect in 2017 and also the opportunity to explore the ZX008 of efficacy in other pediatric orphan seizure disorders is occurring in the investigation initiate study in Lennox Gastaut syndrome. So with that, I’ll now turn the call over the Gail. Gail?

[Gail Farfel:]

Thank you, Steve. As Steve said, we were pleased to announce the initiation of the ZX008 Dravet syndrome Phase 3 program in early January of this year with the start of the U.S. and Canadian study, known as Study 1501. Since that time, we’ve been busy bringing sites online in order to fully enroll the study by the end of the first half of 2016. As a reminder, we are targeting 105 subjects in the study identical to our multinational study which I’ll discuss further in a moment. First though, let me remind you of the Phase 3 trial protocol. We will conduct two identical double blind randomized study of ZX008 compared with placebo. We are investigating two dosage of ZX008, 0.2 and 0.8 milligrams per kilo per day, with the highest dose capped at 30 milligrams per day. Importantly, this is significantly lower than what was previously used in adult obesity treatment. There will be an initial screening visit in the studies, followed by six weeks of baseline data collections along with the continuation of screening procedures. Those subjects who meet entry requirements will be randomized to one of three arms, placebo, 0.8, or 0.2 milligrams per kilo per day of ZX008 oral solution. Subjects randomized into the trial will titrate to their target dose over two weeks, and continue unmet dose during the maintenance period which is 12 weeks long. Subjects who complete the double blind study, and are eligible and medically complaint, can continue into an open label long term extension. The subjects in the study will be 2 to 18 years of age, and we will stratify for approximately equal number of subjects who are 2 to 6 years old, and 7 to 18 years old. Our primary end point will be the change in frequency of convulsive seizures from baselines of 0.8 dose group compared with placebo. The key secondary end point will be the 40% and 50% responder analysis which are important for European regulatory submissions and the convulsive seizure free interval which is of great interest of course to parents and patient. Analysis comparing the lower dose ZX008 treatment, 0.2 milligram per kilo per day with placebo are secondary end points. Additional secondary endpoints include the incidence of status epilepticus and use of rescue medication, as well as caregiver and clinical global impression of change ratings and quality of life assessments. In terms of safety, we will capture adverse events, as well as the typical lab vitals and analysis and will also administer echocardiogram and ECG at six to 12 week intervals for the first year of treatment and every six months thereafter, if no issues arise during the program. We have worked with an accomplished team of cardiologist and with regulators to drop the appropriate guidelines to monitor patient safety in these trials. With that, I'd like now to review where we stand on our multinational study. Study 1502, which we continue to expect, will begin in the next several weeks. We expect initiation for sites in the first two European countries in the next several weeks with a bonus of European site across seven countries to receive approval beginning in April and early May. Based on our progress in getting this study initiated, we anticipate full enrollment in Study 1502 by year end. Before I conclude my remarks, I'd like to provide background on one of the other ZX008 studies we are conducting as part of our Dravet syndrome program. Study 1504 will be a two-part study to investigate the effective adjunct to ZX008 for Dravet patient who are not-completely controlled on a stiripentol regimen, which is a group of three medications approved in Europe, stiripentol, plus valproate, plus clobazam. There are no expected interactions of the ZX008 and clobazam as has been observed with clobazam and other anti-epileptic, but combined use of stiripentol with ZX008 is expected to require dose adjustment of ZX008. Therefore part A Study 1504 is an open label single dose PK characterization of ZX008, clobazam and valproate with or without stiripentol added. The appropriately ZX008 dose from this PK study will be used in the next part of Study 1504 part B, which will be a double-blind placebo-controlled parallel group efficacy study that includes 35 Dravet patients per group with at least four convulsive seizures per month. Unlike study 1501 and 1502, subjects in Study 1504 will be patients who must be on stable doses of stiripentol, clobazam and valproate yet who continue to have suboptimal convulsive seizure control. The two treatment groups will have either ZX008 or placebo added to their stiripentol drug regimen. The duration of maintenance treatment in Study 1504 is 12 week, the same duration as in Study 1501 and 1502 and the seizure endpoints are also the same. In addition, we have added some quality of life outcome in Study 1504 that are important in the EU market. The treatment group sizes in this study are the same as in the other Phase 3 trial, 35 subjects per treatment arm. We expect to begin this study in the second quarter of this year. With that, I will turn the call over to Ann Rhoads. Ann?

[Ann Rhoads:]

Thank you, Gail. As was the case in the first three quarters of 2015 as a result of our strategic decision to sell Zohydro ER business and focus on the clinical development of the ZX008 and Relday, all Zohydro ER revenue and expenses have been excluded from continuing operations for all periods herein and reported as discontinued operations. All prior period information is been recast to confirm to this presentation. With that let me begin my review of the financials for the three and 12 months ended December 31, 2015. Total revenue for the fourth quarter of 2015 totaled $6.1 million and reflected $5.3 million of contract manufacturing revenue and $756,000 of service and other product revenue. This compares to total revenue of $9.9 million in the fourth quarter of 2014, which included $8.9 million of contract manufacturing revenue and $1 million of service and other product revenue. The decrease in contract manufacturing revenue in the fourth quarter of 2015 was due to the timing of shipments of Sumavel DosePro to Endo International under the supply agreement between the two companies. Fourth quarter 2015 research and development expenses totaled $8.6 million, up from $3.3 million a year ago as we continued preparation for our two Phase 3 studies for ZX008. Fourth quarter selling, general and administrative expenses totaled $6.8 million up from $5.8 million a year ago. And net loss from continuing operations for the fourth quarter of 2015 was $11.9 million compared to $9.6 million in the same quarter a year ago. Net income from discontinued operations was $3 million for the fourth quarter of 2015, compared to a net loss from discontinued operations of $10.9 million in the fourth quarter a year ago, which reflects revenues recorded from Zohydro prescriptions and the final allocation of income taxes between continuing and discontinued operations. We reported total net loss for the fourth quarter of 2015 of $8.8 million, or $0.36 per share, compared with a net loss of $20.5 million, or $1.09 per share for the fourth quarter a year ago. And now turning to our full year results, total revenue for 2015 totaled $27.2 million and reflected $24.4 million of contract manufacturing revenue and $2.8 million of service and other product revenue. This compares to total revenue of $28.9 million in 2014 which included $15.4 million of contract manufacturing revenue and $13.6 million of net product and service revenue. The increase in contract manufacturing revenue and decrease in net product revenue in 2015 was due to the sale of Sumavel DosePro to Endo International in May 2014 and the subsequent performance under the supply agreement between the two companies. Research and development expenses for 2015 totaled $27.9 million, up from $11.9 million a year ago as we continued preparations for our two Phase 3 studies for ZX008 and completed our multi-dose clinical trial for Relday. Selling, general and administrative expenses for 2015 totaled $26.3 million, down from $34.6 million a year ago as the Company incurred selling expenses for Sumavel DosePro prior to its sale in May 2014. Net loss from continuing operations was $41.7 million for 2015, compared with net income from continuing operations of $61.5 million a year ago, which included the pre-tax gain on the sale of Sumavel DosePro. Net income from discontinued operations for 2015 was $67.8 million, compared to a net loss of $52.9 million a year ago. The net income from discontinued operations in 2015 includes a gain on the sale of the Zohydro business of $75.4 million, net of applicable tax expense. We reported total net income for 2015 of $26.1 million, or $1.22 per share, compared with $8.6 million or $0.48 per share for 2014. As Steve said, cash and cash equivalents as of December 31, 2015 totaled $155.3 million. And looking at our financial expectations for full year 2016, we expect that our research and development expenses will be in the range of $54 to $59 million, reflecting the initiation and ramp-up of ZX008 clinical studies and anticipate the selling, general and administrative expenses will be $25 to $27 million for the year. Also contract manufacturing revenue from the supply of Sumavel DosePro to Endo is expected at a low single-digit markup over the cost of contract manufacturing. I’ll now turn the call over to the operator to begin the Q&A session. Operator, would you please provide the instructions.

[Operator:]

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

[Paul Matteis:]

Great. Thanks very much. I have a few questions. I appreciate it. The first one is on Study 1504. I’m wondering what the motivation once we're conducting that study, was that – is that a regulatory requirement in Europe or was it suggested at all by the EMEA or any KOLs?

[Steve Far:]

No, Paul, it was not. What I’ll just say what our rational behind running this study and it really because we obviously have a focus on commercializing the cost in Europe and the stiripentol is an approved drug. So for the purpose of ensuring that we can maintain our orphan designation than this study becomes an important element of that. Obviously if we can demonstrate to this product, improved efficiency in patients who are poorly responding to the conventional therapies to stiripentol plus other anti effect drugs then, that will definitely qualify towards maintaining that orphan drug designation. It’s also important with respect to positioning the product in Europe around pricing and reimbursement as well. So, whereas it wasn't said up to be a regulatory study per say, it definitely will be an important study, but it also provides us with some option moving forward to even think about that as a rightly submission in Europe. So for example, we know we need to do one well controlled, randomized control trial in Europe. That trial could actually be that, that registration study in Europe. So, it does give us some option in terms of which of those studies that we would put forward into as the registration study for the European dossier. I want to make the point here that there is no chance of competitive enrolment between 1502, the European trial and 1504. We are going to countries where stiripentol is the standard of care where many of the Dravet patients are already on stiripentol and if you recall patients aren’t allowed to be on stiripentol Study 1502 because it is an investigational drug and we want 1502 to be one of the studies that were used for our U.S. submission. So this Study 1504 is principally going to be operated out of France unless some - one other European country involved as well.

[Paul Matteis:]

Okay. Thanks, that's helpful. And then maybe just on a follow-up, can you talk about the doses that are finalized in the Phase 3 U.S. study 0.2, and 0.8 and how those compare to what the therapeutic doses were in the open-label study published in Epilepsia?

[Steve Farr:]

Gail, you want to take that one.

[Gail Farfel:]

Yes certainly. The selected doses 0.2 and 0.8 reflect the doses that were used when calculated on a milligram per kilo basis in the open label Belgium study. In the Belgium study most of the subjects, the vast majority were initiated on a fixed dose between 10 and 30 milligrams per day and were kept on that dose for many years. And so, the milligram per kilo as the children got older and heavier became a lower number. So therefore, 0.8 is the equivalent mg per kg dose that they started when they were infants and young children and 0.2 reflect the mg per kg dose for those who stayed on for many years.

[Paul Matteis:]

Okay. Got it. But you are not - the 0.8 and 0.2 and who gets what is just randomized, it's not based on age, is that correct?

[Gail Farfel:]

Correct. As regulators prefer they are like fixed dose expiration to look at the relative, the relative doses of the low dose versus the high dose in order to be able to identify how to write a label.

[Paul Matteis:]

Yes, okay. And then if you don’t mind if I just ask one more quick one. Do you expect any data updates from ongoing [attachment] [ph] you studied in any medical meetings this year?

[Steve Farr:]

I'll ask Brad to address that one for you.

[Brad Galer:]

Hi Paul. Actually coming up this May there is a meeting in Amsterdam and then likely where we’ll be submitting follow up on new data cuts to our Epilepsy meeting, I think its September in Prague and of course at AEF which is in Houston this year in December.

[Paul Matteis:]

Great. Sounds good. Thanks very much.

[Operator:]

We’ll go next to Difei Yang with Brean Capital.

[Difei Yang:]

Hi, good afternoon and thanks for taking my questions. There's a couple. So Gail would you remind us between those two studies 1501 and 1502 how many types are involved in the U.S. versus European region?

[Gail Farfel:]

It all totaled approximately 30 in each. We have 28 sites that we have engaged within the U.S. and Canada for 1501 and we are looking for a few additional sites to reach 30, whereas we currently have 31 sites planned in 1502 in Europe as well as Australia and South Korea.

[Difei Yang:]

Okay, thank you. And then in terms of getting the approvals to get these studies up in running in Europe, is it a country by country approval or something like you are guiding for by early April and this should be up in running all of the country that you plan to do but how does that process work?

[Gail Farfel:]

Thank you for that question. There are essentially four elements that are required and one of them is two steps. There is the country level approval which is the two step process. We went through the Voluntary Harmonization Procedure or VHP and have successfully completed that step, and now there is the follow up individual country level approvals and we have received I believe of the seven European countries involved in VHP, we have received three of them and we are expecting the remainder very shortly. Then there is budget and contracting which is almost fully completed for all sites. And then the fourth step is FX Committee approval. So FX committee applications have been submitted for the majority of the sites and we are expecting those approvals in the coming weeks and that’s what will allow the sites to begin to recruit subjects.

[Difei Yang:]

Thank. And then the final question, my final question is the approval will it be something like once you get positive results out of these two trials, you are ready to file for both the U.S. North America Approval as well as the NDA approval is that right?

[Steve Farr:]

That's our plan as of today, to say yes.

[Difei Yang:]

Okay. Thank you.

[Operator:]

We’ll go next to Annabel Samimy with Stifel.

[Andrew Finkelstein:]

Hi guys, this is Andrew in for Annabel. Thanks for taking my questions. First I just want to start up, if I would recall 1501 which is expected to initiate in the fourth quarter but it was announced to have begun in January and 1502 this quarter. Is there any reason for the delay, is there 1502 just because of the - all the process for elements you had to go through?

[Steve Farr:]

Yes, to some extent yes. But if you remember we were in discussion with the FDA during the fourth quarter to get the IND up in running, or get the studies in running soon open IND. And we ultimately got approval to proceed in December and there was some last minute changes to the protocol the FDA requested which ultimately then sort of delayed our ability to get sites up and running in the fourth quarter. We believe it was time - well spent with the FDA we actually had excellent interaction with them in clarifying some issues around the - how we would collect the safety data during the trial. So we certainly believe it was a time well spent and really allowed us to proceed with confidence into the studies in both U.S. as well as in Europe.

[Andrew Finkelstein:]

Okay. And just to be clear - the question data was for the CT?

[Steve Farr:]

It was. It’s around how we - it was as I have mentioned in the script it was how we define normative ranges or normal values for echocardiograms coming into the trial and we were able to reach conclusion with the FDA in that. And plus Gail say something a little bit more about that.

[Gail Farfel:]

To the original - that’s the beginning of the question and so we felt that the change in the FDA requested should be rolled out in the European protocol as well. So that’s where the timing came from.

[Andrew Finkelstein:]

Great. And second, so on the enrolment for the U.S. Phase 3 study, are you seeing any difficulties enrolling in patients given an ongoing competitor Phase 3, are you guys enrolling looking at the same patient type. Also is the stigma associated and [indiscernible] affecting enrolment at all?

[Steve Farr:]

This is Steve. Well first and foremost we don’t think there is any competitive studies out there right now. The Epidiolex program we believe is fully enrolled, so from that perspective we don’t see - no competition. I think where we are at right now is they are really getting all the sites that will be enrolling patients into the study and up in running and that's an integrated process. We are very early into that right now, we only initiated this study in January of this year and we’ll certainly provide an update as we go through the year with respect to the conduct of the study.

[Andrew Finkelstein:]

Great. And my final question. If you are unable to find a partner for the Relday program or to Tier 1, do you foresee yourself taking on the program yourself?

[Steve Farr:]

We do not. We have - we’ve made that decision last year when we transformed the company to the one that we have today and we really would need to focus, want to focus in the orphan neurology area and our focus obviously is with ZX008. The commercialization, our burden for Relday is very, very different to the ZX008. But we do like the product very much. We’ve invested in it, we love the product profile, the Phase the clinical trials supported that product profile so we are definitely committed to trying to find the best developing the commercialization partner not process as I said is ongoing right now.

[Andrew Finkelstein:]

Great. Thank you, guys.

[Operator:]

[Operator Instructions] We'll go next to Rohit Vanjani with Oppenheimer & Company.

[Carlos Solorzano:]

Thank guys, this is Carlos Solorzano in for Rohit. Thanks for taking my question and congratulations on the progress. My question was around the new data for the seven patients. Data is amazing, is very encouraging, efficacy that you’re seeing and no echocardiogram abnormalities. I am just wondering what may be different about this versus the first 12 patients published earlier. Is this a matter of the time, the patient has been on treatment or it's related more to the dose since you guys mentioned its 5 to15 milligrams per day in this new cohort of patients.

[Steve Farr:]

Thanks for your question. I'll ask Brad to take that one for you.

[Brad Galer:]

Actually when we look at the data, we see a lot of similarities, but it's important meant to realize that the earlier studies there really wasn't true baseline obtained. We have a long-term longitudinal data and we continue to see dramatic results, both seizure freedom and dramatic reductions in seizure frequency. The new patients luckily which started since 2010 there are stronger baseline data. So we can track them better, but we view the data very similar. We see significant efficacy in both group the patients.

[Carlos Solorzano:]

Okay. So it's more - you think the fact that you don't see any echocardiogram abnormalities in patient is I recall of just having better baseline data.

[Brad Galer:]

Well, with regards to the echocardiogram, the earlier patients we've only seen if there were changes the majority and there was only few there - only tangent changes seen typically one time. There are two patients where we have had more than one slight change in valve thickening, but those have remained stable without any clinical relevance whatsoever.

[Carlos Solorzano:]

Okay. Thank you.

[Operator:]

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

[Raju Prasad:]

Thanks for taking the question guys. Just trying to extrapolate maybe some of the baseline characteristics from the open label to the Phase 3. I know that one of the patients in the open - in the seven new patients had 0.4 tonic-clonic seizures. Is there a minimum amount of seizures in the running period for the Phase 3. Just trying to figure out how to extrapolate some of them with less than two or three patients.

[Gail Farfel:]

Yes. There is a minimum number of convulsive seizures that is required to entry into the Phase 3 program. We actually have not publicized the minimum, it is experimentally better to not give people a number, but it is consistent with other programs that you have seen and are subject to had numbers such as less than one seizure a month would not be eligible to enroll in the Phase 3 program.

[Raju Prasad:]

Okay. And then on the cap of 13 milligrams dosing, is that a potential issue - looking at the four patients had weight above 40 kilograms in the seven new patients, do you see that at all being an issue as far as dosing goes?

[Gail Farfel:]

We do not believe that it will be. The cap was instituted simply to keep us below the envision same levels of the adults that were treated previously with fenfluramine as an appetite suppressant. We believe based on the years of experience in the Belgian cohort that allowing dosing up to 30 milligrams per day will be sufficient for Dravet patient.

[Raju Prasad:]

Great. And then just a follow up on your comments on 1504. So if I understand that correctly, you may use that for a regulatory filing with EMA instead of 1502. Do I understand that properly?

[Brad Galer:]

We have the option to do that. It's being set up to be an appropriate registration study, but we have made that determination yet that’s something we can do as we move forward.

[Raju Prasad:]

Great. Thanks for answering the questions.

[Operator:]

[Operator Instructions] We'll take a follow up from Paul Matteis with Leerink.

[Paul Matteis:]

Great, thanks. I appreciate it. I just want to clarify one thing, did you see any opening remarks that you expect the U. S. 32 enroll by end of first half '16 and it sounds like it's a pretty quick enrollment pace and you expect all the patients to come on board in the next three and a half months or so. So I just wanted to make sure that I heard you correctly. And if I did, maybe you could expound upon that a little bit.

[Steve Farr:]

Paul, I didn't say exactly that. What I did say is that we are targeting to have a topline read-out of the results by the end of this year, very end of this year. So what that really means is that we have to get the study fully enrolled certainly by the summer months or during the summer months to provide us that opportunity. So as you might imagine, the team here is very much engaged in ensuring that we can't spend the next several months to get that study fully enrolled.

[Paul Matteis:]

Okay. Great, thank you.

[Operator:]

We'll take a follow up from Difei Yang with Brean Capital.

[Difei Yang:]

Thanks for answering my follow up. So the question is on, would you reminder us what is the natural history of these patients. So usually the patient's are diagnosed when they are one year old, possibly two, but fairly young. What happens as they grow? Do they tend to have more seizures, less seizures or the same number? The reason I'm asking this is that for the higher dose arm, 0.8 milligram I would assume you ended up with the patient population tend to be younger on - younger in age, only because of the weight limitation. So I'm trying to think what is that?

[Gail Farfel:]

Great question, Difei, this is Gail. Actually, I think what you have figured out is that with the 30 milligrams cap and an oral solution, we are randomizing both the young patients as well as the older patients and the heavier patients to their dose. But if we cap it at 30 milligrams and you are an adolescent to raise 80 pounds, , you'll be able to tell that you are on the 0.8 mgs per kg dose because you've got a lower volume. So we actually have embedded another randomization schedule using different concentrations of ZX008 oral solution in order to retain the blinding. So in fact, despite the 30 milligram cap, regardless of what age and weight the patient is, they or the site cannot tell if they were randomized to placebo 0.2 milligrams or 0.8.

[Steve Farr:]

And if I – with, sorry, go ahead.

[Difei Yang:]

Go ahead, sorry.

[Steve Farr:]

With regard to your question on natural history of the condition, as they get older typically into adolescence, they, the seizure frequency tends to improve go down though the vast majority continues to have refractory severe epilepsy with multiple seizures. And as Gail mentioned there is a minimum number of compulsive seizures patients need to have to enroll in the study. But for that reason, we are stratifying as Gail mentioned from a two to six years of age and six to 18 to try to comp for that as well.

[Difei Yang:]

Okay, thanks. So just to ask a clarifying question, when you are stratifying these two patient groups, they really - if you get a positive result in one of the age groups, I would have guess it's more likely to be the younger age. That's good enough, right for approval or you have to be positive in both?

[Gail Farfel:]

We have not had a conversation at that detailed level with regulators yet. It's a very good question.

[Difei Yang:]

Thank you. Thanks for answering my questions.

[Operator:]

And with no further questions in the queue, I would like to turn the call back over to Dr. Farr for any additional or closing remarks.

[Steve Farr:]

Thank you, Operator. Well, I hope you can see that 2016 is lot of question about year of execution for us. We have the team in place to be able to move forward on our very exciting program in Dravet syndrome. We definitely look forward to keeping you appraise of our progress as we go through the year. So thank you again for joining us today, we very much appreciate your interest in Zogenix's. Thanks again, bye, bye.

[Operator:]

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