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spk09: Thank you. Greetings and welcome to Direct Corporation's third quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn this conference over to your host, Mr. Mike Ehrenberg, Chief Financial Officer. Please go ahead, sir.
spk02: Good afternoon, and welcome to our third quarter 2020 earnings conference call. This is Mike Ehrenberg, Chief Financial Officer of Direct Corporation. I will provide a brief review of our financial results, and then Jim Brown, our President and CEO, will provide an update of our program. We will then open up the call for a question and answer session. Before beginning, I would like to remind you of our safe harbor statement. During the course of this call, we may make forward-looking statements regarding Direct's products and development, expected product benefits, our development plans, future clinical trials, or projected financial results. These forward-looking statements involve risks and uncertainties that can cause actual results to differ materially from those in such forward-looking statements. Further information regarding these and other risks can be found in our SEC filings, including our 10-K and 10-Q under the heading Risk Factors. Let me now turn to our financials. Total revenue in Q3 2020 was $2.7 million compared to $10.8 million in Q3 2019. Q3 2019 included the recognition of $6.2 million in deferred revenue from an upfront fee and milestone payment. So excluding that, the comparison is $2.7 million versus $4.6 million. Product revenue, largely from the sale of Allzet pumps and Lactel polymers, was $2.4 million in Q3 2020 compared to $3.0 million in Q3 2019. The gross margin for these combined product lines was $55. continue to be strongly cash flow positive. R&D expense was $7.0 million in Q3 2020 compared to $7.9 million in Q3 2019, primarily due to lower expenses in partner-funded R&D programs and lower POSMIR-related expenses. SG&A expenses were $3.5 million in Q3 2020 as compared to $3.8 million in Q3 2019. Our underlying burn rate during the quarter was $7.6 million, In Q3, we raised $6.1 million net of expenses by selling about 2.7 million shares through our ATM facility at an average price of $2.32. At September 30, 2020, we had cash and investments of $49.8 million as compared to $51.3 million at June 30, 2020, and $64.8 million at December 31, 2019. With that, thanks again for joining our call, and I will now turn the call over to Jim for an update of certain of our programs.
spk06: Thank you, Mike, and hello, everyone. Thank you for joining us today. I hope you're all doing well. During the quarter, we made exciting progress on a number of fronts. We announced the design of a firm, the DUR928 Phase 2B Alcoholic Hepatitis Trial, and we are now initiating clinical sites and expect to begin dosing patients very soon. We started dosing in the Phase 2 trial for DUR928 in hospitalized COVID-19 patients with acute liver or kidney injury. After reporting positive top-line data from the Phase 1b NASH study with DOR928, we announced that additional data from this trial will be presented at the upcoming AASLD liver meeting. We continue to work with the FDA on the POSMR NDA. And today, I'm pleased to announce our hiring of Dr. Norman Sussman as our Chief Medical Officer. DUR928 is an epigenetic regulator that modulates the expression of multiple clusters of master genes that are involved in many important cell signaling pathways. DUR928 up and down regulates more than 1,000 genes, involving functions that include stabilizing the mitochondria, reducing lipotoxicity, regulation of inflammatory or stress responses, and promoting cell survival. I'll begin with an overview of the opportunity for DUR928 in alcoholic hepatitis, or AH. There are 122,000 hospitalizations per year in the United States for AH. There are no approved therapies for AH. We demonstrated 100% survival at day 28 in our phase 2A AH trial. The historic 28-day mortality rate for AH is 26%. Currently, we are initiating sites and are on the cusp of starting patient dosing in AFIRM, the 928 Phase IIb AH Safety and Efficacy Trial. AFIRM is a 300-patient, placebo-controlled, double-blind, multinational study. The primary endpoint will be 90-day survival. Based on the results from the Phase IIa AH Trial and the fact that survival is the primary endpoint for AFIRM, we are optimistic that if we are able to demonstrate a robust survival benefit in this trial, it may support an NDA filing. Approval based on a single trial is not uncommon. In fact, 37% of new drug approvals between 2005 and 2012 were based on a single pivotal trial. And 42% of new drugs launched in the United States in 2018 were approved based on a single trial. AH is an acute form of alcoholic liver disease, or ALD. It is characterized by long-term heavy alcohol intake, a recent period of increased alcohol consumption or binge drinking, as well as jaundice, fever, fatigue, weakness, nausea or vomiting, loss of appetite, and a depressed or negative mental state. The AASLD guidelines provide the following criteria for the diagnosis of AH. An onset of jaundice within the past eight weeks. Ongoing consumption for at least six months of more than 40 grams of alcohol a day for a woman or 60 grams of alcohol a day for a man. To put this type of alcohol consumption into perspective, this means approximately three standard drinks per day for a woman and four for a man for the last six months. A 12-ounce beer, a glass of wine, or one and a half ounces of spirits is considered one standard drink. Also, less than 60 days of abstinence before the onset of jaundice, serendipity levels greater than 3.0 milligrams per deciliter, and these patients also typically have elevated liver enzymes. If you think this disease did not affect people you know, you're wrong. While the majority of AH patients are between 40 and 60 years old and have liver cirrhosis, approximately 20% of the AH population are in their 20s and 30s and may not have cirrhosis at all. 89% of hospitalized AH patients have insurance. Unfortunately, during this pandemic, alcohol consumption in the United States has increased. According to a September publication in the Journal of American Medical Association Network, on average, alcohol was consumed one more day per month by three of four adults in the United States. For women, there was a more significant increase of 0.18 days of heavy drinking with a 95% confidence interval, from a baseline in 2019 of 0.44 days. This represents an increase of 41% over baseline and equates to an increase of one day for one in five women. In my conversations with physicians who treat this disease, they have told me the incidence of AH has also increased. According to many of these doctors, they are also seeing a larger number of younger AH patients. there is no approved treatment for AH. What physicians have available to them today primarily involves abstinence and supportive care, which includes nutrition and hydration. An analysis of 77 studies published between 1971 and 2016, which include data from more than 8,000 patients, showed the overall mortality from AH was 26% in 28 days, 29% at 90 days, and 44% at 180 days. The high one-month mortality rate from the time of diagnosis is similar to some ferocious cancers, such as AML and advanced breast or pancreatic cancer. According to the AASLD guidance, steroids may be used in certain patients with severe AH. However, steroids have shown only minimal benefit and may increase the infection rate in AH patients. In the STOP-AH trial, a study of more than 1,000 AH patients, steroids significantly increased the infection rate. The STOP-AH trial also convincingly demonstrated that steroids did not improve survival rate over placebo at 90 days or at one year. And many AH patients are not eligible for steroids. In fact, according to one recent study, less than half of severe AH patients were eligible for steroid use. The hospitalization costs for AH are more than $50,000 per patient in the first year. Alcoholic liver disease is becoming a leading cause of liver transplants in the United States. The cost of the liver transplant exceeds $800,000. Regarding hospital stays in AH, the average hospital stay for an AH patient is approximately seven days, with many staying significantly longer. In our DUR928 Phase IIa AH trial, 14 of the 19 patients were discharged in less than four days after receiving only one infusion of DOR-928. All of the 19 patients in the study survived through the 28-day follow-up period of the trial. Twelve of these 19 patients were classified as severe based on their MELD score. Also, 15 of the 19 were classified as severe based on the scoring system that is specific to AH called Madre's discriminant function score. DOR-928 was well-tolerated by all of the patients and at all doses evaluated in the study, including in all of the severe AH patients. There were no serious drug-related adverse events reported in this trial. AH patients have greatly elevated bilirubin levels. The minimum bilirubin level to be diagnosed with AH is 3, which is about 2.5 times the upper limit of normal. Patients in our Phase IIa trial had an average bilirubin of over 14. Significant early, that is, Day 7, reductions of bilirubin levels from baseline are a critical factor in determining a patient's prognosis. AH patients treated with DOR928 in our study had significant Day 7 reductions in bilirubin. Diagnostic scores, including LEAL and MELD, as well as serum creatinine levels and INR, were also improved in this trial. To summarize the DUR928-AH program, during the quarter we announced the design of the AFFIRM trial for patients with severe AH. AFFIRM is a 300-patient, double-blind, randomized, placebo-controlled, multinational trial. AFFIRM will evaluate three treatment arms, 30 mg and 90 mg of DUR928 and a placebo arm. As with the Phase 2A trial, patients in the AFIRM trial will receive an infusion of the UR928 or placebo on day one, and if they are in the hospital on day four, they will receive a second infusion. The primary endpoint for AFIRM will be 90-day survival. We are currently initiating clinical sites and expect to dose the first patient soon. We expect that if we achieve a robust survival benefit, the study may support the NDA filing. Next, I will update on the DUR928 Phase II trial in hospitalized COVID-19 patients with acute liver or kidney injury. DUR928 is not an antiviral agent. It's a naturally occurring epigenetic regulator that has tremendous potential to treat acute organ injury, including the systemic inflammation, such as is the case of sepsis. Phase IIa clinical evidence in patients with acute alcoholic hepatitis And preclinical evidence in a number of multi-organ injury models, which demonstrate protection of the lungs, liver, and kidneys, as well as demonstrated safety in AH patients in our Phase IIa studies, suggest that DUO928 may be able to help COVID-19 patients. In addition to lung injury, patients with severe COVID-19 can develop multi-organ injury, including acute kidney, liver, and or cardiac injury, resulting from direct viral infections or complications from the viral infections. These may contribute to poor outcomes in patients with COVID-19. From a safety perspective, DOR928 has been well-tolerated in nearly 300 subjects, both healthy volunteers and patients, in multiple Phase I and II studies. Most relevant to COVID-19 are the results from our Phase IIa study of DOR928 in AH patients. As I described earlier, all 19 patients treated with DOR928 survived the 28-day study. while one-month mortality in AH clinical trials is on average 26%. Besides multi-organ injury, one of the main complications associated with the death of AH patients, similar to those patients with COVID-19, is sepsis. Therefore, if acute organ injury could be effectively treated or prevented in hospitalized patients with COVID-19, lives could be potentially saved. This Phase II trial is a double-blind, placebo-controlled, multi-center study to evaluate the safety and efficacy of DOR928 in hospitalized, severe, or critically ill COVID-19 patients with acute liver or kidney injury. This study is an 80-patient trial with a 3-to-1 ratio of accurate to placebo. The dose of DOR928 is 150 mg by intravenous infusion on day 1 and day 4. The primary efficacy endpoint is a composite of survival and being free of acute organ failure at day 28. It is our hope that DOR928, in combination with a standard of care, will be able to help COVID-19 patients with acute liver or kidney injury, which, if successful, ultimately could save the lives of some of these patients. We dosed our first patient in this trial in September. We now have drug at multiple sites, and we are in the process of adding more sites. Next, I will update on the DUR928 NASH program. In May of 2020, we reported positive top-line results from our Phase 1b trial of DUR928 in NASH patients with stage 1 to 3 fibrosis. This was a randomized, open-label, and multi-center study of DUR928 in NASH patients conducted in the United States. DUR928 was dosed orally for 28 consecutive days at 50 milligrams or 150 milligrams once a day or 300 milligrams twice a day. and followed up for an additional 28 days. A total of 65 patients completed the study, and there were at least 20 patients for dose group. Key endpoints included safety and pharmacokinetics, clinical chemistry and biomarkers, as well as liver fat content and liver stiffness by imaging that includes both MRI, PDFF, and fiber scan. EUR928 treatment in this trial resulted in a global reduction from baseline of liver enzymes, liver fat, stiffness as measured by imaging, and serum lipids. Many of these reductions were statistically significant. A statistically significant 24% reduction of plasma triglycerides was seen in the 16 patients who had baseline triglyceride levels above 200 mg per deciliter. 43% of the patients in this trial had at least a 10% reduction in lipid fat as measured by MRI PDFF. In this group of patients, Liver fat, liver stiffness, liver enzymes, and serum lipids were statistically significantly reduced from baseline. B1928 was well-tolerated at all three doses evaluated. There were no serious adverse events reported during the study. Pharmacokinetic parameters after repeated dosing were comparable to those after a single dose from a prior study, indicating no accumulation after repeat dosing. Also, drug exposure was dose-dependent. We believe having multiple important parameters all moving in the desirable direction are particularly impressive when you consider the patients were only dosed for one month. Additional results will be presented in the poster at the upcoming AASLD meeting, which is going to be between November 13th and the 16th. These results, achieved over a one-month course of treatment, together with a continued safety profile of DUR928, are promising indicators of DUR928's potential in NASH. Next, to the POSMR program. POSMR is our investigational postoperative pain relief depot that uses our patented SABR technology and is designed to deliver butyricane to provide up to three days of pain relief after surgery. Since our last earnings call, we have continued to communicate with the FDA regarding their review of the POSMR NDA and believe they are making progress with their review. If approved, we plan to license Fosmer to a partner for commercialization in the United States. We expect that this deal would include an upfront license fee and royalties based on product sales. Today, it's my pleasure to welcome Dr. Norman Sussman as our new Chief Medical Officer. Dr. Sussman is a renowned hepatologist with a proven track record in clinical research of liver diseases. He will provide critical support in advancing our clinical programs, and we look forward to his contribution. Dr. Sussman has extensive clinical experience and expertise in the liver disease field and brings over 30 years of clinical research and development experience in academia and industry. He joins direct from Baylor College of Medicine, where he was an associate professor of medicine and surgery. Dr. Sussman has been a faculty member of Baylor College of Medicine intermittently since 1985. During this time, he has served as a principal investigator for research focused on assessment and management of acute liver failure and artificial liver support. Dr. Sussman has also had leadership experience in industry as the founder and vice president of both Hepatix Inc. from 1993 to 1995 and Amphioxus Cell Technologies from 1995 to 2003. Most recently, he has served in senior leadership roles as a member of the Baylor Faculty Senate and as director of Project ECHO, the telehealth program at Baylor's St. Luke's Medical Center. Dr. Sussman received his MBBCH from the University of Witwatersrand in Johannesburg, South Africa. He then completed his residency at St. Louis University Hospital and his postdoctoral fellowship at Washington University. He is board certified in internal medicine, gastroenterology, and transplant hepatology. Dr. Sussman is also a fellow of the American Association of the Study of Liver Disease, which is a designation that recognizes his superior level of professional achievement in the field of hepatology. He is a thought leader in the field of hepatology, an excellent clinician and communicator, and we're excited to have him with us as a member of our senior team. We are planning a virtual event later this month to introduce Dr. Sussman to our investors. We will announce the details of this event in the near future. In summary, we're excited about the progress on DUR928, the flagship of our epigenetic regulator program. We have begun clinical site initiation visits and are nearing first patient dosing in a firm, our Phase IIb DUR928 trial in severe AH patients. Based on the results, from the Phase II AAH trial and the fact that survival is the primary endpoint for a fund, we are optimistic that if we are able to demonstrate a robust survival benefit in this trial, it may support an NDA filing. We initiated patient dosing and are adding clinical sites into the DUR928 Phase II trial in COVID-19 patients with acute liver or kidney injury. In addition to the positive top-line results we've already announced from our Phase 1b trial of DOR928 in NASH patients with liver enzymes, liver fat, and liver stiffness, as well as plasma lipids all moving in the right direction, we will be presenting biomarker data from this NASH trial at the AASOV meeting this month. When we combine these results with the safety profile of DOR928, we believe it has a chance to play an important role in the treatment of NASH. Today, we welcome Dr. Norman Sussman, Direct New Chief Medical Officer. His experience in patient focus will be critically important for the development of DOR928 in AH and for other indications. And during the quarter, we continue the correspondence with the FDA regarding the Posmer NDA and believe they're making progress on their review. With that, we now like to take any questions you may have.
spk09: At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone contact. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary for you to pick up your handset before pressing the star key. One moment while we poll for questions. Our first question comes from the line of Kristen Klocka. So, Chancellor Fitzgerald, you may proceed with your question.
spk08: Hi. Good afternoon, everybody, and thank you for taking my questions. My first question is in regards to the Phase 2B affirmed study for alcoholic hepatitis. So, based off the three-month mortality probability correlated with MELD scores and the literature around the hospitalizations and mortality, I wanted to ask what you might assume the mortality rate could be for the placebo group with these understandings.
spk06: Well, we did make a number of assumptions with regard to that as we laid out our patient numbers, and we were very conservative in our estimates. That's how we arrived at 300, but we haven't given the actual breakdown. I don't know. Weiqi, what are your thoughts on that?
spk07: Yeah, I think that when we calculated the placebo mortality in three months, We actually look at multiple publications out there, and then based on this group of patients, it's a three-month mortality. So in general, these patients' three-month mortality are at 20% to 30%. So we actually make a run, like a computer modeling run, and then maybe from a host scale of the mortality as compared with 9 to 8. Of course, here on 9 to 8, we haven't had three-month mortality data to base on. However, we do have 28-day mortality to base on. So, assume we have a similar increase from the second month to third month in terms of the rising of mortality as published data. So, then we run a modeling to calculate our power for the three-month mortality.
spk06: Yeah, that was kind of the basis, and then we took a very conservative view on all that as we did the computer modeling.
spk07: Yeah.
spk06: We assumed a lot more placebo patients would live and a lot more 9-to-8 patients would die was our basic assumption.
spk08: Okay, thank you for that. The next question is on the COVID-19 study for acute liver kidney injury. So, it appears on clinicaltrials.gov that you have sites open in Chicago, Detroit, and Newark where, unfortunately, we have seen an increase in terms of the number of COVID-19 cases there. So I know in your prepared remarks you did mention that you are looking to open more sites. So I wanted to ask, what are the key metrics you're looking at at this time? And then also, in a situation where, you know, perhaps Chicago, where cases really are unfortunately skyrocketing, would you look to kind of try to balance it out in the sites? So, for example, if there's one where, you know, there's a lot of patients, you might look to balance it more across the sites?
spk06: But you always try to have balance in any clinical trial for sure. And unfortunately, it does come in splits, as you said, and it's horrible when it does hit a center, and then it'll go away and it'll come up someplace else. So, yeah, we always try to be mindful of balance whenever we're conducting any clinical trial. And as far as the new centers that we look to add in, those are generally in the south and in the west. And we've been working on these for a while and expect that they'll be up soon. So I hope that gives you some sense of it.
spk08: Yes, thank you. And then the last question also related to this program is just that since some of these organ injuries may appear during the hospitalization and now that, you know, there's been more cases, thus more literature to kind of support the different organs that are being damaged as a result of the virus, how often are these patients getting their liver enzymes and the other key measurements checked to, you know, kind of look for this now that it's more known?
spk06: Well, it's all part of their screening. So they get those. It's all part of a normal panel. And it's been unfortunate because we have seen of late that these monoclonal antibodies aren't seeming to help the most seriously ill patients, and they're looking to try and give those earlier on. We've seen a couple of major programs stop their critical patient dosing and look to try to dose patients who are less damaged earlier. But they do the blood chemistries on a regular basis, and the physicians would know what was going on. Wenqi, would you add anything to that?
spk07: Yeah, so I think they do check at least all these patients, given the fact that all these patients are for the hospital physicians and then the caregivers themselves. they usually do care for them daily, but then the samples they do only check for them typically once daily. So every day they do get their safety panels checked. So if there is enzyme levels, liver enzyme levels elevated, they do follow them carefully once they meet the criteria. So Our physicians and our study coordinators, they are following up and monitoring these patients very closely. And then some patients maybe did not quite meet our criteria, but they actually monitor them daily.
spk08: Okay, thanks. That's very helpful. Looking forward to the updates at the liver meeting.
spk06: Good. Thank you.
spk09: Our next question comes from the line of Francois Rees-Boy with Oppenheimer. You may proceed with your question.
spk01: Hi, thanks for taking the question. First one here, I just wanted to talk about the evolution of the primary endpoint here. Obviously, it's easier if it's a shorter time period. It seems like 90 days is still pretty short, which is nice. And then, you know, can you just talk about how that's evolved in terms of the length of survival rate with time?
spk06: Sure. It was historically longer. And in fact, when Gilead did their trial that didn't work with their ASCII-1 inhibitor, that was a six-month trial. But the FDA and the liver associations, both in the U.S. and Europe, have been meeting fairly frequently going over this. And the last meeting where we attended, where this was discussed, was in October of last year in Chicago. At that meeting, it was decided that 90 days would be an appropriate amount of time to be able to look at follow-up and survival if this is an acute episode. So that seemed to be the best duration. And so it was based on that that I think the FDA made their decision that that's what they wanted to see from this trial.
spk01: Okay, great. And in terms of the dosage, can you just talk about the difference between one dose and two doses here and how... you know, how that was decided for the phase 2B and, you know, your confidence in that the second dose at day four could help?
spk06: Sure. Yeah, I'll let Weiqi speak to that first. Go ahead, Weiqi.
spk07: Sure. Thank you, Jim. So we actually, in our phase 2A study, of course, that study was designed as a safety case study. So we gave a first dose. Every patient received the first dose. However, at the time we made a decision, we thought if the patient is qualified to be discharged, why should we keep these patients? Because as earlier Jim mentioned, these patients are relatively younger and then they tend to recover by themselves if you can help them to recover from the acute episodes. So if they are, after first dose recovered from their acute episode, and then why should we keep them in the hospital? So that's why in the first phase 2A study, we made a decision, only those patients, if they are still hospitalized, then they would receive the second dose. And also, that's also based, of course, based on the mechanism of action of our drug. So With that experience in mind, and then we decided when we moved to the phase 2B trial, we will keep the same dosing regimen. So only if those patients are still hospitalized, then they would receive the second dose. After the first dose, if they do recover, and then not fully recover means they are on the trend of recovery. So the chances are most of these patients, they will eventually calm down their liver inflammation.
spk01: Okay, understood. And then is Dr. Sussman on the line or no?
spk06: No, he's not on the line right now. He's actually... His actual first day, so he's still going through orientation and just kind of getting all the paperwork done and everything else. Although, I have to say, he was on a call early this morning, but he's got some first-day stuff to do today. Okay, great. He's actually been working with us, helping us for a while.
spk01: Sorry, go ahead. On the AH side, obviously, with COVID, there seems to be more and more of the drinking and the consumption, as you mentioned. Do you think that's something, are you guys giving any color on the recruitment timing? Is that something that you actually, you know, a lot of companies are struggling to enroll during COVID, and do you think this is something that can actually accelerate your enrollment?
spk06: You know, I don't know if accelerate is the right term, but I do think, unfortunately, I know that alcohol consumption is up in the United States. We know that from the literature. We know that from the physicians we talk to. We've been out talking to, I've been talking to physicians that centers, whether it's for the COVID trial or centers or for AH, as we're signing up these sites, they're all talking about the AH patients that they have in there. So there are a lot more alcohol consumption, a lot more people in the hospital for AH, and unfortunately, it seems as if a lot of them are younger. And so, you know, I don't want to make any projections right now. We want to kind of see how the trial is going as far as enrollment. So we're going to give it some months to get a sense of it all. But it certainly is a different time. And if you've got alcoholic hepatitis, you don't have an option to stay home. If you stay home, you're probably going to die. And so they do end up having to go to the hospital and they do end up at the hospital. And so I think it's different from that perspective versus other trials where You know, it's at the election of the patients. And I've heard this for so many different diseases from my colleagues out there running other companies, that it can be a challenge during this time to conduct clinical trials. But that may not be the case, probably won't be the case for them.
spk01: Okay. Okay. And then just lastly here, this is probably more for Mike. Any color you give on revenues kind of going forward? Is this something that we would expect here? I'm thinking more on the collaboration R&D and other lines, $306,000. It was, you know, negative $30,000 in the first quarter. Just trying to get a gauge for going forward what you can share there.
spk02: Yeah, thanks, Francois. We don't really project our revenues like that, but, you know, we do have a number of early-stage collaborations that generate revenue, and then on the product revenue side, you know, I would say that Q3 was a little bit depressed from the... due to the virus, but I think Q4 would look better.
spk01: Okay, excellent. I'm just trying to, you know, is there something that's changed in the business on that side versus the first quarter and second quarter of 19 where it was more about $1.5 million on that line?
spk02: The biggest change on the collaborative R&D was Gilead. You know, they were driving a fair amount of that in 2019, and so you take that away, but we still have a number of early stage small programs. So they're going to kind of fluctuate from quarter to quarter.
spk01: Excellent. All right. That's it for me. Thank you, guys.
spk02: All right. Thank you.
spk09: Our next question comes from the line of Mayank Mantani with B. Riley. You may proceed with your question.
spk03: Hi, good afternoon. This is Sahil on for Mayank. Congrats on all the progress with the UR9 switch. Thank you. Great to see Dr. Sussman join the team. We look forward to working with him. Our first question from us is on Posamir. Would it be great if you could provide a bit more granularity on some of the information requests, if any, that are more recent than others, and any incremental color you have on sort of the agency thought process on how Posamir might fit in the post-operative pain management paradigm. And, you know, I'm thinking of some of the recent FDA reviews in the space, one being kind of the CRL issued to Avenue Therapeutics due to a theoretical concern of opioid stacking, and then also observing some non-opioid analgesics like IV meloxicam and Huron's program. So just any color you have, that would be great.
spk06: Yeah, I mean, we're trying to stay as neutral as we can on this. But we want our investors to know what's going on as far as communications. And we have been in active communications with the FDA during this past quarter, which is what we shared. We haven't given details of the types of conversations, communications that we've had. And I couldn't really speak to you know, their thoughts on, uh, you know, the post-op space. Certainly there've been a number of decisions in different, uh, you know, with different products. Uh, but you know, POSMR has its own path and, and, uh, and we're working towards it. We don't, we don't want to over peer over the optimistic. We don't want to peer over the pessimistic where I'm really trying to just to communicate a neutral kind of position at this point in time, but just to let people know they're asking questions, we're giving answers very quickly. I, I, at this point don't want to give the types of questions they're asking, but, um, It's still going on.
spk03: Okay. No, that's fair. Appreciate the response. Maybe switching gears to the alcoholic hepatitis program, a similar line of questioning on how you sort of see 928 fitting in the context of the treatment paradigm, particularly in the context of the watch and wait approach. Looking at the recent Gilead observational study that they'll present at ASLD, where sort of clearly earlier intervention, albeit with transplant, may have resulted in better outcome. And in that same line of thinking would help how you think about kind of accommodating a placebo response if patients are aggressively managed in a more well-controlled clinical trial setting.
spk06: Well, I think the nice thing about this study diseases, the patients do have an opportunity to have a liver transplant if they're at the end of the line and there's no other help and no other hope for them. And they turn to be everybody's good stewards as the hep C patients have been. So it's nice to have that backstop. The unfortunate circumstances is that backstop is very expensive. It's at a minimum kind of $800,000 that oftentimes goes well in excess of a million dollars. And so what we have with 928 is something that we hope can be out there to help these patients, put them on the right track physically, and then allow them to move forward with their lives in the right direction and save a tremendous amount of cost along with potentially saving their lives. And so we think there's a great opportunity for this drug because, as you know, there is no therapy approved out there. And steroids have been shown not to improve survival and to double the infection rate nearly still. And so we think it's a great opportunity for 928 to be able to help patients in an ICU setting and may well be the first of many indications, but it's certainly a very, very important one, probably one of the most important ones out there in the liver space today. It's one of the reasons why Dr. Sussman is joining us. And I look forward to when you guys get a chance to hear his experience, because he just literally on Friday left the clinic, and he was treating these patients for many, many years. And so I can give you his perspective as to why he's here and what he thinks it's going to mean.
spk03: Oh, absolutely. Very much looking forward to that sort of virtual investor event. And just lastly, one question on the NASH indication. Kind of given the benign safety profile that you guys observed in the Phase 1B study with the oral candidate. Is there any plan to explore a pediatric NASH indication? And if so, you know, what sort of incremental tox work may be pending?
spk06: It would require additional tox. And that is something that one always looks at. But I think we would cut the path through first in adults and then look for pediatric after. But you're right in noting that DUR928 has a very nice safety profile to date, and we're quite happy that that's the case. And, you know, we're also very fortunate to have all of those parameters moving in the right direction, you know, for a 28-day study. That's pretty impressive, and look forward to sharing more data, the biomarker data, at the ASLV meeting coming up in another two weeks or so.
spk03: Great. Thanks for taking our questions, and congrats on all the progress. Sure. Thank you.
spk09: Our next question comes from the line of Michael Morabito with Tardem Capital Markets. You may proceed with your question.
spk06: Hi, guys. Thanks for taking the questions. I just want to look at a couple of updates. You mentioned that you have already opened a couple of sites so far, but you haven't started dosing yet. Do you have any indication of how many patients you think that you might dose as early as this quarter and how that will increase moving forward? as you open more sites? And could you also give us a balance of how many of those sites will be in the U.S. versus ex-U.S.? Sure. I'll let Weiqi speak to the site split between U.S. and Europe projected at this point.
spk07: Yeah. Probably approximately one-third of the sites will be in Europe, and then two-thirds of the sites will be in U.S. So this is different from the Gilead trial, as Jim earlier mentioned, that's one of the benchmarks for the enrollment. So Gilead mostly, their sites were focused in Europe, but we decided to focus most of our sites in U.S. So that's where we are currently, we are focusing on mainly opening up the U.S. sites.
spk06: Okay. Thank you. I think that's good. Yeah, I think if we look at, you know, using the Gilead trial as a benchmark, they took, it was about 18 months for them to enroll 100 patients, but that was requiring six-month follow-up, and we will be doing only three months, so there will be less time there. They also required liver biopsy of all of their patients, and that unfortunately tends to slow trials down, and they required all of their patients to take steroids, and that only somewhere around 40% of serious patients are eligible to take steroids. So that has a substantial cut on the population as well. When you add those together with the Phase II ADA that we have, it's such a nice response. And then the unfortunate fact that during the pandemic, this condition seems to be higher. All of those things will have an influence on the enrollment rate. Okay, great. Thanks. And as a follow-up, as you move forward with a firm and you begin enrolling and you begin dosing patients, what impact do you expect that to have on the R&D costs moving forward over the next 12 to 18 months? The trial, fortunately, is not a particularly expensive trial. By pharma standards, it's probably about $25 million total. External costs, and so that will be divided up across you know, the duration of the trial. So it's something that we can afford to do and have in our budget. Okay. And finally, just you mentioned in your press release the launch of Methadur by Orient Pharma. Do you expect this to have any kind of meaningful impact on the product revenues with regard to I'll let Mike speak to that. Mike?
spk02: Yeah, so it's the first country to see the launch, so it's in Taiwan, which is a relatively small ADHD market, so probably not right away. Hopefully, Orient will be partnering in additional countries. They have 14 countries in Asia, so certainly would hope that they would be partnering in additional countries and that there would be a growth there, but initially it will be pretty small, we would expect.
spk06: Okay, great. Thanks for taking the question. Sure, thank you.
spk09: Our next question comes from the line of Ed Arce with HC Wainwright. You may proceed with your question.
spk04: Hi, good afternoon, everyone. This is Thomas Yip asking a couple of questions for Ed. Congratulations to Dr. Sisson's appointment to the direct team. My first question is about the Phase II BFM trial Going along with the last couple of questions about enrollment, roughly, can you tell us the rough number of sites that are active so far and given a firm is targeted only for severe patients, what is the expected pace of enrollment versus the phase 2a proof of contact trial?
spk06: Well, the interesting thing in the Phase IIa trial, we enrolled the severe patients much more rapidly. We enrolled all 12 severe patients before we had completed. We had only enrolled seven of the moderate patients because the moderate patients don't typically, they sometimes go to the hospital, but if they do, they don't stay very long because they aren't as severely ill. So the fact we're enrolling severe, I think, will actually... Unfortunately, you know, because they're sick, you know, those patients will present at a much higher rate. The number of centers, I don't know that we've, have we broken that out, Weiqi?
spk07: No, I don't think so. I don't think we have broken it out.
spk06: It's going to be a good number. It'll be north of 40 centers total between North America and Europe.
spk07: Right. Or more, yeah.
spk06: More and more, yeah. And we have a number that we've already, you know, had site initiation visits, and we have more planned almost on, you know, whenever they come on a weekly basis, we add in more and more. And then, you know, they get shipped drug, and then they get set up and get ready to go. So we're just starting it up, but very, very excited about being able to help these patients.
spk04: Yeah, definitely. Sounds like a good progress so far. And then, regarding the affirmed endpoint, is there a 90-day survival benefit threshold of 928 over placebo that you believe could enable 928's NDA?
spk06: If we're able to show survival at 90 days, it's hard to argue against that, right? Because survival is kind of the ultimate endpoint. Now, a surrogate endpoint is an endpoint. It's a very important clinical event, the most important one. So if we can show an improvement in survival over placebo when there's no therapy out there today that is approved and patients are dying at a rate that, you know, some of the worst cancers out there, one month and two months and three months survival, you know, we certainly believe that would merit improvement. should merit an accelerated review and potentially getting approval on a single trial.
spk04: Right. Okay, yeah, we certainly look forward to that. And then one question regarding the NASH program. Given three doses that were tested in Phase 1b, 50, 100, and 150, Are there any work on going to either narrow down the dose or perhaps even testing, you know, putting in a new dosage of NACUA for Phase 2?
spk06: Well, certainly the next trial that we would do would be some type of Phase 2A trial would be my guess, and the dose will be further refined there. But I don't know, Weiqi, do you want to speak to the dose, what we've learned so far?
spk07: Yeah, I think that for this current study, completed study, we have a very wide dose range, casted from 60 to 600 milligrams a day. So that's a quite wide range of doses for the CR928. And as Jim earlier mentioned, that we just have received our biomarker data because of the due to the pandemic of the reagents. So right now we have all the data together. We just submitted a poster for the AASLD, but at the same time we're in the process of sharing our data and then talking to multiple of our KOLs and then to get the feedback what could be our next study in the field.
spk04: Okay, thanks. Thank you for the update. And most of all, thank you for taking our questions, and congratulations on a very successful quarter. Thank you so much.
spk09: Our next question comes from the line of Alomar Piros with Roth Capital Partners. You may proceed with your question.
spk05: Yes. Hello, everyone. Jim, if I may just turn for a quick moment to Mike. Mike, I was too slow to write down how many shares you issued during the quarter. Maybe if you could give me, please, the ending share count as of September 30th, if you have it.
spk02: Yes, 203.2 million shares. Thank you. And, Jim...
spk05: Um, in the COVID study, how many sites do you plan to add to the current three? Um, what is the plan?
spk06: You know, it's, it's not going to be a huge number at this point. Um, right now we're, we're looking to maybe double that. And, you know, it'll depend on how enrollment goes and how this virus goes and where it goes, because, um, it's, it's not a simple process. You find it to say in the city and then, um, difficult, very difficult to go to a city that is a hotspot and to set up at that point in time, because the centers are just overwhelmed. And, um, and so one needs to be somewhat anticipatory, you know, anticipate a little bit or find a center that, that is not yet burning so hot and, and, and work with them. Cause you know, it takes quite a bit of time to get a center up and running with all the legal paperwork that needs to be done. Um, So I think we're just kind of moving through the process. It's very dynamic as it goes.
spk05: Do you have an advantage vis-a-vis some competing drugs?
spk06: That's a great question.
spk05: In terms of that, you address a unique aspect.
spk06: I think so. I don't know that there really is anyone else out there looking to treat patients that have other organs that are damaged actively. Certainly, the steroids are out there and being used for that, and we're happy to use 928 with steroids, so that's fine, and with any antivirals that are helpful. So that, I think, is to our advantage. The reality of it is there are a huge number of trials out there. Most of them are trying to help patients who are less severely ill than the ones we know we're going for severe to critical. So most of our patients that we're looking at are in the ICU or just about to go into the ICU. So it's a different group of patients than a lot of agents we're looking at. And then the other, you laid over at the top of that, these vaccine trials, which although we're not competing with them from the sight of patients, we are competing with them, unfortunately, by virtue of just infrastructure within a given hospital system. and having study coordinators and the like. So when you have some company and they're looking to enroll 30,000 patients or 50,000, those are a wave of requirements from these facilities that are challenging for them to deal with at the same time. So all of these things kind of interplay. So it's a complex world.
spk05: Yeah. So once you had a chance to share the complete NASH data with the KOLs, do you think we might hear about the next steps, the phase 2A trial as you described it.
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