Third Quarter Financial Results Conference Call Transcript
Moderator: Denis Burger; November 4, 2004, 11:00 a.m. Eastern Time
Operator: Welcome to the AVI BioPharma 2004 Third Quarter Financial Results Conference Call.
At this time, all participants are in a listen only mode.
Following management’s prepared remarks, we’ll hold a Q&A session.
Professional investors can ask questions by pressing star followed by 1 on your touchtone phone.
If anyone has difficulty hearing the conference, please press star 0 for operator assistance.
As a reminder, this conference is being recorded today, November 4, 2004.
I would now like to turn the conference over to Ms. Jody Cain. Please go ahead.
Jody Cain: This is Jody Cain with Lippert Heilshorn & Associates. Thank you all for participating in today’s call. Joining me from AVI BioPharma are Denis Burger, chairman and chief executive officer, Alan Timmins, president and chief operating officer and Mark Webber, chief financial officer.
This morning, AVI BioPharma released financial results for the third quarter of 2004. If you’ve not received this news release or you’d like to be added to the company’s distribution list, please call Lippert/Heilshorn in Los Angeles at 310-691-7100 and speak with Eleanor Tang.
This call is also being broadcast live over the Internet at www.avibio.com and a replay of the call will be available on the company’s Web site for the next two weeks.
Before we begin, I’d like to note that comments made by management during this conference will include forward-looking statements within the meaning of Federal Securities laws.
These forward-looking statements involve material risks and uncertainties. For discussion of risk factors, I encourage you to review the AVI BioPharma annual report on Form 10K and subsequent reports as filed with the Securities and Exchange Commission.
The content of this conference call contains time sensitive information that is accurate only as of the date of the live broadcast, November 4, 2004. The company undertakes no obligations to revise or update any statements to reflect events or circumstances after the date of this call.
With that said, I’d now like to turn the call over to Denis Burger. Denis.
Denis Burger: Thank you Jody and my thanks to each of you for joining us.
Today’s call will follow our typical format. Following my opening comments, Mark Webber will summarize our financial results. Alan Timmins will then provide an update on recent business and clinical accomplishments and I will conclude the prepared remarks to review of our upcoming milestones.
As you may have read in the past week, we have reported very promising results from collaborative work conducted with our NeuGene third generation Antisense technology.
Alan will be giving you more details about these programs in a minute. While these results involve studies in various stages, we are excited with our collaborative efforts and how these relationships fit in the broader context of our business strategy.
I’d like to point out the following: Data derived from studies under our collaborative agreement continues to validate the versatility of our NeuGene technology in combating a number of viral diseases that threaten public health.
Included in these are some that we have monitored for years such as Influenza, dengue fever and hepatitis C as well as those viral, toxin and bacteria threats that are part of today’s evolving local health landscape.
Our collaborations with highly regarded institutions such as the U.S. Army and Research Institute of Infectious Diseases or USAMRIID pave the way for additional opportunities.
As you might recall in February of this year, a USAMRIID researcher sustained an Ebola exposure while working with Ebola infected mice. He developed two NeuGene compounds to combat the Ebola virus and delivered them to USAMRIID with FDA concurrence within five days of the accident.
Our positive interaction with USAMRIID raised awareness of our NeuGene technology and strengthened the technology’s credibility. Since our efforts last February, we have developed a formal five-year collaborative research and development agreement or CRADA with USAMRIDD as well as with the CDC.
Furthermore, we have called upon a second time to provide testimony to Congress offering our insights on drug development in bioterrorism.
Another benefit from our collaborative efforts further demonstrate our ability to develop NeuGene compounds in extremely short periods of time to address specific viral diseases for what we call rapid response therapeutics. Once we have received the genetic information for a particular viral disease, we have proven our ability to produce NeuGene compounds to address the diseases oftimes in a matter of days.
Also these types of collaborations allow us to investigate potential of our NeuGene technology for important viral diseases and other indications without requiring AVI to dedicate full resources to support these programs.
This is in keeping with our strategy of focusing internal resources on NeuGene drug candidates that can be quickly developed and address large markets while broadening our product pipeline and moving forward with drug development in other programs.
We took an opportunity at the beginning of this year to reset our clinical timetable and to provide investors with specific achievable milestones.
Since then, we have continued to make what we believe are significant strides, particularly with our viral disease program while working toward corporate partnering opportunities to move forward other programs. To assist with this process, we have strengthened our management adding talented clinical regulatory affairs and corporate development professionals.
Additionally, we have continued to demonstrate the versatility and rapid development of our NeuGene technology (unintelligible) taken together with its excellent safety and efficacy records may make it ideal for fighting infectious diseases that threaten public health.
We are capitalizing on opportunities in which our drugs can provide benefits. This is how drug research is conducted and this is how new drugs are moved forward through the clinical and regulatory process.
With those brief remarks, I would now ask Mark Webber to review our recent financial performance. Mark.
Mark Webber: Thanks Denis. Today I’d like to review our third quarter financial results and our cash position and then I’ll confirm our financial guidance for 2004.
Our revenues for the third quarter of 2004 were approximately $9,000, which compared to revenues of approximately $414,000 reported in the third quarter of 2003. The decrease in the revenues was due primarily to lower grant and research contract revenues.
Operating expense for 2004 and 2003 third quarters remained essentially flat at $5.1 million. For the third quarter of 2004, we reported higher manufacturing costs associated with our clinical development efforts, which increased to $4.2 million from $3.5 million in the third quarter of 2003.
Approximately $500,000 of the 2004 third quarter increase was due to our contracting the production of GMP subunits, or precursors, which in turn will be converted to finished compound by AVI. These finished compounds will be suitable for use in human clinical trials.
These contracting expenditures decreased significantly in the third quarter of 2004 compared with the first and second quarters of this year. We expect these expenditures to continue to decrease in the fourth quarter of 2004 as subunits produced in the first nine months of 2004 were adequate for current clinical development efforts.
Our 2004 third quarter increase was also due partially to increases in outside collaborations and to regulatory affairs costs and additional preclinical and clinical testing of our products.
The increase in R&D costs during the third quarter of 2004 was offset by lower general and administrative costs, which decreased to $965,000 from $1.6 million last year.
Our net loss for the third quarter of 2004 was $5.1 million or 14 cents per share, which compares with a net loss of $4.6 million or 15 cents per share for the third quarter of 2003.
Revenues for the first nine months of 2004 were approximately $145,000 compares to revenues were approximately $835,000 reported for the first nine months of 2003, again reflecting lower grant and research contract revenues.
Operating expenses increased to $20.3 million from $12.5 million for the first nine months of 2003. The increase in operating expenses was due primarily to an increase in R&D costs to $16.9 million compared with $8.9 million in the 2003 period.
Our 2004 year-to-date net loss was $19.8 million or 55 cents per share, which compared to a net loss of $11.5 million or 40 cents per share for the first nine months of 2003.
Review of our balance sheet: as of September 30, 2004, we reported cash, cash equivalent and short term securities of $23.1 million, a decrease of $14.5 million from December 31, 2003.
This decrease is attributed primarily to $20.3 million used in operations and $1.2 million used for the purchases of property and equipment and for tax related costs.
This is offset by the receipt of $7 billion net proceeds from the exercise of warrant issues to separate institutional investors for the purchase of $1.6 million shares of our common stock at $4.62 per share. These warrants had been issued pursuant to a direct equity placement of the company common stock in December 2003.
Total shares equity at the close of the 2004 third quarter stood at $31 million.
We are confirming our previous 2004 financial guidance. We expect expenses to increase compared with 2003 and the cash burn for 2004 to be in the range of 23 to $25 million.
We were informed in the third quarter that we had been allocated $5 million in government funding for the 2005 fiscal year for work on two viral disease research projects. These funds have not been received and are not reflected in the financial statement.
With that overview, I would like now to turn the call over to Alan Timmins. Alan.
Alan Timmins: Thanks Mark and let me add my welcome to those of you joining us this morning on the call and on the Internet.
In reviewing our recent activities, I’d like to focus on several developments with our viral diseases program.
As Denis discussed, results from our rapid response therapeutic program have drawn attention to the important roles our NeuGene compounds could play in the future of biodefense as well as in treating significant viral diseases affecting large numbers of people around the world.
I’d like to begin by discussing our collaboration with USAMRIID. As Denis mentioned, following our interaction earlier this year, in August, we announced a CRADA with USAMRIID for testing our NeuGene therapeutics against several viruses, bacteria and toxins that may be used as bioterrorism agents.
Within the three months since entering into this collaboration, we’ve been very pleased to report positive results from extensive in vivo experimental testing of our NeuGene drugs against the Ebola virus in animals.
There’s no known treatment for this deadly virus and we produced NeuGene agents to target six of the seven major Ebola genes.
Certain of our NeuGene drugs and combination drugs have completely protected animals from a challenge with a dose of lethal Ebola virus that would be usually deadly in seven to ten days.
AVI’s antisense agents have been up to 100% efficacious in both prophylactic and therapeutic experimental protocols. In the words of USAMRIID scientist, ‘few agents have progressed to this level of protection from Ebola virus.’
Based on the strength of these results, USAMRIID investigators are expanding this program to other animal species.
Moving on to our work with dengue virus, this program meets our internal development hurdle as it afflicts tens of millions of people annually and there’s currently no therapy.
According to the Centers for Disease Control, dengue fever, which is transmitted by mosquitoes, is the most rapidly expanding disease in most tropical and subtropical areas of the world. An estimated 50 million to 100 million cases of dengue fever occur each year of which 200,000 to 500,000 are the more severe dengue hemorrhagic fever.
The disease is caused by one of four dengue virus serotypes. Epidemics caused by all four virus strains have become progressively more frequent and larger in the past 20 years.
In June, results from a study conducted jointly by AVI and the Centers for Disease Control demonstrated that a single NeuGene compound inhibited all four dengue serotypes and reduced spiral titer by up to one million fold.
In August, we announced a two-year CRADA, cooperative research and development agreement with the CDC that provides for further testing for our NeuGene compounds.
Last week, encouraging results from a collaborative program with scientists at MIT on combating the Influenza A virus were presented at the Society of Microbiology 44th Interscience Conference on Antimicrobial Agents and Chemotherapy.
Influenza A causes from three million to five million cases of severe illness and as many as 500,000 deaths each year worldwide. Vaccines against mass influenza strains can prevent illness in 60 to 80% of healthy adults but the protection is lower in high-risk groups like the aged who are immunologically compromised.
In the U.S., even with a relatively high rate of vaccination, influenza causes more than 100,000 hospitalizations and 30,000 deaths yearly. Therapeutic limitations of current antiviral drugs, the uncertainties of vaccine development from year to year and the serious threat to public health indicate that there’s a current unmet medical need for the development of new treatments for influenza.
Dr. Qing Ge from the MIT Center for Cancer Research presented data characterizing the effect of our NeuGene drugs when applied to this virus in cell culture. Presented data indicate that several NeuGene compounds each reduced the amount of influenza virus in infected cells in culture from 100 to 1000 fold in a dose responsive and sequent specific manner.
Additionally, some combinations of two NeuGeneS worked synergistically demonstrating an even greater anti viral suppression.
The concern over events related to this year’s influenza vaccine shortage certainly emphasizes the potential need for an effective influenza therapeutic. Our NeuGene drugs are focused on a specific portion of the genetic sequence that cannot readily mutate unlike viral proteins that plague vaccine development.
This means that a NeuGene technology to suppress the flu virus likely would not need to be reinvented to treat different influenza viral strains each year.
Finally, I’d like to provide a brief update on our ongoing West Nile virus study. As background, we’re exceptionally pleased with the results of our pilot West Nile virus study with AVI-4020 conducted last fall, which met its primary safety end points.
Furthermore, the pharmacokinetic profile of AVI-4020 indicated that delivery across the blood brain barrier was achieved in all patients, which may ultimately prove crucial for those with neurological impairment.
Earlier this season, a patient with West Nile virus neuroinvasive disease was treated with AVI-4020 under an emergency IND. Dosing was three-fold that used in a 2003 clinical trial and approximately three times more AVI-4020 was detected in the patient’s cerebral spinal fluid.
Clinical assessment of the patient was consistent with benefits from the drug although this observation is considered anecdotal until more patients are studied.
In August, we initiated a clinical trial to provide an additional demonstration of AVI-4020 safety with the higher dosing protocol and allow for an opportunity to evaluate efficacy. This is a double blind, multi center study to include 50 patients with presumptive acute West Nile virus neuroinvasive disease randomized into two cohorts.
Forty patients will receive AVI-4020 and ten patients will receive a placebo. We’ve continued to enroll additional sites across the study – across the country in this study noting that this is the only clinical study designed specifically to treat acute neuroinvasive disease.
To date, this year’s West Nile virus season has been significantly mild, milder than that in the prior year with only about 800 cases identified as neuroinvasive disease compared with the nearly 3000 that were identified as neuroinvasive disease in 2003.
Due to the posity of patients this year, we’re considering extending this trial to West Africa to complete enrollment in a timely manner.
With that overview of our clinical and preclinical programs, I’d like to turn the call back to Denis.
Denis Burger: Thanks Alan. In reviewing our milestones, I would like to begin by commenting on our intentions for our cardiovascular program.
Based on excellent clinical results from our Resten-NG trials in treating Restenosis, we intend to commercialize NeuGene based products for the treatment of cardiovascular disease through a combination of internal development programs and partnering activities using two distinct approaches.
First, delivering our drug locally on a stent platform and second, delivering our drug systemically with our micro particle delivery system or Resten-MP for use in conjunction with other drug eluding stents, namely Cypher and Taxus.
For delivering Resten-NG via stents, we intend to initiate Phase III clinical trials with our own drug eluding stents in Europe ultimately leading to CE Mark approval within 18 months if clinically successful.
To accomplish this, we have recruited employees and consultants with extensive experience in devices used in intraventional cardiology with direct experience in clinical trials and the approval process on both the European and American continents.
In this program, there are four components that must fit together like pieces of a jigsaw puzzle: the stent, the balloon delivery system, the drug and finally, the coating material to bind and release the drug from the stent.
In the short period of time since unwinding of the Medtronic agreement, we have successfully assembled these four components into a cohesive system that we believe will be the next generation of drug eluding stent or DES.
The most important component in the system of course is the drug and our Resten-NG drug has advantageous characteristics when compared to the drug component in Cypher or Taxus DES.
The coding that we are qualifying is the one used by J&J on the FDA approved Cypher drug eluding stent. Using this coding, we have been able to exceed both the loading and elution characteristics required for our unique drug mechanism. This is critical as this is where the Medtronic technology failed in our joint program with them.
With the experience and expertise of our new staff, we have developed our own stent to match with Resten-NG and its coding. The final component is our balloon delivery system, which is currently being qualified with the sterilization techniques suited for Resten-NG.
Importantly, we remain a drug development company but one that has developed a drug delivery stent platform to take advantage of this unique market opportunity.
For strategic and competitive reasons, we will not provide further detail on the four components that make up our DES.
Investigators and European clinical sites have been identified for this clinical program and a definitive timeline will be detailed at the initiation of the European Phase III study. When the European trial’s initiated, we will then offer our DES package for outlicensing and development in the U.S.
We plan to provide further details on this program at our year-end financial conference call.
We continue to make progress on our program with Resten-MP. As you may know, Resten-MP is our Resten-NG drug delivered intravenously using our patented microparticle delivery technology.
In preclinical studies, this was as effective as Resten-NG delivered by catheters or stents in preventing cardiovascular Restenosis and has many advantages.
We have planned to initiate more extensive Phase II clinical studies with Resten-MP at additional sites in the U.S. in combination with Taxus DES and in Europe with Bayer stents later this year and early next year to compliment our ongoing program.
Now turning to infectious disease programs, based on preclinical studies, we plan to file an IND to initiate human clinical trials with our NeuGene drug for hepatitis C next year.
A disease of the liver, hepatitis C is often associated with blood transfusion and is the principal cause of chronic liver disease, the tenth leading cause of death among U.S. adults and the number 1 cause of liver failure. The market size for HCV is estimated at between ten and $20 billion worldwide.
We are moving forward with our dengue virus program in collaboration with the CEC as previously discussed and expected that program will follow on the heels of our hepatitis C program.
I want to make a couple of important points in regards to our viral disease program as I believe our overall approach has been misinterpreted.
We are extensively investigating our NeuGene technology against a large number of RNA viruses through multiple collaborations with the objective of commercializing a product for a large market opportunity. Most viral diseases have few or no treatment options and very limited if any animal models for investigative work in product development.
We maintain that if our antisense agents can be found efficacious against RNA viruses in the hands of independent collaborators, we have a high likelihood of being efficacious against RNA viral diseases that do not have good animal models like HCV.
There are about 15 families of RNA viruses that cause human disease. With a large group of outside collaborators, we have demonstrated efficacy against viruses in 11 of these 15 families.
The simplest viruses from a molecular standpoint are in the family containing West Nile virus, yellow fever virus, dengue virus, tickborne encephalitis and importantly, HCV.
These viruses are nearly identical in function for the mRNA of mammalian cells where NeuGene agents have been so effective in previous preclinical and clinical studies.
Positive studies by independent collaborators simply raise the confidence level that we can be efficacious in the large market opportunity in this viral group, namely HCV.
Studies with SARS and dengue virus taught us the subtleties of targeting RNA viruses. Studies with West Nile taught us dosing, pharmacokinetics, delivery to the CNS and confirmed our low toxicity profile.
Studies in Ebola taught us dosing, routes of administration and combination approaches. Studies in influenza, Norwalk, Calicivirus and several other viruses confirmed these findings.
Overall, these diverse studies have advanced our HCV program so that we can now move quickly and confidently to efficacy studies cutting one or more years from the clinical development cycle.
Moving to our oncology program, we plan to initiate two additional cancer studies. In the next few months, a screening study designed to identify tumors most amenable to (unintelligible) antisense therapy and a safety and efficacy trial using (unintelligible) antisense in bladder cancer.
As cancer clinical trials are typically lengthy and costly, we are actively seeking pharmaceutical partners to advance our oncology program into later stage development.
In summary, AVI has a proven antisense technology in an environment where the very mention of antisense technology causes concerns and headshaking due to a number of spectacular Phase III failures by others albeit with quite different second generation technology.
In this environment, we are deliberate, cautious and focused by design particularly before advancing into Phase III pivotal studies.
We have robust preclinical and Phase II clinical data which has been collaborated by numerous outside sources. We are now ready to proceed to Phase III studies with sound, carefully planned trials designed for success, our near term opportunities in cardiovascular and viral diseases with longer term opportunities in cancers, PKD, blood metabolism and many others.
Over the past year, some of our product opportunities and timelines have changed as the environment around antisense has changed and near term opportunities arose.
Now before opening the call to your questions, I would like to comment on the recent testimony that Alan provided at a joint hearing before two U.S. Senate committees, which focused on the role of government in sponsoring drug development efforts to combat terrorism specifically through enacting new proposed legislation known as BioShield II.
In Alan’s testimony, we recommended that the following initiatives be part of BioShield II.
First, effectively implement the original BioShield procurement provisions. Second, enact tax incentives for investors and fund biodefense research. Third, enact patent incentives including patent extension and periods of market exclusivity for effective biodefense agents.
And fourth, commit to liability protection and specifically protect the intellectual property of companies participating in biodefense and guarantee the effectiveness of government as a partner into the biodefense industry.
At this time, I’d like to open the call to your questions and ask you to limit yourself to just one question to allow for broader representation than we’ve had in the past. Operator?
Operator: Ladies and gentlemen, if you wish to register for a question for today’s question and answer session, you will need to press star then the number 1 on your telephone. You will hear a prompt to acknowledge your request.
If your question has been answered and you wish to withdraw your polling request, you may do so by pressing star then the number 2.
If you are using a speakerphone, please pick up your handset before entering your request.
One moment please for the first question.
Denis Burger: While we’re waiting for a few questions to get in the queue, I’d mentioned that we recently made presentations at the UBS Global Life Site Life Science Conference at the Rodman & Renshaw Techvest Conference.
We have an upcoming presentation next week at the Paulson Investment Westergaard Small Cap Conference in New York.
Later in November, we’re making a presentation updating our Rest-n-NG drug at the American Heart Association meeting. Finally in the first week in December, Dr. (Iverson) is presenting our virology program at the SMI Virology Conference.
Operator: Your first question is from Ren Benjamin of Rodman & Renshaw.
Ren Benjamin: Hi, good morning Denis and thanks for taking the call.
Just very quickly, the West Nile virus study, you said that there were 800 patients this year, significantly down from last year but 800 had neuroinvasive disease. You’re looking to enroll 40. How many have you enrolled so far?
Denis Burger: Ren, as you know, and as we’ve maintained for the last year or so on these calls, we do not provide patient enrolled numbers because of the issues around that.
I’m happy to say that enrollment at this time has been disappointing and that’s of course because we’ve gone from some 3000 cases the previous year down to 800 cases, potential cases this year.
It doesn’t really reflect on our ability as much as the difficulty in enrollment. The NIH with almost a $30 million budget and multiple sites across the country has only been able to enroll for their program eight patients in the past two years.
So it’s a very difficult setting and to address that, we’re anticipating now and looking into the possibility of moving this trial to other sites of West Africa and the potential other sites so we can complete it in a timely manner rather than waiting for next season.
Ren Benjamin: So what are these patients being treated with if it’s not – since there’s nothing approved, you know, but trials are not recruiting well, what are they being treated with?
Denis Burger: Treated with - they present to the emergency room with usually a warmer viral head cold and now a severe headache that they’ve had for a couple of days that they – classically won’t go away.
And then they’ll also on examination present with some neurologic symptoms and the combination of that gives them a diagnosis of presumptive West Nile with neurologic impairment. And it’s that patient then that is treated palliatively in the emergency unit.
Ren Benjamin: Okay and just in regards to the Phase III trial, you said that of the four parts that are coming together, two needed to be qualified.
What’s the timing of this qualification and when do you think the Phase III will start?
Denis Burger: We’re extremely pleased how far we’ve advanced in a very short period of time and we are pleased with all of the four components.
The qualification at this point is that our drug requires some special sterilization techniques, usually drug eluding stents and the Taxus and Cypher drugs that are on those stents can be sterilized with epaline oxide.
Because the nature and ring structure of our polymer antisense drug, we use what’s called an (unintelligible) rather than the epaline oxide. Most of the balloons and stainless steel stents that have been available in the marketplace haven’t been qualified with (unintelligible).
It’s a sort of a rather straightforward process and procedure but because it hasn’t been done before, we’re now going through that qualification. So we don’t anticipate that this is a major hurdle.
Because of the hazards in protecting exact dates, all I’m going to tell you is that we’re moving as fast as we can to follow up with our clinical sites in the very near future.
Ren Benjamin: Okay. Just one final question, the clinical – well you’re making some nice headway in infectious disease, at least at the preclinical level. When do you think that these agents might see the clinic?
And I don’t mean West Nile virus obviously. Just, you know, any with the collaboration with the USAMRIID, you know, any of those things, when do you think they might move into the clinic?
Denis Burger: There are two agents that will be the first one to go into clinical development, HCV obviously and the second one is Ebola. These are quite different strategically. HCV of course this huge market and really the brass ring in the RNA viral diseases.
We’re trying to file our IND for very early next year. And as soon as we have that filed, we’re going to aggressively move into clinical development. So that expectation actually as a general target is in the first half of next year.
In terms of Ebola, the hurdles to get a drug approved are relatively a low bar. One can’t do challenged clinical trials so the gating event is the preclinical toxin (tk) that we have scheduled for the end of this year followed by a Phase I safety trial in normal volunteers.
That means that and with the expectation of a very safe backbone chemistry, we would expect we would be ready to file an NDA on that drug later in 2005.
Ren Benjamin: Okay. Thanks for answering the questions and best of luck.
Operator: Your next question is from Jason Aryeh of Jalaa Equities.
Jason Aryeh: Good afternoon or good morning gentlemen. Quick question I guess election related, how do you foresee the Bush victory impacting your viral program?
Alan Timmins: Thanks for the question Jason. As you might imagine, our government relations program involves talking to elected officials, appointees and full time career government folks.
The fact that President Bush, his position is safe as President for another four years takes out the small risk that the appointee group that we would talk to would change over on a rapid basis.
So key appointees that we’ve met with will remain in place. Other elected folks that we’ve talked to in the Senate and the House of Representatives, there was no turnover in any of the folks that we’ve thus far met with.
But all that said, you’re bringing up really what’s an important point which is that bioterrorism or the threat of bioterrorism is sort of like the threat of cancer. I mean nobody’s in favor of it.
So it’s a bipartisan effort, a bipartisan issue and in fact my testimony to the Senate, I was invited by Senator Lieberman’s office. So there’s folks on both sides of the aisle that are very strongly behind the biodefense initiatives and including Senator Lieberman, Senator Hatch, Senator (Heed) and we’re bipartisan in our efforts as well.
So the election as it turned out will facilitate what we’re doing and we’ll keep up the momentum. Had the election gone in a different way, I think it’s safe to say that our efforts being on both sides of the aisle would not have been thrown off rail moving forward anyway.
Jason Aryeh: Great and I guess maybe my second question’s for Denis.
Clearly, you guys have continued to put out good preclinical and early clinical data across a wide breadth of different diseases with your antisense program. And clearly, Wall Street and especially a couple sell side analysts continue to be very skeptical in their write-ups post issuance of news.
You know, clearly for example on the flu vaccine results, obviously that must have started I would assume far prior at MIT if I remember correctly than when it was announced so maybe you weren’t capitalizing as much as you were accused of on the disease of the day.
But I mean I guess my question is how Denis do you go about gaining credibility for this company that clearly the company is lacking from Wall Street? What’s your plan to bring back credibility to AVI?
Denis Burger: I think you hit the nail on the head about some of the programs we have under development and the example and that you used, the work at MIT of course has been going on for a year.
When we have the results, we present the results. It was nice that there’s a lot of attention around influenza at this time because the vaccine issue’s a problem that (unintelligible).
With the backdrop of a number of antisense failures, it’s really important for us to make sure that when we go into Phase II and Phase III clinical development that we are absolutely sure of ourselves in the strength of the program.
We spent a lot of time not only preclinically (unintelligible) the target but also establishing that overall chemistry is very, very safe, specific and efficacious.
So there’s two sides that you have to complete in antisense. You have to have the right target and the right chemistry and believe now we’re in a position that that is evident.
The second issue of course over and above just the folks that have to be shown the efficacy of antisense in clinical development is of course the partnership issues.
Whether that’s a pharmaceutical partner, corporate partner, a government partner, we’re without that validation at this point. So we have to move into late stage clinical development with our program and just the street I believe is waiting for the corporate validation that a pharmaceutical partner is buying in to this effort when they can.
Jason Aryeh: And I apologize if you said this at the beginning of the call because I missed it but can you provide the street with when you, I mean, when you expect to deliver such a partnership?
Do you have to actually – do you foresee AVI having to take these programs into Phase III trials before you can get a partner?
Where do you – I mean if you can’t give us a specific time, at what point in development do you expect to deliver?
Denis Burger: I don’t want to talk about specific times but I can talk about development and we feel that with HCV, we can get that partner and this is absolutely an area that’s right for partnering. We can get that sort of partnership as we file our IND and move into the early efficacy study.
It doesn’t require moving into Phase III. There are a couple of examples just recently of companies signing up large HCV partnering opportunities from preclinical data.
Since it’s antisense, I think we have to a have a little more than preclinical but this isn’t something that is going to require Phase III development. So I think that’s where we are.
Jason Aryeh: Okay and are you implying then that HCV will be your first area of partnership?
Denis Burger: We’re pursuing five areas of partnership now and have been for some time and as I mentioned early in the call, we’ve added some corporate development professionals to our team to make sure that we do this in the most aggressive forward-looking way.
We’re looking for partnerships in our cancer program. We’re looking for partnerships for PKD. We’re looking for partnerships in our drug metabolism program with our antisense targeting the cytochrome P450 liver gene target. And in fact, we’re not doing in that program any further development. We feel we’ve done enough to seek those partnerships now.
We feel in the viral program with HIV, we need to do a little bit more.
Jason Aryeh: Okay, thank you.
Denis Burger: Okay, thanks Jason.
Operator: Your next question from Robert Gilliam of Legg Mason.
Robert Gilliam: Good morning. Thanks for taking the call.
You guys, you didn’t mention anything on Avicine and I was just hoping to get an update on the Avicine program, just what the status is. I know that you’re also looking for a partner for that program so maybe you could comment on that as well.
Denis Burger: Yes Robert that’s a good question. We remain convinced that Avicine can be a real drug and a useful one in a variety of different malignancies. And if you recall about a year and a half ago, it was one of our chief programs to move into Phase III.
About a year and a half ago, we made attempts to finance this program through a secondary round of financing and were unsuccessful and that meant that this program to move into Phase III in pancreatic and colorectal cancer was going to cost about $20 million and take about three to five years.
And because of that we felt we needed to put the program on hold, try to partner it and focus strictly on near term opportunities that were both less expensive and much shorter in the final development process.
So all of our efforts on Avicine are in partnerships now and we’re looking at both global and regional partnerships. We’re committed to outlicense this program because we (unintelligible) environment even though it’s attractive to carry it forward.
Robert Gilliam: Yes obviously the data that you previously presented was as you said, you know, pretty attractive, pretty exciting. Have you received, you know, what’s the level of interest as far as partnering opportunities so far?
Denis Burger: We had – we certainly had interest. I think overall, we’re surprised we haven’t had a little more interest.
If you think in terms of therapeutic vaccines overall, it’s one of those areas where there isn’t one approved yet and therefore, a number of the largest pharmaceutical companies are sort of sitting on the sidelines waiting to see how this arena works out.
There’s some approvals that are close. I think Dendrion is doing a very nice job. (Unintelligible) and a variety of other companies and as the vaccine gets approved, I think we’ll see more large pharma interest.
Right now the interest in Avicine is from the second tier or smaller pharmaceutical companies.
Robert Gilliam: Okay. Thank you very much.
Operator: Once again, ladies and gentlemen, as a reminder, to register for a question, please press star then the number 1 on your telephone keypad.
Denis Burger: Well without further questions, I just once again would like to thank you for joining us on this call and letting Alan Timmins, Mark Webber and I update you on our programs. We’re working hard and look forward to future successes. Thank you so much.
Operator: Ladies and gentlemen that concludes your conference call for today. We thank you for your participation and ask that you please disconnect your line.