Arrowhead Pharmaceuticals - Earnings Call - Q2 2018

Transcript

Speaker 0

Ladies and gentlemen, welcome to the Arrowhead Pharmaceuticals Conference Call. Throughout today's recorded presentation, all participants will be in a listen only mode. After the presentation, there will be an opportunity to ask questions. I will now hand the conference call over to Vincent Anzalone, Vice President of Investor Relations for Arrowhead. Please go ahead, Vince.

Speaker 1

Thanks, Bridget. Good afternoon, everyone. Thank you for joining us today to discuss Arrowhead's results for its fiscal twenty eighteen second quarter ended March 3138. With us today from management are President and CEO, Doctor. Christopher Anzalone, who will provide an overview of the quarter Doctor.

Bruce Given, our Chief Operating Officer and Head of R and D, who will discuss our clinical programs and Ken Myszkowski, our Chief Financial Officer, who will give a review of the financials. We will then open up the call to your questions. Before we begin, I would like to remind you that comments made during today's call contain certain forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact, including without limitation, those with respect to Arrowhead's goals, plans and strategies are forward looking statements. These include statements regarding our expectations around the development, safety and efficacy of our drug candidates, projected cash runway and expected future development activities.

These statements represent management's current expectations and are inherently uncertain. Thus, actual results may differ materially. Arrowhead disclaims any intent and undertakes no duty to update any of the forward looking statements discussed on today's call. You should refer to the discussions under Risk Factors in Arrowhead's Annual Report on Form 10 ks and the company's subsequent quarterly reports on Form 10 Q for additional matters to be considered in this regard, including risks and other considerations that could cause actual results to vary from the presently expected results expressed in today's call. With that said, I'd like to turn the call over to Christopher Anzalone, President and CEO of the company.

Chris?

Speaker 2

Thanks, Vince. Good afternoon, everyone, thank you for joining us today. We see drug development as an innovation and application interplay. It requires raw scientific innovation first, both at a level of understanding disease biology and potential interventional strategies and then application of that innovation in humans. This is not necessarily a simple one-two process whereby further innovation is made unnecessary after successful application in humans, rather human application often drives further innovation.

We stand today on the shoulders of the innovation and application work we have done to date. This represents a huge amount of important science spanning multiple classes of technologies, countless preclinical studies and three prior clinical programs. This has all led to the TRiM platform and our approach to and understanding of several disease indications. I laid this out because we view 2018 as a pivotal year in the application of Arrowhead innovation. We are operating at a very high level and have already brought two candidates, ARO AAT and ARO HBV into the clinic and we are on pace to advance three additional candidates to CTA filings by the end of calendar twenty eighteen.

We expect to generate data throughout the year that could provide clinical validation and decrease the risk profile of the platform, drug candidates and ultimately our company. Think of these in four general categories: one, safety of the platform and candidates two, scalability of the platform three, partnerability of the platform and four, clinical relevance of the candidates. Chipping away at these unknowns drives value for us and we made clear progress in all of them last quarter and the period since our last conference call. Let's look at each of these and begin with the most important, safety of the platform candidates. ARO AAT and ARO HBV both started dosing in March.

ARO AAT, which was recently granted orphan drug designation by the FDA is our second generation subcutaneously administered candidate for the treatment of alpha-one antitrypsin deficiency liver disease. ARO HBV is our third generation subcutaneously administered clinical candidate for the treatment of chronic hepatitis B infection. Both first in human studies are designed to include a single ascending dose phase and a multiple ascending dose phase that are essentially run-in parallel. Bruce will talk more about the studies in a moment, but the Phase onetwo design is intended to rapidly get to meaningful readouts on safety and tolerability as well as single and multiple dose activity. We have now treated 38 subjects, 24 on active drug and 14 with placebo between the two programs and both candidates have been well tolerated thus far.

Of course, the studies are still young and several additional dose levels remain to be tested, but it is encouraging to see a favorable safety profile to date. Let's now turn to scalability of the platform. We made substantial progress since our last conference call demonstrating that there is much we can do with the TRiM platform. Just last week, we announced two upcoming presentations that will cover TRiM enabled liver targeted candidates and our extrahepatic capabilities. ARO APOC3 and ARO ANG3 are our most advanced wholly owned preclinical candidates.

They are targeting Apolipoprotein C3 or ApoC3 and Angiopoietin like Protein three or ANGPTL3 respectively. They are designed to address multiple cardiometabolic diseases and may offer various development paths targeting both mass market and or orphan indications. We haven't disclosed much about those programs other than some early rodent data that we discussed at our Analyst Day last year. Bruce Given, our COO will present additional preclinical data for both programs at the Vascular Discovery from Genes to Medicine symposium at an American Heart Association organized conference later this week. These candidates are moving ahead according to plan and we continue to be excited about the opportunities they represent.

We are on schedule to file CTAs for both candidates before the end of the year. The second presentation that we announced is for ARO ENaC, formerly referred to as ARO Lung1, which is the first candidate to leverage the TRiM platform to address diseases of the lung. We will present data on this at the American Thoracic Society twenty eighteen International Conference on May 21. ARO ENaC is an inhaled RNAi therapeutic targeting the epithelial sodium channel alpha subunit or alpha ENaC for the treatment of cystic fibrosis or CF. CF is a rare disease caused by a genetic mutation that leads to mucus buildup in the lungs and pancreas.

In CF lung disease patients can have difficulty breathing and experience frequent and persistent lung infections. Increased ENaC activity contributes to drying mucus in the airway and a reduced ability of the lung to clear toxins and infectious agents. Interestingly, inheritance of poorly functioning ENaC genes by CF patients leads to a milder lung disease. Therefore, researchers have been interested in decreasing ENaC activity in CF patients if possible. However, the development of inhaled small molecule inhibitors have been limited by their short duration of action and worrisome side effects resulting from ENaC inhibition in the kidney.

We think ENaC has good validation as a target and our goal is to selectively reduce it in the lung while sparing the kidney. RNAi broadly and the TRiM platform specifically seem tailor made for this function when the aim is targeted activity against a single gene, long duration of effect and high tissue specificity. We believe we can do all of those. The presentation later this month will be our first on the TRiM pulmonary platform and the ENaC program. We have submitted and plan to submit ARO ENaC abstracts to additional medical and scientific meetings later this year.

In addition, our plan is to hold an Analyst Day this summer to discuss the Lung program and ARO ENHAC in more detail. We have not yet scheduled that event, but we will announce it when we have set the date. Our expanded capabilities also present the good problem that we or any other company for that matter will not have the resources to pursue every opportunity to extract all the value from the Trim platform by ourselves. It clearly makes sense to enter into a limited number of strategic partnerships, so the partner ability of the platform is a value driver for us. Our collaboration with Amgen continues to progress well.

That deal covers two cardiovascular targets, one against lipoprotein A, which is now referred to as AMG eight ninety. The second, which we call ARO AMG1 is against an undisclosed target. Both are wholly licensed to Amgen. We feel confident that we will do additional partnerships with other companies in the future. Let's now turn to the most important value driving category, clinical relevance of the candidates.

During the quarter, we presented clinical data at EASL from ARK-five twenty, a prior generation compound for HBV. I want to highlight some of those data because they represent what we see as a very encouraging proof of concept for the use of RNAi compound in HBV and therefore are relevant to our ARO HBV program. The poster presentation included follow-up data for patients enrolled in the HepARC2001 multi dose extension study. In the study, eight chronic hepatitis B patients, five E antigen negative and three E antigen positive received up to nine doses of four mgs per kg ARK520 once every four weeks with daily entecavir. Viral DNA, RNA and antigen knockdown were measured at regular intervals.

Patients were monitored for an additional twelve months following the last ARK-five twenty dose. Key results include the following. Multiple doses of ARK-five twenty resulted in S antigen reductions in all patients by as much as 5.3 logs. Where measurable multi log reductions were also seen in e antigen, correlated antigen, DNA and HBV RNA. We were pleased to announce that one e antigen negative patient while remaining on entecavir seroclear for all measurable viral markers including S antigen, core related antigen, HBV RNA and HBV DNA.

We believe this will represent a functional cure. Two out of three E antigen positive and two out of five E antigen negative patients or half of the patients in the study achieved productive and sustained host responses. These were characterized by mild ALT elevations coinciding with continued reductions in various biomarkers, which persisted after ARK-five twenty therapy was removed. Two patients that experienced sustained host responses, but have not yet seroclear appear poised to potentially seroclear if the trends in the decrease of viral markers continues. These are important data that are getting a lot of attention from key opinion leaders in HBV.

We think they suggest that an RNAi compound like ARO HBV has the potential to be a backbone therapy in combinations aimed at achieving a functional cure of HBV. To us and many KOLs that we interact with, these data look as though ARK-five twenty treatment may have led to an awakening of the immune system, which is the key requirement for functional cures to occur and be sustained. Keep in mind that ARK-five twenty was designed to be active against all cccDNA derived mRNA transcripts, but missed transcripts from integrated DNA. ARO HBV specifically addresses this deficiency. So we are more confident than ever about ARO HBV and we are eager to see if this translates into improved patient outcomes.

Lastly, during the quarter, we closed an equity financing with gross proceeds of $60,400,000 This strengthened our balance sheet so that we can continue to be focused on speed and move our development programs toward key milestones that could represent significant value catalysts. With that overview, I'd now like to turn the call over to Bruce Given, our COO and Head of R and D. Bruce?

Speaker 3

Thank you, Chris. Good afternoon, everyone. Our two clinical programs, ARO AAT and ARO HBV are moving forward on the planned schedule without any encountered delays so far. Our experience from prior clinical programs and relationships with investigators have made it possible to move these programs rapidly. We are always looking for innovative new ways to do things and this is certainly true for our clinical trial designs.

As Chris mentioned, our first in human study designs for ARO AAT and ARO HBV are intended to get to data readouts on safety and activity rapidly and include both single dose and multiple dose cohorts. The single and multiple dose phases are designed to run almost in parallel as opposed to sequentially, which could potentially shave months from more traditional development timelines for each product. We view these designs as essentially Phase onetwo studies. Let me illustrate how this is designed to work. For ARO HBV, the site will bring in a cohort of healthy volunteers and each subject will receive a single subcutaneous dose of either ARO HBV or placebo.

Safety labs through eight days are collected and reviewed by a data safety committee, or DSC. If these results are determined to be acceptable by the DSC, they will authorize two things. First, the initiation of a multiple dose cohort of HBV patients at the same dose level. And secondly, escalation and enrollment of another single dose cohort of healthy volunteers at the next higher dose level. This same cycle will continue for each additional cohort until we dose escalate to the predefined top dose level of four hundred milligrams.

ARO AAT has a similar design, but will enroll healthy volunteers for both the SAD and MAD portions of the study. There are a few other minor differences, but the essential design is the same for both candidates. This means that both programs will potentially have data readouts around the same time if healthy volunteer and patient accrual proceeds at approximately the same pace. For both candidates, protocols call for studying doses of thirty five, one hundred, two hundred, three hundred and four hundred milligrams. Using fixed doses instead of scaling on a milligram per kilogram basis will simplify the process for the pharmacists at the sites and reduce the risk of dosage error.

It ultimately may give opportunities for simplified commercial dosage forms such as prefilled syringes that make it easier for patients and or physicians to administer the product. For both candidates, the primary outcome measures are safety and tolerability. For ARO AAT, secondary outcome measures include pharmacokinetics, percent change in serum alpha-1a trypsin levels and duration of response. For ARO HBV, secondary outcome measures include pharmacokinetics and an assessment of the change in all measurable viral markers, including S antigen, DNA, RNA, E antigen and correlated antigen. Both studies began dosing in March.

And as I mentioned, they are progressing according to schedule at this point. For ARO HBV, we have enrolled and dosed the first three cohorts of 18 subjects in the single dose portion of the study at doses of thirty five, one hundred, and two hundred milligrams. We have also received clearance from the DSC to begin the multiple dose portion of the study in HBV patients at the one hundred milligram dose. Patients are being screened and scheduled and we anticipate that the first patient will be dosed later this week followed shortly by the rest of the patients in the cohort. For ARO AAT, we have enrolled and dosed the first three cohorts totaling 20 subjects at doses of thirty five and one hundred milligrams.

We have received DSC clearance to escalate to two hundred milligrams and we anticipate that cohort will be dosed next week. We are extremely pleased with the pace of enrollment for both studies and want to thank our clinical operations, manufacturing and program management teams as well as our CRO and clinical sites for all the hard work required to maintain our aggressive schedule. We are also gratified that the DSCs in both programs have found the accumulated safety information to be acceptable to allow dosage escalation without exception or delay. It's still very early in both of these studies, but all the results to date build confidence around the candidates and about the potential for the TRiM platform more broadly. With that brief review of our clinical programs, I'd like to turn the call over to Ken Biszkowski, Arrowhead's Chief Financial Officer.

Ken?

Speaker 4

Thank you, Bruce, and good afternoon, everyone. As we reported today, our net loss for the quarter ended March 3138 was $14,900,000 or $0.18 per share based on 84,100,000.0 weighted average shares outstanding. This compares with a net loss of $6,000,000 or $08 per share based on 74,600,000.0 weighted average shares outstanding for the quarter ended March 3137. Revenue for the quarter ended March 3138 was $700,000 compared to $9,000,000 for the quarter ended March 3137. Revenue was lower because revenue from the $30,000,000 upfront payment received from Amgen for the ARO LPA called AMG eight ninety agreement was fully recognized in October 2017.

Revenue in the current period primarily relates to the recognition of a portion of the $5,000,000 upfront payment received from Amgen for the ARO AMG One agreement. Of the total upfront payments of $35,000,000 all but $1,300,000 has been recognized as revenue to date and the remainder is anticipated to be recognized over the next six months. Total operating expenses for the quarter ended March 3138 were $15,700,000 compared to $15,100,000 for the quarter ended March 3137. This slight increase is primarily due to drug manufacturing and toxicities study costs for our ARO AAT and ARO HBV candidates, partially offset by reduced clinical costs as we were closing down our discontinued candidates in the prior period. Net cash used in operating activities during the quarter ended March 3138 was $15,400,000 compared with net cash used by operating activities of $14,300,000 during the quarter ended March 3137.

This slight increase was also driven by increased drug manufacturing and toxicity study costs for ARO AAT and ARO HBV candidates. Turning to our balance sheet, our cash and short term investments totaled $91,500,000 at March 3138 compared to $65,600,000 at September 3037. In January 2018, we completed an equity financing issuing 11,500,000.0 shares, which resulted in 56,600,000.0 in net cash proceeds to the company. Our common shares outstanding at March 3138 were $87,600,000 With that brief overview, I will now turn the call back to Chris.

Speaker 2

Thanks, Ken. As you've heard, we've accomplished a lot in the last four months of I'm sorry, we've accomplished a lot in the first four months of the year and have already begun answering key questions. We expect the remainder of 2018 to be even more productive. Here are a few key goals we have for the rest of the year. One, we anticipate that we will complete dosing in both ARO HBV and ARO AAT first in human studies.

As Bruce mentioned, the studies are progressing well. So what does that mean for timing of data readouts? We hope that we will have a meaningful amount of data for both programs to submit late breaking abstracts for AASLD. If accepted, that would mean presentations on one or both programs at the liver meeting in November. The timing for that is tight, so we cannot guarantee that we will make the deadline, but that is our goal.

Two, we are on schedule to file CTAs by the end of the year for ARO APOC3, ARO ANG3 and ARO ENaC. Three, we intend to provide more data on ARO ENaC and the expansion of our TRiM platform into diseases of the lung. This includes presentations at multiple medical and scientific meetings throughout the year and an Arrowhead hosted Analyst Day in the summer to discuss the pulmonary platform in detail. Four, exploit opportunities to maximize the value of our technology through partnering and collaborations. This will potentially allow us to focus our internal development on a select number of our lead candidates and also give us exposure to additional high value opportunities that may be beyond the reach of our current resources.

And five, present data on our various pipeline products and our TRiM platform through medical and scientific meetings and through publications in peer reviewed journals. This is indeed a big year for us. Thanks again for joining us today. I would now like to open the call to your questions. Operator?

Speaker 0

Our first question comes from the line of Maury Raycroft with Jefferies. Your line is open.

Speaker 5

Hi, everyone. This is Vesna on for Maury today. I have a couple of questions for Chris and Bruce, if possible. First one would be on your ongoing HBV program. Thank you so much for the details on the doses that's and the cohorts that is very helpful.

So if I heard correctly, you're about to dose the first patients later this week. And then are you going to open additional sites or only the sites that are currently listed on clinicaltrials.gov? And will you be planning on opening any U. S. Sites for the HBV program?

Speaker 2

Bruce, do want to take that?

Speaker 3

Yeah, sure. So, I have to admit I haven't looked at the, clintrials.gov site lately to see, if all of our sites are listed there. But the sites for this particular trial are in New Zealand, Australia and Hong Kong. And, most if not all of those sites are active at this point. And, we have screening going on, right now at several of the sites for HBV.

All of the normal volunteers are done at a single site in New Zealand. But the HBV screening is quite active, at this point. So, that's the plan. We're not planning on bringing this particular study, into The U. S.

I'm sure that, you know, we would hope that enrollment would be completed probably before we could actually, get up and running in The U. S. In any case.

Speaker 5

Got it. That makes sense. Then I would have a question about the other program, the AT program. You gave a lot of clarity on the first trial on the healthy volunteers. Can you provide any guidance at this point when will you start treating patients?

And what results of the initial trial would lead to that decision? Thanks.

Speaker 3

You want me to go again? So as we said here in describing the current trial, this trial is just normal volunteers. The reason for that is because we learned in the ARC AAT program, with our prior technology, that, normal volunteers predicted patient responses for both depth and duration of knockdown very well. And of course, normal volunteers are much handier to recruit. So we felt very comfortable that that was a good surrogate.

So we would expect that our next trial, certainly our next broad based trial will be in patients. And, it would, likely, follow, the current trial. So I don't think we're likely to be in patients. Certainly our current plan would not have us in patients before 2019.

Speaker 5

Thank you. Thank you so much for taking my questions.

Speaker 6

Sure.

Speaker 0

And our next question comes from the line of Catherine Xu with William Blair. Your line is open.

Speaker 2

Hi, all. This is Roland on for Catherine. Can you talk a little bit about your plans after the data for ARO HBV and ARO AAT at near end? And secondly, about the progress of toxicology for each? Thank you.

Speaker 3

Okay. So our chronic toxicology studies are underway for both programs. So the plan would be that around the time these two studies both end, you know, we would be unrestrained with respect to the duration of trials we could use going forward. So assuming that both of the programs, you know, that we don't have surprises and that the results are positive, and that's always a big assumption in clinical development. But assuming everything is go, we would expect that future trials would all be in patients and that they would be, in the case of HBV, we would be doing trials, presumably in combination with other agents, trying to find the recipe that would result in functional cure.

So we would be looking for functional cure I think going forward in future trials in HBV. And in AAT we would be in patients and we would be looking for the ability to bring appropriate changes on biopsy I think in patients treated with ARO AAT for longer term trials.

Speaker 2

For AAT I think what we're going to find out this year is what our dose level is. And also I think we'll have a good idea about dosing frequency. We are expecting that HBV will be dosed monthly because we think that probably deeper knockdown is better is the deepest knockdown we can get is probably best for HBV. For AAT, we'll see if that's monthly dosing or less frequently.

Speaker 3

Yes. It could well be quarterly or possibly even less frequent than that. We'll just have to wait and see.

Speaker 2

Okay. Thank you.

Speaker 0

And our next question comes from Ki Bin Kim with Chardan. Your line is open.

Speaker 7

Yes. Thanks. For the two current programs, if you are not able to make the deadline for AASLD, what's the plan for releasing that data? Could you just simply do it as a press release?

Speaker 2

Yes. So that's hard to say because I don't know it's hard to address that kind of hypothetical because I don't know how much data we'll have should we miss that deadline. Our hope and frankly our plan at this point is to have sufficient data to give us a shot at a late breaker for ASLD. Given how we are enrolling these two studies so far, we feel good that we've got a good shot at that. And so that's our plan.

Now should that not work out, we'll have to we'll make an audible at that point. But right now it's our plan to not have those studies finished, but have enough data generated that we will have an interesting enough late breaker abstract that could be accepted.

Speaker 7

Okay. And then going back to the recent ESOL data for 05/20, what is the plan or protocol for any further or continued follow-up of those patients, especially the two who appear to be trending towards perhaps zero conversion?

Speaker 3

Yes. They continue to be followed by the principal investigator. They're not technically on study at this point. They're just the clinical the principal investigator is continuing to follow them and has consent to continue to give us their results. But they're in routine care in many ways at this point.

So I think, we'll continue to be able to follow them over time as long as they stay under the care of the PI.

Speaker 7

And how far out were those two patients who were trending positively?

Speaker 3

Well, you know, they all stopped treatment around the same time, which is around November of twenty sixteen or So they're at this point they're almost out a year and a half.

Speaker 7

Okay, great. Thanks.

Speaker 3

You're welcome.

Speaker 0

Our next question is from Patrick Dolezal with LifeSci Capital. Your line is open.

Speaker 6

Hi, thanks for taking my questions. So just on the ARK-five 20 data presented at EASL, can you just provide us with a little more context on the importance of observing the first patient experience seroclearance many weeks after the cessation of treatment?

Speaker 3

Yeah, well I think you know the thing that was interesting in the data Patrick is that you know, what we saw, you know, in looking at these patients, you know, who were followed so closely is, you know, we picked up signs of, you know, the host immune system responding as early as after a single dose. And then we saw, you know, episodes of the host, you know, responding to treatment, on therapy and then once the therapy was discontinued. So the, you know, sometimes people lose track of what the goal is in HBV. You know, the goal of treatment in HBV with all of these drugs that are being developed is not to, you know, do what you do with HCV where you take the virus literally down to zero in the body. That's not the goal here.

The goal here instead is to suppress the virus enough that the host immune system, comes back and takes over to produce seroclearance and then to, provide a durable, response. And for instance, you know, it's easy for people to forget, but interferon, most of the functional cures that occurred in interferon tended to occur in year two or year three. Now our hope is, you know, with more effective drugs, and for instance with RNAi that not only targets cccDNA but also targets integrated, our hope is that these drugs will be, you know, effective enough that we'll see, the host come back even faster and produce seroclearance events, you know, with shorter durations, you know, finite therapy even on, you know, while therapy is ongoing. But at this point, just showing that it was possible with these new therapies and these new approaches to create an environment where the host could actually seroclear a patient was a big deal, you know, to the HBV investigators. And is considered to be an important milestone with these new agents that are coming along.

And that integrated DNA story is an important one.

Speaker 2

All of those patients that we were following, all eight of those patients will have had integrated DNA that was capable of transcribing for F antigen. So there was going to be a floor below which we could not go with ARK-five 20 because it was not going to knock down any of that F antigen coming off of integrated DNA. So we're really and even with that, we saw evidence of a sustained host response in half of those patients. And so we're really excited to see what happens when you just crush the virus and you turn off all sources of S antigen.

Speaker 3

Yeah, guess that's right. I guess the thing that was really also very important here is that half of these patients showed that the host immune system was there to wake up. And, you know, that's not been clear with, interferon therapy and especially with nuke therapy. You know, it's not been clear how many patients we could actually, you know, get to a point that their immune systems would wake up. That's a big topic in the field is immune exhaustion and what's it going to take for these immune systems to show life.

And to see signs of life in half of the patients was I think a surprise. A seroclearance is a very important event. But Chris, that's right. You know, the fact that half of these patients, showed immune reawakening I think was a big surprise and again very important in the field.

Speaker 6

Great. Thanks a lot. And that actually dovetailed right through my second question. So appreciate the detailed response. You're welcome.

Speaker 0

Our next question is from the line of Madhu Kumar with B. Riley FBR. Your line is open.

Speaker 8

Hi, this is Jennifer on for Madhu. Thank you for taking our questions. First, first one thinking about the recently presented ARC-five 20 data with multi lock reduction in viral biomarkers off RNAi therapy versus competitors that saw viral marker biomarkers rebound off RNAi therapy. What do you think the key differences that explain the divergence in off RNA response? Namely, to what extent do you think degree of HPV knockdown contributes versus the need for steroid with certain delivery methods?

And then the second question is, what types of treatment protocols have you considered for later stage studies assuming some degree of antiviral biomarker activity in the Phase onetwo? Namely would you be more likely to pursue chronic treatments over a six to twelve month dosing period, a more acute stop and shock type approach or both?

Speaker 3

Well, guess it's always hard to comment on other But I do think that what stands out about ARK-five twenty to this day in these naive patients that we treated extension is, you know, nobody has come close to the level of sort of viral perturbation, that we were able to cause. And I do believe that it is important to hit the virus very hard. So I do think that that's going to be important. As we move into this phase now where we start doing combination therapy to try to get functional cure, I think it's important to hit the virus everywhere.

And that's part of why we think RNAi is going to be a cornerstone therapy. We don't think it's enough just to hit the virus hard, for instance, with COR, or just hit it hard with DNA, or even just hit it hard with S antigen. We think we have to really take on the virus everywhere it lives. You know, every protein it makes has important impact in its viral life cycle. Everything the virus tries to do.

And now we know even integration is probably a very important evolutionary part of the viral, you know, game plan. So we think it's important to hit the virus very hard and we think that's a key differentiator, across products. As far as this next phase Before

Speaker 2

you go ahead, let just add one final point on that. So I view this in three ways. One, as Bruce says, I think that the extension for ARK-five 20, we saw a deeper knockdown of these biomarkers than has been shown by a competitive RNAi therapeutic. Second, we expect to see even better knockdown with ARO HBV because we are knocking down both integrated S antigen coming from integrated DNA as well as cccDNA. So I think we're going to have a bigger club than competitors.

Second, you brought up this issue of steroid pretreatment. We don't as you know, it sounds like we don't require steroid pretreatment given the TRiM platform. We think that is enormously important because it doesn't make much sense to us that you are attempting to wake up the immune system at the same time that you are giving steroids to dull the immune system. And so we just don't think that's going to work. We don't have that problem.

We don't need to produce steroids, we don't believe. And then finally, just to put a slightly finer point than what Bruce said about knocking down every aspect of the virus. AeroAgb is designed to silence everything that virus makes. We think all those are important. And let me just call out ex antigen.

I think that there is increasingly interesting information coming out about the importance of Axanogen and we're quite careful to make sure that we knock that down. And at least in animal models, we feel confident that we do and we expect to knock that down in humans as well. And I think as you look at competitors, I think that's a key differentiator. I think you got to look to ex antigen and I think that it's potentially quite important that you knock that down and we believe that we're going to anyway. Yes.

Speaker 3

And then I think to get to your second question, which I think was a very insightful question, by the way is, it's the neat thing about HBV is that because the basal the baseline rate of functional cure in any sort of reasonable duration of time, let's say six to twelve months or whatever is essentially zero, we can do small cohorts of patients, eight to 10 patients, and look for recipes that work. And because of that, you know, we could be pretty agnostic about what the combinations are. But you also raised the point of, you know, will there be some interesting looking regimens where you pretreat with one drug and then you do combination and then you maybe have an off period and hit them again? And it's possible that we will see some, exotic approaches, in the coming couple years, as people really try to digest, what we saw with ARK-five twenty, for instance, and what we start to see in other programs. And what we're even seeing, you know, in the discontinuation work that people are doing after chronic nukes, for instance.

So that was a prescient question, I think. And I believe that we may wind up doing some exotic things as well as we try to find that right recipe to really drive the functional cures that the field is going to be looking for over the next few years.

Speaker 2

And also keep in mind that the current study that we think will be we'll complete enrolling this year is a three dose study. And so it is possible that some of those patients could enroll in an extension sometime in 2019 should we have that to allow them to continue dosing. But there will almost certainly for probably all those patients, certainly most of them, there will almost certainly be a holiday before we have Cryptox coverage to initiate any kind of extension study. And so we'll have some data around that. Think towards the end of this year and early in 2019, what happens when you hit the virus hard and then you go off therapy.

I think we may see some interesting data coming out of that.

Speaker 8

Great. Thank you so much guys.

Speaker 3

Sure. Yes, terrific.

Speaker 0

I'm not showing any further questions. I'll now turn the call back over to Chris Anzalone for closing remarks.

Speaker 2

All right. Thanks everyone for joining the call today and we will talk to you soon.

Speaker 0

Ladies and gentlemen, this does conclude the program. You may now disconnect. Everyone have a great day.