Achieve Life Sciences, Inc. (ACHV) Q4 2019 Earnings Report, Transcript and Summary

Good morning ladies and gentlemen, and welcome to the Achieve Life Sciences Fourth Quarter and Year End 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded.I would now like to turn the conference over to your host, Ms. Jaime Xinos, Executive Vice President of Achieve. Thank you.

Thank you, Cindy and thanks everyone for joining us. On the call today from Achieve we have Rick Stewart, Chief Executive Officer; Dr. Cindy Jacobs, Chief Medical Officer; Dr. Anthony Clarke, Chief Scientific Officer; and John Bencich, Chief Financial and Operating Officer.Before we begin, I would like to remind everyone that today's conference call contains forward-looking statements based on current expectations. These statements are only predictions, and actual results may vary materially from those projected. Please refer to Achieve documents filed with the SEC concerning factors that could affect the Company, copies of which are available on our website.I will now turn the call over to Rick.

Thank you, Jaime. I'll start by focusing on the major successes for the cytisinicline development program during 2019 before examining some of the near term value drivers. Mostly the positive outcome from the ORCA-1 Phase 2b trial in 254 patients provided clear clinical evidence where the cytisinicline 3 mg three times daily dose was the optimal dose and administration.A 54% quit rate at the end of treatment was a real win differentiating cytisinicline with a superior scientific profile to other prescription smoking cessation drugs and also providing a signal of potentially better efficacy to currently approved smoking cessation products. We will talk more about this later.Secondly, the Phase 2b results allowed constructive interactions with the FDA to obtain final agreement on the protocol design for our two Phase 3 clinical trials. We anticipate to initiate the first trial in midyear subject to the availability of capital. Thirdly, Achieve has maintained momentum on the outstanding nonclinical studies required for NDA filing such as the carcinogenicity and chronic toxicology studies.Fourthly, commercialization activities have commenced with a detailed assessment of the market opportunity where Chantix, the market leader generated over $1.1 billion in global revenues in 2019. Globally, there are more than 1.1 billion smokers with over 34 million smokers in the U.S. Approximately 480 deaths occur annually in the U.S. from smoking related diseases translating into 1300 smoking deaths daily. Without doubt, it is a huge market opportunity with Chantix only treating roughly 4% of all U.S. smokers.Fifthly, we are in discussions with key opinion leaders about the design of a Phase 2 trial using cytisinicline to treat vapers and e-cigarette users who are addicted to nicotine. Vaping and e-cigarettes are harm reduction tools for smokers where there are currently no treatment options for vapers and e-cigarette users who want to stop their reliance on nicotine. It is estimated that there are approximately 11 million vapers and e-cigarette users in the U.S. alone and the proportion who want to stop will find it difficult because of nicotine addiction.The 2019 controversy over severe lung illness in some vapers has only exacerbated the situation. We've engaged with FreeMind, a consultancy which identifies non-dilutive funding sources to assist in raising financing for this trial. Achieve will potentially be the first mover to proceed with indication in e-cigarette users and vapers wanting to control or stop nicotine addiction.And finally, Achieve successfully raised additional capital to fund the continued progress of the non-clinical and clinical program. On today's call, we will focus on three near term value drivers. Firstly, an overview of the new ORCA-1 cytisinicline analyses presented this week at the Society for Research on Nicotine & Tobacco or SRNT Annual Meeting. Then I will provide an update on future trials including the outcome of our FDA discussions, our plans for Phase 3, as well as an exploration of cytisinicline for e-cigarette users and vapers. And finally John will review the financial results from the fourth quarter and year end 2019.An overview of new analyses was presented to the SRNT conference by Dr. Mitchell Nides of LA Clinical Trials yesterday. The slides are now available on the Achieve website. Dr. Nides was the principal investigator for the ORCA-1 Phase 2b trial and was also an investigator for multiple Chantix trials. As I said earlier, the ORCA-1 study evaluated 250 full smokers at eight clinical trial locations in the U.S. and smokers receiving 3 mg three times daily at 25-day treatment period experienced impressive quit outcomes.Smokers in this cytisinicline arm demonstrated a 54% abstinence rate at week five or compared to 16% who were placebo and a 30% four-week continuous abstinence rate compared to 8% for placebo. These statistically significant results obviously indicate that a treatment effect was observed in smokers who were treated with cytisinicline.The new analyses presented this week explored two important items. Whether or not factors such as demographics, smoking habits, prior quit attempts or clinical trial location have an impact on cytisinicline treatment effect and further biochemical verification or scientific proof that smokers who said they did quit actually did.We conducted these additional analyses so that we could be assured that cytisinicline is effective regardless of demographics or smoking history and to further confirm by additional biochemical verification cytisinicline's effectiveness as an aid to smoking cessation. The analyses of external factors or effects to mollify analyses results indicate that cytisinicline benefit was consistently observed across a wide variety of criteria.Meaning, cytisinicline helped smokers quit regardless of demographics such as age or gender, regardless of how many years or packs a day they had smoked, how many times they tried to quit previously and importantly regardless of what prior treatments they had utilized in prior quit attempts including Chantix, Zyban, or nicotine replacement therapy. Additionally, these data also confirmed that treatment benefit was not influenced by clinical site location.It is important to note that the participants in the ORCA-1 trial represented a heavy smoking population with a long duration and extensive prior quit attempts. The average smoking history of subjects was 32.1 years, smoking an average of 18 cigarettes per day. Additionally, subjects had an average of 4.5 quit attempts without a prescription or over-the-counter therapies. Despite these compounding factors, cytisinicline demonstrated consistently impressive quit rates.Moving on to the analyses of our biochemical verification of smoker reported quitting. Both exhaled carbon monoxide or CO and serum cotinine are biochemical products from cigarette smoking that were measured for objective biochemical outcomes in the ORCA-1 trial. These two measures, CO in particular, are the gold standard in smoking cessation trials to biochemically confirm smoking cessation. They are accepted by the FDA and the use of standards for currently approved smoking cessation therapeutics.In the 3 mg three times a day arm, the self reported 74% reduction in cigarettes smoked was matched by a similar 80% reduction in CO. This was the highest level of CO reduction in the study and provided objective verification of the 74% reduction in the number of cigarettes smoked.In contrast, the placebo group had a self reported 62% reduction in cigarettes smoked but there was a mismatch with only a 38% decline in CO. This indicated either a significant underreporting of the actual number of cigarettes smoked or smoke is over compensated by deep inhalation of cigarette smoked and holding smoke in their lungs for longer.In addition to the CO efficacy measurement the new analyses also demonstrated cytisinicline biochemical efficacy by measuring serum cotinine. Consistent with the CO analyses, all subjects in the cytocine treated arms had a statistically significant reduction in serum cotinine levels by the end of the study treatment, whereas the placebo group did not.These new data points provide additional significance so through the ORCA-1 trial results. Cytisinicline was successful in a population of heavy smokers with a long smoking history who had made a number of prior quit attempts. This is regardless of age, gender, race or geographic location of the trial sites.Also cytisinicline showed significant reduction in the exhaled CO and in the serum cotinine levels in comparison to placebo treated patients. There was a benefit to all cytisinicline treated smokers, not just confirmed quitters. This is important because it provides evidence for the better outcome could have potentially been achieved if the treatment had been longer than 25 days.Turning to future plans and an update on the Phase 3 clinical trial program. In the fourth quarter of 2019 we held discussions with the FDA to finalize our Phase 3 clinical trial protocol and overall development program for cytisinicline. The three key items were agreed with FDA.Firstly, and most importantly, the FDA agreed with the overall Phase 3 trial design utilizing the simplified cytisinicline dosing of 3 mg administered three times daily and with an extended treatment period of six and 12 weeks. No changes were required for the proposed primary and secondary analyses. The FDA agreed with evaluating our longer treatment was appropriate which as I outlined just now could lead to even better efficacy outcomes.Secondly, the FDA also agreed that the use of the newly developed single 3 mg cytisinicline tablet in the Phase 3 program was acceptable. Thirdly, the FDA agreed that the single 30 mg high dose of cytisinicline in a maximum tolerated dose trial was sufficient. As a reminder, this was a standard safety study required for the NDA to ensure no serious side effects if cytisinicline is taken beyond the recommended dose.The fact that we did not reach any serious or severe adverse effects at 10 times the 3 mg recommended dose reinforces the safety profile we have seen with cytisinicline historically. To be clear, we have no intentions of testing doses higher than 3 mg in our Phase 3 trials. Overall we are extremely pleased with the outcome of our discussions and with our collaboration with the FDA review teams.We are confident that the Phase 3 trial designs are well poised to address three key factors. Number one, the evaluation of the high end 3 mg dose of cytisinicline given only three times daily which was the best performing cohort in the ORCA-1 trial. Number two, the simplification of the dosing schedule leading to ease of use for smokers and number three, the extension of the treatment duration to six and 12 weeks expected to yield better and more durable efficacy results.The extension of the dosing period to six weeks in the Phase 3 trials could have significant benefits. It will allow us to measure the primary endpoint of four weeks continues abstinence while patients are still receiving cytisinicline treatment. This was not possible with a 25-day treatment period in the ORCA-1 trial. As documented in the literature measuring efficacy while patients are on treatment typically results in higher quit rates. This approach is consistent with historic Chantix Phase 3 clinical trials.Significant effort is now ongoing to prepare for the upcoming Phase 3 trials. The interim chronic toxicology report is under review and expected to be submitted to the FDA in April. Clinical trial medication has been manufactured and packaged. Contract research organization has been selected and clinical site selection is underway.Shifting towards other opportunities in nicotine addiction, Achieve's proposed Phase 2 clinical study to evaluate the potential for cytisinicline as a nicotine addiction cessation treatment of vapers and e-cigarette users has received significant attention.The number of the e-cigarette users continues to grow and is reported in the Annals of Internal Medicine in 2018 has reached nearly $11 million users in the U.S. alone of which nearly half are around the age of 35. While e-cigarettes and vapes have historically been viewed as safer than combustible cigarettes, these products must sustain nicotine addiction and their long term safety remains unproven. We believe cytisinicline could help address this emerging issue.We have initiated an agreement with FreeMind, an organization that assists life science companies with non-dilutive financing opportunities. Their key focus is to help us identify sources of funding for future scientists clinically in vaping trials.In parallel, we've launched a market research program including an initial study of 500 subjects to evaluate vaping and e-cigarettes user demographics, behaviors, and perceptions on addiction and quitting. The outcome is expected to inform clinical development activities, commercial assumptions and patient selection for future clinical trials.I'll now turn the call over to John for review of the fourth quarter financial results.

Thanks Rick. I would like to provide an update on our cash balances as of December 31, 2019 and also our operating expenses for the fourth quarter of 2019. As of December 31, 2019 the company's cash, cash equivalents and restricted cash were $16.7 million compared to $14.7 million as of December 31, 2018. Our year-end cash balance reflects the proceeds from our December financing which provided incremental cash net of transaction costs of approximately $12.3 million.Turning to our statement of operations, the company incurred a net loss of $3.2 million for the quarter ended December 31, 2019 as compared to a net loss of $3.6 million for the same quarter of 2018. Total operating expenses in the fourth quarter of 2019 decreased by approximately $0.5 million over the fourth quarter of 2018. As highlighted previously, operating expenses decreased in the second half of 2019 as we finalized our ORCA-1 trial. We expect our quarterly operating expenses to remain low in advance of initiating the Phase 3 development of cytisinicline.That concludes the summary of our fourth quarter financial results. I would now like to turn the call back over to Rick.

Thank you, John. Finally, I want to talk about Achieve's commercialization plan. Our goal is to maximize the value of direct revenues to Achieve and to its shareholders. There is an obvious global partnering opportunity which in the case of Chantix in 2019 represented roughly $1.1 billion in revenues. The U.S. opportunity alone represents over 80% of the world market or nearly $900 million.We assess the global smoking cessation market in a similar way, with an overwhelming majority of revenue potential coming from the U.S. market and roughly 20% from the rest of the world. Our expectation is that cytisinicline will be cost effective with potentially better efficacy and a superior side effect profile in currently available prescription smoking cessation drugs.In terms of future commercialization, we believe there are multiple categories of potential target prescribers, including smoking cessation clinicians, specialists in other diseases, such as oncology, cardiovascular and respiratory, and primary care physicians. Increased access to smoking cessation medications and counseling continues to expand.For example, a number of states have permitted the prescribing of smoking cessation therapies by pharmacists, and retail pharmacies in the U.S. are now implementing behavioral counseling and prescribing in-stores. The approach to each of these stakeholders is changing rapidly with improved access via digital technology and reduction in reliance on large-scale traditional sales forces for the primary care channel.Achieve's commercial strategy reflects this changing environment. Ultimately we expect Achieve's commercial approach to be a combination of digital marketing and highly targeted personal promotional efforts. Our recent discussions with potential U.S. and international partners reflect this dynamic.So in summary, Achieve is now Phase 3 ready with a drug that has already treated over $21 million patients to date in Central and Eastern Europe with over 2000 patients in two large-scale investigator led Phase 3 trials, both and which were published in the New England Journal of Medicine and a comprehensive clinical development program. Cytisinicline will address the market with 34 million smokers in the U.S. and over 1.1 billion globally.Thank you again for joining the call. Operator, please open the line for questions.

[Operator Instructions] Your first question comes from Michael Higgins from Ladenburg Thalmann.

Good morning guys, how are you?

Very well, thank you, Michael, keeping well?

Good. A couple of questions for you if I could. Can you give us a bit more feedback on your discussions with governmental groups on potential e-vaping study and some feedback for us on the potential study design, number of patients, sites which you are looking to get on to that study? Thanks.

Okay, Cindy do you want to answer that one?

Yes, actually we're just finalizing that protocol with our key opinion leaders. I think it's fair to say that it is going to be a double-blind, randomized study. The evaluation for safety will look very similar to our Phase 3 studies in smokers. The efficacy components will be similar as well as far as looking at not only vaping abstinence or vaping cessation for four weeks, but weekly monitoring as far as cotinine and they being over a 12-week period.

Okay, that's very helpful. CO as well I assume?

Yes, we are looking at CO because this study right now is looking at vapers only. So we are monitoring for any vapers that might go back to smoking as far as CO levels.

Got you, okay. Would it also have the six and 12-week period like ORCA-2?

All subjects would be at 12 weeks, but you can look, we are looking at it at the six-week as an independent endpoint as well as the 12 weeks.

Okay, that's interesting. Okay, thanks. And then a question on we are hoping to see some results this spring. I understand the principal investigator would like to hold those for a conference. Is it possible to get some topline results out this spring?

Yes, I think that's going to be tough one. You might remember Michael, this was conducted in New Zealand in a principally Māori population. And I think there were some processes that need to be gone through with the patient population down there. So our expectation is, it is going to be coming out in the fall.

Okay. SRNT-E I assume?

Correct.

Okay. The last one from me and then I'll turn it back in the queue. The news said the course is 119 and I was hearing one of the reasons may be the reason that Mainland China has had some much more detrimental impact from the virus that their smoking rates are much higher in women and this is a respiratory disease. Any evidence that e-vaping may have an effect on one's ability to become severely affected by COVID-19?

Yes, I mean - I think it's very early days to be able to call definitively. I think there has been a lot of debate around the fact that the mortality rate of a man in China is somewhat higher than the women's population, I think it's about a 70/30 split. I don't think it can be translated more widely yet. But certainly, the Mayor of New York on Sunday I believe was talking about the impact of smoking and vaping on either the prevalence of COVID-19, and/or the severity of it. Tony, do you want to talk a little bit about the kind of underlying pathology related to that?

Yes, sure. I mean, this is a moving field. I mean, literally on a daily basis with new stuff is appearing from researchers, but my understanding is this. When they look back at what happened with SARS in China, it did seem to affect males more prevalently than females. And one of the arguments presented at the time is there is a huge disparity in the number of smokers compared with non-smokers.In other words, the males smoke a lot more than females there in China. And that was kind of people looked at it and said, well, that's kind of interesting, but I wonder if that's the real reason, or if it is something else? What's happened since then is that we now understand that there are two reasons how these COVID viruses get in, we inhale them, and the area of the lungs, as we all know, is like several football fields, it's massive. That's one way.The other thing that seems to have happened that we've discovered is that the H2 receptor, this is an angiotensin converting enzyme to receptor is also expressed in the lung. And it seems to be the protein that these viruses latch on to. And the interesting thing here that literally is coming out just in recent days is that it appears that this new COVID-19 uses a similar mechanism. So it seems to bind to the H2 receptor. And the reason that's important is because nicotine seems to cause an increase in the expression of H2 receptors in the lungs.In other words, smokers and also vapers could also express a lot more of this receptor and then maybe leave them more prone to the virus taking hold if they inhale it. And I think this is really important because a lot of the press in the last couple of years have been saying it's safer to vape than it is to smoke. Well, certainly in terms of a lot of the stuff that's been smoked that might be true in cigarette smoke. But now we're seeing that if it is nicotine that causes this, then, vapers are just as much at increased risk of this virus taking hold of smokers.So it's a moving field, but it's looking really interesting. It's the first time I think, that we've seen a real problem that is specific to kind of vaping, whereas previously everyone was saying vaping is safe.

Yes, that makes sense. There is a lot of overlap with the SARS virus and COVID-19. SARS 2 virus as they're calling it.

Yes.

It has the same receptor binding motif, same H2 receptor, same the critical residues.

Yes.

So and that's also why they're bringing out a lot of what's worked in SARS here for COVID-19. We'll see more of an impact in Q…

There is stuff appearing on a daily basis with this. So that's my latest understanding, you know repeated working out so fast.

I appreciate that. Thanks guys.

You're welcome

Your next question comes from Vernon Bernardino from H.C. Wainwright.

Hi guys. Good morning. Thanks for taking my question. And congrats on the progress and getting closer to the Phase 3 looking forward to that initiation with cytisinicline. I'm intrigued by Michael's question on the vaping and the doctor's answer on H2 and nicotine role in increasing expression. But first, I'd like to ask as far as the discussions with KOLs on vapers use two things. Do they see that because one of the things about the cytisinicline is perhaps as we all know the studies show that if some patients for example, some subjects in the Phase 3 studies in the past had been on the trial longer they been achieved, they could have stopped smoking. Is there a dynamic like that that is seen in vapers use and do you foresee something like that? I know that you're going to look at all these, but you're also going to be able to look at six and cessation durability after that, but is there anything like that as far as the thinking in a study in vapers use?

Cindy?

Well, I'm not sure I'm understanding the question, but this study is really looking at individuals who are vaping that want to quit vaping. So we'll be selecting for those individuals who really want to control, reduce their nicotine addiction, as well as potentially stopping vaping in their control of nicotine addiction.We're also doing a survey and I don't know Jaime, if you'd like to kind of just overview as far as understanding more the population of vapers. Obviously, there's not been studies really looking in this regard of vapers for stopping vaping with unlike something like cytisinicline. So we are kind of on the cutting edge here and looking at this population and moving forward, but we are very committed to looking at this as an added or additional indication to our smoking cessation with FDA.

Okay, so to backtrack a little bit then on when vapers use these devices to try to quit smoking, how does it compare as to the length of time it takes versus other smoking cessation products, including Chantix?

I'm not sure that, actually no, I don’t have that information at hand.

As Cindy mentioned, we're conducting a survey with 500 vapers that's ongoing at this time, and we're trying to get at some of those answers, because we all have that same question. Are these cessation methods that they're using vaping for or are they use, do they actually want to come off of nicotine all together? And what is their willingness to try alternative strategies beyond vaping or e-cigarettes to do that. So I think part of the survey that we are currently fielding would probably give us some of that insight.

Okay, and so the research on them is early, but as far as what direction is being taken? What are some of the near term questions that perhaps need to be answered as far as the research on nicotine H2 and coronavirus?

That that is a tough one. Yes, I think. I think the numbers are too, ill-defined right now. You know, the first instance of coronavirus was really identified in November. And whilst at the current time we're getting data coming in from China. The real question is, how reflective is that data or what is going on, say in the U.K. and the U.S.? There is certainly some degree of evidence that in fact, the smoking and vaping population is perhaps, and I'm only saying perhaps more susceptible to coronavirus, and perhaps is getting most of their symptoms.And I think that's what Bill de Blasio was really getting at Sunday in his conference call, that these are only perhaps, because we simply don't have enough data points. But it - certainly given the impaired nature of smokers and to a degree vapers' lungs, it is entirely logical that those two would be potentially evidence with more data.

Okay, and then last question before I get back in the queue. How do the lungs compare people who had a severe response to coronavirus versus those with the issues of vapers who felt ill with these approved type of products?

Again, I don't think there is an update. I mean, I think most recently, I mean, as Tony said, we're seeing new data on a day-to-day basis. And certainly - as recently as yesterday they were identifying that x-rays are potentially a better tool for diagnosing COVID-19 in patients. And certainly what you're seeing is not only what you're seeing in the U.S., but this glass effect that people are talking about is a clear characteristic of COVID-19.Now, again, what we are looking at the moment publications coming out of principally China in people, males in particular, who are older and have been substantial smokers. Does that actually correlate with the experience in Italy, where again, you have an elderly patient population perhaps and others strong smokers?So I think the diagnostic tools that we're talking about for COVID-19 are developing on a virtual daily basis. So, yes, what we expect to see is moving forward, starting to get a better understanding of the impact of smokers versus non-smokers, vapers versus non- vapers, but clearly there is a message that is coming out from various sources in the U.S. in terms of start to look at those populations as more at risk than non-smokers.

And how many people in China use vaping products? And then I'll get back in the queue. Thanks.

Yes, relatively few. If you take smoking population of roughly somewhere between 70% and 80% of the Chinese population, yes I think you're looking at somewhere in the 15% to 17% actually use vaping devices, and principally there are dual users as well.

Okay, thank you very much. I appreciate you indulging my follow ups.

Okay.

Your next question comes from John Vandermosten from Zacks SER.

Good morning. Regarding the FreeMind work that's only related to the vaping study, right? It's not going to be funds from that relationship are going to be used more broadly?

Cindy?

Yes, correct.

Okay. And I assume that they're looking for things like grants from government or private groups. Is that mostly the source that they would help you from?

Yes. That’s correct.

Okay. And then another question on measuring for that vaping trial carbon monoxide and cotinine levels, I assume that carbon monoxide is only related to smoking, right? I mean, if they were just vaping you wouldn't be able to detect it from carbon monoxide?

Yes, so I think, we'll still be monitoring for CO obviously for any cigarette, reverting back to cigarette smoking or increasing cigarette smoking.

Got it. And then cotinine, that's tied to nicotine. I'm not quite sure of that. Maybe you could just give me a sentence or two on how that's fits into the vaping and also with smoking?

Yes, so cotinine is a metabolic product of nicotine, so nicotine then goes into cotinine and other things. So you can measure cotinine in the serum, or in this case, we're going to be looking at it in saliva, and it's with a specific lab that's connected with Neal Benowitz and his research and a quantitative saliva cotinine testing. So we can actually measure then changes in cotinine levels, which would relate to changes in nicotine.

Okay, and is the same amount of nicotine. You know, I'm wondering if the same amount of nicotine is different when you're trying to measure it between smoking and vaping because when smoking is heated up quite a bit more than it is vaping?

Well, I think the amount of nicotine whether it is in smoke or in vaping, the cotinine levels will be a direct measure of how much nicotine the body or in the lungs that nicotine has gone. So I'm not sure that I know exactly the answer to your question, but that's why it's very important to have a quantitative assay for cotinine, which a lot of these assays are just yes, no, they have then a lower limit of detecting cotinine. But that's why we're really looking at a research lab at a quantitative level for cotinine to look at various aspects of changing in this study over the 12 weeks.

Okay, and you said earlier that the FDA accepts both carbon monoxide and cotinine for the normal studies that would be done for cytisiniclineand regular smoking, right? So they already recognized that as an endpoint?

Absolutely.

Okay, and just final question on, it looks like you guys presented yesterday morning at the SRNT conference, any feedback from that at all in terms of audience response or anything in response to the presentation of that data?

Well, at least we know that there were individuals there and there was about - there was over 30 individuals there in the meeting room. I guess that's one thing that surprised us. It was given by a video and auditory with Dr. Mitchell Nides due to the obviously the reduction in travel.

Okay, thank you guys for the answers.

Okay.

Your next question comes from Michael Higgins from Ladenburg Thalmann.

Good morning, guys, a couple follow ups if I could. From the max tolerated dose study the 30 mg dose, where there any notable adverse events? Were they in line with what would be expected, say nausea, abnormal drains [ph]?

Yes, so at the highest dose of 30 mg we did finally see nausea and vomiting in 2/6 individuals, which even though they were moderate adverse events, that's where FDA agreed with us that we didn't need to press farther in this patient populations, and that was the expected adverse events. We just expected it at a lot lower levels, and it took 30 mg to actually see that.

So you didn't see it at 27 or earlier?

Well, you saw some nausea maybe sporadically throughout the trial, but it was the combination of 2/6 individuals that not only had nausea, but actually had vomiting that was then the trigger to say, okay, this dose is then what would be in close to, if not there at the maximum tolerated dose for this patient population, certainly did not fulfill the criteria, the protocol, which was any one severe adverse event. This was moderate, but that's where then the Data Safety Monitoring Committee, ourselves, and FDA agreed to stop the trial and say it was adequate.

Right, understood. Yes, those are awkward studies. [Indiscernible] Now we have ORCA-1 being reviewed a bit further. I was wondering, I think this is an old question. The adverse events in the down titration on considering the patients are getting so much more drug, you know if the adverse events that we see in the table here from yesterday's slide again here, since they're higher down titration did they happened earlier in the study when they were at a higher dose it would seem to make sense?

They were sporadic, but there was a slight increase as far as earlier, but it wasn't evident. It wasn't something that we felt was a significant time onset. But again, if you're only looking at onset of adverse events in like, three to six individuals or so it's really hard to call out any difference in time onset, so we'll have to look at that. Obviously, we won't have the titration arms in the Phase 3. But looking at time onset for the 3 mg three times a day we'll have a better chance of really evaluating that in the Phase 3 studies with some hundreds of subjects.

Right. Thank you. Rick, you mentioned some, you know some comments on ORCA-2 design. I didn't catch what you had said on the secondaries. Can you give us some feedback as to what the secondary points are looking like?

That's one for Cindy again?

You want me to take it. So the secondary endpoints are really looking at longer term follow up at the 24 weeks or six months for smoking cessation. And it's also looking at comparison of relapse, looking at if there is a reduction in overall relapses, if you had six weeks of treatment versus 12 weeks of treatment.

Got you. Okay, interesting. Thank you. Any update for us on the NCCIH funded non-clinical reproductive study, has that been completed yet?

Yes, it has. We have actually, we are reviewing the report and that it will be probably submitted at the similar time, if not at the same time as our 13-week more chronic toxicity studies to FDA in April.

Okay. Is the started work to a gating factor being and in vaping, non-dilutive funded events? Is that what we're waiting for? It sounds like sites are being activated and set up and drug product is being ready. It's not really ready. Can you give us an update as to what the gating factor we would be seeing?

Rick, do you want to take that?

Yes, sure. Let me make sure I understood the question Michael. So, when I go is the vaping study gated by the start of the Phase 3, is that right?

Is the standard Phase 3s gated by e-funding - or sort of funding for the e-vaping study?

Now, the start of the Phase 3 is entirely independent. We are talking with FreeMind that vaping study will start when we've got non-dilutive financing. In the meantime, we've got the smoking cessation Phase 3s, which are currently in the setup phase. As I said, we're in site selection right now. The actual timing and the start of the Phase 3 is somewhat dependent on the availability of capital, but they are actually independent.

Okay, thank you. Then just sort of one last one last one here. And Jaime you alluded to some of this with the 500 patient survey. Just trying to get a better handle on the quit rates among those that have smoked for 30 years and are traditional smoking cessation patients versus the e-vapers. There is 11 million or e-vapers out there versus 34 million cigarette smokers, but on a quit rates or wanting to quit rather, rates similar or different and you may not have that data but just trying to get a sense for it here. Thank you.

Yes, I can say from the survey that is one of the questions that we're looking to address. We've segmented the population that we're interviewing into dual users, never smokers, and prior smokers. So people who have a quit, so I expect that we'll get different answers from those audiences and that's kind of the point of conducting the research is to determine where they come together and where there's maybe some commonalities versus differences in their quit behavior and their quit journey.We're also really looking to understand as we did in our smoking survey earlier and about 1100 smokers, what is their willingness to try something new if they have an option? And really what is their perceived level of addiction, and are they looking to quit or are they fine just being vapers or e-cigarette users for the expected future?So I think those questions will really help us to build out a forecast and also understand who we should be bringing into our trial, because we obviously want people who are motivated to quit to be enrolled in the clinical trials, otherwise the results are not going to be as we would hope.

Right. When do you expect to get these survey results and do you need them to define the statistical assumptions in the e-vaping quit study?

We do not need the results for anything directed towards the Phase 2 at this time, and we expect to have them in the next several weeks.

Great. I appreciate all the feedback and all the questions. Thanks again, guys.

Thank you.

There are no further questions at this time. I would like to turn the conference back over to Mr. Rick Stewart.

Well, I'd just like to thank you all for joining Q4 2019 and full year results conference call and we look forward to talking to you in the near future. Thanks a lot.

Ladies and gentlemen, this does conclude today's conference. You may now disconnect and thank you for your participation.