BioCryst Pharmaceuticals, Inc. (BCRX) Q4 2012 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the BioCryst Fourth Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today, Mr. Robert Bennett, Executive Director Investor Relations and Communications. Sir, please go ahead.

Thank you. Good morning and welcome, everyone, to BioCryst's fourth quarter and 2012 corporate update and financial results conference call. Today's press release and accompanying slides for this call are available on our website, www.biocryst.com. [Operator Instructions] Joining us on the call today are Jon Stonehouse, Chief Executive Officer; Dr. Bill Sheridan, Chief Medical Officer; and Tom Staab, our Chief Financial Officer. Before we begin, I'll read a formal statement shown on Slide 2 regarding risk factors associated with today's call. Today's conference call will contain forward-looking statements, including statements regarding future results, unaudited and forward-looking financial information and company performance or achievements. These statements are subject to known and unknown risks and uncertainties, which may cause our actual results, performance or achievements to be materially different from any future results or performance expressed or implied in this presentation. You should not place undue reliance on the forward-looking statements. For additional information, including important risk factors, please refer to BioCryst documents filed with the SEC, which can be found on our company website. With that, I will turn the call over to Jon.

Thank you, Rob. Good morning, and thanks to everyone for joining us today. While the fourth quarter of last year was one of the more challenging quarters in our history, we enter 2013 focused on rebuilding shareholder value. Our plan to get there and our priorities are to develop a revolutionary therapy for preventing hereditary angioedema attacks, as well as a broad-spectrum antiviral with the potential to fill a gap as a medical countermeasure. In addition, we will carefully manage our cash by investing in these priority programs to enable us to reach value-creating events as quickly and efficiently as is reasonably possible. The restructuring we implemented the end of last year will allow us to extend our cash runway to reach important events over the next 15 to 18 months. We reported last month the results of an important experiment evaluating the efficacy of our nucleoside inhibitor, BCX5191 against HCV in infected animals. Unfortunately, this experiment did not show enough antiviral activity to justify the continued development of 5191, so we terminated the program. While we would've preferred a successful outcome, we reached this decision quickly with minimal additional cost. When we met with analysts and investors at the JPMorgan Healthcare Conference last month, the discussions primarily focused on the HAE program and the opportunity for BioCryst to advance the first oral prophylactic treatment for this orphan disease into human studies. Our oral HAE program includes the advancement of the lead compound BCX4161 into Phase I, targeting the end of this quarter, and the selection of an improved second-generation oral compound for HAE to advance into preclinical development later in 2013. The goal for the 4161 Phase I trial is to demonstrate consistent and adequate oral bioavailability and pharmacodynamic effects on kallikrein. We expect results around midyear. In addition, our discovery team has made excellent progress on the second-generation HAE compound. Our primary goal for the second generation is to improve the oral bioavailability of 4161. Given this will likely be an improvement over 4161, we intend to move forward with the second-generation compound to secure a solid position for the long-term success in the treatment of this orphan disease. We continue to advance our other priority program, BCX4430, the broad-spectrum antiviral being studied for hemorrhagic fever viruses. There remains a gap in the government medical countermeasure stockpile to treat these viruses. Our early proof of principle data in yellow fever and the data from other studies we have conducted with the U.S. Army Medical Research Institute of Infectious Diseases, or USAMRIID, encouraged us in seeking additional government funding for the future development of 4430. This program has the potential to move faster than typical drug development programs, as we will pursue the animal rule path to approval. We will provide updates regarding additional study results and funding as the year progresses. With that, I will now turn it over to our CFO, Tom Staab, who will discuss our financial results.

Thank you, Jon, and good morning, everyone. Today, I'd like to summarize the key elements of our fourth quarter and full year 2012 financial results, as well as to provide financial guidance and to discuss our 2013 operations. Our guiding principle continues to be focusing our cash resources on advancing our key development programs, while minimizing noncritical and non-project spending. Throughout 2012, BioCryst has routinely delivered a substantial reduction in general and administrative expenses, culminating in 2012 G&A expenses at approximately half of 2011 levels. These reductions, coupled with the restructuring of our operations and focused R&D development plan, illustrate our results-oriented focus in extending our cash runway to achieve key milestones in our HAE and broad-spectrum antiviral programs. Our fourth quarter financial results are summarized on Slide 4. Revenues for the fourth quarter of 2012 were $4.1 million compared to $5.2 million in the fourth quarter of 2011. The decrease in revenue resulted from reduced peramivir development activity and underlying collaborative revenue received from BARDA HHS. Fourth quarter 2012 R&D expenses were $11.1 million, down 22% from $14.2 million in the fourth quarter of 2011. Our R&D expense has decreased primarily due to reduced peramivir development in 2012. In addition, the program mix between the 2 quarters has changed. Lower development costs associated with the ulodesine program have been offset by higher development costs associated with the BCX5191 and 4161 preclinical programs. We expect R&D expenses to continue to decrease in 2013 due to: One, our corporate restructuring; two, focusing our R&D efforts on the HAE and broad-spectrum antiviral programs and programs reflecting an earlier stage and less costly development; and three, from the conclusion of Phase II ulodesine development activities in 2012. As mentioned in previous calls, we do not intend to invest further in the ulodesine program until we secure a partner. Furthermore, we expect a continued reduction in peramivir activity due to the termination of the 301 Phase III clinical trial. All future and substantial peramivir development activity has been postponed pending joint BARDA HHS, FDA and BioCryst meetings to occur throughout the first half of 2013, from which, the program's future will be determined. Moving on, fourth quarter 2012 G&A costs of $1.9 million were below the $2.1 million incurred in the fourth quarter of 2011. This decrease resulted from the continued realization of cost containment measures and the company's restructuring. In addition, we managed to decrease G&A expenses from 2011 levels, even though the fourth quarter of 2012 included most of the transaction costs associated with the dissolved merger with Presidio Pharmaceuticals. In addition, the fourth quarter of 2012 included $1.8 million of costs associated with our December restructuring. Moving below the operating line. We incurred $1.2 million of non-cash interest expense in the fourth quarter of both 2012 and 2011, and a mark-to-market gain of approximately $800,000 in 2012, as compared to a loss of $1.1 million in last year's fourth quarter. Interest expense in the hedged mark-to-market gain/loss relate to our nonrecourse notes and related hedge arrangement enacted in conjunction with the RAPIACTA royalty monetization. In summary, we successfully decreased our fourth quarter 2012 net loss per share to $0.22, or a 24% reduction from a $0.29 loss per share in the fourth quarter of 2011. Our full year financial results for 2012 are summarized on Slide 5. Revenue for the 12 months ending December 31, 2012, increased to $26.3 million compared to $19.6 million for the 12 months ending December 31, 2011. The increase was primarily due to the recognition of approximately $7.8 million of previously deferred forodesine-related revenue in the first quarter of 2012, recognition of $3.3 million of RAPIACTA royalty revenue from Shionogi in the second half of 2012, with both additions somewhat offset by a reduction of collaborative revenue associated with decreased peramivir development in 2012. Full year 2012 R&D expenses were $51.5 million, down from $57.2 million in 2011. Lower ulodesine and peramivir development costs were partially offset by higher 2012 development costs associated with the BCX5191 and 4161 preclinical programs, as well as the recognition of $1.9 million of previously deferred forodesine expenses associated with the amendment of the Mundipharma agreement. General and administrative costs decreased 43% to $6.8 million in 2012, compared to $12 million in 2011. The significant decrease results primarily from a reduction of noncritical consulting and other administrative expenses during 2012, and avoidance of onetime expenses incurred in the 2011 relocation of our corporate headquarters, offset somewhat by $1.5 million of transaction costs associated with our dissolved merger. Total operating costs of $60.2 million in 2012 were well within our guidance range of $57 million to $69 million for the year, and were 13% below 2011's operating expenses of $69.2 million. As mentioned in December, we significantly reduced the size and operations of the company in order to extend our cash runway. The corporate restructuring will result in significant changes to our future operations. By reducing our workforce by 50%, as well as decreasing other costs, we anticipate decreasing our 2013 operating cash burn by 30% to 40%, and decreasing our operating expenses by 40% to 60%, as compared to 2012 levels. These changes allow our existing cash investments to last longer and enable us to impact important near-term milestones. In 2012, we incurred $4.7 million of interest expense compared to $3.8 million in 2011. The difference resulted from 12 months of interest in 2012 versus approximately 10 months in 2011. Fiscal 2012 included a mark-to-market loss of $700,000 compared to a $4 million loss in 2011. These losses reflect changes in the U.S. dollar/Japanese yen exchange rate under our hedge agreement. Accordingly, in regards to the bottom line for the year, the 2012 loss per share was $0.79, reflecting a 37% reduction as compared to $1.26 loss per share in 2011. Now moving to Slide 6, I would like to discuss our cash balance, cash usage and our guidance for 2013. We ended 2012 with cash and investments of $37.1 million compared to $57.7 million at the end of 2011. Our operating cash usage for the fourth quarter and 12 months ending December 31, 2012, was $7.1 million and $36.8 million, respectively. The 2012 cash usage represents the low end of our guidance range of $37 million to $43 million. As a reminder, operating cash use excludes any impact of our royalty monetization, hedge collateral posted or returned, sale of stock in the marketplace and any other nonroutine cash outflows or inflows like restructuring and transaction costs. In comparison, our total 2012 cash burn was $38.5 million. As mentioned in our December restructuring conference call, our yearend cash balance represents approximately 15 to 18 months of cash runway, reflecting a significant extension to our cash runway prior to restructuring our operations. In regards to our operating outlook for 2013, we expect operating cash use to be in the range of $22 million to $26 million. Furthermore, we expect operating expenses to be in the range of $25 million to $35 million. That concludes my financial review. And now, I'd like to turn the call over to Dr. Bill Sheridan. Bill?

Thanks, Tom. Today, I'm going to focus my comments on BioCryst's oral kallikrein inhibitors for hereditary angioedema. Our HAE development program consists of 2 kallikrein inhibitor projects. The lead compound, 4161, is poised to enter Phase I clinical studies in the coming weeks. And we are well-advanced in identifying a second-generation preclinical candidate with superior bioavailability. We are pleased with the progress we have made in both projects over the past year. The primary goals of the 4161 Phase I program are to demonstrate oral bioavailability and safety in humans. We need to show consistent PK with adequate exposure levels that suppress plasma kallikrein. Several factors lead us to conclude that there is a reasonable probability of achieving therapeutic levels of 4161 in humans with oral dosing of the clinical formulation, despite relatively low solubility and permeability characteristics. First, the levels of 4161 required to fully inhibit kallikrein in human plasma are quite low, less than 100 nanomole. Second, with the clinical formulation, 4161 solubility has improved more than one hundredfold compared to drug in saline. Third, the clinical formulation reduced variability in preclinical exposure to less than fivefold, an acceptable level at this stage in development. Fourth, exposures in rats after oral dosing were sufficient to inhibit kallikrein for 24 hours in spite of the higher inhibition hurdle in rats versus humans. 4161 is five to tenfold less potent in rat plasma compared to human plasma. Fifth, aPTT prolongation after 4161 oral dosing was confirmed in 3 species. aPTT is an on-target effect of 4161 and higher levels of the drug are needed to prolong this laboratory test compared to those needed to inhibit bradykinin production. Sixth, based on comparisons to ecallantide, the levels of 4161 needed for clinical benefit are likely to be quite low and consistent with the range needed to inhibit kallikrein in the lab assays. Ecallantide is a 60-monoacid protein kallikrein inhibitor that is approved for the acute treatment of HAE attacks. As shown in Slide 7, we used the preclinical PK -- I beg your pardon. We used the clinical PK of ecallantide and the concentrations that prolong aPTT to calculate the ratio for these 2 effects. This is about 13 to 26-fold. We then applied that fold range to the concentration of 4161 that prolongs aPTT in human plasma, 1.3 micromoles. Dividing this by 13 to 26 gives us an estimate of effective 4161 concentration of 50 to 100 nanomole, the same range that we see for maximum kallikrein inhibition in the lab. The actual PK/PD observed in the single ascending dose part of the Phase I study will determine the dosing frequency for the multiple ascending dose part of that study. If it is necessary to dose more than once daily, we believe that this is perfectly acceptable for a first-in-class oral treatment that will advance the care of HAE patients. We look forward to sharing Phase I results in mid-2013. Our discovery team has made excellent progress in the identification of new oral compounds for HAE. We have listed the main goals for the second-generation project on Slide 8. These include improving bioavailability, retaining potency and retaining specificity, and eliminating tissue factor/factor VIIa activity. Over the last 15 months, we have developed several series of compounds based on 4 novel scaffolds. This work has led to the identification of a number of promising candidates that meet our target for potency. Early screen selectivity are showing desired results. The next steps are to complete selectivity screening and to test bioavailability in rats. We are on track to select our second-generation lead to advance into preclinical development later this year. Now I'll hand the call back over to Jon.

Thank you, Bill. We initiated our HAE program over 2 years ago based on market attractiveness and the potential to greatly improve convenience for patients and caregivers. The approved treatments for HAE all posted double-digit sales growth in 2012. Despite the burden of an IV administration every 3 to 4 days, sales of the leading prophylactic treatment are forecast to increase almost 50% worldwide in 2013. Think about that for a minute. These patients are either driving to an infusion center or self administering an IV treatment every week to prevent attacks. Imagine the difference if they could take their treatment orally instead. An oral prophylactic treatment could revolutionize the treatment paradigm and make a real difference in patients' lives. Our team is focused on reaching the near-term milestones that lie ahead for BioCryst's HAE and broad-spectrum antiviral programs, which are summarized on Slide 9. We will determine the bioavailability in the 4161 Phase I trials by mid-year. If successful, we will move into a Phase II pilot study in HAE patients who experience a high frequency of attacks in the second half of 2013. We also look forward to presenting additional proof of principle efficacy results for 4430 and updating you regarding external development funding as the year progresses. We will do all of this while carefully managing our financial resources, ultimately with the goal of building value. This concludes our remarks, and we will now open the call to your questions.

[Operator Instructions] Our first question comes from Liisa Bayko from JMP Securities.

For your antiviral target for hemorrhagic fever, can you just tell us a little bit more about specifically what the target is?

Sure. So there are a number of hemorrhagic fever viruses and the United States government agencies, including the CDC, have put out a list of highest priority threats. And amongst those are viruses like Marburg virus and Ebola virus, so what we're talking about here are agents that are zoonotic. But we know that during the Cold War, that some of these viruses were weaponized by other countries. So the goal of this program is to create medical countermeasures against potential terrorist and other types of biowarfare threats. These are very nasty viruses with very high mortality rates.

Okay. And what -- so you're developing a specific compound. What is its mechanism of action?

The mechanism of action of 4430 is viral ironate polymerase inhibition. And we had a poster -- actually, an oral presentation at the Second Antiviral Congress in November last year that described the yellow fever results and also the spectrum of action of the compound, which is quite broad.

And so when will you know if and when it will be funded? What's kind of the timing on how that will process for the program?

Well, it's the government, first off. So that is a little bit less predictable. But we've had a lot of interest by various agencies. And we're in a series of discussions with folks and I would say increasingly more confident as these discussions proceed. And I think a big piece of this is we've got some real compelling data that is driving the interest. So we expect to get some of it. We've actually had funding in an indirect way where Department of Defense, USAMRIID in particular, has been doing experiments with our drugs. So that's one form of funding. But we're looking to move the program forward in preclinical tox and then filing an IND and moving it forward and that's another set of funding.

Okay. And so when -- in terms of when -- I mean, are you going to wait until you have that before you pursue the program? And when might...

We're making a small investment of our own capital to get the tox work going, but we'd only do that if we had a pretty high degree of confidence that there's enough interest level that we think there's a good chance we're going to get the money to move it the rest of the way. So we're hoping later this year. I can't give you a specific time because it's just these things are really hard to predict.

Our next question comes from Rahul Jasuja from Noble Financial.

I want to start with a question on the HAE program. And maybe this is for Bill. I'm trying to understand here, the obvious advantages with the oral, but in looking at the oral, the challenges probably are, I guess, getting the right kind of exposure, patient to patient variability, which you don't have with the injection version. So now, it seems like given the profile that we've looked at, and it seems like you're way off from a safety signal given the therapeutic window. But the efficacy, do you think a challenge here would be that there could be variability in efficacy from patient to patient? Is that a challenge you look at?

Certainly, it's something we'll evaluate. And the first thing we'll look at with regard to that question is the PK and the effect on the laboratory kallikrein inhibition assay. So that assay, we're still refining. And at the moment, it's extremely aggressive stimulus for contact activation. So it's more or less a worst case scenario. And that's not the situation in an attack of HAE. Even though the attacks are very serious, the pace of contact inhibition is quite slow. So these assay's over in minutes and you get massive contact activation. And so we can inhibit all of the kallikrein in that assay, so we'll be using that to perform the clinical program. I think you're right that more variability is not as good as less variability. And that's one of the factors we'll assess as we see the results of the PK and PD come through into Phase I.

But Rahul, I would -- this is Jon. I'd just make one comment. I think if there's patient to patient variability, and you've got a titrate based on patients, I still think that's better than an infusion every week, right? And so the hurdle for 4161, I think, is relatively low. Now the second generation, we want once a day, we want really good PK and that's what we're driving towards. But the first one, I think the hurdles are relatively low when you look at the competitive landscape.

Sure, that makes sense. So just to get the numbers right in my mind, the therapeutic window here, the C max between 0.05 and 0.1 micromolar, correct? Is that right? And then, you begin to see an effect on aPTT at 1.3 micromolar. So you're way off from where the danger signal is. Is that the right way to think about it?

It's almost the right way. I think the danger signal is not the aPTT, it's the prothrombin time. So in -- nature has already done the experiment of deleting pre-kallikrein, that's called Fletcher factor III, and people with that trait lead perfectly normal lives, they have no bleeding problems, they have very prolonged aPTTs. So prolongation of the aPTT is just a signal that the drug is working on a kallikrein at the higher end of the range. So there's even more of a therapeutic window if you look at the prothrombin time and that data is on our website.

Okay. And then in designing this serine protease for inhibiting kallikrein, you do not want or you want to have a minimal effect on Factor VIIa, is that right?

That's right. And we're extremely confident that the second generation series will solve that particular ding, it won't affect the tissue factor/factor VIIa. That was one of the criteria we set in the discovery program. So I think your questions allude to the difficulty of creating specificity in serine protease inhibitors. So any good medicinal chemist can make you a serine protease inhibitor and the problem in the field has always been creating enough specificity at the same time as retaining potency. So we've already succeeded in a very spectacular way with 4161 and getting rid of tissue factor/factor VIIa is the icing on the cake with regard to specificity. So that, I think, we're very confident in.

Okay. And then sort of my last question here, sort of a clear my mind here is that sort of pertains to variability. But the question I have is looking at the preclinical data, do you need to inhibit bradykinin 100% in patients? And even if there's variability, if you're inhibiting at 40% or 60%, isn't there enough significant relief that you can get away with that variability?

I think that's an excellent question and you're almost certainly right. I don't know exactly where the point estimate lies, maybe 40% to 60% is even more than you need. So I think, in the way these assays are set up, they don't really adequately reflect the slow pace of the onset of an HAE attack and the activation of kallikrein on the vascular endothelium. So we're currently looking into developing another assay to benchmark the results in the simple assay that we have that relies on endothelial cells as the surface to start off contact activation, which is much more reflective of what's going on in the real clinical condition. So I can't predict, with any accuracy, what those assays will show until we've got the results. But I think it's a safe bet that the degree of suppression of bradykinin production in that assay, or I should say the extent of bradykinin production suppression in that assay will likely require much lower concentrations of the drug compared to these massive stimulus assays to staph aureus or ellagic acid.

That's another reason why this pilot Phase II study is really important too, right? Because there, we want to get HAE patients that have a high frequency of attacks and test 4161, assuming that we're successful in the Phase I test 4161, to see what effect it has on preventing attacks. So that will be -- that's a pretty fast study because it's small numbers of patients. And it will really be proof of concept for the drug.

So just one last point, just to drive home your comment. And that is that the assay that I've been talking about that has kallikrein inhibition IC 50s, we have a slide on the website, that's done in the presence of perfectly normal quantities of the equivalent of Cinryze. In other words, normal plasma has normal amounts of C1 inhibitor in it at the start of the assay. So even more than the therapeutic dose of Cinryze, can't over -- in that assay, can't overcome the stimulus with ellagic acid. So it's really a worst case scenario IC 50.

[Operator Instructions] Our next question comes from Steve Byrne from Bank of America.

Bill, to what do you attribute the results with 5191 that were non-efficacious in chimps, but based on dosing, that was efficacious in rats? How do you attribute the differences there? And I guess, moreover, does it affect your reliance on the rat data that you have so far in 4161 and 4430?

Let me take each of those 3 projects one at a time. So I think with regard to Hepatitis C, a problem in the field is that the only animal efficacy model that exists is in chimpanzees. So as you can imagine, it's neither desirable nor practical to routinely use chimpanzees to look at dose response and the like as a standard preclinical model. So generally speaking, it hasn't been done and it's reserved for particular circumstances such as the one we were in. So I think that, in general, of course, you would much prefer to have an animal preclinical disease model to test your exposure response relationships. So the problem there we had was we didn't have that data, we had safety in rats and there's a limit to dosing this drug in a potential clinical trial in HCV based on the rat safety data. So we tested the doses that would give the same exposures and we accurately calculated that. We confirmed that with PK in chimps. And unfortunately, those exposures didn't work out. So I think that's a pretty relatively unique case of just major difficulties in access and use of the relevant animal model in preclinical development. So of course, without in vivo efficacy data, your modeling isn't going to be as accurate. With regard to 4430, we're in a completely different position, like chalk and cheese difference. So here, we've got spectacularly good efficacy in a preclinical model. And in infectious disease in general, preclinical models are much more predictive of clinical efficacy results. And indeed, for viruses like Marburg virus and Ebola virus, you can't do clinical trials, and the development pathway relies completely on animal rule efficacy. So there will never be an efficacy study done with 4430 in those viruses for obvious reasons. So there, we're on extremely solid grounds in trusting the exposures and the dosing that would give rise to efficacy in animals. And the last example was the HAE program. We haven't had access to C1 inhibitor knockout mice. We're still looking into that, and we might be able to gain access just to see what that looks like. It's still a bit difficult extrapolating exposure response in knockout mice to the real clinical HAE disease. It would be of interest. But on the other hand, we know exactly what the target is and we know how much 4161 completely inhibits that target in human plasma in very good assays. And on top of that, there's the aPTT assay. So I think that situation is I would class as intermediate between the 5191 and the 4430 in terms of how much preclinical confidence have we got that we're going to get the exposures we need. Or that the -- or in estimating the exposures that would help the disease. As I said, we're still working on making the supporting assays for the HAE program more lifelike, more realistic. And if that all works out, then the exposures that we need aren't going to go up. If anything, they're going to go down. Does that help answer your question?

And then you mentioned earlier -- yes, that's helpful. You mentioned earlier in your discussion of 4430 about the mechanism of action. Is it likely that this antiviral would have efficacy on viruses much broader than just these hyper-virulent ones that you're targeting?

So the screening results were in the presentation at the Antivirals Congress, so there are a range of viruses, I think, that our focus -- so the general answer to your question is yes. But I want to emphasize that our focus for this program is as a fast development path, animal rule, medical countermeasure with the U.S. government or standards various agencies as the #1 customer.

So in the short term, that's a smart strategy because that's what brings value into the company the fastest is a stockpiling order. In the long term, there might be broader utility that's more attractive in other places that we may want to explore. So yes, the answer is yes.

And Jon, if you could just talk for a moment about any -- about the interest level you're getting from prospective partners for ulodesine?

Yes, I mean, we're still searching for partners. We're having some discussions but our goal was to have a partner in place at the end of last year and that's not the case, obviously. So it's been more of a challenge than we expected. We're not going to move the program forward without the funding from a partner. And we've got a Phase-III-ready asset that we think is attractive. But we've got to find someone who sees it that way and we'll continue to explore that. But there's nothing around the corner.

Our next question comes from Christian Glennie from Edison Investment Research.

Can you just clarify the strategy for 4161? Does that go ahead as a candidate in its own right or do you envisage the second generation sort of eventually replacing that and becoming the key candidate in HAE?

So it all depends on what we see with 4161. But as we said before, we think the hurdle's relatively low to be a benefit to patients and caregivers compared to the current treatments, the once-a-week IV infusion. So if it's multiple times a day, you get a titrate to affect between patients, that's not ideal, but we believe that it could be better than what's currently in the market, and therefore, garner market share and worth pursuing. The next generation we want as a once-a-day, potent, orally bioavailable drug that's got much better PK. And yes, I think, eventually, we would replace 4161 with the second generation.

Okay. And then just following up on the last point about ulodesine. I mean, is there any scenario in which that comes into play more? I mean, is there any sort of triggers or anything that might happen that might change the sort of current situation?

There's nothing that we'll be doing in terms of more data another study, that kind of thing. I guess the competitive landscape could change, which might trigger something. But at this point, we're just continuing to look to see who would be interested in funding this Phase III program.

Our next question comes from Ed Arce from MLV & Co. Ed Arce - MLV & Co LLC, Research Division: I apologize, for some reason, my phone went mute for a couple of minutes. So if this question has already been asked, I apologize. But wondering about 4161, I know that you still have your plan on target to enter the clinic by the end of the first quarter, in the next few weeks here. And if you could elaborate on what activities, if any, you've done in regards to the clinical hold and applying GMP?

Certainly. So yes, you are correct. We're about to enter the clinic soon. And we've completely addressed the GMP comments that led to the clinical hold. The protocol and the toxicology program and all of the other details were fine. And the issue here was we were intending to compound the final drug product at the Phase I site. One could speculate on why this became an issue but, as you might recall, there was a New England -- there was a problem with a company in New England that led to public health issues with regard to a drug that was compounded and sent across state lines. So that may or may not have affected us. In any case, we've gone to Europe for our Phase I study, to a very good site that does GMP drug manufacturing on-site, drug product manufacturing, so that solved that issue. Ed Arce - MLV & Co LLC, Research Division: Okay. And then looking ahead a little bit, assuming that, that first trial in healthy volunteers goes well and you begin a Phase II sometime later this year in HAE patients, I noticed you mentioned that you would be focusing on high-frequency attacks as a target population for the proof of concept study. Just wondering if you could elaborate on what your thoughts are?

Sure. So this is one of those situations in medicine and in clinical trials where you don't need very many patients with an illness to show an effect of a drug, if you've got a good drug. So if the Phase I data interpretation is we have good PK and good PD, then absolutely, we will want to put it into a small number of HAE patients who have very frequent attacks. And if we can show an effect, we'll see it very quickly. So that can be a small and relatively short study which would act as a proof of concept study. And in addition to giving us more confidence to invest in that program, it would also help to select doses for a full Phase II study, and -- for full development of the drug, in other words. So it would play a very important role in developing the drug and it will be a really neat study to do. Ed Arce - MLV & Co LLC, Research Division: Okay. And then one more question on 4161, I guess, and on the second-generation compound. Given the improvements that you hope to see with that compound, can you see a scenario in the future where you may either sideline or discontinue development of 4161 in favor of the second-gen compound?

Yes. I think the answer is yes. I could see it actually getting to market and then, if we see a much improved second generation that makes it to market as well, I could see replacing it in the marketplace. So either the timeline condenses to where they're very close together and it no longer makes sense to pursue 4161, or they both make it to market and one's massively better, and so we replace the second -- or replace 4161 with the second generation. Ed Arce - MLV & Co LLC, Research Division: Okay. And then one last question on sort of timelines of milestones over the next 12 to 15 months here. Do you anticipate any other outside funding, I guess, other than the ongoing RAPIACTA royalties?

Well, like I said before, we're pursuing government funding for 4430 and we're hopeful that we'll start to receive some of that this year. And then there's a number of other alternatives that we always have at our disposal to bring in capital into the company, that will -- we constantly explore and evaluate.

And I'm showing no one else in queue at this time.

Great. Well, then, as always, we appreciate your interest in BioCryst and have a great day.

Ladies and gentlemen, thank you for participating in today's conference. This concludes our program. You may all disconnect and have a wonderful day.