BioCryst Pharmaceuticals, Inc. (BCRX) Q4 2013 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen and welcome to the BioCryst Fourth Quarter 2013 Conference Call. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions]. As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference, Robert Bennett, Vice President of Investor Relations and Operations. You may begin.

Good morning and welcome to BioCryst fourth quarter and 2013 corporate update financial results conference call. Today’s press release and accompanying slides for this call are available on our website at www.biocryst.com. At this point, all participants are in a listen-only mode. Later we will open up the call for your questions and instructions for Q&A will be provided at that time. Joining me on the call today are Jon Stonehouse, Chief Executive Officer of BioCryst; Dr. Bill Sheridan, our Chief Medical Officer; and Tom Staab, Chief Financial Officer. Before we begin, I will read a formal statement as 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, 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’s 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. Throughout 2013, our team successfully executed a strategy to advance our core assets while managing our operations with financial discipline. We headed 2013 with a series of positive events that represent real advancement in each of our core programs. Initiation of enrollment in the BCX4161 Phase 2a trial, selection of two optimized second generation kallikrein inhibitors with superior PK properties, the filing of our first NDA as well as the release of Additional NIAID Funding for further BCX4430 development. We begin this year building on a solid foundation with momentum to make even bigger strides with our programs. Our ultimate goal in HAE is to become a market leader in the prevention of attacks by bringing to market a drug that can be given as one pill, once a day to prevent all HAE attacks. 4161 does not have the profile to achieve this goal. But it could be a huge improvement over currently marketed therapies. We plan to follow up 4161 with an improved second generation kallikrein inhibitor that we believe has the potential to prevent all HAE attacks. Since our third quarter call, we have advanced enrolment in the 4161 proof of concept OPuS-1 clinical trial to the point where we are confident that we will report top line results by the end of the second quarter. The main goal of this pilot study is to understand the correlation between 4161 drug exposure in HAE patients and the reduction in attack frequency. Anything beyond even a modest impact on attacks increases the attractiveness of 4161 as an HAE therapy. In December, we advanced two optimized plasma kallikrein inhibitors into pre-clinical development. Compared to 4161, these two compounds have similar potency and greatly improved selectivity and oral bio availability. The oral absorption of both second generation compounds surpasses 25% and plasma concentrations of each optimized compound exceeded the target EC80 concentration at 24 hours after a single oral dose. To increase our likelihood of success, we plan to move both compounds forward in the pre-clinical toxicology studies with the goals of moving at least one in the phase one by the end of the first half of 2015. Yesterday we announced that the FDA accepted for review our new drug application for peramivir. The NDA was assigned a standard review time resulting in a PDUFA action date of December 23, 2014. The FDA also communicated that it does not currently plan to hold an advisory committee review of the NDA. If approved, this would be the first BioCryst discovered drug commercialized in the U.S. We are preparing to make peramivir available in the U.S. during the 2014-’15 flu season. Any revenue generated from peramivir sales through stock piling or seasonal demand will help fund our HAE program. We continue to move our broad spectrum antiviral BCX4430 through pre-clinical development under the NIAID contract that was awarded last September. The goals under this contract are to advance both the intravenous and the intramuscular formulations of 4430 through Phase 1. While this is an early program it's important to remember that we plan to pursue FDA approval via the Animal Rule. This has the potential to shorten the overall development timeline and if we are successful, could result in 4430 sales through government stock filing around the time we expect to launch our first oral Kallikrein Inhibitor. Finally, the next important milestone for the program is the publication of a scientific manuscript detailing the additional research on the antiviral activity of 4430 against Filovirus diseases. Following the completion of our second generation oral Kallikrein Inhibitory discovery program our team in Birmingham has the capacity to begin work on new discovery effort. We have agreed with our board to follow a strategy of discovering small molecules for rare diseases and have chosen our initial targets. It will be sometime before our discovered projects result in clinical programs. These projects are important for the long-term future of the company, the serve to refill our pipeline as our current programs progress through development and commercialization. I’ll now turn it over to our CFO Thomas Staab who will give an update on our financial results.

Thank you John and good morning everyone. Today I will summarize our fourth quarter and full year 2013 financial results and I’ll also share our 2014 guidance. At the end of 2012, we established a guiding principle for our operations and then followed this principles throughout 2013. This principle is to focus our cash resources on our core programs to advance them to value creating milestones and to eliminate non-critical spending. We will continue to follow this principle throughout 2014. As John mentioned in his remarks we were able to make substantial advancement in each of our programs yet we were able to significantly decrease our operating cash usage. We take great pride in having been able to aggressively advance our programs to important value creating milestones yet also having been able to maintain the financial disciplines remain in the low end of our 2013 operating expense and operating cash guidance ranges. We are pleased to have ended 2013 with over $40 million in cash and investments which represent an increase from our cash balance at December 31, 2012. On Slide 7, you will note that revenue for the fourth quarter of 2013 increased a 158% to $10.6 million as compared to $4.1 million in 2012. This change was due to an increase in collaboration revenue from BARDA/HHS associated with activities, supporting the peramivir NDA filing. With the filing of the NDA we have completed substantially all of the development activities contemplated under the BARDA/HHS contract. Accordingly we expect future revenue under this contract to be much lower than in 2013. Furthermore at the aggregate revenue level, we expect our total 2014 revenue to decrease from the level in 2013. Fourth quarter 2013 R&D expenses were $15.6 million, up 41% from $11.1 million in the fourth quarter of 2012. This increase was primarily associated with higher development cost associated with the peramivir NDA filing and the progressing of our HAE program but was partially offset by lower development – development costs associated with the ulodesine and BCX5191 programs. Similar to the revenue discussion, the fourth quarter represented a high level of peramivir R&D activity, leading up to the December filing of our NDA. This activity increased fourth quarter 2013 R&D spend and also increased the corresponding revenue we receive under our BARDA/HHS contract. Fourth quarter 2013 G&A costs were $1.3 million, a decrease of 34% from the $1.9 million incurred in the fourth quarter of 2012. This decrease is primarily due to a focus on reducing non-project related costs and the continued realization of cost containment measures including those associate with the company’s 2012 corporate restructuring. Moving below the operating line, we incurred $1.2 million of interest expense in the fourth quarter of both 2013 and 2012. We recorded a mark-to-market hedge related gain of approximately $2.1 million in the fourth quarter of 2013 as compared to a gain of $782,000 in the fourth quarter of 2012, both amounts related to the fluctuation and exchange rate of the Japanese Yen relative to the U.S. dollar. Interest expenses and the hedge mark-to-market adjustments relate to our non-recourse notes in related hedge arrangement enacted in conjunction with our RAPIACTA royalty monetization. Turning now to the bottom line, please note we successfully decreased our net loss by 51% to $5.4 million or $0.09 per share in the fourth quarter of 2013 as compared to a $11.1 million loss or $0.22 per share incurred in the fourth quarter of 2012. Our full year financial results are summarized on Slide 8. Revenue for the 12 months ended December 31, 2013 decreased to $17.3 million as compared to $26.3 million in 2012. The decrease was primarily due to $7.8 million of previously deferred forodesine-related revenue recognized in the first quarter of 2012. This revenue resulted from the restructuring of our license agreement with Mundipharma. 2013 R&D expense were $42.7 million down 17% from $51.5 million in 2012. The decrease from 2012 levels resulted from lower development cost associated with the termination of our BCX5191 program in early 2013, lower spending on our ulodesine program as we suspended development of that drug candidate as well as a reduction of R&D infrastructure as compared to 2012. This decrease was partially offset by higher BCX4161 and BCX4430 development cost incurred in 2013. R&D expenses in 2013 also included a onetime $5 million non-cash write off of a differed collaboration cost asset associated with our ulodesine program and our PNP licensing agreement. Furthermore, 2012 period also included the recognition of $1.9 million of previously deferred forodesine expenses associated with the restructuring of the Mundipharma agreement. 2013 general and administrative cost decreased 24% to $5.2 million from $6.8 million in 2012. Once again, this decrease resulted from the focus on our guiding principle in the cost containment measures and the corporate restructuring mentioned previously. Dropping below the operating line, we incurred $4.8 million of interest expense in 2013 and $4.7 million in 2012 and recorded a market-to-market hedge gain of $5.3 million 2013 as compared to a loss of $749,000 in 2012. In regards to the bottom line, we were pleased that we successfully decreased our 2013 net loss by 23% to $30.1 million or $0.55 per share as compared to a $39.1 million loss or $0.79 per share incurred in fiscal 2012. On Slide 9, we have summarized our actual performance against our 2013 financial guidance and also have provided our 2014 outlook. At December 31, 2012, we had cash and investments of $40.8 million which reflects a successful public offering we completed in August that netted $18.5 million. For 2013, our operating cash usage of $22.8 million was at the low end of our $22 million to $26 million guidance range and represented a 38% reduction from fiscal 2012. 2013 operating expense of $48 million was also at the low end of our 2013 guidance range of $44 million to $55 million. Looking ahead to 2014, we anticipate operating cash utilization to be in the range of $35 million to $43 million and operating expenses to be between $48 million and $59 million. Drilling down at this onto tail, we expect to see an increase in R&D expenses and this increased correspond a higher operating expenses. The increase in R&D expenses is associated with a greater level of R&D activity in our HAE portfolio as compared to 2013 and results from the expectation of later stage and more expensive development of BCX4161 and more substantial preclinical development on our two second generation molecules in order to facilitate IND filings in the first half of 2015. The more extensive activity in our HAE portfolio is partially offset by the expected reduction in prime of you R&D activity in 2014. Additionally, as noted in our press release, we have specifically excluded equity base compensation expense from our operating expense guidance due to the difficulty in accurately projecting this experience. The change in our stock price over the last 12 months expected future volatility as well as the potential vesting of our performance based stock options make this non-cash expense difficult to predict. In closing, we are very pleased with the financial discipline and operational accomplishments, we achieved 2013 and look forward to continuing our success in 2014.

Thanks, Tom. We started this year in a much strong position compared to last year. And I believe it’s in large part due to the great team of people and high quality of assets we have at BioCryst. Over the next 18 months we have the opportunity to take the company to an even better place with the potential to be in a late stage development program like 4161 in clinical trials with our second generation HAE molecules, in the clinic with our broad spectrum antiviral program, commercializing parameters and discovering and optimizing new small molecule oral drug candidates for rare disease targets. We will remain disciplined and focused on the programs at hand and I think over time you will begin to see a BioCryst can develop into a leading rare disease, small molecule company. That concludes our prepared remarks and we will now open it up to questions.

[Operator Instructions] Our first question from the line of Charles Duncan of Piper Jaffray, your line is now open. Charles Duncan – Piper Jaffray: So, Jon, I had a question and maybe built from what is philosophical about this, but with regard to 4161 and more broadly the program for the first phase two day of coming down. I’m wondering if you could provide little bit more color on your prepared regarding a clinical factor you would like to see, is this all about exposure and a tax frequency or is it some quantitative reduction in a tax that you are looking for to and this and that if it’s later what would you see has being necessary?

Hi Charles, thanks for the question. At this stage of development what we currently have in hand is seven days of exposure in normal subjects, little bit a lot Phase1 study and very good relationship between exposure and invitro inhibition of Kallikrein that we saw and discussed in previous calls. So, the current study needs to do on that foundation and the first thing that I'd like to see is a relationship between exposure and outcome in reduction and in a tax frequencies. So, even if see that small subset of patients who drive well, then that counts as a success for the program and establishes the scientific foundation for not just 4161 but also for second gen compounds. So, when we move on to and ask the question how much of the reduction in the tax frequency do we need to see to support further development of 4161, I think that we'll have to evaluate the data. Obviously the more the better but for example if it’s turns out that patients with hereditary angioedema absorb the drug less than the normal subjects, that a fraction of them observe it very well and do very well with the reduction in the tax. Then that could still be a great drug. And one could imagine doing a trail of therapy with marketed drug and those who do well stay on it and they that would be a great advancement within our compound in this disease. So an increased levels affect, [lev study with Cinryze] showed a 50% reduction in tax frequency if we see something similar with this drug that would be astoundingly good to see that with our agent, and obviously better than that would be fabulous. So, I think that’s the way we’re thinking about it. The other important element not to forget is that this is a four week study and HAE patients and it give us very valuable information on safety and tolerability that will set ourselves to the next day. Charles Duncan – Piper Jaffray: Let me ask a follow-on with regards to since you brought up that other comparisons study or a study due to comparison with it seems like there is always some hazard and comparing cross study, when you look at the types of patients that you are enrolling in the current phase II I believe, you are looking at a minimum of four per month tax, whereas others have looked at an average of 4 per month or so, are there potential compounding variables with regard to call it a severity of disease or attack frequency and ability to draw conclusions or comparisons.

Yeah, I think you are bringing up true as I mean in clinical research which is, it's always difficult to do cross study comparisons, because this study has done at different times, different location, background therapies could be different and it could be factors that you don’t understand. So, the internal validity is fine because they're randomizing the sequence and each patient ended on the study gets both active drug and placebo in four way blocks. So, the internal validity is fine. I think that we'll have to see what are the demographics looks like and what the tax frequency actually is on the study. And you are correct in the way you described our eligibility criteria. It could be that the actual attack frequency is on average of one on one or it could be more or less than that on the placebo period. So, I think that no matter what it is, it is difficult to make cross study and comparisons, they are valid. Charles Duncan – Piper Jaffray: And then one more and then I'll get back in the queue with regard to strategy, Jon your last statement in your prepared remarks in terms of the coming company absolutely focused on rare diseases I guess that seems like a good thing to me, in terms of the business model but I am wondering what you see is being differentiated in your strategy and what gives you some competitive advantage perhaps going forward and executing on that.

Yeah I think the first thing is mostly companies you see in the space are companies that have biologics and its replacement typically rather than an enzyme inhibitor so when we started looking at targets, we were pleased to find out, they were in abundance, they were somewhere in enzyme block or would actually work in a rare disease. So I would categorize what we found and we’re not going to go into detail on what the targets are until we get into the clinic. But I can broadly describe them in terms of two categories one is disease where there is already a biologic and so the target is validated, the clinical path is already outlined, but the biologic is given in an IB form and an oral could be a revolutionary change for patients in that disease. The second bucket is again a validated target, but there isn’t anything and so we have taken a little bit more risk on a clinical and regulatory front, but we’re confident that we can get there because we’re looking at diseases where they are horrific. And patients can die and so we think that the regulators will be a bit more flexible or able to show data that on these targets with our enzyme inhibitors that has a potential to make a difference for patients. So that’s broadly what we’re thinking about them and working at. Charles Duncan – Piper Jaffray: Thanks for taking my question.

You are welcome. Thank you Charles.

Thank you. Our next question comes from the line of Heather Behanna of JMP Securities. Your line is now open. Heather Behanna – JMP Securities: Hi. Thanks for taking my question and congrats on the progress.

Thank you. Heather Behanna – JMP Securities: Welcome. I just have a couple of questions. First is more about Peramivir. I was just curious if you guys could give some color sort of historically with approval of medications and then sort of the timing of staff paneling that comes after approval. If you could just give us a little bit of color of what we might think about historically, we're trying to think about what might happen when Peramivir stop piling.

I’m not sure that Peramivir, fits into any kind of historical comparison that you can do given that the unusual path that we’ve taken, but, here is -- I can tell you what we know and that is Board of Health clearly said to us that in order to have a procurement conversation the products needs to be licensed. And so approval needs to come first and we've always said that, we've always known that. So, I think that’s the first step. How quickly that happens after very difficult for me to predict obviously, we will pursue it as aggressively as possible, but I don’t think you should expect any kind of real meaningful discussions to occur until after we get approval. And then, from an amount perspective, it’s an IV neuraminidase inhibitor. We know the amounts that they stock pile for Tamiflu and those are in the millions sort of courses therapy. We don’t expect that and this will be more of a niche spot for their portfolio. We know that back in 2009 when we had just started a Phase 3 study they ordered 10,000 courses and paid $22.5 million. We expect that slightly to be above that. But beyond that I can't really tell you a whole lot. Heather Behanna – JMP Securities: Okay, that’s helpful. And then I just had a couple of questions on the Phase 2a study. Concerning that exposure is such an important outcome, if you can just tell us at what point or how often during the study you’re looking at PK patients and if you’re mostly looking for trough values or just sort of give us a little bit more information on that.

The OPuS-1 Phase 2a study does have PK sampling and clearly this is done as an outpatient study. It’s in contrast to Phase 1 with normal subjects. No volunteers are admitted to a Phase 1here and stayed there for seven days. So the degree of detail you can get in PK sampling if the first inhibitor in Phase 1 is much richer than it is in an outpatient setting. We will attempt to collect more than just trough PK values and we’ll see what we get at the end of the day and how many samples we can put into PK parameter calculations. I think what we’re looking for here is how similar or dissimilar is the exposure in HAE patients compared to the normal subjects in the Phase 1. So I think that we should have a good handle on that with the data we’re collecting. Heather Behanna – JMP Securities: Okay, great. And then just one more question about that study; if someone does have an attack and needs an acute therapy to help or they’ve been – are they still on the study, do they have to discontinue from the study? What are the parameters?

So, great question. As both as a physician and as a person, everybody would want people who would get an attack hereditary angioedema to get therapy for that attack. And that’s exactly what happens on this study. So whatever that patient uses, whether it’s [indiscernible] or synrise to treat an acute attack, they’re able to do that. They will stay on the study and indeed that’s exactly the way previous prophylaxis studies have been conducted and that’s the standard. Heather Behanna – JMP Securities: Fantastic, thank you very much.

Thanks.

Thank you. Our next question comes from the line of Serge Belanger of Needham & Company. Your line is now open. Serge Belanger – Needham & Company: Hi, good morning guys. I have a couple of questions on 4161 and peramivir. I guess I’ll start with 4161. You mentioned you’re presenting a couple of posters at AAAAI next week, just wanted to know what that you’ll be presenting. And now that you’ve affirmed your timeline for expected results on the Phase 2a study, just wanted to enough data on where you are with the toxicology annual data as you look for your potential for Phase 2b study in the second half of the year.

Okay. Thanks for the question. So with regard to the process that we presented on Saturday at AAAAI, San Diego and we have a poster describing in a bit more detail about the Phase 1 study and that we also a poster describing in a bit more detail about kallikrein inhibition assay. So the actual data posters is embargoed until the presentation. And once they’re presented, then the process will be available on our website. With regard to the toxicology question, we’re on track to having the results of our third annual toxicology program be available in time to support a 12 week Phase 2b study to be started in the last half of this year. So that’s proceeding as expected. Serge Belanger – Needham & Company: And then on peramivir, now that you have a PK for that, I guess beyond stock piling potential orders, there is a potential here for seasonal sales given the label of – that you’re proposing – just wanted to know if you started partnership discussions or what your plans are for the seasonal sales.

Yeah, our plan, Serge, is to make the drug available for seasonal sales. So we’re doing all the stuff that is associated to that. We conducted market research earlier, actually last year, so we’ve got a pretty good idea of where we think it could be used in the emergency room possibly and urgent care. And then we’re doing all the planning activities to make sure that the drug is available shortly after approval and so a plan in place to manufacture drug, package, you know, all of that stuff is in the work. And then there’s a whole bunch of other things around distribution and the life that we’re in the process of planning and we’ll have in place, so that when people need the drug, they can get it.

Thank you. Our next question comes from the line of Brian Abrahams from Wells Fargo. Your line is now open. Shin Kang – Wells Fargo: Hi, guys. Thanks for taking my question. This is Shin calling in for Brian. Maybe a follow up to Duncan’s question; I was curious if you’re embarking on a new discovery program or whether you’re leveraging or just in strengthen, maybe nucs or kinases or proteases. And just to be clear, when you say validated targets, are you referring to the target protein itself or the pathway where that protein plays a role?

At this time, we’re not going to get into details of which types we’ve selected. Clearly, our discovery strength is in structure based direct design with small molecule enzyme inhibitors. So things like ion channels, you can throw out for example or protein-protein interactions across a large surface area, they’re not suitable for that technology. There are categories of – and you mentioned some of them. They are very good as potential classes of targets for small molecule enzyme inhibitors and for structure-based drug design. With regard to validation, I think that it’s a widely used term and actually if you could just want a confusing answer on the definition of what you mean by target validations, what we mean is a very deep and strong body of evidence that supports the pathophysiology and pathway and what we’re looking for here is pathways that are relatively simple that don’t have a lot of branching and redundancy and where there’s excellent evidence that has accumulated around not just molecular evidence, but in vitro cellular tissue culture, animal model and human genetics as a – and if it’s available obviously therapeutic intervention, so more the merrier on that. But we have a certain set of criteria and we have high standards on selecting that target with regard to the body of evidence and the consistency in debt with that evidence. Shin Kang – Wells Fargo: Maybe a follow -- with your recent investments and focus on kallikrein and with your rich chemical library of potential protease inhibitors, I was wondering if you found any targets or compounds in the complement pathway that might overlap?

So obviously if there are targets where our expertise and working on other scaffolds or other enzyme inhibitors could apply where we could go maybe a little bit faster, that makes it even more attractive. So the answer is yes. If we see spots where we can leverage existing knowledge, we will certainly pursue those kinds of – as long as it fits all the other criteria that builds in.

Thank you. Our next question comes from the line of Mario Corso of Mizuho Securities. Your line is now open. Mario Corso – Mizuho Securities: Hi, good morning. Thanks for taking my questions. I was wondering if you would talk a little bit about as we think about post Phase 2a on 4161, what kind of work you have either done or planning to optimize the formulation and those things scheduled. And then secondarily as we think about mark potential – if there is research or flaws about what effect having in oral treatment could have on the size of the patient population, you know, of 5000 or so patients on therapy now, where do you think that number can get over time? Thank you.

I’ll take the first part of it. Excellent question. The main goals of the formulation development program 4161 right now to increase the dose in an individual capsule to move from hard gel which is just a temporary Phase 1 type of delivery vehicle to a soft gel and to move towards commercially acceptable shelf life in the stability program. So the formulation program is going well, at some point or another we’ll need to do the relevant studies to show that what are the new formulation in the soft gel that we come up with and what sort of PK we get with that compared to the Phase 1 formation, all of that is pretty standard sort of you know C&C development work.

So, Mario on the market question that they asked, let’s start with 4161 you know assuming that is going to remain a three times a day drug, waiting there is a decent amount of patients out there that just having a version to needle and three times a day is going to be very reasonable for them to move to and so I would say – you know and the better the efficacy and safety profile then more people that are going to be on it. So I would say you know I’d be really pleased with 4161 achieving that similar to Cinryze, that’s my perspective. Then give them the efficacy better even more, if with the second gen remember what I said that goal is one pill once-a-day wipeout attacks. My view there is who would be on that if we are successful, right on you and you know our review is that’s equivalent to a cure for the disease and so for patience that’s a major step forward and so the market share there is much more significant. Mario Corso – Mizuho Securities: One just little quick follow-up, D think that’s a reasonable chance that the formulation administration, can that improve PK?

No, I think that molecular characteristics are what they are and I’m expecting that formation development will improve exposure and I don’t expecting a reasonable chance of increasing the dollars so for example we might be able to go from 100 milligram capsule format to year 200 milligram capsule format if that’s the case and that would be quite significant and moving from hard gel to soft gel is a necessity so we have to do that, but I’m not thinking on an improvement in exposure.

Thank you. Our next question comes from Ed Arce with Roth Capital Partners, your line is now open. Ed Arce – Roth Capital Partners: Hi everyone, thanks for taking my questions. Actually a lot of them have already been asked but I do have a couple more which is probably more for Bill. As I look at Slide 5 on the deck and I know that some of this has been revealed before they just want to ask if you could walk us through some of the assay and around PK data specifically the component that give you confidence in achieving once daily oral dosing for the next gen.

Sure, yeah now I think you know the second generation programs are very exciting albeit early and very happy that we’ve got a sweated compound that we’ve been enabled from our two main preclinical development and as we went through the discovery across this in our original goal was you not to come up with much better bioavailable compounds of similar potency, similar or better specificity. As we went through that process we got the results of the phase 1 with 4161 and we are actually pleasantly surprised with degree of exposure we got with that compound so that we raised the bar and while we raise the bar was to go back to our comparison Cinryze that we’ve talked about before and how much inhibition of kallikre in future assays associated with accessible prophylactic therapy and you know it’s about the center of inhibition so if we can maintain 30% inhibition around the clock with the once-a-day of new Indiscernible] and that would be a good result. So that’s the HAE in that assay, the EC is four times easy, 50 for a typical small molecule compound that is redesigned here so we set about our floor, what we really want to see here is that drugs that are above the ICEID so more than four times EC, 24 hours after we give a dose to rats and we you know had done that experiment previously with 4161, the results were on Slide 5 and we’ve only got 1.5 or 50% in career increase about DC 50 that you know they – The result with the second gen is much better and way more than fivefold those components. So we exceed the ICEID, so that’s an important outcome that having better probability with those compounds. We met all the other goals that I mentioned so the potency is similar to 4161 which is a highly positioned compound to some of the animal, the special few cities actually better to improved, so with improved specificity, not that’s really initially clinically with 4161 because you know we already have hundreds to thousand ton from and we improve that and the effect in improving the bioavailability is to have much more dunk [ph] and after a dose and that gives us confidence to this program and obviously when they do they knew when they move from rats to primates to humans but I think that given external vulnerability you know pretty optimistic that we won't be able to see single opportunity for once a day that are using in people. Ed Arce – Roth Capital Partners: Great, thank you. The only another question I guess I have is around your 2014 guidance, I just want to get more detail around the components of your OpEx, I know you said earlier in your – I guess one of the questions or comments that you expect the R&D spend for 2014 to be higher than past year, how do you see the SG&A spend and where – what are some of the ranges that you think are reasonable to assume for stock base compensation, thanks.

Thanks for the question, so you know in regards to op expenses the primarily – the predominant increase there is in R&D expenses, we’ve taken great prep over the last two years to reduce our G&A expenses to levels that they’re currently at, so I wouldn’t expect us to you know flip around and start increasing those significantly you know we do we will have slight increases just to make peramivir available but it's really tails in comparison to the R&D expense and then you look at R&D expenses I said in my prepared remarks with the expectation of a Phase 2B trial in 4161 that’s longer in duration than 28 days, that expense and with lot more patients or with more patients that expense goes way up and then you’re also take into account that we’ve been successful with two second generation compounds and we want to see both of those to get to high indeed in early 2015 so the line share of all that work will be in 2014 and it will be effectively doubled because there is two compounds. In regards to your last question which his stock comp expense or equity based compensation, the reason we excluded that from our guidance is that it's based on some parameters that I just cannot predict. You know you can look at our stock performance or stock proceeding just over a dollar in January 1, 12 and we’re over $12, and so although that volatility, the actual stock price in the fact that we have some performance based out there with success on your programs, we’re going to invest in stock options that’s an immediate hit, I just cannot predict and give you a range for 13 or the stock comp expense for 2013 was roughly $4.5 million so that sort of gives you know probably a floor.

Thank you, our next question comes from Rahul Jasuja, Noble Capital Markets, your line is open. Rahul Jasuja – Noble Capital Markets: Hi guys, just a couple of questions. Let me start with 4161, is this is probably for you and looking at the development of 4161 and these follow the second generation in the glitters, the graphs is showing that there is a huge distinction in the preclinical or the pre-clinic you know the second generation is being dramatically

Things that indicate otherwise, but that's the plan. Rahul Jasuja – Noble Capital Markets: Okay. And then, And then I want to also ask you about the costs of bringing two to market and the concept of, and I want to make sure I'm getting this right, is the thinking internally that the second generation once a day would wipe out complete attacks just because of the promise shown in the early stage studies and preclinical studies, the 4161 because of its nature, may be a potential use to decrease the number of injections used, the Cinryze and so on, so decrease the number of injections in high frequent attack cases, and if that's the case, is it streamlined to run a trial expecting to define where those patients who have a higher frequency and looking to decrease injection use?

Yeah. That's not the plan. I think we believe at least from what we see thus far that 4161 could be an attractive marketed product. And then, if we are successful in bringing one of the second gen forward into the market and it’s the way we described our goal one per ones a day like by the tax, I think people are going to move to them. All right, so that's really the strategy. Rahul Jasuja – Noble Capital Markets: Okay. And then, one final question on peramivir. Given the path it has taken, the historical path, and so there will be renewal of the NDA and now the noise should we expect the label out there that is different that allows it to be used in a broader population give the past data and the past experience?

I think you should expect a label pretty similar to the other neuraminidase inhibitor, that's the label that you should expect. Rahul Jasuja – Noble Capital Markets: Okay. Very good. Thank you.

Thank you. [Operator Instructions] Our next question comes from Tazeem Ahmad of Bank of America. Tazeem Ahmad – Bank of America Merrill Lynch: Hi, guys. Thanks for taking my question. Just down for 161. Is the three times per day dossing kind of setting stone at this point or do you think there is potential that you could do an immediate dose twice per day. And if so, would you be in a position to know that from the upcoming data or would you need advanced data in upcoming trail to do that.

Thanks for the question. So we'll understand the potential for that much better once the current study is finished an unbounded. So if there is a really outstanding benefit, that would give us pretty strong reason to test twice a day. If the benefit is very, very modest that would not be a stronger reason to test twice a day. I think that we would have to wait to see what that data teaches us. Tazeem Ahmad – Bank of America Merrill Lynch: So as long as I have you on the phone, just so I'm clear by what you're experiencing as benefit, are you defining the amount of decrease in breakthrough attacks, so let's say it is on par with Cinryze, would you consider that to be reason to pursue a twice per day, or would you want to see something much better than that?

So you are focusing on the right end point. I think the answer depends on the distribution of the data. So if the benefit is concentrated in a sub-group of patients to do extremely well for example, for whatever reason maybe they absorb the drug better for example. Then, we still might have the reason to test twice a day, if on the other hand it's more defused, I think that the impetus to test twice a day may not be strong. I think at the end of the day the regulatory negotiation potentially because at some point in the development program, there needs to be the appropriate data source schedule ranging experiment to make sure whatever dossing the patients. So I think that right now I want to keep my options open.

Thank. And I'm seeing no further questions at this time. I'd like to hand the call back over to our CEO Jon Stonehouse for any other remarks.

So I just want to say thank you again for your interest in BioCryst the next coming months should be very interesting with a number of milestones that we'll be approaching and we look forward to keeping you updated. Thank you very much. Have a good day.