Good day ladies and gentlemen, and thank you for standing by. Welcome to the BioCryst Pharmaceuticals' First Quarter 2017 Earnings Call. At this time, all participant lines are in a listen-only mode to prevent background noise. [Operator Instructions] We will have a question-and-answer session later, and the instructions will be given at that time. And as a reminder, this conference is being recorded. Now, I would like to welcome and turn the call to the Chief Financial Officer, Mr. Tom Staab. Please go ahead.

Thank you, Carmen. Good morning and welcome to BioCryst's first quarter 2017 corporate update and financial results conference call. Today's press release and accompanying slides are available on our Web site. Participating on the call with me today are Jon Stonehouse, Chief Executive Officer; and Dr. Bill Sheridan, Chief Medical Officer. Following our formal remarks we will answer your questions. Before we begin our remarks I want to direct your attention to Slide 2, which discusses our use of forward-looking statements and potential risk factors regarding in investment in BioCryst. As detailed on the slide, today's conference call will contain forward-looking statements, including those statements regarding future results, unaudited and forward-looking financial information, as well as the company's future performance and/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 these forward-looking statements. For additional information, including detailed discussion of risk factors, please refer to the company's documents filed with the Securities and Exchange Commission, which may be accessed on our Web site. I'd now like to turn the call over to Jon.

Thanks, Tom. Good morning, and thanks for joining us today. I am pleased to report a very productive first quarter for 2017, in which our programs continue to progress according to plan, and our financial position has strengthened since our last quarterly update. Let me start with BCX7353 and the APeX-1. The APeX-1 trial continues to recruit as planned, and we have now completed Part 1, fully enrolled Part 2, and are enrolling Part 3. As a result, we expect top line results from Part 2 this quarter, and results from the entire study, including Part 3 in the third quarter. The interim results from Part 1 were very encouraging; especially considering this was a small number of patients with frequent attacks treated over a relatively short period. We designed Part 1 of the trial to exceed the drug trough levels that we expect to be necessary to effectively manage the disease, and we succeeded in doing this with a daily dose of 350 milligrams. We look forward to seeing the results of Parts 2 and 3 of the trial which will study lower doses. Bill will provide an overview of what will be in the second interim analysis of APeX-1 shortly. We also recently announced a complementary program using a new oral liquid formulation of 7353 for the treatment of acute attacks in HAE. The rationale for pursuing this indication is simple. First, the market is large, currently over $500 million annually. Second, the PK profile of 7353 appears to be well-suited for an acute therapy. And lastly, the current therapies are injectable, and patients and physicians tell us an oral acute therapy will make a big difference in patients' lives. The first exploratory trial we plan to run in this setting is ZENITH-1, and it's planned to begin this summer. Bill will go into more detail on this in the rationale in a moment. To round out the update, let me review the status of the rest of our pipeline. We continue to make progress expanding the availability of RAPIVAB by gaining approval in Canada, in January, and filing for approval in Europe earlier this year. We have also recently filed a supplemental New Drug Application with the FDA to expand the treatment age for RAPIVAB down to two-years-old based on the data from an ongoing trial in pediatric patients. We remain on track to file an IND for the IV formulation of galidesivir this quarter. And finally, we remain on track with our discovery efforts on other rare disease targets, and expect to announce one new program that will enter preclinical development by year-end. That's it for my update. I'll now pass it over to Bill.

Thanks, Jon, and good morning everybody. First, I would like to review the plan for completion of APeX-1. This trial in HAE patients is designed to estimate the efficacy effect that daily oral capsule 7353 in preventing angioedema attacks, evaluate safety tolerability and drug exposure, and measure the effects of the drug on a target enzyme. To achieve those objectives we're testing a range of doses, from 62.5 milligrams daily to 359 milligrams daily in a three-part design, as indicated on Slide 4. The total planned sample size is 70 subjects, 22 on placebo and 48 on various doses of active drug, 18 at 350 milligrams, 12 each at 250 milligrams, and 125 milligrams, and six at 62.5 milligrams. An update on trial progress is shown on Slide 5. As Jon noted, Parts 1 and 2 of APeX-1 are now fully enrolled, and we are on target to record the second interim analysis in the second quarter. This will include all subjects enrolled in Parts 1 and 2, and further protocol and the statistical analysis plan. Placebo subjects will be pooled from both parts for analysis. I'm pleased to report that in the final segment of the trial, Part 3, we have already randomized six subjects, with another seven subjects currently in screening. We expect to report the complete trial results, with the indicated planned total sample sizes in the third quarter. As indicated on Slide 6, the scope for the second interim analysis will be similar to that of the first, with reports on efficacy, safety, drug exposure, and PD effects on plasma kallikrein. The planned number of placebo subjects in this analysis is 20, 18 from Part 1 and two from Part 2. The planned number of subjects treated with 125, 250, and 350 milligram daily oral 7353…

Thank you, Bill. I'm pleased to discuss the details of our first quarter 2017 financial results. We closed the quarter with a much stronger balance sheet, with approximately $105 million in cash in investments resulting from the successful completion of a public equity financing in March following our announcement of positive interim AEeX-1 results. With the cash run rate expected to be at least a year beyond the reporting of full APeX-1 trial results, we are now focusing our efforts on completing patient enrollment in the final portion of APeX-1. Turning to Slide 9, our revenue for the first quarter of 2017 increased to $9.4 million from $4.8 million reported in the first quarter of 2016. The increase was primarily due to a $4.4 million increase in royalty revenue from our partners, Shionogi, Green Cross, and Seqirus, as well as a $2 million milestone payment associated with the Canadian regulatory approval of RAPIVAB. These increases were somewhat offset by lower collaborative revenue from galidesivir development under government contracts. The increase in royalty revenue was largely associated with another stockpiling of RAPIACTA by the Japanese government in the first quarter of 2017. As a reminder, future government stockpile orders are very difficult to predict due to the relevant governments' appropriation and stockpiling process, and therefore you should not rely on the $4.1 million stockpiling benefit recorded in this quarter to recur in future quarters. First quarter 2017 R&D expenses decreased to $16.8 million from $20.6 million incurred in the first quarter of 2016. The decrease resulted primarily from the termination of avoralstat in 2016, and to a lesser extent the decrease in 2017 galidesivir development expenses under U.S. government development contracts as compared to the first quarter of 2016. General and administrative expenses of $3.1 million for the first quarter of…

Thank you, Tom. Let me wrap up by saying things are getting very exciting at BioCryst, especially when you look at the progress we've made so far this year. Our strategy of building a company that brings to market oral drugs for rare diseases is coming together. Our lead program in HAE is highly differentiated and well advanced as we look forward to starting Phase 3. When we complement this program with an acute treatment therapy, the combination has the potential to offer patients something that could change their lives. Our antiviral programs will continue to contribute alternative capital that has and will continue to offset some of our capital needs. And finally, our discovery programs are progressing to where we could start to see them refill our pipeline and create sustainable value. That's it for our prepared remarks. We'll now open it up for your questions.

Thank you so much. [Operator Instructions] And our first question is from the line of Jessica Fye with JPMorgan. Your line is open.

Hi, guys, good morning. Thanks for taking my question. I was wondering if there's any chance you could refine a little bit the timing for the Part 2 interim. I'm also curious -- for APeX-1. I'm also curious about how we should think about the dose levels in ZENITH-1? And lastly, just the rationale for bringing forward the liquid form in the treatment setting. Is that solely for potentially faster onset, which already looks pretty fast? Or is there an element of pricing consideration in there as well when you think about prevention versus treatment? Thank you.

All right, I'll take the first one, Bill could take the second one, and then I'll take the third one. So -- and now I forgot the first question. What was it again?

APeX-1 timing.

APeX-1 timing, yes. So, we're fully enrolled. But giving you any fidelity beyond second quarter, we can't give you. So it's -- it'll come in the second quarter, we're very confident to that.

So the second question was around any color on the doses for ZENITH. We'll go into the exact details once we start the study, but I would encourage you to look at the PK slide that we presented today, which was Slide 7, and doses in the range of 250 milligrams to 1,000 milligrams get to what we believe to be therapeutic levels very quickly. And one advantage of this drug, in thinking about it as an acute therapy, is a single dose is going to persist for a very long time because of the half-life of the drug, and it would be pretty unlikely to require a second dose of the drug to treat a single attack. So I think that you'll see the dose levels we've picked when we announce the details later.

Yes, and then your question around liquid formulation. So in general, liquid formulations can have a faster onset than capsules or pills, and so that's what we would expect in this situation. And then I think the other thing is we really want to separate prophylaxis therapy from acute therapy, so different formulation, number one; a likely different dose, number two; and we'll definitely have separate branding as well to really distinctly make these tow different products. But what's nice is they complement each other, right. So we've been asked questions, why start this trial now? Why do this? You use the same sales force, you're calling on the same people. And so it's just a no-brainer for us when you look at the market size, and the fact that an oral could be a huge differentiator here to go after this market, in addition to prophylaxis.

Jessica, does that answer your question?

Yes, thank you.

Thank you. And our next question comes from the line of Charles Duncan with Piper Jaffray. Your line is now open.

Hi, good morning guys. First of all, thanks for taking my question, and secondarily, congratulations on the progress in the quarter.

Thanks Charles.

Thanks Jon. I have just a couple of questions. One is, you mentioned in the press release that you've done additional post-hoc analysis on the abdominal attacks that were kind of a point of contention in the first interim. And I'm just wondering if you could provide any additional color or when you would anticipate that data? Could that come with the second interim and clarity on that?

Hi, Charles, it's Bill. The press release intended to indicate the post-hoc analysis that we already presented in the last call, on the first interim analysis. And just as a refresher, in the planned analyses, we saw a difference when we looked at the anatomical locations of attacks categorized into peripheral or abdominal. And then we looked into all of the events that were categorized as abdominal attacks in a post-hoc analysis, and divided them up into attacks where they're abdominal symptoms only, or events where they're abdominal symptoms only, and events where there are abdominal symptoms plus crystal-clear unequivocal evidence of angioedema in a peripheral site that you could see, or else the diagnostic pink rings on the skin, erythema marginatum. And the dramatic treatment effect that we saw in the peripheral attacks was essentially very, very similar to a benefit that we saw in attacks that had both abdominal and peripheral symptoms. And what we were left with was a reversal, apparently, in that benefit in the small number of events that were abdominal only. So the conclusion that we drew with the help of our principal investigator and expert advisers, supported by all of the investigators we talked to and patient advocates, was that it can be very difficult with early symptoms of angioedema events in the abdomen for patients with the disease to decide whether that's really something that's heralding an angioedema attack or whether it's dyspepsia or some other event. So we talked about that fairly extensively on that call. So there are no new analysis of that. We will replicate exactly the same categorization in the second interim analysis that's coming up in the second quarter.

Yes. And our focus has been on get to the parts of the study where we're studying lower doses where we expect that we'll see less of this, and educating the sites on how to differentiate these symptoms from real abdominal attacks.

Okay, that makes sense to me. I thought that the data were clear when you initially presented it, so I was kind of wondering about reading about additional post-hoc analysis, but that was before sufficient espresso for me this morning. My second question was regarding Phase 3, or at least an end of Phase 2 FDA meeting and perhaps even design and scope. Is it overly optimistic to think that could come by the end of the year? I know final data in 3Q for Phase 2. But wouldn't it be great to be -- known to be in Phase 3 or going into Phase 3 by year-end? Any thoughts on that?

Sure, Charles. So yes, it would be great, and that's our goal. And we're going to make every effort to try to make that happen by the end of the year.

Okay. And final question regarding the liquid form, I'm very intrigued with that acute treatment as well. But I'm kind of wondering if that could be a challenge for patients who see predominantly a GI attack, and how you would deal with that. And then whether or not there would be exacerbated or reduced food effect and other absorption effects with the liquid pharmacies like…

Good questions. Let me take the food effect first. We did a pilot food effect study in the Phase 1, and we've done subsequent research on food effect in clinical pharmacology studies. And I'm pleased to report that even a high-fat meal with this drug does not decrease the overall exposure with the drug. Obviously, if you take any medicine on a -- after you've just eaten a brontosaurus, then absorption of the medicine is likely to be delayed, so that's a consideration. And we'll collect the data during the study on exactly the timing of the treatments in relation to when subjects last ate a meal. So that'll be interesting to see how that pans out. But there is no overall exposure difficulty with the drug with related -- with relation to food. Moving to a liquid formulation should accelerate absorption to the extent that you don't have to break down the capsule or dissolve the powder in the capsule; it's already presented as a liquid. In terms of running a clinical trial, if somebody is already so advanced in their angioedema attack that they're already vomiting, then clearly, that's not a situation where you would want to study the effect of an oral drug because it'll come straight back up because of the vomiting from the disease. So, if that's the case, then that particular event wouldn't be eligible for an experimental therapy in a study like this. There's one other element I didn't have in my prepared remarks, but there's been, as I indicated, a big shift in the way patients manage their disease. And one of the things we need to learn in this study, which we will learn, is can you successfully run a study with medicine administered by the patient, and collect the data you need and have an interpretable result. We'll execute it to the highest possible standards, and that's something we'll learn. And I'm optimistic that that's eminently feasible. But prior studies of acute treatments haven't been done that way. They've been forcing people to come to the hospital or the clinic to get the experimental medicine. So I think it'll be a very interesting study, very informative, and it'll give us the data we need to make a development decision about is this something that we can pursue and succeed with.

Seems like lessons could be learned from the migraine space; thanks for the added color. I'll hop back in the queue.

Thank you. And our next question comes from the line of Liisa Bayko with JMP Securities. Your line is open.

Hi there, and thanks for taking my question. I'm just curious on the timing of some of the GI effects you've seen with the higher dose and maybe in some of the healthy volunteer studies. Is this more of an early event? Or it's something that seems to kind of come on later, just curious about timing?

Sure. Liisa, we've looked at all of that data. It's an obvious question, and I can make a comment across the program, both in healthy subjects, and in HAE patients. The first thing to say is that with single doses, abdominal adverse events are extremely unusual. So that's the first thing. I think the second thing is that the timing in relation to minutes or hours after the -- when you take the dose, is the onset tends to be within the first few hours. So I think that -- I don't know that you can necessarily draw any particular conclusions from that, other than that that's the observation.

Okay, that's helpful. And just remind us of the kind of rationale behind evaluating the 62.5 milligram dose in the Part 3 of APeX-1. Is it really just dose-ranging? Or do you expect to see -- is that a potential target dose for you guys?

Good question. And in essence, the last part of the question, that will depend on what we see. So, I think the rationale for doing dose-ranging studies is very, very, very simple, and that is that the guidance responses on conductive clinical trials and development of drugs strongly, strongly recommends adequate dose-ranging studies. And I feel very confident that having four dose levels in a study like this provides a wealth of information on not just efficacy, but all of the other things we're measuring. The PK and the PD, by the way, are very rich data sets, and they'll help us determine dose or doses for our Phase 3 study. That's the goal, from a development perspective, is to really nail the dose selection for the Phase 3. The recently amended the study and added Part 3 was that we were very encouraged by the CSL COMPACT trial data that was presented, in November, at the Allergy College meeting, by Dr. Zuraw, and subsequently published this year in The New England Journal of Medicine first author Hilary Longhurst. And fortunately they had a lot of detail in the presentation, in November, including the trough levels of total C1 inhibitor, which is the sum of endogenous C1 inhibitor plus what was delivered from the previous dose of either 40 or 60 units per kilogram of subcutaneous C1 inhibitor. And we can convert that to multiples of the 50% effective concentration, which we did, and the achieved trough levels of about five and about six times the EC50, which is bang in the middle of our proposed therapeutic target range. So once we saw that data, we started planning to amend the study to add a dose that would add about two to three times the EC50, which we expect 62.5 to do. I can't know at this stage how successful that's going to be. And the three possibilities are; it doesn't work, but all the other doses work, in which case, we have a very successful dose-ranging study from a regulatory perspective; or it works a little bit but not well enough to make it a dose that you'd want to market, same conclusion; or it's really fantastic, in which case maybe we'll have to study an ineffective dose at some point. But all of those outcomes are very helpful for the program.

Great. Thank you.

You're welcome.

Thank you. And our next question comes from the line of Maury Raycroft with Jefferies. Your line is open.

Hi, thanks for taking the question. Just wondering from a biological standpoint, if any new understanding or rationale has evolved for the abdominal attack noise that you're seeing? And, I guess, if in an ideal situation what you would need to determine if the abdominal attacks are from a lack of 7353 efficacy or something else?

Yes. Thanks, Maury. The difference in the ad hoc analysis that we saw, to my mind, rules out any question about lack of efficacy on abdominal attacks, because we have patients with symptoms of abdominal angioedema and unequivocal evidence of angioedema in the periphery and the drug worked brilliantly. So, you can't have it both ways. It either works on abdominal attacks or it doesn't. And even though that evidence strongly, strongly suggests, not just to me, but to our top advisers who are experts in the disease, that that's the conclusion to draw. With regard to biology, GI upset from drugs is a pretty commonly observed event for orally administered drugs. It's usually a dose-related phenomenon. And there are tactics that I discussed at the time we presented the first interim analysis that will likely help to ameliorate that, even if we need to persist with 350 milligrams daily as a dose. So I think that this -- my anticipation is it's a manageable issue, and we look forward to seeing the second interim analysis when we have it. At the moment, we're blinded, of course, so there's nothing to report. So we'll have that soon.

Yes. And I think based on the Phase 1 data; we're encouraged by the fact that the likelihood that we'll see less of this at lower doses is reasonably high. I think one thing that I'd like to really stress, because I'm not sure that investors and analysts completely understand this, is when Bill says unequivocal attack when -- in this mix category, it's either some swelling in another part of the body or this erythema marginatum. So think about that for a minute. They're having an abdominal attack, and they're having a red ring, and we take care of it with 7353. 7353 works, right? So why wouldn't it work in just an abdominal attack? That does not make sense.

Got it. And one other question about the liquid formulation, I was just wondering if you could mention some of the other ingredients that are included in it, and how it will be administered. Will it be a once-use container, or will it be drawn from a bulk container?

So, let's fast forward to launching the liquid for as an acute therapy. I'm sure that Lynne, who's our Head of Commercial, would want that to be as simple as possible and very attractive to patients. And I fully anticipate that that will be the case. In terms of the volume of liquid that we're asking a subject to swallow in this clinical trial, it's quite small. It's less than two ounces.

Yes, and it's in a single bottle that…

Yes. It's a single, yes. It's…

So it's not like they have a bulk [indiscernible] an amount. And like Bill said, when we get to the commercial point there's a lot to do to this. There's some taste masking that we're adding to this initial formulation.

It's all the usuals. It's all of the standard things that you would imagine that you would do if you want to have a medicine that people will swallow in a liquid form, I mean, nothing magical.

Yes. We're -- I mean, because 7353 is so easy to work with, we're really confident that we can get to a highly attractive ultimate commercial form.

Great. Thank you.

You're welcome.

Thank you. And our next question comes from the line of Christopher James with Ladenburg Thalmann. Your line is now open.

Hi, good morning, and thanks for taking the questions. First, how many doses do you plan advancing to Phase 3? And then a follow-up question to the food effect, are you doing anything to better enhance or encourage the taking of a meal in Part 2 and Part 3?

Yes. Hi, Chris. The doses in Phase 3, regulatory guidance encourages sponsors, whenever possible, to test more than one dose level in the Phase 3. That'll likely be the case for us. So we'll probably choose tow doses for Phase 3. Obviously, the Phase 3 design and all the details around that is an iterative process, and an end-of-Phase 2 meeting is required to sort of pin all of that down. But there are good reasons to want to take more than one dose level into Phase 3. And you can see other sponsors in this field have done exactly that. So I think that that's probably what you should expect. What was the second part?

The second one is on what things can you do with [indiscernible] food effect in Parts 2 and 3?

Yes. So, we're somewhat constrained in APeX-1 because we have to have the dose each day administered first thing in the morning, because of the essential collection of serial PK profiles on one of the clinic days, typically, it's day 14. So, in order to do that, you have to have all of the previous doses taken in the morning so that you can administer a morning dose on the day that the subject attends the clinic for the serial PK draws. Most people don't eat ham and eggs for breakfast or any other sort of big meal. So we are encouraging, and we're reiterating that in the instructions to the site for the subjects on the trial, try to have more than just an espresso shot on the way to work. And we're also implementing education that reiterates what, of course, is in the informed consent form with regard to the effects that we saw in the Phase 1 with regard to mild GI side effects. And to ask subjects to think about is this typical for me or not when they get -- in terms of an HAE event, is it typical for me or not if I'm having abdominal symptoms. And be thoughtful when recording what's in the diary. So that's probably the limit of what we can do in APeX-1.

Great. Thanks for taking the questions.

Yes, you're welcome.

Thank you. And ladies and gentlemen, this concludes our Q&A session for today. I will turn the call back to management for any final remarks.

Yes. So as always, we're pleased that you're interested in BioCryst. As I said before, we think this is a very exciting time for the company, and look forward to updating you in the second quarter with the second interim analysis of APeX-1. Have a good day.

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