Sarepta Therapeutics, Inc. (SRPT) Q4 2011 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the AVI BioPharma Fourth Quarter and Year End 2011 Earnings Conference Call. My name is Keith and I will be your operator for today. At this time all participants are in a listen-only mode. Later we will have a question-and-answer session. [Operator Instructions] As a reminder, today’s conference is being recorded for replay purposes. And I would now like to turn the conference over to your host for today, Ms. Erin Cox, Manager of Investor Relations. Please proceed, ma’am.

Thanks, Keith, and thank you for joining today’s call. Earlier today we released our financial results for the fourth quarter and year ended 2011. The press release is available on our website at www.avibio.com. And our 10-K will be filed on or before March 15. Joining me on the call are Chris Garabedian, our President and Chief Executive Officer and Mike Jacobsen, our Vice President of Finance. I would like to note that during this call we will make a number of statements that are forward-looking, including statements about the development and clinical status of AVI’s product candidates and their potential efficacy, clinical results, intellectual property position, revenues, expenses, potential funding from the government and other sources, and collaboration and partnering opportunities. These forward-looking statements involve risks and uncertainties, many of which are beyond AVI’s control. Any of such risks could materially and adversely affect our business, results of operations and the trading price of AVI’s common stock. For a detailed description of risks and uncertainties we face you are encouraged to review the official corporate documents filed with the Securities and Exchange Commission. With that, let me turn the call over to Chris Garabedian. AVI’s President and Chief Executive Officer, Chris?

Thank you, Erin. Good afternoon, everyone, and thank you for joining us. I’m pleased to provide you with an update and overview of our activities and accomplishments since our last quarterly update along with our financial performance in the fourth quarter and for the full year of 2011. We’ve continued to realize significant progress in our value driving programs, particularly in our rare disease program for the treatment of Duchenne muscular dystrophy and our antiviral programs for the treatment of the life-threatening hemorrhagic fever viruses of Ebola and Marburg. There is a lot of information to cover on the call, so I will begin by providing a detailed update on our DMD program. We completed our placebo controlled portion of study 201, our Phase II B study of eteplirsen in Duchenne muscular dystrophy in February. I’m extremely pleased to announce that we are on track to have top line results of our placebo controlled 24-week data by the end of April. This is a seminal event for the company and that it will help us evaluate the potential disease modifying effects of our drug compared to an untreated placebo cohort. Importantly, we were very careful to include enrollment criteria in that trial that enhances our ability to detect the treatment effect over a 24-week timeframe. We did this by establishing inclusion criteria that captures progressive disease. For example, we enrolled boys that were at least seven years of age at the time of enrollment and also required a certain walking distance on their six-minute walk test specifically between 200 and 400 meters walk that will be informative for predicting a progressive decline of ambulation and other muscle strength and performance endpoints. While we were very encouraged by the biochemical evidence from our previous UK study as it showed that 10-milligram per kilogram and 20-milligram per kilograms dose once weekly by IV infusion produce increases in novel dystrophin in every patient as well as dose-dependent reduction in inflammatory T-cell infiltrate in the muscle biopsy. It is important to note that our current study 201 trial evaluated higher doses over longer duration of treatment than what we saw in the previous study. As a reminder, 12 patients in Study 201 received once weekly intravenous infusions of either 50 milligrams per kilogram of Eteplirsen, 30 milligrams per kilogram of Eteplirsen or placebo. We had recently amended the Study 201 protocol to include four weeks of open label Eteplirsen which allowed the patients to receive uninterrupted continued dosing of Eteplirsen and immediate roller of our placebo patients to open label Eteplirsen. This amendment also gave us sufficient time to set up and train the local institutions that will be dosing these patients closer to their home town rather than to fly these families weekly to Columbus, Ohio where the placebo blinded portion of the study took place. Study 202 which is our extension study to Study 201 and which will assess the long-term safety and efficacy of Eteplirsen received IRB approval and has already begun dosing the first few patients. These patients were initiated dosing this past week. We now have six patients on 30 mg/kg and 6 patients on 50 mg/kg and we will have 48 weeks safety and efficacy data in eight of these patients and 24 week data in four of the original placebo patients by the end of this year. We have also requested an additional biopsy in Study 202 which will occur at 48 weeks in the original Study 201 treated patients and at 24 weeks the same time point in the original placebo patients. These biopsy data will be important to understand the steady state or potential plateau levels of dystrophin at the dose we tested at the 48-week time point in addition to adding to the earlier biopsy data sets at 12 weeks and 24 weeks. Finally, we will continue to capture clinical outcomes from these patients in study 202 during this open label phase at 36 weeks, 48 weeks, and every 12 weeks through the 108 weeks from the original study 201 initiation of dosing. We also believe these additional biopsy results along with the additional longer term clinical outcomes and safety will be useful in our discussions with the FDA as we discuss the fastest path toward approval. Additionally, we have an update related to our long-term animal tox program and I’m pleased to say that we’ve completed dosing in our nine-month primate study, our six-month mouse study, and our 12-week juvenile rat study. We expect to have final data sets by the end of the second quarter for all of these studies. We will plan to put these study 201 Phase IIB results along with the long-term animal tox program results into a briefing document to request an end of Phase II meeting with the FDA in the third quarter of this year. The purpose of that meeting with the FDA will be to discuss the design of our pivotal study including gaining feedback on the acceptable endpoints for approval. We are still planning to have a larger confirmatory study for eteplirsen ready to enroll by year end with dosing to begin in the first half of 2013. We have continued to make process improvement in our manufacturing of eteplirsen and are preparing our contract manufacturers to deliver drug supply for our pivotal study as well as our ongoing extension study. Since our last earnings call, we also announced we are actively pursuing development of a product candidate that skips exon 45 through an IND-enabling collaborations with Children’s National Medical Center and Carolinas Medical Center. And we are also finalizing the terms of a second IND-enabling collaboration through NIH’s trend program, the treatment of rare and neglected diseases which was Francis Collins is brainstormed to assist in translating promising technology from the bench to the clinic and we were pleased to win support for the development of a product candidate that skips exon 50. We expect that these two additional exon skipping drugs will be ready for initial clinical trials by the end of 2013. Furthermore, these two collaborations along with our Eteplirsen program formed a foundation of our larger pan exon development program and may serve as a lynchpin in the pursuit of a class approval of our backbone chemistry for DMD. We believe a class approval is possible if we can demonstrate sequence dependent efficacy and sequence independent safety and pharmacokinetics at a standard dose and using the same manufacturing process to produce the same quality of products. Because of the breadth and diversity of genetic mutations across the DMD population, several dozen drugs would be required to treat every DMD patient with our technology. And a class approval would be the only feasible way to make more drugs available for the majority of exon skipping amenable DMD patients including those with less prevalent genetic mutations. Related to our pipeline of follow on DMD drugs that target other exons, we had an important hearing with the European Patent Office in November of last year where we opposed what we considered an overly broad patent that had claims to 11 of the most prevalent exon skipping target, including our lead program targeting an exon 51. We invalidated or amended claims to 9 of the 11 exon skipping targets and strengthened our freedom to operate in the European Union for our overall DMD development program. However, of the two exon skipping targets for which we did not prevail, one was for the target of our lead program, exon 51. Although the written decision of the opposition hearing has not yet been posted by the European Patent Office, we are preparing to submit an appeal later this year or within four months of the posting of the written decision. We put this patent decision in the context of the world-wide market opportunity for our DMD program. On approval of just the top four or five exon skipping drugs would triple the US opportunity beyond Eteplirsen. And with the favorable patent decision on the top exon beyond exon 51 in Europe, the market opportunities for these top exons across US and Europe is more than six fold greater than the US only opportunity of our lead product Eteplirsen. Overall, our DMD program has been a critical inflection point. And if the 24- week data from our Eteplirsen study is favorable and shows the benefit on clinical outcomes that we’re hoping for, we will be intent on exploring the fastest path toward approval of the drug with the FDA. We believe it is an exciting time to be developing therapies for rare diseases like Duchenne and it is the time where we are seeing an alignment of goals across industry, patient advocacy, the legislative agenda and the FDA. As evidence of this, today the FDA is hosting here first Rare Disease Patient Advocacy Day designed to connect patient advocacy groups like the National Organization of Rare Disease and the genetic alliance with the NIH and the FDA in the interest of increasing awareness and collaboration. And just yesterday the NIH hosted their fifth Annual Rare Disease Day in which AVI participated to show our solidarity with other rare disease company’s advocate and stakeholders. Now I’ll turn attention to our government sponsored infectious disease program where we continue to advance our two drug candidates for the treatment of the light threatening Ebola and Marburg. We had our final drug and safety monitoring review up the completed phase I single ascending dose or SAD studies earlier this year. And the DSMB concluded that the druggist faith at the highest tested of 9 milligrams per kilogram. This is an important finding that it demonstrates the safety of our morpholinos in the clinic with one of our next generation chemistries that we refer to as PMOplus. Specifically today this chemistry is a positively charged version of our morpholinos which has shown greater anti viral efficacy without drug related adverse event in human subjects. We are now preparing for the multiple ascending dose or MAD study in healthy volunteers and we are looking forward to exploring multiple doses and potentially higher doses then 9 milligrams per kilogram which will help us understand and possibly widen the therapeutic window for not only our Ebola and Marburg drug candidate but for future applications against the merging viral and bacterial target utilizing the same backbone chemistry. These MAD studies are planned to start in the second half of this year. In parallel to the safety studies for these two drugs we have also begun a series of studies in primates to establish the optimal drug component dose activity and pharmacokinetics to determine the appropriate design for our pivotal studies in primate to support approval of these drugs under the FDAs Animal Rule. We have completed the first of those studies to determine the most effective dose and drug component to proceed with our Marburg program. Earlier this week at the ASM, The American Society of Microbiology, Biodefense and Emerging Infectious Disease Research meeting held in Washington DC, we announced data from a Marburg primate study where we showed that our drug candidate AVI-7288 achieved 100% survival at the end of treatment at 14 days and through the end of follow up at 14 days compared to 0% survival at this time point for the untreated controls. Importantly, we have also demonstrated that AVI-7288 on a standalone basis was efficacious as a single agent at a dose of 15 milligrams per kilogram compared to the previous combination therapy that we had been testing against the Marburg virus. To this end, we have made an amendment to the current open IND to proceed with the active components of what was formally known as AVI-603 which will be now referred to as the single agent AVI-7288. We are in the middle of a similar study for our Ebola drug candidate, while we are evaluating the acid components of the drug at single agents versus the combination drug AVI-6002 that had been previously tested. We should be able to announce top line results from this study in the coming months. Last year, we had a modification to the contract with the Department of Defense which supported completion of our multiple ascending dose studies and all of the primate studies prior to our pivotal studies within our current contract module, the first of four which would come to fruition the first module in mid 2013. So, over the next year through the middle of 2013, we are on track to complete our multiple ascending dose studies and the additional primate studies which include PKPD studies in primates and the delayed time to treat studies in primates, all of which will also be looking at efficacy and survival endpoints. While we are on the subject of our execution of the government-sponsored programs, I’d like take this time to provide an update on some organizational changes at the company, many of which have enhanced our ability to execute on the current government programs as well as support the potential award of future contracts with the department of defense and other government agencies that support research for medical counter measures and pandemic planning. First we announced the higher of our Senior Vice President of Technical Operations, Jayant Aphale who had significant experience in scaling up drug production in anticipation of late-stage clinical trials and commercial approval. Prior to joining AVI, Jayant was the VP of Manufacturing for GlaxoSmithKline where he was based in Belgium overseeing their vaccine production facility and capability. Priority to GSK, Jayant was at Enobia, helping that company prepare for late-stage clinical development and commercial scale for a fusion protein to be a flight in the area of rare disease. Both of these experiences and Jayant’s expertise and manufacturing operations in scale up are well suited for both our DMD program and our infectious disease applications with the government. We’ve also made some additions at the Vice President and Senior Director Levels that will also strengthen our support team on the government in DMD programs. Specifically, we hired Diane Berry as our Vice President of Global Health Policy and Government Affairs. Diane has spent most of the last 10 years working at various federal agencies on Capitol Hill and built an expertise and high level contacts across these organizations that are charged with developing the government’s programmatic legislative and funding priorities for medical countermeasures and executing to those priorities. She most recently was the Chief Scientist and Director of Threat Characterization and Countermeasures in the Office of Health Affairs at the Department of Homeland Security, where she served as a nexus between the Department of Homeland Security and the Department of Health and Human Services on medical countermeasure issues primarily through her role as the public health emergency medical countermeasure enterprise. We also recently hired Teresa Moody as our Senior Director of Project Management to oversee all of the activities across our Ebola and Marburg programs. Teresa joined us from Quintiles where she spent the last 10 years working almost exclusively on government-sponsored infectious disease programs. Here, Teresa became an expert in complying with government regulations and guidelines in support of these programs in addition to becoming an expert in writing proposals for various agencies to ensure the best chance of contract awards. Additionally, we hired Robin Wallace as our Senior Director of Clinical Operations to oversee and manage the clinical aspects of both our DMD and Ebola and Marburg programs. Robin brings with her more than 15 years of global clinical trial management at the CRO and pharmaceutical biotech side of the industry. She has been a successful trainer and mentor of clinical trial associates and managers and brings a high degree of professional excellence to our company. Lastly, I regret to inform you that Effie Toshav, our General Counsel and a Senior Vice President of the company tendered her resignation effective last Friday, February 24, to pursue other opportunities. We are sad to see her leave and are thankful for her many contributions to the company during a critical time of transition over this past year. Our staffing has changed quite a bit over the last year and accommodated in a reduction in force of about 30% of our full-time staff in December. We also reduced the non-essential activities and cut our reliance on a variety of contract workers and consultants. As we began 2012 with approximately $40 million in cash, we believe that this effort to focus on the most essential activities and staff required to execute our priority programs has made us a leaner, more efficiently run organization that is better equipped to manage our cash burn. With that I would like to turn the call over to Mike Jacobsen, our Vice President of Finance and Principal Accounting Officer who will review the financial results for the quarter.

Thanks, Chris. First, I may begin by discussing our fourth-quarter results. I will then address the results for the full year and conclude by providing some overall financial guidance for 2012. For the fourth quarter of 2011, AVI reported an operating loss of $9 million compared with an operating loss of $1.7 million in the fourth quarter of last year. The increase is primarily the result of a $1.9 million decrease in government research contract revenues and a $4.8 million increase in our R&D expenses. Revenue for the fourth quarter of 2011 was $13.6 million. This is down slightly from the $15.5 million one year ago. This decrease was primarily due to the completion of the H1N1 flu contracts in the second quarter of this year partially offset by incremental revenues on the current segment by Ebola and Marburg government contracts. R&D expenses were $18.7 million in the current quarter compared to $13.9 million in the fourth quarter of last year. The $4.8 million increase was due primarily to incremental activities for Ebola and Marburg. Additional spending on our DMD product candidate just completed Phase IIB clinical trials and severance costs associated with our December 2011 reduction in force. These increases were partially offset by decreased N1H1 spending. G&A expenses in the fourth quarter were $3.9 million compared to $3.4 million in the fourth quarter of last year. The $500,000 increase was due to our severance costs associated with our December 2011 reduction in force and slightly higher consulting costs. Now, let’s take a minute and look at our full-year results. For the year 2011, the operating loss was $35.9 million compared with an operating loss of $20.9 million for 2010. The $15 million increase was primarily the result of increased R&D costs of about $31 million partially offset by the increase in our revenues of $17.6 million. Revenue for this year was $47 million compared to $29.4 million for the prior year. This increase was primarily due to the additional revenues on the current segments for Ebola and Marburg government contracts, partially offset by the completion of the H1N1 flu contract in the second quarter of this year. R&D expenses were $66.9 million this year compared with the $36 million for the prior year, an increase of approximately $31 million. The increase was due primarily to $23 million in incremental expenses related to Ebola and Marburg Research, $6.5 million in expenses related to our DMD program, $5 million in other incremental R&D, and about $4 million in additional manufacturing activities. These increases will possibly offset by the $5 million reduction in costs related to the H1N1 flu contract. G&A expenses for 2011 were $16.1 million, compared to $14.4 million for the previous year, an increase of $1.7 million. The increase was primarily the result of a $1.4 million increase for personal related costs and $1.1 million increase in consulting costs. These costs were partially offset by decreases in legal and severance costs of approximately $500,000 each. The net loss for the fourth quarter of 2011 was $1.4 million or $0.01 per share, compared to net loss for the fourth quarter of last year of $7.6 million or $0.07 per share. A $6.2 million decrease in the net loss was primarily due to $13.4 million in other income associated with the change in the valuation of our outstanding warrants, partially offset by an increased operating loss of $7.3 million. For the full year 2011, our net loss was $2.3 million or $0.02 per share, compared to a net loss for 2010 of $32.2 million or $0.29 per share. The $29.9 million improvement was primarily due to $44.5 million of other income attributable to the change in the valuation of the warrant, partially offset by $15 million increase in operating loss. Turning to the balance sheet, we had cash and cash equivalents of approximately $40 million as of December 31, 2011. This is an increase of $6.3 million from December 31, 2010. The increase was due primarily to the April 2011 public stock offering where we raised $32.1 million offset in part by $23.7 million of cash used in operations during this year. Now let me turn to our 2012 guidance. For 2012, we’re anticipating revenue of $40 million to $50 million and an operating loss of $30 million to $35 million. In addition, we anticipate that our capital spending on patents and equipments will be approximately $1.5 million and the non-cash expenses for stock comp depreciation amortization will be in the $4.5 million to $5 million range. As you recall, our other income expenses primarily driven by the fair market values of our outstanding warrant which is non-cash item is heavily influenced by fluctuations in our stock price. With regards to our quarterly splits, our first quarter revenue will be approximately $2 million to $3 million lower than the remaining quarters. This is simply to the timing of third party manufacturing activities on our Ebola and Marburg contracts. We believe we will continue to receive funding from our exiting Ebola and Marburg government contracts and we’ve assumed this revenue in providing this guidance. Additionally with this funding, we believe we’ll have sufficient cash to fund our operations for at least the next 12 months if we do not continue to receive this funding, our guidance would naturally change. With that, I will turn the call back over to Chris.

Okay, thank you Mike. Operator, you can open up the call to questions.

[Operator Instructions] Your first question is from the line of Ted Tenthoff with Piper Jaffray.

And it sounds like some exciting hires and some good way to start out 2012. So with the statements that you’re going to have 24-week data un-blinded by the end of April, will you be sharing that with us then and or will you be receiving it?

Yes. We will be sharing top line preliminary results from that 24-week un-blinded dataset. As you know Ted, we are a public biotech company, we are going to basically disclose when we get un-blinded data, we are going to try to assess and analyze it in a top line fashion as quickly as we can and put out a press release. Obviously, it’s a very rich dataset, there is a lot of information that we’ll have and it will take a while to really understand everything that the data is telling us, but we will get the most salient top line information disseminated in the form of a press release and that’s really what I’m referring to happen by the end of April.

Great, that’s really helpful Chris. And then when it comes to the - when it comes to the new drugs that you are working on for exon 45 and 50. Do you think you would have that or when do you think you might be able to file IND for those programs?

Yeah, we are optimizing the kind of lead optimization for those programs and we still have a lot of IND-enabling work to do and we have to meet with the FDA to ensure that our thoughts and plans for what is required to get the product into the clinic or both of those products into the clinic will be sufficient. So that’s what will take place over the next year and we’re hoping that we would have an IND filed and be ready for clinical trials by the end of 2013.

Excellent. And then just one last quick question, while you were giving guidance you mentioned that there was a $4 million to $5 million charge and I missed what that was for in 2012?

Yes, that one was a non-cash effect of the stock compensation and depreciation and amortization.

Your next question is from the line of Marko Kozul with ThinkEquity. Please proceed.

Chris, in your first question you mentioned the cleaning the F&B review for the highest dose 50 milligrams, I was wondering if and when you will present that data, will that be part of the end of April update?

Yes. So we basically had the 12-week 50 milligram per kilogram DSMB in January where they were able to look at the biopsy data. Yeah, we expect that the top line data will include both data from the 12-week 50 milligram biopsy results as well as the 24-week 30 mg/kg pre and post. Now, again we are collecting a lot of parameters. At this point, it’s hard to predict exactly what will be shared, but we expect that there will be an element of biopsy data in that - these top line results. Previously we had suggested that we might have an interim look. We since provided guidance Marko, if you had been following it that we didn’t want to risk un-blinding and so we have not seen any of the interim biopsy data to date neither I nor Ed Kaye nor anyone at AVI has seen, looked at, had exposure to the biopsy data and that was for the purposes of the protecting the blind.

All right, perfect. And then you mentioned enrollment criteria for the safety B study that - I was wondering if you could differentiate - maybe talk about the enrollment criteria and how you think that compared to enrollment criteria for the other competing DMD drugs that are out there?

Yes, and the reason I highlighted it Marko because I think it was one of the more thoughtful ways we approach this study especially when you’re dealing with small sample sizes. We knew that a placebo arm will be important to show a true treatment effect. And we knew the best chance to show a treatment effect in a 24-week timeframe was to try to get a patient population that was likely to show some level of decline over that 24 weeks. And so, we did a few things we looked at the literature on natural history and a lot more has been generated over the last couple of years on the natural history of DMD and what was predictors of decline are, we learnt from other companies who done studies in the area like PTC did a blinded placebo control trial for their drug [indiscernible] and understood what were the confounding factors based on their patient population and their enclosing criteria that might have made it harder for them to have shown an effect. We looked at other competitive datasets, so that’s why I highlighted the seven years to 13 years is the age range that we felt would show that more progressive rate of decline and the six minute walk test based upon of score of between 200 and 400 meters walked was also suggestive of a patient population that would be in the decline. So I’m not as familiar with the details of our competitors, those one main competitor we have GSK for sensors product that’s also targeting exon 51. I do know in there their open label results that they have shared they have much broader inclusion criteria and included patients who were much healthier at baseline and many of the patients in their open label study would not have qualified for enrollment in our study. So I think that hopefully answers your question, but how it’s differentiated from others datasets in the DMD states.

Are they being brought on primarily to advance the hemorrhagic virus program or is this part of a broader strategy to drive - maybe additional and future government contracts by advancing some of the earlier programs including [indiscernible] and the antibacterial programs as well.

The short answer is, both. The people I highlighted are part of the broader operational leadership team and they bring great skills and can manage and influence doing the right things on both sets of program. Obviously, Diane Berry and Theresa Moody can lend a lot more experience on the government side of things, but we can also use their expertise for example, Diane Berry is already helping me work on some of the legislative agenda in the rare disease area. There are areas in global health that we have not really focused on that she is helping me focus on. So again, Theresa Moody is an excellent project manager and we can learn a lot from her to apply that to the DMD space. Robin Wallace also spent most of her time as a Senior Director of Clinical Operations focusing on making sure our DMD program was intact, doing the right thing, could cap any audits by the FDA to inspections et cetera. Now, she is applying that rigor to make sure we’re doing the same thing with our math studies for example on the government side. So I think it’s part of my operational leadership team and expect them to contribute across both sides of the business.

Your next question is from the line of Reni Benjamin with Rodman & Renshaw.

I guess just a little bit of clarity, maybe I just missed it in the - in your prepared remarks, but our 201 and 202 completely distinct studies that are running or is 202 kind of the rollover extension phase of 201?

Yes, Reni, study 202 is the extension, right, so it is the rollover. It’s again - as you know, it is common and usually preferred that once you start a cohort of patients if at all possible it’s great to get uninterrupted dosing to show in the case of a chronically - chronic disease that’s going to need treatment potentially for a lifetime that you want to gain uninterrupted dosing from a safety standpoint and to measure while you’re added get some efficacy measures as well. So this is the rollover extension study. We’ve designed it for an additional 80 weeks, okay, from the study 201 28-weeks, again 24 weeks blinded portion versus 4 weeks open label. And that as I mentioned was to prepare all of the remote local sites to take these patients and continue following them. So it’s basically we’ll have - at the end of study 202, we’ll have 108 weeks of data on the initial treated cohort and then again about a year and a half of data on the placebo patients who crossed over.

And just - I think you mentioned that you’d be collecting clinical data every 12 weeks or so in that extension phase. Would that mean - is that correct and if so, since it’s open label, would it be possible or would we be getting updates every 12 weeks as to how the data is continuing to progress?

Yes, I mean that is one of the benefits and beauties of an open label study is that unlike the blinded portion which you have to clean and scrub before you lock down and once you unblind you can’t go back. Open label often times is reported as unaudited data in a more timely fashion. We obviously we get a little bit of time to make sure we analyze it and understand what the data is telling us. But yes we would anticipate continued communications and updates in the open label portion of that study both safety and efficacy and again that’s why we are excited to have, have got all these patients rolled over.

Okay. And just regarding the clinical parameters can you just review for us what should - when the top line results come out what should we be focusing on. You mentioned that you’re looking at a lot of data points and I’m sure you’re going to specify which ones you think are most important. Can you just give us as of which are the ones that you think are most important. Should we be looking for an improvement in these parameters or it’s just a decrease in the decline a good enough result to move forward.

Yes. It’s a great question Ren, So first of all this is the first placebo controlled study with Exon skipping effects in DMD. And so we don’t know what to expect, we never seen an Exon skipping drug tested against the placebo group. So what I anticipate and again how we selected these patients is I’m guessing again we don’t know until we unblind that the placebo group will shoot some level of decline on at least some of the parameters we are looking at. Whether the treated group shows stabilization, an increase which I think would be beyond expectations if these boys were getting improvement. Or do we just show a significant kind of mitigation of the rate of decline which could also be a win for the treatment effects. So, it ultimately is the delta that we’re going to be focusing on. What happened to the placebo group from base line over 24 weeks and what happened to the treated group and how large is that delta on a variety of parameters. Now, we did capture a lot of clinical endpoints and it’s hard to predict which ones will show the greatest treatment effect and its one of the reasons we looked at a lot of end points because we don’t know what exon skipping in producing dystrophin and will actually produce. Is it going to have a greater impact on six-minute walk? Is it going to have a greater impact on muscle myometery strength testing? The MBITTs maybe will see a greater impact on the four stair-climb test or the 10 meter walk is part of Norstar ambulatory composite score. So part of the analysis will be focused on where are we seeing the greatest treatment effect and how meaningful is that treatment effect. So again I can’t be too prescriptive at this point but again we will highlight what we believe demonstrates the impact that our drug is having on the disease.

Okay. And just final question from me, disregarding any sort of partnership talks or discussions that may or may not be going can you give us any color? Is there an excitement in the field at least given what pharma is sort of going through and a lot of the acquisitions that are taking place right now? Do you see a heightened level of interest and with that our people kind of waiting for this data or what they want even more advanced data to formally evaluate the product?

Yes, Reni there is definitely been interest from various pharma partners in this program, in the rare disease space in general and in DMD in particular and again I think they have given as feedback that they have like what we’ve done over this past year in a few months with this program. I think we heard a lot of feedback that these same pharma partners did not have the confidence and faith in previous management and maybe I could do this the right way and I think we addressed that. I think at our current valuation of the current economics that would be attached to a deal prior to the data when the data is so close. Again doesn’t make much sense because of they are not going to give us economics that would reflect what we think data set and how much de-risk the program. So I think we have to see where our valuation is post data set will have to see what the interest level is in that post data and again we have look at the economics of interested parties but make no mistake we believe this is the program that we are managing well, we’ve got the right expertise who knows how to do job development in the rain diseases and Duchenne in particular and we have to be compelled with an economic package that makes sense for partnership. So again our job is to keep this program moving, keep creating value for it, and we will see how that’s reflected in many overtures from partners.

Your next question is from the line of Mara Goldstein with Cantor Fitzgerald.

Just a point of clarification on the Duchenne study, the endpoints - even though you are collecting the information the endpoints do not specifically include these functional tests like the six-minute walk test for muscle strength or anything like that that purely for your use and not necessarily as an endpoint? Correct.

Mara, no, not exactly. So we are collecting all of those as endpoints. And - but they are - it’s how we would describe it as exploratory, okay. So we have identified a primary endpoint of dystrophin as a percent of - positive fibers as a percent of normal, okay. Again similar measure we did in our previous UK study. So and we have a key secondary endpoint of looking at the T-cell infiltrate in the muscle biopsies pre and post. We think even with this small sample size that we have a chance to show statistical significance on either of those endpoints or possibly both, and I think that is something we need to have or we hope to have as the foundation of our biologic activity, right. And a foundation of an efficacy point. Now the endpoints that we’re going to be looking at from an exploratory basis, it’s hard to say if any of these could be powered to show statistical significance, but what we’re intending is that at the very least we will see directional data that suggests that there is a treatment effect and maybe compiling data numerically that suggest the treatment affect. And again the study was originally designed to inform our pivotal study and we think that this information will allow us to power and figure out how to size the length of time we need to provide treatment in the pivotal all of these things could be informed. Now as we get the statistical significance on any of those clinical outcomes, I think we have a home run on our hands. So we’ll have to see if the treatment effect is robust enough, I have to show that.

Right. And I just I know this is maybe speculation at this point to some degree because, you think about signing a Phase III which has be done and also looking at INDs further compounded, but when do you anticipate you might be able to look at cocktails of the treatment, cocktails the drugs for treatment?

I think that is what I would call as a step three, okay? Step one is demonstrating that our technology can produce treatment effect with a target exon, exon 51 in this case with Eteplirsen. Step two is to reproduce similar results in terms of safety and efficacy looking at another exon skipping application or tool like this would be our exon 45 and our exon 50 program that we hope to get in to the clinic. I think at that point we hope to be in FDA and show that we have sequence dependent efficacy and sequence independent safety in terms of and so that if we were able to get a pan exon or class approval where maybe submitting in the data tax targeting exon would allow us to have a group multiple exon skipping drugs. I think at that point then it’s a matter of combining those rights for those features with a double skip, okay to restore dystrophin in their genes - in genes translation. So I think again that’s a little further afield but it is something that we’re thinking about, but I think we have to clear the first couple of steps first.

Our last question comes from the line of Richard Deutsch with Ladenburg Thalmann.

Yes. Chris, in one of our previous conversations, I seem to recall that we were discussing whether Eteplirsen platform could be expanded outside of just the Duchenne exon and I think you mentioned to me that it wasn’t able to. Can you review that and explain why you will be able to skip exons in Duchenne, but you wouldn’t be able to translate that to target exons that maybe helpful in restoring other genetic enabled diseases.

Yes. So first, I would clarify your interpretation of what I said. So, let me be clear. We have a full research program that is focused on exploring new chemistries. We’ve advanced one of those new chemistries, PMOplus that I described looking at antiviral targets, no reason we couldn’t explore the PMOplus chemistry to look at non-viral targets as well. We also showed demonstrable proof of concepts with a peptide conjugated PMO, which turned out to show some toxicity when dosed systemically, but we have continued to advance peptide-conjugated versions of our PMO with the interest in getting better cell penetration into different cell types right to go after different disease areas and tissue targeting and to be able to try to start to dial up or down a various PK properties and targeting a different, different cell types. What I’ve mentioned around our PMO chemistry okay, which is the oldest base backbone chemistry we have - we referred it is the naked PMO backbone chemistry. No longer has patent protection. Also the application of our PMO which has worked a well in DMD to date when delivered systemically seems to have better affinity for disease cell types where the cell membrane is compromised where what we described in DMD field is leakier by the cells so, in the case of DMD when we dosed our PMO systemically its get uptake into leaky disease muscle tissue to allow us to ultimately translate protein and restore dystrophin. We do not see the same affinity for healthier cell types, and so what I meant to convey if you interpret it differently, is that we are focusing in other disease areas with our advanced chemistry that have shown better interest for your uptake better affinity for other cell types and again we that PMO may have application for other disease areas and we are exploring that with some academic collaborator along with new chemistry, but we’re not to disclose where those applications might occur.

Okay, ladies and gentlemen, with that we are out of time for our question-and-answer session today. So I would like to turn the call back over to management for closing remarks.

Okay. Thank you, operator. Well, look, everyone at AVI is very excited about the progress we’ve made at the company over 2011 and the beginning of this year. We have an ambitious, but achievable set of goals for this year. We are very close with the DMD dataset and we look forward to reporting on the progress of that on our next call or before then at various conferences and investment conferences throughout the year. So thank you all for joining us today.

Ladies and gentlemen, that concludes today’s conference. Thank you for your participation. You may all now disconnect. Have a great day.