Savara Inc. (SVRA) Q3 2015 Earnings Report, Transcript and Summary

Good afternoon everyone and welcome to the Mast Therapeutics Incorporated, Third Quarter 2015 Financial Results and Update Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. Please also note that today’s event is being recorded. At this time I’d like to turn the conference call over to Ms. Ioana Hone, Head of Investor Relations at Mast. Ma’am, please go ahead.

Thank you, Jamie. Good morning. During this conference call, we will make forward-looking statements within the meaning of federal securities laws, in regard to our investigational drug our business strategy, expectations and plans, our objectives for future operations and our future financial conditions. All statement other than statements of historical facts are forward-looking statements. Such statements may include words such as belief, could, would, will, plan, intend, and similar expressions. You are cautioned not to place undue reliance on forward-looking statements, which are only predictions and reflect our belief based on current information and speak only as of today, November 12, 2015. For a description of risks and uncertainties that could cause material differences between our actual results and those stated or implied by the forward-looking statements, please see our quarterly reports on Form 10-Q, filed with the Securities and Exchange Commission on August 12, 2015 and November 12, 2015 which are available on our corporate website www.masttherapeutics.com and at the www.sec.gov. With that, I would like to turn the call over to Brian Culley, Chief Executive Officer of Mast Therapeutics.

Thank you, Ioana. Good afternoon everyone and thank you for joining today’s call. With me today are Brandi Roberts, our Chief Financial Officer and Ed Parsley, our Chief Medical Officer. I’ll begin today with an update on our lead candidate Vepoloxamer for sickle cell disease. As you all know, Mast is conducting a 388 patient Phase 3 study called EPIC, which seeks to demonstrate that Vepoloxamer can reduce the duration of a vaso-occlusive crisis. We now have opened more than 75 sites in 12 counties with more than two thirds of the study sites located in the U.S. We recently opened sites in the United Kingdome and France and a few weeks ago our EPIC study surpassed the 80% enrolment mark. We are extremely proud that Mast has enrolled more patients in an interventional sickle cell disease study than any company in history. Thank you in part to an incredible effort by our clin-ops team and motivated investigators around globe. We are able to share some key demographic characteristics from the EPIC study. The average age of patients’ enrolled to-date is 15 years and 72% of EPIC patients are under the age of 18, a distribution which is in line with our objectives. About 80% of our clinical sites have enrolled more than one patient reflecting broad support for the study and more than 50% of patients’ enrolled to-date are coming from the U.S. That’s a finding which we expect will continue through completion of the study. Notably 61% of patients enrolled in EPIC are on hydroxyurea. As you may remember, in a Phase 3 study run by prior sponsor vepoloxamer showed a statistically significant reduction in the length of vaso-occlusive crisis in pediatric patients and patients who are on hydroxyurea. So as such, we believe the demographics I just shared are encouraging and give us added confidence about the potential for vepoloxamer to show a clinical benefit in sickle cell disease. In September, the Independent Data Safety Monitoring Board for the EPIC study held a meeting to review data from the first 250 patients enrolled in the trial. The SMB reported to Mast that no unexpected safety signals had been observed and that no further meetings of the DSMB would be necessary before completion of the study. Separately, as we discussed in detail at our Investor Day in early October, a blinded statistical analysis conducted on the first 250 patients concluded that the study’s actual performance was consistent with the statistical assumptions of which the study was designed, including as expected levels of variability in the primary efficacy outcome measurement across the U.S. and non-U.S. regions. Turning again to enrolment, as many of you saw in the Detailed Enrolment Graphic we shared publicly at our Investor Day, patient enrolment has tracked very closely with our projections. While we experienced slower than predicted enrolment in the last month we believe our service performance is an outlier and not a signal of a broader slowdown. In fact vendors enrollment is back in line with our original projections and specifically although we are only in the second week of November, we already enrolled more patients this month than we did in the entire month of October, which gives us confidence that we really only lost a few weeks. Now we don’t know why October was slower than expected, but we solicited feedback from our sites, including during investigated meetings which we conducted in the second half of October, at which approximately 90% of our U.S. sites were represented and based on their continued enthusiasm and support we continue to anticipate the enrolment of the final patient will occur in Q1, 2016. To be conservative however, we are now updating our timeline for announcing top-line EPIC data to Q2, 2016. This will provide us with sufficient time for post-studies activates required prior to announcing top-line data. For those who are unfamiliar with this process, I will just briefly explain that following the final patients enrolment and resolution of their crises ,we must wait for a 30 day observation period to pass, followed by weeks of blinded data review and quality control procedures, leading ultimately to data base lock and unblinding by the study statisticians. Once their work is complete, the statisticians can provide senior management with the top line data and that is when Mast executives will learn the outcome of the study and its top-line results, which we will announce promptly thereafter. In addition to our focus on enrolment, we have been working to enhance our vepoloxamer data set and support our NDA with additional clinical studies. You will recall that we previously announced positive results from a 60-patient thorough QT study and last month we dosed the first patient in our weekly dose study EPIC-E. EPIC-E will expand our already extensive safety data base with repeat exposures and provide physicians with new world experiences using vepoloxamer during a vaso-occlusive crisis. Third, we are in the process of staring a special population study in approximately 40 renally-impaired subjects to supplement dosing information in our eventual label. This may sound like a lot of clinical work for a rare disease program, but our objective is to deliver to the FDA a robust data package to help ensure vepoloxamer is improvable and utilized in the most appropriate way for each patient. Thus each of these clinical studies I just mentioned, along with the tissue oxygenation sub-study and bio market data being collective within EPIC is intended to enhance our NDA and provide the agency with supporting evidence to demonstrate vepoloxamer efficacy in improving the path of physiologic processes occurring during vaso-occlusive crisis. Because we believe vepoloxamer will demonstrate a clinical benefit in this study, we have already begun to prepare for an NDA submission, including building out an experienced regulatory team. Following the announcement of top-line results from EPIC in Q2, we will request a pre-NDA meeting with the FDA to discuss our submission and to gain their insight on our forthcoming application. We believe we will be invited to participate in an FDA Advisory Committee meeting and are planning for this event. Among other things, the Advisory Committee meeting will give the agency the opportunity here to refer some patients in advocacy groups about the need for a new therapy in this disease. If our NDA is approved, we would anticipate launching vepoloxamer in the second half of 2017 consistent with our prior guidance. From a commercialization perspective, we believe vepoloxamer is extremely well posted for success in the FCB market, as a novel therapy with a unique and relevant mechanism of action and which has the potential to be the first and only approved treatment to reduce the duration of an ongoing crisis. We would have a significant first-to-market advantage as we currently enjoy more than a two year head start on our closest interventional competitor and an even greater lead on prophylactic treatments which have only just begun in the long road of clinical testing. Certainly we’ve been extremely focused on conducting a rigorous Phase 3 study in sickle cell disease. I’d like to note that we also are excited about our other clinical programs, because we potentially can impact a far greater number of patients in diseases including heart failure and stroke. In particular, last month we initiated our Phase 2 study of vepoloxamer for the treatment of chronic heart failure. With Phase 2 study as a randomized double blind placebo control multicenter and global study utilizing a new formulation of vepoloxamer. Approximately 150 patients will be randomized equality into one of three studies arms and receive one of two dose levels of vepoloxamer or placebo control. Vepoloxamer will be administered in addition to standard medical therapy as a single intravenous infusion lasting just three hours in an out-patient setting or short stay in-patient unit. The purpose of this study is to evaluate whether vepoloxamer can provide a functional and/or biochemical benefit to damaged heart muscle cells, which will be evaluated by echocardiograms and blood based laboratory markers and to evaluate the safety and pharmacokinetics of vepoloxamer in chronic heart failure patients compared to placebo control. Notably, this Phase 2 study is testing a new formulation of vepoloxamer designed to be more suitable for heart failure patients and for which we recently filed a provisional patent application. We now have multiple pending patent applications, including a new formulation application and a new composition of matter application, which would provide multi-protection for vepoloxamer in the setting of heart failure. This new formulation is distinct from our sickle cell formulation, which we believe could provide us with important commercial advantages and/or business development opportunities. In addition, earlier this week non-clinical data of vepoloxamer in advanced heart failures was presented at the American Heart Association’s Scientific Sessions. The results from that study indicated that repeated administration of vepoloxamer in animals with severe heart failure elicited progressively sustained improvements in Left Ventricular Systolic Function, which is evident for at least six weeks. We were pleased with the AHAs recognition of this study and continue to believe the results support the development of vepoloxamer for the treatment of acute and chronic heart failure. We also continue to work with world leaders in the stroke filed, to develop a regulatory and clinical strategy for vepoloxamer in ischemic stroke with the goal of demonstrating that vepoloxamer can improve microvascular perfusion and reduce infarct sizes in patients. Depending on the outcome of our other programs, we would look to advance the stork program into the clinical in the second half of next year. Now, we usually spend the majority of our time talking about vepoloxamer, but I think it’s worth highlighting the progress we recently made with AIR001, our second pipeline product. We believe AIR001 maybe uniquely suited to address the serious unmet need of patients with heart failure with preserved ejection fraction of HFpEF and our pursuing development in that indication. In particular, we currently are supporting two institutional sponsored Phase 2a studies of AIR001 in patients with HFpEF. Initial observations from these ongoing Phase 2a studies are encouraging. In particular, this week at the American Heart Association a lead breaking clinical trial presentation suggested that organonitrates, which otherwise can compete with AIR001 were not a suitable treatment for HFpEF patients. But the medical expert from the main clinic who presented this work explained that inorganic nitrates might have been a better choice for this patient population, based upon biochemical issues with the bio activation of organonitrate that occur in diseased states such as HFpEF. We certainly agree with the suggestion and in fact data analyzed from the first six patients from one of these two studies is showing significant reductions in pulmonary arterial, pulmonary capillary and right atrial pressures. We recognized the sample size of six patients in the study thus far is small, but we nevertheless are encouraged by the fact we’re seeing a positive early signal for AIR001. In our second investigator sponsor study which is blinded and placebo controlled, there are still four patients left to enroll. So we will not see that data until after enrollment is complete, which we hope will turn before the end of the year. But if the results from these Phase 2 studies are positive, we would plan to begin a Phase 2b proof of concept study of AIR001 and HFpEF patients next year, either on our own or with a partner. Overall, I think it’s important to keep in mind that there are two Phase 2a heart failure studies yet to be reported by Mast, which may markedly elevate the value of our second asset. I have two additional items to mention to you today. We continue to be committed to raising awareness in the investment community of Mast’s work and our progress. We received substantial feedback which is positive from our Sickle Cell Conference in September and our Investor Day and Dr. Marty Emanuele, our Senior Vice President of Development will be representing Mast in upcoming events hosted by Maxim Group called Sickle Cell Disease, from science to the commercial opportunity and how the treatment paradigm is changing, which will be held on November 20 in New York City. Additionally and I think this is a great example of our last, but is not any least. We also recently announced the appointment of two new members to our Board of Directors, Peter Greenleaf and Matt Pauls. We are excited to welcome the contributions of these two highly respected and successful biotech executives and are pleased they want to be involved with our company’s growth. Peter Greenleaf is the CEO of Sucampo Pharmaceuticals and has a long track record of commercial and transactional success and similarly Matt Pauls is the CEO of Strongbridge Biopharma and brings us a wealth of experience, most notably in commercializing drugs for rare diseases. We believe their collected expertise in helping small and mid-sized companies transition into industry leaders will be vital as we approach the completion of our EPIC study and position for product commercialization. At the end of the day, we believe the best way to reward our shareholders for their patience and support is to complete the EPIC study as quickly as we can and with the highest quality data possible, in order to demonstrate vepoloxamer’s clinical value and to continue to build value across other indications, as well as with our AIR001 program. With that, I’d like to turn the call over to Brandi to go through our Q3 financials.

Thank you, Brian. First, let me began by discussing the highlights of our third quarter 2015 operating results. As of September 30, 2015, the company had cash, cash equivalents and investment securities totaling $49.9 million. Stockholders’ equity was $33.5 million. Research and development expenses for the third quarter of 2015 were up 36% to $7.3 million, compared to $5.4 million for the same period in 2014. This increase was due primarily to an increase in research related manufacturing cost for vepoloxamer. Selling, general and administrative expenses of $2.5 million for the third quarter of 2015 were consistent with the same period in 2014. We strongly believe in vepoloxamer’s potential and are positioning ourselves for success. As a result we expect to spend more capital each successive quarter on NDA preparations, including the addition of new employees, commercial strategy and readiness initiatives and other related activates that weren’t necessary earlier this year or last year. We expect our operating expenses for the last two months of 2015 will be approximately $9 million to $10 million, excluding share based compensation expense. We always try to maintain at least 12 months of cash-on-hand at all times and we anticipate that our cash balance of almost $50 million at September 30, which includes spending from Hercules will be sufficient to fund our operations for the next 12 months. Let me turn the call back to Brian to conclude our corporate update.

Thanks Brandi. Mast should be announcing data from the largest intervention of sickle cell trial ever conducted. In parallel we are comparing the business for clinical, regulatory and commercial success and are committed to bringing new treatments forward for patients suffering from severe diseases. We thank the patients and their families and caregivers, as well as our stockholders for giving us this opportunity. We also would be pleased to take a few questions at this time. Operator.

[Operator Instructions] And our first question today comes from Jason McCarthy from Maxim. Please go ahead with your question.

Hi Brian, hi Mast team. It sounds like everything is just continuing to haul along. We are excited for vepoloxamer, we’re also excited for the other indications past SED. But for sickle cell, can you just discuss some of the IP state that’s around vepoloxamer as you’re headed towards commercialization, in terms of patent expirations or what do you expect the IP state to look like once you do get to commercial launch in 2017.

Yes, certainly Jason. Thank you and thank you for recent initiation. The IP approach that we take is unsurprisingly to have multiple layers. So with respect to sickle cell disease, possibly the strongest and easiest to understand is working status, they open exclusivity, which typically a company would enjoy seven years. We also have a number of patent applications that are done entirely recently, including a composition of matter application, which if allowed would provide 20 years of exclusivity, so that would give us a lot more life beyond just the orphan designation. We also have a number of other applications in place around manufacturing end use and there are some aspects of the purification process of vepoloxamer that are not subject matter of patent applications, but could be characterized as a trade secret. So it’s not a simple saying to take NF grade poloxamers 188 and turn it into our product. So those three levels give us what we feel is quite a high bar, which we project that market.

Okay, great. And just this one more question. It’s a little more abstract I guess, but it certainly can be realistic. Assuming success launch in both the U.S. and Europe, has Mast thought about Africa where you’re going to have the biggest sickle cell population in the world. Given that it’s an IV treatment and I guess my question is, is it feasible to try and go into Africa where establishing an IV in many regions could be challenging at best in many cases.

Yes, so the answer is we have thought about it. Like many commercial situations, there’s layers. You have to do some market segmentation. So it is not the case that you look at 4 million individuals in Nigeria and multiply some acquisition cost to that. What you have in terms of market segmentation is you have pockets of cash pay, particularly in countries in Northern Africa where there is a very real and tangible market opportunity. Probably for Mast the access to that market is best done through a partner. We don’t today have the kind of relationships that allow us to do that properly. So that would be our approach. With respect to Europe, you didn’t ask about that, but that is something that there is a little bit more of a trodden past for which we could pursue Europe on our own or we could seek a partnership. But I think when we think about it in particular, Northern Africa, for us that is more – there are companies out there who like those kinds of projects and they probably represent good partners, because your absolutely correct. The number of individuals with sickle cell disease in some of those countries, Morocco, Algeria etcetera, is quite significant.

Okay, great, thanks. Congratulations again on all the progress Brian.

Thank you, Jason.

Our next question comes from John Newman from Canaccord. Please go ahead with your question. Mr. Newman, is it possible your phone is on mute.

Hello.

We can hear you now. Please proceed.

Hi, yes I just had a question Brian with regard to just the way that you think the market will respond to this product given that there is a lot of Medicaid patients. I know that you’ve done a lot of detailed analysis on the market and I’m just curious, could you specifically talk about any differences that you’ve seen among specific sites or hospitals in terms of their payment levels and just sort of the body of work that you’ve done with respect to digging up all that relevant information. Thanks.

Yes, so thanks for the question John. We have done some appropriate levels of work for where we are in development, to understand the commercial market here in the U.S. and one of the things that is beneficial I suppose for Mast is that there is a high concentration of patients located in certain typically metropolitan centers and even within metropolitan centers you’ll find certain hospitals that tend to be the go to hospitals. So the patient may have a better experience at hospital A than hospital B and share that experience with others and you find that they necessarily become centers of excellence, but they become sort of destination locations for patients. So with respect to the economics, those are all very individual across the patient population, but also unique to the hospitals. You have additional hospitals, you got different structures. We’ve spoken about some of this at our Investor Day last month, but I think the takeaway is that you see a huge range. You see hospitals that have all manner of -- they call them subsidies and supplementations that make their effective reimbursement rates very, very different. So you could find an urban hospital that has a lot of volume that has accessed some of the supplemental reimbursement opportunities if you will, where you might see one center as getting even as much as four or five times more dollars for treating a patient quoted to sickle cell data inclusive prices than a hospital just down the road. So it ends up being an approach that necessarily needs to be sort of targeted on a hospital by hospital basis. So for us just speaking very globally, we sort of look at the top 200 hospitals and say, okay we need to understand how each of them operate and have appropriate strategies therein. Does that help answer that question?

Yes, thank you.

Good.

Our next question comes from Yale Jen from Laidlaw & Company. Please go ahead with your question.

Good afternoon and thanks for taking the questions. The first question I have is that you guys mentioned a start to recruit patients in London and I guess Paris, U.K. and France. I remember in the Analyst Day that you guys have mentioned that in UK and France that there’s a high concentration of sickle cell patients in those areas. So could you give us a little bit more sort of color in terms of how the patient recruitment goes at this moment and what do you anticipate?

Yes, I can talk a little bit about the population. So perhaps you’re being too conservative, but we have to meet about 40,000 patients in the EU. I’ve seen numbers from other companies in sickle cell that are significantly higher, but we work from 40,000 patients and our data suggests that about 54% of those 40,000 are residing in the UK and France and we know that the concentration goes beyond that into really Paris and London. So for us, both with respect to enrolling patients, as well as ultimately getting drugs to those patients, the fact that there is a high concentration is very helpful to us. But with respect to enrolling itself out of the Paris and London hospitals, I mean they’ve only been opened for a short amount of time, so I’m not sure. Did you want us to comment more globally on ex-US recruiting or help me to understand specifically what aspect of those two territories you’d like to know more about?

Just saying that – okay, maybe just broadly speaking in terms of ex-US recruitment this fall, I mean what percentage patients so far have sprung outside of U.S., I guess that’s one tip that’s maybe helpful.

Piloted partially. We expected enrollment ex-U.S. to be about 40% of the overall study population. As you may recall, Brain had said that we have over 75 centers opened, but more in the United States. So we expect that more enrollment will come from the United States based on volume of centers. However as Brian did mention, we did recently open UK and France and we intend to have sites opened both, in London and outside of London, as well as in Paris and outside of Paris.

Okay, great. That level of color is very useful. And just the last part of the question here, which is that Brian you mentioned that the process of the last patient and you have a one month follow-up in some of the blinding data review and ultimately on blind data. Could you just maybe either repeat or just give us a little color in the overall in that timeline, how long that may last after the last patient has been recruited?

So as Brian said, every patient gets a 30 day safety follow-up. However, when you look to close the ultimate database, all of the ongoing adverse events, particularly the serious ones are followed to resolution. So it could be that that last patient, if there was a safety issue, if that follow-up period extended beyond that. Then, when we finally get that last patient wrapped up safety wise, then we can really begin the final process of locking down the data from each individual patient, each individual site in each region, each country and until you kind of get there, you can’t put a real timeline against that process, because you really don’t know what region and where most of your data or your outline data is going to end up. So it’s very difficult for me to say, yes after that last patient I can deliver the results by X date. I really can’t do that at this point.

Okay, that’s very helpful too and thanks a lot and congrats on the progress at this point.

Thank you so much.

And your next question comes from Michael Higgins from Roth Capital Partners. Please go ahead with your question.

Thank you and thanks guys for opening the lines, hosting the call. Obviously you have very little data in a few months despite the push back from Q1 and Q2 which is over in your term. I may have missed it, is there any update for us on the duration of IV opioid dosing and the standard deviation seems like the age, those over 18, the HU patients percent from the U.S., etcetera, etcetera all seem to be in line with the Analyst Day, but I didn’t hear the update on the IV opioid dosing.

So what was presented at Investor Day was the last time that the data has been looked at by the blinded statistician. So our plan was to not continue to query the data. The data was queried at that point to really make sure that we had our sample size right and then our regions were performing as we had expected them to. That isn’t a parameter. We plan to continue to monitor, because the studies are over 80% involved. So we really – that was a one-time look. We do monitor region-by-region as more regions come online and involve for whether or not they are outliers, because we would want to adjust and perhaps hold enrollment in a region. So we do continue to look for outliers, but other than that, no, we don’t continue to launch that.

I see, so the update is the 80% and sincerely the breakout in demographic, so that explains why it’s very similar. A follow-up if I could, is just looking ahead to a possible outcome, we’ve talked before that it seems like that it should have one, you mentioned that on the call as well Brian. Any read in as to why you may need one or why the FDA would possibly not look for one?

I don’t know why they wouldn’t. The agency has been I think fairly explicit about their supports for finding a new treatment for sickle cell patients. Even not long ago it was identified as an aim of theirs right on the homepage for the FDA and they certainly have been very active in including sickle cell in patient focused drug development programs, hosting a number of meeting and really educating the organization about the disease. So I think if we have data that is supportive of an NDA submission and it is accepted for review and continues down the path, I think the agency would welcome as we would welcome an opportunity to highlight what does the first treatment in sickle cell disease in 17, 18 years look like and let’s understand, let’s all use as an educational opportunity to understand what’s important in sickle cell patients, what do they need to see from a new treatment and what does an approvable application contain etcetera.

Okay, that’s helpful. If I can try to sneak two more in here that are closely related; you have the average number of sickle cell patients that your EPIC docs in the U.S. are seeing. And then on a related note, are you conducting any surveys of the EPIC docs, the patients, their families along the way.

So what we do know is that the major, the clinics that we are at follows a wide range of patients, for a routine patient care for sickle cell patients as low as following 30 patients at smaller centers to well over 700 patients at much larger centers. So there is a wide range of centers represented. Not all of centers are super high volume centers.

I though you said 150 as an average, would that be a reasonable number?

It would probably be on the high side, I think based on what the average center sees. And then other center of patients that they follow, not everyone is sick. So they may see some patients once a year, some patients once a month or patients in a crisis in that wide range. So we know there is a broad range of the spectrum of disease among sickle cell patients.

And Greg, remind me any surveys being done along the way.

Surveys of – you mean the patient families or..

Yes, sometimes these studies...

We are highly engaged with our centers and with patient family events. So we sponsor patient family events and have our personnel present at those events to really kind of keep both, the fact there is as study ongoing and research is ongoing and the EPIC program in front of them, so that they are really are aware that they should come in and request that when they are in an emergency department and they know that there is a possible new drug available to them. So do highly engaged with our sites for that reaction.

I appreciate the feedback. I’ll jump back in the queue, thanks guys.

Thanks Michael.

And our next question comes from Ted Tenthoff from Piper Jaffray. Please go ahead with your question. Q –Ted Tenthoff: Great, thank you very much. And just if you could remind me, what are the marketing plans in Europe, especially was it – it is something generated there. And then if you could give us a brief update on the heart failure study and the plans for stroke.

Sure Ted. So Europe from a commercialization perspective is going to follow the U.S. So the US timeline and launching in the second half of 2017 is attracting most of our efforts if you will. Europe well, the work that we put into planning for Europe is going to track backwards from when we think we could be on the market in the Europe. So we are more advanced, we are certainly far more advanced in terms of readiness in the U.S. I would say that with respect to Europe the effort has been a little bit more about understanding the demographics, understanding the patient population, understanding the treatment diagrams and so forth, than it is being able for example have a conjuring pricing analysis already in our pocket or having sat down with the appropriate payer representatives and having that all dialed in. But as we go forward that work will mature and we’ll be able to share I suppose more in detail about what our thinking is. With respect to heart failure, I’m sure you are aware we recently initiated the 150 patient heart failure study. Stroke would be contingent if we have positive date in Q2 next year in sickle cell disease. We expect that our resources and ability to move vepoloxamer into the stroke indication will be somewhat facilitated. Our excitement for that will of course be increased. If we do not have positive data, then we’ll just have to evaluate the opportunity at that time. So it’s sort of difficult to really look beyond the top-line data in sickle cell and be conclusive about it. And what we are trying to do is to provide the investment community and provide the asset options and opportunities to shine. We noted that vepoloxamer is suited for acute ischemic events and on one hand that’s exceptionally. It’s not a drug that’s designed for a specific disease, it’s really designed for an event. Its designed for these acute events. The problem is almost every acute event tends to be a challenge. They tend to be disease like stroke, and like heart failure, like sickle cell that inherently contain a lot of variability. So, for us we want to makes sure that if any one indication is not going to pan out because we don’t find what we are looking for with respect to clarity. Then the point or we find data variability than we had anticipated, we wouldn’t want that to terminate what is otherwise a program with a lot of potential. So we’ve had to put a hierarchy in place. We think that our best and nearest opportunity is in the sickle cell program and then brought in the heart failure as a recent addition, I think we certainly hope particularly based on the feedback that we received from the stroke expert, we really do hope that we are able to move it into the clinic in stroke, because I think there is a lot of enthusiasm to these experts to pull that indication. Q –Ted Tenthoff: That’s fairly helpful. So just to clarity, the plan will be to launch the drug yourself in Europe and then would you seek partners in the Middle East and Asia.

Yes, that’s our base case today, that’s exactly correct. Q –Ted Tenthoff: Great, thanks guys.

And our next question is a follow-up from Yale Jen from Laidlaw & Company. Please go ahead with your follow-up.

Thanks for taking the follow-up questions. I just want to confirm that you guys feel that the [indiscernible] meeting for vepoloxamer for sickle cell disease that you guys think that might happen or is something you may or may not think that will happen. Thanks.

Yale, personally I think we have to be ready for that eventuality and I think that’s really what we trying to give you or give the community a heads up that we know that this is a possibility. First new medication in 18 years, no clear regulatory pathway previously owned as far as the agency is concerned, that we would want to be ready for that eventuality and as Brian has mentioned. We believe that the FDA will want to hear from the sickle cell community, their thoughts on having a new medication. So we believe it will be a positive for us helping, for us to have the agency here from patients and families. We are just are saying we are ready for that eventuality.

Okay great. That’s very helpful, thanks a lot.

And ladies and gentleman, we’ve reached the end of the allotted time for today’s question-and-answer session. I would like to turn the conference call back over to Brian Culley for any closing comments.

Thanks operator. I appreciate everyone joining us this afternoon and please enjoy your day.

Ladies and gentlemen, that does conclude today’s conference call. We do thank you for attending. You may now disconnect your telephone lines.