DURECT Corporation (NASDAQ:DRRX) Q1 2023 Earnings Call Transcript May 8, 2023

Operator: Greetings and welcome to the DURECT Corporation First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tim Papp, Chief Financial Officer. Thank you, Tim. You may begin.

Tim Papp: Good afternoon and welcome to DURECT Corporation’s first quarter 2023 earnings conference call. This is Tim Papp, Chief Financial Officer of DURECT. Before we begin, I would like to remind you of our Safe Harbor statement. During the course of this call, we may make forward-looking statements regarding DURECT’s products and development, expected product benefits, our development plans, future clinical trials or projected financial results. These forward-looking statements involve risks and uncertainties that can cause actual results to differ materially from those in such forward-looking statements. Further information regarding these and other risks can be found in our SEC filings, including our 10-K and 10-Qs under the heading, Risk Factors.

To begin, I would like to review our first quarter 2023 financial results. Our total revenues in the first quarter were $2.1 million, compared to $1.9 million for the prior year. This increase was due primarily to an increase in collaborative R&D revenue. R&D expense was $8.6 million for the first quarter compared with $8.2 million for the prior year. The increases were primarily due to higher clinical trial expenses for our ongoing AHFIRM trial and contract manufacturing expenses for larsucosterol. For the first quarter, SG&A expenses were $4.1 million, compared with $3.7 million for the prior year. This increase was primarily due to higher market research expenses, higher audit-related expenses, as well as higher employee expenses. As of March 31st, 2023, we had cash and investments of $44.4 million as compared to $43.6 million at December 31st, 2022.

We completed a registered direct offering in February 2023, raising $8.8 million in net proceeds. Excluding the proceeds from the financing, our cash burn in the first quarter was approximately $8 million. We believe our cash on hand is sufficient to fund operations into the first quarter of 2024. Lastly, I would like to highlight that we will be hosting a KOL event in New York City on May 16th. We are pleased to be hosting Dr. Paul Gaglio from the Columbia University, Department of Medicine and Dr. Brett Fortune from the Albert Einstein College of Medicine, Department of Medicine in Division of Hepatology. Dr. Gaglio and Dr. Fortune are both renowned hepatologists with a wealth of experience treating alcohol-associated hepatitis or AH. We look forward to hearing their insights about the current treatment paradigm for AH, and the unmet medical need in this highly lethal disease.

Several members of our leadership team will join Dr. Gaglio and Fortune to discuss the ongoing development and commercial landscape for larsucosterol in AH in advance of the top line readout from AHFIRM. You can find the details for the webcast of the event in our press release from April 27th on our website. Now, I would like to turn the call over to our CEO, Jim Brown for an update on certain of our programs.

Jim Brown: Thank you, Tim. Hello, everyone. Thank you for joining us today for our first quarter 2023 update. We’re excited about the continued progress for our lead clinical program. Larsucosterol for the treatment of alcohol-associated hepatitis. 2023 is poised to be a significant year for DURECT as we look forward to completing our AHFIRM trial and reporting top line data by the end of the year. If successful, we believe AHFIRM has the potential to support an NDA filing. Our primary focus of the company remained gaining approval for larsucosterol in AH and bringing this potentially lifesaving therapeutic to patients with no effective treatment options today. We are nearing our enrollment target of 300 patients in our Phase 2b AHFIRM trial.

With more than 285 patients dosed to-date. We continue to expect completion of enrollment by the end of this quarter. As a reminder, AHFIRM is a 300-patient, placebo-controlled, double-blind, multinational study with two active dosing arms and a placebo arm of 100 patients each. We’re enrolling patients with severe AH, which are patients with MELD scores ranging from 21 to 30 and Maddrey Discriminant function scores greater than or equal to 32. The primary endpoint for AHFIRM is reduction in mortality or liver transplant at 90 days. We’ve enrolled patients in AHFIRM through a global network of clinical sites, including leading hospitals in the US, Australia, EU and the UK. Our sites include renowned liver centers, and we are working with some of the world’s preeminent thought leaders in AH.

The FDA has granted our larsucosterol AH program Fast Track Designation, and we are hopeful that a positive result in AHFIRM could support an NDA filing. With this in mind, larsucosterol has the potential to be the first FDA-approved treatment for AH, where there is a substantial unmet need for these patients. We designed AHFIRM to be a potentially pivotal trial based on our Phase 2a data, and our open-label Phase 2a trial, all 19 patients survived the 28 days. An encouraging results giving that approximately 26% of hospitalized AH patients die within 28 days based on historical data. In April, we announced that our Phase 2a data had been published online by the American Journal of Gastroenterology. This peer-reviewed article includes cross-study comparisons with well-matched severe AH patients from the contemporaneous trial conducted by the Defeat Alcoholic Steatohepatitis or DASH Consortium.

While the sample sizes were small, and these patients were not part of a controlled study, these comparisons indicate that severe AH patients treated with either 30 milligrams or 90 milligrams of larsucosterol has statistically significantly lower Lille scores compared to the patients treated with a standard-of-care including steroids. In addition, liver enzyme levels decreased rapidly in the larsucosterol-treated patients, including statistically significant reductions in ALT. We believe these results provide further evidence of the potential for larsucosterol as a treatment for AH. Our confidence that the AHFIRM trial will be successful is driven by our compelling Phase 2a study data, including the recently published comparisons, the mechanism of action of larsucosterol which ties directly into the biology of AH, and our multiple preclinical animal study, where we observed the profound survival benefit and multiple relevant acute organ injury model.

I’d like to briefly turn to the market opportunity for AH. In addition to this high mortality rate, AH represents a significant cost to the US healthcare system, with over 150,000 hospitalizations attributed to AH at a cost of between $50,000 to $150,000 each. As a result, larsucosterol represents a potential multibillion dollar opportunity in the United States alone, and it could simultaneously provide substantial overall cost savings to the healthcare system. We will discuss the economic opportunity for larsucosterol further during our upcoming KOL event. We’ve begun to lay the groundwork for potentially commercializing larsucosterol in the US and believe we can effectively launch the product to a modestly sized, hospital-focused Salesforce.

We are also continuing to build awareness around the role of epigenetic regulators in acute diseases like AH. AH is also a global concern, allowing our larsucosterol the potential to serve ex-US AH patients and their healthcare system. These ex-US markets represent additional attractive market opportunities. Because we enroll patients from a global site network, we believe a positive result from AHFIRM may support regulatory filings in the EMA and other regions. In summary, we continue to make great strides with AHFIRM and have enrolled more than 285 patients to-date. We are on track to complete dosing the last patient in the AHFIRM trial this quarter, which would enable reporting of top line results in the second half of this year. If successful, we believe AHFIRM has the potential to support an NDA filings.

With that, we’d now like to take any questions you may have.

Q&A Session

Operator: Thank you. We’ll now be conducting a question-and-answer session. Thank you. Our first question is from Kristen Kluska with Cantor Fitzgerald. Please proceed with your question.

Kristen Kluska: Hi, good afternoon, everybody. Thanks so much for taking my question. The first one I had is, if you could break down for us this $50,000 to $100,000 cost that you cited in your prepared remarks. I guess how much of this is just driven by the fact that patients are often in the hospital for a couple of days. And obviously, I respect and understand, the 90-day endpoint related to the FDA. But you know time to hospital, especially because in the 2a number of your patients didn’t even need that second dose. I guess like how important are those statistics going to be for payer conversation should this drug to be successful?

Jim Brown: It’s a great question, Kristen. Thank you and it’s good to hear from you. I’ll start it and then I’d like Keith to maybe speak a little further on this issue as well. I think we’ve seen from most of literature that I’ve seen is, there typical patient stay in the hospitals around six days. For those that live and longer for those that don’t. And for those that live, it’s about a $50,000 costs. For those that die in hospital it’s a $150,000. And the majority of patients that they’re going pass away actually, they move them out of the hospital to hospice care. But Keith, do you want to maybe speak some to the pharmaco-economic drivers vis a vis hospitalization costs?

Keith Lui: Sure. Thanks for the question, Kristen. I think it’s a good observation. I mean the folks that are driving the higher end of that $150,000 cost, of course, are the ones that unfortunately expire and die while in hospital. This is taken from the HCUP NIS data set. And our belief, and we’re doing a continued research in this is that, those are the patients that unfortunately take up the most amount of healthcare utilization as far as diagnostics, more intensive care unit time and hospital length of stay. And you had cited our Phase 2a study that showed that you know two-thirds of the severe patients only required one dose. However, that may be different in the AHFIRM trial. So we’ll be interpreting all of those results, length of stay, time in ICU and time a step down unit, overall length of stay. And all that will be important as we put together our value prop and budget impact models for the market access and payer environment.

Kristen Kluska: Thank you. Appreciate your thoughts there. And a question we’ve been getting is just, why do you believe that other mechanisms have failed in this space? And what is it about larsucosterol’s mechanisms that might be more appropriate in the setting, especially with this recent paper and some of the deeper diligence you’ve conducted?

Jim Brown: That’s a great question as well. And I’ll address it and then we’ll see if we have some more, because we have both WeiQi and Norman on the line as well. I think that first off, it’s a complex disease, AH, unfortunately leads to the breakdown of a number of systems. These patients are eventually dying of multi-organ failure. So it’s not just the liver, eventually most of them die actually from kidney disease. And we’ve shown with larsucosterol that we protect against the multi-organ failure, protect the kidneys, the liver, the lungs, and numerous models. And we’ve shown – showing up as it were in protection of these organ systems in humans who have chronic kidney disease or chronic liver disease, when we dosed and seen reductions in the set of care in 18 these markers of cell death.

If we look at drugs that have been tested against AH in the past, there the two main areas of focus, and one was in trying to reduce apoptosis and a couple of drugs have been tested there and unfortunately, didn’t work. And then there’s also been drugs looking to block certain a cascade of the inflammatory system with monoclonal antibodies. And those also were more one note and really couldn’t address the breadth of the disease. With larsucosterol, we have a molecule that changes what we know is gone wrong. We know that there are elevations in DNMT or DNA methyltransferase levels in these patients. And so, we know from patient data, that there is hypermethylation ongoing and we know a host of different systems within the cells are damaged.

We know larsucosterol protects against mitochondrial membrane’s damage. And so, we’ve got that component of it. We know it reduces lipotoxicity and reduces inflammation, enhances cell survival and regeneration of the cells and increases autophagy there’s just a host of different components that have gone wrong that are addressed. But maybe I give it to – maybe WeiQi, you can start and then, Norman maybe finish on this as well. Any additional thoughts?

WeiQi Lin: No, I think, Jim, you have covered it quite well. I would also just add one more thing, because alcohol, particularly alcohol-associated hepatitis subjects, they do have impaired liver regeneration. So, liver regeneration is very important in overcoming the acute liver injury, and then resulting acute liver failure. So, larsucosterol certainly promoting the liver regeneration that’s also important. Jim did mention that a little bit as well.

Jim Brown: Thank you. And Norman?

Norman Sussman: Yeah – pardon me, too much to add to that. I was very impressed with the mitochondrial stabilization, because the mitochondrial dysfunction is a big part of the apoptosis pathway. So that was important. And the quote, you know, steroids affect inflammation, but they also probably interfere with liver regeneration. As WeiQi pointed out, you need sort of this broad improvement without inhibiting the liver regeneration in order to recover from this. So, I feel as if prior treatments have addressed one thing at a time, and what you need is something much broader than that. And the mechanism of action is really impressive. But even more impressive is the empiric data that we saw in the Phase 2a trial.

Jim Brown: Great. Well, thank you, both. Yeah I think it is interesting when you see the histology of these patients, they aren’t often biopsy, but sometimes there you do see mega mitochondria. So you know that there’s a stress in that organ now anyway sort of.

Kristen Kluska: Okay, thanks. And then for the second half of the year readout just because we’re getting really close now, do you anticipate that you would share certain endpoints first through a press release? And then maybe save more detailed data for medical presentation? What are your kind of preliminary thoughts on this, assuming that the plan goes to place with timing?

Jim Brown: Yeah, you know it will depend on the timing. But, this is too important to wait, and we wouldn’t. So when we have the last patient enrolled, which we’re getting close, obviously, we know, we’re now over 285. So we just have this the few patients to go. A dozen or so left. And so, when we enrolled that last patient, we will announce that, and then people can start the countdown. So they’ll know it’ll be three months from then until last patient last visit. And Norman and the team have done a great job of keeping up with the patients. As we’ve gone through, we’ve been closing out centers as we can and closing out patients as we can. And so, our hope is that, we’ll just have the last, you know, 10 or so patients you know to clean up as we get to the last few months.

So the team is hoping to have data within two months or so after last patient last visit. That would be wonderful. So we’re happy when whenever it comes. But when that day comes when we unblind the trial, we hope to report out with just a few days. And so, that would be our objective. I’m sure we’ll have a press release and I’m sure conference call. I don’t know about the timing of that versus meetings. We certainly wouldn’t hold anything back at that point. I think we’ll talk about it. And then eventually we’ll present the data in more – in a broader fashion you know through publications and meetings. And, Norman do you want to add anything to that?

Norman Sussman: No, I think that’s correct, Jim. Clearly, we’re as excited as anyone too, to unblind and see what the top line data on you know the most important things and then decide on a publication and presentation strategy.

Kristen Kluska: Great, thanks. Look forward to seeing you in New York next week.

Jim Brown: Yes, absolutely. And so I thank you for reminding me. Yeah, we do have our KOL event next Tuesday in New York. So, happy to have you guys over and that’s not online. It would be great.

Operator: Thank you. Our next question is from Ed Arce with H.C. Wainwright. Please proceed with your question.

Ed Arce: Hi, Jim. Hi, everyone.

Jim Brown: Hey, Ed.

Ed Arce: Thanks for – hi, thanks for taking my questions. It was great to see you last week and I also look forward to seeing you next week at your event. Beyond the timing of the trial, I just had a couple more questions. I think this would be important as investors start sharpening their pencils on this readout, is, to just go over and explain why there were actually two – there are two dose arms in the study. And ultimately, you know if both are positive and both are powered for statistical significance, you would seek to get both of them on the label. And then separately, the other question I had was just around commercialization, given that this is potentially a pivotal study and you could be looking at you know, an approval in the not too distant future.

We just wanted to get your thoughts on the hospitalization Salesforce, the MSL’s Salesforce, how you expect that to unroll given that there is a fairly concentrated targeted set of call points? Thanks so much.

Jim Brown: Okay, so, Ed. And I’ll start off and then I’ll let WeiQi speak to a little more to the doses, and then we’ll certainly have Keith speak to the commercialization post that. So, with regard to the doses, we are looking at two different doses, which allows us to gain a bit more insights. And it’s – basically we’ve seen pretty exciting results already in the Phase 2a with both of these doses. And we’ve seen in various other human experiences, a variety of doses tested, and oftentimes the low dose looks every bit good, if not better than the higher. And that’s also been the case in some of the non-clinical. So it’s a – but we certainly are excited to see what will come from this. But as far as dosing, WeiQi, any additional thoughts there?

WeiQi Lin: Yeah, those two doses were selected based on our understanding of the dose response relationship in various in mechanistic studies, and also based on the NDA new data involving animals and in humans. And on top of that, that was based on PK data we obtained through the Phase 2a study. So, that’s how we determined these two doses should be in the optimum dose range of the drug exposure to the liver, because AH is specifically a liver-centric disease. So that’s how we selected these two doses. Although we know that 150 milligram dose, that’s the one we also use in the Phase 2a study, that the highest result is also safe in this subject. Nevertheless, 30 milligram and the 90 milligram we selected moving to Phase 2b, we believe the optimal dose range.

Jim Brown: Yeah, I think that’s a good point from a safety standpoint. We’ve – in the NASH patients, we dosed for a month, 600 mil – as high as 600 milligrams a day. So we certainly have given a huge amount more than these doses, and for a much more extended period of time. So maybe then, I’ll hand over the commercialization question to Keith, who, for those of you who don’t know, he has a tremendous commercial experience, in particular, of late before coming to DURECT at both Genentech and Pharmacyclics has sold a number of oncology products and he’s dealt with lethal diseases before. So we’re excited for Keith and his team to take this on.

Keith Lui: Yeah, thanks, Jim. On – and to your question of potential hospitalization Salesforce. We have been doing some preliminary work on just understanding the hepatology and gastroenterology marketplace and the various hospitals and their discharge volumes in AH, working with big data houses that are well known like IQVIA and Syneos, and others. But we know that there’s a rough population of heps and gastros and advanced practice providers in the US about 5,000 to 6,000. We know there’s around 4,000 hospital accounts, but only about half of those have had AH discharges of over 10 per year. So, we’re starting to get down through the funnel on what that concentrated target list may look like. But we’re still pretty early in the analysis.

You know, I think we’ve talked about on previous calls, a Salesforce roughly somewhere between 50 and 100, I think would be ample to cover the United States for a rare disease hospital-based disease like AH, and we continue to work through on pace of what our commercial planning looks like. We’ll talk a little bit more about that at next Tuesday’s KOL events as well. But we do have a pretty good understanding of where the targets may be and where those high volume tertiary liver transplant sites may be and start to think about tearing structures and how that might influence the construction of a field sales force and commercial organizations that look like.

Ed Arce: Great, Keith. Thanks for that. I appreciate it. And I look forward to more details on Tuesday. One additional question if I may, is just around the primary endpoint. Obviously, 90-day mortality and reduction and transplant. But we know as you mentioned, Jim, that, AH, natural history is about 26% mortality rate at 28 days. Do you have any measures for the rate of transplants for AH patients?

Jim Brown: Great question and I’ll let Norman speak to a little bit after I’m done. Unfortunately, they’re just the bottom line is there aren’t enough leverage to go around. There about 9,000 livers available for transplant in the United States across the entire country. We know there are 150,000 hospitalizations in 2024 for AH, and then we estimate that about 120,000 patients represent those 150,000 hospitalizations, with some coming back again. So, 120,000 patients, 9,000 transplants, well, they aren’t – they don’t all go to AH in fact, they estimated that about half of those 9,000 transplanted livers go to people with alcohol-associated liver disease. The other half go to people who remaining have viral patients and inherited diseases like Wilson’s and PSC and some, obviously to NASH patients as well.

So you’ve got about half of those, about 4,500 going to patients with alcohol-associated liver disease, and somewhere between a half and a third of that remaining that 4500 go to AH patients, which means, you’re talking about somewhere around 2,000 patients being – you know, having livers available to them out of 120,000. So it’s just the numbers aren’t there. And I know, Norman can speak much more eloquently than I can with regard to this.

Norman Sussman: I don’t know about eloquently. But that is, as you know, it’s a moving target. Because transplanting people for AH is a fairly recent development and sort of gaining popularity. And previously, people didn’t want to admit, they were transplanting them, because there was sort of this general feeling that you needed six months of sobriety. And so, there was tremendous underreporting and that was shown in a very nice paper by Brian Lee. Since then, you know there’s been general acceptance that’s growing, actually, universe has now created a special category for alcohol-associated hepatitis. So, we’ll get more accurate numbers going forward. But for right now, we don’t know that exact number. And as Jim said, we think, I think speaking to my colleagues that, it’s approximately a third to a half of the people attributed to alcohol.

And alcohol makes up about half of the transplant volume of that 9,000 patients that transplanted. So, and getting to the endpoint, it does obscure to the 26% and 30%, you mentioned is sort of an all comers. So if you just take a general population of AH, you should expect a 30%. And that’s been shown in multiple studies. But when you deal with a transplant center, they tend to see people in the higher ranges. And so the mortality of patients with a MELD of say, 25 is more like 40%. And so, you see higher mortality as you go up as your admission MELD score goes up.

Jim Brown: Yeah, I would add also from a pharmaco-economic standpoint. So if we take a rough guesstimate of the number, Norman just gave us, say it’s close to 2,000. We know transplants can cost close to $1 million each. So you’re talking about you know somewhere in the range of about a $2 billion check that’s been written for that piece. And then other component, the hospitalization, we think represents probably $7 billion to maybe $8 billion as well. So it’s a substantial cost to the health care system, for sure.

Ed Arce: That’s very helpful.

Jim Brown: Okay, sure.

Operator: Thank you. Our next question is from Francois Brisebois with Oppenheimer. Please proceed with your question.

Francois Brisebois: All right, thanks for taking the question. Just a couple here. Just in terms of the inclusion criteria, just to touch on the MELD score and the severity, can you remind us the difference between the Phase 2a and the Phase 2b in terms of severity of patients? And also you know from the cross comparisons either with Louisville or DASH, can you also touch on the severity of those patients and I guess the implications of the changes in severity in the Phase 2b? Thank you.

Jim Brown: Yeah, sure. And to straight up, we’re taking severe patients. So these are patients in the front trial, but they range in MELD from 21 to 30. Which match exactly with the severe patients we had in our Phase 2a trial. And to put that into some perspective, you got to know the 21 year got about a 20 let’s say, 25%, 26%, maybe to a 30% chance of dying in the next 30% chance of dying in the next 90 days. And if you go to MELD of 30 is 60%. And as Norman says, in the mid-range of the 24 to 25, it’s 40%. And so it’s obviously a huge problem. And as far as the consortium goes, what we tried to do is, is pick patients who would have matched for our study. That was the objective there to get like-and-like. And then we had to have patients who, you know, we’re doing a 28-day comparison.

So they had to be alive at 28 days. So we had to not count the DASH patients that died. And there were a number that unfortunately died before 28 days that aren’t counted in there, because they don’t have 28-day, ends on a day earlier or a score data at all. And what we saw was their survivors versus ours and all of our survived. We still saw to my eye, improvements in liver function and that looked like we had patients who were in a better space. I don’t know if Norman or WeiQi you got anything to add?

Norman Sussman: I think that accurately stitches. When you look at the paper, remember that the patients in the DASH trial, the subjects in the DASH consortium had to survive a 28-day. So any patients who died prior to that were censored out of it. And even with that, you know you see better survival. And what was really impressive is how much their biochemistry was better, including their markers of liver injury bilirubin and MELD scores. While and MELD scores, it’s a bit more complicated. But so, but survival of bilirubin were significantly better.

Francois Brisebois: Great, thank you. And if I could just ask one last one. And so in terms of as the comment to the previous answer about the doses used, is it fair to assume you don’t necessarily expect a dose response here? Correct?

Jim Brown: We might – I mean, we were doing the study in order to determine that. We couldn’t say enough. We couldn’t get enough information out of the small number of patients in the Phase 2a so we’re doing this trial to understand dose. And I certainly hope we can distinguish between the two doses, but I think it remains to be seen. I don’t know WeiQi what would you say to that?

WeiQi Lin: Well, absolutely, I think that’s what Jim you answered probably. So right well we have to see that they stood out or not.

Jim Brown: Yeah, we just don’t know.

WeiQi Lin: Yeah.

Francois Brisebois: Understood. All right, thanks very much.

Jim Brown: I’m being happy – if either one wins, I’m really happy. So I’ll take either one or both.

WeiQi Lin: Yeah.

Francois Brisebois: Fair, thank you.

Operator: Thank you. Our next question is from Sean Kim with Jones Trading. Please proceed with your question.

Sean Kim: Right. Hi, everyone. Thank you for taking my questions.

Jim Brown: Hi, Sean.

Sean Kim: Hi. I just have a few questions on the clients and couple on the commercial. So I guess my first question is that, you know, based on your you know further analysis of the Phase 2a study, just curious to hear your thoughts around you know some patients requiring second dose of larsucosterol, to see if there was any differences in terms of demographic characteristics of these patients or their ultimate clinical outcomes versus those who received only one. And kind of tying that into the commercial. If you think about, you know, potentially commercializing the product, you know, your thoughts around the potential pricing, whether it’ll be per dose basis or per treatment?

Jim Brown: Sure. Well, I’ll take it first and certainly ask WeiQi to comment as well and then obviously, Keith on the second. I think the first thing is important to note that, we didn’t have very many second doses, even in the severe patients just a small number. And because it was the first testing of this drug in AH patients, I think early on, we had some physicians who were keeping their patients in the hospitals to enable a second dose, just thinking they wouldn’t give the drug its best chance, not really kind of considering the way it works. Outside of oncology is the first epigenetic modulator to being developed in medicine. And so the whole concept that only a single dose might reset my epigenome and allow my organs to improve is a very different way of approaching and thinking about medicine.

The way I think about it for what it’s worth, I think about it. But like a heart attack for the liver, you’ve got a liver under change that stress, but if one can get it over that acute stress circumstance, the liver doesn’t have great regenerative capacity and does drug aids in that regard. I think it’s all about showing it up, showing the other organs up. So the body can begin to repair itself. But WeiQi, what are your thoughts around the second dose?

WeiQi Lin: Yeah, just like Jim mentioned, that the epigenetic modulation, typically, as we know that effect is relatively long lasting, especially for DNMT1 inhibition effects theoretically would be even longer lasting than the DNMT3a and 3b inhibition. So, larsucosterol inhibits all three effect, we expect what they must, relatively longer lasting than anti-inflammatory aging to our anti cell death agents, or just simply promoting the liver regeneration. Now talking about the liver regeneration. Another factor with one or two doses as a lever is a very unique organ that can regenerate. So it was otherwise once you have the liver to overcome the acute episode, that it wasn’t regenerate. And then hopefully, whatever we recover the acute episode that these are the reasons why we only selected one or two doses for this particular indication.

Jim Brown: Thank you, WeiQi. And now, Keith maybe some thoughts around the one or two doses and commercialization. I know at this point, we’re a ways away from pricing. But maybe you just give some general thoughts.

Keith Lui: Yeah, sure. It’s a good question. I would say at this point, I would corroborate what Jim was saying. It’s probably too early to say although, in our market access strategy meetings, this is certainly a topic of discussion. Obviously, the final decision is going to be influenced heavily by the AHFIRM results and looking at the cohort of patients and their outcomes that had one or two doses. But haven’t run a similar analysis on previous drugs, pre-launched drugs that I’ve worked on. I will say it is challenging for pricing on a per treatment course basis, as opposed on a per dose basis, you run into various issues like ASP, best pricing and what have you government discounts and, and the like. So while we have not made any kind of determined decisions on that, it is something that we’ll take into effect the AHFIRM results and that will strongly you know, have a heavy influence like I said, on how we think about overall pricing and on a per treatment course versus per dose pricing arrangement.

Sean Kim: Okay, that’s helpful. Thank you. And just one more question on the commercial side. So I guess you mentioned about 5,000 to 6000 hepatologists and gastros. Just wondering how many of those doctors are currently aware of larsucosterol and epigenetic regulator program in general? And how much effort you needed to bring these patients up-to-date on larsucosterol?

Jim Brown: That’s a great question. And I think I’d let Norman start and then I’ll let Keith finish, because I think I might have followed in perspective. So I’d love to hear this one. So, Norman?

Norman Sussman: Right. It actually has data. So I’m just going to say that among my colleagues, so, I sort of have lived in the academic hepatology world, which is a lose term for saying transplant centers. And among those colleagues, there is practically uniform knowledge of this trial. Keith has done a much more thorough job of looking at people to reveal what happened. Not meaning to sound pejorative, but in sort of the next year. And so, Keith, I would like to like you to take it from there.

Keith Lui: Yeah, we’ve conducted some market research in the US looking at unaided recall, various products in AH and obviously there aren’t too many that are under development and certainly the larsucosterol program is furthest along in 2b development. But I would corroborate what Norman was saying, in those hospitals that are typically transplant centers or academic referral centers with multiple hep and gastro specialists that have a particular interest in alcohol. I think to recall or you know the knowledge of our trial and larsucosterol is high. However, when you look at the entire population of about 5,000 to 6,000 that I quoted earlier, that’s inclusive of anybody, because this is not a disease that is you know, typically referred to only a handful of sites or only a handful of sites have AH specialists, it’s any hepatologists or gastroenterologists, they would have the training to treat AH.

And so, it is fairly spread out to our knowledge right now. And when you get out of those tertiary care centers and specialty sites that are still seeing AH patients, the recall is going to be a little bit lower. But therein lies the commercial opportunity, and why we’re trying to understand what the baseline of that now particularly that’s not too surprising, given that there’s nothing approved for AH and having worked in disease areas that have had little or no standard-of-care and other fatal diseases like in oncology, hematology. You know, there’s a lot – there may be a number of things under development. But until you hit a randomized controlled, clinical trial study endpoint, that doesn’t really raise a flag for most people to start paying attention.

I think if AHFIRM hits later this year, as we’ve talked about, we certainly will have a big flag to raise with that whole population of heps and gastros and events, practice providers, and bring a lot of value to patients and to the AH community.

Sean Kim: Thank you very much.

Operator: Thank you. There are no further questions at this time. I’d like to hand the floor back over to Jim Brown for any closing comments.

Operator: This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.