XBIT - NASDAQ

Ashley Otero - Corporate Development Manager John Simard - CEO Mike Stecher - Medical Director

Kumar Raja - Noble Capital

Good day, ladies and gentlemen and welcome to the XBiotech’s First Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today’s conference, Ashley Otero. You may begin.

Thank you, operator. Before turning the call over to our CEO, John Simard, I would like to make the following remarks. During this call, forward-looking statements including declarations regarding management’s beliefs and expectations will be made. In some cases, you can identify forward-looking statements by terminologies such as may, will, should, would, could, expects, plans, contemplates, anticipates, believes, estimates, predicts, projects, intends, or continue or the negative of such terms or other comparable terminology, although not all forward-looking statements contain these identifying words.

Thank you for the introduction and thanks to all those attending the call this morning. I will speak to the status of our ongoing marketing authorization application first here this morning and then give a more general background of the other operations that are ongoing. As we already publically announced, on April 20, an oral explanation in support of our marketing authorization application was given to the EMA at its headquarters in London, England. In our opinion, an overwhelming body of evidence was presented that confirmed our True Human antibody works through specifically target tumor associated information and that this activity results in an important therapeutic benefit for patients with advanced colorectal cancer. At the April 20 meeting, we thus presented unambiguous findings from our Phase 3 pivotal study that our antibody therapy controlled a combination of key symptoms associated with advanced cancer and in particular advanced colorectal cancer. These symptoms included pain, fatigue, anorexia and muscle loss. Each of these measures were in fact established with the EMA’s scientific group as the primary endpoint of the clinical study. And to be clear, we did in fact meet the planned primary outcome of the study. The symptoms we measured each are of critical importance to the patient’s well being. That is in fact why the combined endpoint was considered so relevant as a measure of our drug’s activity. At the request of the EMA, we spent a long time investigating what we could learn about what these symptoms told us about the patient’s disease. These findings were also groundbreaking. Our analysis showed that the symptoms that we used as an endpoint for the clinical study with far more relevant measures of prognosis than the longstanding use of tumor measures. Our findings showed that patients which achieved the primary endpoint, in other words, patients which had achieved stabilization or improvement with these combination of symptoms also had dramatic increase in overall survival, reduced tumor progression in substantially fewer disease related serious adverse events. What was equally remarkable was that the safety and tolerability of the therapy was unprecedented for oncology. In the double-blinded placebo controlled Phase 3 study, doctors actually attributed more adverse events to placebo than to the antibody therapy. The findings with the therapy not only met our planned endpoints, but the new endpoints exceeded all of our expectations for its value as a measure of disease progression. At our invitation, the London meeting was attended by renowned oncologists that have used the antibody therapy in their clinics to treat colorectal cancer patients. These oncologists were Andrew Hendifar from the UCLA’s Cedars-Sinai Cancer Center, Alexander Knuth, Professor Emeritus and Former Chief of Oncology University of

[Operator Instructions] Our first question comes from Kumar Raja of Noble Capital. Your line is open.

Hi. Thank you for taking my question. So the ongoing US colorectal trial. Can that be leveraged for re-examination by the EMA and also when you guys released Phase 2 data for staph aureus; there were some imbalances in the arm. And for the Phase 3 trial, what is the expectation in terms of how large a trial in terms of how many patients you need and what can be done in that trial to reduce these imbalances?

Hi. Thanks for the question. Thanks for calling in today. Mike, do you want to start with the second question?

Sure. Regarding the imbalances, as I'm sure you are aware, the patient numbers in the Phase 1/2 trial were 36 and 16. So 36 patients treated with the antibody and 16 with placebo. 30 of those were at the highest dose level and we did this design in this way in order to evaluate different dose levels, not only for the, essential for dose limiting toxicity, but also for the dose effect. So what we had was a study with relatively small numbers, which we had great results we feel, but there was this imbalance that we saw in the number of deaths. So, the way we would handle this and the way we will handle this moving forward is the same way anyone else would and that is with larger numbers, and with Phase 3 pivotal trial, it's going to take quite a bit more than 52 patients, so larger numbers and one-to-one randomization that should account for any potential additional imbalances.

Does that answer your question on that?

Yes. And on leveraging the US trial for re-examination by the EMA for?

Yes. I was going to answer that, and as a given example, of the study in muscular dystrophy which failed on the first pass and to be granted approval, when they came back for the re-examination, they apparently did discuss and used the Phase 3 data that was ongoing in a separate study as part of the arguments to support the conditional approval that they ultimately achieved. So I think if history is any guide, with this re-examination process, it seems that anything could potentially be on the table. It's really up to the examiners at that time to decide what they think is relevant. This Phase 3 study could be viewed as relevant, but on the other hand, it's not really necessary. We did achieve the primary endpoint. The purpose of this study in Europe was to show improvement in [indiscernible] and collection of symptoms that are unquestionably clinically relevant, pain, fatigue, anorexia and muscle mass, we demonstrated that and I think we want to focus on that, it's independent of the US study and in our case, I'm not sure that we need the US study to be successful in our appeal.

Thank you. [Operator Instructions] At this time, I’m showing no other callers in the queue for questions. I'll turn the call back over to management for closing remarks.

We have no further remarks, but we do thank again everyone for coming on the call this morning. That will wrap up the session.