Good afternoon, and welcome to the ChemoCentryx Fourth Quarter and Full-Year 2018 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. As a reminder, this conference will be recorded.

I would now like to turn the call over to your host Bill Slattery of Burns McClellan. Mr. Slattery, please go ahead..

Thank you, operator. Good afternoon, and welcome to the ChemoCentryx fourth quarter and full-year 2018 financial results conference call. Earlier this afternoon, the Company issued a press release providing an overview of its financial results for the fourth quarter and full-year ended December 31, 2018.

This press release, along with a few slides that you may find helpful while you listen to this call, are available on the Investor Relations section of the Company's website at www.chemocentryx.com. Joining me on today’s call is Dr.

Thomas Schall, President and Chief Executive Officer of ChemoCentryx, who will review the Company's recent business and clinical progress.

Following his comments, Susan Kanaya, Executive Vice President, Chief Financial and Administrative Officer of ChemoCentryx, will provide an overview of the Company's financial highlights for the fourth quarter and full-year 2018 before turning the call back over to Tom for closing remarks.

During today's call, we will be making certain forward-looking statements, which those of you following the slides can see if you look at Slide 2.

These forward-looking statements are based on current information, assumptions and expectations that are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements.

These risks are described in the Company's filings made with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K to be filed on March 11, 2019. You are cautioned not to place undue reliance on these forward-looking statements, and ChemoCentryx disclaims any obligation to update such statements.

In addition, this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, March 11, 2019. ChemoCentryx undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this live conference call.

At this time, it is my pleasure to turn the call over to Tom Schall.

Tom?.

Thank you, Bill, and good afternoon to everyone listening. Thank you for joining us on our fourth quarter and full-year 2018 conference call.

For those of you, who are following on the slide, Slide 3 shows that in 2018, we demonstrated our ability to execute across multiple clinical trials, giving us confidence that we will continue to deliver on our 2019 goals and indeed beyond. I am proud of our accomplishments in 2018. Among others, we achieved the following four notable milestones.

One, we completed the enrollment of the ADVOCATE Phase III pivotal trial of our C5a receptor inhibitor of avacopan in ANCA or anti-neutrophil cytoplasmic auto-antibody-associated vasculitis on schedule, indeed and what some have called record-tying.

Two, in Q4 of last year, we dosed the first patient in our large AURORA trial of avacopan for patients with Hidradenitis Suppurativa. This is a historic moment for ChemoCentryx as we go beyond kidney disease into dermatological diseases.

Three, we made excellent progress in our clinical trials of avacopan in C3 glomerulopathy and also in the trial of our second unique asset, the CCR2 inhibitor CCX140 in Focal Segmental Glomerulosclerosis.

Four, we are now looking forward to a cascade of catalysts over the next 18 months in which we expect multiple topline data readouts starting of course with ADVOCATE data in Q4 of this year.

And let's not forget the very strong execution on our plan has enabled us to attract the capital we need to move forward on these major and data rich trials simultaneously while planning for commercialization in the U.S. Let's talk about this March progress that CCXI has made through our late-stage clinical trials.

I will start with the ADVOCATE trial as referenced in Slide 4. A trial that we believe represents the largest randomized controlled clinical trial of a new drug candidate ever in ANCA-associated vasculitis.

The current standard of care treatment in ANCA is high-doses of daily steroids, such as prednisone or methylprednisone, coupled with a powerful immunosuppressant that is steroids coupled either with rituximab, also called RITUXAN, or steroids coupled with cyclophosphamide.

Importantly, this two-pronged standard of care regimen is limited to about six months of acute therapy, because of the significant mortality and morbidity it causes, particularly from the high-dose daily steroid regimen.

Make no mistake, there is an unmet need today for a new therapeutic that will lead to a both a safe induction as well as a durable remission of active vasculitis in ANCA-associated vasculitis.

This malady cries out for a new remedy, patients want a therapy that will stop the disease fast, prevent relapses and free them from the terrible afflictions of both the disease and of the chronic steroid use, thus greatly improving their quality of life.

Our belief is that avacopan will be the answer and that it will establish a desperately needed new standard of care, a new standard which makes regimens that include high-doses of chronic steroids simply obsolete.

The pathway ahead is clear, pending positive ADVOCATE data in Q4, we plan to file full regulatory submissions for marketing approval next year in the U.S. and in Europe. These marketing applications will be based on the 52-week data from the ADVOCATE pivotal Phase III trial involving more than 300 patients.

We are focusing on demonstrating the effective, rapid and sustained remission of ANCA vasculitis, thus reducing the total burden of disease for ANCA vasculitis patients and improving their quality of life.

Accordingly, the primary endpoint of the ADVOCATE trial is to show the ability to squelch the active vasculitis symptoms as measured by something called the Birmingham Vasculitis Activity Score or BVAS.

We will measure BVAS in both the avacopan group that is those who get active avacopan, but no daily dose of steroids and also the standard of care group who get the daily dose of steroids, but no of avacopan, and we will measure their BVAS remission at weeks 26 and 52.

Put most simply, the ADVOCATE trial aims to confirm, a) that there are rapid and beneficial effects of avacopan on reducing the BVAS score, hence eliminating the active vasculitis and this is extrapolating from the earlier successful Phase II clinical trial results. We also wish to show that this effect is durable.

b) We wish to show and confirmed that the need for chronic high doses of steroids and with them the debilitating consequences of steroid use can be eliminated when avacopan is used to treat ANCA vasculitis.

The two endpoints of BVAS remission at weeks 26 and weeks 52 are engendered by the nature of the disease and how ANCA vasculitis has been treated historically. BVAS remission is defined. It's defined in ADVOCATE as it has been in past Phase III trials of other agents in ANCA vasculitis.

Specifically, BVAS remission equals a BVAS score of zero, but also one must be off of daily steroids for at least four weeks. Therefore, BVAS remission cannot be measured until week 26 at the earliest because the daily doses from the steroid regimen must be tapered to zero over the first approximately five months.

The precedent for this definition of BAVS remission is a regulatory endpoint was established previously by the Phase III trials of rituximab, especially in the so-called RAVE trial.

RAVE showed rituximab plus daily steroids and note that daily steroids are still part of the regimen with rituximab, in terms of controlling active vasculitis signs and symptoms was at least as good i.e. statistically non-inferior to the previously established regimen of daily steroids combined with cyclophosphamide.

This was based on the proportion of patients that achieved BVAS remission at week-26, about six months between the two groups. After the RAVE trial, daily steroid doses tapered over six months plus rituximab or daily steroid doses plus cyclophosphamide, which is still used became the standard of care.

Note in both cases, the daily steroid regimen is part of the standard of care. In ADVOCATE, achieving the BVAS remission at week-26 as defined would be a big win. It has only been done once before in a registration trial, the RAVE trial of rituximab.

Beyond 26 weeks, the purpose of the 52-week endpoint is to determine the durability of remission induced by avacopan as measured again by BVAS.

We hope and believe based on data and extrapolation that the ADVOCATE trial will show that at week-52 avacopan therapy is at least as good or possibly has an advantage in durable remission over the standard of care arm.

Our expectation here is driven in part by the knowledge that some patients for example, on the standard of care start to relapse once they come off the high-dose chronic steroid therapy. Also as I mentioned before, BVAS remission is but one important marker for ANCA vasculitis patients.

It is an important one to be sure, but perhaps equally important are the other components of the total burden of disease in ANCA vasculitis.

In fact, some would say it cannot be overstressed, how these other factors in the total burden of disease in ANCA represent a huge unmet therapy need and we believe accordingly a large pharmaco-economic opportunity as well.

We believe avacopan has the potential to broadly benefit patients and alleviate across the entire spectrum of the total burden of disease. Why? Data from the Phase II CLEAR trial of avacopan set a compelling precedent for us and the experts.

The Phase II data show that avacopan rapidly alleviated not only the signs and symptoms of ANCA vasculitis as measured by BVAS, but also improve the overall quality of life patients, inpatients, as well as demonstrating many objective improvements in measures that show preservation of organ function, particularly in the kidney and other metrics.

Moreover, there was evidence that avacopan therapy accomplished these benefits, while patients also enjoyed a reduction in the toxicity caused by chronic use of steroids. We are measuring many of the same objective parameters of ANCA disease in Phase III ADVOCATE trial.

In meetings with regulators, they too have indicated, they are interested in how avacopan might actually improve the total burden of this disease.

As referred to in Slide 5, including the quality of life and objective biological responses such as glucocorticoid-induced toxicities, changes in the vascular damage index and stabilization of the Estimated Glomerular Filtration Rate.

All of these are complications that are associated with steroids and we and others are keen to see if they will improve in Phase III as they did in Phase II. As I mentioned, all of these endpoints were measured in the Phase II trial with avacopan when compared to the daily high-dose steroid containing standard of care.

So we have modeled the Phase III ADVOCATE trial on the Phase II CLEAR trial, deriving confidence from those previous results. Look for the release of topline data from ADVOCATE in Q4 of this year and we plan to make full regulatory submissions in 2020.

ADVOCATE and ANCA vasculitis may have opened the valve in our avacopan pipeline in the drug strategy, but we have opened it still further providing a flow of potentially very high value orphan disease indications for this drug.

For example, let me now turn to our AURORA trial of avacopan in the treatment of Hidradenitis Suppurativa or HS referred to on Slides 6 and 7. AURORA is a large randomized controlled and potentially registration supporting Phase IIb trial and it is our first late-stage clinical trial outside of renal disease for avacopan.

This demonstrates that the science of C5a receptor inhibition has applications in multiple disease indications. HS is a damaging and disfiguring skin disorder driven by neutrophils, which are activated by C5a binding to its proinflammatory receptor, the C5aR, C5a receptor. Avacopan target C5aR with exquisite selectivity.

Currently adalimumab, also known as Humira is the only approved medication for HS and sales exceed about $1 billion worldwide for Humira in HS.

This is despite the fact that Humira is fairly regarded as having only a somewhat modest effect in HS, published studies for example, so just that only about half the patients with moderate to severe HS disease receive some early benefit and of those, roughly have find that the treatment loses its effect over time.

The unmet need therefore, in terms of combating this disease and improving quality of life is clear. We dosed the first patient with avacopan in our AURORA trial in HS in late December. The AURORA trial design is depicted on Slide 7. AURORA is a randomized controlled trial of some 390 patients spread across three arms.

We believe it is the largest randomized controlled trial in HS currently ongoing. The primary endpoint will be assessed after 12 weeks of treatment with patients then being followed for an additional 24 weeks.

Using the FDA validated hidradenitis suppurativa clinical response or HiSCR score, key secondary endpoints in the trial include things like skin pain, quality of life, and other metrics of importance to HS patients. Our aspirational goal is to complete patient enrollment of AURORA this year.

We will use our experience from the ADVOCATE trial where enrollment rates were unprecedentedly swift to focus on site activation and accelerate the rate at which patients come in to the AURORA trial. Finally for the avacopan pipeline in a drug strategy, let's move to our third ongoing trial with avacopan in C3 glomerulopathy or C3G.

C3G is a rare and terrible kidney disease that strikes the young. There are no FDA approved therapies for C3G. We have an ongoing trial with avacopan in C3G a trial which we believe is the most definitive clinical trial in the C3G space.

Last year, taking the advice of experts in the community and availing ourselves of newly published data, we expanded our original C3 trial design to now encompass 88 patients in two strata and using a randomized controlled design as you can see in Slide 8. Enrollment across this trial is now approaching 50% of the overall 88-patient target.

While technically a Phase II study, we designed the trial to potentially support registration discussions with agencies of avacopan and C3G if we achieve a positive primary endpoint.

This endpoint will be assessed using a renal histology index at six months of therapy and we will compare the histology from the avacopan therapy group to that in the group receiving the empirically derived standard of care alone.

All of these approaches in our trials at a mechanistic level are quite different and we believe better than others in the complement intervention space. For example, avacopan is unique in its selective targeting of the C5a receptor. Avacopan leaves all other components of the bodies complement cascade intact, so they can do their job.

As you can see by looking at the diagram on Slide 9, this may confer significant advantages to avacopan therapy in at least three clearly differentiated ways. First, avacopan's mechanism of action is downstream in the complement cascade, completely avoiding the biological consequences that can follow therapeutic intervention further upstream.

Second, avacopan precisely targets the C5a receptor, and while that snuffs out the activation of C5a – C5a receptor driven disease causing neutrophils, it leaves the C5b-9 defense mechanism intact. Third, and some may ignore this at their peril, avacopan preserves the beneficial functions of the second C5a receptor, the so-called C5L2 pathway.

Even the closest competing mechanistic approaches in the complement intervention space are nowhere near as specific as our orally administered C5a receptor inhibitor, which we specifically designed to avoid the complications of inhibiting other parts of the pathway, including the beneficial activities of the second C5a pathway through C5L2.

No one else can make that claim. Importantly, I'll stress again that avacopan is a small molecule, which is orally administered, making it convenient for patients and therefore potentially improving its chances of uptake and compliance once approved.

Our plans for the avacopan pipeline into drug strategy are summarized clearly in the next slide, Slide 10 and I think it is a most exciting value creating proposition for both patients and investors alike.

Keen observers note, correctly, I think that we have a succession of three major readouts of data planned starting later this year with avacopan and ANCA vasculitis, where avacopan could certainly revolutionize the current treatment paradigm and followed the following year by C3G and HS data readouts.

Before I turn to our robust financial situation, let me give you a brief update on the good progress with another of our unique small molecule assets, the CCR2 inhibitor known as CCX140.

Building on the extensive safety and efficacy data from our previously successfully completed Phase II trial of CCX140 in diabetic chronic kidney disease, our LUMINA trials represented or referred to on Slides 11 and 12 assessed CCX140 in the rare debilitating kidney disease of Focal Segmental Glomerulosclerosis or FSGS for which there is no approved treatment.

The LUMINA trials involved two subpopulations of patients with primary FSGS as depicted in Slide 12, which are actively now enrolling in parallel. The first subpopulation, patients with so called sub-nephrotic syndrome is more than 50% enrolled.

The second population running in parallel is in a quite rare population of patients with so-called nephrotic syndrome and we have enrolled two of the first six patients planned for group one. Although, we may roughly double that target if the initial results in the first six look promising.

2018 was a great year for execution, across our sweeping pipeline program at CCXI. 2019 promises to be even more exciting. There are multiple growth drivers as you can see some of them outlined on Slide 15 – Slide 13 rather, giving us some potentially amazing prospects over the next 18 months or so and beginning in Q4.

As I mentioned, we expect a cadence of topline readouts starting with the Phase III ADVOCATE trial in Q4 of this year, followed next year by avacopan in C3G and then the AURORA trial of avacopan in Hidradenitis Suppurativa. And then these results will be followed by or possibly accompanied by the LUMINA trial data of CCX140 in FSGS.

Also in 2020, we plan to file submissions with the FDA and EMA for avacopan in the treatment of ANCA vasculitis. Don't forget that our powerful drug discovery and basic science clinical support platform is underlying all of this. This platform is like a finely tuned engine, humming along behind the scenes, powering the enterprise.

Our science and discovery platform continues to create value, identifying novel modes of action of our late-stage pipeline assets, such as avacopan and CCX140, while also moving forward towards additional novel pipeline candidates in renal and dermal diseases and indeed beyond.

I will conclude here by reminding us that CCXI possesses 100% of the rights for all of our drug candidates in the United States.

For avacopan and CCX140, we have licensed the international commercial rights upon approval to our world-class partner, Vifor Pharma, who will pay us milestone payments for progress and who will also pay tiered royalties between the teens and the mid-20s on any aggregate net sales in their territories.

I'll turn the call now over to Susan with the observation that our financial position is very strong as Susan will explain in a moment. We ended 2018 with $177 million and have already taken in another $20 million this year.

Susan?.

Thank you, Tom. Our fourth quarter and full-year 2018 financial results are included in our press release today and are summarized on Slide 14. Revenue was $9.3 million for the fourth quarter compared to $56.3 million for the same period in 2017.

For the full-year ended December 31, 2018, revenue was $42.9 million compared to $82.5 million in the previous year. The decrease in revenue reflected the adoption of the new revenue accounting standard ASC 606. Research and development expenses were $15.1 million for the fourth quarter of 2018, compared to $12.9 million for the same period in 2017.

For 2018 as a whole, R&D expenses rose to $62.7 million from $49.5 million in 2017, primarily due to the advancement and enrollment completion of our Phase III ADVOCATE trial and the initiation and patient enrollment of our avacopan Phase II clinical trials in patients with C3G and HS, and the CCX140 Phase II LUMINA trials in patients with FSGS.

General and administrative expenses were $5.6 million for the fourth quarter compared to $4.1 million recorded in the fourth quarter of 2017.

Full-year 2018 G&A expenses increased to $20.4 million from $16.5 million in 2017, primarily due to higher employee related expenses, including those associated with our commercialization efforts and higher professional fees.

We recorded a net loss for the fourth quarter of $10.8 million compared to net income of $39.7 million in the fourth quarter of 2017. Our full-year 2018 net loss was $38 million compared to net income of $17.9 million in 2017. Total shares outstanding at December 31, 2018 were approximately 50.7 million shares.

As Tom stated, we ended 2018 with $177 million in reported cash and investment. Additionally, in January, 2019, we added another $20 million to our reserves through the issuance of common stock from our equity distribution agreement. Lastly, we expect to utilize cash and investments in the range of $75 million to $85 million in 2019.

Tom?.

Thank you, Susan. To summarize, as you can see from Slide 15, 2018 was an outstanding year of execution on ambitious goals, completing enrollments in ADVOCATE, making great progress in our trials of avacopan in C3G, and CCX140 and FSGS, and launching our AURORA trial of avacopan in HS.

Our track record of execution makes us very confident that we will continue to achieve on our 2019 goals and start a wonderful sequence of topline data readouts in no fewer than four late stage clinical trials.

Our financial strength also gives us the fuel we need to run these trials simultaneously and to work on full licensing submissions in the Europe and United States for avacopan in ANCA-associated vasculitis as we continue to plan for commercialization of these products in the United States.

In short, we are entering an unprecedented era of opportunity, full of potential for patients, clinicians, and the investors that we serve. With that, I will now turn the call back over to the operator and look forward to your questions.

Operator?.

Thank you. [Operator Instructions] Our first question comes from Michelle Gilson of Canaccord Genuity. Your line is open..

Thank you. Hi, congrats on the progress. This is Lina here on for Michelle.

So maybe the first question, maybe you can talk a little bit about the PK/PD profile that avacopan has demonstrated in clinical trials in ANCA and in healthy volunteers? And then maybe you can dig a little bit and specifically into the PD data and biomarkers that suggest there’s an effect on neutrophils and whether you see – if you can also basically relate these data to what we know about Hidradenitis Suppurativa pathogenesis and whether you believe that these biomarker data are enough to suggest that you can see a read through to your Phase II trials from clinical data of an anti-C5a approach in HS? And then I have a follow-on..

Sure, of course. All very relevant questions, really great question.

So we know from our data when we measure the pharmacokinetic/pharmacodynamic relationship of avacopan that essentially we're achieving a target which we set out long ago, which was to make C5a receptor bearing sales particularly blood neutrophils, which are the most abundant and probably the easiest to measure and probably it's the neutrophil driving most of the damage processes in the diseases that we're interested in as they respond to C5a through the C5a receptor.

So we've done a lot of work to make those cells essentially pharmacologically inert to C5a in the body even when the drug avacopan is at its lowest levels throughout the day. We started those studies in healthy volunteers, where we perfected certain methodologies to look in whole blood, which is quite difficult to do it actually.

Whole blood functions of neutrophils and their ability to change in response to the drug, that's the pharmacodynamic part.

So those changes include the ability of those neutrophils to migrate in response to C5a, the ability of those cells to adhere and up regulate their adhesion molecule notably CD11b for those of you, who are aficionados of this area.

And the ability of the neutrophils to spit out disruptive mediators reactive oxygen intermediates, as well as other enzymes from the granules of neutrophil, so neutrophil degranulation.

If a neutrophil is inhibited in any of those functions and certainly all of those functions, it will be inhibited in the body from finding its target and therefore damaging its target in the real world.

So our PK-PD relationship assessments beginning first in animals but then going to humans, first healthy volunteers where some of the data has been published, and then later data in patients, where the are data yet to be fully published, but have been discussed, really shows that we can even at trough levels of the drug that is the lowest level of the drug during the course of the day, we can essentially with avacopan ablate the ability of the neutrophils to migrate at anything like the physiological or pathophysiology concentration at C5a.

We can absolutely stop the neutrophil from degranulating and producing destructive reactive oxygen intermediates in response to C5a, once a person has been dosed with avacopan.

And they certainly do not up regulate their adhesion molecule CD11B, which – all of which means the neutrophils when activated or attempting to be activated by C5a and C5a dysregulated conditions such as ANCA vasculitis or Hidradenitis Suppurativa.

Those neutrophils won't stick to the tissue, the blood vessels, they won't degranulate and they won't migrate, they won't bring in more neutrophils to do this destructive process. So we have achieved our goal of making C5a receptor pharmacologically inert in human beings.

We've shown that the levels of drug even at the trough the lowest level of the day, we can accomplish this. So this has been a very nicely depicted in data both talked about in international meetings some of it's been published.

In humans – I'm sorry in patients rather going beyond healthy humans, patients who have taken the drug longer tend to even get higher levels of C5a receptor inhibitor avacopan in their body. So there is even more drug around even at trough to essentially make the cells bearing C5a receptor pharmacologically inert 24 hours a day.

There are things that avacopan does not do, it does not cause a buildup of C5a in the body. This is biologically impossible in any case. It doesn't cost C5a to accumulate inside cells, it doesn't cause a huge change in the amount of C5a receptors on a given cell.

But even if it did, we'd still have vast excesses of the drug to cover that, that change in receptor. And it doesn't importantly impede the beneficial effects of the second C5a receptor C5L2, which we and others have shown as a protective effect at least in the disease models most relevant to what we are treating in the human clinic.

So the PK-PD looks very, very clear for avacopan. We've shown it in actual human beings, who have taken the drug and tested their blood neutrophils before and after dosing and essentially provided good evidence, excellent evidence in fact for everything that I just discussed in terms of those relationships.

The net effect is, those neutrophils cannot respond to C5a through the C5a receptor to do their destructive damage. They're not immunosuppressed, however, these neutrophils can still do other functions if needed. So that's another important differentiating point.

So we know – we've used that very carefully when we started predicting our doses to go even earlier in to studies, some years ago in ANCA vasculitis and those predictions from all of those models and the healthy volunteers turned out to be very applicable to ANCA vasculitis patients.

We've done some work in those patient population, that work continues, and we see no material differences between patients and healthy volunteers, other than the drug tends to accumulate not unexpected over time to a modest degree, which was predicted, and therefore, provides us even greater drug coverage on the target the C5a receptor.

This seems to apply as well and so far as anyone can tell to what's happening in other indications where complement dysregulated neutrophils are driven by complement C5a to create their destructive effects like in Hidradenitis Suppurativa.

To the extent that anyone can tell, there is lots of complement activation including C5a presence, doesn't seem to be extraordinary beyond other disorders like ANCA. There is certainly more activated neutrophils around responding through C5a receptor, but again, there's only so much capacity.

So they seem to be very similar to their neutrophils in ANCA vasculitis and other diseases.

Therefore, again, extrapolating from our clinical experience and our vast amount of preclinical modeling in vivo, we believe that the way to treat HS with avacopan is not the similar than the way we treated another complement dysregulated neutrophil driven like ANCA and so that's what we're doing in the AURORA trial 390 patients.

So I think that covers most of the questions you are asking, if I missed one let me know..

No. This is great.

I was just also wondering in terms of HS landscape, maybe you can talk a little bit about where do you think avacopan would fit in based on the profile that you described and based on what you've seen with the C5a and C5 mechanisms?.

Sure. Thank you. We've only – the world is only seen a little bit of data on C5a in this disease and that data is compelling. So far we have essentially 14 patients at a single site. The proof-of-concept there was with an antibody, a chimeric antibody meaning it's got a lot of mouse content apparently, and it's a once-a-week infusion antibody.

So there are some things to deal with there going forward for development. The contrast for us is we are an orally active molecule were taken in a capsule form, can take it at home and you take it daily.

So there maybe – there's already differences in the mechanism – the mode of administration, the mechanism of action again is an antibody versus a small molecule. And the other approach takes away C5a from the C5L2, which we believe and others believe is actually a beneficial pathway.

We don't know what readout that might have in Hidradenitis Suppurativa. In models of ANCA vasculitis, it’s very clear that C5L2 disruption leads to worse disease, C5aR inhibition including with avacopan virtually eliminates the disease in ANCA vasculitis models, which have been done very carefully.

So not all those differences notwithstanding, I think there's great enthusiasm for the idea of C5a’s involvement in HS, since you're asking specifically about HS, and the fact again that it is probably being driven through neutrophils, which are driven through the C5a receptor, the proinflammatory part of C5a pathway.

So we believe again that should these data hold up in larger controlled trials including our trial, the AURORA trial, then having an orally active drug should be a big advantage in that patient population.

I know there's another sponsor using that antibody who will be reading out some Phase II data in the first controlled setting, I believe fairly shortly. So we all wait eagerly what that data will tell us. Assuming they find a dose and a response from that study that will be interesting.

We believe we already have a dose for complement-activated neutrophil-driven diseases, that's how we've designed the AURORA trial. So our trial is very large randomized controlled trial and powered to be of registration grade. So that's where we are.

How all this will ultimately fit together? Believe me, there's plenty of opportunity in this landscape across these diseases and I believe there's room for all innovations. I happen to believe that we have the most differentiated and advantageous approach ultimately..

Thank you. May I ask another one, promise last one.

Maybe you can talk a little bit about ADVOCATE trial specifically about the baseline characteristics? And are you seeing any trends that can indicate that some patients would be less likely to respond to standard of care? And how are you accounting for discontinuation in the study? And maybe a little bit about the powering of the study?.

I can comment on some of that. First I'm going to say that obviously ADVOCATE is ongoing. We have still patients that are being dosed in ADVOCATE. It is all still blinded. So I really have intentionally not looked even at the blinded data to find out if there seem to be any ideas coming out of baseline data characteristics even in blinded trends.

So I simply don't have that data. I will say this though, from what I do know about baseline characteristics, it appears to represent the patient population around the world, which I think is not unexpected since it's a global trial. And in terms of how this drug works, remember what we're trying to do here.

We are inhibiting the neutrophil from doing its ultimate destruction. So in ANCA vasculitis, you have auto-antibodies against your neutrophils, and in our view the auto-antibodies themselves are not necessarily the problem. They do get the neutrophils sort of semi activated or primed.

But it's clear, again from very careful genetic and model data, at least in animals that the ultimate culprit is C5a receptor. It is both necessary and sufficient. It seems to be the lethal agents in this cascade. That's what we're blocking.

So irrespective of ideas, and there are some ideas in the world that one form of ANCA vasculitis is a little bit more difficult to treat than another form and may relapse more frequently, et cetera, et cetera.

Frankly, a priori, we don't really much care about that because we're targeting how the neutrophil actually inflames the blood vessel and eventually destroys it. So I personally did not in our model take into account, whether or not you have one form or the other, so called MPO, GPA versus MPA disease for example.

So to me, our mechanism should work equivalently on both. We're representing the population of ANCA in our trial and we should be able to determine, I think quite definitively if the drug has activity across this patient population as well as of course looking at the pre-specified subgroup analyses that take into account some of these other factors.

So – but there should be no surprises in the distribution of the patient population in ADVOCATE. And to the extent that in Phase II, we had a representative patient population and I believe we did between the CLEAR and the CLASSIC trial.

Again, we didn't see anything that stood out dramatically from those data as we've reported before in terms of responses. In terms of differences in efficacy I should say..

Thank you so much. Thank you for answering my questions and congrats again on great quarter and great progress of the year..

Thank you, Lina. Appreciate your questions..

Thank you. Our next question comes from Steven Seedhouse of Raymond James. Your line is open..

Yes. Thank you. Good afternoon. First thing I wanted to ask about was just the importance of impacting pain in Hidradenitis Suppurativa. So Humira improved pain in only one of their two Phase III studies and there's some evidence now that IL-1 alpha antagonism can reduce pain as well.

When you look at complement inhibition in this disease with avacopan, does it make sense mechanistically that you would reduce pain? And do you think that pain reduction is just a secondary result of improving the lesions or is it a different ideology I guess in and off itself?.

Yes, that's a beautiful question, and it starts to eliminate some beautiful and intricate biology I think. So what we do know is this, all of these mediators seem to ultimately talk to each other to some degree.

So for example, we and others have shown certainly in vitro experiments that inhibition of C5a receptor can diminish the production of TNF and IL-1 in cell culture experiments and that’s not a new observation. I think this has been shown in one form or another for a long time.

And it used to be thought that IL-1 and TNF were upstream of some of these other mediators, but I think it's more of a network. So the mechanism of the pain reduction is simply not entirely clear at the direct level. To the extent that it will occur, and I believe it will occur as it exemplified by TNF and IL-1 results today.

I do think there's a good chance that this will read through with C5a receptor. And in fact, we know that C5a interestingly does have some effects on nervous system tissue directly. There's plenty of results in the literature that suggest that.

So let's just say this, whenever you do a clinical trial, while it's important to build models, so you can build the right endpoints, I think you have to be open-minded.

But to the extent that it would not surprise me, if we saw a reduction in pain, maybe both directly with C5a receptor antagonism, but certainly indirectly as the inflammatory cascade gets damped down and we go from a smoldering fire to maybe some embers that are just banking, that wouldn't surprise me in the least.

And I think that we should definitely look very carefully at that parameter as we come out of the trial. It's built into the HS secondary endpoints that we're looking at..

Okay. Thank you. And this recent IL-1 alpha antibody bermekimab, this HS study was in 42 patients, but I guess eight patients dropped out before completing the study and the protocol used on Last Observation Carried Forward or LOCF analysis to handle those dropouts.

And when you look back at a Humira Phase III, I mean they use that, but it was a sensitivity analysis. The primary analysis there was a non-response imputation. So can you just clarify in your Phase II are you using LOCF in the primary analysis? Or will the dropouts be considered non-responders obviously it could affect the response rates..

Yes. Steve, it doesn't surprise me that some of the anti-L1 folks dropped out. There's a long history of some issues with the approach with anti IL-1 as you know, or IL-1 receptor antagonists. So yes, it can be a pretty dicey thing. Let me say this, we haven't talked about all the details of how we're going to analyze HS.

But as I mentioned before, it's a 390 patients study. We designed it with the both statistical power and other approaches to be essentially a registration grade trial. So I think you can infer from that information that we will use the appropriate statistical analysis to make sure that we are sort of the Phase III grade analysis.

And I think obviously with that amount of – and we will certainly have the power to detect the signals we need to. .

Okay, thanks. And just last thing quickly on enrollment velocity of that study.

Can you say how many centers are online and how many patients you've treated so far in HS?.

Well, let me put it this way, we have patients randomized in this study. We're still getting our sites up and running. I'm going to report on more details on that next quarter. But these trials – there's a lot of pent-up demand in this patient population and these trials, as you may know, can enroll very rapidly.

So we're seeing – let's just say we're seeing a significant amount of enthusiasm. So when I mentioned that our aspirational goal is to get the trial enrolled or certainly largely enrolled this year, it's certainly based on some data that we have. So I'll fill in some more numbers as we go into the next quarter and get more sites up and running..

Okay. Thank you. Appreciate it. Thanks for taking my questions..

Thank you, Steve..

Thank you. Our next question comes from Dae Gon Ha of SVB Leerink. Your line is open..

Yes. Hi, good afternoon. Thanks for taking our questions. So just wanted to follow-up on the HS, the AURORA trial question. Tom, just wanted to get your take on, given the pent-up demand and obviously your colleagues are about to get done with their trial. So I would imagine there's even more of an influx of interest.

How are you thinking about and how are you planning about balancing rapidity of enrollment, but also quality of output? Specifically, can you comment on maybe site overlap between the SHINE study and the AURORA study that's going on with yours? And then the other question with regards to HS, can you also remind us on what the estimated breakdown is within the prevalence of moderate to severe HS, how early stages two and three take up? And then I have a follow-up.

Thanks..

Yes. So I can certainly address some of those items Dae Gon. Thank you for the questions. Again, without going into too many specific details, clearly there is some overlap in sites between SHINE and AURORA. That would only be expected.

But there's actually quite a large number of sites and qualified sites that won't overlap, and you'll see that again as we go forward through the trial, but particularly as we start reading out the information.

What I will say is this, the investigator community in HS has become – they're amazingly aligned and their desire to come up with new therapies. They became very much coalesced around the previous PIONEER result and how PIONEER was done.

They've contributed greatly to understanding and all becoming as standardized as possible in how trial readouts and trial assessments need to be done with such things as the HiSCR or high score. They've also contributed fundamentally to quality of life indices and in a very meaningful way.

So the HiSQOL for example is something that really has come out of a marvelous community effort in the HS investigator community.

I think all of that's by way of saying that because there hasn't been that much for this patient population for a long time, these folks are really focused and they're all plugged in and trying to make sure that they do standardized their assessments across their field.

We go beyond that of course, and some of these folks have contributed in our trial, have been in PIONEER, they’ve been in SHINE. So they know fundamentally what they're doing. And obviously there even in a new field, there is a cadre of KOLs and we all appeal to them. Beyond that, we've been very careful in this trial as we have with many other trials.

And one advantage of ChemoCentryx is we've been in the clinical trials business for quite some years. So we've run big trials all over the world and we've learned a lot of good lessons from that experience in different indications.

So we're really taking a lot of time for training, standardization, centralized assessments, and even adjudications were appropriate in some of these metrics. So we fundamentally believe we'll get high quality data, even though we will have not inconsiderable number of sites in this trial. But this is a switched on community. They're highly trained.

They're all focused on how to get good readouts for HS. It's not trivial as you know, but I think that we're getting the advantage of some other efforts and we're right there on the riding the crest of that wave. So I believe that we'll be able to really get very good quality data. So that's essentially how we're controlling for the variability.

You had a second question, which I've forgotten now. Sorry about that..

Yes. No problem.

So it's just the breakdown of early stages two and three within the moderate to severe patient?.

Yes. Thank you. So the data for HS is staggeringly inconsistent, somewhat confusing. But I think we and others can speak with some authority at least generally. If we don't go to breaking down the categories that discreetly, but we can certainly speak with some confidence about Hurley II and III as a category of moderate to severe.

And so I think the data are pretty good. And as you know, here in the U.S., orphan drug designation has been given to for Humira, adalimumab for Hurley II, III. So I worked on that because we're also keen on getting that designation. We've been very successful in orphan drug designations with avacopan and other indications.

We've done a lot of work on this. So suffice it to say, I'm pretty convinced that moderate to severe Hurley II, III in the U.S. is an orphan designation. It's probably fewer – it is fewer than 200,000. And the numbers between 150,000 and 180,000 are not unmeaningful based on the very best data to-date that we can glean from a variety of sources.

So that's the prevalence data. It's harder to breakdown farther than that I think with any credibility. So I won't do so here. And then the question is how many patients will you be able to capture in that prevalent population? The answer is no one yet knows.

But suffice it to say that again, when you look into the data for Humira, it's actually quite surprising how few scripts are written for that indication. And yet, as I mentioned, I think everyone's best estimate is about $1 billion worldwide for HS.

So maybe the answer there is you don't need to – you don't need to get, but a reasonable fraction, not a huge fraction of that that prevalent population to still make a great return for that drug. Our goal obviously is to get patient relief in the broadest number we can.

So we're going to definitely take a hard look at that 150,000 and 180,000 in the U.S. and figure out how to do that..

Okay. And then just quickly my last question is on FSGS LUMINA trials.

Just given the cadence of events and I guess the pace of enrollment seems to be quicker in LUMINA-1, I just wanted to get your take on, is the next trial contingent on both trials completing? And what are your thoughts on maybe looking at some other podocytopathies or proteinuric renal diseases? Thanks again..

Yes. Thank you, Dae Gon. So those trials are independent entities, neither of them depend really on the other to move forward.

The nephrotic syndrome was attractive to us because the FDA has given pretty clear guidance, guidance with a small G anyway, that if one can really significantly reduced the proteinuria in that population even in a fairly small number of people because their prognosis is so bad.

There's really a great and serious discussion to be had about a registration in nephrotic syndrome. They have been a little more circumspect around what it would take beyond proteinuria, if anything, to get a registration in the sub-nephrotic population. So that's our LUMINA-1 population, nephrotic populations LUMINA-2.

But if regulators and therefore the rest of us treat these as kind of two separate labels or two separate indications, so either can go forward on its own. And probably – well nephrotic syndrome is obviously a lot, lot more rare. So that's why the numbers is aimed for quite a bit smaller. Podocytopathy, I love the general idea of podocytopathy.

As you may recall, and I alluded to it in my remarks, we ran a successful one-year long trial of CCX140 in diabetic chronic kidney disease. We showed a fairly rapid and durable lowering of proteinuria with CCR2 inhibition by CCX140 above and beyond what could be achieved just with standard of care alone.

We added it on top of standard of care and showed a delta that was robust and consistent.

So then we just pivoted to FSGS is another form of chronic kidney disease, one which was more tractable and one for which proteinuria lowering could conceivably result in at least a conditional license, and certainly a discussion with regulators about how to get the drug approved based on that end point.

So although that was to the good and in the background, as I mentioned in the close of my remarks, people should not forget. We do science here at ChemoCentryx. It's very, very – sometimes very basic, but always to the purpose of supporting the drug.

So either creating a new drug, which obviously CCX140 and avacopan were new some years ago, they came out of our pipeline, we invented them here. But once we have those molecules, there's a lot of mechanism questions that come out of clinical data. And so no one really understands.

And I think we understand now why CCR2 inhibition in the kidney leads to such a rapid and profound reduction of proteinuria, both in animals, mice and in man, but it happens – it happens reproducibly. And it happens with other mechanisms that when people tie up to ligand for CCR2 for example.

They saw similar effects some years ago in a Phase II study. And the reason it happens is because we think, anyway, we've shown now and we discussed this at American Society of Nephrology meeting last autumn, CCR2 is uniquely express probably on a population of stress podocytes [themselves].

And maybe when it's expressed and engaged, it's contributing fundamentally to the acute podocytopathy going back to the direct part of your question. It may even be on a population of podocyte precursor cells or podocyte stem cells coming out of the bone marrow and we've shown that with some very elegant genetic experiments and bone marrow transfers.

Those two populations are in addition to the normal textbook kind of inflammatory macrophages, which are also resident in the glomerulus. All that's by way of saying, I think you're right. I think this target will be really interesting in other podocytopathies.

We're looking very carefully at that and we may well expand the 140 indication spectrum to include some of those podocytopathies. So yes, watch this space. Very good question..

Great. Thanks again for taking the questions and congrats on the progress..

Thank you, Dae Gon..

Thank you. Our next question comes from Ted Tenthoff of Piper Jaffray. Your line is open..

Thank you very much for taking my questions. Tom, I always learn at least two or three things when I listen to you talk about this topic, really fascinating, and I love how you described the discovery engine as a well-oiled machine. So I'm excited to see what comes out of that well-oiled machine.

Question if I may on – actually two, one housekeeping for Susan. With respect to the shares that were issued, can you give a sense of what number that was or what's the average price was during the offering in January? Thank you..

Of course. Thank you, Ted. So the $20 million that we issued was roughly 1.6 million, 1.7 million shares at $12 a share..

Great. And then Tom for you, so looking forward, obviously a lot of clinical updates coming, really exciting time next year as a company kind of such a transition into a commercial company.

What really has to be done, obviously dependent on data, obviously dependent on regulatory outcome, but what really are sort of the steps you start to make to think about the commercial opportunity in the U.S.? Thanks very much for taking the questions..

Thank you, Ted. Those steps are already well underway here. And as you know, we’re really becoming aware of what the market is. We are doing a lot of with professional organizations and through the team that we've hired here to do this work in house, looking a lot into how these patients are actually treated, where they actually present.

I'm talking about ANCA vasculitis now for the moment. Really what are the metrics that patient – behind how the patients are treated and what's the patient journey look like. So that whole buying process is a big thing. We're laying out – then from that we start to conclude whoever going to need to actually sell this drug actively.

Clearly, we went into this. I often talk about our renal franchise. Some people correctly point out to me and they asked me, its ANCA vasculitis, it doesn't have renal in the name of the disease. Absolutely, true, it's a systemic vasculitis. It happens to be that the kidney is acquisitively sensitive.

So anywhere up to 75% or 80% of people over the history of their disease will manifest renal consequences. And those tend to be very expensive, obviously if they go into end stage renal disease, et cetera, and even deadly.

So we do think of it as a renal disease, but in addition to nephrologist, this is treated by rheumatologists and frequently lung manifestations are the other big problems. So we're learning more and more about ANCA vasculitis, where it presents? How it presents? I won't go into all the details today, but it's kind of eye opening.

So that whole research process and the data it's yielding is telling us about how we need to think about fielding the correct type of salesforce, the right mix of reps versus MSLs and so on and how big that force looks. All of that work is absolutely going on in background.

Certainly, a lot of work in the U.S., there's a lot of work in Europe talking to various at least the sort of pre-discussions with various health authorities in the various jurisdictions. So yes, that stuff is going on and we're taking it very seriously and we know we have.

We have enough time to get it right and we're already putting a big effort into it in background. So its way beyond what we – we talked a lot about the clinical progress. I allude to the purring machine, the purring engine there behind the scenes.

But this is another part of that engine, which is fascinating stuff and we've hired some really experienced and excellent people to get it done. So that's going on in background.

And of course there's all the parallel path of making sure the submission packages for the various licenses, [NDA] process and so on, that's also happening here in ChemoCentryx again with a whole group of people that we brought in last year. So it's an exciting time of growth in the company..

Perfect, and of course, I don't mean to put the cart in front of the horse here. The regulatory, the clinical data and the regulatory will come first. One other quick question, if I may. I know you retain rights in China. What are your high level thinking about how to bridge that large, but difficult market? Thanks..

Yes. No, that's great. Probably when we last talked about that we had retained the rights in China, since then Ted, what we've done is our friends at Vifor International were so keen on getting those China rights. I mean we were in discussion with the number of players to really figure out what to do in China.

Ultimately, we gave Vifor the China rights to avacopan and CCX140. We got some money upfront for those rights, about $21.5 million or $22 million as I recall. But more important than that – and that was fine, but more important than that was the sales on those two assets will now accrue to the aggregate or cumulative sales in the Vifor territories.

And as you know, we get really lovely royalties off the topline of aggregate sales from their territories, as I mentioned in my remarks, ranging from the teens to the mid-20s based on sales tiers.

So China could contribute when – so now you have to ask the question of Vifor, but eventual sales in China will contribute to reaching different sales goals in aggregate and their territory is conceivably taking us into other tiers. And so the cumulative effect of that deal I think in the end was spectacular for us.

And I know that was meaningful for Vifor who’re very keen to be able to start thinking about how they're going to establish themselves in that part of the world as well..

Cool. Thanks for [indiscernible] missed that. Thanks for the update guys..

Thank you, Ted..

Thank you. Our next question comes from Ed White of H.C. Wainwright. Your line is open..

Hi. Thanks for taking my questions guys. So just a couple of quick things on the AURORA trial.

First of all with the topline data expected in the middle of 2020, is that going to include only the 12-week data or will we see some of the follow-up data on the patients for those additional 24 weeks? And then also, Tom, you mentioned in the past many times that you have had the HS study is powered to be registrational grade study, but have you actually had discussions with the FDA regarding this study as registrational in nature? And I just have a follow-up for Susan later..

Sure. So what we're committing to on the topline data is the 12-week data right now. So we'll commit to that topline primary endpoint data. And again we aspire to get there in 2020, if we can get this trial mostly enrolled in 2019, and hopefully or earlier the better.

But again, we'll keep you on taste with updates on that through this year based on enrollment. But yes, that's our commitment right now is the 12-week topline data. Obviously the follow-up data will be in process as well around the same time, but we want to make sure we talk about the 12-week as soon as we can.

This conversations with the agency, we have had certain conversations. Let's just say for the moment we're trying to first get our orphan drug application approved. And so once we have that application, I think I'll be willing to say a lot more about where we may or may not be with the discussion with regulators.

I suffice it to say that this trial is big. It's a very mature asset. Obviously it's a Phase III asset in other indications. So all of that up the benefits of the experience and the safety database and so on and so forth, certainly are not – they are certainly not harming our cause in that respect. But we just need to – it remains to be seen.

And of course, I think the agency will be hesitant to commit to any study of being a Phase III prior to seeing the data and of course, prior to ascertaining whether or not we're in an orphan space with this particular asset. So I'll have more to say about that as we go through that process this year..

Okay, great. Thanks Tom. And then just for Susan, considering the $177 million, again the year with plus the $20 million raise in January. Maybe you can talk a little bit about the cash runway.

Is this enough to get to launch with the potential Vifor milestones?.

Sure. So I think that's a great question, Ed. I mean I think $177 million before the $20 million put this in very strong position. We've been consistent in providing guidance that it gets us through the multiple data readouts, including ADVOCATE, C3G, HS as well as the FSGS programs.

So with anticipated filing in 2021 that wouldn't be too unreasonable, but that's about as far as we're actually projecting at the moment..

Okay, great. Thanks Susan..

Sure. Anytime..

Thank you. Our next question comes from Anupam Rama of JPMorgan. Your line is open..

Hi. This is Tessa filling in for Anupam this evening. Thanks for taking the questions and for the updates here. Maybe as we look towards the Phase III ADVOCATE readout later this year, perhaps a housekeeping question.

Can you guide us to what we will see in the topline in 4Q? And what we will have to wait for in follow-up presentations? And then secondly, one on AURORA, apologies if I missed this earlier, but can you remind us of what type of reduction in high score you are looking for at 12 weeks both on a relative and an absolute basis? Thanks so much guys..

Certainly. So with the ADVOCATE data, obviously we'll be looking at the topline data from the primary endpoint of BVAS. So you'll hear the BVAS scores and the comparison between the standard of care arm and the avacopan arm for both week-26 and week-52.

We hope to be able also to release the topline data on the quality of life assessments using the validated instruments that we employed similarly in the Phase II CLEAR trial. We will be giving readout on parameters that read to the preservation of organ function, including renal parameters.

So we used to look for things like proteinuria values, proteinuria reduction over the course of the trial. Look for eGFR, look for things like the shedding of kidney inflammatory markers in the urine such as MCP-1 to creatinine ratios. Again, those were presented in the Phase II study and we've similarly built our plan to analyze them here.

And then we will hope to be able to talk about vascular damage index and glucocorticoid toxicity and the delta between the groups. So that's a pretty ambitious slate.

We hope to be able to achieve most of it, but at minimum you should look to BVAS scores and some of the objective lab readouts, which we'll be able to analyze I think in the time period that we've assessed. And certainly we'll speak to the overall efficacy of the drug and whether the data mirror what we saw in the Phase II study.

In terms of the HiSCR score, we did a lot of modeling based on the TNF studies before.

I think that we've been looking again to be able to at least detect the kind of signal at 12 weeks that was manifest in the largest spread for adalimumab in the PIONEER studies, and that should be handily achieved I think with the power that we have in our HS study.

So you could use that as a sort of benchmark, and again, we'll have more details as we go forward on those readouts, but we should very handily be able to see those kinds of deltas..

Okay. Thanks very much Tom..

Thank you, Tessa..

Thank you. [Operator Instructions] We have a question from Harshita Polishetty. Your line is open..

Hey, Tom and Susan. Congrats on the progress and thank you for the detailed update on the late-stage programs. Most of my questions have been answered, but I have a quick one on your small molecule PD-1 inhibitor program, if I may.

I understand it's very early on in the process, but could you provide some color on CCX4503 and how that addresses the challenges seen with developing small molecule antagonists, I guess with regard to targeting the highly hydrophobic PD-1/PD-L1 interaction surface? Thank you..

Yes, that's great. Thank you, Harshita. It's been a while since we had questions about that beautiful discovery engine we have. Our medicinal chemistry here is so excellent. I love to tell the world that, and this is another example.

So as you know, antibodies are clearly ruling the risk with the PD-1/PD-L1 area as with many of the other checkpoint inhibitors.

And for good reasons, these are fairly large protein interactions, and you're right, certain challenges like some of these hydrophobic packets and so on that get in the way of trying to really mediate disruptive interaction with small molecule have been daunting.

Our guys have cracked this, at least, at certain levels, and our ultimate goal is to crack it in fact with orally active compounds. And we have made great progress. As you know, we published some data on the 4503 molecule or, at least, presented some at a meeting last autumn.

I think it was very well received and certainly got a lot of people interested. And now we've even take – we've taken some steps further. We hope to be able to talk about those this year. Ultimately, as a business, we’ll probably need to take forward some of these oncology assets in the context of a partnership for a variety of reasons.

We're still fairly focused in terms of size obviously and focused on inflammatory disease. But this is really a thrilling set of developments here. And if one could truly get useful small molecules, and frankly 4503 is pretty good molecule, but I think we've got even some better ones now.

Clearly some of the liabilities of protein-based checkpoint inhibitors might be overcome. And as you well know, as good as the checkpoint inhibitors are right now, they have liabilities or difficult to manage and the induction of autoimmune conditions with the checkpoint inhibitors is very common. They can be very serious.

And the fact is you've got a long-lived antibody in the body, and certainly the biological half-life is quite extreme.

If you could somehow manage that by dosing and titrating the dose carefully with a small molecule, one that wouldn't stick around quite so long as you were managing some of these other effects or could be given at massive pulsatile doses as you're trying to go for the therapeutic efficacy intermittently, it could be profoundly advantageous and usually valuable.

So that's what we're working on, and we're going to talk a lot more about the details of some of that chemistry progress I hope this year at a number of big meetings. And we’re going to try to get some papers published to detail a little bit more some of the questions you're asking. But it's very exciting.

It's very exciting in background and I think it's going to have great value. And as I said, probably in terms of a business relationship, it will be carried forward in the context of what we hope will be a high value partnership..

Great. Thanks, Tom. That's very helpful, and once again congrats on the progress..

Thank you so much, Harshita..

Thank you. At this time, I'm showing no further questions. I'd like to turn the call back over to Tom Schall for any closing remarks..

Well, I just want to thank everyone for joining our call today. The discussion was very, very interesting and the questions were insightful, and I really look forward to updating you further as we go forward and then in weeks to come, and I very much look forward to talking with you at minimum at the next quarterly call.

Thank you very much and have a great afternoon and evening..

Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you for your participation and have a wonderful day. You may all disconnect..