Michelle LaSpaluto – Senior Director of Accounting Michelle Berrey – President, Chief Executive Officer Garrett Nichols – Chief Medical Officer Linda Richardson – Chief Commercial Officer Timothy Trost – SVP, Chief Financial Officer and Corporate Secretary.

Katherine Xu – William Blair & Co. Geoff Meacham – Barclays Capital, Inc. David Lebowitz – Morgan Stanley & Co. Yigal Nochomovitz – Citigroup Global Markets, Inc. Ryan Tochihara – JPMorgan Securities.

Good morning, and welcome to the Chimerix Conference Call discussing the Financial Results for the Second Quarter for 2016. Please be advised that today's call is being recorded at Chimerix's request. I would now like to turn the call over to Michelle LaSpaluto from the Chimerix team. You may begin..

Thank you and welcome to the Chimerix second quarter 2016 financial results conference call. This morning at 7:30 AM Eastern Time, we issued a press release containing financial results and other updates for the second quarter of 2016. The press release is available on the company's website at www.chimerix.com.

You may also access today's call via webcast on the Investors section of the Chimerix website. An archive of the webcast will be available approximately two hours after the conclusion of the event.

On the call with me today are Michelle Berrey, President and CEO; Garrett Nichols, Chief Medical Officer; Linda Richardson, Chief Commercial Officer; and Tim Trost, Chief Financial Officer.

Before we begin, I'd like to remind you that the statements made on today's call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks, uncertainties and other factors, including the possibility that there may not be a viable continued development path for brincidofovir, that the FDA and other regulatory authorities may not approve brincidofovir-based regimens and that the marketing approval, if granted, may have significant limitations on their use.

As a result, brincidofovir may never be successful and commercialized. In addition, Chimerix may be unable to file for regulatory approval of brincidofovir with other regulatory authorities. These risks, uncertainties and other factors could cause actual results to differ materially from those referred to in the forward-looking statements.

You are cautioned not to rely on these forward-looking statements. These risks and uncertainties are described in Chimerix's filings with the Securities and Exchange Commission including its Form 10-Q filed today, it's most recently filed reports on Form 8-K and other documents subsequently filed with the Securities and Exchange Commission.

All forward-looking statements are based on information currently available to Chimerix, and Chimerix assumes no obligation to update any such forward-looking statements. At this time, I'd like to turn the call over to our President and CEO, Michelle Berrey..

Good morning, everyone, and thank you for joining us. The last couple of months have been an important time for us at Chimerix, as we worked to design a comparative study of brincidofovir in patients with life-threatening adenovirus infection.

We are also advancing our intravenous formulation of brinci toward the clinic to enable the continuation of our programs, addressing CMV and BK virus within the stem cell in solid organ transplant populations.

We continue to be encouraged by the expanding clinical data, showing brinci's antiviral activity against smallpox, CMV and adenovirus, and are focusing on maximizing the clinical utility of our candidate for these patients who have limited treatment options. Starting first with our adenovirus program.

We have continued to analyze data from our recently completed AdVise trial to inform our next development steps in this indication.

As Garrett will walk through in more detail, data from this study demonstrated the potent activity of brincidofovir in pediatric patients with life-threatening adenovirus infection, showing a strong antiviral effect which correlated with overall survival.

Based on these results and available data from our Expanded Access program, we continue to believe that brinci may provide a much needed antiviral option to treat various adenovirus infection.

In addition, we've been compiling data from the historical literature to identify the risk factors that best predict core outcomes from adenovirus infection when brinci is not available, which include unrelated or mismatched donors, T-cell depleted graft and early detection of adeno in the post-transplant period.

These same predictors in patients who received brinci through Expanded Access or through AdVise often did not lead to fatal outcomes, even when the immune system was not yet regenerated.

As Garrett will walk through, these critical insights gained over the last five years can now inform the design of a comparative trial to most effectively demonstrate the potential benefit of brinci in this too often fatal infection.

The key goal of our ongoing discussions with the FDA and with European regulators is to design a trial that will target those adenovirus patients who are most likely to benefit from treatment with brinci. We will provide further guidance at an appropriate public venue following agreement on this trial design.

At the same time, we are also working to optimize the delivery of brinci to address the GI side effects which impacted the SUPPRESS trial. We're planning to initiate our first in human trial with a IV formulation of brinci in the second half of 2016 to establish target exposures, safety, and tolerability.

We believe data from the single-dose escalation study will put us in a strong near-term position to advance our programs in CMV and BK virus in both the stem cell and kidney transplant populations. We are also evaluating options for the oral formulation which may enable longer term use of brinci as a prevention in the solid organ transplant setting.

With a patent life for brinci extending into 2034, it is crucial that we continue to plan for the long term in order to maximize the value of brincidofovir. We continue to efficiently invest in our early discovery work and look forward to expanding our pipeline later this year with our promising norovirus candidate, CMX521.

In initial studies, CMX521 has been confirmed as a polymerase inhibitor, an important milestone as the mechanism of action at this conserved region may translate to activity of CMX521 across the many different streams of norovirus that have been identified in recent outbreaks.

Annually, norovirus causes over 200,000 deaths in the U.S alone, many of which are in patients who have undergone solid organ or stem cell transplantation. The global economic burden has been estimated at more than $60 billion annually. Clearly, this is an area of unmet medical need.

Finally, as Tim will touch on, we have remained committed throughout 2016 to continued cost reductions in the near term and efficient timely clinical execution. This has enabled us to retain our robust financial position, and you can expect continued capital prudence from Chimerix as we move into the final months of 2016.

We also plan to provide additional financial guidance once we have clarity on the required next steps to progress the adenovirus indication and the resources needed for that effort. I would now like to turn the call over to Garrett Nichols, our Chief Medical Officer, who will provide an update on our clinical programs..

Thank you, Michelle. This morning, I will start with an update on our activities on the adenovirus program. As many of you know, adenovirus infections are deadly complications in the immunocompromised patient.

Severe manifestations may occur even in the healthy individuals however, as has been recently during a reported outbreak of a Chinese adenovirus B7 strain in organ, in which almost 200 otherwise healthy adults and children were affected and over two-thirds of which were hospitalized.

Of those, approximately one-third were admitted to the intensive care unit, 18% required mechanical ventilation and five patients died.

Mortality rates from common adenovirus strain are extremely high in transplant recipients, as high as 50% in pediatric liver transplant patients and 60% to 80% in allogeneic stem cell transplant recipients that developed disseminated disease.

Patients early after transplant, particularly those who have received medications that deplete their T-cells to prevent rejection and graft-versus-host-disease are particularly high risk before outcome because they cannot mount an immune response to the virus.

The only currently available treatment option is IV cidofovir, which not only is associated with significant risk for acute kidney failure, but also has low potency and often fail to clear the virus.

We believe that the recent top line results we released from May from the week 24 interim analysis of the AdVise trial provided significant contrast to the current standard of care.

Pediatric stem cell transplant patients who are treated with brinci for serious adenovirus infections in AdVise showed impressive reductions in adenovirus viral loads, with more than 80% able to suppress virus at undetectable levels. Even patients with no detectable CD4 cells.

In other words, those in whom the immune system had not yet recovered had rapid biologic responses which were defined as a 99% reduction in the viral load or clearance of the virus from the blood at week four.

Patients who had such a rapid virologic response had significantly lower mortality which overall was less than 45% at week 24 in the pediatric stem cell transplant patients with disseminated disease.

In AdVise, we also noted an improvement in the survival rate as accrual proceeded in the study with the final quartile of neuro patients having a mortality rate close to 20%.

Finally, the pediatric patient population in AdVise appeared to tolerate brinci better than the adults in either AdVise or SUPPRESS, which may in part be attributable to the use of the suspension formulation in kids and in part attributable to differences in gut biology.

So in summary, the AdVise trial met our expectations for demonstrating brinci's benefit for the treatment of adenovirus in stem cell transplant patients, and we look forward to presenting this data in detail at the upcoming premier infectious disease conference, IDWeek, in New Orleans in October.

As we discussed in May, our analysis of the AdVise data and our work with the historical literature on adenovirus and data from our EIND program had highlighted a number of significant risk factors within this pediatric patient population that we have been working to understand as we collaborate with the FDA on our next comparative study.

First among these factors is transplant from unrelated or mismatched donors. These patients are more likely to develop graft-versus-host-disease which can reactivate viruses such as adenovirus from lymphoid tissue in the lungs or gut.

The treatment of graft-versus-host-disease with steroid is a risk factor for high viral-loads and dissemination of the virus throughout the body. The second key factor is T-cell depleted grafts or T-cell depleting antibodies such as CAMPATH.

These are important medications that prevent graft-versus-host-disease, but are associated with delays in functional lymphocyte recovery to day 100 after transplant and beyond. Patients who receive T-cell depleted graft and develop adenovirus infection typically have high viral loads that do not respond well to IV cidofovir.

And finally, early reactivation of adenovirus post-transplant is an important factor associated with poor outcomes.

Patients who reactivate early after transplant are at particularly high risk or bad outcomes for the current standard of care, because they frequently need months of nephrotoxic IV cidofovir before their immune system can handle the virus on its own.

Following all of our analysis, we believe we have the data to design an additional comparative trial against the standard of care control in pediatric patients with serious adenovirus infection in order to support a potential regulatory application.

We're applying our learnings that I just highlighted from the AdVise study and from a systematic review of the individual patient data from the historical literature in order to identify the patients who will derive the most benefit from brincidofovir-based therapy.

By selecting patients who do not respond as well to the current standard of care, we believe that we will maximize our probability of success. As Michelle mentioned, we are continuing discussions with the FDA and European regulators, and we'll provide further guidance regarding trial initiation upon completion of these discussions.

In the meantime, we continue to see firsthand the clear unmet medical need in this disease, as approximately one patient per day applies for brincidofovir through our Expanded Access trial and Named Patient Program in the U.S. and EU.

Finally, we're very pleased to announce that the European Commission has granted orphan drug designation for brincidofovir for the treatment of adenovirus.

Companies that obtain orphan designation benefit from a number of incentives in the European Union, including scientific advice specific for designated orphan medicines and market exclusivity for 10 years, with an additional two years for medicines that have complied with an agreed pediatric investigation plan.

This, again, shows extreme unmet medical need in this patient population. Next I'll provide an update on our progress with new brincidofovir formulations. To start, our intravenous formulation of brinci is currently being readied for a first time in human study later this year.

The first-in-human study will establish target exposure levels and the tolerability of the formulation. In preclinical studies, the IV formulation has been very well-tolerated, achieving exposures far in excess of those achievable with oral delivery and without the gastrointestinal side effects that have been dose limiting for the oral formulation.

This will give us the flexibility to examine the same exposures that have been effective for CMV prevention in stem cell transplant patients, while also allowing to explore higher doses that could potentially be even more effective for the treatment of certain DNA viral infections, such as BK virus in kidney transplant recipients.

In closing, I'll update the status of our work in the smallpox program. The development of brinci for smallpox continues in partnership with BARDA.

Once we complete the second animal efficacy study of brinci in a smallpox model, the company plans to meet with the FDA to discuss any additional required data for a regulatory decision for brinci for the smallpox indication in 2017.

We have also provided regulators with information supporting the safety and tolerability of a short course of brinci oral tablets as intended for use as a medical countermeasure in the event of a smallpox bioterror attack.

So, in summary, we have quite a few milestones remaining for the rest of 2016 that will help us work towards both near-term and longer-term clinical goals. First, we are discussing our next study for the treatment of adenovirus disease after stem cell transplantation in the U.S. and EU.

Second, IV brinci will be moving into the clinic before the end of the year. Third, we'll be continuing development for the smallpox indication. And finally, we are kicking-off IND enabling studies for CMX521 for norovirus. With that, I'd like to now hand the call over to our Chief Commercial Officer, Linda Richardson..

Thank you, Garrett, and good morning, everyone. As our clinical team continues to advance discussions on the next adenovirus study for brinci, commercially we are focused on three areas. First, we're continuing to increase understanding and awareness regarding the clinical and economic impact of viral infections in the transparent population.

Second, we're strengthening our understanding of the adenovirus commercial opportunity by delving into patient populations that may be at risk for the infections, and where brinci could potentially provide much needed antiviral benefits. And lastly, we're beginning our norovirus market-sizing and opportunity assessments.

Regarding the first point, generating publications from our trials and EIND data is a priority. During the ICAAC meeting this past June, investigators described prospective data collected from our AdVise study 304 and Expanded Access trial study 350.

They provide – they showed data on 26 adult and pediatric solid organ transplant patients who'd received brinci to treat adenovirus infection.

In addition to substantiating, the life-threatening adenovirus infection that exists outside of the high-risk stem-cell transplant population, the data showed that following administration of oral brinci, rapid and sustained reductions in adenoviral levels were achieved.

Chimerix also would be sharing new 24-week data from our AdVise trials during the upcoming IDSA meeting in October; information that will provide greater detail on the results we saw in cohorts A and B patients. We believe learnings here are important to advance an understanding of adenovirus and the impact of brinci on improving patient outcome.

Meanwhile, the body of evidence around DNA viruses continues to advance. For example, again at IDSA, researchers from the Fred Hutchinson Cancer Research Center in Seattle will present their findings around kinetics of DNA viruses and the correlation of these viruses with mortality during the first year post-HDK.

Essentially, this work is linking viral detection, viral quantity and risk factors, such as the timing of infections, to outcomes, all of which are important in our development plan and for demonstrating the clinical value of brinci.

In advance of 2017 BMT and European BMT meetings, we are developing these awareness materials to help educate clinicians on the prevalence and impact of viral infections in immunocompromised transplant patients.

We plan to support educational seminars and symposia at relevant conferences throughout 2017 to help highlight the clinical and economic impact of a variety of DNA viral infections. Regarding our second area of focus, sizing the antivirus market, we are looking at several sources of data.

First, we've received the updated 2014 CIBMTR data, regarding numbers of allogeneic stem cell transplants performed in – in 2014 there were nearly 23,000 total HCT transplants, with about one-third being allogeneic.

Pediatric transplants, where we've historically seen a 12% to 15% incidence of annual detections represented approximately one-in-five allogeneic stem cell transplants in 2014.

We're also examining government sources, such as the hospital cost and utilization database, to better characterize the types of patients who are discharged with the diagnostic code of adenovirus infection.

Understanding these patient types may help us assess other patient populations where serious adeno infections exist and help identify new areas for studying brincidofovir. An early look at this source indicates that there are over 4,000 hospitalizations annually that involve the diagnostic code for an adenovirus infection.

More than 20% of these adenovirus-related hospitalizations were associated with an immunocompromised condition, and four of five adenovirus-associated hospitalizations were for pediatric patients. We plan to share other data, including longer length of stays associated with adeno, pneumonia and enteritis at an upcoming scientific conference.

Sizing of the European adenovirus market is also underway. We've initiated work in Europe that will help provide more granularity on the current practices related to the identification and treatment of adenovirus infections. Finally, Michelle mentioned the work our discovery team has done advancing our norovirus candidate.

The commercial team has begun to frame the opportunity in this area. There are estimated 700 million cases of norovirus each year. No vaccines or antivirals are currently approved. While self-limiting in the general population, in the immunocompromised patients, norovirus infection can become chronic, debilitating, and even life threatening.

One report cited nearly one-in-five allogeneic stem cell patients contracted norovirus in the first year post-transplant and 17% of renal transplant patients became chronically infected with the norovirus infection. We look forward to providing more information on this opportunity in the future.

Now I'd like to turn the call over to Tim Trost to review the financial..

Thank you, Linda, and good morning. As Michelle LaSpaluto mentioned in her earlier introductory remarks, earlier today we issued a press release containing our financial results for the second quarter of 2016.

Starting with our balance sheet, on June 30, 2016 we had approximately $301 million in capital available to fund operations and had approximately 46.2 million outstanding shares of common stock. Turning to our statement of operations, Chimerix reported a net loss of $18.1 million, or $0.39 per basic and diluted share, for the second quarter of 2016.

During the same period in 2015, the company reported a net loss of $24.8 million, or $0.59 per basic and diluted share.

Contract revenue for the quarter was $1.8 million, as compared to $2.6 million for the same period in 2015, due to a decrease in the second quarter of 2016 in reimbursable expenses associated with the company's ongoing development contract with BARDA.

Collaboration and licensing revenue for the quarter decreased $1.5 million due to the non-recurring recognition of revenue in the second quarter of 2015 related to our license with ContraVir. Research and development expenses decreased $13.8 million for second quarter of 2016, compared to $21.9 million for the same period of 2015.

This decrease was due primarily to completion of the SUPPRESS and AdVise trials and close-out of our two solid organ trials, SUSTAIN and SURPASS. General and administrative expenses decreased to $6.6 million for the second quarter of 2016, compared to $7.2 million for the same period in 2015.

The decrease results from a $1.8 million decrease in commercial consulting costs, partially offset by an increase in compensation costs, primarily stock-based compensation.

Loss from operations was $18.5 million for the second quarter of 2016, compared to a loss from operations of $25 million for the same period in 2015, due primarily to the decreased research and development expenses, as previously discussed.

Looking forward to the remainder of 2016, we currently expect both R&D expenses and G&A expenses, particularly R&D expenses, for the full year 2016 to be significantly lower compared to full year 2015, although there may be some unevenness from quarter-to-quarter.

While, as Michelle and Garrett noted earlier, we are continuing to develop the new clinical development plan for brinci, we've also continued to aggressively work to streamline our cost structure and to conserve our capital on hand.

Specifically, we reduced R&D expenses in 2Q 2016 a further $7.2 million, or 34%, compared to 1Q 2016 and $17.8 million, or 56%, compared to 4Q 2015. We've reduced G&A expense a further $0.3 million, or 5%, compared to 1Q 2016 and $3.1 million, or 32%, compared to 4Q 2015.

We've thus now effected a reduction of quarterly total operating expenses compared to 1Q 2016 of $7.5 million, or 27%, and compared to 4Q 2015 of $21 million, or 51%.

Consequently with continued vigilance toward controlling our costs, we remain well-capitalized to fund our development path forward, with approximately $301 million of cash and investments at June 30. Now I'd like to turn the call back to Michelle for final remarks..

Thank you, Tim. We hope that this morning's updates have provided you with a better understanding of our continued work in adenovirus, and the goals of our ongoing discussions with the FDA and with European regulators. We plan to provide details regarding the next study in adenovirus infection around the end of 2016.

We're looking forward to clinical data on the IV formulation of brinci and plan rapid progression of the IV formulation into patients with CMV or BK virus infection. Our smallpox program continues to move forward with the second efficacy study in an animal model.

The importance of smallpox as a potential bioweapon has been recognized by our congressional representatives and we remain hopeful that brincidofovir will be added to our strategic national stockpile. This time next year we hope to have CMX521 advancing toward the clinic as the first potential antiviral for norovirus infections.

Our capital is sufficient to achieve these important next milestones for brinci and to advance our early discovery pipeline. We'll now open the lines for any questions..

Thank you. [Operator Instructions] The first question is from Katherine Xu of William Blair. Your line is open..

Hi. Good morning..

Good morning, Katherine..

Good morning. I am just wondering for solid organ transplant, a lot of times the CMV prophylaxis could a last year or two.

So could you just comment on the – would there be any problem with an IV patient in this setting?.

Yeah. Thanks, Katherine. This is Garrett. The issue as far as prophylaxis for kidney transplant patients, for example, in seropositive kidney transplant patients, prophylaxis is generally applied for 100 days and for the D plus or minus population it's about a six-month period of prophylaxis.

But, as you indicated, there are subgroups of patients that receive even longer periods of prophylaxis, such as lung transplant patients. The IV formulation is probably not optimal for long-term prophylaxis.

This is the reason why we are pursuing alternative formulations of brincidofovir that may be more optimized for longer-term use in solid organ transplantation.

That is not to say that IV does not fulfill significant unmet medical need in the solid organ transplant patients, where treatment of CMV and BK virus are still a significant unmet medical need..

And so we have some competitor basically read out in the near-term those will be oral drugs [against] [ph] CMV only in the prevention setting as well.

So assuming that it is successful, can you just comment on your strategy on developing the IV brinci to differentiate from that kind of medication and how you would grab market share down the road?.

First, as we work with our physicians, we remain focused on the broad spectrum activity that the drug brings. That really is the differentiating factor, but these patients, unfortunately, are susceptible to a broad number of DNA viral infections after their stem cell transplant.

Those include BK, those include adenovirus, CMV, HHV-6; all those infections are serious problems and could potentially be addressable by the IV formulation of brinci.

And in the stem cell transplant setting, where the patients are associated with their hospitals for the first 100 days after transplant and are frequently seen two times or three times a week, getting an IV infusion is not an issue for those patients.

So certainly we believe that the IV brinci formulation provides a potential solution, whereas other agents that are under investigation don't have that broad spectrum of activity..

Thank you..

Thank you, Katherine..

The next question is from Geoff Meacham of Barclays. Your line is open..

Good morning, guys, and thanks for taking the question..

Good morning.

How are you?.

Good. Good. Just a couple for you, Michelle, or maybe Garrett. So, how important are precise historical controls for AdVise and can one look at baseline disease maybe as a better starting point for comparisons? I'm just trying to think about the regulatory view now and maybe what the puts and takes are for additional studies..

So, I think we were disappointed in the matched historical controls. It proved to be very difficult for us to collect these for a number of reasons. First of all, in the U.S., many of the key stem cell transplant centers that were participants in the AdVise trials had had access to brinci since 2009.

And so, we had to go back pretty far back to 2004 in order to get matched controls from some of these centers. Other centers, we were not able to collect matched controls from those centers, because the IRBs insisted that we end up getting consent from all patients or family members in order for their inclusion.

We were, obviously, concerned that that would potentially bias the collection of information to patients who wouldn't survive and with the mortality endpoint that would not have worked out in our favor. So we didn't end up pursuing those particular centers.

And at the end of the day, when we ended up getting the matches, the fact that there were older patients, in other words patients from 2004 to 2009, meant that some of the key factors that we would try to match these patients on were not well matched.

There is – one of the key things that we've learned is that when you go back that far, matching patients on viral load, for example, wasn't possible because quantitative PCR wasn't available back then.

And so, what we were able to look at was patients that were characterized by their types of transplant and their risks, but were unmatched on other characteristics, such as [indiscernible] recovery, such as graft-versus-host disease, such as organ type of involvement, where we have lot more proven or probable pneumonia in the patients that were treated with AdVise when compared to others.

I think, this is just to say that this is – we were trying to achieve a regulatory approval strategy with this matched control population did not appear to be successful.

We weren't able to get a good comparative population and we now know that, that moving forward that getting a comparative clinical trial is going to be important for us to be able to move forward for adenovirus. But we've learned a lot in this process.

We're the first company that really is investigating antivirals for the treatment of adenovirus and we've learned a lot to be able to design that next pivotal clinical study and design it for success..

Garrett, just as a follow-up to that.

I mean, what's been the discussion on more novel endpoints? Do you have to do a more quality study to tackle the adenovirus properly?.

So, we've made our proposals and we're getting feedback from the FDA. We're in active dialogue with regards to a number of different things for the study, including the comparator, including the population, including the endpoints and the timing of those endpoints. And then we've got parallel conversations ongoing with the European regulators as well.

So, we're trying to pull all of this together to agree, hopefully, to a global trial that can enroll patients both in the U.S. and EU. But this is a reason why it's going to be an iterative process that will continue throughout the fall and we hope to have a final design by the end of this year..

Okay. That's helpful. Thank you..

Thank you..

Thank you. The next question is from David Lebowitz of Morgan Stanley. Your line is open..

Thank you very much for taking my question.

Would you be able to speak to the upcoming IV trial, what that is going to look like? And then following that study, what would be the next steps? Is it something that will directly into a Phase 3, into a pivotal trial, or would there be more exploratory trials after that?.

So, the first time in human study is a single-ascending-dose study, which will establish the pharmacokinetics of the IV formulation. We, obviously, anticipate that by delivering IV that you need less drug, because the oral formulation is not necessarily 100% bioavailable.

So, we need to establish the pharmacokinetics of the drug, and also importantly, the tolerability of the drug in healthy volunteers.

Once we have that data in hand, we would then be able to move directly into infected patients to do a multiple ascending doses and treat patients for two weeks to four weeks, for example, either patients that have cytomegalovirus infections, for example, or BK virus infections would be the way to go for that particular study.

And then from there, we will be heading into Phase 3 studies pretty quickly. These studies are smaller studies. They can be completed rather quickly and we will be back into Phase 3 in the stem cell transplant setting.

And ideally the purpose of these two studies is really to establish the tolerability of the IV formulation demonstrating that we don't have the GI side effect profile that has been the issue in the stem cell transplant population with the current oral formulation.

We are very helpful to be able to go into the stem cell transplant, deliver the same type of exposures that have been effective, antiviral exposures with brinci, but without the GI side effect profile, so really bringing all the benefits without the side effects..

Will this be something that we could see making the transition back to a pivotal in latter part of 2017 or would it be something more 2018 timeframe?.

We're hopeful. I think it's just going to be depending on how quickly we can get these studies enrolled, but that's our hope..

Okay.

And just quickly jumping over to adeno, would you be able to speak the dynamics between pediatric and grown-up populations, and how that might affect your study designs going forward?.

It's really interesting. We've learned a lot about adenovirus in the conduct of AdVise and by looking at the patient outcomes on an individual basis in the historical literature. It really does appear the results have a different course when compared to the kids.

This is an interesting virus that doesn't really cause latency, but it's fixed around, it persists, and in patients it takes a while for patients to clear the infection once they've had it.

So, pediatric patient who contracts adenovirus when they are, say, two years old, might have it sitting dormant in the gut until they are three before they clear it.

And so the probability is higher for pediatric patients to be carrying adenovirus into the transplant, and for that reason pediatric patients more likely reactivate the virus from latency or dormancy once they get their immune system beaten up. Adults primarily may be getting infected via exposure from the community.

So they may have a different type of a manifestation. They are not reactivating in the gut, but they're basically getting exposed to a respiratory infection, for example, and thus have higher incidences of pneumonia and we know that pneumonia is associated with a higher mortality of these patients.

So, really much more of an opportunistic infection in adults than in kids. And because it occurs less frequently in adults than kids, it's not looked for as often. So they're not using surveillance techniques, they're not using PCRs to screen patients, and so therefore, they're catching it much, much later in adults when compared to kids as well.

So, there is a number of interacting factors here that may influence the different outcomes that we see in pediatrics versus adults, but it is primarily a pediatric disease.

In AdVise it was over two-thirds of the patients were pediatric patients, and thus we're looking at potentially doing a first study in pediatric patients to remove that heterogeneity from the study and allow us to achieve our goals faster..

Thanks for taking my questions..

Thank you..

Thank you. And the next question is from Yigal Dov Nochomovitz of Citigroup. Your line is open..

Yeah, hi, guys. Thanks for taking the questions. I just wanted to dig in a little bit more into the adenovirus trial design. It sounds like you're saying that you only can enroll cidofovir refractory patients.

Could you perhaps just define that more specifically and then what percent of adenovirus infection could that constitute overall? And then with regards to the design of the trial, would the plan be to only enroll the cidofovir refractory or have some sort of run-in period to see whether the patients don't respond to cidofovir? Thanks..

It's an interesting question. It's one of the things that we've really tried to look at is the – who are patients that do poorly, and it's really – it's more about viral loads than it is about prior treatment with cidofovir.

As we look in the study that we conducted, the AdVise study, the initial cohorts of patients were pre-treated with cidofovir at much higher rates than the later enrollees. So at the very beginning of the trial there were patients that were treated with cidofovir were not responding very well, and then were treated with brinci.

And unfortunately, those patients that were often in multi-organ failure, we weren't able to save those individuals.

As the study progressed and as we enrolled subsequent cohorts of patients, mortality went down and down, such that by the time we got to the end of the study, mortality was on the order of 20% in the final quartile of pediatric patients that were enrolled.

So really striking difference and that's due to the use of brinci upfront rather than after extensive cidofovir experience and salvage treatment. So the study will enroll patients certainly that have established disease.

We're looking at patients with proven or probable adenovirus disease in an organ system and patients that have at least a 1,000 copies of virus in the blood.

And that's a number that we're looking at, whether we tweak that a little bit to a little bit higher in order to ensure that, these are patients that are not going to do well with cidofovir therapy.

That's the kind of patient population that we're looking at and we're looking at randomizing patients either brinci or standard of care regimen which is either cidofovir or decreasing immunosuppression or both.

We'll be looking at controlling specific inclusion and exclusion criteria in order to really select for these patients are going to do well with cidofovir, but also are not going to – to die quickly and that's really – it's going to be important that we enroll patients and treat them before they get to that multi-organ failure stage that really is something that an antiviral can necessarily rescue the patient from.

As far as the endpoints, we're looking at endpoints of non-relapse-related mortality and potentially combining with measures of kidney function, but these are all things that are under discussion with the regulators..

Thanks, Garrett. That's helpful clarification. One other question, we noticed very recently there were two articles in Transplant Infectious Disease two case studies on brinci, one in acyclovir-resistant HSV-1, another one in patients with disseminated acyclovir and cidofovir-resistant BVV infection.

You spoke earlier about the broad spectrum activity of brinci, could you comment a bit on these studies and whether you would potentially pursue these other indications?.

So, these are very important studies. These area individual cases that have been described where brinci has activity – has shown clinical activity that matches it’s in vitro activity against all of the double-stranded DNA viruses that affect these patients. So, those include herpes simplex and varicella zoster.

These are infections that are typically prevented using acyclovir in these patients, but there was a recent study that was presented at Tandem BMT where investigators at the Sloan Kettering Cancer Research Center who were treating patients with brincidofovir removed acyclovir prophylaxis and saw a very, very low rate of breakthrough herpes simplex or varicella zoster infection a data with zero while the patients were on brincidofovir.

So, really kind of accounting for the activity and the promise for patients that have those rare resistant infections where brinci really offers an oral available therapy for these infections that really have no other options at the moment..

Great. Thank you very much..

Thank you, Yigal..

Thank you, Yigal..

The next question is from Jessica Fye of JPMorgan. Your line is open..

Hey, guys, this is Ryan on for Jess. Thanks for taking our questions. Maybe a couple of questions for Tim. Can you help us think about the potential cost for a Phase 3 program for adenovirus? And second, I know you talked about 2016 expenses being -coming in lower than last year.

But as we think about – can we think about R&D staying at this sort of run rate for the rest of the year? Thanks..

So, yes, thanks, Ryan. So, as to the first question, the cost of an adenovirus trial, I mean, the first thing we need to understand is to get clarity on what is that trial.

So, we are not yet in a position to provide any guidance on that, but as I believe Michelle said early on, on today's call, once we have some clarity on what that trial looks like, we do anticipate being able to give some financial guidance there.

As to R&D run rates, I mean, we've kind of said what we are going to say namely that we expect full year expenses for 2016 for both R&D expenses and G&A expenses, but to your question, particularly R&D expense, significantly lower than they were in 2015.

One of the key problems here is if you go back to our year-end call, we did say that we expect expenses to temporarily trend lower. However, we also said that once the new plan is clarified, we expect expenses trend back upward again. So again back to my initial comment, once we have clarity on the next generation clinical [indiscernible]..

And I think one thing just to add, Ryan, on that – I mean the study that we're currently discussing with the FDA and the European regulators is in the likely range of around 200 patients. Again, with the ability if we can have monitoring throughout that trial and reach that delta along the way, then we can cut that trial short potentially.

But again, we're not talking about a SUPPRESS like 450 patient type of trial. So, these are – these are not a – well, it's not – we're are not anticipating a large trial in the range of a SUPPRESS trial. But again, once we get that nailed down, we'll give you that guidance later this year..

Okay.

And is there any more you could elaborate on for the newer longer-term use brinci formulation?.

On the IV or on the oral that we're living towards?.

Sorry, on the IV. I guess – I guess to an earlier question, just sort of trying to think about the enrollment timelines for getting data.

I mean, is there – could you maybe remind us the number of sites that you have for the IV study?.

So, for the first time in human study, this is – this is a healthy volunteer study that we're anticipating starting in the coming months. That – those studies typically just enroll cohorts of ascending dose, it's a single dose study. These are healthy volunteers and we will screen those patients and get them enrolled by cohort pretty quickly.

So, we're anticipating getting that study started before the end of the year and we should have data out shortly thereafter..

Great. Thanks for taking the questions..

Thank you. The next question is from Stephen Willey of Stifel. Your line is open..

Good morning. Thanks for taking my question. This is [indiscernible] for Steve today. So, wanted to ask you about on the EAP Emergency IND patients.

Have you been able to extract any kind of information from these patients that will help you shape your Phase 3 design? Anything you can provide – any color you can provide on that?.

So, we have treated hundreds of patients with brinci via Emergency IND or compassionate use mechanisms in the U.S. and the rest of the world.

Unfortunately, because of the regulations, we're not permitted to directly get data from those patients, but we have encouraged the physicians – the publisher experienced with the compounds and really we have encouraged the physicians to pull together and pool their data as we're doing in both the U.S. and Europe at the moment.

So, we look forward to having increasing publications that will increase the number of patients that have been treated with brinci with adenovirus in some of these – some of these have been very, very dramatic responses and so we'll look forward to that in the coming months..

Okay.

And can you also talk about what an initial proof of concept study for CMX521 might look like? Is this likely to be a talent study in healthy volunteers and then what might a larger potential your pivotal study look like given the episodic nature of the infection?.

Well, I think to address the second point, it is self-limited in the immunocompetent host, we're going to just give you kind of a bad weekend. But in the immunocompromised host, unfortunately these patients can be chronically infected for hundreds of days.

A study from Northwestern indicated that the solid organ transplant population infected with norovirus had a median of 230-some days of diarrhea which is just horrendous.

So in those patients, clearly an antiviral that could knock down norovirus and knock down symptoms would be rather straightforward for a Phase 2 or a Phase 3 study to document the drug – the drug's efficacy.

In terms of earlier studies, the situation is that you can do and there have been designed human challenged studies that can quickly, basically get you into not just pharmacokinetic and tolerability studies, but quickly into proof-of-concept study. So, we're looking at our options as far as that's concerned as we move the candidate forward..

Okay. Thanks for taking my questions..

Thank you..

Thank you. And the final question will come from Yigal of Citigroup. Your line is open..

Yeah, hi. Thanks. I just had one follow up. Correct me if I'm wrong, but I thought there was a natural history study for adenovirus going on in Europe. And if so, could you just comment on whether any of the learnings from that study may be helpful in structuring the new AdVise trial? Thanks..

So, we're just kicking off that study now. I think the – our review of the literature includes both European and U.S. experience with both brinci and with the current standard of care.

This is going to provide important context for us as we end up looking at the opportunities and potentially could provide us opportunities for alternative filing strategies.

But I think that as we look at this study, it's really going to be important for us to document the current standard of care and the outcomes that are associated with that current standard of care.

But as our feedback from European physicians has been that they're just desperately in need for an antiviral that can control adenovirus in the highly immunosuppressed stem cell transplant patients, but also one that does not associate with the severe nephrotoxicity with the current standard of care..

And Garrett, when will we get some initial data from that natural history study?.

So, we're kicking this study off now. We're going through the submission process in order for us to collect the data, and hopefully we'll be coming out with data early next year..

Great. Thanks a lot..

Okay. Thank you, all, very much. One last item before we close this morning's call, just to save the date, we are planning an Investor Event in New York over the last few years. We have held that in October, but which IDWeek occurring in the last weekend, Halloween Weekend in New Orleans, you may choose to join us for.

We wanted to wait and so after we have been able to present the final AdVise data at IDWeek. So, our annual investor update will be taking place on December 1 in New York, so please [indiscernible] close of market on that date, and we'll be providing formal invitations and the details around that in the next few weeks.

I wanted to thank you all for your time and support this morning. And we look forward to bringing you continued updates over the next few months. Thank you, all..

Thank you. Ladies and gentlemen, this concludes today's conference. You may now disconnect. Good day..