Matt Hogan - CFO Jim Brown - President & CEO.

Annabel Samimy - Stifel Nicolaus Irina Koffler - Cantor Fitzgerald Jason Napodano - Zacks Research.

Welcome to the DURECT First Quarter Earnings Call. [Operator Instructions]. I would now like to turn the conference over to your host, Mr. Matt Hogan, CFO. Thank you Mr. Hogan, you may begin..

Good afternoon. Welcome to our first quarter 2015 earnings call. This call begin with a brief review of our financial results and then Jim Brown our President and CEO will provide an update on our business. We will then open up the call for Q&A session. Before beginning, I would like to remind you of our Safe Harbor Statement.

During the course of this call, we may make forward-looking statements regarding DURECT’s products and development, expected product benefits, our development plans, future clinical trials or projected financial results.

These forward-looking statements involve risks and uncertainties that can cause actual results to differ materially from those in such forward-looking statements. Further information regarding these and other risks are included in our SEC filings, including our 10-K and our 10-Q under the heading Risk Factors.

Let me now turn briefly to the financials. Total revenue was $4.8 million in the first quarter of 2015 compared to 6.3 million in the first quarter of 2014.

Excluding all deferred revenue recognized for upfront fees from our agreements, revenue from our R&D collaborations was $1.6 million in the first quarter of 2015 as compared to $1.4 million in the first quarter last year.

Revenue from this source always fluctuates from quarter to quarter depending on the state of development under the various programs and what our role is in those programs.

Product revenue largely from the sale of ALZET pumps and LACTEL polymers was approximately $3 million in the first quarter of 2015 as compared to $2.8 million in the first quarter last year. Our gross margin on these products was around 67% in the first quarter. And these product lines continue to be strongly cash flow positive for us.

R&D expense was $5.4 million in the first quarter this year as compared to $5.5 million in the first quarter last year so not much change. SG&A expenses were $2.8 million in the first quarter this year as compared to $3.4 million in the first quarter last year.

As a result of the above plus interest expense our net loss for the first quarter 2015 was $4.9 million compared to a net loss of 3.6 million for the same period of 2014. At March 31, 2015, we had cash and investments of $29.8 million, which compared to $34.9 million at December 31, 2014.

After the quarter closed we raised 10.1 million net by selling 5.4 million shares in the open market at an average price of a $1.94 per share using our at the market facility. It's really our pro forma cash position will be about 40 million. We have 19.8 million in long term debt.

With that thanks for joining the call and I will turn it over to Jim for a discussion of non-financial matters..

On focus on what's new since our last call and our significant program, therefore I won't be touching based on every program that we have. I will begin with our Epigenomic Regulator Program and DUR-928. DUR-928 is the lead module from this program, it's n endogenous small molecule, DUR-928 is the first in a new family of endogenous steroid hormones.

DUR-928 represents a major discovery for DURECT and although still to be proven a potential major advancement for medicine.

DUR-928 demonstrated significant effects in six different animal model while not demonstrating any toxic effect in the pre-clinical toxicology studies conducted nor have we seen any safety single in the initial Phase 1 study despite achieving plasma concentration of DUR-928 that were at least 100 times the normal endogenous levels for this hormone.

We have working on this program for more than 3.5 years before we announced it on March the 2nd, and our six patent families in process to protect it. DUR-928 is an epigenomic regulator of lipid homeostasis, inflammation and self-survival.

It inhibits cholesterol synthesis more broadly than statins that statins which block HMG-CoA reductase enzyme in that pathway, 928 also blocks the five other major enzymes in that pathway. DUR-928 inhibits triglyceride. In inhibits bile acid and fatty acids synthesis in a similar fashion to the bile acid analog.

It inhibits lipid absorption and transportation via MTP similar to the function of like lomitapide. DUR-928 downregulates PCSK9 and it can be given orally. It inhibits information by downregulating TNF alpha, the interleukins, COX-2 and others.

It improves cell survival, increases bile acid secretion and it improves insulin sensitivity and glucose tolerance. DUR-928 does all of this and it occurs naturally within the body. Our animal data are divided into two main categories, safety and efficacy.

With regard to safety and pharmacokinetic and toxicology studies conducted in mice, hamsters, rat, dogs and monkeys, DUR-928 has been found to be orally bioavailable and safe at all doses tested to-date. These non-clinical results supported the initiation of DUR-928 into human safety trials with our oral formulation.

Regarding efficacy, the biological activity of DUR-928 has been demonstrated in six different animal disease models involving three animal species.

Three of these models represent acute toxic or ischemic organ injury as demonstrated in kidney and liver, and three represent chronic disorders of liver lipid accumulation, fibrosis and dysfunction such NAFLD and NASH.

For the pharmacology studies supporting the chronic indication DUR-928 has demonstrated improved liver morphology and reduced liver triglycerides and cholesterol in mice and hamsters at a high fat diet. It is reduced fibrosis and NASH scores in mouse NASH model.

In pharmacology studies supporting the acute indications for DUR-928 the molecule has demonstrated improved survival after injury from lethal doses of acetaminophen and ethanol in mice, it has improved survival after exposure to lethal doses of endotoxin in mice and it has reduced ischemic injury in a rat kidney model that mimics restricted blood flow similar to what you would see in cardiac surgery.

In March we reported results from our initial Phase 1 safety study, this trial was conducted in healthy subject. It was a single side randomized double blind placebo control, single ascending dose trial in 30 subjects of which 20 received 928 and 10 received placebo.

There were five doses tested, the highest of which resulted in plasma level that were greater than 100 fold those of the patients or the subjects endogenous levels of DUR-928. No treatment related side-effects were noted at any dose. The half-life appears to be suitable for once daily or less frequent dosing.

And it's a precursor to the Phase 1 multiple ascending dose trial. This past month we also started this multiple ascending dose Phase 1 trial. This is a single site randomized double blind placebo control multiple ascending dose trial in 20 subject.

There are two doses that will be given once daily for five consecutive days in healthy volunteers and we expect to have the results from this trial in the second quarter of this year.

Now going to move on to the therapeutic opportunities DUR-928, the first group of potential clinical indications for DUR-928 is acute organ injury for which we use our injectable formulation.

The initial indications of interest are acute kidney injury, which has orphan indications and this would be examples of this would be something protecting the kidney's during some type of major open heart surgery or bypass surgery, as well acute liver failure which also has orphan indications and an example here would be acute [indiscernible] toxicity and finally ischemia and reperfusion injury which also contains orphan indication.

Post-operative acute kidney injury or AKI, has been associated with cardiac surgery, there is an increased of post-operative AKI, it is currently seen as somewhere between 5% to 25% of patients undergoing major surgery.

AKI pretends a poor outcome for even small evaluations of serum creatinine are significant, have been associated with dialysis and reduced survival. Other potential clinical indications for DUR-928 are in the chronic liver diseases which we will pursue with our oral formulation.

The initial indications for chronic use are non-alcoholic fatty liver disease and non-alcoholic steatohepatitis, additionally there are multiple orphan indications we plan to invest today.

Both NAFLD and NASH is a growing global epidemic, NAFLD and NASH are hepatic manifestations of the metabolic syndrome and unfortunately NAFLD now prevalence has doubled in last 20 years to the point that it basically 1/3rd of the U.S.

population has non-alcoholic liver disease and 3% to 5% of Americans are about little bit more than 10% of those NAFLD patients go on to have NASH, a non-alcoholic steatohepatitis with about 20% of those patients develop cirrhosis. By comparison between 1999 and 2002 the prevalent Hepatitis C viral infections in the United States was 1.6%.

It's projected that soon NASH will be the number one cause of liver transplant in the United States. This past March there was a keystone meeting up in Canada on NASH, it was the first [indiscernible] actually held.

We had one of our key scientist up there and there was a lot of discussion as what causes this transaction from non-alcoholic fatty liver disease to NASH patients and they were there is a new therapy that’s being proposed and supported by some data that the progression from NAFLD to NASH it is in somewhat potentially associated with endotoxin, a bacterial leaking coming in from the gut expressed into the liver and if that case does hold up it would actually even be more relevant for the DUR-928, our strength in being able to protect against endotoxin and toxicity and the inflammation associated with it.

In summary DUR-928 is a novel, endogenous small molecule that’s an epigenomic regulator of lipid homeostasis, inflammation and cell survival. We have compelling data for multiple animal model. In acute organ injury models we have shown improved survival in the presence on chemical damage caused by alcohol or biologic damage caused by endotoxin.

We also have approved post ischemic organ function in the chronic metabolic disease model. We have seen improved liver morphology and reduced liver triglycerides and cholesterol, we have seen reduced inflammation, reduced fibrosis as well as a reduction of a NASH score. And we have seen improved glucose tolerance and insulin sensitivity.

We have an injectable formulation for our acute dosing and we have an oral formulation for our chronic dosings. This product is suitable for once daily or less frequent dosing, it's some of the models we have seen just phenomenal data by only dosing every three days. We have seen no toxicity in any of our pre-clinical studies to-date.

As well we have seen no adverse events from our first Phase 1 trial. The next steps for DUR-928 are completion of the multiple-ascending dose the oral Phase 1 trial, we expect those data this quarter second quarter 2015.

Next we will be starting the single dose injectable Phase 1 trial in the second half of this year and the multiple ascending dose injectable trial to begin in the fourth quarter of this year. The Phase 2 for this program will begin in 2016 in multiple patient populations.

We’re looking at acute organ injury looking at orphan indications with our injectable formulation, we’re also looking at orphan indications for the chronic indications with our oral formulation as well we’re looking at chronic indication of the oral formulation, that is not orphan such as NAFLD NASH.

Now that the program is public we’ve ramped up our engagement with our key opinion leaders to assist us in defining the right studies to prioritize in 2016 and we look forward to updating you as this year unfolds.

While we have been working on DUR-928 we continue to focus and maintain progress with our other programs which include two late stage product candidates. The first I will discuss POSIDUR.

Since our face to face meeting with the FDA in late September we have had additional interactions with the FDA to clarify what we need to do to address the complete response letter.

These interactions have done a lot to clarify key points with the FDA and in late February we sent the FDA a synopsis of the protocol we proposed for a clinical study that is designed to gather the data, the FDA would like to see in the NDA resubmission.

When we get feedback from the FDA we will be in a position to finalize the protocol and get going on the trial. Regarding timing of the response there is no formal PDUFA date when they need when they would have to get back to us. However the FDA has told us that they are working on it, so we expect to hear back from them soon.

In the interim we’re engaging with clinical research organizations and key investigators regarding conduct of the trial and rather than talk about the trial right now we would rather get feedback from the FDA on our protocol synopsis and then we will be in a far better position to describe the trial.

With this clarity from the FDA as the missing piece with regard to our partnering discussion we are able to now move those forward. There is strong interest in the program for multiple party, to that end we are looking forward to getting this feedback from the FDA.

The interest in POSIDUR is driven by the substantial market opportunity for a 2, 3 day post-surgical pain product that has the potential to meaningfully reduce opioid use after surgery. I will now move on to Remoxy, Pain Therapeutic has stated that they are focused on in orderly transfer of the program back from Pfizer.

At that point Pain Therapeutics has finalized their strategy for resubmitting the NDA at their partnering efforts. The Pain Therapeutics press release on April the 21st, stated that they had resumed responsibility for Remoxy under a letter agreement from Pfizer.

They said that Pfizer has started to transfer document data and regulatory responsibilities related to Remoxy to Pain Therapeutic. They further stated that they expect the transition to be successfully completed or substantially completed in the second quarter of this year.

We have been in contact with Pain Therapeutics, shared with them our knowledge of the work we conducted with Pfizer and we’re standing by, ready to assist Pain Therapeutics in any way that we can. We look forward to updates from Pain Therapeutics in the coming weeks.

Now moving to Relday, Zogenix stated that the multiple dose trial started in the first quarter of this year and they expect to have data in the third quarter of this year from this trial. They have also stated that they are targeting for an end of Phase 2 meeting by early 2016. This is a milestone for which we would receive a payment.

Relday has stated they intend to seek a partner from outside of the United States. If they do partner DURECT will receive a portion of Relday would seek.

With a product like this once the PK, is established there is no need for a Phase 2 study, so the next step in development would be Phase 3 which could occur in 2016 for which we would also receive a milestone payment at the start of Phase 3. We feel Relday will be a nice product opportunity for treating schizophrenic patient.

In the earlier Phase 1 trial therapeutic plasma levels were achieved on the first day of dosing followed by control release profile over the whole four week period.

Relday offers a simpler dosing regimen as compared to the current therapy because the patient would most likely not have to be weaned off the oral medication as they transition to the long acting injectable.

Relday offers a subcutaneous injection rather than an IM injection and unlike the leading injectables in this category with Relday there is no need for reconstitution prior to use. Market research on this product is quite positive and we look forward to more data later this year and potentially to having another program in Phase 3 in 2016.

The last program we will review today is our ORADUR-ADHD, Orient Pharma is our partner for our ORADUR-Methylphenidate and they have certain far-east territories for which we get a royalty while we have retained rights for the Europe and the United States.

Orient Pharma has been interacting with the Taiwan FDA and they expect to start a Phase 3 trial in Taiwan in the middle of this year and complete in 2016. Although the commercial opportunity for us is not that large in Taiwan we’re looking forward to having that data generated as it may be very useful for us.

As you may know Methylphenidate is one of the two may ADHD drug and the ADHD market is a large market. As a reminder the ADHD market in the United States was about $9 billion and grew 6% in 2014.

The features of our product candidate are rapid onset of action, the long duration, the small capsule and with regard to abuse deterrent we have minimal alcohol dose jumping and resistance to physical tampering. About 20% abuse ADHD drugs and 40% of the users snort them, a strategy by which our order technology would be prevented.

Our market research suggest this could be a very attractive product. With that we would be happy to take any questions that you might have..

[Operator Instructions]. The first question is coming from the line of Annabel Samimy..

So I want to ask you about 9 to 8, obviously very excited about the program but from our perspective it's a still little bit hard to I guess wrap our heads around the compound given at early stage. So maybe you can help us layout the timelines.

I know you just mentioned that you’re doing a lot of single and multi-escalating doses or multi-ascending doses in 2H.

But once we get into Phase 3 trial is like how do you see this progressing for -- studies or acute indications, are they going to be rapid type studies, the chronic ones, are those going to be your long studies, like how do we think about this so we can even try to formulate an idea of this value in our head..

First off you’re absolutely right, this year we’re going to spend the majority of our time focusing on getting the Phase 1 done and I think we’re a little bit ahead of schedule where we thought we would be, we had expected to start in the multiple ascending dose for the oral program.

The middle of this year we actually started, we are able to start it last month and we actually have data before the second half of the year. And we will be doing the injectable Phase 1 following that in the second half of this year.

Once we have accomplished or completed the Phase 1 dosing, the next step would be Phase 2 data to look for various model of efficacy before we want to pursue and there are quite a few as you can imagine, there are more than half a dozen potential orphan indications for the chronic use as well as NAFLD NASH and alcoholic fatty liver disease potential for treating hepatitis patients.

Once they have been cured of their virus because they still have damaged liver that needs to be treated. And then on the acute side there is of course acute kidney injury around surgeries, and as well as acute liver damage that can occur from toxicity and host of other things.

So there are a lot of opportunities in front of us and what we’re doing actually right now, why we’re doing the Phase 1 work, because we’re working with our key opinion leaders and we have got a number of KOLs we’re working with both nephrologist and liver specialist and others to really fair it out which are the best opportunities for us to pursue.

There are only a certain number of Phase 2 trials within our current capability at direct financially can pursue and so we most likely do three or so and we have to fight and nail this down next year.

But that’s the kind of the range that we’re looking at, we want to make sure that once we can get a decision sooner rather than later and that the data will be meaningful.

To that end that’s one of the reason -- I'm very pleased that he was able to execute on the aftermarket financing and able to bring in another $10 million to look forward but we will certainly look forward to other means to fund ourselves as we accelerate.

One of the things that is interesting on the chronic side I think the street is used to saying people who are looking at NASH result typically taking a year to see result, typically they have to dose those patients for a year and I think it's because the primary function of these molecules that they are looking at, the activity of molecules is to kind of get the fat out of the liver, they reduce the triglyceride and cholesterol and by secondary means then reduce the inflammation because the entire cost is that high lipids in the liver are no longer there and secondarily the liver starts to clean itself up overtime.

It may well be with our molecule that we see this response faster, maybe in months rather than a year and we’re getting just a cleaning of this from some of the work that we have done with that NASH model in Japan where we start just almost basically kind of a reversal of cirrhosis at the four weeks of dosing because we have this direct anti-inflammatory effect, along with getting rid of that and the self-survival and so it's quite possible that we’re hoping that we can see the signal maybe sooner.

We even saw in the one mouse study that we did in the United States just within, just a certain number of hours within 14 hours or so there was some very significant chemical about chemical changes in those mice.

So it still remains to be seen, I know it's a long weighted answer but we’re kind of building the ship, we’re flying it but we’re moving through this year we will have better clarity as each quarter unfolds..

So I guess on the issues with cash flow, obviously you’ve your 10 million from the HCM that you just had I guess last quarter.

Then you got the milestones coming up, can you give us a sense of the size of these milestones that are coming up whether it's from the Zogenix or PKI [ph] can you just help us size that a little bit in our heads?.

Well I'm not allowed to give you the exact details, most of these milestones that we’re talking about would cover most of a quarter's worth of earn or substantial portion of it.

Right now our burn rate is about 5 million a quarter that would go up once we start POSIDUR study, we’re estimating that would have cost associated with it, kind of 8 million to 10 million in outside expenses to run the trial and get the resubmission ready that will be spread over the course of over maybe 18 months or something through the resubmission.

So there is possible milestone payments from these existing programs, there is a little milestone on approval for Remoxy and I think the other source of cash here is if in fact did partner POSIDUR for example, we wouldn’t do it unless we were getting a meaningful upfront and the most likely scenario would be someone sharing the cost of that Phase 3 program as well and then a large milestone on approval.

So if that happens then we’re on a very different place financially..

Okay, so just on the point of partnership I think you had a line in your press release where you said you’re preparing to be in a position to commercialize POSIDUR yourself in the U.S.

and haven't gone back to the old press releases but it seems like you’re leading a little bit more towards commercial, keeping out of the proprietary program, are partnership talks not going as you expected or is it completely on hold until you hear something from the FDA and have a study of the timeline because this is several quarters now they were waiting to hear what the response is here..

All right. So let me address that, no that’s not meant to convey in any way, shape or form that now we have increased our desire to do it ourselves, we’re not -- it's safe to say we have considerable interest from people who might like to partner this program and we have had meaningful discussions with several of them.

The one remaining gating item of course is figuring what is the remaining study that we’re going to do.

Once we have that many of these parties have already done a lot of due diligence but that’s the one piece that’s kind of missing and then our plan is to drive those discussions forward and figure out are they offering a sufficiently good deal that we should do it at this time or not.

And if it's not attractive we will keep it ourselves and potentially go forward ourselves just like POSIDUR did. So we want to keep all options open, but there is considerable interest in the program quite frankly and which is driven by the market opportunity. What was the other part of your question? The timing.

It has been also frustrating for us that we are not ready to get started with this study but it was late February that we sent this protocol synopsis to the FDA. So they have had about two months with it and for all we know tomorrow we’re going to hear from them. But there is no formal PDUFA requirement form to get back to us.

As Kim, mentioned in his remarks they have told us they are looking at it and they expect to get back to us but we just you know I'm sorry we can't put a date on it, we don’t control that..

Our next question comes from the line of Irina Koffler..

I think you’ve answered a lot of the ones I had, I just wanted to dwell a little bit more into the expense side which is on collaborative R&D, can you remind us what programs are in that line item and if you were to partner POSIDUR and maybe split development cost would you generate more revenue out of that line?.

So firstly who is it coming from, is it Zogenix with Relday? Santen, you may recall we licensed a depo injectable program in ophthalmic area and then we have got some feasibility projects underway. Those are the current ones in the first quarter that show up in the line of collaborative revenue.

If we did some work to support Pain Therapeutics on Remoxy it would reimburse those expenses that could show up as well in future quarters, there wasn’t anything in the first quarter from that source.

So that’s a current, if we were to license POSIDUR and they were paying half of the let's say the Phase 3 program, we probably would show that as -- we will probably show the full expense on our books and then the revenue that we got for at the half of the expense as the revenue..

And then are you going to get a milestone from Orient when you start the Phase 3 like you would with Relday?.

No. Just a reminder we don’t get one for that, reminder kind of the Orient Pharma relationship because we haven't talked about it in a while.

What was attractive to us about doing that partnership with them is that we made a series of different formulations to try to pick the right one and they undertook at their expense to run multiple Phase 1 studies in Taiwan to generate the data and help us pick the right formulation and so that part didn’t cost us anything, it was almost like an off balance sheet way of getting the program through these studies.

And they get the rights to Taiwan and few other Asian countries, we get a small royalty back, but they don’t have any rights to Europe or the U.S., we retained all of that, and if you think about it, never mind those were the bigger market opportunities.

So it was kind of an interesting way to get somebody else to fund that clinical work and then we will have access to the Phase 3 data that they generate in Taiwan, not that we are implying you could use that immediately in the U.S. but it would certainly derisk the program if that Phase 3 goes well and they would expect to have that data next year..

So that would facilitate partnering discussions in the U.S.?.

Absolutely, and Europe..

Okay and then SG&A was a bit lower this quarter, is there something driving that or is it expected to rebound later?.

It was a little bit high in the first quarter last year, so we’re benefiting from that comparison. I think that the current rate is kind of normal..

Our next question comes from the line of Jason Napodano..

I had a lot of the same questions on 928, I guess the one thing I'm wondering is in terms of posters or papers or presentations, when do you think we will start to see the first kind of things coming out with respect to all the animal models that you talk about?.

It will be a bit while, we do have some papers that Professor Ren has published and we can share those with people, if they are interested they can contact us and we’re happy to -- with regard to the others they will be coming out overtime.

There is -- we’re working on potential strategies for publications and we look forward to actually sharing those at various meetings as things unfold, because some of the data are quite compelling.

The NASH data for example we saw a greater than 3 reduction which I know which I don’t anyone else has really ever seen something in that range from a therapeutically relevant molecule..

I think we’re just mapping out the strategy right now because on the one hand it would be tempting to just like put out a press release on each one but on the hand that kind of ruins the ability to maybe put together and submit for a nice publication somewhere in a noted journal, so we’re trying to puzzle all that through..

And the second question just on POSIDUR and I don’t know if you’re willing to answer this or not but if the protocol comes back and it's relatively similar to what you, if feedback comes back from the FDA it's relatively similar to what you submitted.

How quickly do you think you can get a program up and running?.

A little over a quarter is the realistically time you need to get the investigator setup, electronic diaries programmed all that kind of stuff. We obviously have in mind who we would use as key investigators and we have been interviewing the CROs and all that but realistically it takes a little over a quarter--.

For doing everything we can to prime the [indiscernible] but that’s kind of when you shoot the gun off that’s what it takes..

And then our gases, probably a year to enroll and then about six months to analyze the data and write it up if they come back and approve what we have submitted which we thought was responsive to their request..

Our next question comes from the line of [indiscernible]..

I’ve a follow-on and you may have already this question in somewhat but I don’t recall hearing Matt or Jim comment in a conference call or perhaps other form about the potential partnering in monetizing POSIDUR.

Does this suggest that the company has decided not to commercialize POSIDUR which makes all the sense in the world, I can understand that given current circumstances.

And are you suggesting that it's likely we will see some event over the next year or so with respect to obviously the financials have to meet, but there will be some kind of monetization of the POSIDUR relationship?.

There is what we’re trying to convey, we believe this is a valuable asset and we’re not going to give it away, all right. So we’re in discussions with a number of parties and if somebody, we think will do a very effective commercialization job offers us the right terms we’re very likely to go that route.

But to be honest with you if the terms aren't what we think it's worth, we’re prepared to wait, maybe talk to them again in a year when the Phase 3 is done or couldn’t place some of the steps so we could commercialize it ourselves. I think that’s really what we’re trying to communicate if that’s clear..

We have a number of parties that we’re talking to right now and so there is a tremendous amount of interest in it as you can imagine because of [indiscernible] success and we do believe that we afford three days versus their one day and easier to apply and many other advantages over their product.

So I think from a commercial standpoint it's a tremendous opportunity, it's a great opportunity for POSIDUR and probably should be equal to or greater for us quite frankly. And so yes there are a lot of people that are very interested.

I actually think there is a greater potential for us to be able to partner this product now because of the presence of 928 and that has a wonderful potential beyond where POSIDUR could, greatest POSIDUR could be and so there is an opportunity there for us to maybe keep the acute side ourselves and potentially at some point after Phase 2 put in place something for that product on the chronic side.

Just as a reminder that’s one of a family of molecules that we have discovered, so 928 is the lead but there are others..

Right, so that was my sort of follow-on. It's given the excitement about 928, it's in the platform.

It would seem to me from a resource allocation that you’re suggesting that that may capture greater resources than monetization POSIDUR with your own commercial delivery distribution network?.

Yes I think 928 is a game changer for sure for us. I mean you’ve seen in just opening -- basically the company doubled in value in a month and there is a lot more value here than that reflect I believe.

So yes it's a wonderful opportunity, I’ve had certain physicians who are experienced, guys older than me who say this is somewhat akin to the discovery of corticosteroids in the late 40 where you have got a molecule that can treat arthritis and leukemia and poison ivy.

And except the therapeutic window is amazingly large for this sequence, you know, margin, we have yet to see any side effect in any of our top studies nor in our Phase 1 files.

So at some point you will see something but certainly if you gave me a 100 times the amount of corticosteroid I’ve in my blood or a 100 times the amount of testosterone, the 100 times the amount of [indiscernible] or insulin I would be in a really bad position, those are all great therapeutic, natural entities that have endogenous molecules have become therapeutic but you can give me that much and in this molecules case that’s not the case.

So it's a really fast thing..

So are you in a position to start talking about your partner strategy relative to 928 in the platform or is it more discovery work?.

It's very early, as you can imagine something I guess I think comes along once in a career and so we certainly have a lot of interest from the big players in here. I'm just think about PCSK9 just by itself, it's an enzyme that it just degrades the receptors that line your blood vessel that pull cholesterol out of your blood.

And so if you don’t knock those out you are able to lower your cholesterol and so all the big companies, there is a half dozen or more major companies making monoclonal antibodies, they are spending billions of dollars to make monoclonal antibodies to take out PCSK9 but we have a ability to take it down and regulate.

So as you can imagine there is a lot of interest in what this molecule can do and potential of it and it can be I think potentially if we get this far and we decide to do this, one could theoretically can fight up the opportunity such that the chronic oral indication could have a partnership around it or some kind of venture investment and then the injectable, the acute use which is just one or two injections around the time of surgery or child takes too much medicine or whatever the case might be and that case that would be hospital based product that direct could commercialize themselves.

And we can pick orphan indications there to get through the regulatory process perhaps a little faster and can be commercialized easier than the hospital based products..

Our next question is a follow-up from the line of Irina Koffler..

I just want to go back to the DUR-928 and what are you looking to get out of these multiple ascending dose studies in the oral and the IV that would help you determine which of the sticks are half dozen or three indication that you’re going into.

Is there something that we should be aware of that you’re looking for that will inform your future decisions if you could share that?.

No unfortunately it's not, it's just, we’re just seeing how much can we give in and whether there is accumulation or not and that kind of thing. So it's just your basic pharmacokinetics that you’ve to do with the new chemical entity. So we’re doing that now.

The beautiful thing and the nice thing about this is we have it in all of us, you and I and Matt, and everyone listening on this call has a few nanograms [indiscernible] in your blood right now and so we are able to check within each subject in this trial what is the amount that they have and then we can give them that much more and show that they aren't any changes to them.

So we will get a sense of how much we can give, so far we have not had any ceiling and so it will be probably limited on how much can be absorbed and then we will have kind of cart [ph] launch to be able to go from there into our Phase 2 knowing some sense of the relative plasma concentrations in these animal models to effect which we do have a good sense of and that we’re not sharing that publically right now but we do I think a very good sense of some of these models, I know we know it, what plasma concentrations are and what the effects are and so to that end we have done some dose response as it were in these animal models and so we can apply some of those learning to this.

The interesting thing is it's highly, highly conserved molecule. This molecule was actually discovered in liver cells that were in culture, human liver cells.

We then developed an assay for it and we went back and we tested the plasma of hamsters and mice and rats and dogs and monkeys and found that in each one of those species the native concentrations were almost the same as human.

So we all are highly conserved, all these mammals I just mentioned all have just about the exact same amount of 928 circulating around in our blood and the effects seem to be quite similar when we look across all these species and so when we made a jump like we have seen this effect, we have seen this particular gene cascade that’s been altered in a disease state and we say okay let's now test it like for example we went from the [indiscernible] and we tested it in endotoxin first time in and boom it works and then we go and we test in the ischemic rat kidney and we see a reduction, dramatic reduction in creatinine, 2.4 milligrams per deciliter.

So it's really, it's been really a lot of fun but then if it's very logically, so to answer your question, what we’re doing with this Phase 1 is just to get the Phase 1 done so we can move on to Phase 2 so if something has to do and so far everything is coming out exactly as we expected..

So with respect to dose finding for these things, if there is no feeling on how high you can take the dose and you’re just using your prior animal work to inform your decision as to what a good therapeutic dose might be, but you really don’t know so how are you going to identify the appropriately dose to use?.

Well I think we’re going to be able to get pretty close because like I’ve said we have gone between various specifies and when we dialed in a particular plasma concentration we see a particular kind of effect. So I think we will be able to dial it in for humans and I think we will be okay, I do. It will be milligram kind of dose to people..

At this time there are no further questions. I would like to turn the floor back over to management for any final remarks..

I would just like to thank you for participating on the call and if you do have questions afterwards please feel free to reach out to us. Thank you..

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation..