Matt Hogan - CFO Jim Brown - President and CEO WeiQi Lin - SVP, R&D, R&D Business Development and Principal Scientist.

Annabel Samimy - Stifel Nicolaus Jim Malloy - Laidlaw & Company Yi Chen - Rodman & Renshaw.

Greetings, and welcome to the DURECT Corporation Second Quarter Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Matt Hogan.

Thank you Mr. Hogan, you may begin..

Okay. Good afternoon and welcome to our second quarter earnings call. This call will 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 a 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-Q under the heading Risk Factors. Let me now turn to our financials.

Total revenue was $3.2 million in the second quarter of 2016 compared to $4.4 million in the second quarter of 2015. Excluding all deferred revenue recognized for upfront fees from our agreements, revenue from our R&D collaborations was around 262,000 in the second quarter of 2016, as compared to $1.6 million in the second quarter last year.

And revenue from this source always fluctuates from quarter-to-quarter depending on the stage 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 $2.8 million in the second quarter of 2016 as compared to $2.7 million in the second quarter of last year. Our gross margin on these products was 67% in Q2 2016, and these product lines continued to be strongly cash flow positive for us.

R&D expense was $7.9 million in the second quarter of 2016, as compared to $5.6 million in the second quarter of last year, and SG&A expenses were $2.9 million in the second quarter of 2016 as compared to $2.7 million in the second quarter of last year. So our net loss for Q2 2016 was $9 million as compared to $5.5 million in Q2 2015.

At June 30 2016, we had cash and investments of $33.9 million compared to $29.3 million at December 31, 2015.

We also had $19.8 million in long term debt, and I should notice that after a note for you that after the end of the quarter, we refinanced this debt to extend the final maturity to four years through August 1, 2020 and have an 18 month interest-only period through March 1, 2018.

With that, thanks again for joining the call and I’ll turn it over to Jim..

Thank you, Matt. I’d like to take a few minutes to comment on the progress since our last earnings call and update you on our upcoming news flow and potential milestones. Over the remaining five months of this year, we could see Phase1b human data from DUR-928 dosed in NASH patients, Phase 1b human data from DUR-928 dosed in kidney impaired patients.

The approval of REMOXY ER which would be DURECT's first pharmaceutical product and it has a September 25 PDUFA date. The submission of DUR-928 IND for a Phase 2 kidney trial in the United States, as well as the submission of DUR-928 IND for a Phase 2 liver trial in the United States.

Over the next 17 months, we can potential see the launch of REMOXY ER into the U.S. market bringing a next generation abuse-deterrent opioid to a society in desperate need of a better alternative.

Multiple DUR-928 Phase 2 trials are underway, data from one or more proof-of-concept studies with DUR-928, data from PERSIST, the POSIMIR gallbladder Phase 3 trial and the potential for business development deals either regionally or globally, as well as the resubmission of POSIMIR NDA.

DURECT has a rich pipeline consisting of a novel endogenous new chemical entity which is DUR-928 that may have broad actability for orphan diseases, acute organ injuries such as acute liver failure and acute kidney injury, and chronic metabolic diseases such as NAFLD and NASH.

We also have two late stage products that are being developed for large market opportunities in post surgical pain and chronic pain. We could have our first product REMOXY ER approved this year and in 2017 proof-of-concept data in humans from DUR-928 and our second NDA stage product POSIMIR resubmitted.

With approximately $250 million market valuation, DURECT has multiple ways to generate substantial returns based on these programs. I will now briefly review our major programs in greater detail. Beginning with DUR-928, DUR-928 is an endogenous small module which we in-licensed four years ago.

It is a sulfated oxy-sterile and the first of a new class of intracellular hormone therapeutics. DUR-928 acts as an Epigenomic Regulator. It's involved in the regulation of lipids, inflammation, and cell survival. We are taking DUR-928 forward in two development programs.

The first is for chronic metabolic disorders with oral delivery and the second is for acute organ injuries with an injectable formulation. We made substantial progress recently in dosage form development and we have developed both oral capsule and injectable formulations for the programs.

In the past, we have disclosed compelling animal data from eight different animal models that suggest substantial efficacy that DUR-928 has. We have been very active recently conducting multiple additional animal pharmacology studies this year. These studies have affirmed the potential of DUR-928 as a significant medical break-through.

Data from these studies has allowed us to de-risk and guide our human clinical trials to add new indications and patent protection for the program. A data from some of these studies may be presented or published later this year. DUR-928 continues to demonstrate a strong safety profile.

We have assured it to be safe and given very high doses in animals and in our Phase 1 study. So we're getting close to having our first data from human patients. Our first human Phase 1b safety PK trial is underway giving a single oral dose to liver function impaired or NASH patients.

And our second Phase 1b safety PK trial was initiated this week, giving a single dose by injection to kidney function impaired patients. Data from these trials are expected to be available in the near future, and while these studies are primarily for safety PK, we will be looking at biomarkers associated with these diseases.

These studies will then enable and form subsequent proof-of-concept studies and our planned Phase 2 studies. We've recently been granted a face-to-face pre-IND meeting with the FDA. This meeting will be held in late September.

The meeting will be to inform our IND submission and enable us to conduct clinical trials with DUR-928 in the United States in patients with acute kidney disease. The team is in the process of preparing a second pre-IND meeting request.

This meeting will inform the IND submission for a trial with DUR-928 patients in the United States in patients with liver disease. If DUR-928 demonstrates biomarker changes in patients together with the existing animal efficacy as well as our safety data from animals and man, we should see the program reevaluated.

Early stage programs at other companies have achieved some impressive evaluation as Big Pharma and Biotech are highly interested in molecules that may address liver disease and may affect inflammation. We have a few examples.

The first most recently was in March 2016 this year, and Gilead did a deal with Nimbus on a Phase 1 program where they paid $400 million upfront and another $800 million in milestone. Back in January 2015, Gilead did a deal with Phoenix on a Phase 1/early Phase 2 program where they received $90 million upfront, and another $390 million of milestone.

And in February of 2015, Merck to deal with MGM on a pre-clinical program where the payment was $94 million upfront, plus $106 million which represented about 15% equity stake and over about $700 million implied market cap and $250 million from Merck over the initial five year term of the deal.

It should be remembered that in addition to DUR-928’s potential in lever disease, it has the added potential to be a new therapeutic for kidney disease and other organ injuries, and it could be game-changing for DURECT shareholders. Now I am going to briefly discuss POSIMIR.

As a non-opioid for post surgical pain, POSIMIR offers a big market opportunity. It would compete with Exparel which has given Pacira a roughly $1.3 billion market valuation. We are running a Phase 3 study in laparoscopic gallbladder removal.

We are in the process of implementing a request by the FDA to amend the protocol to move to an active control arm that will be bupivacaine. We feel this will produce a stronger NDA resubmission and will offer potential commercial advantages as no competitive non-opioid product on the market has been bupivacaine in a well controlled study.

We have confidence in this trial based on our prior 50 patient trial we conducted in this same surgical model, where we saw a 25% reduction in pain, that was statistically significant using the same statistical methodology we’ll be using in our current trial.

In addition to changing Exparel in this trial from Pacira to Bupivacaine, we are switching the primary efficacy endpoint which is going to remain pain on movement from 0 to 72 hours after surgery to 0 to 48 hours after surgery.

Pain reduction from 0 to 72 hours will be a key secondary endpoint, other secondary endpoints including 72 hours opioid use remain the same, each simply move down one nosh to accommodate a new secondary end point. We expect to enroll about 264 patients in this embedded part two of this trial.

And we expect this new part of the trial to take about one year to enroll. The existing clinical trial sites are being switched over as we speak to the updated protocol on a rolling basis. The newly added sites will begin with the embedded protocol already in place.

So why are we moving to a 48 hour time point? Post surgical pain gradually subsides over time, thus it is easier to measure difference in pain relief between POSIMIR and compared to analgesic early or after surgery, when the underlying pain signal is larger in both groups.

For this reason looking at a shorter 48 hour window, means a fewer patients overall are needed to show difference between POSIMIR and Bupivacaine. In other words trial can be inadequate - can be adequately conducted with fewer patients in a shorter period of time and at a lower cost.

We believe our trials and shoulder arthroscopy and hernia repair demonstrate clear evidence of POSIMIRs effect of 72 hours and this will be – should be adequately reflected in the POSIMIR label.

A 48 hour trial requiring fewer patients can be completed more rapidly and enable us to resubmit the NDA more quickly and thereby help maximize our market opportunity.

Of note, we think a win over bupivacaine at 48 hours will be quite attractive to payers and P&T committees alike who are interested in true advances over current practice when setting formularies and reimbursement rates. It is important to remember that our competitors have used 24 to 48 hours end point in some or all of their pivotal trials.

It’s also worth noting that even though part 2 of this trial will not be powered to show superiority at 72 hours, it is possible that our key secondary end point which is pain preserved at 72 hours will nonetheless turn out to be statistically significantly positive which would of course be icing on the cake.

As a further reminder in our previous laparoscopic cholecystectomy gallbladder removal trail with a cohort of only 50 patient, we saw a statically significant improvement in pain intensity over 72 hours using the same statistical analysis that we’re using in PERSIST.

This month we're implementing logistics of the switchover to part 2 of the trial and we’re currently estimating that we will complete enrolment in about one year, have top line data a few months later and resubmit hopefully in late 2017 with a possible approval about six months later.

POSIMIR offers a multiple differentiating opportunities for DURECT and for the patients. The NDA could include efficacy data from three common surgeries that is hernia, shoulder and gallbladder removal.

POSIMIR could possibly be the first product with efficacy in laparoscopic procedures, and this is important given the trend to less invasive procedures whenever they are possible. If PERSIST is successful, POSIMIR would be the first product to show efficacy against standard bupivacaine in a well controlled study.

It would have the extended duration of up to three days based on our 660 milligrams of dosing and finally a simple rapid administration but no code change storage requirements. We own all the worldwide rights to DURECT, it’s a valuable asset and we’re in discussions with numerous companies at this point with regard to communalization rights.

Last but not least, I’ll update on REMOXY ER. According to pain therapeutics, the ER has been added at the request of the FDA to distinguish the extended release feature of REMOXY. The NDA was resubmitted in March of this year and the PDUFA date has been set for September 25, 2016.

In May of 2016, the FDA informed Pain Therapeutics that there was tentative date of August 5, for an advisory committee meeting to review the REMOXY ER NDA. Then in July of 2016, the FDA informed Pain Therapeutics they had determined that at advisor committee meeting would not be necessary, it would not be held on August 5.

Pain Therapeutics also stated the FDA advised them that the regulatory review remains active and is ongoing and the PDUFA date of September 25 remain unchanged. So we’re now less than two months away from the PDUFA date for REMOXY ER. REMOXY ER has excellent abuse-deterrent properties.

It can eliminate a reduce or abuse by snorting, injecting, smoking, chewing, crushing and mixing with drinks. Some of this abuse data was shared with at the American Pain Society Meeting in Austin Texas on dates of the May 11 through the 14 of this year.

When compared to the approved extended release oxycodone products, we believe that REMOXY ER has the potential to be a best-in-class temporary resisted formulation. REMOXY ER will be entering a large market with over $2 billion in U.S. annual sales. DURECT' receives a royalty on sales that start at 6% and goes to 11.5%.

So if the sales are end up being in the range of between $250 million and $500 million, the royalty to DURECT' would be somewhere between $16 million and $35 million per year.

We have patents that extend through at least 2031 so this product should share DURECT' shareholder for a long time and our NOL position about $300 million with federal and more than $200 million for state which means we won't owe taxes on these on these royalties for some time to come.

REMOXY ER has five dosage strengths including a 5 mg which would be the lowest extended release dose of oxycodone available and is consistent with recent government agency guidelines to start patients on the lowest dose possible and may allow for some immediate relief oxycodone patients to be converted to extended release.

REMOXY ER is a true twice a day dosage form. It was designed to have a PK that is not bioequivalent to OxyContin.

There have been a lot of kind of renewed focus lately driven primarily by a major investigator reporting piece by the LA Times which was published in May about whether oxycodone actually works in many patients for a full 12 hours which would also be an issue for any other products that are bioequivalent to OxyContin.

We look forward to the PDUFA date of September 25, and believe that REMOXY ER can be an attractive product to service the large population of chronic pain patients while deterring illegitimate users in a way we wish to tamper with the product for improper use.

To summarize between the potential approval of REMOXY ER DUR-928 the clinical data and POSIMIR Phase 3 data and the potential of resubmission of business development opportunities, we have an awful lot to look forward to here. With that I want to thank you for your attention and we will take any questions you might have..

[Operator Instructions] Our first question comes from the line of Annabel Samimy. Please proceed with your question..

Hi, guys. Thanks for taking my question. So with regard to POSIMIR, first I guess, these continual changes to what should have been a confirmatory Phase 3 trial for safety purposes seems kind of - we are given the extent that it’s going to be taking when you have what is seemingly a much more valuable program that’s in development.

So can you please explain the rationale for all these changes what it should have just been a confirmatory type of trial and are these changes FDA directed or are they directed by you and how is this going to impact any kind of partnership discussion given that this trial continues to be delayed? Thanks..

Okay. Well, first of all, this is the change that we announced earlier this year at the request of the FDA and that went….

Right. But the 48 hours does not, that’s a new change..

Right. The new piece is the 48 hours which actually makes it quite frankly just a lot faster and easier for us. So the FDA wanted to see a positive control and we're happy to comply based on in particular the fact that we've beaten positive control in the same model with 50 patients.

And so we did our sensitivity analysis and modeled it all up and found it, we could conduct a trial a lot faster and a lot less expensively by doing it in 48 hours and we already have two studies hernia and shoulder that are 72 hours.

So, certainly we have the 72 hours, if we have 48 for gallbladder and quite frankly we’ve got I think a very strong chance of winning the 72 hours anyways as a primary endpoint, we will have all that information in place.

And as far as cost goes by doing it this way we're going to be probably in the maybe a $2 million so cost -- additional cost with regard to it. And timing wise, you know we’re looking at six months difference from what our original timeline is. So six months more, $2 million more. We think at the end it will be a stronger package.

You asked about competition or not about competition but about potential business development. I can see we have not had – never had more people looking at the product than we do now.

We’ve had quite a group of people looking at it and I think they’re quite interested in the potential of being able to beat bupivacaine and with our 72 hours from shoulder and hernia with beating bupivacaine with its custom-made for laparoscopic surgeries, I think that puts us in a position to be I think the product could be quite strong when it is out there..

Has FDA asked anybody else to -- do you have a comparator trial against Bupivacaine?.

I have no idea what the FDA is asking. But one thing I did noted that Heron reported today some Phase 2 data with use of bupivacaine as an active comparator. So it’s possible they could have had that communication with them, but I have no idea..

Okay. And then on to 928, like what point are you going to be able to discuss partnership with anybody because this is going to be a pretty expensive costly trial for you, and right now I mean it seems like you're going all sorts of different angles with this drug, right.

And I guess the question is do you at least get a proof-of-concept for one of the indications and then move forward because it seems like you know….

Well, that's what - we’re definitely positioning to be able to get proof-of-concept and that's what we’re working for in a number of fronts. You're right we're doing a number of fronts. I would agree with you that the oral chronic utility in NASH and some of the lipid storage is easy, and those kinds of things can be longer trials for sure.

And we are and have been in discussions with potential partners in regard to that. I can't say for sure when that might occur both regionally and globally. The acute uses are then -- are much different because each patient would only get a single injection or maybe two injections or so.

And those are different clinical trials for different indications and can be discerned more rapidly. And in fact that's the first IND that we’re looking at in the United States is for acute kidney injury. And so to that end we should see something more rapid..

Thanks.

Remind us again why you’re enrolling in Australia?.

Yes, Australian what they were doing is actually it serves both the chronic and the acute use and there we’re doing the oral and injectable work down there and we started to work down there because it was much more rapid to get started and is less expensive, probably about a third less expensive doing clinical trials in Australia versus the US. .

Is there any chance that you’re going to have to repeat it here the same types of….

No, not at all. They’re all being done under GMPs. It's actually quite -- we’ve had some advisors here, number of really good advisors in the US advising our work down in Australia. And some of the world’s leaders actually have worked with us on this product for a number of indications.

And we will be able to tell you a lot more in future quarters as we update. I think that you’re going to be I think quite pleased, but no one can say..

Okay.

And then any further discussion on partnership for REMOXY from Pain Therapeutics?.

I don’t know….

…or doing this on their own?.

Yes, they’re doing that on their own. I have – I wouldn’t be able to update you. I can only tell you that you know there aren't that many good assets out there and the advantages of this versus everything else out there I started to touch on a little bit but I think it's worth just repeating.

And that is we’ll have the only oxycodone formulation, that’s 5 milligram which is important from the government not just CDC, DEA, and the FDA all want that kind of go low and slow start with the lowest dose. That’s quite important from an abuse-deterrent standpoint we can tie -- stand toe-to-toe with anybody.

I think we'll have data and that will show that and you’ve seen some of that from last May. And so I think those are kind of some of the real reasons why it’s going to be a nice opportunity for someone..

Great. Thank you. .

Our next question comes from the line of Jim Malloy. Please proceed with your question..

Hi, guys. Thanks for taking my question.

The no add comps still with the PDUFA I mean certainly it seem like a positive your stock reacted positively back when that happened, can I get your take on at when you think -- does it increase the chances for an approval or decreases?.

Jim it’s impossible. So I think it’s a positive thing personally. But then if you look at the history of the San Diego Pfizer way back when could have accepted the FDA that was just a 30 and 40 milligram dosage strength that had a little bit higher standard deviation with the assay. And but the 5, 10 and 20 milligrams were within the plus or minus 10%.

So that NDA could have been approved for those strength at that point in time and those are probably the most important economically going forward. So I feel very comfortable about where the NDA is, it’s not my NDA at this point it’s Pain Therapeutics. But I think the odds are pretty darn going for it. .

I know particularly in the FDA is difficult business. The attributes of REMOXY you know third time around there's been a history of having to go a couple times with this abuse-deterrent drug for you to get approved so who knows but hopefully this time it will work.

Certainly with the current mood of where the public discourse on opioids as I means last time they licensed this thing to King for $200 million and given sort of your industry knowledge I think they’re looking to along those lines again?.

Well, I don't know I mean this is -- business development always fluctuates with markets and everything else. I don't know whether they'll do a deal or whether they'll do for the product or for the entire company I think they're probably opened to more than one look at the whole thing.

I wouldn't be surprised to see them have very nice valuation based on this product.

I think the potential is quite nice and if you look at the sales that are out there and if this can as I said earlier stand toe-to-toe and maybe even be better than the things that are out there in abuse-deterrent or at least equivalent to them and have the 5 milligram dosage strength.

And also have that we didn't talk about it earlier much but have to chew 12 hours release rate I think that's quite important. If you look at that L.A.

Times article, so we've heard rumors for years and that’s been a problem with the with the Purdue product and I had always kind of consider that patients coming back in pain but what they focus on that article is not just that but also that the patients are going into narcotic withdrawal after eight hours.

And so you know to be able to be out there for 12 we’ve no urge to deliver beautifully and genetically and protect the patients over those 12 hours that’s really important.

The government is also starting to move in number of states to saying you know if I’m a chronic pain and I’m getting twice a day labeled doses I’m going to get 60 pills for a month and that’s it. Which means if I’m running out at 8 hours what am I going to do. And with our product they should be covered.

And so I think the 5 milligram strength I think you know the true 12 hours I think these are nice advantages for REMOXY as it get out there, that plus of course the abuse-deterrents you can’t mix it with alcohols and snorting and those kinds of things..

And then you mentioned about a year to enroll with the new trial design.

At what point do you anticipate top line data for PERSIST at this point?.

I think we’re looking, we’re marking the changeover right now so think about a year from now we’d say maybe two or three months after that so in the fall of next year..

Also second half 2017 is still in play?.

For next submission yes, resubmission sorry..

You think resubmission will be by second half of 2017..

Yes..

Okay, very good. Now the 48 hours certainly would still be better than the 12 hours Exparel has on its label and you mentioned it’s an easier target to hit..

Right..

Why 72 hours in the first place, why not 48 hours the whole time?.

We started way back when we actually, we can kind of dial in what we want with this kind of dosage form, we’ve actually made as you know from the Raleigh work we’ve made one month and even more than a month duration for our technology.

So we can dial it quite long and when we met with various surgeons, the orthopedic surgeons want to think the last five to seven days but most of the soft tissue guys told that three days was enough and so that’s why we went for three days. And we also based our dose on what was done with regard to I-Flow.

You remember the ON-Q pump from I-Flow and they showed with their literature where they were quite successful in hernia trials and other surgeries. They have to deliver about 10 mg per hour and that’s pretty much held true for our work and I think others.

And if you look at a dosage form that’s delivering 260 or 400 or whatever you can cut and divide by 10 and say that many hours you are going get.

So they are delivering 260 they are going to get 26 hours, they are delivering 400 hours they are going get 40 hours and we’re delivering 660 so we get pretty close to 72 hours and I think that holds up pretty well.

So we did the three days bases on our medical consultants, clinical consultants early on but at this point in time we’re looking to move the product through to approval and we already have 72 well defined I think by shoulder and hernia, so now it’s about just completing this trial and showing that the safety we’re looking for and the efficacy we’re of course wanting to have against bupivacaine hydrochloride which we should based on the 50 patient trial be able to achieve..

Why not 36 hours or 24 hours..

You could but at some point in time we just felt the 48 was fine so..

And any challenges to changing the primary end point in the middle of the trial?.

Well remember it’s divided into two parts, so part one is now against saline and that’s going to be as it was before, that’s just going to shift to becoming just a safety trial so the first, it’s not quite 100 patients or so we’ll have in that group.

That will be all be just safety information and then the second group will be the 264 patients against bupivacaine hydrochloride at 48 hours. So that will be the primary end point for that study.

And typically at most trials you don’t lock down the statistical analysis plan right before you complete an analysis, so you always have time make adjustments to yourself but I think at this point in time we’re announcing to the world that we’re going to be 48 because that’s what we’re going to do..

Makes sense, thank you very much for taking the questions..

Our next question comes from the line of Yi Chen. Please proceed with your question..

Hi, thank you taking my questions. Can you give us some color on the potential partnership for DU-928 and also the potential for DU-928 to get fast track status or breakthrough designation potentially for indications like acute kind of injuries. Thank you..

Okay, sure. The first with regard to - I’ll answer the first one, I’ll let Dr. Lin who's here, she can address the potential for the regulatory opportunities.

With regard to the partnerships we have had enquires from most major companies in our industry around the world and we’ve kept it kind of a light and that we’ve not allowed too many to get too close to it but we’re considering and looking at the possibility of maybe a regional view with 928 or possibly a deal for the chronic indications the oral use as they are – as they were noted by a question earlier by Annabel that they can be quite expensive and quite lengthy in duration.

So it makes sense at some point in time potentially by having that. But having a after proof-of-concept makes a lot more sense for us from a value standpoint but that’s - WeiQi, do you want to..

The second question is about the fast track designation or breakthrough designation, so for the fast track designation certainly you can start to apply for that after you have preclinical data. For the breakthrough designation it’s required to have clinical data to apply for that.

So we’re certainly like Jim talked earlier we are going to meet with FDA by the of September to discuss with the IND filing at the same time we are going to show our preclinical data and get input from FDA about the definition..

Okay. Thank you..

Our next question comes from the line of [indiscernible]. Please proceed with you question..

Thank you and I apologize if this was asked earlier, I missed a few minutes.

The NASH epidemic is well known and it seems like several of the drugs that were further ahead of DUR-928 in clinical trials have had incredible difficulty in showing efficacy and I was just wondering if you could briefly discuss your mechanism action where it acts along the NASH through cirrhosis paradigm and how if you want to compare or contrast that may defer with some of the recent drugs where there have been some problems.

Thank you very much..

Sure. I’ll let Dr. Lin address that..

Yes, thanks for the question. In fact, we believe all compounds adds at a higher level.

As a matter of fact is that, upper stream of our multiple nuclear receptors which in turn modulates inflammatory responses and then cell survival fibrosis, as well as metabolic pathways so our compound is unlike most other compounds maybe acting on a very specific target point and we’re asking at a multiple levels and then modulating multiple pathways simultaneously.

That's why we believe our compound so earlier we talked about, our compounds are major three pathways as lipid, and inflammation and cell survival. I would add today that we also have fibrosis another pathway to be added on.

So in that we actually cover all these pathways simultaneously and we’ve been shown in many preclinical models that our drug actually is very effective in all these four pathways and modulating simultaneously. That’s why we think our compound could be different from other compounds and maybe distinguish from that..

I think Dr. Lin makes a really good point. She has a very a very strong pharmacology team doing a lot of good work here and I tried to hint to that in my talk. There is a potential this year that we could possibly patch together some human data plus pharmacology data possibly for a poster or something depending on how things go so..

As a follow on if it’s okay, there similarly an acute kidney injury drugs that have been tried in clinical trials have failed recently, the last one was a IV [ph] drug I think about three years ago because of some side effect issues and again I was just wondering because that’s not a disease state widely appreciated by Wall Street but again it’s a huge unmet medical need both acute and chronic kidney injury.

I was wondering if you could discuss the applicability there..

Yes, actually that’s very interesting. We say many, many failed trials in the kidney diseases. As a matter of fact, when we talk to our nephrologists they all told us AKI for example, acute kidney injury is not a singular disease, quite often it has multiple underlying diseases which induces acute kidney injury.

So when – if a drug just packaging on one specific link of the disease typically it doesn’t work because there is so many underlying diseases happening.

That's exactly we believe our drug could be potentially useful because we target multiple organs, we target multiple pathways of those underlying diseases and the target multiple pathways regulating the pathogenesis of the disease.

Therefore, we saw that’s in particular that’s why our compound has been shown in multiple preclinical animal disease models not just one, not just two and multiple of these models.

So, that's why we thought we’re not only targeting the kidney if the kidney is injured but we’re also targeting other tissues or other organs that are with the underlying diseases..

And the opportunity on the side of the renal disease when Dr. Chertow spoke a couple of quarters ago, he was feeling that it was an opportunity - everybody as large as NASH, if you look at the potential to make a difference in medical and healthcare..

Great. Thank you so much. .

There are no further questions at this time. I would like to turn the call back over to Mr. Hogan for any closing remarks..

Okay, well thank you all for participating. And as always if investors or analysts have further questions, please do call us, we'd be happy to be responsive. Thank you very much..

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. And have a wonderful day..