Matt Hogan - Chief Financial Officer Jim Brown - President, Chief Executive Officer and Director Felix Theeuwes - Chairman, Chief Scientific Officer.

Jim Molloy - Laidlaw & Company Yasmeen Rahimi - H.C. Wainwright Len Yaffe - Stoc*Doc Partners.

Greetings and welcome to the DURECT Corporation 2016 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Matt Hogan.

Thank you. Mr. Hogan, you may begin..

Okay. Good afternoon. Welcome everyone. 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 the 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 under the heading Risk Factors. So now just a couple quick remarks on our financials.

Total revenue was $3.5 million in the fourth quarter of 2016 compared to $5.2 million in the fourth quarter of 2015. Revenue from our R&D collaborations was $738,000 in the fourth quarter of 2016 as compared to $2.3 million in the fourth quarter last year.

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

Product revenue largely from the sale of ALZET pumps and LACTEL Polymers was $2.8 million in the fourth quarter this year as compared to $2.9 million in the fourth quarter last year. And our gross margin on these two product lines was 66% in the fourth quarter. And these product lines continue to be strongly cash flow positive for us.

R&D expense was $8 million in the fourth quarter of 2016 as compared to $6.7 million in the fourth quarter last year. SG&A expenses were flat between the two periods at $2.8 million. And our net loss for the fourth quarter this year was $8.8 million as compared to $5.8 million in the fourth quarter of 2015.

At December 31, 2016, we had cash and investments of $25.2 million which compares to $29.3 million at December 31, 2015. With no additional capital, this current cash balance goes through the end of this year and our focus on supplementing our cash resources remains on business development.

We had an underlying cash burn rate of $7.3 million in the fourth quarter excluding around $3.5 million that we raised by selling 2.6 million shares through our ATM facility at an average price of $1.37. With that, let me turn it over to Jim..

Thank you Matt and hello everyone.

In 2017, we look forward to reporting DUR-928 Phase 1 and other data at scientific meetings, commencing at least one Phase 2 trial with DUR-928 with primary sclerosing cholangitis likely the first oral indication to be pursued, selecting lead topical formulations for DUR-928 that will be taken into a proof of concept clinical trial in psoriasis, potentially establishing a commercialization partnership for POSIMIR, completing enrollment in the Phase 3 POSIMIR clinical trial PERSIST and announcing topline results and lastly reporting our topline results from the Phase 3 trial with ORADUR-Methylphenidate in Taiwan conducted by our partner Orient Pharma.

I will begin with DUR-928. The start of 2017 has been an exciting time for the program. We have received feedback from the FDA's gastroenterology division and have initiated drug-drug interaction studies in advance of the Phase 2 work planned for later this year.

One of the Phase 2 trials we are working towards is an oral Phase 2 study in primary sclerosing cholangitis or PSC. We have reported additional safety, pharmacokinetic and very encouraging biomarker data from the Australian Phase 1b NASH trial.

Data from this trial were accepted for a poster presentation at the April European Association for the Study of the Liver or EASL meeting in Amsterdam. This will be the first time DUR-928 clinical data will be presented at a scientific meeting.

This coming Saturday, March 17, data from two studies conducted in a widely used animal model of NASH has accepted for a poster presentation at the American Association for the Study of Liver Diseases or AASLD Emerging Trends in Non-Alcoholic Fatty Liver Disease conference in Washington DC.

We completed the first cohort and now enrolling the final cohort of the Phase 1b study in chronic kidney disease patients. And today we are announcing a new potential opportunity for DUR-928 and that is the treatment of psoriasis. I will now move to discuss our STAM mouse model and NASH Phase 1b study data and their posters.

The biological activity of DUR-928 has been observed in more than 10 different animal disease models involving three animal species. These models represent both acute and chronic disorders involving organs such as the kidney, liver, brain and lung. On March 17, we will be presenting a poster at AASLD conference.

The poster is titled, DUR-928, an endogenous regulatory molecule that exhibits anti-inflammatory and anti-fibrotic activity in a mouse model of NASH. After the meeting, this poster will be available on our website. The STAM model involves inducing NASH in diabetic mice.

It is well-recognized and has been used to test a large number of the drugs that are in development in this space. A smaller number of these drugs have been tested in the second phase of this model. The second phase of this model is intended to evaluate the ability of a molecule to reverse established fibrosis and hepatocyte ballooning.

Daily oral administration of DUR-928 for four weeks in this model resulted in inhibition of the progression of liver inflammation, hepatocyte ballooning and fibrosis. When tested in the second phase of this model, there was evidence that DUR-928 may reverse the liver damage. We also observed a reduction both in number and size of hepatic nodules.

In this animal model, hepatic nodule formation is a precursor to hepatocellular carcinoma. Now moving to our human data. The Phase 1b NASH study was designed to test the safety and pharmacokinetics of DUR-928 when a single oral dose was given to NASH patients.

Combining the low and high dose groups, a total 20 NASH patients and 12 match control subjects received DUR-928. The control subjects were matched by body weight, age and gender, but without liver disease.

I will go through a few of observations from this study, however, we are holding back some findings in order to preserve our ability to present full details at the American Association for the Study of Liver Diseases on April 22 in Amsterdam.

Regarding safety, based on everything we have seen, we believe that DUR-928 is a drug with a wide safety margin. There was one patient that experienced a serious adverse event which was shortness of breath that the investigator classified as possibly treatment related because it occurred shortly after dosing.

It should be noted that this was a patient with a prior history of arrhythmia and with an ongoing viral infection. The patient's shortness of breath occurred without unusual biochemical changes and it resolved without intervention. We don't consider it meaningful but disclosed it because of the way the physician recorded it.

As a reminder, we have dosed more than 140 people with DUR-928 and have not seen any other incidents and we have dosed to much higher levels in people.

With IV dosing, we have safely achieved plasma concentrations in people that are 1,000 times the endogenous levels of DUR-928 and in animal studies we have reached plasma concentrations of DUR-928 that were between 10,000 to 20,000 times endogenous levels and have not observed toxicity.

With respect to pharmacokinetics in both the low and high dose cohorts and the high dose cohort received four times the dose of the lower dose, the pharmacokinetic parameters were comparable between the NASH patients and their match controls which demonstrates are the pharmacokinetics of DUR-928 is not altered in patients with reduced liver function.

While this study was not designed to assess efficacy, we did see a dose dependent reduction in certain clinical chemistry and biomarkers. Changes in the clinical chemistry and biomarkers that we observed in both cohorts of this trial were impressive especially when one considers that they were observed after just a single dose.

These changes are in line with the responses that we have seen with DUR-928, both in cell culture and in the 10-plus animal pharmacology studies that we have conducted. Here are a few of the dose-dependent reductions we saw in both cohorts.

We found that IL-18, an inflammatory mediator implicated in both liver and kidney disease was decreased in the NASH patients. Both full length CK-18, a generalized cell death marker and cleaved CK-18, a more specific cell apoptosis marker, were greatly reduced after DUR-928 treatment, with effect being more pronounced in cirrhotic patients.

At last November's AASLD meeting in Boston, it was reported that greater reductions in CK-18 and CCK-18 were associated with a greater reduction of fibrosis in NASH patient.

At the upcoming EASL meeting on April 22, we are going to detail regarding the changes of the clinical chemistry and biomarkers that were studied in this trial, including ones we haven't mentioned yet.

We think it will be very interesting for people to understand what these changes are especially when they are stacked up against what other companies have presented after dosing their drug candidates for much longer periods of time.

While we are excited about the opportunity for NASH and ultimately developing DUR-928 for NASH, we have been spending a lot of effort over the last few quarters working with advisors to plan the details of a Phase 2 trial in primary sclerosing cholangitis or PSC utilizing an oral formulation of DUR-928.

PSC is a chronic liver disease characterized by progressive cholestasis or decrease in bile flow with inflammation and fibrosis of the bile ducts. It's an orphan medical condition for which there is no established medical treatment.

The rationale for DUR-928 working in PSC is its ability to modulate both inflammation and cell survival, which is further supported by the clinical chemistry and biomarker changes observed in our Phase 1b NASH study. Multiple animal models are also suggestive that DUR-928's potential to aid in the treatment of PSC.

The most notable of these is the bile duct ligation study that we conducted at the suggestion of Dr. Frederik Nevens. In two studies, conducted by a CRO in Canada, the bile duct was surgically ligated, resulting in cholestatic inflammatory liver injury.

Nine days of oral administration of DUR-928 in the rats in this study resulted in a significant improvement in body temperature and body weight, as well as a statistically significant reduction of total bilirubin, including both direct and indirect bilirubin.

We have shared DUR-928 data with two patient advocacy groups in the United States for PSC, both of which have offered to help us with improvement. We are not prepared to describe the details of the Phase 2 trial design quite yet but wanted people to be aware of this indication and that it is rising to the top of our priority list.

Next an update on our kidney Phase 1b study. Our second Phase 1b study with DUR-928 is being conducted in Australia. It's an open label, single ascending dose safety and pharmacokinetic study in patients with impaired kidney function.

These patients either have stage 3 or stage 4 chronic kidney disease and we also have matched control subjects that are matched by age, body mass index, gender, but they have normal kidney function. This study is being conducted in two successive cohorts evaluating single-dose levels of DUR-928 administered by intramuscular injection.

The low dose cohort consisting of six kidney function impaired patients and three matched control subjects has been completed. And after a pharmacokinetic safety review of the low dose cohort, the safety was defined and we have proceeded to the high dose cohort which utilizes a dose that is about four times higher.

Data from the low dose cohort show the pharmacokinetic parameters between the kidney function impaired patients and the matched control subjects were comparable. So having impaired kidney function didn't affect the pharmacokinetics of DUR-928.

A high dose cohort of this study is currently partially enrolled and we hope to wrap that up in the not-too-distant future. Now for something entirely new, psoriasis. We announced today that we been evaluating the potential for DUR-928 as a topical treatment for psoriasis.

We did an initial exploratory Phase 1b study using an injectable formulation of DUR-928 and encouraged by that study, we are focusing our efforts on a topical formulation for psoriasis. Why psoriasis? Psoriasis is an autoimmune and inflammatory skin condition that affects approximately 7.5 million Americans.

Our goal is to develop a psoriatic therapy that does not involve modulation of the systemic immune function. We have been exploring psoriasis because of the anti-inflammatory and cell survival activities of DUR-928. In particular, we know that DUR-928 modulates IL-1, IL-6, IL-17, IL-18, TNF-alpha and other mediators of inflammation.

In addition, the reductions we have observed in full length and cleaved CK 18 in NASH patients fit well with the effect observed with injectable drugs that are being evaluated to treat psoriasis. A study of DUR-928 in a mouse model psoriasis demonstrated encouraging results that included reduction of IL-17.

This is the interleukin often associated with autoimmune disease in psoriasis. This led us to conduct a Phase 1b study in psoriasis patients in Australia. This study was a microplaque clinical trial in nine evaluable psoriasis patients.

This trial involves giving intradermal microinjection of formulations of DUR-928 into the plaques of these psoriatic patients. We injected either formulations of DUR-928, the vehicle formulations. We also included a steroid catalog as an active comparator. The patients were followed for two weeks after injection.

The results of this study warrant further investigation and as a result we are advancing this program to the next clinical trial, but with a topical formulation. We have leveraged our drug delivery expertise and are testing a number of topical formulations in a cadaver skin model.

One or two formulations from this work will be evaluated in the next clinical trial, which would be another proof of concept trial like the previous one, only this time DUR-928 will be delivered topically.

If this proof of concept trial is positive, the topical formulation of DUR-928 could prove to be a valuable addition to the treatment of psoriasis and other dermatologic conditions. Now an update on POSIMIR.

We are excited about the progress of POSIMIR, our investigational project that is designed to provide up to three days of pain relief after surgery with a non-opioid. In our shoulder and hernia pivotal trials of POSIMIR, we observed 20% to 30% less pain while at the same time a 60% to 80% reduction in the use of narcotics.

In these two trials, we saw approximately 20% more of the patients not taking any narcotics after surgery, when they were compared to their respective control groups. We believe that POSIMIR has the potential to help in the fight against this epidemic of narcotic abuse in our country.

We are now over halfway enrolled in PERSIST, the POSIMIR Phase 3 clinical trial consisting of patients undergoing laparoscopic cholecystectomy or gallbladder removal surgery. This trial is on track and should finish dosing in the third quarter of 2017, which puts us into position to have topline results this year.

In a previous clinical trial in the same surgical model, POSIMIR was compared with an active control, that is bupivacaine hydrochloride, in 50 patients. In a post hoc analysis of this study, POSIMIR demonstrated an approximately 25% statistically significant reduction in pain intensity on movement for the first two and three days after surgery.

This will be the same statistical methodology that will be used in the PERSIST trial. Our expertise and our experience with the same surgical model gives us confidence. Assuming that PERSIST is successful, POSIMIR will have a highly differentiated features that should be commercially competitive in this large marketplace.

It will have efficacy data from three common surgical models that is hernia, shoulder and gallbladder removal. It will be the first product to demonstrate efficacy in laparoscopic procedures which is important given how many surgical procedures are performed laparoscopically and given the trend towards less invasive surgical procedures.

We will have an extended duration of up to 72 hours driven by the amount of bupivacaine that we are delivering and we have a simple and rapid administration technique the places the drug directly into the wound where it is closer to the effected nerves.

Together, POSIMIR's features could deliver superior benefits to physicians and patients with the potential for unsurpassed pain reduction, the launched available duration of effect and the greatest ease of administration in its class.

From a business standpoint, we are currently in negotiations with a number of potential partners regarding licensing, development and commercialization rights for POSIMIR for which we hold worldwide rights. I will now briefly update on two ORADUR programs. The first being REMOXY ER.

As you know, our licensee, Pain Therapeutics, received a complete response letter for REMOXY in September 2016.

We understand from its public disclosures that Pain Therapeutics met with the FDA in February 2016 to discuss the regulatory path forward for REMOXY ER and that Pain Therapeutics will provide details of the FDA meeting after they receive the final minutes.

And with regard to ORADUR-ADHD, Orient Pharma, our licensee in selected Asian and South Pacific countries, has completed dosing of our Phase 3 study in Taiwan with our ORADUR-Methylphenidate product candidate. They expect to have topline results from this study in the second quarter of this year. We retain the rights for U.S.

and European markets, which are the largest ADHD opportunities. Assuming that the Phase 3 in Taiwan is positive, we would then kick off business development discussions with potential partners for the U.S. and Europe with an asset that would be more defined and derisked. Lastly, just a word about our injectable programs.

We have several development programs that use our injectable technology, most notably are POSIMIR and Santen, but we also have two ongoing feasibility programs for injectable products and could have a third in the near future.

These programs are being funded by large pharmaceutical companies and utilize both existing therapies and new chemical entities that have large market potential. Our hope is that one or more of these will emerge into full development programs with the associated licensees, milestones and royalties.

With that, we now like to turn over the call to any questions you might have..

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

Hi. Thanks for taking my question. I appreciate it. I had a question on the POSIMIR trial.

Any ongoing dialogue with the FDA? Obviously, in the past some issues were with the drug and not necessarily the first drug this happened to, but any ongoing dialogue with the FDA that has been going through the trial? And then whether there is an interim futility analysis at any point that we could expect?.

No. We are not. First of all, I will take the second. We are not doing any interim futility analysis. I think we feel pretty comfortable with regard to the trial given our experience with he 50 patients and now we are enrolling more than 260. So I think we feel pretty comfortable with the opportunity to be successful in this trial.

And the communications we have with the agency, there are always communications, back and forth and time-to-time, we will have conversations with regard to various aspects. But nothing of merit, I guess. Nothing to say..

Okay..

Yes..

And then recently, a competitor EXPAREL had some very interesting PK data with some very good P-values.

Any bearing that could have on potential label expansion should you get approved for POSIMIR?.

I think it's an interesting point. Yes, we are happy to see Pacira make some progress.

I will note, though Jim that that trial, although they described it as a positive control kind of trial, it was actually more placebo, because they put bupivacaine in both their group and the saline group and they also only evaluated the drug for efficacy, their drug for 36 hours between our 12 and 48.

The reason they didn't include the first 12 is that's when bupivacaine hydrochloride works the best, right. So it's kind of a cutting and pasting to clues where they wanted to be. But I am glad to see them with a successful trial. I think certainly POSIMIR has the opportunity to be utilizing a number of opportunity.

It's kind of broad, if you think about their label claims around bunion and hemorrhoid, the areas covered there, if you put a coffee cup on a table in front of you left a ring, that's kind of what they are doing.

So we have opportunities with regard to not only shoulder and hernia, but then we expect to do removing gallbladder and it's a huge market opportunity. There certainly is enough space for multiple companies to be successful here. And we wish them all the best..

Okay. And then the last question for me. I will leave some questions for Annabel.

Hitting the ATM, you have been hitting the ATM, did you say what's the current cash level which you expect to reported $25 million for the year-end?.

Yes. We reported $25.2 million for the year-end. I think we did, I have to re-look what I said, we did about $3.5 million raised in the fourth quarter. We did a tiny bit in January, about like $700,000 worth in net asset..

Okay. So the $25 million captures most of what the ATM brought in..

Basically..

All right. Thank you for taking the questions..

Sure..

Our next question comes from the line of Ed Arce. Please proceed with your question..

Great. Thank you. This is Yasmeen, on for Ed Arce. I have a number of questions. One is, can you provide any update an your plans for the Phase 2 trial and AKI? And then secondly, it's on your NASH program.

Are you able to disclose any baseline characteristics of the NASH patients in terms of what their minimum NASH score was? And as well as may be any additional insight of what other biomarkers were evaluated beyond to the ones that were disclosed in press release?.

I will take the last one first again. Yes, actually a lot of that information will come clear at the EASL meeting on April 22. And that's when we will talk about the other clinical chemistry and biomarkers, which there are some very interesting ones I wish I could say more, but we want to leave that off the table right now.

So we have an opportunity to present that. We want new data to be presented at the meeting. And so we are holding with regard to the specifics of the patient and to the various changes that we have seen.

As far as AKI and the other opportunities, we certainly are interested in multiple opportunities and those are both AKI and NASH are great opportunities for DUR-928 and we are looking forward to soon starting INDs and starting the Phase 2 studies. Right now we are just completing the DDI work to enable that dose INDs to be submitted..

Okay. Great. Thank you. And then maybe one last question, if I may.

So do you see any type of challenges or limitations of 928 maybe due to its molecular weight size for being successfully developed for topical formulation?.

No, I don't think so at all. In fact, basically if you look at it structurally, it's a steroid and I don't know, Felix, if you want to speak to that, but I think it looks actually pretty robust..

Steroid molecules have been used widely in many topical applications. And the mass of that molecule is such that it would easily penetrate the skin and the potency of the molecule, I think, is very helpful in that regard. So we think this is a great opportunity..

Right. The only we did the microplaque assay with an injectable formulation was just to jumpstart everything because it does take a little bit of time to create a nice topical formulation that is in a cream that dissolves and all those kinds of things and not sticky.

And so we just went forward with the injectable because you get the drug right there, you know it's there and you can immediately evaluate..

Thank you. That was very helpful given that most steroids, the structure of the molecule being definitely increases penetration and therefore have a favorable PK profile. That's very helpful. Thank you for taking and answering our question. Thank you..

Sure. You are welcome..

[Operator Instructions]. Our next question comes from the line of Len Yaffe. Please proceed with your question..

Thank you very much. I had a couple of questions for you. I was wondering first on your discussion of the potential new indication for DUR-928.

If you could, I guess, talk about besides psoriasis and I know you have got a very full plate, any thoughts of going into atopic dermatitis, which is sort of an allied autoimmune disease? And in terms of psoriasis, the drugs that are used that would, can you talk if you are going after mild to moderate with the steroids topically used? Or because you are inhibiting, it sounds like the pathways that the subcu injectable drugs go after and yet it would be topical, would you going after the more moderate to severe with a competitive advantage, in that it wouldn't have to be injected? And then I will ask a question on the NASH side..

Yes. Len, being a physician, you pick up on this stuff pretty quickly. Obviously, atopic dermatitis is a great opportunity as well. And it's a larger opportunities than psoriasis. And so it's certainly something that we are interested in it.

We started with the psoriasis patients because they are pretty easy to be able to work on and the microplaque assay is a really nice way to do it right, because each patient can serve as their own control basically. So you could do these microinjection in the plaques and look for the various responses.

And we did include a steroid as a positive control. So we had a sense to be able to balance all that out. As far as the type of psoriatic patients, certainly we will start with mild to moderate. I think you are right. There is a potential for going beyond that.

We all had friends and relatives who have undertaken the systemic immune system modulation that has to be occurring and I have heard some horror stories and it's just a dangerous thing to do to, but it's obviously important to these patients, especially if they have got other things.

And remember, the systemic stuff goes for the psoriatic arthritis as well. But I think there is room for an opportunity beyond the side effect profile you see with steroids and not getting to the point where you are suppressing your systemic immune system and that's where 928 can reside..

Great. And then on NASH, there has obviously been a lot of activity in terms of companies either aligned themselves with others or being bought out by other companies and there are numerous examples of that.

And I was wondering, given a couple of things, your cash position, the attractiveness of the opportunity and obviously many of the drug companies that have been conjunctionally involved in hepatology don't have a presence in NASH, if you think that a partnership may be a possibility perhaps at a later date when you have more clinical data to present? And then secondly, some of the companies have had difficulty with enrolling patients in clinical trials and I know you are early on as you proceed through the next level of clinical trials, could you give us a timeline for maybe when you plan to do that and when in the U.S., if you have got the KOLs and the sites lined up, how you see it coming because we are also not only are we seeing some delays, but the clinical results perhaps aren't as impressive as people thought and in at least one case, they changed an endpoint that they were going to have to make an easier kind of overall endpoint for approval? So there seems to be tremendous opportunity available in this area and I was just wanting your overall thoughts there..

Yes. I think you have hit on a lot of stuff, a lot of very important strategic stuff actually. First of all, with regard to potential partnerships. As you can imagine, just even with the small amount of data we have talked about publicly, there has been a tremendous interest in this molecule, as you would expect.

We are being highly, highly selective only allowing just a very small number of companies to get closer information and understanding and I think that's an important piece.

We don't want to have the world, but looking at this, there are opportunities, I think, for potential partnerships around this for sure, both either regionally or globally or divided. One can also divided along route of administration, oral, topical, injectable, that kind of thing. So there are multiple ways which one can look at this opportunity.

One, you are right in pointing out that NASH has been challenging. There are a huge number of companies in this space. There is a lot of confusion. There is a lot of animal data out there. And it's difficult. Because it's all about the patients and what you see.

We have seen the important, we think the important, biomarkers move and clinical chemistry markers move that really matter. And if you look at what people are trying to do by putting these combination of therapies together, I have had one past president of AASLD tell us that they are trying to create 928 does.

And that is, we reduce and change and modulate both the metabolism and inflammation and enhanced cell survival. So we kind of hit all three components there. As far as using advisors to work in this regard and working towards that end, we have more than 20 clinical advisors. We have four past presidents of AASLD.

We have, as you know, with Glenn Chertow, the leading kidney specialist in the United States probably. We have, who's who of a number of organ systems around the body who are quite interested in seeing 928 be tested in their various disease of choice and the like. With regard to PSC, which is one of the opportunities we are looking at.

We not only have Frederik Nevens who is from Leuven. He is an expert in this disease and liver in general. We have a number of people from the United States who are also equally as well respected as Frederik is. So as far as NASH is concerned, that's an opportunity we are interested in.

But we are not rushing into that right now because it is a very expensive large clinical trial. It might be better suited to do that with the right partnership. We certainly like the opportunity for PSC.

We think we can show a difference a lot quicker and we have discussed with the patient advocacy groups enrollment and ways of recruiting patients to get into the trial and the like. So I think we have a number of opportunities and certainly we really are excited about the opportunities for the acute use of -928 for acute organ damage and the like.

And then obviously with the topical that we just opened upon today..

Okay. And a last quick follow-up on acute kidney injury. I am unfamiliar with pharmacological treatments may be obviously steroids if there is information that have been shown to be effective. It seems like of it is based on fluid balance and removing any toxins.

Can you tell us a little bit about acute kidney injury what the market opportunity is? If in fact there are competing treatments there? If it would really be the first drug that would be approved for this area?.

Unfortunately, there really isn't anything out there. The only thing they can give you today for acute kidney damage is the same thing they could give you 40 years ago and that is, like you said, fluids and prayer. I don't think steroids really have shown much of an effect.

If you actually look at the control studies where steroids were evaluated, they still use today in some cases, but they have not shown to be particularly beneficial. There are a couple of other drug that have been tested and no success to-date.

So it really is about and then in designing that trial and looking to find kidney patients who are where one can assess the extent of the damage actually make a difference there. So we have various things we are building. I am not going to give away a bunch of.

But one of the things is that you would want to make sure you correct it right away, would be any prerenal issues. In other words, what you want to do is get patients in who potentially have acute kidney damage and make sure they are fully hydrated and that you take away any kind of kidney functionality associated with just being simply dehydrated.

So we don't patients in the trial that fluids can fix, right. And so we want to make sure that they actually do have kidney damage beyond fluid repair and then look to making a difference there..

Great. Thank you very much..

All right..

[Operator Instructions]. There are no further questions over the audio portion of the conference. I would now like to turn the conference back over to management for closing remarks..

Well, we just like to thank you for participating. And as always if investors or analysts have any questions, please feel free to reach out to management. We would be happy to try and answer them. Thank you very much..

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