Matthew Hogan - Chief Financial Officer James Brown - President and Chief Executive Officer.

Francois Brisebois - Laidlaw & Company Ed Arce - H.C. Wainwright Len Yaffe - StockDoc Partners.

Greetings, and welcome to the DURECT Corporation Fourth Quarter 2017 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, Matt Hogan. Thank you. You may begin..

Good afternoon. And welcome to our fourth quarter earnings conference 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 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. Now let me turn briefly to our financials.

Total revenue was $19.5 million in the fourth quarter of 2017 compared to $3.5 million in the fourth quarter of 2016. The Q4 2017 figure included $15.4 million in deferred revenue from the $20 million upfront fee associated with our Sandoz agreement. This revenue in Q4 is a non-cash item as $20 million was received in Q2 2017.

If one excludes deferred revenue from upfront fees already received by the company, then revenue from our R&D collaboration was $0.8 million in the fourth quarter of 2017 compared to $0.6 million in Q4 2016. Product revenue largely from the sale of ALZET pumps and LACTEL polymers was $3.2 million in Q4 2017 as compared to $208 million in Q4 2016.

For the year as a whole, product revenues from ALZET and LACTEL were a record $13 million as compared to $11.5 million in 2016. The gross margin for the combined ALZET and LACTEL product lines was 68% in the fourth quarter of 2017 and these product lines continue to be strongly cash flow positive for us.

R&D expense was $6.6 million in the fourth quarter 2017 compared to $8 million in the fourth quarter 2016 due to lower R&D costs associated with POSIMIR DUR-928 to a lesser extent and other programs. SG&A expenses were $3.3 million in the fourth quarter of 2017 as compared to $2.8 million in the fourth quarter of 2016.

And at December 31, 2017, we had cash and investments of $36.9 million compared to $25.2 million at December 31, 2016. And I should also mention that we just amended our debt agreement with Oxford Finance such that we pushed back the start up principle payments by three quarters, so from March 1 of this year to December 1.

With that, thanks again for joining the call. I’ll turn it over to Jim for an update on other matters..

Thank you, Matt and hello, everyone. We made substantial progress in this last quarter. With regard to DUR-928, we’re dosing in one Phase II trial and the second Phase II trial has started site visits with a goal to have data from these trials later this year.

We completed the pre-IND interactions for the topical use of 928, selected the lead formulation and are completing activities that should allow initiation of this Phase II study in the third quarter. With regard to our later stage programs, the NDA for RBP 7000 was accepted by the FDA and the PDUFA date has been set in July.

And today, Pain Therapeutics announced the NDA for REMOXY ER has been accepted for review and the PDUFA date is set for August. The potential exist for these two NDAs to be approved between the end of July and the first week of August. I will now update on these programs in greater detail beginning with DUR-928.

DUR-928 is a lead product candidate in our epigenetic regulator program. It is an endogenous small molecule and a new chemical entity. We consider 928 a member of a new class of intracellular stress hormones.

It may have broad applicability and chronic metabolic diseases and chronic liver disease, such as nonalcoholic steatohepatitis at primary sclerosing cholangitis in acute organ injury and in inflammatory skin disorders, such as psoriasis and atopic dermatitis.

We’re developing 928 for three different roots of administration, the oral root for chronic metabolic or other liver disorders by injection for acute organ injury and topically for localized dermatologic conditions. Earlier this week, we announced the initiation of patient dosing in the first Phase II trial for DUR-928.

This study is investigating 928 in primary sclerosing cholangitis or PSC. PSC is a chronic liver disease characterized by a progression of cholestasis that is a decrease in bile flow with the inflammation and fibrosis of the bile ducts.

Over time, PSC leads to liver failure, infections and tumors of the bile duct or of the liver, ultimately requiring liver transplant. At this time, there is no apparent treatment or no approved treatments for PSC.

DURECT has received orphan drug designation for DUR-928 to treat patients with PSC, and DURECT believes the data generated from this trial will be relevant to other chronic liver diseases, involving inflammation fibrosis and cholestasis, including NASH. This past Monday, we hold a key opinion leader webcast on the topical PSC with Dr.

Keith Lindor, as our featured speaker. Dr. Lindor is a senior advisor to the Provost at Arizona State University and a professor of medicine at Mayo Clinic. Prior to joining ASU, he served as the Dean of the Mayo medical school and was chair in the division of gastroenterology and hepatology. He also has served as the Editorian Chief of Hepatology.

And in 2016, he was the president of the American Association for the Study of liver diseases or a AASLD. Dr. Lindor was a key person in gaining approval of ursodiol to treat primary biliary cirrhosis. The primary focus of his research is on clinical trials and means of optimizing the medical management of people with these disorders.

Key messages from the webcast highlighted the unmet medical need in PSC, the fact that PSC may be under-diagnosed and the key efficacy endpoints, which are liver stiffness and alkaline phosphatase. A recording of this call can be found on the direct Web site.

This PSC Phase 2A trial is a randomized open label study involving approximately 30 to 40 patients evenly divided into two cohorts, a low dose cohort receiving 10 milligrams and a high dose cohort receiving 50 milligrams, and may include up to 15 clinical sites. The patients in the trial will receive oral dosing of the DUR-928 for four weeks.

After dosing, they will be followed up for an additional four weeks. The objectives of this study are safety, pharmacokinetic and pharmacodynamic markers will be evaluated including the percent change from baseline of serum alkaline phosphatase or ALP. Other biomarkers will be evaluated as secondary endpoints.

As this is an open label study, we expect to generate data during the course of 2018. Additional information on the trial design, the eligibility criteria and site locations, can be found on clinicaltrials.gov using the NCT identifier, NCT 03394781.

We are pursuing PSC as our first chronic oral study for 928, because results from our non-clinical pharmacology studies in several animal species support the use. Particularly the rat bile duct ligation model, where 928 treatment significantly reduced total direct and indirect bilirubin levels.

These studies have shown that DUR-928 significantly reduce serum biomarkers, including ALP, inflammation fibrosis, cell death, minimized hepatic nodule formation and improved survival. Some of these study results are presented in a poster at the AAS or were presented at a poster at the AASLD meeting in March of last year.

And all of these non-clinical data supports the move into the clinical development for PSC. The transition into clinical development for PSC is also supported by our data from our NASH and our chronic kidney disease Phase Ib studies that were conducted with DUR-928. The first of these studies was a single dose study in NASH patients.

Data from this study were presented at a poster last spring at the AASL meeting in Amsterdam. Reporting on changes in biomarkers following a single dose of 928 in both cirrhotic and non-cirrhotic NASH patients.

These biomarker changes included a reduction in bilirubin of approximately 30%, a reduction in inflammatory biomarkers and reductions in both CK-18. These are markers of cell death and apoptosis by up to as much as 47%. These results were specifically significant and were demonstrated within 24 hours of dosing.

The second of these Phase Ib studies was a single dose CK study in chronic kidney disease patients. Similar biomarker signals were seen in this study with treatment related reductions in bilirubin, full length CK-18 and cleaved CK-18 within 24 hours after intramuscular injection of 30 or 120 milligrams of DUR-928.

These changes occurred in patients or mass control subjects who had elevated baseline levels of these biomarkers. In both of these studies, the higher the baseline levels of these biomarkers, the larger the reduction.

Inflammation and fibrosis of liver can result for many causes, and PSC is a disease in which we may be able to non-invasively obtain a signal of the potential effects of DUR-928 in other liver diseases.

This PSC study may allow us to see a signal in patients after just one month of dosing using well accepted biomarkers, such as reduction of ALP, to allow us to more readily advance into the next step of development. We are working with the PSC patient organizations to help create awareness for the study.

So there is a lot of interest from the patient community about the possibility of using an endogenous compound, which to date has shown a good safety profile to help treat this disease of great unmet medical needs. I will now move on to the DUR-928 injectable program.

Here we are pursuing alcoholic hepatitis, here too I will refer to just as AH as the first acute indication for DUR-928. The Phase IIa protocol is focuses --this safety protocol focused on the safety and pharmacokinetics of 928 in moderate and severe age patients, and has been submitted to the FDA.

The IND is open and we are actively setting up clinical sites with the intention of dosing in the near future. AH is a significant public healthcare burden and is responsible for more than 320,000 hospitalizations per year in the United States. And globally, there are 3.3 million deaths every year resulting from harmful use of alcohol.

Given the lack of approved effective products for alcoholic hepatitis and a relatively high short-term mortality rate, which exceeds in many cases 30%, in severe cases that is, a new drug that improves outcome for patients could be transformational.

The use of 928 to treat AH is supported by the activity the compound has demonstrated in multiple animal models. Several of which are published in the literature, including acetaminophen alcohol injury mouse model, the endotoxin injury mouse model, the STAM NASH model, the bile duct ligation rat model, ischemic renal injury model and others.

DUR-928’s ability to reduce mortality and prove organ morphology and function and reduce inflammation in animal models of acute organ injury all support the transition into clinical development in AH.

In addition, these previously mentioned studies are the results of -- we recently compiled are associated with an recently completed ADNI study that evaluates tissue distribution and elimination of 928 in rats following an IV bolus dose. This confirmed a preferential uptake of DUR-928 in selected target organs, including the liver and the kidney.

Result of the ADNI study were accepted as a late breaking poster presentation at the upcoming Society of Toxicology conference, which is going to be held between March 11th and the 15th of this year in San Antonio, Texas.

Transition to development for AH is further supported by human data from our Phase 1B studies in NASH and our chronic kidney disease patients, evaluating the effects of a single dose of 928, which I talked about earlier.

The FDA is recognizing both the public health importance of alcohol associated liver diseases, as well as the need to establish surrogate markers to inform the design or definitive clinical trials for alcoholic hepatitis.

To this end, the FDA, the National Institute of alcoholic abuse and alcoholism or NIAAA and AAFOD have organized a two-day workshop on clinical trials design and endpoints for alcoholic hepatitis and other alcohol associated liver diseases that will be on March 26th to 27th of this year at the FDA Silver Springs Maryland facility.

One of our key consultants, Dr. Craig McLean will be driving the agenda at the workshop on potential biomarkers that can be used to assess the mechanisms of disease, the disease severity prognosis and response to therapy through the course of alcoholic liver disease with a focus on the importance of CK18s in alcoholic hepatitis.

Several of our other clinical advisors will also be speakers at this workshop. Our initial Phase II study, which was co-designed by our advisor, will be an open label ascending dose study that compares three doses of 928 in patients with AH, and it will focus on pharmacokinetics and safety outcomes.

In addition, we will be assessing the pharmacodynamic outcomes as part of the safety evaluation by observing changes to the patients MELD score. The model for end stage liver disease or MELD score is important scoring system for assessing the severity of end stage liver disease.

The MELD scores calculated using serum bilirubin, serum creatinine and prothrombin time. DUR-928 has demonstrated the ability to reduce bilirubin and creatinine in animal model and as reduced bilirubin in two single dose Phase Ib clinical studies. This is of particular importance in AAH patients as they have MELD scores.

This study will be conducted in two parts, their name Part A, Part B. Trial will be -- have a total of 24 patients and six dose groups. Part A1 involve 12 patients with moderate alcoholic hepatitis that is patients with MELD scores of between 11 and 20. They'll be divided into three dose groups of four patients each.

The doses that will be given will be 30, 90 and 150 milligrams of 928 given by IV infusion. Sequential dose escalation is planned following the review of safety of pharmacokinetic results of the prior dose level. Part B will involve 12 patients with severe alcoholic hepatitis, i. e. is patients with MELD scores between 21 and 30.

They will also be divided into three dose groups of four patients each. The doses given in Part B will be determined based on the results from Part A. The trial will evaluate dose, the dose effect on safety, pharmacokinetic and pharmacodynamic responses in these patients.

Additional information on this trial design, including eligibility criteria and site locations, can be found at clinicaltrials.gov using the NCT identifier, NCT 03432260. The first site visit was held this week. We look forward to initiating dosing in the near term and hope to report patient data later this year.

We will also be announcing a KOL conference call for this indication in the near future. Finally, I'll turn my attention to the DUR-928 topical administration program. We've developed topical formulations for 928 because of promising results we achieved in an exploratory Phase Ib trial in psoriasis patients, utilizing intralesional injections of 928.

We are working with expert advisors to finalize our study protocol for a Phase 2 proof of concept study with topically applied 928. We have had pre IND interactions with the FDA and are completing the final line clinical study requested by the FDA prior to submitting the IND. We expect to initiate this study in the third quarter of this year.

We believe there is a large market opportunity for new topical drugs in inflammatory skin diseases, such as psoriasis and atopic dermatitis and we will update further on this Phase 2 study design during our next quarterly call. I will now move on to POSIMIR.

We continue to work with our partner Sandoz regarding potential next steps for the POSIMIR program. We will update with further information when a decision on the future of the program has been made. Now to RBP-7000. RBP-7000 is a nice opportunity for direct shareholders, and is the closest to market.

The RBP-7000 product opportunity for DURECT is the result of a patent deal with Indivior. As a reminder, Indivior PLC was spun out of Reckitt Benckiser in December 2014 and they are traded on the London Stock Exchange. RBP-7000 is Indivior’s investigational once monthly injectable risperidone product candidate for the treatment of schizophrenia.

Indivior announced the NDA for RBP-7000 was accepted for review this past December and the PDUFA date is now set for July 28th of this year.

A summary of the Phase III and long-term safety setting data for RBP-7000 include once a month dosing, a rapid onset of action, no loading dose with the initiation of treatment, no supplemental dosing during treatment and demonstration of clinical efficacy and safety in schizophrenic patients.

Last year, DURECT received an upfront non-refundable payment of $12.5 million, and we have a potential $5 million milestone payment upon NDA approval, Indivior will also make quarterly earn out payments based on single-digit percentage of U.S. product sales.

These payments extend until the expiration date of the patents covered by this agreement, which is until 2026. In of March 2017, Indivior stated that their rating their guidance for the potential peaks, net revenues of RBP 7000.

And if approved, they expect to be in a range of $200 million to $300 million per year with an assumption of no material change in the U.S. market circumstances. The final product I'll update today is REMOXY ER. REMOXY ER is based on our older technology.

The investigational drug is a unique long-acting formulation of oxycodone designed to be dosed twice a day and to discourage common methods of tampering associated with opioid misuse and abuse. In February, Pain Therapeutics announced that they had resubmitted their REMOXY ER NDA.

Today, they announced the NDA has been accepted for review and the PDUFA date has been set for August 7th. The epidemic of opiod abuse is a national crisis that we hear about regularly in the media from Congress and from the White House. Some companies are pulling back on their promotional and selling efforts, including Purdue.

Yet the need for these agents to treat a patient's pain remains. And the market for produced oxycodone remains approximately in the range of around $2 billion a year. REMOXY ER has the potential to provide multiple means of tamper-resistance plus two twice a day dosing and the only 5 milligram dosage strength to this market.

As a reminder, DURECT would receive a small milestone on approval and a royalty on sales that range from 6% to 11.5%. In summary, with our RBP 7000 or REMOXY ER, we have the potential to have two NDAs approved within the next five to six months.

Each of these products could offer differentiating features that may benefit patients and the healthcare system in large and important markets.

Most importantly, we have DUR-928 an endogenous intracellular stress hormone that has demonstrated profound effects in various animal models and in single dose studies in human patients with what appears to be a wide safety margin.

We're dosing in one Phase II trial, beginning site visits in the second, with a third trial lined up for initiation in the third quarter. During 2018, we could have two NDAs approved and data from two different Phase II trials with DUR-928. With that, we'd like to now take any questions you might have..

Thank you [Operator Instructions]. Our first question is from Adam Walsh. Please go ahead..

This is [Neil Cunningham] on the call for Adam. Congratulations on the progress on moving forward with the 928 program.

Can you just walk me through how you guys are thinking about your comfort level as far as funding to get through the three Phase II programs?.

Well, I guess one comment I'd make is, as you noticed, these are not large Phase II studies. The number of subjects that are in each study are not that large, they're open label, they don't last that long in duration. So actually, they're not that expensive to run.

So we very carefully watch what we spend around here, but we think we have the sufficient resources to get through most of this year's objectives. And of course, we’ll be helped if we get some product approvals as Jim outlined..

That's right, I think they are substantially less if you add those three up as compared to what POSIMIR was last year with a large Phase III..

And then as far as in the 928 Phase II trial on PSE, have you guys had any discussions with the FDA as far -- or do you want to elaborate on endpoints or things specifically that you're going be looking for in the data. I know the Phase I data was impressive what you saw early on.

Just would you guys mind elaborating on anything specific that you guys are looking for?.

So I think what we’ll be looking at, we'll be looking at -- it’s one of those, it’s a Phase IIa trial. So the first thing we're looking at is safety and then the dose effect. But we will also be looking at alkaline phosphatas. And so we look for a drop in that. We have seen that in animal models, so we certainly hope to see that.

We've seen in the NASH patients and the chronic kidney disease patients that had high CK-18s. We saw those dropping, both the cleaved and the full length.

And if we see that as well, which I would hope is exactly what we would see that, that should track because alkaline phosphatas is an intracellular enzymes, those are markers of cell death that come cells that have died. And so one would expect those things should move together..

Our next question is from Francois Brisebois, please go ahead..

Just a couple of quick ones here. The fact that it’s open label and they'll be -- you'll get a chance to see the data.

How often is that and is this something that you'll share or what should we be looking at from here?.

I think we will be sharing. But once we get enough information, we're not going to -- after one patient has done run and get the labs done. So we're going to -- we'll batch them together and get some critical mass of patients. And at that point, run some data and have a look.

So it'll be something that's probably just talking about end of the year later in the year rather than every two months or something coming out with something..

And that would be the final data they’re not like interim pretty much?.

No, it will be -- it depends. It depends on the enrollment rate..

And then in terms of the transition from PSE to whether it’s AH or NASH, or any other indication. Is it mostly -- I know you mentioned the alkaline phosphatase. Is it mostly ALP that you'll be looking at, is there any other read through? Obviously this is a non-invasive way to diagnosis.

But anything else?.

I think it's important to separate these two, there are two different Phase II programs and it's confusing because we're talking about one drug. But I would really consider that Drug A, oral-928 and Drug B injectable 928.

So let’s talk about Drug A, oral-928, that's being studied in PSE and in that case we're looking at alkaline phosphatase phosphate as a key. We will be also be looking at cytokeratin-18 and some of the other markers there.

But the big one there is alkaline phosphatase that has been understood and the FDA is I think looking at that, and we have the thought leaders who are working with the agency to help that guidance, including the guide we’ve got also approved. So now let's talk about the second drug that is 928 via injection for acute organ disease.

And in this case, the first acute organ damage we're looking at is alcoholic hepatitis. In this case, we're looking at cell death markers for immediate circumstances. We're looking at the CK-18, the FDA in fact is having a meeting later on this month to evaluate and one of our thought leaders Dr.

Craig McLean is going to be leading this charge to look at and he's got a really good data he's done showing mortality associated with CK-18 changes and elevation.

So there's a nice relationship that one can see between the rise in CK18’s innate acute organ damage circumstance and death and mortality potential outcomes, and we can evaluate that as well.

We’ll also be looking at bilirubin and other things vis-à-vis the MELD score, which is the way these patients are going to be tracked for safety but will also get a pharmacodynamic input there. So similar markers but different circumstances..

And then lastly on safety being endogenous.

How many times -- can you remind, how many times you dose this in humans and animals? How many times multiple times of heavy doses?.

We’ve dosed in animals, we've gone out for quite a while and some very quite amazing. We’re talking about this early. We’ve actually done in some of the reports has done a study in rabbits as an example, where you look at teratogenicity or whether or not a drug will have effect on birth effects or it would be causative factor there.

And we did not see anything. And these rabbits received blood levels or had blood levels that were about 45,000 times than normal level, which I can’t even -- it's hard to get your head around. So it’s amazingly high doses of this drug seems to have no effect in normal, not even in the growth of pups.

And yet just 10 milligrams might have a dramatic difference in patients. So it is quite fascinating the discrepancy there we believe it’s because it is a stress hormone and the receptor or availability of the drug to get to the side of action is being dictated by virtue of whether or not that cell was damaged or not..

Our next question is from Ed Arce. Please go ahead..

So a few questions, first one thinking through your PSC programs for oral 928, ALP is clearly an important marker there. And I’m wondering if you could tell us what affect size you’ve seen in reducing ALP in your preclinical models and how closely does that translate human efficacy.

And perhaps would looking at the BDL model results from OCALIVA shed some light on the potential effect size there..

It’s impossible to speculate from an animal model to human, especially because there are different disease circumstances. We create a circumstance in these animals where we’ve got damage organs, and are able to look at that. And so we do see drops in ALP.

I personally think that the more relevant information is from the human patients, be they the chronic kidney disease patients and NASH patients that had elevated CK-18, because there you’ve got organs that are damaged and cell death going on, and actually it appears to be able to rest at to some degree.

And so to the extent that that is occurring, which we believe it is and literature would tell us that it is in PSC patients and that we can alter that, then we should see an outcome and reduced ALP. But we have to see that, and we have to see it in the patients.

So we think we’ve lined up everything the best we can but at the end of the day, it’s just like in sport they’ve got to play the game. Here we’ve got to run the trial. But I think we’ve got a good chance, but still it needs to be done..

And just to clarify, you had said earlier the PDL model data that you ran was presented at ESO last year, not ASLD?.

The bile duct ligation model was -- actually those data would not -- those have not been presented yet. The STAM data were presented AASLD, the ESO study we presented -- there we presented the NASH data from humans where we should bilirubin down.

I used that just as a correlative between the fact that we had been able to take rats and do this bile duct ligation study, and that study involves cutting the bile ducts, ligating them and we show even though that occur showed a statistically significant drop in the bilirubin in those rats.

And now we have this correlative where we went to NASH patients and we dosed them and those that had a high bilirubin we saw a reduction in their bilirubin, a statistically significant reduction in their bilirubin. And then we did this chronic kidney disease patient with much fewer patients and normal subjects.

So just a handful of people but in the ones that had high bilirubin, we saw once again dramatic reduction in their numbers, and in that case actually even lasted longer. So we've seen it in an animal model, we’ve seen it in two different patients or groupings as well..

So just getting back to the PDL model then, you expect to present those results somehow?.

Maybe, we have a lot of animal models date that we could present, we're going to present the data at the Society of Toxicology and ADNI coming up this month. We do or we are going to become more aggressive in the publication of things in general. So it will be easier for people to get references, so that will occur.

We have a number of models that we haven't disclosed publicly at all. They are really interesting data, but it just hasn't the opportunity yet. So as time allows and people aren’t too busy then we will not -- and everyone is always too busy, but we'll find the time to get somebody on an airplane out some place and show the data..

And I would imagine that you would have some degree of presence at ESO in April?.

We will be there. I don't think we're going to be having any data at this point in time no, because we don't have any studies that that will be having data come out that soon. But obviously we were there last year with that poster that was pretty groundbreaking and then it showed the CK-18 levels down within 12 hours, the bilirubin down.

I don't think anybody has shown those data with bilirubin..

And then one last question, if I could. Turning to your IV formulation and this indication in AAH, this is from prior experiences given with alcoholic patients and with moderate to severe MELD scores. This is a rather difficult patient population to control for studies in a controlled environment like this.

Have you thought through how to supplement standard compliance procedures to offset that?.

One of the things is we’re not doing long-term follow up on these. They're only going to be going out as long as 28 days, and they’ll be dosed while they're in the hospital, which will be a seven day circumstance and beyond that, it will just be a 28 day follow-up. So we're looking at this, because we think we can save lives quite frankly.

If this drug does in humans what it is done in these animals. And so if that's the case then we know that humans have this same drug coursing through our veins, the same molecule that if it does that then you we'll be -- then we're in a different circumstance.

If we show what I'm hoping we can show we could possibly get a breakthrough designation and then we'll be in the different circumstance, but we'll see. It’s all to be demonstrated. But it’s a good point and to that end, we're going to be dosing in the hospital in just 28 day follow up..

Actually one last quick question to understand, is your expectation to have some degree of data from this AH study this year?.

Yes..

[Operator Instructions] Our next question is from Len Yaffe. Please go ahead..

I had a couple questions for you. I find it very interesting that at a time when you may be looking at the hepatology and other markets longer-term you’ve got this potential significant revenue stream coming from your legacy products.

And I was wondering first if you could review for us on REMOXY and on Indivior, what the -- both the royalty rates are and how many years those drugs are likely to have patent protection in the United States..

The first, let's start with the closest, even though maybe it's only by a week and so it’s closest to RBP-7000. That we get a single digit, it's called a patent earn out rather than a royalty but it's functionally the same. And that's in the U.S.

The patent is going out to at least 2026, I think there’s some possible extensions on that, but it's at least until 2026. And that would also involve $5 million approval milestone. And they have projected last year between $200 million to $300 million of sales.

For REMOXY, the royalty rates are higher, the upfront is lower, it's less than $2 million on approval for milestone. The royalty rate start at 6% and go to 11.5%, but that 11.5% is around a billion. So you could think at the lower end there. Then it depends on what the sales might be. Purdue is still selling close to $2 billion worth of oxycodone.

We think we have advantages over -- certainly our oxycodone and some of the other things out there and ours is this REMOXY ER is in a two twice a day. It has got potential to have resistance against many mechanisms.

And then lastly to my knowledge it'd be the only 5 milligram dose out there and people looking to use less of narcotics as much as possible, these patients still need it. And your question on the duration, I think the longest of the patents there goes out to 2032 something like that in that range, it's pretty long..

And then the other question is on alcoholic hepatitis. I believe that Dr. McLean recently was one of the lead authors on an expert review of medical management and pharmacotherapy for severe alcoholic hepatitis that came out, I think in January.

And I was wondering if that article could possibly be something you posted to your Web site with his permission or be made available. I believe it was a very thorough review of the fact that there's really nothing other than cessation of drinking and cortical steroids, which are highly contraindicated for the treatment of alcoholic hepatitis..

You're absolutely right. There was a large study that was funded that looked at cortical steroids and pentoxifylline, it was in over a thousand patients, thousand one hundred and something patients.

And in that study, they basically show pentoxifylline doesn't work and they showed that there wasn't a statistically significant improvement in mortality or survival with the corticosteroid. So if you’re a physician in that circumstance, it is difficult. There isn’t much out there. And certainly Dr.

McLean and we’ll put that piece out there we’ll look to put it up. But he is also going to be leading this effort with the FDA to look at these. He is a big supporter of our -- his research has shown some pretty interesting information on the CK-18’s full and cleaved and the ratios and the like and mortality and survival on these patients.

And I think he will be presenting those data and I'm hoping publishing those data pretty soon. And that will also serve to help, move the field forward..

This concludes the question-and-answer session. I’d like to turn the floor back over to management for any closing comments..

Well, thank you all for participating. If you do have additional questions, we’re always available to chat. Thank you very much..

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