Good afternoon, and welcome to our Second Quarter 2021 Earnings Conference Call. This is Mike Arenberg, Chief Financial Officer of DURECT Corporation. I will provide a brief review of our financial results, and then Jim Brown, our President and CEO, will provide an update on our programs. We will then open up the call for a question-and-answer 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 could cause actual results to differ materially from those in such forward-looking statements. Further information regarding these and other risks can be found in our SEC filings, including our 10-K and 10-Qs under the heading Risk Factors. Let me now turn to our financials.

Total revenue in Q2 2021 was $2.3 million, compared to $24.5 million in Q2 2020. This year-over-year difference is primarily due to the recognition of $23.1 million in deferred revenue from the termination of the Gilead Agreement in Q2 2020.

Excluding this deferred revenue, total revenues increased from $1.4 million in Q2 2020 to $2.3 million in Q2 2021. Collaborative R&D revenue, again, excluding the large recognition of deferred revenue in Q2 2020, increased by approximately $530,000 year-over-year.

Product revenue, now essentially from the sale of ALZET pumps, increased from $1.2 million in Q2 2021 to $1.6 million in Q2 2021. Q2 2020 was a down quarter as it was impacted by COVID disruptions to our all ALZET customers. Our gross margin from product revenue was 77% in Q2 2021. Product revenue continues to be strongly cash flow positive.

R&D expense was $7.4 million in Q2 2021, as compared to $6.6 million in Q2 2020. The increase was primarily due to higher clinical trial expenses, and higher contract manufacturing costs for DUR-928. SG&A expenses were $3.2 million in Q2 2021 as compared to $3.3 million in Q2 2020. Our underlying burn rate during the quarter was $8.7 million.

At June 30, 2021, we had cash and investments of $88.6 million as compared to $56.9 million at December 31, 2020. I also wanted to briefly mention an SEC filing that will take place tomorrow. The three-year term of our existing shelf registration statement expires in October, but we will be filing a new shelf registration statement.

We’re following it tomorrow to leverage certain deficiencies of filing right after our 10-Q. We do these filings as normal corporate housekeeping, but I felt it was worth mentioning. With that, thanks again for joining our call. And I will now turn the call over to Jim for an update on certain of our programs..

Thank you, Mike, and hello, everyone. Thank you for joining us today. We made good progress in the second quarter of 2021. We’re enrolling at a good rate in AHFIRM, our Phase 2b study of DUR-928 in patients with severe alcohol-associated hepatitis. We made excellent progress in opening additional clinical sites in the U.S.

with the addition of seven new clinical sites since our last earnings call. We now have 26 sites enrolling for AHFIRM, which represents 75% of our goal for U.S. sites. We’re also closing in on getting clinical sites up and running in Europe, the United Kingdom and Australia.

We presented the DUR-928 program at the Epigenetic Therapeutic Targets conference, and additional DUR-928 clinical data in two posters at the EASL International Liver Conference. And we’re in negotiations with potential partners for POSIMIR. Now, let’s move to our most important program, DUR-928 in alcohol-associated hepatitis or AH.

As you all know, we’re conducting a very important clinical trial of DUR-928 in AH, called AHFIRM. AHFIRM is our ongoing Phase 2b efficacy and safety study. It is a placebo-controlled, double-blind multinational study, targeting 300 patients. There are three treatment arms, 30 milligrams and 90 milligrams of DUR-928 and a placebo arm.

As with the Phase 2a trial, patients in the AHFIRM trial receive an infusion of DUR-928 or placebo on day one. And if they are still in the hospital on day four, they receive a second infusion. The primary endpoint for the trial is 90-day survival. I will begin with an overview of the timeline for the AHFIRM trial.

We enrolled our first patient at the end of January and since then, have been steadily adding new clinical trial sites. In the United States, we now have opened 26 sites, which represents three quarters of the planned U.S. clinical sites, with nine more sites pending.

We are also on track to open additional sites in the UK, Europe and Australia in the coming months. We are pleased with the enrollment rate. Several of the initial clinical sites have been enrolled with subjects at a high rate, well above our internal target rate. We expect the overall rate to accelerate as newer sites start to hit their stride.

We look forward to providing an update to our expected completion date, once this latest wave of COVID passes, and the hospital environment at our clinical sites stabilizes for a few months. Based on enrollment so far, we are hopeful that we will be in a position to guide to a shorter timeline to trial completion.

The main focus of the Company is to execute this trial to the highest level of quality and in a timely fashion. AHFIRM is the highest priority in the Company. Hospitalized patients with AH are in desperate need of an effective therapy.

There are approximately 132,000 hospitalizations per year in the United States for AH, and there is no approved treatment. What physicians have available to them today primarily involves abstinence and supportive care, which includes nutrition and hydration.

Corticosteroids are used in some cases, but have been shown to have no survival benefit at 90 days or one year. The average overall mortality of AH across clinical trials is 26% at 28 days, 29% at 90 days and 44% at 180 days, and has not improved in the past 50 years.

Unfortunately, even prior to the COVID pandemic, the incidence of AH was increasing in younger patients. And during the pandemic, alcohol consumption in the United States has increased by approximately 30%. AH has a significant economic impact on the U.S. healthcare system as well.

The average hospital stay for an AH patient is approximately seven days, with many staying significantly longer. The average hospitalization cost for an AH patient is more than $50,000 in the first year. Alcoholic liver disease is becoming a leading cause of liver transplants in the United States, and the cost of liver transplant exceeds $875,000.

We estimate the annual cost of AH to the U.S. healthcare system to be as high as $6 billion. Let’s review why we are so optimistic about the use of DUR-928 in the treatment of patients with severe AH. First of all, in our first trial of DUR-928 in AH patients, all 19 patients including 12 severe AH patients survived.

12 of these 19 patients were classified as severe, based on MELD scores. 15 of the 19 were classified as severe, based on a scoring system that is specific to AH, called Maddrey’s Discriminant Function score or MDF.

Based on the degree of liver damage suggested by these scores, historical data suggests that several of them were likely to have not survived 28 days, yet all of them did survive. Second, 14 of the 19 patients were discharged in less than four days after receiving only one intravenous infusion of DUR-928.

Additionally, prognostic scores, including Lille and MELD, as well as bilirubin and other biomarkers were improved compared to baseline in the Phase 2a trial. Third from a safety standpoint, DUR-928 was well tolerated by all of the patients and at all of the doses evaluated in the Phase 2a trial.

There were no serious drug-related adverse events reported in this trial. And fourth, we can gain some additional insight into treating severe AH patients, like those who are in the AHFIRM trial, by examining the severe patients from our Phase 2a trial in a cross study analysis. Dr.

McClain from the University of Louisville or UL, conducted a comparative analysis of the 8 severe AH patients treated with DUR-928 in the 30 and 90 milligram cohort from our Phase 2a trial with 13 severe AH patients from a University of Louisville study. The UL patients received supportive care including steroids.

Both groups had similarly high initial MELD scores at 24.5 and high MDF scores of greater than 60. The DUR-928 treated patients had substantially lower Lille scores as compared to the UL group, and all of the DUR-928 patients survived the 28-day follow up period, while three of the UL patients did not survive past 28 days.

This analysis was presented by Dr. Craig McClain at the 2019 AASLD Liver meeting. A slide of this comparison can be seen in our corporate deck on the direct website.

The fifth reason as to why we are so optimistic about the use of DUR-928 in the treatment of patients with severe AH, is that in addition to the clinical trial results, we also have numerous in vivo animal models, supporting the data that demonstrates DUR-928’s potential against multi-organ failure, which can occur in AH patients.

The final rationale as to why we are optimistic regarding the DUR-928’s potential to treat patients with severe AH is DUR-928’s mechanism of action and how it connects with the remarkable results we saw in the treatment of AH patients. DUR-928 is an endogenous epigenetic regulator.

The vast majority of what is in the nucleus of the cell is not DNA, but proteins and other molecules that determine which genes are expressed and are known as the epigenome. DUR-928 acts on one of these proteins, DNA methyltransferases, also known as DNMTs, through which it regulates gene expression.

One way to visualize the importance of the epigenome is to compare it to the software of a computer. You have the same DNA or hardware in every cell in your body, the same DNA in every cell, but think about the different cells and tissue types that make up your body.

The reason for this is that the epigenome, which is in this example, would be the software controls which genes are expressed and which are not. It is effectively the brains of the operation. DUR-928 acts to repair malfunctioning software without changing the hardware. DUR-928 binds to and inhibits the activity of DNMT-1, 3a and 3b.

DNMTs are epigenetic regulating enzymes that add methyl groups to DNA in a process called DNA methylation. Treatment with DUR-928 in stressed liver cells led to decreased DNA, hypermethylation and modulating expression to more than 1,000 genes that are associated with multiple crucial cellular signaling pathways.

These modulations can lead to improved organ function and survival, reduced liquid accumulation and inflammation, as we have observed in various in vivo animal models, and in the promising results from our completed clinical trials in AH and NASH. In July of 2019, Argemi et al published a study in Nature Communications.

In this study, liver samples from 82 patients with liver disease, including 27 AH patients, plus samples from 10 subjects with normal livers were examined. The gene transcription patterns of the AH patients were found to be distinctly different from the control subjects and from patients with other liver diseases.

Importantly, in the AH patients, there was DNA hypermethylation, ultra transcriptomics and liver cell dysfunction. The expression of DNMT-1 and DNMT-3a were found to be profoundly increased in AH patients, but not in control subjects or patients with other liver diseases.

The liver cells of the AH patients were characterized by increased expression of DNMT, DNA, hypermethylation, transcriptomic reprogramming and loss of mature liver cell function. The results of the study suggest that inhibition of DNMT could be a novel therapeutic approach for AH.

During this quarter, we were also invited to present at the 2021 Epigenetic Therapeutic Targets Virtual Summit, which is for leading companies in the field of epigenetics to present to their peers.

To our knowledge, we were the only presenter utilizing epigenetic regulator to restore function in injured cells, as opposed to most who were using epigenetics to kill cancer. Our presentation was well received.

In conclusion, the results from our Phase 2a study demonstrating 100% survival of 14 to 19 patients leaving the hospital before day four, and the positive safety profile that was observed in severely ill patient, the comparative analysis with the UL severe AH patient data, in vivo animal model results, and the correlation of DUR-928’s mechanism of action with the epigenetic dysregulation seen in AH patients, all together make us optimistic regarding the potential for the AHFIRM trial.

Given the high unmet need for hospitalized AH patients, the lack of current treatment options and the high mortality rates, we believe a robust survival benefit in the AHFIRM trial would support an NDA filing. In addition, the FDA has granted Fast Track designation for DUR-928 in the treatment of AH. Approval based on a single trial is not uncommon.

In fact, 37% of new drug approvals between 2005 and 2012 were based on a single pivotal trial, and 42% of new drugs launched in the United States in 2018 were approved based on the single trial. Next, I’ll update on the DUR-928 NASH program.

In 2020, we reported positive results from our Phase 1b trial of DUR-928 in NASH patients with stage 1 to 3 fibrosis. This was a randomized open label and multicenter study of DUR-928 in NASH patients conducted in the United States. DUR-928 was dosed orally for 28 consecutive days and the patients were followed up for an additional 28 days.

A total of 65 patients completed the study and there were at least 20 patients per dose group. DUR-928 treatment in this trial resulted in a reduction from baseline of liver enzymes, liver fat by imaging, liver stiffness by imaging and biomarker, serum lipid and insulin resistance. Many of these reductions were statistically significant.

A statistically significant 24% reduction of baseline plasma triglycerides was seen in 16 patients, who had baseline level above 200-milligram per deciliter.

At 28 days, 43% of all patients had at least a 10% liver fat reduction by MRI PDFF with a median reduction of 20% from baseline, which was statistically significant with a P value of less than 0.001.

In this group of patients, ALT levels were also significantly reduced from baseline and additionally liver stiffness by transient elastography or TE, serum lipids and some biomarkers, including the fibrosis biomarker and cell death markers were statistically significantly reduced from baseline in certain dose groups.

DUR-298 was well tolerated at all three doses evaluated. There were no serious adverse events reported during the study. Data from this trial was presented and a poster at the 2020 AASLD meeting. At the June 2021 EASL, we presented two posters on DUR-928. The first reviewed additional data from the 28-day NASH trial.

The second poster reviewed data from a PK trial of DUR-928 in patients with Child-Pugh B and C liver function impairment. The additional NASH data demonstrated potential of DUR-928 to impact liver fibrosis or stiffness. Overall reduction and MRE and pro-C3 through 28 days were consistent with the data on TE and MRI-PDFF.

This poster also showed DUR-298’s potential in improving insulin resistance in these NASH patients. There were approximately 20% median reductions from baseline, homeostatic model of insulin resistance or HOMA-IR, following 28-day oral dosing in certain dose groups, although they were not statistically significant.

The data were consistent with what was observed in animal model. The DUR-928 significantly increased insulin sensitivity and improved glucose tolerance. In the second poster, we reviewed data from the safety and PK study of DUR-928 in patients with moderate or Child-Pugh B and severe or Child-Pugh C liver function impairment.

DUR-928 was very well tolerated by these patients with no adverse events reported throughout the study. Moreover, a statistically significant reduction in cCK-18, a biomarker of apoptosis was observed at 12 hours after DUR-928 dosing.

Regarding the mechanism of action of the DUR-928 in NASH, recall that DUR-928 reduces DNA hypermethylation and inhibits DNMTs. In 2017, Hardy T, et al published in gut, a study that evaluated 26 patients with biopsy proven non-alcoholic steatohepatitis.

They found DNA hypermethylation at the PPAR-gamma promoter region in hepatocytes, which could also be detected in the plasma of these patients and used as a stratification marker for the fibrosis stage.

The clinical results we’ve observed at DUR-928 in NASH patients, together with a continued safety profile and its mechanism of action, all support further evaluation of DUR-928 potentially NASH. We are planning our next steps for NASH. Next to the POSIMIR program.

POSIMIR is a novel non-opioid sustained release local anesthetic that is approved to produce post-surgical analgesia for up to 72 hours following arthroscopic subacromial decompression. POSIMIR contains more bupivacaine than any other approved single dose sustained release bupivacaine product.

We believe this may be an important differentiator in the market. Another potential differentiator for POSIMIR is the ease of application. POSIMIR is applied directly into the surgical wound, the primary source of post-surgical pain.

At the end of surgery, POSIMIR is administered into the subacromial space under direct arthroscopic visualization, where it continuously releases bupivacaine for 72 hours or more. The FDA approval is based on the pivotal trial of arthroscopic subacromial decompression surgery with an intact rotator cuff.

The primary outcome measures were mean pain intensity and total opioid rescue analgesia administered, both evaluated over the first 72 hours after surgery versus placebo. The opioid epidemic in our country is responsible for approximately 200 deaths every day.

The objective of the POSIMIR program is to give health care providers and in turn their patients a non-opioid alternative for post-operative pain control or at a minimum, a way to reduce the amount of opioids required to reduce post-surgical pain.

Subacromial decompression is a shoulder surgery used to treat impingement syndrome, a common repetitive use injury that causes pain when your arm is raised over the head. There are over 600,000 surgeries involving arthroscopic subacromial decompression performed each year in United States.

We view subacromial decompression as a beachhead to get POSIMIR on the market. And we believe the opportunity to expand the label to cover a broader group of surgical procedures represents significant upside. To summarize, we believe there are a number of product features that have a potential to differentiate POSIMIR in the market.

POSIMIR is approved to provide 72 hours of post-surgical analgesia from a single application and in the pivotal trial demonstrated a statistically significant reduction of both, the level of pain and use of opioids. POSIMIR contains more bupivacaine than any approved single dose sustained released bupivacaine product.

And according to our investigators, in the clinical studies, POSIMIR’s ease of application will be a welcome benefit. In addition to these attractive features, we believe there are a number of potential avenues available to extend the label to include more surgical indications. We are in negotiations with potential commercial partners for POSIMIR.

Our plan is to use the proceeds from partnership to help fund our epigenetic program and our flagship product DUR-928 for the treatment of alcohol-associated hepatitis. In summary, this was a good quarter for DURECT. We are making great strides with AHFIRM. We have 26 U.S. sites up and running and we are pleased with the patient enrollment rate.

With 26 clinical sites including patients, we are now at 75% of our U.S. site initiation goal. Additionally, we remain on track to initiate sites in the UK, Europe and Australia in the next few months. We expect to have between 30 and 40 clinical sites in the United States and 15 to 20 sites across the UK, Europe and Australia.

Elevated DNMT expression and DNA hypermethylation reported in the liver samples of AH patients fits well the DUR-928’s mechanism of action and helps to explain the efficacy signals, including survival of patients observed in our Phase 2a AH trial. We have Fast Track designation by the FDA for our AH program.

We expect that if we achieve a robust survival benefit, this study will support an NDA filing. The commercial partnership process for POSIMIR is ongoing. We presented two posters at EASL, which further affirmed the mechanism of action and activity of DUR-928 in patients with NASH and severe liver disease.

The mechanism of action for DUR-928 helps explain the efficacy signals, including survival of patients in our Phase 2a trial, as well as the encouraging results from our Phase 1b NASH trial and provides further scientific rationale for developing DUR-928 for the treatment of multiple other acute organ and chronic diseases.

With that, we would now like to take any questions you might have..

Thank you. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Kristen Kluska with Cantor Fitzgerald. Please proceed with your question..

Hi. Good afternoon, everybody. Thanks for taking the questions. The first one here was just based on some of the comments you made that the trial is going faster than your internal projections. I just wanted to see, if you could elaborate for us what some of these factors might be.

Were your estimates, for example, conservative to consider some impact from COVID-19 hospitalizations? Is it in part driven by the number of cases in general being on the rise or any other factors that you could potentially point to this trend?.

It’s very interesting. Yes. We -- first of all, COVID definitely has an impact. And there’s no ignoring that, and the continuation of COVID continues to have an impact on sites.

We have -- as we said, we have certain sites that are enrolling at a rate that is faster than we had originally projected, and then, we have other sites that are coming up more slowly. And it’s going to be a balance of these as we go forward in time that will define whether or not we’re able to complete the trial early on.

Right now, at this point in time, what we’re saying is we’re going to give an update on that in the future. But the update will come after this delta wave has passed, and when the hospitals have had three or four months of more normalcy. And Norman also on the call, so I guess, I’ll let him maybe speak to that as well.

Norman?.

Yes. Thanks. Hi, Kristen. Yes, I agree with what Jim said. The COVID had this very sort odd effect that increased drinking, there were much higher incidence of people getting into trouble with alcohol, but then also it affected both the availability of beds and the availability of research staff.

So, many times research staff were not considered essential and therefore not allowed in. And that was improving, but we’ll have to wait and see what effects this delta wave has, and whether the hospitals will start to, again, block non-essential personnel from coming in..

Thank you. And then, there was an accepted article that was published in Hepatology this week that looked at the impacts of COVID-19 on liver transplants and alcohol-associated liver disease, including severe AH.

A one of the findings there was talking about just the number of waiting -- waitlist periods for liver transplants in that AH and ALD have been the biggest drivers here, especially after COVID-19. And I also know this year at EASL, there was a lot of presentations looking at different steroid and antibiotic regimens as well.

So, I just wanted to get your thoughts. I know you’ve talked about this a lot in the past.

But, just how does it reinforce the level of unmet need for you when hearing about studies like this and other ways that physicians are looking to treat their patients right now?.

Yes. I think that’s another question for Norman..

Yes. It’s very good. And I see I’ll have to make sure I always stay up to date on my journals, in case you ask the question. Yes.

So, what we are -- what we’ve seen is -- and in fact, the data for 2020, I think we just published is the annual UNOS and SRTR report shows a continued decline in hepatitis C and a continued increase in the undefined, which is mostly NASH and non-alcoholic fatty liver disease, sort of neck and neck with alcohol.

Alcohol includes both, chronic alcohol with cirrhosis and acute AH. And if you survey across the country, transplant centers, there’s quite a wide range of responses from people saying, we will transplant people who have only very recently stopped drinking to some people having fairly stringent criteria about when to admit, that is still shaking out.

So, there’s quite a lot of variation across the country and also in our sites. Some of our sites are saying we won’t translate anyone with AH, if they haven’t seen abstinence for some period of time, and others are saying we’ll transplant them and then try to deal with on the back end.

There was a very nice publication by Brian Lee on the outcomes and on post-transplant drinking, serious drinking turned out to be about a 10% or 11%. But the one in three years survival were comparable to any other indication for transplant..

Thank you. And then, the last question I have is, I know that AH is the main priority for the Company. But, now that it’s been a few months since the detailed MLA has been published and you’ve been at some conferences, including one that’s particularly related to epigenetic therapies.

Curious if any experts that you’ve engaged with or others have highlighted other potentials that they see for either DUR-928 or this concept in general? Thanks, again..

Sure. No, there’s definitely a lot of interest in this. When I think about -- it’s interesting to having had an opportunity to participate in that epigenetics conference.

The vast majority, almost all of the effort in the utilization of the epigenome in medicine today is in the realm of trying to find a way to disrupt the epigenome cancer cells, which is a wonderful thing. And they’ve gotten some really good results in helping patients, especially with these horrible diseases like AML and others.

But the other side of that coin is to try and amend and help the cells by virtue of supporting the epigenome, which becomes dysregulated in disease, and we have that opportunity with DUR-928. It’s an extremely complex place to be and that there are there are literally millions of sites of methylation.

We’re so fortunate that we have a naturally occurring molecule and we understand how well it works. And we understand the thousand genes [ph] that it turns on and turns off.

And so, that gives us an insight that is way ahead of anywhere else and to try and to produce that de novo would be -- it may take, many careers to bear many lifetimes to be able to do that. And at this point with our capacity from ability to deal with data.

So, we’re really fortunate that we have that kind of insight and that has opened the door for a number of potential diseases. Sorry about the long winded introduction. At the end of the day, we are talking to people we have a number of indications we’re evaluating.

It was really nice to see the additional NASH data we published on the insulin improvement and insulin resistance, as well as the improvement in those markers of fibrosis that certainly shows the 928 great potential I believe in NASH. But then there are a number of other key indications and some product indications that we’re also pursuing.

So, the company is going through an evaluation process to select our next 928 efforts beyond what we’re doing in AH and NASH to put into the clinic. And so, we’re very fortunate to have the opportunity that we have in front of us..

Our next question comes from the line of Francois Brisebois with Oppenheimer..

I was just wondering, on the -- I know, not much is to be shared on potential partnerships.

But are we still thinking that a partnership came around for POSIMIR that it would be ready -- that the partner would be ready to launch by the end of this year, whether or not he launches by then? And in terms of potential label expansions above and beyond what is currently on the label? Any thoughts about, would a partnership want to see that expansion prior to a partnership, or is this something they would be willing to do? Any color you can give on, if the label maybe had hernia in it, or a label expansions -- just the size of the market with the current label right now would be very helpful.

Thank you..

Mike, do you want to address that?.

Sure. Yes, I think, the first question about will partner still be able to launch by the end of the year, we think that’s still possible. Part of the challenge is commercial manufacturing has been a little bit delayed. So, the timing of getting commercial supplies maybe is going to be a little tight to get something out by the end of the year.

And also sort of up to the partner, whether they would want to launch something late in the year or wait till the start of the next year. So, could happen either way. And then, the second part of your question about label expansion.

I think certainly, all the partners we’re talking to recognize that the massive potential of getting labeled expansion was a means to grow the opportunity. And so I think, once we put a partnership in place, it is likely that the partner will take the lead on working towards that label expansion..

Okay, great. And you mentioned Fast Track designation for alcoholic hepatitis.

Any potential for -- what would it take to potentially see breakthrough therapy designation and any potential on timing there, is this something that we wouldn’t expect ahead of data?.

Yes. I think what you need for breakthroughs, you need control data. And so, you will need data from AHFIRM to be able to do that. If AHFIRM is statistically significant, then that will bring breakthrough with it, because we’ll have this acute unmet need. The certain of the patients die 90 days, no treatment out there that is effective today.

And if we have those kinds of data, then I think there’s a very good chance we will get breakthrough..

Our next question comes from the line of Ed Arce from H.C. Wainwright..

Good afternoon, everyone. This is Thomas Yip asking questions for Ed. Congratulations on all the progress made so far in 2021. So first, good to hear clinical sites for AHFIRM run up in the U.S. And as you mentioned, we’ll just have to wait till the delta variant cools down a little bit, for more details.

But so far, what geographical areas would you say are stronger than the others? And also, can you remind us what your target patient number per site is?.

We don’t have a target patient number per site. There may be at some point if certain sites enroll at dramatically high rates, we may put a cap on them. But we don’t have a minimum number, though. As with any clinical trial, there are always sites that perform better than others.

As far as geographic distribution, I think Norman could speak much better to that across the U.S. Norman is there….

We have very specifically tried to cover all the areas partly because they are big -- most of the centers are transplant centers, and so that’s where the highest density of alcohol-associated hepatitis is found, and also the most experienced investigators. And so, we have tried to cover most of -- I would say that tried to cover the whole country.

It just happens curiously that our highest enrolling sites are in the Midwest and the East Coast. And some of the West Coast sites have taken a little longer to come up. I don’t expect that to last. But, we’ve chosen sites with a specific goal of having a diverse population.

And by geography, certain sites see certain kind -- certain racial groups more commonly than others. And so, we’re hoping that the trial will end up being very well-balanced both geographically and by race and ethnicity..

Makes sense. Thanks for the details for the U.S. sites. Perhaps for ex-U.S.

sites, in the AHFIRM that are opening later this year, what are some steps before they can fully open and are we targeting kind of the same diverse patient demographic for these sites as well?.

So, the sites are going to be UK, the EU, and Australia. So, Australia has, I would say, a relatively homogeneous population, but we are going all the way across the country because they’re big sites on the east and the west side of Australia, mostly along the southern edge.

In UK, we have about five sites, I think we’ll expect to see a fairly uniform group there. And then Europe tends to be more uniform than the U.S., but we have targeted, I think it is four countries. And then, the question -- the answer to your question is, all of these have national committees that require approval.

So, we are working through those at the moment. And I think we’re making pretty good progress on getting the necessary approvals. So, that includes both, the regulatory -- the competent authorities and the review -- the ethics committees..

Got it and understood, look forward to that. Perhaps one final question regarding POSIMIR. Is there an internal date that you have so far that will make it possible to launch POSIMIR in the U.S.

with a third-party sales organization?.

Well as Mike was saying, the manufacturing is going on kind of independent of the negotiations. But I don’t -- there’s going to definitely be a date by which it doesn’t make sense.

But, I don’t know, Mike, what your thoughts are there?.

Yes. We don’t have a drop dead date. But part of it depends on the partner, right? Different strategies and capabilities in place with existing sales forces and such. So, we don’t have a drop dead date for getting it this year.

But thankfully, the most important thing is getting it with the right partner and in combination with the right strategy to expand the label. So, that’s more important than arbitrary deadline at the end of the year. But obviously, we’re hoping to do it sooner than later.

But getting the right partner and the right strategies in place is the most important piece..

I think that’s -- I just want to emphasize what Mike said. I think getting the expanded labels is really crucial to increasing the opportunity..

Right. Yes, that makes a lot of sense. Okay. Well, look forward to the progress for the second half this year. Thanks again for taking our questions..

Sure..

That concludes our question-and-answer session. I’d like to hand the call back over to Mr. Jim Brown for closing remarks..

With that, we want to thank you for your time today. And as always, we’re available. So, please reach out if you have any further questions. Thank you so much and take care..

Ladies and gentlemen, this does conclude today’s teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day..