Stephen Yoder - President, Chief Executive Officer Darlene Deptula-Hicks - Senior Vice President, Chief Financial Officer.

Christopher Marai - Oppenheimer Michael King - JMP Securities David Bautz - Zacks Investment Research John Hollander - Elton Research.

Greetings and welcome to the Pieris Pharmaceuticals 2016 First Quarter conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star, zero on your telephone keypad.

As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Darlene Deptula-Hicks, CFO. Thank you, you may now begin..

Thank you, Rob, and good morning everyone, and thank you for joining us for our first quarter 2016 earnings conference call. With me today is Stephen Yoder, Chief Executive Officer. We announced financial results yesterday, May 11, 2016 after the market closed for the first quarter ended March 31, 2016.

You can access the press release on the Investor Relations page of our website.

Before we begin to review financial results and business highlights, in compliance with the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995, I’d like to caution that comments made during this conference call by management may contain forward-looking statements that involve risks and uncertainties regarding the operations and future results of operations of Pieris, including statements relating to the timing and progress of our clinical and preclinical trials.

Actual results or events may differ materially from results or events discussed in the forward-looking statements. Factors that might cause such differences include those set forth from time to time in the company’s filings with the SEC, including without limitation the company’s Forms 10-K, 10-Q and 8-K.

Furthermore, the content of this conference call contains time sensitive information that is accurate only as of the date of this live broadcast, May 12, 2016. Pieris undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.

With that, I’d like to hand the call over to Stephen Yoder, CEO..

Thank you, Darlene, and good morning to everyone. We appreciate you joining us for our 2016 first quarter earnings call. As most of you are probably aware, Pieris Pharmaceuticals is a clinical stage next generation therapeutic protein company advancing a fully proprietary class of targeted therapeutics we call Anticalins.

Our strategy is to develop Anticalins in ways that are highly differentiated over in particular monoclonal antibody approaches. This includes the inhaled delivery of Anticalin proteins directly to the lung to locally treat respiratory disorders, such as asthma, at the anatomical locus of disease.

This differentiation strategy also includes very unique multi-specific drug formats which we are pursuing in particular in the area of immuno-oncology. Importantly, regardless of our approach, Anticalins carry the benefit of excellent drug-like properties as they are derived from human non-immunogenic natural binding proteins.

As you know, we ended the last quarter of 2015 on a very positive note wherein we announced a major oncology collaboration agreement with Roche.

We received development milestone payments from our collaborators, Daiichi Sankyo and Sanofi, and we nominated a development candidate and initiated IND-enabling activities for PRS-343, a potential first-in-class bi-specific agent targeting both CD137 and HER2.

PRS-343 represents our most advanced proprietary drug candidate in immuno-oncology, and immuno-oncology is a major focal area for Pieris, and we’ll highlight later in this call our recent efforts to position Pieris as a leader in the IO multi-specifics area.

Before diving more deeply into our IO strategy, I’d like to take about our other fully proprietary programs which we continue to advance in the first quarter of this year. These two programs, PRS-080 and PRS-060, are product candidates addressing large market opportunities in anemia and asthma.

We are especially proud of the fact that these candidates were made possible through our proprietary Anticalin drug discovery platform, which is exclusively deployed at Pieris.

PRS-080, as you may remember, is a half-life optimized Anticalin for the treatment of anemia and which functions through the potent inhibition of hepcidin, a protein target generally regarded as the master negative regulator of iron metabolism.

Hepcidin up-regulation in states of chronic inflammation traps iron in our storage cells, which then hinders the body’s ability to create an adequate supply of red blood cells.

This in turn causes what is called functional iron deficient anemia, and notably PRS-080 represents potentially the fastest path to clinical proof of concept for the Anticalin drug class, as we aim to assess the drug candidate’s ability to increase hemoglobin levels, which is an established clinical endpoint in patients with anemia of chronic disease.

As you know, results from our placebo-controlled Phase I clinical trial for PRS-080 in healthy volunteers were presented last December at ASH, the annual meeting of the American Society for Hematology, which showed a favorable safety profile and proof of mechanism, which includes a statistically significant increase in total serum iron mobilization relative to placebo.

Our ongoing single ascending dose trial in patients in Germany on patients undergoing hemodialysis is expected to complete by year-end, which will be followed by a multi-dose trial which we expect will be completed by the middle of 2017 and which will allow us to assess the clinically important endpoint of hemoglobin levels.

Our second proprietary program is PRS-060, an Anticalin which functions by antagonizing the clinically validated target IL4 receptor alpha in the lungs and which offers the very significant advantage of being potentially the first effective inhaled treatment for uncontrolled asthma on this target.

We believe that there are numerous potential advantages for inhaled therapeutics over subcutaneously administered antibody approaches, which includes the potential for a significantly lower dose, low systemic target engagement, lower cost of goods, and increased convenience which leads to a generally broad uptake potential in asthmatic patients.

You may remember in September of last year, positive preclinical data on that program were presented at ERS, the annual European Respiratory Society annual meeting by Professor Gary Anderson, the director of the Lung Health Research Center at the University of Melbourne.

Among the data we have presented, we have shown that PRS-060 exhibits both time dependent and concentration dependent antagonism of the target in a human transgenic inhalation mouse model. We’ve shown very low in silico predictive immunogenicity and we’ve shown the technical feasibility for inhalation as both a wet aerosol and dry powder.

As we mentioned last quarter, we plan to carry out initial clinical studies with a nebulized Anticalin formulation but plan to cross over to a dry powder formulation after demonstrating initial clinical benefit in early patient studies.

This program currently is in IND-enabling studies and we expect to initiate a first-in-man clinical trial in the first half of 2017, next year. I’d now like to turn to our immuno-oncology pipeline and our overall IO strategy.

As I noted earlier, Pieris is very committed to developing differentiated multi-specific protein therapeutics in this exciting area and our lead program, PRS-343, is a bi-valent, bi-specific fusion protein targeting CD137 in an agonistic manner on T-cells as well as the HER2 protein on solid tumor cells.

CD137 is a co-stimulatory immunoreceptor that plays an important role in the activation of T-cells, and despite the obvious appeal of this target, approaches to CD137 agonism with conventional antibodies have been plagued by challenges in establishing a satisfactory therapeutic window in cancer patients because of undesirable systemic T-cell activation, which has led to severe levels of toxicity.

PRS-343 in contrast was designed to promote CD137 based activation of T-cells specifically at the site of HER2 positive tumors, which we believe can drive potent local activation of tumor-specific T-cells, leading to an efficacious drug with a very manageable toxicity profile.

At AACR just last month, we presented publicly the first in vivo proof of concept data for PRS-343 in a preclinical mouse model in which we showed evidence for both tumor localized HER2 dependent T-cell activation and an enhanced therapeutic index compared to conventional CD137 antibody approaches.

We found that PRS-343 led to tumor growth inhibition and a significantly better response in a mouse unigraph model compared to either isotype control or the benchmark CD137antibody.

The data, which do include the phenotyping of both peripheral and intra-tumor lymphocytes support the proposed mode of action of co-stimulatory T-cell activation at the tumor base.

Also, we noted in our prior call that earlier this year, we had a positive pre-IND meeting with FDA aligning with the agency on a toxicology strategy, drug release protocol, and general first-in-human trial design for PRS-343.

We have continued to make great progress with our IND-enabling studies and our objective remains to file an IND for a Phase I study in HER2 positive solid tumor patients in the first half of 2017.

We plan on targeting very high unmet medical need cancers, which include HER2 positive gastrointestinal cancers, muscle invasive bladder cancer, and HER2 positive metastatic breast cancer. The broadly leverageable platform nature of our Anticalin technology is also evidenced in our earlier IO pipeline.

Turning beyond PRS-343, we have PRS-342, which is a bi-specific drug candidate currently in preclinical development and which contains the same CD137 building block as PRS-343; however, in this case its linked genetically via an antibody Fc region to another Anticalin which targets glypican-3, or GPC3, a tumor target highly over-expressed particularly in hepatocellular carcinoma, or liver cancer.

As with PRS-343, we have confirmed tumor-dependent T-cell activation with PRS-342 ex vivo, and this program is currently undergoing further preclinical analysis. During this last quarter, we achieved another major objective, which was to strengthen our ability to develop novel multi-checkpoint therapies.

To this end, we executed a license and transfer agreement with Enumeral Biomedical wherein we licensed specific intellectual property related to Enumeral’s D4 anti-PD1 antibody program for the purpose of developing novel multi-specific fusion proteins that combine checkpoint targeting Anticalins with Enumeral’s anti-PD1 antibodies for applications in oncology.

The D4 antibody family exhibits preclinically a mode of action similar to marketed PD1 targeting antibodies, and our strategy is to develop a multi-specific checkpoint antagonist comprising this PD1 antibody fused to at least one other checkpoint targeting Anticalin.

Under the terms of the agreement with Enumeral, Pieris agreed to pay a $250,000 upfront fee as well as a $750,000 fee due later this month for the maintenance of the license.

Pieris also agreed to pay Enumeral development and commercial milestones upon achievement of specific events, as well as royalties in the low to low-middle single digit range as a percentage of net sales. This agreement also provides optionality beyond PD1.

In particular, upon payment of the aforementioned license maintenance fee, Pieris also receives at no additional cost a 12-month option to license additional Enumeral IP for another yet unspecified antibody program under the same terms and conditions as for the Enumeral D4 family of PD1 antibodies, with an optional license maintenance fee due one year from the original agreement.

Any therapeutic candidates resulting from the exercise of that option would also be subject to the same milestones and royalties pertaining to any fusion protein involving Enumeral D4 PD1 antibody program. Overall, this transaction has three important benefits for Pieris.

First, it provides a clear synergy with our Anticalin platform, enabling us to generate potentially best-in-class Anticalin antibody multi-specifics. Second, it provides an intra pipeline synergy given the strong rationale to combine PD1 blockade with CD137 agonism, which is the mode of action of our lead IO program PRS-343.

Third, it provides an opportunity to build an independent highly competitive and differentiated position around an established core component of the current IO treatment paradigm, mainly PD1 blockade.

We believe that the platform nature of our multi-specifics capabilities as shown through these programs will be a value driver in our pursuit of other strategic partnerships, including in the area of immuno-oncology.

As you know, we have an ongoing IO collaboration with Roche which was announced last December to discover, characterize and optimize Anticalin-based drug candidates against an undisclosed IO target from Roche which is different from any targets we have been pursuing internally, including CD-137.

Roche is responsible for IND-enabling activities, when we get there, and then subsequent development and worldwide marketing of any resulting products for which Pieris is eligible to potentially receive more than $400 million in milestone payments, as well as undisclosed royalties, and the majority of those milestone payments are related to the clinical development of resulting therapeutic candidates rather than sales-based milestones.

Although the collaboration is in its early stages, we are extremely pleased with both the progress we have made so far and the highly collaborative nature of this relationship. With respect to our other partnerships with Sanofi and with Daiichi Sankyo, three programs continue to advance through preclinical and early clinical development.

We will provide you with continued updates on these efforts at an appropriate time later this year. I would like to conclude by reminding everyone that we believe we’re creating a balanced business model with risk management across two important fronts.

First, we’re pursuing a diversified pipeline of predominantly proprietary and partner programs involving leading pharma partners who fully fund these novel programs and from which we stand to receive potential milestone payments now of more than $700 million plus royalties.

Second, we are diversifying within our own fully proprietary pipeline by developing novel therapies targeting various therapeutic areas of major unmet medical need, including IO, respiratory disorders like asthma locally in the lung, targeting moderate to severe asthma, and of course anemia of chronic disease.

This concludes the corporate update, and I would now like to hand back over to Darlene to guide you through our financial results for the first quarter of 2016..

Thank you, Steve, and good morning again everyone. Let me begin by saying that the company’s financial results for the first quarter ended March 31, 2016 were in line with our expectations. We recognized revenue of $1.2 million for the three months ended March 31, 2016 compared with $0.2 million in revenue in the three months ended March 31, 2015.

This $1 million increase in revenue was primarily due to the recognition of $0.8 million of the $6.5 million upfront payment relating to our recent collaboration with Roche, which payment was received and services commenced in January of this year, and $0.4 million of associated research and development service revenue with that agreement.

No upfront payments or R&D service revenue were recognized in the corresponding first quarter of 2015. This $1 million revenue increase was offset slightly by a $0.2 million decrease in grant revenue as compared to the prior year quarter.

Research and development expenses were $3.7 million and $1.5 million for the three months ended March 31, 2016 and 2015 respectively.

The $2.2 million increase in R&D expense this quarter over quarter is primarily due to a $0.7 million increase in preclinical and CMC development costs associated with our PRS-300 series immuno-oncology program, $0.3 million in increased preclinical efforts as we advance PRS-060, our asthma program, towards IND-enabling studies, and $1.4 million increase in other R&D expenses primarily due to an additional $0.6 million in personnel related costs, which includes non-cash stock-based compensation expense of $0.1 million, a 5% or a $300,000 license fee due to TUM, the Technical University of Munich resulting from the Roche upfront payment received in January, and $0.5 million in general lab supplies, consulting and facilities costs.

These costs were offset by a $0.2 million decrease in our PRS-080 anemia program costs as the Phase Ia trial was completed in the third quarter of last year, and the Phase Ib single ascending dose study just commenced in the first quarter of this year.

General and administrative expenses were $2.0 million and $2.4 million for the three months ended March 31, 2016 and 2015, respectively.

This $0.4 million decrease resulted primarily from a reduction of $800,000 in professional fees, which includes legal and consulting costs offset by an increase of $0.3 million in personnel related costs, which also includes non-cash stock-based compensation expense of about $100,000.

Other increases to general and administrative costs include investor relations fees and some travel costs, which together increased approximately $0.1 million quarter over quarter.

The net loss for the first quarter 2016 was $4.2 million or $0.10 per basic and diluted share as compared to a net loss of $3.7 million of $0.13 per basic and diluted share in the first quarter of 2015.

Our average shares outstanding for the first quarter were 39.8 million shares, up from 29.3 million shares at year-end ’15 attributable--I’m sorry, at the quarter 2015, attributable to our July 2015 public offering.

Turning to the balance sheet, total cash and cash equivalents as of the first quarter ended March 31, 2016 totaled $31.2 million as compared to approximately $29.3 million at year-end ’15. In January, we received the $6.5 million upfront payment resulting from the Roche collaboration signed in December.

We believe with the current cash on hand and expected revenues, we have sufficient cash to further the development of our product pipeline and pursue our corporate initiatives into 2017. With that, I will turn the call back over to Steve..

Thanks again, Darlene. We achieved many important milestones last year.

Having generated positive data for our lead programs in anemia and asthma, we established a new large pharma collaboration with Roche while progressing our existing collaborations with Sanofi and Daiichi, and advancing our proprietary immuno-oncology portfolio, including PRS-343 and 342.

The momentum from 2015 has led to a positive first quarter in 2016 with continued pipeline progression across the board. Our key objectives for 2016 are several and include the completion of our first-in-patient trial for PRS-080 in anemia, which is a prerequisite for establishing proof of concept in our targeted anemia patient population.

It also includes continued progress for both PRS-060 in asthma and PRS-343 in HER2 solid tumors, with an anticipated initiation of first-in-man trials for each program in the first half of 2017; continued progress with our immuno-oncology multi-specifics franchise in general, including PRS-342 , working towards developing yet novel therapies with meaningful differentiation over conventional antibody approaches; also includes leveraging our licensing agreement with Enumeral to develop novel PD1-based multi-specific checkpoint blockade offering differentiation over current PD1 antibody approaches, and finally, potentially securing additional partnerships as further validation of our Anticalin drug platform.

Before I conclude, I would like to thank the Pieris team for their creativity and dedication and for their commitment to helping Pieris build sustainable and substantial value for our shareholders over the long term. Thank you for joining us today and for your interest and your support. We would now like to open the call to your question. .

[Operator instructions] Thank you. Our first question is coming from the line of Christopher Marai with Oppenheimer. Please go ahead with your questions..

Hi, good morning. Thanks for taking the questions. Congrats on the quarter.

I was wondering, first just with respect to your collaboration with Enumeral, they’ve been doing a lot of interesting work identifying potentially new approaches to lots of checkpoints in fact beyond PD1, and I’m wondering if your collaboration extended beyond that one target or if you’re just kind of looking for a best-in-class PD1 there.

Then too, maybe if you could comment on the path forward for your IO compounds, such as 343, just given the increasingly competitive landscape, time to clinic and the like, how you’re really looking at sort of triaging the opportunity to have bi-specifics targeting multiple IO targets. Thank you..

Thank you, Chris. I’m happy to answer those questions. With respect to the Enumeral transaction, at the heart of this agreement is our fundamental belief that having an Anticalin antibody-based approach in the PD1 space is something that is very important to have a high value long-term immuno-oncology pipeline.

We believe that that is not only becoming a fundamental point of immuno-oncology approaches, but it also is very synergistic with what we’ve been already been developing, including our lead program, PRS-343.

So what we’re able to do is to piggyback off of the known PD biology that’s out there with the likes of nivolumab and pembrolizumab and add on top of that additional checkpoint blockade, which as you can see through our several antibody Anticalin-based bi-specifics, we’re able to achieve simultaneous target engagement and have the antibody-like pharmacokinetics and the antibody-like manufacturability parameters, all of which are very favorable when you talk about antibody-based bi-specifics.

So fundamentally, this is about having a best-in-class, potentially multiple best-in-class PD-based approaches, and we’ve already built multiple permutations of PD1 antibody Anticalin fusions with undisclosed but existing Anticalins in the checkpoint space.

Beyond that, however, we saw an opportunity to explore on what for us would be very favorable terms having optionality, and so what we have as part of that agreement is the ability to explore over the next year at no additional cost the potential advantages of another Enumeral-based program which is as yet chosen, as yet undisclosed to the public, but which we are currently working through and we will be selecting that program in due course, and then look over the ensuing months to year if that’s something that we think could be synergistic with our existing approach.

That’s the extent of the collaboration. It’s more of a hand-off from Enumeral to Pieris, and then really independent protein engineering work and subsequent development by Pieris or potentially future collaborators with Pieris.

Your second question relates to the line of sight for our lead IO programs, and I’m going to focus on PRS-343 because this is a program where we have the capital, we have the line of sight to the clinic, and we have built the infrastructure to move this forward and we’re very confident in our ability to advance this into patients with these signals.

As you mentioned, this is a crowded space in general, IO. There is always questions of patient recruitment and the complexities of combination therapy, and here I would like to mention two things.

In terms of combination therapy, we’re first moving this forward as a monotherapy, a monotherapy trial, but our data have shown and continue to show that this is not just a bi-specific molecule but likely to be a bi-functional molecule where one can get activity by having HER2 antagonism, but in addition and as always intended, CD137 agonism at the tumor.

So we believe this is a fundamentally unique mode of action and one of high, high attraction, and that segues into the second point, which is important, is that we are attracting the attention of the brightest thought leaders in the immuno-oncology space, and without name dropping today just in the interest of professionalism, I can say we have amassed an amazing clinical advisory board across all of the tumor types that we have mentioned where we’re prioritizing, as well as immuno-oncologist experts, and these are people who have raised their hand not just to advise us but likely to become investigators in the trial.

So that level of excitement, that level of commitment that we’re seeing already at this stage gives us great hope that we’ll be able to recruit the right patients in a timely manner, starting in the first half of next year..

Okay great, and thanks. I think you touched upon perhaps my last question. Obviously with the regrettable passing of Dr. Kohrt, there’s been a bit of a gap, I guess, in your technical expertise perhaps on the bi-specific approaches.

So it sounds like that’s kind of continued on and you’ve attracted new interest and new advisors in that respect, that are of perhaps similar caliber? Thanks. .

Sure, Chris, yes, and just to reiterate, we work with a number of thought leaders across a broad spectrum of immunology and oncology, and as we mentioned during the last call, it was very regrettable with the passing of Dr.

Holbrook Kohrt, but we have a wealth of input both in terms of strategic input and input in the labs and actually working under collaboration.

Just a reminder, all of the in vivo data that we’ve generated to date, all of the in vitro data we generated to date was actually outside of the Stanford collaboration, all of the in vivo data was done with existing relationships that we had besides the Stanford group.

So we believe that while that is a very regrettable development, it in no way compromises our ability to advance PRS-342 or any other pipeline member in our IO pipeline..

Great, thank you. Congrats on the quarter..

Thank you..

Our next question is from the line of Michael King with JMP Securities. Please go ahead with your questions..

Hey guys, thanks for taking the question, and I apologize - my connection has been a little sketchy, so if I get a little blurry, just ask me to repeat the question. But I did want to follow up on Chris’ questions regarding the relationship with Enumeral.

Just wondering if you could talk about, without obviously giving away trade secrets and such, what drew you to collaborate with Enumeral beyond just the relatively low cost of entry? I wonder if you could perhaps talk about robust you feel their technology is, and I have some business questions about that, but maybe just start sort of with the fundamentals on Enumeral and then I’ll follow up.

.

Sure Michael, and thanks for the question. We heard you loud and clear, so no need to repeat.

The way we approach--generally our drug development approach is really not to go out and have first-in-class targets but to leverage known targets in new ways, and we believe PD1 is a perfect example of this, where we know a lot about that and we know particularly a lot about the antagonizing, the simple antagonism of PD1 preventing the interaction of PDL1.

With that approach, we assessed how we wanted to establish a position here, and a PD1-based antibody approach in general allows us to leverage antibody-like pharmacokinetics and antibody-like manufacturability, which I think is an important part of the equation.

If you looked at the different antibodies that were out there, we having tested that particular set of antibodies under NPA, we’ve been comfortable with the biophysical properties and we’ve been comfortable with the in vitro mode of action as positive publicly for that family of molecules.

So while there are maybe different approaches to PD1 out there, we believe one that mimics the mode of action of marketed PD antibodies, that adding on top of that additional multi-checkpoint blockade is a very good strategy of Pieris, and what it requires are well-behaved building blocks, and we believe with our well behaved Anticalins and a well-behaved PD1 antibody, which we believe the Enumeral family of D4 antibodies exhibits, that was a very good approach scientifically, and of course with the economics involved that was also a good opportunity for Pieris to get a very good position, an independent position on attractive economics for Pieris..

Okay, that’s very, very helpful. Thanks Steve. If I just may follow up a little bit, you’re referring to it as a family of antibodies, and I’m just wondering if maybe you can give us more color on that and tell us a little bit about them.

I guess they have unique binding sites or binding properties, or what other things are there about this family of antibodies that makes them unique?.

Right. What we’ve identified or what we’ve in-licensed is what’s called the D4 family of antibody sequences, a certain set of the D4 family which has the ability to antagonize the interaction of PD1 and PDL1 shown in vitro. There are multiple family members that likely have that same mode of action.

The differences come down to biophysical properties, things that might make one more amenable to attach to another Anticalin or a second Anticalin.

So it really comes down to the unique combination at a biophysical property level, is probably the short answer, and what we have is the optionality to work with multiple D4 members for multiple programs, picking and choosing the right building block antibody for the right building block Anticalin, or Anticalins. .

Okay, understood. That’s excellent.

The terms of the agreement are specifically for multi-functional constructs, including Anticalins? In other words, it doesn’t give you the right to use just a naked PD1, or does it?.

That’s right. Our strategy is not to go out with the 15th or 16th PD1 antibody.

Our strategy is to go forward with a novel biologic that adds to the known biology that PD1--the benefits the PD1 antagonism brings, and we believe that the Anticalins that we have in our arsenal are complementary with PD1 blockade in a multi-specific manner, which is in turn very synergistic with the CD137 agonism, which is shown with the PRS-343 mode of action.

So our strategy will be to go forward not with a PD1 antibody but with a PD1 based bi-specific or multi-specific link to one or more [indiscernible]..

Got that, okay. Great.

It sounds to me like you guys are doing the molecular biology, you’re doing the cell lines, you’re doing the scale-up and all that?.

Yes, so consider this a transfer, at least initially, under [indiscernible] protein for us to assess the biophysical properties and activities of those antibodies, but at the heart this is a transfer of sequence data that’s patent protected, and we’re taking those antibody sequences and then we’re devising genetic fusions with one or more Anticalins expressed as a fusion protein.

All of the molecular biology is done at Pieris and all of the subsequent activities have been and will continue to be done by Pieris..

Okay, and these are outside of the agreement with Roche, or is there some ability to work with Roche on some of these constructs?.

Well, I can say every immuno-oncology program that we have ever talked about to date is outside of the collaboration with Roche. Roche brought to us an undisclosed additional IO target, which we haven’t disclosed it, but one we had not been working on.

It’s a defined collaboration around that target, so while we of course have an interest in socializing what we’re doing with existing partners, it is by no means part of the collaboration in any shape or form..

Okay.

Finally on the--let’s say if you were to then subsequently out-license any molecule or molecules to a third party, I assume you would then pay pass-through royalties to Enumeral?.

Yes, that’s right. As we’ve mentioned in our 8-K, among other things in the Enumeral license transaction is a set of royalties on net sales in the low to low-mid single digits on net sales of product, which would be regardless of which entity is commercializing that product, Pieris or a licensee or a sub-licensee..

I see, got it. Okay. Then switching gears real quick, tell us a little bit about glypican-3. What do we need to know about that, that makes it an exciting target? Thank you..

Sure. Well, glypican-3 is a target that we believe has a strong level of validation, particularly in hepatocellular carcinoma.

It’s a target that has been increasingly exploited not just in the antibody space with groups having an enhanced effector function, but also you start to see groups pursuing this in early stages in the area of IO, so for example CAR T. So we think this is a good target that has the right differentiation expression profile.

We also believe that in HCC, there is an immune component [indiscernible] in the tumor bed, and we believe that also dovetails nicely with our approach of localized T-cell activation through CD137 agonism. So we believe it is a novel model of action where current groups are not actively working on it.

We have built multiple versions of our CD137 Anticalin linked to one or more of our GBC-3 targeting Anticalins, and we have in vitro data that show this mode of action that is T-cell dependent activation at the tumor site, and we’re currently working in the in vivo area, have not yet disclosed or talked publicly about any in vivo data or any details around the continued studies.

If you think about hepatocellular carcinoma, it is one of the areas of highest unmet medical need, like in the top three, and it’s screaming for new therapies.

The indicated therapy, sorafenib, has modest benefit, so we believe this is a potentially great area to exploit, potentially on our own or potentially in partnership as we think about future collaborations. .

Thanks so much..

Thank you, Michael..

Thank you. As a reminder, to ask a question, you may press star, one from your telephone keypad. The next question is from the line of David Bautz with Zacks Investment Research. Please go ahead with your questions..

Hi, good morning.

I’m curious if you could talk a little bit about what else needs to be done prior to IND filing for both 060 and 343, and also will we get a chance to see any more preclinical data on one or both of those compounds?.

Yes, so both of these molecules are about--let’s see, we’re in the second quarter of 2016, they’re about a year or so from that first-in-man study. As these are biologics-based drug programs, by working backwards you can probably figure out what needs to be done.

I think the key is that we have a defined infrastructure in place to service all of these requirements, so things like making the formal GNP supply, making the engineering supply beforehand for the tox study, conducting the tox study, having the full finish taken care of.

For the asthma program, PRS-060, there is the additional med tech component, which is the nebulisation of that, but that’s a very manageable add-on step, and then there is the actual filing of the regulatory documents which for PRS-343 will be done at FEA under an IND.

So right in the middle of all the activities that are required, and everything is on schedule. We’ve got great project leadership and external advisors to make sure this thing runs on schedule..

Okay, and when those compounds first enter the clinic, are you going to be able to go straight into patients or will a healthy volunteer study be required first?.

Good question. I just realized, David, I didn’t answer your second question which was, are there going to be additional preclinical data sets disclosed beforehand. The answer is yes, certainly for PRS-343.

As we continue to tease out the mode of action and show the benefits on both the HER2 side and the CD137 side of the molecule, yes, we intend to be disclosing more data across the various conferences from the summer and into the fall conference season, including the IO R&D focused conferences, or IO-focused R&D conferences.

I think the same holds true for PRS-060 as well.

In terms of our first-in-man strategy, well, the strategy for PRS-343 as an oncology program is to go straight into patients as a monotherapy, and it will be an all-comers trial HER2 positive, which will be based essentially on the HercepTest positive HER3 plus, HER2 plus [indiscernible] positive on patient signature.

So that’s, I believe, a pretty straightforward path into patients, and then the expansion cohorts will be driven by data. For the PRS-060 path to patients, we believe the most effective approach right now is to start in health volunteers. That allows us to get a pretty good handle on safety, tolerability and pharmacokinetics in a very rapid fashion.

We do also then beyond that have a clear strategy to get into patients, looking for example at the ipilimumab trial designs that were progressing from the healthys into the initial patient trials. That’s a good road map and one that we’re certainly considering as we think about how we’re going to move from healthy volunteers into patients..

Okay. So when you did the study in 080 in healthy volunteers, you kind of had a clinical readout of sorts with monitoring iron levels in the blood, so I’m curious if there’s something similar to that.

Is there any type of readout you could look at in the healthy volunteers in the 060 trial to see about mechanism of action?.

That’s a good question, and so I think the short answer is, it depends. It depends on the types of healthy volunteers that you enroll, so there are a number of biomarkers that you can assess and get a handle on - you know, PKPD-like markers as a function of target engagement, for example.

Exhaled nitric oxide is a known non-invasive marker of response to therapy in patients, and depending on the type of exhaled nitric oxide signature in healthys, one could think about that type of measurement, so we’re still working on that.

I think that we’re focusing first and foremost on the safety and the tolerability of local intervention here, and pharmacokinetics, but we’re certainly looking at the best balance of speed and getting a handle early on, on the potential efficacy of target engagement in the lung for that patient population..

Okay, great. Appreciate you taking my questions. .

Thanks David..

Our next question is from the line of John Hollander [ph] with Elton [ph] Research. Please go ahead with your questions..

Hi Stephen. I’m wondering on Pieris [indiscernible] anemia trials, if as far as what you view as competition in the field and the emphasis you’re putting on progressing PRS-080 trials in comparison with this newfound immuno-oncology platform. .

Sure. Happy to answer the questions, John. So in terms of the competition, you have out there on target competitors in hepcidin antagonists, or even on the other side, ferroportin. I think it’s safe to say that the competition has thinned out.

We have an aptamer-based technology on the same target from a company called Noxxon Pharmaceuticals that we’ve been watching, and the transition from healthy volunteer data looking at iron mobilization into hemoglobin readouts were not as robust for them as maybe they had hoped, and not sure of the progression of that molecule.

It seems like that program might not be progressing as we might have expected it would.

Now, there are major differences between PRS-080 and this aptamer from this company, including a tenfold higher affinity and a threefold longer half-life, and we believe in our initial clinical trials we saw a much more robust in dose and time-dependent iron mobilization response compared to that program, so we believe that those correlations really have no relationship to what we expect to see moving from our iron mobilization data into our hemoglobin-based readouts.

Beyond the hepcidin approaches, there are the HIFs - the HIF-1-alpha approaches, which are in many cases oral, and that brings a level of convenience that is not with biologics, which would be intravenous infusions.

It’s a different mode of action altogether where those programs operate by creating state of hypoxia, which among other things drives endogenous EPO production, and our drug mode of action of hepcidin antagonism, as far as we can see and as far as we know in the industry, does not drive endogenous EPO production, so they are fundamentally different approaches I like to think of the HIF1 alpha approach as a more blunt intervention, and I think time will tell how those stack up against hepcidin antagonism.

So that’s how we’re looking at the competitive landscape.

The on-target competitors where we believe we are best-in-class based on the features of our drugs, and then the HI-1-alphas which have a different mode of action altogether but which are progressing in late stage or even indicated in other indications, but generally moving in the anemia space.

In terms of the continued progression of this program, we believe that getting a read on the hemoglobin levels is a very important readout for that program as well as achieving clinical proof of concept for the Anticalin drug class.

If one thinks about the next generation therapeutic drug classes that have existed over time, there hasn’t been a lot of companies that have made is this far and who have made it through that clinical proof of concept stage.

We think that will be a really attractive inflection point for the platform as well as for that program, so we’re focused on getting the hemoglobin level readout and then we will be assessing in more detail what we’re going to be doing with that program..

All right, great. Thank you..

You’re welcome..

Thank you. There are no additional questions at this time. I would like to turn the floor back to management for closing remarks..

Sure. So thanks again for your attention today and your continued support of Pieris.

On behalf of the entire team, whom again I want to thank for their tireless efforts, I can say with conviction that we believe the future for Pieris is a bright one as we continue to make diligent progress in bringing differentiated drug candidates closer and closer to patients who really need them.

We look forward to keeping you updated on our progress. Thank you for joining the call, and have a great day..

This concludes today’s conference. Thank you for your participation and you may now disconnect your lines at this time..