Richard Pye - Investor Relations Glyn Edwards - Chief Executive Officer David Roblin - Chief Operating Officer and President of Research & Developments Erik Ostrowski - Chief Financial Officer.

Arlinda Lee - Canaccord Genuity Tim Chiang - BTIG Debjit Chattopadhyay - H.C. Wainwright Samir Devarni - RX Securities John Gillings - JMP Securities Julie Simmonds - Panmure Gordon.

Good day. And welcome to the Summit Therapeutics' Conference Call on the Financial Results for the Fourth Quarter and Fiscal Year-ended, 31 January 2018 and Operational Progress. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Richard Pye, Senior Director of Corporate Affairs and Communications.

Please go ahead, sir..

Thank you and welcome to everyone joining us on the call to discuss our financial results for the fourth quarter and half year ended January 31, 2018 and our operational progress. Earlier today, we issued a press release summarizing these results. If you have not had a chance to review, they are available on our website at www.summitplc.com.

Our Chief Executive Officer, Glyn Edwards; our Chief Operating Officer and President of Research & Developments, Dr. David Roblin and our Chief Financial Officer, Erik Ostrowski will provide today's prepared remarks, which will then be followed by a question-and-answer session. We will be using slides to guide part of today's discussion.

These slides are available on our webcast and available for download from our website within the Events & Presentation section in the Investors part of our website.

Before we begin our discussion, I would like to remind listeners that we will be making forward-looking statements during [Technical Difficulty] risks and uncertainties associated with an investment in Summit Therapeutics.

While we may elect to update these forward-looking statements at some points in the future, we specifically disclaim any obligation to do so, even if our views change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to today.

I’d now like to turn the call over to Glyn for an overview of our year and more recent corporate activities.

Glyn?.

Great. Thanks, Richard and thank you all for joining us today as we review a very successful year in the developments of our treatment for Duchenne muscular dystrophy or DMD and infectious diseases. We will spend the majority of the core reviewing, our positive 24-week interim data from the PhaseOut DMD clinical trial.

Our expectations for the Q3 data readout from that trial and the regulatory options. But before I do, I’d like to review the progress made in our antibiotic programs. The world that seen a lack of innovation in the treatment of bacterial infections. Few new mechanism antibiotics have been launched in the past 20 years.

And as a result, these infections are becoming increasingly difficult to treat. Most new antibiotics in development are just iterations of existing classes of drugs and target niche populations, which hinders their commercial opportunities. We see an urgent need for innovation in antibiotics as a major opportunity for us.

Our strategy here is quite simple, we intend to develop new mechanism antibiotics, but show advantages over current standards of care and can create compelling value for patients, payers and healthcare providers. Our lead example of this strategy is our precision antibiotic ridinilazole.

Ridinilazole is in development for the front-line treatment of C. diff infections or CDI. In Phase 2 clinical trials ridinilazole provided evidence with stability to treat the initial infection and reduce recurrent disease, which is the key clinical issue in CDI. This past year, we were awarded a substantial contract from BARDA worth up to $62 million.

And we believe this is a testament to ridinilazole's strong clinical and preclinical data and it promises a potential new treatment option in CDI. The contract will be used to funding part our two Phase 3 clinical trials. We’ve designed the Phase 3 clinical trials to help position ridinilazole as the new standard of care in CDI.

The primary endpoint is testing for superiority over Vancomycin, the current standard of care, which we believe will help drive first and second line use if approved. If we meet this primary endpoint, we believe the data could support a label that includes both treatments and prevention of recurrent CDI.

In addition, we’ll be collecting health economic outcomes measures, which is important for the commercial launch of ridinilazole. There has been a delay in CMC activities, manufacturing activities there is related to producing clinical drug supply for the Phase 3 trials.

And as a result, the Phase 3 trials are now expected to initiate in the first quarter of 2019. With the [indiscernible] we can to minimize the impact of this delay to the overall development timeline.

Leveraging our expertise and success with ridinilazole thus far, we acquired the bacterial genetics-based platform last December in connection with our acquisition of Discuva Limited. This platform facilitates the discovery and developments of new mechanism antibiotics that are optimize against resistance development.

We believe this platform has the ability to transform our antibiotic development efforts and positions us as a leader in the space. And recently, we announce the first program stemming from this platform and its targeting gonorrhea.

There is a pressing need for novel antibiotics against gonorrhea due to increasing antibiotic resistance and lack of new treatments. Gonorrhea is showing disturbing patterns of resistance developing for the current standard of care and with treatment options proving increasingly ineffective, we’re nearing an era of untreatable disease.

The platform has identified a series of innovative compounds with a novel target. And in early testing the compounds have shown high potency against strains of gonorrhea and because it’s a new target, the compounds are potent against gonorrhea strains that are resistance to current treatment.

We expect to nominate to candidate for IND enabling studies in the second half of this year. Our goal to go from novel mechanism candidates to new standards of care is not unique to our antibiotic programs. In DMD, we are pioneering the approach of utrophin modulation stop disease progression in all patients with DMD.

DMD is a progressive universally fatal muscle wasting disorder caused by the absence of dystrophin. Utrophin structurally and functionally similar to dystrophin and its present naturally in developing and repairing muscle fibers and switched off.

By maintaining production of utrophin to substitute – our compounds aim to address the underlying cause of DMD. And we recently reported very exciting positive interim data from the Phase 2 clinical trial of dystrophin [ph] on the utrophin modulator.

We believe this compound has the potential to become a first in class oral therapy that can slow or stabilize disease progression for all patients with DMD. We’ll now refer to the slides that are available on the webcast and for download on our website and I’ll hand it over to David Roblin to take us through to some findings.

David?.

Okay, thanks Glenn and can we just start with slide 3. As a reminder, DMD is an open label and Phase 2 proof of concept trial that is 48 weeks in men's. In a total of 40 patients with DMD, who are up between the ages of five and 10.

The trial is taking place in both the US and UK and evaluating a number of endpoints related to muscle health and function. As DMD is a slowly progressing disease, we are most focused now on the endpoints related to muscle health and function.

As DMD is a slowly progressing disease, we are most focused now on the impact of Ezutromid on this muscle health in this trial. The 24-week interim data were reported in January and February of this year. Topline data from the full trial is expected in the third quarter of this year.

After patients have completed the full trial in 48 weeks of treatment, they have the option to continue to receive Ezutromid in an extension phase of the trial. This will enable us to gather important long-term safety and efficacy data.

Now on to slide 4, we are thrilled with where we are with Ezutromid, the 24-week interim data were very promising and we are very much looking forward to the topline results from the full trial.

With encouraging 24-week data, we are advancing our proprietary activities for a placebo-controlled trial of Ezutromid as well as a potential regulatory filing that will be based on the full trial results. This will ensure we can move Ezutromid forward as quickly as possible once the full trial results are in hand.

Our excitement around the 24-week interim data lies in three key points outlined on slide 5. We believe we have shown stabilization of muscle membranes by maintaining the production of utrophin. This has led to a significant and meaningful decrease in muscle damage. This in turn has led to a significant decrease in muscle inflammation.

All of this occurred after only 24 weeks of treatment. I’ll now go through each one of these points in further detail starting on slide 6. Recall that both dystrophin and utrophin act to stabilize muscle membranes. Each of these proteins takes on a roll at different times in muscle development.

Normally, utrophin is made as a muscle fiber is developing or repairing and switches off as dystrophin is switched on to take utrophin's place in a material muscle fiber. Since patients with DMD are not able to switch on dystrophin, their muscle membranes become stable as soon as utrophin actually switches off.

Thus, begins the constantly generative cycle of muscle damage and repair seen in dystrophic muscle. The aim of Ezutromid is to keep production of utrophin to stabilize muscle membrane and to break the cycle of damage and repair.

So, is the Ezutromid induced utrophin stabilizing the muscle membranes enough to break this damage and repair cycle? Yes, we believe it is and we have three lines of evidence to support this. First, we observe a significant and meaningful decrease in muscle damage as shown on slide 6.

Muscle damage and repair can be tracked by the presence of developmental myosin. Like utrophin, development in myosin is normally present during muscle development and repair but like utrophin is switched off as the muscle fiber materials [ph]. In DMD, developmental myosin is found in recently damaged muscle fiber that are in the repair process.

However, if utrophin is being produced, by the action of Ezutromid and stabilizing muscle membranes, one would expect to see a decrease in the developmental myosin levels. We indeed saw this at 24 weeks compared to baseline. On the left hand of the slide is a sample baseline and a 24-week biopsy from the same patient.

You can visualize significant reduction in the amount of developmental myosin stained in blue after treatment. In total, there’s an average 23% relative reduction in developmental myosin. This finding reached statistical significance. Further, this decrease we believe is clinically meaningful.

In validation studies the amount of developmental myosin correlated with disease severity [ph]. So, we believe this is evidence that Ezutromid is reducing severity in patients with DMD. Now let’s turn to slide 7. In the absence a Utrophin modulator, both Utrophin and developmental myosin are expressed during muscle fiber repair.

It is more damage leading to more repair, Utrophin levels go up and developmental myosin levels go up. If it is less damaged leading to less repair then Utrophin levels would be expected to go down and developmental myosin levels would go down. If we look at the 24-week biopsy data on Utrophin we see something very different.

There is evidence of reduced damage and repair measured by the significant reduction in developmental myosin but the levels of Utrophin do not go down in lock step [ph]. After 24 weeks of Ezutromid treatment we showed a 7% increase in mean Utrophin intensity. Evidence that Utrophin expression is being kept switched on by Ezutromid.

This is on the back of already high levels of Utrophin. The third key observation of Ezutromid activity was a significant decrease in muscle inflammation as shown on slide 8. Muscle inflammation is a downstream effect of muscle damage and can be measured with magnetic resonance spectroscopy T2 or MRS-T2.

As you may recall, patients in PhaseOut DMD needed to be on stable doses of steroids in order to enter this trial. Again, the implication here is that Ezutromid induced Utrophin is having its intended effect of stabilizing muscle membranes, there should be a decrease in muscle inflammation.

We in fact saw a decrease in two different muscles, the soleus or calf and the vastus lateralis, one of the five muscles. The decrease in T2 in the soleus was statistically significant. This is further evidence that Ezutromid is reducing the disease severity and having a positive effect on muscle health in patients with DMD.

So, can we turn to slide 9 please. As I’ve mentioned, DMD is a disease caused by the lack of dystrophin that leaves material muscle fibers prone to failure. The muscle fibers are then caught in a relentless cycle of muscle damage and repair after many rounds of damage and repair the muscles are slowly replaced with fat and fibrosis.

This then eventually leads to a loss of muscle function. So, we have incorporated clinical endpoints in PhaseOut DMD that can track the impact of Ezutromid not only over the 48-week clinical trial but also over the extension phase. We have already shown an impact on muscle membrane stability as measured by the maintenance of Utrophin.

On muscle damage and repair as shown by significant and meaningful decrease in developmental Myosin and on muscle inflammation as shown by significant decrease in MRS-T2. We believe these changes will eventually lead to the slowing of stabilization of fat increase and clinical functional decline.

We look forward to continuing to follow the patients in PhaseOut DMD and for future trials defined as Ezutromid’s longer term disease impact. We believe that this early impact on muscle health really does set us up for success in this trial outlined on slide 10.

Recall the primary endpoint over the full 48 weeks of treatment is changes in magnetic resonance parameters. Therefore, we will meet the primary endpoint if we sustain a decrease in muscle inflammation from baseline or by slowing the increase in fat accumulation.

These measures have been taken every 12-weeks in the trial and provide us with the picture of the impact of Ezutromid overtime. In the muscle body [Technical Difficulty] we expect to sustain the decrease in muscle damage as shown by the developmental Myosin and maintain Utrophin expression.

We do believe that it's likely too early in DMD disease progression to affect the signal in any of the exploratory functional measures after 48 weeks of treatment. So, overall, we are very optimistic and looking forward to the results of the full PhaseOut DMD trial. With that, I'll hand back to Glyn. .

Thanks a lot, David. Shift the top-line data in the third quarter be positive. We believe that there are two potential regulatory pathway options to advance Utrophin and these are outlined on slide 11. One of those options is to pursue an accelerated regulatory approval in the U.S. based on the full data from PhaseOut DMD.

This would allow us to access the market while conducting a confirmatory clinical trial that would lead to a full approval. Another option is to run a pivotal clinical trial that could lead to a full regulatory approval and access to the market. And we are actively preparing for both of these options while we await the top-line trial results.

In summary on slide 12, we believe the interim data provide evidence of Utrophin modulation, reduced muscle damage and reduced muscle inflammation with significant decreases in muscle fiber damage and inflammation observed, we believe that these data are very promising.

And we're excited about the top-line data from the full trial, where we expect to see continued evidence of Ezutromid activity. But finally, we're conducting activities to help ensure that we have the clinical and regulatory flexibility to rapidly advance Ezutromid for the patients in need.

And with that, I'll turn the call over to Erik, with a review of the financials that WERE announced today.

Erik?.

Thank you, Glyn. I'll now provide an overview of key components of our financial results for the fiscal year-ended January 31, 2018. We will of course provide detailed results in our regulatory filings and I encourage you all to review those accordingly.

We present Summit's results in accordance with International Financial Reporting Standards in pound sterling, but for convenience purposes, I'll give US dollar equivalence for certain key numbers. I'll begin with the income statement highlighting some of the key items.

Revenues for the year-ended January 31, 2018 were £25.4 million or $36.1 million, as compared to £2.3 million during the year-ended January 31, 2017.

This increase was driven by the receipt of the $22 million milestone payment received from our strategic partners Sarepta Therapeutics upon the first dosing of the last patient in our PhaseOut DMD clinical trial.

Revenues in the current year also reflects the recognition of £6.9 million related to the $40 million upfront payment we've received when we entered into the collaboration with Sarepta. Research and development expenses were £29 million or $41.1 million for the year-ended January 31, 2018, up from £19 million during the previous year.

This increase reflects the continued advancement of both our DMD and CDI clinical trial activities as well as the continued expansion and strengthening of our clinical development team.

With respect to our DMD activities, we continue to progress our Phase 2 clinical trial PhaseOut DMD as well as research activities associated with our future generation Utrophin modulator program.

Turning to our CDI program, we continued to conduct preparatory activities related to our two planned Phase 3 clinical trials of ridinilazole, which we plan to commence in the first quarter of 2019. General and administration expenses increased to £12 million or $17 million for the year-ended January 31, 2018, from £8.3 million for the previous year.

This increase was driven by increased staffing costs, a non-cash net negative movement and exchange rate variance and an increase in overhead and facility related costs. And finally, net loss for the year decreased to £7.1 million or $10.1 million, compared to a net loss of £21.4 million for the previous year.

The lower net loss this year was driven by the previously discussed increase in revenues, which was partially offset by increased overall operating expenses. We completed our financial year on January 31, 2018 with cash and cash equivalents of £20.1 million or $28.5 million, compared to £28.1 million at January 31, 2017.

As a reminder, the January 31, 2018 cash balance reflects the payment of $5 million related to the cash purchase price component of our acquisition of Discuva Limited, which was completed in December 2017.

Post our fiscal year-end in March 2018, we completed an equity financing that rates £15 million or about $21 million in gross proceeds or approximately £14.1 million or about $20 million in net proceeds after deducting estimated operating expenses.

So, on a pro forma basis, our end of the year cash balance has adjusted to reflect the need proceeds from the March 2018 financing was approximately £34 million or about $48 million. As a reminder, we have a number of funding arrangements in place to support our ongoing program development activities.

As Glyn mentioned earlier [indiscernible] contributing towards our new result program activities and under our partnership agreement with Sarepta Therapeutics, Sarepta is contributing towards our global DMD research and development activities.

In terms of our cash guidance, we believe that the net proceeds from the March 2018 equity financing along with our existing cash and cash equivalents and funding arrangements will be sufficient to fund our operating expenses and capital expenditure requirements through at least April 30, 2019.

I’ll now turn the call back over to Glyn for closing remarks.

Glyn?.

Thanks a lot Erik. So, over the past year, we have advance to a company with two clinical programs that have had positive data in patients, we have external validation on both the DMD and CDI programs and the strengthened pipeline to secure our futures leaders in DMD and antibiotics.

I’d like to thank our team, who have been instrumental in the key advances over this year. But most importantly, I’d like to thank the patients, the families and the trial sites who have been involved in our clinical trials.

We’re looking forward to another exciting year and particularly as you can guess to the top-line results from our PhaseOut DMD which we report in the third quarter of this year. And with that, we’ll open the line for any questions. .

Thank you. [Operator Instructions]. Our first question today comes from Arlinda Lee of Canaccord Genuity..

I guess, I was curious about the data readout in the 3Q. What would you consider our positive readout and how are your regulatory discussions going and when might we hear more about your registrational plan? Thank you..

As usual, the first part is an easy one and the second is what the cricketers here call a googly, so I’ll answer them accordingly. So, the data we have seen so far is really very exciting.

We’re seeing stabilization in membrane, we have seen a reduction in the cycle of muscle damage exemplified by the decrease in Developmental Myosin and we have seen this T2 measure. So, if we maintain this level of improvements at 48 weeks as we saw at 24 weeks and that will be a huge success.

And that will be certainly enough for us to maintain our excitement and enthusiasm to go forward. As always, so potential we can see other things. But in terms of success that’s in totally brutal terms that we need to meet the primary endpoint.

So, of those, I think the most important from a regulatory point of view are the magnetic resonance related endpoints. But we just have to maintain what we have seen in 24 weeks to be able to meet that, at 48 weeks. But from a scientific point of view and from a data completeness and overall proof that the drug is working.

We would also like to see the same things that we see in the improvements in the muscle repair measures and the maintenance of Utrophin under those circumstances. So, we got sort of three parts to it, the inflammation, the repair and the utrophin. So that’s what we are hoping to see at 48 weeks and you can see why we’re so excited.

Having seen in 24 weeks, you know we think the chances of seeing this in 48 weeks are pretty good. Now, we continue -- on your second question about when we will know and have clarity on regulatory path forward, and what are our regulatory interactions being to date.

That’s a really big question and we will now know for sure until we’ve got the 48-week data and we’ve decided what to do and see how that relates to our regulatory interactions so far.

But we continue to have dialogue with the regulators on many factoring on validation of the assay techniques and the various endpoints that we’ve used in this study but we won’t have clarity on the passport until after we got this data and have some further discussions with the regulators.

So, it will be after we’ve got the data before any clarity emerges. In the meantime, we are preparing for all options and a substantial part of the funds that we just raised are going to accelerating our regulatory preparedness, so that we, the early filing in both Europe and the US is a viable option for us. .

Great. Thank you very much.

May be just a follow up, so then do you think you’ll be able to start your pivotal trial this year?.

That’s a good additional question as well. So, the thing that’s very helpful to us is that the trial which on the earlier slide we called the confirmatory trial and the pivotal trial are virtually identical. So actually, the trial that we need to run and the eye the regulatory pathway is virtually the same.

So that makes things easy because you know we can start preparing for that trial no matter what its name is. And so, we are preparing for that, I have been discussed the protocol, we’ve had parent groups coming in and looking at endpoints with us.

We’ve had groups of experts around and so we’re developing a relatively clear path for that and we will be aiming to get that start not later this year but early next year is our target to get that going.

But the good thing is effectively it's the same study which ever path we go down and so the preparation for that trial is independent of what our regulatory decision is..

We will now take a question from Tim Chiang of BTIG. .

Hi Glen. I had a couple of questions. Thanks for taking my questions. You know my first one is how much time do you think you’d say under the accelerated pathway which is the traditional pathway and I know that you sort of outlined two potential scenarios to reach the market with Ezutromid.

Could you quantify that in terms of time?.

Yes, so that’s an interesting question. So, I think that really boils down to how long would the pivotal trial take if you file on the basis of accelerated approval and you get awarded that accelerated approval that's a decision by the FDA for the sake of augment is the same length of time as then looking at a full approval based on the full trials.

So, the difference in time to market is really the length of time it takes to carry out and evaluate the data from that study. And then we’ve not nailed it down completely but our current thoughts are that this would be about an 18 months treatment period rather than 48 weeks that we’ve got there.

So, a 50% longer than the last current phase out trial and you’ll obviously have to have a large number of patients and be a randomized control study. If we chose six-minute walk test, then you can see what PTC and [indiscernible] and others have done and that’s about 250 patient study.

That some thought that if you use North Star and ambulatory [ph] assessment because of the lower variation in the natural history of that you could do a similarly pilot trial on the endpoint with probably 150, 160 patients.

So, we are talking both in terms of recruitment period, the follow-up, but that is likely to be a two and a half, may be three years. So, I think the broad approximation you could be on market two and a half years quicker if with the accelerated approval than with the full approval.

That doesn’t take into account what happens if you have Sarepta like experience of a two year discussion with the FDA on your accelerated plans and that just highlights why it’s really important for us no matter which pathway we choose to go down that we start this study as soon as we can so that we got the greatest certainty of getting what looks like a very effective drug to patients as soon as we can..

Okay. That’s helpful, Glyn. I had a follow-up and this is sort of tied to your collaboration with Sarepta. Do you have any other developmental milestone payments associated with Ezutromid i.e.

let’s say you show a successful outcome at 48 weeks, do you get any additional potential cash from Sarepta on that data point?.

So, there are further milestones to come and in particular there’s one more what I would call development stage milestone. When we did the deal with them, we were envisaging a more traditional regulatory path and so while we have not disclosed when that payment would be, it would be part of a more traditional path of a pivotal study and so on.

And as is very common in these licensing agreements, if a pathway has accelerated so that you miss a stage out and you get to market more quickly than that accelerates the payments of these things.

So yes, actually not only do you get if we have strong enough data and the agencies agree we have strong enough data to take this accelerated path, that also accelerates the payment. I think that’s a really minor part of the value proposition compared with the value we would get by getting to market more quickly.

I think it is -- depends on our data but if we can get to market on the basis of an accelerated path in the US or the conditional approval in Europe then that has the -- to be of great value to us and more importantly allow the drug to be made available to the widest number of patients in the earliest possible timeframe. .

We will now take question from Debjit Chattopadhyay from H.C. Wainwright..

Hey. Good morning, guys. Can you hear me? Great.

So, in terms of the CMC issues with your codify program, any read through into Ezutromid or those two are totally independent and there are no learnings to be gained from the first one?.

There’s always learnings to be had from every experience. But in terms of the detail of the technological reasons there is not a read through.

But both of these drugs are at a relatively straight forward APIs of the basic drug component is relatively straight forward and then both of them have formulation issues in one case of [indiscernible] we’re making a tablet.

And in the case of Ezutromid we then go through a step to come up with the appropriate particle size probably with spray drying. So, there’s no technological read through.

There is however the organizational read through in making sure that you’ve got appropriate skills in place and employee capacity to be able to manage the processes and that’s something that we are strengthening as we go forward and those actually David may say a few words, he has reminded me that CMC issues are the cores of the quite a number of CRLs.

So, a number of products are delayed getting to market because manufacturing isn't sorted out. So, it is something we're putting a lot of effort in to sorting up before we get into these Phase 3.

So, the short answer is, there is no technical read through, but it does illustrate, we need to be stronger in our manufacturing expertise in the company as we grow the headcounts and as we get closer to market with both of these products. .

Okay. Just from an organizational perspective as you say 2019 is shaping up to be kind of a big year for you guys with multiple say pivotal programs underway.

How much does your headcount increase by? And despite your recent capital raise, where does the balance sheet get you into from now on?.

Yeah, I'll take the second part of that. And then I'm turn it over. But, yeah, in terms of the cash that we have currently, which includes the capital raise that you mentioned Debjit, our guidance is that we can fund the company through at least April 30, 2019. So, through our fiscal first quarter of 2019.

I'll let David take the other piece, which is around headcount..

Yeah, we've done well to get where we got. And I think somewhat related to premise of the first question Debjit, the scales and capabilities that get you where you are now are now are best probably all that you need to get to, where you need to go to. So, we've been expensed in the companies through this last year. And in fact, the headcount doubled.

So, I think we're in a pretty good position. We benefit well from an experienced CRO base that we've been able to work with. And there will be increased headcount through the next year particularly on the back of positive data, which enables us to go through forwards to an accelerated filing.

Some of those will be in the CMC area, some of them will be in the development operations arena. But it won't be so surprised to probably as the past year. .

Great. And then one last follow up. So, if you play out a scenario where, you have 48-week data. You hit on the biomarker related endpoints but miss on the functional improvements, maybe because the trial is not powered and everything else.

What is the FDA's position, because they seem to be exclusively focused on dystrophin and maybe functional outcomes whereas you are looking at a totally new biomarker and a new alterative way of stabilizing these patients? So where do you and the FDA meet in that scenario for a conditional accelerated approval?.

Yeah, it's Glyn here. If you just walk back before Sarepta, then they weren't focused on dystrophin. So, I think when you come with the new mechanism, then it gives you the opportunity to look at new surrogate endpoints.

So, it's no doubt that both the FDA and EMA the dream is to have somebody coming with a controlled study with statistically significant difference in functional endpoints. So, there is no doubt, there is a strong preference to functional endpoints for full approval.

But both regulators have pathways for accelerated approvals and there is a high unmet need. So, I think there is a path through. And also, just before I hand to David, I also just like to just take issue with your premise, which seems to imply we were going to miss on the functional endpoints. The functional endpoints are not a key part of this study.

This study is designed around these earlier stage things. So, this study was never designed in order to see a benefit in the functional endpoints. If we do see something, it's a huge plus rather than a near miss if we don't.

David?.

Yes. The thing I would add to that, is the FDA have expressed their opinions quite recently actually in the guideline they issued for development of drugs for Duchenne and other Muscle Dystrophies.

And they touch on the importance of surrogate endpoints and the importance of surrogate endpoint is that, it has to be reasonably expected to have an impact on the mobility and mortality of the disease if you treating.

In fact, the Duchenne, they call out two, but Duchenne, first of all, they invite on such to come forward with endpoints, but need that criteria, biomarkers that need the criteria. But they get two example us, one is dystrophin itself and the second actually is magnetic resonance parameters.

And of course, will you get the benefiting in this 40-patient study that the MRS parameters are the primary endpoint.

So, they are open two, looking at MRS, there is a good amount to all publish data are very fact the consortium that we work with imaging DMD have been to the FDA to have discussions about the potential or this endpoint as a biomarker in Duchenne. So, I think we don’t standalone on this, I mean work with others.

And the FDA have expressed an interest in this primary endpoint as a potential biomarker. .

We will now take question from Hartaj Singh of Oppenheimer. Please go ahead. .

This is Emma on for Hartaj.

On ridinilazole, could you just remind us update approximate past of the two Phase 3 studies? And then, are they notably funded with the product contract and [indiscernible] are you still looking to secure some additional funding before initiating in the first quarter of 2019?.

Hi Emma, its Glyn here. No, the cost of the Phase 3 is an excess of $100 million and the BARDA funding is 62 and we expect to receive from our licensing deal we did towards the end of last year during the period up to the end of the Phase 3s, so with $6 million to $7 million. So, on that basis there is still a gap.

But actually, the bottom money does have to be spent on that project. But the rest of funding is tangible between various things. So, the cash guidance that Erik just gave covers keeping the lights on Cambridge and Oxford and those things. So, we will need to do something to address our cash before we finished the Phase 3.

But if you look that the, the BARDA and is a very substantial part of it. And there are many territories, where we could do additional regional licensing deals. So, I think in terms of our cash needs over the next 2 to 3 years.

The CDI project is pretty significant, it’s the DMD program that’s the potential huge value here and also the potential -- has the potential, the larger potential needs for cash..

Our next question comes from Chad Messer with Needham & Company..

This is [indiscernible] from Chad. So, most of the questions have already been asked.

But how do you guys see going forward a combination going on with the Sarepta drug?.

That’s a really exciting interesting question. Actually, this morning much to Richard's annoyance, I spent most of the morning in the labs at Oxford University with [Kay] Davidson and her team. And they’ve been, actually doing some of the real experiment to look at combinations of various different therapies.

And there is some really exiting data going to be published by her team over the coming months in that area. And if you go back to when we announced the deal with Sarepta [at Kay] announcing some of the questions from you guys about why Sarepta did this deal.

He said two things, one is you know they want to have a foot in various different treatment modalities [indiscernible] your drug and modulations are really exciting treatment deals. They saw the potential to use utrophin modulation together with the Exxon skipping technology.

So, I think everyone in the field thinks that until we get the absolute perfect drug that gives a complete rescue that there is huge potential to use combinations of this gene therapy with utrophin modulation or whether its exon-skipping with utrophin modulation or whatever.

So, I think that’s a long-term very exciting goal that we all think is very credible. Just to get back to the near-term reality though, none of those things can happen until we show single agent activity for each of these things and that’s why solid focused on trying to get their gene therapy.

We are focused on trying to get utrophin modulation, Sarepta are looking at a number of different Exon-skipping not just different genotypes but also the next generation exon-skipping.

So, I think it’s a really exciting time in the field but we think utrophin modulation has had great data so far has the potential to be the cornerstone treatment when both as a single agent and the potential to be used on top of any of the other treatments..

Our next question comes from Samir Devarni of RX Securities..

Hello everyone, thanks for taking my questions. I’ve got three, just the announcement today about potentially an accelerated filing, is obviously new news and its obviously very encouraging and I’m just trying to get my head around how that logistically would work.

If you’re planning to run a potentially a confirmatory placebo control study, who would enroll into that study with the drug conditioning available? That’s the first question.

Second question is just on the BARDA money that we are potentially expecting this year just in light of the slight pushback to the seeded program, perhaps you can just confirm you much you expect to receive this year? And my final question is just on the R&D guidance, perhaps you could just give us some indication of how much you expect to spend on R&D this year? Thanks very much.

.

I ‘m happy to take the last two. I think Glen can take the first. So, we’re not giving specific guidance around how much BARDA money we expect to receive this year but I think what can help you is the $62 million grant in a front-end loaded grant as we’ve mentioned before.

So, the first 32 million of that 62 comes towards the beginning part of the Phase 3s. And again, the BARDA expected receipts are factored into that and I guess the last thing I would add on that front is you know we did record BARDA income in Q4 as you see in the MD&A, so we had about £1.1 million there.

In terms of R&D expense guidance, I think a good way to think about that as you look forward and in model out in the next 12 months or so. If you take a look at the Q3 and Q4 overall R&D and kind of use that as a proxy to model out the rest of the year.

Again, taking into account BARDA receipts to offset some of that as well as the Sarepta cost share which we haven’t really talked much about on this call but as you may recall Sarepta is contributing 45% of our global DMD costs and that’s starting in January of this year. So that’s another source worth of cash to offset the expense.

I will hand it back to Glyn for the first part of the question. .

Yes, so its David here. It’s a good question, and its one we’ve definitely thought about. The first thing to say is as Glyn mentioned earlier, the next trial levities under an accelerated MD&A all while progressing through to a normal NDA is the same trial. So, whether you call it confirmatory or pivotal it's the same trial.

And we need to start it early in either eventuality of the approach the FDA with a surrogate biomarker based on the current study it will important that we are ensuring due diligence in executing a confirmatory trial, so we need to get going on it.

The reality is that this trial will recruit fast and it should have recruited and patients beyond dose well and during the regulatory procedure which will probably last a year and in addition to the regulatory procedure of course is the payer discussion that would have to happen before drug was fully available to patients.

So, I think with both of those elements in consideration we will have the next trial recruited well and before Ezutromid is on the market and accessible to patients through their payer relationships..

And can I just ask one follow-up to Erik just in terms of the cost sharing revenue that will come in.

Are you simply going to net that from your R&D or will there be another line of income for that money?.

Yes, that will be a question and so you actually that’s in the financials we’ve just put out that R&D cost share component covered by Sarepta comes into the revenue line item. And so, we record the R&D in full if you will and so that you net out..

We will now take a question from Liisa Bayko of JMP Securities. .

Hi, this is John on for Liisa. Thanks for taking the question. I was just wondering; you guys are going to be looking at 36-week data as well for MRI and functional endpoints. I was wondering if you’re going to be putting an announcement when you take a look at that as well..

It’s David here. The key things here in order to make the current trial as appropriate and thorough for a subsequent regulatory approval, we have blended ourselves within the company to all efficacy data, so we won’t see that 36-week data in fact until we see the final data set.

So, the answer is you should expect to hear more about that when we publish the final results in the third quarter..

Okay.

And then I guess this is data dependent, but can you talk a little about your thoughts on timing of your decision to which path to pursue, do you think that’s going to be at the same time as you release the data or even need to take some times you kind of consult with FDA on their thoughts, how do you see that playing out?.

Yes, I think we will be slightly more conservative for the second part of your -- to your alternatives. The data will come out -- obviously price sensitive as soon as we get the data we are going to make an announcement about it.

The -- but I think the data will speak to us about the likelihood of each regulatory path, it won't be definitive until further time has passed. But I think it will be blinding the obvious from the data. So, I think we are focused on that, we are focused on it.

We won’t make a formal announcement about which regulatory path till much later but my guess is we all look at data and either be crying into our buckets so we’ll be cheering..

We will now take a question from Julie Simmonds, Panmure Gordon. Please go ahead..

Assuming we will hear on the announcement of the data basically, what’s going to be the approach as far as you’re concerned if you use an accelerate approval strategy in the US?.

Yes, so we have a partnership with Sarepta, Sarepta are responsible for European filings so ultimately there will be joint decision but they will be executing on European regulatory plannings.

But there is a similar pathway in Europe to the US called the conditional approval in Europe the requirements are slightly different in the US for an accelerated approval look at surrogate endpoint but with high degree of robustness about those secondary endpoints whereas in Europe the conditional approval more looks at clinical endpoints but without necessarily needing any statistical proof on those.

So, the way they look at the data is slightly different. But broadly speaking, we think that the opportunity for the early filing in Europe and the opportunity of early filing in the U.S. up pretty similar in terms of the data that we get. And obviously our focus will be in the U.S. and Sarepta's focus will be on Europe. .

Excellent. The single trial we are planning on doing will be sufficient for both of those..

Correct. Yes, it would. And yeah, we've actually been discussing that trial design in the joint steering committee with Sarepta as one of the interested parties in that study design. .

There are currently no further questions. .

Great. Well, if there are no further questions, I'd like to first of all thank you all for joining us today. I have to say that this is the most exciting time for the company. We've got these two quite different therapeutic areas, and we seem to be making progress at a phenomenal rate in both of them.

And hugely excited the big milestone coming up versus being focus of the questions is our 48-week data. But the data we've already seen from the 24-week analysis was right at the top-end of our expectation. So, we're hugely excited by this and really very optimistic about what we likely see in the coming months.

So, thank you all for your interest and we look forward to keeping you informed as the data point emerges. Thanks very much indeed. Bye bye. .

This concludes today's call. Thank you for your participation. You may now disconnect..