Will O'Connor - Stern IR Dr. Joseph Patti - President & CEO Mark Colonnese - EVP & CFO Anna Novotney-Barry - VP, Clinical Development.

Ed Arce - H.C. Wainwright & Company Anita Dushyanth - Zacks Investment Research.

Good day, ladies and gentlemen and thank you for standing by. Welcome to the Aviragen Therapeutics Fourth Quarter and Fiscal Yearend Financial Results Conference Call. At this time all participants are in a listen-only mode. Following the prepared remarks we will have the question-and-answer session and our instructions will follow at that time.

[Operator Instructions] It is now my pleasure to hand the conference over to Will O'Connor of Stern Investor Relations. Please proceed..

Thank you, operator. My name is Will O'Connor of Stern Investor Relations. I would like to welcome you to the Aviragen Therapeutics conference call and webcast to review the Company's fourth quarter and fiscal yearend 2016 earnings results to provide an update on recent pipeline and corporate developments.

Earlier today, we issued a press release which outlines the topics that we plan to discuss today. The release is available at aviragentherapeutics.com. With me today from Aviragen Therapeutics are President & CEO, Dr. Joseph Patti; EVP & CFO, Mark Colonnese; and Vice President of Clinical Development, Anna Novotney-Barry.

Before we begin the call, I would like to remind you that today's discussion will contain forward-looking statements that involve risks and uncertainties. These risks and uncertainties are outlined in today's press release and in the Company's recent filings with the Securities and Exchange Commission, which we urge you to read.

Our actual results may differ materially from what is discussed on today's call. With that, I'll now turn the call over to Aviragen’s CEO, Dr. Joseph Patti..

Thanks, Will and good morning everyone. Throughout the fourth quarter we've made significant progress in all areas of the organization, critical to building a dynamic value creating anti-infective company. We advanced our clinical pipeline of three direct-acting anti-virals.

We've strengthened our management with the addition of Jonas Niaura as Vice President of Corporate Development & Strategy and we've bolstered our balance sheet with the addition of $20 million of non-dilutive funding.

Additionally in July, we executed an exclusive worldwide License and Sponsored Research Agreement with Georgia State University Research Foundation to jointly develop and commercialize RSV replication inhibitors discovered by Professor Richard Plemper and his team in the Institute for Biomedical Sciences at Georgia State University.

This collaboration marks another important milestone at Aviragen as we continue to broaden our portfolio of novel anti-virals focused respiratory infections with significant unmet clinical needs.

Now turning to our anti-viral clinical development program, let's begin with a brief overview of our vapendavir program, a direct-acting anti-viral to treat upper respiratory infections caused by human rhinovirus in at risk populations such as asthmatics and COPD patients.

We are currently evaluating the safety and efficacy of vapendavir in the Phase 2b SPIRITUS trial which is a multicenter randomized double-blind placebo controlled dose-ranging study in moderate to severe asthmatics.

These patients are experiencing symptomatic HRV infection and have a history of their asthma worsening with an upper respiratory infection.

The primary endpoint of the study is the change from baseline to study day 14 in asthma control as measured by the asthma control questionnaire 6 or ACQ-6, the ACQ-6 is a validated tool that includes both an objective measure of lung function and patient reported data reflecting asthma symptoms.

Key secondary endpoints in the study include lung function assessment such as FEV1, the incidence of modern severe exacerbations and the use of beta 2-agonists. We are 92% enrolled in this study. We anticipate completing our moment in the near-term and releasing top-line data from the trial around the end of the year.

Now let’s us turn BTA585, our oral fusion inhibitor in development for treatment of prevention of respiratory syncytial virus or RSV infections. We are pleased to report that following a temporary delay and approval from the UK Regulatory Authority, MHRA. Enrollment has resumed in our Phase 2a RSV challenge study.

The study which was initiated in April is a double-blind placebo controlled trial designed to evaluate the safety pharmacokinetics and anti-viral activity of BTA585 in healthy volunteers challenged intranasally with RSV.

Following a positive test for RSV or five days after challenge, two cohorts of 30 healthy adults will be randomized to receive either 585 or placebo dosed-twice daily for seven days and monitored for 28 days.

The primary endpoint of the study is area into the curve for the viral load and nasal wash amongst subjects who test positive for RSV prior to dosing. The first cohort of 30 subjects dosed at 400 BID has been enrolled.

Following a safety review committee in early October, a decision to proceed to enroll the final cohort or 600 mgs BID will be determined. As a point of reference both 400 milligram and 600 milligram BID have previously been evaluated in our Phase 1b seven day multiple ascending dose study.

Data from MAD study showed that BTA585 was generally well tolerated at all dose levels and overall there are low incidents of adverse events. Additionally, there were no serious adverse events. No drug related clinically significant changes in ECGs or laboratory values.

So given the current timelines, we expect anticipate top-line anti-viral data from the Phase2 trial will be available around the end of the year. Finally, let’s turn to our third Phase2 clinical candidate BTA074, a first-in-class direct acting antiviral in the development of genital warts, or condyloma.

Condyloma are caused by human papillomavirus types 6 and 11, the most common manifestation of HP infection and the most commonly sexually transmitted viral disease worldwide. In February we initiated a 210-patient randomized, placebo-controlled Phase 2.

As we previously reported, due to a delay in the availability of drug product, required to resupply the initial clinical sites, we have extended the project timing for top-line data results. We’re now producing enough drug to complete the entire trial and we will be delivering that drug product to clinical sites in late Q4 calendar 2016.

We will also be expanding the number of sites in order to expedite enrollment in this trail. As we see enrollment trends from all participating clinical sites, we should have better clarity on when enrollment will be complete and when top-line data would be available. As of today, we anticipate top-line data in the second half of 2017.

With that, I'll turn the call over to Mark to review the financials.

Mark?.

Thanks, Joe, and good afternoon, everyone. Today I'll be reviewing the financial results of the fourth quarter and fiscal year ended 2016 at June 30 ,2016 as well as providing an update of our cash position. Let's start out with the bottom-line.

Our net loss for the three month period ended June 30, 2016 was $7 million as compared to a net loss of $19.9 million in the same period of 2015. Basic and diluted net loss per share was $0.18 for the three month period ended June 30, 2016 as compared to $0.55 in the same period of 2015. So the income statement components of our loss are as follows.

Revenue decreased to 6.6 million -- $600,000 for the three month period ended June 30, 2016 from 4.1 million in the same period of 2015 due to a $3.5 million reduction in royalty revenues. We actually had some modest government stockpiling sales of the true product Relenza in 2015, while there was no stockpiling in 2016.

Just as background here, almost all of our royalties from regular in market flow sales come in the late fall and winter months and is typically reported in our December and March quarters. If we have any meaningful royalties in the June and September quarters, it might become from government stockpiling orders.

Turning now to research and development expense, we increased our investment to $6 million for the three month period ended June 30, 2016, from $5.2 million in the same period in 2015.

The increase reflected higher clinical cost related to the initiation of our Phase 2a challenge trial, investigating the use of BTA585, as a treatment for RSV and higher expenses for producing clinical supplies of BTA074 for its Phase 2 clinical trial for the treatment of condyloma.

This trend of modestly higher R&D cost should continue at least for the period that we have three concurrent Phase 2 clinical trials ongoing. As you reviewed our income statement, you certainly noticed the large expense last year, totaling $17.6 million related to in process R&D expense.

This was purchased R&D from our Anaconda Pharma acquisition in 2015 and was a onetime expense. There was no in process R&D expense this year. Looking at general and administrative cost, we continue to keep a lid on our G&A spending and there was no increase in spending in 2016 over 2015’s level.

As you look closer to our financial statements, you will note some unusual accounting related to our sale of a portion of our Inavir royalties for gross proceeds of $20 million to HealthCare Royalty Partners or HCRP which we announced in April 2016. So, I'll just take a minute to give you the main impact on our financial statements.

As a result of the limit on the amount of royalties that HCRP can earn under the arrangement, U.S. accounting rules require Aviragen to account for this transaction under what's known as the debt accounting method, so there is no gain on our income statement and we have recorded an $18 million liability related to this transaction.

Part of which is in current liabilities and the majority of it is in long-term liabilities on our balance sheet. Now here is the important thing to note, Aviragen has no obligation to pay any amounts to HCRP other than to pass-through to HCRP its share of royalties as they're received from Daiichi Sankyo who markets Inavir.

So although we have a large liability on our books, we have no obligation to pay it.

In addition, although the royalty payments were sold to HCRP, the debt accounting rules require the company to continue to recognize as revenue HCRP’s share of the royalties, so to help clarify this for you, we've added a new line on our income statement for HCRP’s royalties called non-cash revenue.

As this share of the royalties are passed through Aviragen to HCRP under the arrangement, the $18 million liability is reduced by a like amount.

Finally, we're required to record non-cash implied interest expense on the liability each quarter, so we've added a new line for non-cash interest expense on our statement of operations to help identify these amounts for you.

This is interest expense that we will not be paying from Aviragen's cash either, so I hope the new line items that we've added to our income statement will help all of you better track the results of our operations.

So the good news of all this is that the Company held $69 million in cash in short-term investments as of June 30, 2016, this was buttressed last quarter by real cash from the aforementioned royalty sale and based on our current operating plan which includes our three ongoing Phase 2 development programs should last roughly into early 2018.

To quickly summarize the financial results for the full fiscal year ended June 30, 2016, we reported a net loss of 25.4 million as compared to a net loss of 19.1 million in the prior year.

The $6.3 million increase in net loss from prior year was primarily due to a $15.3 million decrease in revenues reflecting a $6.8 million reduction in royalty revenue principally related to Relenza and $8.5 million in lower service revenue, due to the cancellation of the BARDA contract in 2014.

Also contributing to the higher full year loss was $6.5 million increase in research and development expenses, largely related to higher costs for the Company's vapendavir and BTA585 clinical development programs.

These items were partially offset by the impact of the non-recurring $17.6 million in-process R&D expense recorded in fiscal 2015 related to the acquisition of Anaconda Pharma.

That wraps up comments and as a reminder the fourth quarter and fiscal year-end 2016 financial results as well as this afternoon's announcement are available on the Investors section of our Web site.

So with this point, let's open up the call for questions, operator?.

Thank you. [Operator Instructions] Our first question comes from the line of Ed Arce with H.C. Wainwright & Company. Your questions please..

So just a couple of questions here, if you could tell us a little bit more about these new formulations that you mentioned in your release and how you see integrating that into the overall program going forward?.

So actually this is Joe, so we recently completed a bioavailability study in healthy volunteers in which we dosed each subject with three different versions of Vapendavir, the phosphate capsule which is the current form of the Vapendavir in the SPIRITUS trial.

A new tablet as well as a new oral suspension and the reason, we felt this important was twofold one, from a Phase3 and commercialization perspective, we felt tablet would be the preferred form of Vapendavir in addition it adds the opportunity for increased intellectual property protection.

And secondly because of asthma is an important problem in pediatrics, we felt that an oral suspension would be best amenable for that patient population. And so the good news is all three of those in the healthy volunteers they look comparable..

Good okay, so when would you be prepared to switch to the tablet, I guess for the next trial?.

Right for the next trail that we conduct would be utilizing the tablet..

Great, okay, went over the financing part, excuse me the accounting for the recent financings I don’t really feel like I have any other questions there. I guess I will stop there and get back in the queue..

Thank you. Our next question comes from the line of Anita Dushyanth with Zacks Investment. Your questions please..

So first on the, about 20 patients are yet to be enrolled in the Vapendavir study if I’m right? And is that primarily all be a rating from just one center in North America and Europe or would that be only North America or Europe, like where are we waiting for this last [Multiple Speakers]?.

Sure Anita we have approximately 68 centers that are participating in the SPIRITUS trial, both in United States as well as Central Europe.

So we’re able to enroll across the whole spectrum, so where would they show up, the period until we can enroll them it depends on when they have been screened but now, we’re waiting for them to develop an upper Respiratory infection, so they can be randomized..

Okay, and that does not like the necessarily in a single center is sort of still distributed across the country?.

Yes I believe that well from a perspective, we have approximately 60% in the states and 40% outside..

Okay and also, so I know you’re sort of waiting to release the top-line data at the end of this year, so actually that could you like just detail some plans like what are you planning to do after that?.

Yes, absolutely..

[Indiscernible] and the [Indiscernible]?.

So first talk specifically about vapendavir and SPIRITUS trial, with favorable data, we'll be preparing our end of Phase 2 packet for the FDA and that's important as we contemplate a Phase 3 safety program. So that would be the next immediate step for that program following the data.

For BTA585, we're looking to complete the challenge study and get top line antiviral data again around year end.

For that program, we're also working on responding to the FDA's clinical hold which includes -- would include, our response would include the clinical data from the ongoing study once its complete as well as additional non-clinical studies that we are in the process of completing.

So that would be the next program, the next iteration for that program, and then obviously we still would be enrolling in BTA074 in the first quarter of next year. So that would be still an ongoing enrolling program..

And you're also planning to respond to the FDA by in the beginning of 2017, right?.

We anticipate responding to the FDA in Q1 of 2017..

Thank you. [Operator Instructions] We have a follow-up question from the line of from Ed Arce with H.C. Wainwright & Company. Your questions please..

Hi Joe, so just one other question, as you look forward to the readouts of SPIRITUS at the end of the year and looking forward to discussing all that data with the FDA and moving forward broadly, I know you're in the process of beginning negotiations with potential partners both in Europe and potentially in Japan or greater Asia, so could you perhaps give us a little bit more details around where that stands now and how you see that going forward into next year?.

Yes sure so, we don't really like to comment specifically on those sort of discussions, but what I can tell you is that we're reaching out as you indicated to both global, potential global partners and regional partner organizations that currently have respiratory sales franchises where we believe vapendavir would fit well.

So that's the process of getting the program on the radar screen, having the initial dialogue which then will facilitate the more in-depth discussions once the data are available..

Thank you. There are no further questions in queue, so I'd like to hand the conference back to Dr. Patti for closing comments and remarks..

Thank you. The last 12 months have been transformative period for Aviragen. We rebranded the Company as Aviragen Therapeutics to reflect our transition from a drug discovery an early phase licensing organization to one focus on clinical development of anti-viral therapies. We out-licensed our antibiotic program to Sparrow Therapeutics.

We advanced the clinical development of our three antiviral programs both clinically as well as on the CMC front. We strengthened our executive management team with the addition of business development skills and finally we bolstered our balance sheet with $20 million of non-dilutive cash.

We enter our fiscal 2017 year with excitement regarding our clinical programs and look forward to the data readouts from our Phase 2b SPIRITUS trial and Phase 2a RSV challenge studies around the year-end. Thank you for joining us this afternoon and have a great day..

Ladies and gentlemen, thank you for your participation on today's conference. This does conclude the program, and you may all disconnect. Everybody have a wonderful day..