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Edited Transcript of CBAY earnings conference call or presentation 9-Aug-18 8:30pm GMT

Q2 2018 CymaBay Therapeutics Inc Earnings Call

NEWARK Aug 27, 2018 (Thomson StreetEvents) -- Edited Transcript of CymaBay Therapeutics Inc earnings conference call or presentation Thursday, August 9, 2018 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Charles A. McWherter

CymaBay Therapeutics, Inc. - Senior VP & Chief Scientific Officer

* Daniel Menold

CymaBay Therapeutics, Inc. - VP of Finance

* Pol F. Boudes

CymaBay Therapeutics, Inc. - Chief Medical Officer

* Sujal A. Shah

CymaBay Therapeutics, Inc. - President, CEO & Director

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Conference Call Participants

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* Jay Olson

Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst

* Matthew Cross

* Tyler Martin Van Buren

Piper Jaffray Companies, Research Division - Principal & Senior Biotech Analyst

* Yasmeen Rahimi

Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to CymaBay's Second Quarter 2018 Financial Results Conference Call. (Operator Instructions) Please be advised that the call will be recorded at the company's request. It is also being webcast live on the Investors section at the CymaBay website at www.cymabay.com.

Now I would like to turn the call over to Mr. Dan Menold, Vice President of Finance at CymaBay. Mr. Menold, please proceed.

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Daniel Menold, CymaBay Therapeutics, Inc. - VP of Finance [2]

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Thank you, operator, and good afternoon, everyone. Earlier today, we issued a press release announcing our second quarter 2018 financial results and business update. You can access that release on our website under the Investors tab.

Joining me on the call today are Sujal Shah, Chief Executive Officer; Dr. Pol Boudes, Chief Medical Officer; and Dr. Chuck McWherter, Chief Scientific Officer.

They'll provide an update on our financial position and clinical program and review upcoming milestones before we open up the call for Q&A.

Before we begin, I'd like to remind everyone that statements made during this conference call, including the Q&A session relating to CymaBay's expected future performance, business prospects events or plans, including clinical plans, are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995.

Although the company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, actual outcomes and results are subject to risks and uncertainties and could differ materially from those forecasts due to the impact of many factors. The company assumes no obligation to update or supplement any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Participants are directed to the cautionary statements set forth in today's press release and as well as the risk factors set forth in CymaBay's quarterly and annual reports filed with the SEC for factors that can cause actual results to differ materially from those anticipated in the forward-looking statements. This call is the property of CymaBay, and any recording or rebroadcast is expressly prohibited without the written consent of CymaBay.

At this time, I'd like to turn the call over to Sujal.

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [3]

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Thank you, Dan, and good afternoon to all of you joining us on the call today. I'll keep my opening remarks brief with a review of recent activities and key upcoming catalysts before we take questions.

Our focus on 3 themes that were central to the progress we made in the second quarter and remained significant drivers of near term growth, including, first, further clinical derisking of seladelpar in our primary biliary cholangitis, or PBC; second, advancement of regulatory dialogue informing our pivotal Phase III PBC study design; and finally, diversification of seladelpar development with the initiation of a Phase IIb study in patients with nonalcoholic steatohepatitis, or NASH.

First, as a recap from our first quarter call, 12- and 26-week data from our ongoing Phase II study of seladelpar in patients with PBC were highlighted in a late-breaking presentation at the International Liver Congress in 2018, hosted by EASL in Paris last April. We believe these results establish that the doses of seladelpar to be used in Phase III exhibit anti-cholestatic and anti-inflammatory activities with favorable tolerability and safety that would provide potential advantage over current second-line treatment for PBC. As we announced at our Analyst and Investor Day in June, we completed enrollment with over 100 patients entered into this study, a significant achievement over a relatively short period of time in an orphan disease such as PBC.

We are very encouraged that all of the first 40 patients completing one year of treatment elected to remain on seladelpar treatment in a long-term extension study. In the fourth quarter, we plan to provide an expanded set of results from this ongoing Phase II study, including from those patients completing 52 weeks of treatment. As a reminder, 52 weeks is a key regulatory time point, as it represents the duration of treatment at which the primary endpoint in the Phase III study is measured. We believe this study continues to provide key risk benefit information about seladelpar, and will make an important contribution to regulatory submissions planned at the conclusion of Phase III development.

The second area of focus in Q2 was centered on our interactions with regulatory agencies in the U.S. and Europe to finalize a design for our planned Phase III study of seladelpar in PBC. We will target a label in the second-line treatment of PBC that would support a profile demonstrating improved efficacy and better tolerability than Ocaliva, the only currently approved second-line treatment for PBC.

We have been pleased with the FDA and EMA's level of engagement that we believe reflects the need for improved therapies for patients with PBC. During our Analyst and Investor Day, we highlighted our plans to proceed with a double-blind placebo-controlled Phase III pivotal study, in which approximately 240 patients will be randomized to receive either placebo or 1 of 2 dose regimens of seladelpar, either 10 milligrams or 5 milligrams, with the potential to increase the dose to 10 milligrams after 6 months for those patients that have not yet met the primary endpoint. The primary endpoint will be the same responder rate used in the pivotal study of Ocaliva. Specifically, a responder is defined as a patient achieving an alkaline phosphatase, or AP, level below 1.67x the upper limit of normal, with at least a 15% reduction from baseline and a normal total bilirubin at 52 weeks.

Key secondary endpoint will be AP normalization rate and changes in pruritus, as measured by the numerical rating scale, or NRF. We are actively working on global initiation activities, and remain on track to start this study in the second half of this year.

Finally, in addition to the progress we've made in PBC, we announced in May that we initiated a Phase IIb proof-of-concept study of seladelpar in patients with NASH. This study is a randomized double-blind placebo-controlled dose-ranging study that is intended to enroll approximately 175 patients with liver biopsy-proven NASH at U.S. investigational centers. We are enrolling non-cirrhotic NASH patients with a liver fat content above or equal to 10%, a NASH activity score, or NAS, superior or equal to 4 and a liver fibrosis stage from 1 to 3.

Seladelpar at doses of 10, 20 and 50 milligrams, taken once daily, will be evaluated versus placebo. The primary efficacy outcome will be the change from baseline in liver fat content at 12 weeks, as measured by magnetic resonance imaging using the proton density fat fraction method, or MRI-PDFF.

Among the secondary measures of efficacy is the evaluation of histological improvement in NASH and fibrosis, as assessed by comparing liver biopsy samples taken at baseline and 52 weeks. Additional planned assessments include MRI-PDFF measurements at 26 and 52 weeks of treatment as well as the use of the latest innovative biochemical markers and noninvasive imaging that reflect liver inflammation and fibrosis. We are closely collaborating with Dr. Stephen Harrison, Medical Director of Pinnacle Clinical Research, the coordinating investigator for this study and a world-renowned NASH expert. Although it is still early, we are very encouraged by our experience thus far, and expect to be able to provide additional guidance on time lines for the study in the very near future.

As we enter the second half of this year, we are extremely pleased with our progress in both PBC and NASH. At the end of the second quarter, we had $212 million in cash, cash equivalents and short-term investment, and continue to believe this supports our current operating plan into 2021, which includes funding of our pivotal Phase III study in PBC and Phase IIb study in NASH.

With a strong balance sheet and key operational objectives in PBC and NASH progressing well, we continue to evaluate additional areas of development for seladelpar as well as other programs in our pipeline. Our activities to-date have been focused on evaluating the scientific and clinical rationale, the understanding of the unmet medical need and having ongoing discussions with thought leaders in an effort to identify and establish potential future areas of development for seladelpar and other pipeline programs in various indications. We look forward to speaking more about these additional opportunities as our plans are formalized.

Thank you, again, for joining us today. We would now be happy to take your questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question from Yasmeen Rahimi of Roth Capital Partners.

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Yasmeen Rahimi, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [2]

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Question goes to Pol. Can you provide us some insight on how pruritus is measured in the open-label Phase II trial versus Phase III? What is the same? And what is different? And then maybe also elaborate on why did you decide to measure pruritus in your upcoming Phase III of 6 months versus 12.

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Pol F. Boudes, CymaBay Therapeutics, Inc. - Chief Medical Officer [3]

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Thanks for the questions. So the open-label expansion, we're now using the same evaluation. We have the visual analogue scales. And we have the classical instruments, the 5D-itch score. The difference from the first part of the study is that we are not having as much evaluation compared to the beginning of the study. Now for the Phase III study, we're going to use something that is a little bit different from the VAS, but is very much correlated with the VAS. The VAS goes from 0 to 100. And we're going to use numerical scales, which is a 1 to 10 scale, where basically you have to pick on which level you are. And we're going to do that with an electronic diary. So that will be -- that's the difference with the Phase II program.

And in terms of -- I think the last part of your question was 6 months versus 12. We're going to do -- the 6-month analysis is going to be the primary analysis, if you want, for pruritus. But we are also going to measure the data at month 12.

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [4]

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And Yasmeen, perhaps I can also add that if you look in the published literature, the VAS and the NRS are extremely well correlated, over 99%. So it's a difference between a visual scale of 0 to 100 and a numerical rating scale of 0 to 10 that's assessed from a verbal assessment. We've certainly done a fair bit of work around the PRO ourselves in terms of eliciting feedback from patients around both frequency and the methodology to make the measure. All of that is incorporated in the design for the Phase III study.

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Yasmeen Rahimi, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [5]

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If I may ask one follow-up question. You have mentioned during your Analyst Day that you are thinking about designing another study with PBC patients with advanced disease. Can you give us some color how the trial design would look like in regards to size, exact patient population, and maybe a little bit of color on the time line around that?

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [6]

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Yes. So I think at this stage, it's a bit premature for us to give specific guidance around how the study would be designed. I think we've talked more specifically about really the purpose of this study. The severe PBC patient population is very different from the broader population that have been studied in both Phase II and Phase III clinical trials for Ocaliva and, thus far, in our clinical experience as well. And really the key difference here is taking a very different approach from our predecessors in this population, recognizing there's an importance in understanding exposure, there's an importance in understanding proper safety and dosing regimen for what is a much more severe patient population. And recognizing that there's an intent from our perspective in truly understanding the risk and benefit in this population. So from a high-level perspective, the idea is to do something very measured and careful in the advanced population in order to give us the information necessary to truly inform the overall label for seladelpar. So discussions with the agency in studying this population remain ongoing, and we will look to give some further detail as those discussions progress.

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Operator [7]

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Our next question comes from Tyler Van Buren of Piper Jaffray.

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Tyler Martin Van Buren, Piper Jaffray Companies, Research Division - Principal & Senior Biotech Analyst [8]

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So we've clearly seen positive results in reduction of AP at 12 and 26 weeks. So could you just give us your updated thoughts on the 52-week data, and what you're hoping to see with respect to that, and how it may translate to responder rates and ultimate Phase III study success?

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [9]

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Sure. Maybe I'll start, and perhaps the rest of the team can jump in. Without question, as you mentioned, we are very encouraged by what we saw through the 26-week time point with the data set presented at EASL, where, at 26 weeks, we see reductions in alkaline phosphatase of 45%, where transaminase decreases in the 40% range. And fundamentally, the anti-cholestatic effects, at least through 26 weeks, at -- whether you look at or 5 or 10 milligrams, are coming in around 68% to 79%. And we can't compare between seladelpar and Ocaliva as we don't have head-to-head data. But if you just think about where seladelpar has been progressing, at least thus far, it appears to be demonstrating the potential for improved efficacy and a greater responder rate from that data set. Even the 5-milligram dose group there had a baseline AP of approximately 348 units per liter, which is higher than the baseline AP in the patients that were enrolled in the Phase III [Poy] study. So very encouraged by the level of response that we have seen through 26 weeks. What we typically see in this setting, and what we want to be able to observe, is a response that continues to be sustained between 26 and 52 weeks. With that level of AP decline, and I should mention, as many as 25% to 30% of patients actually experiencing normalization of AP through 26 weeks, there isn't necessarily the expectation that you continue to see vast increases in AP reduction between 26 and 52. What we want to be able to see, and what is typically seen in this setting, is the response that continues to be sustained. It is important for us to also see the same level of anti-inflammatory activity sustained, as we saw from 26 to 52 weeks. And of course, every patient that we have more data on continues to support the overall safety profile of seladelpar as well. So that will be another key observation in the 52-week data.

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Tyler Martin Van Buren, Piper Jaffray Companies, Research Division - Principal & Senior Biotech Analyst [10]

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Great. Yes, just one more question. And then with respect to the NASH program, I guess, in general, in terms of reduction in liver fat by MRI, what levels do you think is clinically relevant? Why do you think the mechanism of seladelpar might be differentiated than what we've seen with some of the other compounds?

And finally, enrolling patients with fibrosis stage 1 through 3, I guess, is obviously, more on the mild side as opposed to some of the Phase III programs, which are enrolling more severe stage 3 and 4 patients. So I'm curious to get your thoughts there.

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Charles A. McWherter, CymaBay Therapeutics, Inc. - Senior VP & Chief Scientific Officer [11]

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Okay. This is Chuck McWherter. I'll try to respond that, and Pol may want to add on to my comments as well. So first of all, what's the reasonable level of hepatic fat reduction to expect? I think the champion right now has been NGM282 and Madrigal, both of them coming in more or less around a 40% -- 30%-- mid-30s to 40% reductions in hepatic fat. But I think even levels somewhat lower than that could still be interesting because of what seladelpar may have the potential to offer. It's our view, and we hear this echoed by other thought leaders in the field, it's not necessarily fat per se that you want to reduce. It's more lipotoxic fat, saturated fatty acids that instigate and then perpetuate inflammation and inflammation leading to fibrosis. So where PPAR delta stands out, we believe, and seladelpar in particular, is its ability to be a foundational therapy in NASH by reducing fat via its fatty acid oxidation in the liver as well as in peripheral tissue, in peripheral adipose, which is a source of hepatic fat due to shuttling during fasting periods, as well as its direct anti-inflammatory effects on both macrophages and Kupffer cells as well as effects on fibrosis. We saw reductions in fibrosis of about 50%.

So just to kind of recap, I think we're -- that was really the basis. We were very conflicted to study seladelpar in this population. And we'll find out where we stack up first, in our interim results, the primary result on hepatic fat. But as importantly, at the end of the day, we'll have a 52-week biopsy histology readout, which I think will help to link the hepatic fat measurement. In terms of the population that we enrolled, F1 to F3, it's true and -- for practicality, you do widen the lens a little bit. But I think that those sponsors, who are going for non-cirrhotic NASH, typically, they're focused on F2 and F3. And we expect in this study to have well over half of our patients F2 and F3 as well. So I think at the end of the day, where our focus in this study is on fat and NASH pathology, we will be able to get a good read on effects on fibrosis as well and for -- expect that the results that we would see on the metabolic and anti-inflammatory features would translate into a more advanced stage patient anyway. I don't know, Pol, if you wanted to comment.

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Tyler Martin Van Buren, Piper Jaffray Companies, Research Division - Principal & Senior Biotech Analyst [12]

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Will you be able to specifically measure that lipotoxic fat that you mentioned, and see if there's any correlation with improved clinical outcomes?

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [13]

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Yes, that would be terrific if we could do it. We've been able to do that in mice, where you can actually sample the liver. We did a pretty extensive panel of hepatic lipidomics, which we actually published in Hepatoloy Communications. And we saw strong reductions, not just in total fat, triglycerides, which is arguably benign, but in palmitate saturated fatty acids, the various chain lengths as well as well as mono and saturated fatty acids and diacylglycerols as well. So I think the short answer is, no, but we have a strong reason to suspect, based upon the fundamental pathway that we're modulating, that we would expect that will have the same effect in human livers.

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Pol F. Boudes, CymaBay Therapeutics, Inc. - Chief Medical Officer [14]

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And Tyler, one other question you asked is around the differentiation of seladelpar as a potent and selective PPAR delta agonist. And Chuck talked a lot about some of the metabolic components of the mechanism, which we are encouraged by. Another differentiator relative to some of the agents being studied today is that seladelpar has not only effects in the liver, but also in peripheral tissues. So if you think about the thyroid hormone receptor beta agonist of Madrigal, which is liver-directed, elafibranor, the mixed PPAR alpha/delta of GENFIT, effectively liver-directed, 60% or more of the fat that ends up in the liver comes from the periphery and PPAR delta in particular and seladelpar has expressed, and seladelpar has action also in adipose and in muscle. So we're enthusiastic about better understanding the differentiation that this feature of the mechanism has. As well as the fact that not only do we have these impacts on promoting fatty acid oxidation and the effects that Chuck really outlined, it's known that one of the key effects of FXR and FGF19 is around the inhibition of bile acid synthesis. And we know that seladelpar, from our experience in PBC, has a very robust impact on inhibiting bile acid synthesis. So -- without LDL increases, of course. So there's some really key elements of differentiation around delta that we're excited to be exploring here in this Phase IIb study.

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Operator [15]

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

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Matthew Cross, [16]

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This is Matt on for Ed. Given the timing for the seladelpar PBC trial currently being set for 2H '18, is this more likely a September or firmly a 4Q event?

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [17]

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It's a little bit of precision, which we would be excited to update you all on as we get closer to that initiation. But I can tell you that all of the activities here internally have been geared towards getting this -- what is going to be a global study with over 100 centers initiated. So the progress continues to move very well here internally, and we'll make sure and give an update as the study commences.

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Matthew Cross, [18]

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Great. And then for the recently initiated Phase IIb POC study in NASH, how is the rate or pace of rate enrollment tracking so far, especially given all the current clinical competition?

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [19]

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Yes. It's early days for us to make any specific comments on enrollment, and we don't typically do that in between studies. We've outlined that as our first study in NASH. We're really benchmarking enrollment timelines off of the experience of our principal investigator, Stephen Harrison, who's worked with both NGM and Madrigal. The study that Madrigal conducted is very similar in design and similar in size to what we're conducting today. So we look at about an 11- to 12-month enrollment time line for this study. Things are continuing to progress very well. Having Stephen as principal investigator has really helped us elevate the attention that this study has been given at the centers that are enrolling patients. So we couldn't be more pleased at the level of engagement from centers. You're absolutely correct. This is a very competitive space, every study involved in -- every center involved in our study, of course, enrolling patients for other studies as well. But the emphasis on the seladelpar Phase IIb at the centers that have been selected for our study is really, I think, from my perspective, at the top of the list as we move through this program. So we feel very encouraged. And of course, we'll know more in the months to come, and be able to provide more precision around that time line.

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Operator [20]

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Our next question comes from Jay Olson of Oppenheimer.

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Jay Olson, Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst [21]

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I was curious about the target product profile for seladelpar in PBC, which you described as being differentiated on both efficacy and tolerability. And I was wondering, if the secondary pruritus endpoint is -- if you have sufficient power in the study to show a statistically significant improvement versus placebo.

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Pol F. Boudes, CymaBay Therapeutics, Inc. - Chief Medical Officer [22]

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Jay, it's Pol. I think the simple answer is yes. Based on the previous experience with what we've seen in the Phase II program, and based on the size of the trial, I think we are confident that the trial is appropriately powerful via right this outcome.

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Jay Olson, Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst [23]

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Okay. And then for Ocaliva, there was some long-term biopsy data for PBC patients showing a reduction in fibrosis. And I was wondering if you were going to be collecting similar biopsy data for PBC patients perhaps in a long-term extension to your Phase III study.

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Pol F. Boudes, CymaBay Therapeutics, Inc. - Chief Medical Officer [24]

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I think -- yes. I think the data that Ocaliva presented were very interesting. So we're going to try to introduce the same kind of things. As you know, the medical practice is going away from doing biopsy in PBC patients, but the practice also is valuable depending on the place you are working. And I think it's a very good idea. So we're going to try to get as much sample as possible. And as you said, it's be part of the study, but also the extension phase because you have to take this study to the FDA after at least 3 years of treatment.

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Operator [25]

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(Operator Instructions) Our next question comes from Steven Seedhouse of Raymond James.

(Operator Instructions)

There are no further questions at this time. I would like to turn the floor back over to Sujal Shah for closing comments.

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [26]

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Thank you. As you all know, our focus today and through the rest of this year, remains on the efficient execution of our pivotal Phase III study in PBC, as we'll look to enroll -- initiate that study in the second half of this year, and our phase IIb proof-of-concept study in NASH. In addition, we have worked very hard to put ourselves in a position to begin exploring future opportunities for growth, and look forward to providing updates in the near future as these ideas mature. I could not be more pleased by the effort and dedication put forth by everyone here at the company, and the patients and investigators involved in our program. Thank you again for being on today's call.

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Operator [27]

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