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Edited Transcript of ELOX earnings conference call or presentation 5-Nov-19 9:30pm GMT

Q3 2019 Eloxx Pharmaceuticals Inc Earnings Call

New Brunswick Dec 11, 2019 (Thomson StreetEvents) -- Edited Transcript of Eloxx Pharmaceuticals Inc earnings conference call or presentation Tuesday, November 5, 2019 at 9:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Barbara Ryan

Eloxx Pharmaceuticals, Inc. - IR Officer

* Gregory Williams

Eloxx Pharmaceuticals, Inc. - COO & Interim Chief Medical Officer

* Gregory L. Weaver

Eloxx Pharmaceuticals, Inc. - CFO

* Matt Goddeeris

Eloxx Pharmaceuticals, Inc. - Director of Research

* Robert E. Ward

Eloxx Pharmaceuticals, Inc. - Chairman & CEO

* Susan Schneider

Eloxx Pharmaceuticals, Inc. - SVP of Clinical Development, Ophthalmology

* Thomas Haverty

Eloxx Pharmaceuticals, Inc. - Chief Medical Officer

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Conference Call Participants

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* Edward Andrew Tenthoff

Piper Jaffray Companies, Research Division - MD & Senior Research Analyst

* Michelle Lim Gilson

Canaccord Genuity Corp., Research Division - Analyst

* Shawn Michael Egan

Citigroup Inc, Research Division - Senior Associate

* Yun Zhong

Janney Montgomery Scott LLC, Research Division - Equity Research Analyst & Director of Biotechnology Research

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Presentation

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Operator [1]

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Good afternoon, everyone, and welcome to Eloxx Pharmaceutical's Third Quarter 2019 Earnings Webcast and Conference call. Today's call is being recorded. At this time, I would like to turn the call over to Barbara Ryan, Eloxx's Investor Relations Officer. Please begin.

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Barbara Ryan, Eloxx Pharmaceuticals, Inc. - IR Officer [2]

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Thank you, operator. Welcome, and thank you for joining us this afternoon for a review of Eloxx Pharmaceuticals Third Quarter 2019 Financial Results and Business Updates. Joining me this afternoon are Robert Ward, Chairman and Chief Executive Officer of Eloxx Pharmaceuticals; Dr. Greg Williams, our Chief Operating Officer; Dr. Tom Haverty, our Chief Medical Officer; and Greg Weaver, our Chief Financial Officer.

Before we begin, I'd like to remind you that any statements made during this call that are not historical are considered to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these statements as a result of various important factors, including those discussed in the Risk Factors section in our most recent annual report on Form 10-K filed with the Securities and Exchange Commission, and our other reports filed with the SEC.

Any forward-looking statements represent our views as of today, November 5, 2019, only. A replay of this call will be available on the company's website, www.eloxxpharma.com following the call.

It is now my pleasure to turn the call over to Robert Ward, Chairman and Chief Executive Officer of Eloxx Pharmaceuticals.

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Robert E. Ward, Eloxx Pharmaceuticals, Inc. - Chairman & CEO [3]

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Thank you, Barbara, and welcome to Eloxx's Third Quarter 2019 Earnings Webcast and Conference Call. This was an excellent quarter for Eloxx. In addition to advancing our clinical and scientific programs, we've also strengthened the leadership team with the appointment of Dr. Tom Haverty as our Chief Medical Officer. Tom is a board-certified nephrologist, and he brings an established track record of successful drug development and R&D leadership from senior executive roles from companies like Schering-Plough and Merck. Tom has been consulting with us for most of the past year, and we're pleased to have him join our team.

Today, we'll provide an update on our progress in the clinic with our Phase II clinical programs in cystic fibrosis and cystinosis. As we guided, our cystinosis trial has progressed to a point where we've had our first important clinical observations. Doctors Williams and Haverty will share the progress and observations with you in a moment. We will have a steady cadence of additional data and updates as we move through the upcoming quarters.

Just this past week, the Eloxx team made 4 scientific presentations on ELX-02 at the North American Cystic Fibrosis Conference, including the full results of our MAD study, which reinforced the emerging overall favorable tolerability profile of subcutaneous ELX-02. We had an opportunity to hold an investigators' meeting, engage the scientific community and to meet with HIT-CF and other potential strategic partners.

The expressed level of interest and support for our cystic fibrosis program has really been quite remarkable. Currently, our Phase II program consists of 2 trials: one, for clinical investigators enrolling patients at sites in Europe and Israel, where today, we have multiple sites open in Israel, and we expect the European sites to open this quarter. Our second Phase II trial focuses on sites in the United States, where today, Boston Children's Hospital is open, and we're expecting additional U.S. clinical trial sites to open this quarter as well.

Our expansion of our cystic fibrosis programs to the U.S. has been made possible in part by the support provided by the Cystic Fibrosis Foundation and the Therapeutic Development Network. We are aware that there are available patients who have expressed interest in participating in our trials, and the extended period of opening these clinical sites will mean that our cystic fibrosis trials will be fully enrolled during the first quarter of 2020. As a result, we're changing our guidance for top line data in cystic fibrosis to the first half of 2020.

For our Phase II program in cystinosis, I'm pleased to report that we're on track to report top line data this quarter, and we've already observed meaningful activity for ELX-02 in this patient population. The cystinosis program dose escalates each patient through the 3 doses studied in the program. After treatment, at each dose level, the safety review committee meets to evaluate safety and tolerability before patients are escalated to the next higher dose level.

To date, we have completed the first and second doses in the first cohort, and after the successful review by the safety review committee, we're now dosing patients with the third and final dose.

We're very encouraged and pleased to report that the preliminary data show that the ELX-02 has been well-tolerated, and we are already seeing significant reductions in white blood cell cysteine levels, the primary measure of efficacy for approved drugs in this indication. Upon completion of the third and final dose, we will discuss the data with our principal investigator as well as a panel of scientific and clinical experts before reporting our top line data later this quarter.

Later this week, our Eloxx team will be participating in Kidney Week to present new data on our completed renal impairment study and to share additional preclinical data on the activity of ELX-02 in supporting studies for cystinosis and other kidney disorders.

During the quarter, we continued to advance our work in ophthalmology as our team achieved an important proof-of-concept milestone, demonstrating that our ERSG compounds can restore protein production in the eye when injected intravitreally in an animal model. Our screening programs continue to evaluate opportunities to advance ELX-02 for new indications or other novel molecules from our ERSG library.

To expand the [luck] we're advancing our screening work to include diseases such as primary ciliary dyskinesia; in the eye, we're evaluating Usher syndrome and other disorders of the photoreceptors or retinal pigment epithelial cells. And we believe that the encouraging results from our ongoing cystinosis study support expanding our research in the kidney into diseases such as autosomal dominant polycystic kidney disease where there's a high prevalence of nonsense mutations patients.

We are the most advanced company tackling the great challenges of developing new therapies for nonsense mutations, and there's a high level of interest and enthusiasm in the scientific, clinical and business communities for our programs. We remain actively engaged in pursuing strategic business relationships to expand our therapeutic footprint and accelerate our progress.

We ended in the second quarter of 2019 with $64.9 million in cash and cash equivalents. We are well funded to advance our clinical programs and deliver top line data in cystic fibrosis and cystinosis, advance the screening programs for ELX-02 and our library of molecules into additional indications into 2021. Our talented and highly experienced team is committed to our mission of bringing safe and effective medicines to patients who need them as rapidly as possible.

I'd now like to turn the call over to Dr. Greg Williams, our Chief Operating Officer, who'll provide you with an update on our Phase II clinical programs.

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Gregory Williams, Eloxx Pharmaceuticals, Inc. - COO & Interim Chief Medical Officer [4]

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Thank you, Bob. I'd like to provide you with an update on our Phase II programs for ELX-02 in cystic fibrosis and cystinosis. As Bob mentioned, we presented the results of our multiple ascending dose or MAD study for ELX-02 at the 2019 North American Cystic Fibrosis Conference last week, and also had a meeting with our U.S. clinical investigators.

The MAD study provided us with the opportunity to explore the safety and pharmacokinetics of 2 alternative ELX-02 drug concentrations along with ascending doses. The study results indicated that they were consistent and dose proportional increases to Cmax and AUC across the dose range with no accumulation. And that elimination is primarily renal as parent compound and is essentially complete within 24 hours post dose.

To date, ELX-02 has been generally well tolerated in clinical studies with 105 volunteers exposed and no reported FAEs or renal findings. Overall, these results support our ongoing Phase II programs.

As you know, our CF Phase II program currently consists of 2 trials: one in Europe and Israel, and the second in the U.S. There is a high level of interest and support for these trials in both the U.S. and globally. For both of these trials, we are aware that there are available patients who have expressed interest in participating, and the extended period for opening clinical trial sites means that our cystic fibrosis trials will be fully enrolled in the first quarter of 2020.

In Europe and Israel, Professor Eitan Kerem, MD, Head of the Division of Pediatrics Children's Hospital, Hadassah Medical Center in Israel is the global lead investigator. Our Phase II protocol has been given a high priority ranking by the European Cystic Fibrosis Society Clinical Trial Network. We are actively enrolling patients in Israel and expect European sites to open this quarter.

In the U.S., Dr. Ahmet Uluer, Director of the Adult Cystic Fibrosis Program at the Boston Children's Hospital, Brigham and Women's Hospital CF Center is the lead investigator.

We are very pleased with the high quality of the clinical sites we're working with. Boston Children's Hospital is open for enrollment, and we are expecting additional U.S. clinical trial sites to open this quarter as well. We appreciate the support of CFS in advancing our U.S. trial. We will provide an update at our Phase II CF program when we announce our cystinosis top line results later this quarter.

Regarding our cystinosis program, we previously reported that our Phase I renal impairment study has been completed. And this Thursday, we will be presenting the results of that study at the American Society of Nephrology Kidney Week in Washington, D.C. Since most patients with nephropathic cystinosis have renal insufficiency, the results of our Phase I renal impairment study have been important in helping us correctly define the doses for these patients.

As I reflect on the past year that I've been with Eloxx, we have completed in the SAD, MAD and renal impairment trials and have now started 3 Phase II trials in multiple countries.

During October 2019, we also completed an interim CMC review meeting with the U.S. Food and Drug Administration, and we have gained alignment with the agency on our manufacturing formulation and process, which we believe will be suitable for our expected drug supply needs through completion of our pivotal trials.

I'd like to introduce Dr. Tom Haverty, our Chief Medical Officer, to discuss the advances in our work in genetic kidney diseases.

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Thomas Haverty, Eloxx Pharmaceuticals, Inc. - Chief Medical Officer [5]

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Thank you, Greg. Nephropathic cystinosis is a generic kidney disease, where patients are lacking a transporter for cysteine and it accumulates in the kidney, eye and pancreas, among other organs. It leads to end-stage renal disease and kidney transplantation and has been treated with sustaining preparations, which break up the cysteine. Both Cystagon and Procysbi were approved on the ability to lower white blood cell cysteine so there's a validated biomarker of cystinosis, which we can employ in our trial using ELX-02 in nephropathic cystinosis.

In nephropathic cystinosis, we are pleased to be advancing our Phase II clinical trial with Dr. Paul Goodyer, Professor of Pediatrics at McGill University, who is serving as our principal investigator. The trial is evaluating multiple doses of ELX-02 for the primary endpoint of safety and exploratory endpoints that will include white blood cell cysteine levels. Our Phase II cystinosis trial involves 2 separate cohorts with 3 escalating doses and 3 patients per cohort. A cohort is complete when each patient has escalated through each of the 3 dosing levels or if the safety review committee recommends halting escalation.

Following the completion of each dose, the safety review community meets to review the patient safety data prior to escalation to the next dose level. The first 2 doses in the first cohort are complete, and the safety review committee has authorized us to start the final dose in this first cohort, which is currently ongoing. At the second 1.0 milligram per kilogram dose level, ELX-02 is already demonstrating in the preliminary analysis a statistically significant reduction in white blood cell cysteine levels.

Upon completion of the first cohort, we will review data with the principal investigator and conduct a separate review with the panel of cystinosis scientific and clinical experts before reporting top line data later this quarter. We believe that the emerging profile of ELX-02 for cystinosis is suitable for continued development, and we intend to seek regulatory advice following top line results on initiating an extension study for patients in the first cohort and to expand the trial to include sites and patients in the United States.

We believe that achievement of proof-of-concept for ELX-02 in cystinosis will provide a basis for expansion to studies of additional kidney diseases caused by nonsense mutations.

One such genetic kidney disease is autosomal dominant polycystic kidney disease, or ADPKD, which is a relative common, inherited genetic kidney disease occurring in between 1 in 400 and 1 in 1,000 patients and is the fourth leading cause of end-stage renal disease in the United States. Over 25% of the primary genetic changes that cause ADPKD are nonsense mutations, where a premature stop code under the gene leads to a truncated, often unstable protein.

I'd like to return the call back to Greg for an update on the portfolio.

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Gregory Williams, Eloxx Pharmaceuticals, Inc. - COO & Interim Chief Medical Officer [6]

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Thank you, Tom. We continue to expand our research capabilities and are pleased to report the advances of the HIT-CF program ongoing in Europe. Earlier this year, we joined the HIT-CF consortium to support the collection of cystic fibrosis patient-derived organoids and the initiative to conduct a prospective clinical trial to evaluate the predictive potential of the organoid model. To date, HIT-CF has collected samples from 100 individuals bearing rare, nonsense mutations in the CFTR gene.

HIT-CF will develop organoids from these samples and test the organoids for ELX-02 responsiveness in the laboratory. The intent of the program is to enroll the individuals in the clinical trial to evaluate their cystic fibrosis responses. We believe this program will continue to expand the applications of organoid technology from drug discovery through the drug approval and treatment process.

We have also continued to develop our pipeline of new indications and our library of novel compounds. We have completed screening on 30 of the most active read-through agents in our ERSG novel compound library. Eloxx holds global rights and has an extensive patent portfolio with long life on composition of matter and use for all of these compounds. We believe there are multiple opportunities to expand our pipeline by advancing these novel molecules in new routes of administration and/or by addressing new therapeutic indications.

For example, this quarter, we evaluated the 3 most prevalent ADPKD nonsense mutations in an in-vitro read-through assay and have demonstrated significant substantial levels of read-through for ELX-02 and several library compounds. In developing a new indication demonstrating substantial activity in the in-vitro mutation specific assay is the first step in our preclinical development toward IND. We intend to evaluate additional cellular and/or animal models of ADPKD and, with positive results, advance toward IND submission.

In our inherited retinal disorder program, where there remains a high unmet medical need and prevalence of nonsense mutations, we are conducting feasibility and IND-enabling studies for ERSG library compounds. We believe that our intravitreal ERSG approach could provide restoration of critical proteins to preserve or restore visual function across the nonsense-related inherited retinal disorder landscape.

As we previously reported, library compounds have demonstrated dose-dependent read-through using our in-vitro assay platform and acceptable intravitreal tolerability. During the quarter, we achieved an important clinical milestone, demonstrating that several of our library compounds successfully restored protein production in an animal model.

We conducted studies in a mouse model with a naturally occurring nonsense mutation in the OCA2 gene, which results in a form of albinism present in human type 2 oculo transcutaneous albinism. In this model, R262X mutation results in a lack of OCA2 channel protein, which is needed to establish the pH of the organelle that produces pigment, the melanocyte. Loss of the functional OCA2 protein results in a lack of pigment in the retinal pigment epithelium and the underlying choroid.

Multiple Eloxx ERSG compounds have demonstrated an increase in pigment, an indication of functional restoration of the OCA2 channel after a single intravitreal injection of Eloxx ERSGs. We have used a dose range of 50 to 200 nanograms per mouse eye, which we believe provides a window for efficacy based on our current tolerability profile. This outcome demonstrates that ERSG compounds can reach inherited retinal disorder of relative tissue layers beyond the photoreceptors.

These data support that ERSG compounds may be applicable to a wider range of inherited retinal disorders than first anticipated, as the compounds can impact cells deep in the neurosensory retina, including the retinal pigment epithelium and choroid. This means the potential of such a therapeutic could extend to additional nonsense mediated inherited retinal disorders, including Best's disease and choroideremia. Furthermore, we are encouraged that this is achievable through intravitreal delivery, which provides a global distribution of the compound to target tissues of the eye.

We are pleased that the Eloxx ERSG library screening is progressing in identifying new indications for the expansion of ELX-02 potential therapeutic uses and to enable further development of the lead library compounds. We are actively exploring opportunities to accelerate our development through strategic partnerships.

I would now ask Greg Weaver, our Chief Financial Officer, to provide a review of our financial results for the third quarter of 2019.

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Gregory L. Weaver, Eloxx Pharmaceuticals, Inc. - CFO [7]

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Thanks, Greg. As of September 30, 2019, the company reported total cash, including cash equivalents and marketable securities of $64.9 million, which we believe will fund the company's operations through top line data in cystic fibrosis and cystinosis and into the first quarter of 2021. The third quarter of 2019 change in total cash was $11.4 million.

For the quarter ended September 30, the company incurred a net loss of $12.9 million or $0.32 per share as compared to a net loss of $11.2 million or $0.32 a share for the same period in 2018.

One of our key accomplishments in the third quarter was entering into an agreement with the Cystic Fibrosis Foundation who will provide $1.6 million in funding, contributing towards our U.S. Phase II cystic fibrosis study.

In the third quarter, noncash stock compensation expense totaled $3 million, with $2.3 million allocated to G&A and $0.7 million to R&D. Third quarter 2019 R&D expense totaled $6.8 million as compared to $5.4 million for the same period in 2018. The quarter-to-quarter R&D expense increase was driven by growth in our Phase II clinical activities, cost related to the renal study, the MAD Phase I study, along with preclinical and CMC operating costs and noncash stock comp.

G&A expense for the third quarter 2019 was $6 million, a slight increase from $5.9 million for the same period in 2018.

Moving to the 9-month year-to-date numbers. The company incurred a net loss of $39.2 million or $1.05 per share as compared to a net loss of $33.2 million, also $1.05 per share for the same period in 2018. The $6 million increase in net loss was driven primarily by the higher R&D expenses. Noncash stock comp for the 9 months of 2019 was $8.6 million, with $6.6 million recorded to G&A and $2.0 million to R&D.

Year-to-date R&D expenses totaled $20.2 million compared to $14.0 million for the same period of 2018, an increase of $6.2 million. The year-over-year R&D increase was driven by growth in our multiple Phase I and Phase II clinical trials, along with expanded preclinical operations and noncash stock comp.

Year-to-date G&A expense totaled $18.9 million, which was flat with year-over-year -- year-to-date G&A in 2018. And for modeling purposes, total shares outstanding at September 30, 2019, was 40.0 million shares.

That concludes the financial comments. And I'll turn the call back over to Bob.

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Robert E. Ward, Eloxx Pharmaceuticals, Inc. - Chairman & CEO [8]

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Thank you, Greg. We've accelerated and expanded our clinical development efforts to conduct our Phase II clinical trials of cystic fibrosis and cystinosis in top sites with leading investigators in the U.S., Europe, Israel and Canada. We expect to be reporting a steady cadence of clinical results over the coming quarters, including our top line cystinosis data later this quarter.

We're very pleased that our Phase II clinical trial of cystinosis is enrolling patients with the support of non-dilutive funding, from Génome Québec and Genome Canada. Preliminary data from this trial are already showing significant biologic activity with substantial reductions of white blood cell cysteine levels. We believe that these results form the basis of proof-of-concept with implications in a broad number of additional indications and meaningfully de-risk other studies in this dosage range.

We're pleased that our CF Phase II clinical trial protocols received financial support from the Cystic Fibrosis Foundation, and that our protocol has been sanctioned by the Therapeutic Development Network. We appreciate Dr. Ahmet Uluer from Boston Children's Hospital, serving as the lead for our trial in the U.S.; and Dr. Eitan Kerem from the Hadassah Medical Center, serving as our global lead investigator. With the opening of sites in cystic fibrosis, we expect that enrollment will occur rapidly as patients have already been identified.

We will provide an update on cystic fibrosis enrollment when we report top line cystinosis data, and we expect the CF trials to be fully enrolled in the first quarter of 2020.

We continue to advance our portfolio of novel ERSG molecules. We believe that several of these compounds demonstrate encouraging levels of read-through activity and preliminary tolerability data, which supports their potential therapeutic development. We anticipate driving progress across the portfolio in both stand-alone and partner programs. We continue to be very active in business development across our portfolio library in a variety of indications and geographies.

This Thursday, we'll be presenting the results of our renal impairment study at the American Society of Nephrology Kidney Week in Washington, D.C. We will also be making presentations and hosting one-on-ones at the Piper Jaffray Conference in New York City on December 3, and at the Evercore ISI Second Annual Health Con X on December 4 in Boston.

We thank you for joining us on our third quarter 2019 earnings call and look forward to continuing to update you on our progress. Thanks again for attending today's call. Operator, you can now open up the call for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question is from Michelle Gilson with Canaccord.

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Michelle Lim Gilson, Canaccord Genuity Corp., Research Division - Analyst [2]

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Congratulations on the early data. I guess I was hoping you could clarify for us. You talked about seeing statistically significant reductions in cysteine levels in white blood cells for the first 2 doses. Yet, how should we be thinking about top line data when they are reported with respect to statistical significant reductions versus clinically meaningful?

Should we be comparing cysteine levels to Procysbi or Cystagon target levels under 1 micromole? Or should we be looking for normalization? I guess -- what would you guys view as the bar for cysteine levels that you think would establish ELX-02 as being able to be used as monotherapy?

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Robert E. Ward, Eloxx Pharmaceuticals, Inc. - Chairman & CEO [3]

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Yes. Thank you, Michelle. I'll turn to my clinical colleagues in a moment to provide some additional comments. But I just wanted to remind everyone that in the Phase II study in cystinosis, the primary endpoint relates to safety and tolerability. So an important part of the trial is the completion of the currently ongoing highest dose endpoint. After which, there's a follow-up period of additional safety data that's collected. And then there's a review of the totality of the data.

So when we think of the preclinical data that supported our move into this indication, Michelle, we've seen consistent dose response across whether it's cellular models, animal models, in-vitro models. And once again, with 3 doses, we'll be looking for a dose response. I just wanted to clarify that the 1.0 mg per kg dose was the second dose of the 2 doses that had been administered where the substantial reduction of white blood cells cysteine occurred. So with the third dose, we'll first be looking for a dose response curve.

Now I'll ask Dr. Haverty to comment in a moment on how we interpret the clinical benefit associated with this and how we evaluate the totality of the data. But I would remind everyone that if you have the opportunity to read the Procysbi current package insert, it would say that the goal of therapy is to dose escalate patients to a point where the cysteine levels are below that 1 milligram per 0.5 cysteine of mega protein level. So there is a target level that's guided on the Procysbi experience.

So Dr. Haverty, as you think about the totality of the data from Phase II, can you help set expectations of what will we be talking with the expert panel about? And how will we interpret selection of dose to take into additional clinical studies?

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Thomas Haverty, Eloxx Pharmaceuticals, Inc. - Chief Medical Officer [4]

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Sure, Bob, thanks. And thanks for the question, Michelle. Yes, I think the 1 nanomole 0.5 cysteine per milligram of white cell protein is a good bar to try and aim below since that's what Cystagon and Procysbi have achieved.

I would also point out that the third cohort will be dosed at 2 milligrams per kilogram and for 2 weeks. So we will have the opportunity to get an improved dose response on dose as well as a duration response. And as Bob mentioned, we will show this data to cysteine clinical experts in the fourth quarter to clarify what should be achieved and how to select the dose going forward.

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Robert E. Ward, Eloxx Pharmaceuticals, Inc. - Chairman & CEO [5]

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Does that answer your question, Michelle?

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Michelle Lim Gilson, Canaccord Genuity Corp., Research Division - Analyst [6]

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Yes. Yes, definitely. I was also wondering, would you consider increasing the dose given the safety profile demonstrated thus far as you do see a dose response? And then I guess, you are targeting certain exposures at each dose level. And are you able to reach those targets with the -- with doses that you have been giving patients at 1 mg per kg?

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Robert E. Ward, Eloxx Pharmaceuticals, Inc. - Chairman & CEO [7]

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Yes. So Michelle, remember, this Thursday, our team will be presenting. Dr. Williams will be presenting the Renal Impairment Study, and we know that renal clearance plays an important role in dose selection. And remember, with cystinosis patients, they often experience renal impairment, so different levels of renal functions. So the dose has to be adjusted for them.

Dr. Williams, do you want to just remind us of how we use animal models to pick dose range we want to explore? And how that then shapes the dosage range that's selected for the cystinosis and the cystic fibrosis trial?

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Gregory Williams, Eloxx Pharmaceuticals, Inc. - COO & Interim Chief Medical Officer [8]

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Sure. Thank you, Bob. So as we thought about the exposure range that would be appropriate for patients, both in cystinosis as well as in cystic fibrosis, we looked across our translational animal models where the nonsense mediated genes were spliced into those animals. We looked at the exposure levels that demonstrated efficacy, and then we matched those exposure levels with our dosage range in patients.

So with the cystinosis trial, we are looking at 3 ascending doses with the first dose at 0.5-milligram per kilogram, the second at 1 milligram per kilogram and the top dose at 2 milligrams per kilogram. Recognizing that because these patients have different levels of renal impairment, we are adjusting the dose based on our renal impairment study data and based on their individual EGFRs to achieve the exposures of 47.5, 90 and 195 microgram hours per ml. Excuse me, it's 47.5, 95 and then 190 microgram hours per ml.

So we are maximizing exposure while maintaining a safety margin that's acceptable. Is it possible we could go higher in future studies or future cohorts? Yes, that's possible. We need to make sure that the drug is well tolerated in patients, and we'll confirm with some additional safety data as we go forward. But For now, we think we're in the right range to achieve efficacy at a safe and tolerable dose.

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Robert E. Ward, Eloxx Pharmaceuticals, Inc. - Chairman & CEO [9]

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So I was just going to remind everyone. Remember when we talk with regulators, they're really looking for us to identify the lowest dose at which one achieves the efficacy goals of the treatment that's being developed, because it's viewed that the lowest effective dose is one where you still achieve the desired therapeutic outcome but by minimizing drug exposure, have the best safety or tolerability profile.

So as Greg had pointed out, yes, the SAD study, up to 7.5 milligrams per kilogram single-dose exposure, 5 milligrams per kilogram single daily exposure, highest daily exposure in the MAD study. We're not at those levels. But we are, based on our exposure in the animal models, in the range where we're looking for the efficacy in both these indications. Is that accurate, Dr. Williams?

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Gregory Williams, Eloxx Pharmaceuticals, Inc. - COO & Interim Chief Medical Officer [10]

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Absolutely, Bob. Thank you.

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Operator [11]

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(Operator Instructions) Our next question is from Yun Zhong with Janney.

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Yun Zhong, Janney Montgomery Scott LLC, Research Division - Equity Research Analyst & Director of Biotechnology Research [12]

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So the first question is about ototoxicity and the abnormal audiogram that you saw from the MAD study. And I wonder how long of a treatment period -- after how long a treatment period did you see those adverse events. And in the Phase II study, if you have any patient discontinuation due to similar AEs, would that have a big impact on data analysis?

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Robert E. Ward, Eloxx Pharmaceuticals, Inc. - Chairman & CEO [13]

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Thank you, Yun, for the question. Remember, there's been 105 individuals that have been exposed to ELX-02 across our SAD, MAD study and renal impairment, and now 3 patients in the cystinosis trial. And you're referring to the hearing variation, of which I'd ask Dr. Williams to remind us.

Out of the 105 individuals exposed to date, what is the rate at which there were some reports of hearing variation? And how does it compare to what might have been associated with aminoglycosides? As I recall, aminoglycosides, it's irreversible, bilaterable, spreads to additional frequencies. Could you help us understand what was observed in the hearing test to date across our program?

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Gregory Williams, Eloxx Pharmaceuticals, Inc. - COO & Interim Chief Medical Officer [14]

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Right. So there were 3 total healthy volunteers out of 105 exposed that experienced shifts in high-frequency audiometry studies. Most of that occurred out of the normal hearing range. There were no clinical symptoms. The patients have been on drug for some time.

The great news is that because we were testing extensively, we found these shifts in high-frequency audiometry. This is frequently associated with or -- an analogy is used that this is the canary in the coal mine. When we determined these changes then we discontinued study drug, and the patients were all resolved or trending toward resolution. One study drug was removed.

This is clearly -- these were clearly reversible changes. This is in complete contrast to what's typically observed with aminoglycoside antibiotics where those changes are irreversible. Aminoglycoside antibiotics typically result in irreversible and permanent hearing changes. So the safety profile that we've observed with ELX-02 and our library of ERSGs, thus far, is distinctly different from that of aminoglycoside antibiotics.

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Robert E. Ward, Eloxx Pharmaceuticals, Inc. - Chairman & CEO [15]

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And the safety review committee that meets in the Phase II trials, do they evaluate hearing as well as the parameters?

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Gregory Williams, Eloxx Pharmaceuticals, Inc. - COO & Interim Chief Medical Officer [16]

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Yes. So we are continuing our Phase II program with a dedicated audiovestibular safety review group that assesses patients before dosing, after each week of dosing. And as part of our safety review assessment that's conducted after each treatment group, patients have been cleared to continue with no meaningful changes. That's the same procedure that we've followed during our MAD study, where we had a regular AV safety review performed as well as DSMB. So we've got careful, expert monitoring of hearing throughout the study.

And thus far, the safety profile in our Phase II trial has been -- the drug has been very well tolerated with no study drug treatment-emergent events reported to date.

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Yun Zhong, Janney Montgomery Scott LLC, Research Division - Equity Research Analyst & Director of Biotechnology Research [17]

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Okay. So -- and also a follow-up question about the study design of the Phase II study. According to the information posted on ClinicalTrials.gov, the 8 patients in the U.S. will include 4 patient homozygous with the G542X mutation, but the other 4 patient would be homozygous patient with either Class 1 or Class 2 mutations. So my question is, is that the same for the study in EU and Israel? And so the reason for the design is because you want to see different out -- or different treatment outcome in different patient populations?

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Robert E. Ward, Eloxx Pharmaceuticals, Inc. - Chairman & CEO [18]

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So, Yun, remember, when we talk now about our cystic fibrosis trial, the way that we defined responsive genotypes is by screening in the organoids a wide variety of genotypes, where previous research has established that organoid responses have shown a high correlation to clinical trial outcomes in both sweat chloride or FEV1.

And so the G542X genotype, this is whether it's homozygous or heterozygous, has shown a nice responsiveness to ELX-02 in the organoid model. So in all of our Phase II trials, every individual will have G542X on 1 or both alleles.

So Dr. Williams, as we think about achieving our full enrollment in the first quarter with enrollment actively ongoing now in Israel, with our opening of sites in Europe, with Boston Children's Hospital open for enrollment and additional U.S. sites coming along, the trial is not yet fully enrolled. Are the guidances for homozygote and heterozygote mix based on the investigators' identifying patients who meet the inclusion/exclusion criteria? Or are they fixed ratios?

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Gregory Williams, Eloxx Pharmaceuticals, Inc. - COO & Interim Chief Medical Officer [19]

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Right. So we're looking to include up to 4 homozygote G542X in the US and up to 4 in Europe and Israel as well. In terms of heterozygotes, we're looking, as Bob said, at patients with G542X on 1 allele and minimally responsive alleles on the second. They could be -- they could include 128X, they could include 553. They could involve a number of others that are minimally responsive. Our goal is to demonstrate -- to evaluate both safety and efficacy in patients with these nonsense minimally responsive mutations that are consistent with what we've seen in our nonclinical data.

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Robert E. Ward, Eloxx Pharmaceuticals, Inc. - Chairman & CEO [20]

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Did that answer your question, Yun?

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Yun Zhong, Janney Montgomery Scott LLC, Research Division - Equity Research Analyst & Director of Biotechnology Research [21]

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I believe so. Yes.

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Robert E. Ward, Eloxx Pharmaceuticals, Inc. - Chairman & CEO [22]

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Yes. And one thing I would just mention. Remember, we have talked about being part of the HIT-CF consortium, where the HIT-CF is corresponded by the European Union. And it's done in collaboration with the European Medicines Agency, and I believe the FDA is also consulting, where samples from cystic fibrosis patients with rare mutations are being collected. They'll be tested in the laboratory and then a prospective trial run to determine how the organoid responsiveness predicted outcomes in the clinical trial.

We are very pleased to hear from HIT-CF consortium, as they've already collected samples from 100 nonsense mutation patients for which they're developing the organoids, and ELX-02 will be screened on those organoids. So we do feel that HIT-CF is making terrific progress, and we look forward to having these identified additional patients of the European work that they're conducting as well.

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Operator [23]

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And our next question comes from Ted Tenthoff with Piper Jaffray.

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Edward Andrew Tenthoff, Piper Jaffray Companies, Research Division - MD & Senior Research Analyst [24]

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So I wanted to know what next stats were with respect to the ocular program. Pleased to see all the progress on the other programs, too.

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Robert E. Ward, Eloxx Pharmaceuticals, Inc. - Chairman & CEO [25]

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Yes. Thanks, Ted. We think that the ocular program really has a tremendous potential since there are a large number of individuals with different diseases where nonsense mutations underlies the underlying disease state.

Remember, when we achieve our desired concentration of drug in the target tissue, we believe we'll be enabled to read through nonsense mutations found in that target tissue. So establishing a dosage range for intravitreal administration, we believe, will give us the opportunity to address multiple indications.

So Dr. Schneider, would you talk a little bit about our progress towards our sustained release formulation for intravitreal administration?

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Susan Schneider, Eloxx Pharmaceuticals, Inc. - SVP of Clinical Development, Ophthalmology [26]

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Sure. Thank you, Bob. We're delighted with the emerging data profile of our ERSGs focused on IRDs, and we are pleased to have determined our target dosing levels for IDT or intravitreal administration. A key next step is using this information to inform our sustained release program, assuring that we achieve a long-duration injection profile.

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Robert E. Ward, Eloxx Pharmaceuticals, Inc. - Chairman & CEO [27]

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So we are aware that today, for intravitreal administration, once-a-month administration such as Eylea or Lucentis originally launched with, that as formulation technologies improve, that therapies are tending towards once or twice a year as the desired target. We'd like to establish at least a 2-week formulation, which we'd use as the basis for IND filing and moving into human studies. But Ted, one of the important milestones was really the demonstration in the mouse pigment model that our molecules are biologically active.

So, Matt, could you just remind us how does that model inform us on the ability to generate protein?

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Matt Goddeeris, Eloxx Pharmaceuticals, Inc. - Director of Research [28]

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Ted, so this is Matt Goddeeris. And we were really eager to look for a model that had a nonsense mutation in a relevant tissue that we were targeting. So what this model allowed us to do is test whether or not functional protein could be made after an intravitreal injection. We've tested multiple ERSGs, and we are able to see positive responses in those molecules in the model.

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Robert E. Ward, Eloxx Pharmaceuticals, Inc. - Chairman & CEO [29]

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So with that nanogram exposure, Ted, our next step is to engage with a sustained release partner and develop a sustained release profile that's at least bimonthly, and then that would be what we'd go forward with for IND filing.

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Operator [30]

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And we have a follow-up from the line of Yun Zhong with Janney.

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Yun Zhong, Janney Montgomery Scott LLC, Research Division - Equity Research Analyst & Director of Biotechnology Research [31]

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So just wanted to confirm, when you report top line data from the cystinosis study, would that be only from 3 patients in the first cohort?

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Robert E. Ward, Eloxx Pharmaceuticals, Inc. - Chairman & CEO [32]

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You're correct, Yun. We are going to take our top line data from the first cohort, both report top line, but also use that data to engage with the regulatory agencies to look at creating an extension program for the patients in that cohort as well as looking to open up additional sites for the trial here in the U.S. But we're going to have our key investigator and clinical expert meeting this quarter, and then that will be the basis of those next steps.

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Yun Zhong, Janney Montgomery Scott LLC, Research Division - Equity Research Analyst & Director of Biotechnology Research [33]

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Okay. So the plan for the second cohort will still be to be determined based on your discussion with the panel?

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Robert E. Ward, Eloxx Pharmaceuticals, Inc. - Chairman & CEO [34]

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I think that at this point in time, we're very pleased with the progress we're making, and we're evaluating, is this an opportunity to accelerate the program.

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Yun Zhong, Janney Montgomery Scott LLC, Research Division - Equity Research Analyst & Director of Biotechnology Research [35]

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Okay. So then, this might be a follow-up question on a previous question. So do you think you will have to show superior outcome as compared to Cystagon and Procysbi to be a commercially viable product? Or at this point, it's too early to talk about that?

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Robert E. Ward, Eloxx Pharmaceuticals, Inc. - Chairman & CEO [36]

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Well, when you think about target product profile, when a drug is being developed, we write a target product profile that describes the clinical outcomes as well as patient-reported outcomes that go along with therapeutics. So this is both acceptability of routed administration.

So for example, is a subcutaneous self-administered dose a frequency and volume that's acceptable to patients. We listen to patients as they talk to us about the suitability and acceptance of therapy. Remember, one of the challenges right now in the cystinosis population is adherence to existing therapy.

Now also when we talk to both patients who shared some anecdotal observations with us right now, as well as with physicians, our understanding that there's a belief in the clinical community that restoration of the cystinosis transporter may result in other clinical benefits than would be found with cysteamine helping to push cysteine out of other pathways, because our desired goal here is to restore the pathway that would typically be present with functioning cystinosin.

So I think that one of the key discussions that will come from talking with the cystinosis experts will be what is the full range of clinical data that we'll be looking for? We definitely believe that the biomarker is an important endpoint. And I believe -- Yun, did that answer your question? I'm sure Dr. Haverty would have some thoughts to share with you as well.

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Yun Zhong, Janney Montgomery Scott LLC, Research Division - Equity Research Analyst & Director of Biotechnology Research [37]

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Yes. I think that's pretty helpful.

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Operator [38]

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And we have a question from the line of Joel Beatty with Citi.

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Shawn Michael Egan, Citigroup Inc, Research Division - Senior Associate [39]

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This is Shawn Egan, calling in for Joel. I apologize if my questions have already been asked, I'm a little bit late to the call. But have you disclosed how many patients who are included in the statistically significant cysteine reduction? And maybe could you also talk about how quickly that reduction was observed, and maybe by what magnitude?

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Robert E. Ward, Eloxx Pharmaceuticals, Inc. - Chairman & CEO [40]

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Yes, Shawn, so we'll give full top line result when the first cohort has completed all 3 doses. So the 3 patients enrolled in the first cohort. Dr. Williams, do you want to describe the enrollment of the patients and the flow of how the data response will go this quarter?

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Gregory Williams, Eloxx Pharmaceuticals, Inc. - COO & Interim Chief Medical Officer [41]

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Sure. So the -- each cohort consists of 3 patients, and there are 3 doses within each cohort. The first cohort is patients that are 18 years and older. The second cohort includes patients 12 years and older. So as each cohort is conducted, as the first cohort is conducted, we'll conduct a full additional safety follow-up before we begin the second cohort. And in cohort 1, the doses are 0.5, 1.0 and then 2.0 milligrams per kilogram. We are dose adjusting based on their individual level of renal impairment.

And there's a full safety review conducted between each dose group before dose escalation is approved by the safety review committee. When we have the data from the third dose group, which is about halfway done now, we will have a review by a group of clinical cystinosis experts. We will review those data with the investigator, and then we will release top line data on cohort 1, which is 3 patients.

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Robert E. Ward, Eloxx Pharmaceuticals, Inc. - Chairman & CEO [42]

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And yes, Shawn, when we talked about the statistically significant reduction of cysteine level observed with the second dose, the 1 mg per kg, it was with the 3 patients in the first cohort. We will give additional data out as we release our top line data later this quarter.

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Shawn Michael Egan, Citigroup Inc, Research Division - Senior Associate [43]

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Sure. I really appreciate the thorough answer. And just a quick follow-up. Now having successfully demonstrated kind of in-vitro read-through from a number of different compounds in your library in a few different indications. Maybe talk about how you're prioritizing development in each. And are there some agents you'd like to partner and others that you'd like to kind of keep in-house?

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Robert E. Ward, Eloxx Pharmaceuticals, Inc. - Chairman & CEO [44]

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Yes. I think, Shawn, that's a terrific question. What we've done is evaluated both kidney disease, lung disease and the eye, and look at it as the ability to either introduce a novel compound. So for example, the work in the eye will be with a novel compound. With cystic fibrosis and cystinosis currently being ELX-02, it's an opportunity for us to continue to extend ELX-02.

So for example, for ADPKD, both ELX-02 and other library compounds have shown activity. So since ELX-02 is further advanced, opening an IND and ADPKD is much faster with ELX-02 than it is to complete all the IND-enabling studies with a novel compound.

So time for development is an important consideration. The relative profile is an important consideration as well. And as you mentioned, different strategic partners bring different opportunities to the table. So we're undergoing a process now to make sure that as we move forward to our next trials, that we'll be making the right strategic choices as to whether they're novel molecules or continue to extend on ELX-02.

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Operator [45]

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And ladies and gentlemen, this concludes our Q&A session. I would like to turn the call back to Robert Ward for his final remarks.

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Robert E. Ward, Eloxx Pharmaceuticals, Inc. - Chairman & CEO [46]

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Thank you, Carmen. And thank you, everyone, who joined our call this evening. We're very pleased with the progress the team continues to make, and we'll look forward to seeing you again on our next call. Remember, we'll be at Kidney Week this week and then at investor conferences as we move through the final course of the year. Thank you so much for your time tonight.

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Operator [47]

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And with that, we thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating. You may now disconnect.