Good day, ladies and gentlemen, and welcome to the AVI BioPharma Fourth Quarter and Year End 2011 Earnings Conference Call. My name is Keith and I will be your operator for today. At this time all participants are in a listen-only mode. Later we will have a question-and-answer session. [Operator Instructions] As a reminder, today’s conference is being recorded for replay purposes. And I would now like to turn the conference over to your host for today, Ms. Erin Cox, Manager of Investor Relations. Please proceed, ma’am.

Thanks, Keith, and thank you for joining today’s call. Earlier today we released our financial results for the fourth quarter and year ended 2011. The press release is available on our website at www.avibio.com. And our 10-K will be filed on or before March 15. Joining me on the call are Chris Garabedian, our President and Chief Executive Officer and Mike Jacobsen, our Vice President of Finance. I would like to note that during this call we will make a number of statements that are forward-looking, including statements about the development and clinical status of AVI’s product candidates and their potential efficacy, clinical results, intellectual property position, revenues, expenses, potential funding from the government and other sources, and collaboration and partnering opportunities. These forward-looking statements involve risks and uncertainties, many of which are beyond AVI’s control. Any of such risks could materially and adversely affect our business, results of operations and the trading price of AVI’s common stock. For a detailed description of risks and uncertainties we face you are encouraged to review the official corporate documents filed with the Securities and Exchange Commission. With that, let me turn the call over to Chris Garabedian. AVI’s President and Chief Executive Officer, Chris?

Thank you, Erin. Good afternoon, everyone, and thank you for joining us. I’m pleased to provide you with an update and overview of our activities and accomplishments since our last quarterly update along with our financial performance in the fourth quarter and for the full year of 2011. We’ve continued to realize significant progress in our value driving programs, particularly in our rare disease program for the treatment of Duchenne muscular dystrophy and our antiviral programs for the treatment of the life-threatening hemorrhagic fever viruses of Ebola and Marburg. There is a lot of information to cover on the call, so I will begin by providing a detailed update on our DMD program. We completed our placebo controlled portion of study 201, our Phase II B study of eteplirsen in Duchenne muscular dystrophy in February. I’m extremely pleased to announce that we are on track to have top line results of our placebo controlled 24-week data by the end of April. This is a seminal event for the company and that it will help us evaluate the potential disease modifying effects of our drug compared to an untreated placebo cohort. Importantly, we were very careful to include enrollment criteria in that trial that enhances our ability to detect the treatment effect over a 24-week timeframe. We did this by establishing inclusion criteria that captures progressive disease. For example, we enrolled boys that were at least seven years of age at the time of enrollment and also required a certain walking distance on their six-minute walk test specifically between 200 and 400 meters walk that will be informative for predicting a progressive decline of ambulation and other muscle strength and performance endpoints. While we were very encouraged by the biochemical evidence from our previous UK study as it showed that 10-milligram…

Thanks, Chris. First, I may begin by discussing our fourth-quarter results. I will then address the results for the full year and conclude by providing some overall financial guidance for 2012. For the fourth quarter of 2011, AVI reported an operating loss of $9 million compared with an operating loss of $1.7 million in the fourth quarter of last year. The increase is primarily the result of a $1.9 million decrease in government research contract revenues and a $4.8 million increase in our R&D expenses. Revenue for the fourth quarter of 2011 was $13.6 million. This is down slightly from the $15.5 million one year ago. This decrease was primarily due to the completion of the H1N1 flu contracts in the second quarter of this year partially offset by incremental revenues on the current segment by Ebola and Marburg government contracts. R&D expenses were $18.7 million in the current quarter compared to $13.9 million in the fourth quarter of last year. The $4.8 million increase was due primarily to incremental activities for Ebola and Marburg. Additional spending on our DMD product candidate just completed Phase IIB clinical trials and severance costs associated with our December 2011 reduction in force. These increases were partially offset by decreased N1H1 spending. G&A expenses in the fourth quarter were $3.9 million compared to $3.4 million in the fourth quarter of last year. The $500,000 increase was due to our severance costs associated with our December 2011 reduction in force and slightly higher consulting costs. Now, let’s take a minute and look at our full-year results. For the year 2011, the operating loss was $35.9 million compared with an operating loss of $20.9 million for 2010. The $15 million increase was primarily the result of increased R&D costs of about $31 million partially offset by…

Okay, thank you Mike. Operator, you can open up the call to questions.

[Operator Instructions] Your first question is from the line of Ted Tenthoff with Piper Jaffray.

And it sounds like some exciting hires and some good way to start out 2012. So with the statements that you’re going to have 24-week data un-blinded by the end of April, will you be sharing that with us then and or will you be receiving it?

Yes. We will be sharing top line preliminary results from that 24-week un-blinded dataset. As you know Ted, we are a public biotech company, we are going to basically disclose when we get un-blinded data, we are going to try to assess and analyze it in a top line fashion as quickly as we can and put out a press release. Obviously, it’s a very rich dataset, there is a lot of information that we’ll have and it will take a while to really understand everything that the data is telling us, but we will get the most salient top line information disseminated in the form of a press release and that’s really what I’m referring to happen by the end of April.

Great, that’s really helpful Chris. And then when it comes to the - when it comes to the new drugs that you are working on for exon 45 and 50. Do you think you would have that or when do you think you might be able to file IND for those programs?

Yeah, we are optimizing the kind of lead optimization for those programs and we still have a lot of IND-enabling work to do and we have to meet with the FDA to ensure that our thoughts and plans for what is required to get the product into the clinic or both of those products into the clinic will be sufficient. So that’s what will take place over the next year and we’re hoping that we would have an IND filed and be ready for clinical trials by the end of 2013.

Excellent. And then just one last quick question, while you were giving guidance you mentioned that there was a $4 million to $5 million charge and I missed what that was for in 2012?

Yes, that one was a non-cash effect of the stock compensation and depreciation and amortization.

Your next question is from the line of Marko Kozul with ThinkEquity. Please proceed.

Chris, in your first question you mentioned the cleaning the F&B review for the highest dose 50 milligrams, I was wondering if and when you will present that data, will that be part of the end of April update?

Yes. So we basically had the 12-week 50 milligram per kilogram DSMB in January where they were able to look at the biopsy data. Yeah, we expect that the top line data will include both data from the 12-week 50 milligram biopsy results as well as the 24-week 30 mg/kg pre and post. Now, again we are collecting a lot of parameters. At this point, it’s hard to predict exactly what will be shared, but we expect that there will be an element of biopsy data in that - these top line results. Previously we had suggested that we might have an interim look. We since provided guidance Marko, if you had been following it that we didn’t want to risk un-blinding and so we have not seen any of the interim biopsy data to date neither I nor Ed Kaye nor anyone at AVI has seen, looked at, had exposure to the biopsy data and that was for the purposes of the protecting the blind.

All right, perfect. And then you mentioned enrollment criteria for the safety B study that - I was wondering if you could differentiate - maybe talk about the enrollment criteria and how you think that compared to enrollment criteria for the other competing DMD drugs that are out there?

Yes, and the reason I highlighted it Marko because I think it was one of the more thoughtful ways we approach this study especially when you’re dealing with small sample sizes. We knew that a placebo arm will be important to show a true treatment effect. And we knew the best chance to show a treatment effect in a 24-week timeframe was to try to get a patient population that was likely to show some level of decline over that 24 weeks. And so, we did a few things we looked at the literature on natural history and a lot more has been generated over the last couple of years on the natural history of DMD and what was predictors of decline are, we learnt from other companies who done studies in the area like PTC did a blinded placebo control trial for their drug [indiscernible] and understood what were the confounding factors based on their patient population and their enclosing criteria that might have made it harder for them to have shown an effect. We looked at other competitive datasets, so that’s why I highlighted the seven years to 13 years is the age range that we felt would show that more progressive rate of decline and the six minute walk test based upon of score of between 200 and 400 meters walked was also suggestive of a patient population that would be in the decline. So I’m not as familiar with the details of our competitors, those one main competitor we have GSK for sensors product that’s also targeting exon 51. I do know in there their open label results that they have shared they have much broader inclusion criteria and included patients who were much healthier at baseline and many of the patients in their open label study would not have qualified for enrollment in our study. So I think that hopefully answers your question, but how it’s differentiated from others datasets in the DMD states.

Are they being brought on primarily to advance the hemorrhagic virus program or is this part of a broader strategy to drive - maybe additional and future government contracts by advancing some of the earlier programs including [indiscernible] and the antibacterial programs as well.

The short answer is, both. The people I highlighted are part of the broader operational leadership team and they bring great skills and can manage and influence doing the right things on both sets of program. Obviously, Diane Berry and Theresa Moody can lend a lot more experience on the government side of things, but we can also use their expertise for example, Diane Berry is already helping me work on some of the legislative agenda in the rare disease area. There are areas in global health that we have not really focused on that she is helping me focus on. So again, Theresa Moody is an excellent project manager and we can learn a lot from her to apply that to the DMD space. Robin Wallace also spent most of her time as a Senior Director of Clinical Operations focusing on making sure our DMD program was intact, doing the right thing, could cap any audits by the FDA to inspections et cetera. Now, she is applying that rigor to make sure we’re doing the same thing with our math studies for example on the government side. So I think it’s part of my operational leadership team and expect them to contribute across both sides of the business.

Your next question is from the line of Reni Benjamin with Rodman & Renshaw.

I guess just a little bit of clarity, maybe I just missed it in the - in your prepared remarks, but our 201 and 202 completely distinct studies that are running or is 202 kind of the rollover extension phase of 201?

Yes, Reni, study 202 is the extension, right, so it is the rollover. It’s again - as you know, it is common and usually preferred that once you start a cohort of patients if at all possible it’s great to get uninterrupted dosing to show in the case of a chronically - chronic disease that’s going to need treatment potentially for a lifetime that you want to gain uninterrupted dosing from a safety standpoint and to measure while you’re added get some efficacy measures as well. So this is the rollover extension study. We’ve designed it for an additional 80 weeks, okay, from the study 201 28-weeks, again 24 weeks blinded portion versus 4 weeks open label. And that as I mentioned was to prepare all of the remote local sites to take these patients and continue following them. So it’s basically we’ll have - at the end of study 202, we’ll have 108 weeks of data on the initial treated cohort and then again about a year and a half of data on the placebo patients who crossed over.

And just - I think you mentioned that you’d be collecting clinical data every 12 weeks or so in that extension phase. Would that mean - is that correct and if so, since it’s open label, would it be possible or would we be getting updates every 12 weeks as to how the data is continuing to progress?

Yes, I mean that is one of the benefits and beauties of an open label study is that unlike the blinded portion which you have to clean and scrub before you lock down and once you unblind you can’t go back. Open label often times is reported as unaudited data in a more timely fashion. We obviously we get a little bit of time to make sure we analyze it and understand what the data is telling us. But yes we would anticipate continued communications and updates in the open label portion of that study both safety and efficacy and again that’s why we are excited to have, have got all these patients rolled over.

Okay. And just regarding the clinical parameters can you just review for us what should - when the top line results come out what should we be focusing on. You mentioned that you’re looking at a lot of data points and I’m sure you’re going to specify which ones you think are most important. Can you just give us as of which are the ones that you think are most important. Should we be looking for an improvement in these parameters or it’s just a decrease in the decline a good enough result to move forward.

Yes. It’s a great question Ren, So first of all this is the first placebo controlled study with Exon skipping effects in DMD. And so we don’t know what to expect, we never seen an Exon skipping drug tested against the placebo group. So what I anticipate and again how we selected these patients is I’m guessing again we don’t know until we unblind that the placebo group will shoot some level of decline on at least some of the parameters we are looking at. Whether the treated group shows stabilization, an increase which I think would be beyond expectations if these boys were getting improvement. Or do we just show a significant kind of mitigation of the rate of decline which could also be a win for the treatment effects. So, it ultimately is the delta that we’re going to be focusing on. What happened to the placebo group from base line over 24 weeks and what happened to the treated group and how large is that delta on a variety of parameters. Now, we did capture a lot of clinical endpoints and it’s hard to predict which ones will show the greatest treatment effect and its one of the reasons we looked at a lot of end points because we don’t know what exon skipping in producing dystrophin and will actually produce. Is it going to have a greater impact on six-minute walk? Is it going to have a greater impact on muscle myometery strength testing? The MBITTs maybe will see a greater impact on the four stair-climb test or the 10 meter walk is part of Norstar ambulatory composite score. So part of the analysis will be focused on where are we seeing the greatest treatment effect and how meaningful is that treatment effect. So again I can’t be too prescriptive at this point but again we will highlight what we believe demonstrates the impact that our drug is having on the disease.

Okay. And just final question from me, disregarding any sort of partnership talks or discussions that may or may not be going can you give us any color? Is there an excitement in the field at least given what pharma is sort of going through and a lot of the acquisitions that are taking place right now? Do you see a heightened level of interest and with that our people kind of waiting for this data or what they want even more advanced data to formally evaluate the product?

Yes, Reni there is definitely been interest from various pharma partners in this program, in the rare disease space in general and in DMD in particular and again I think they have given as feedback that they have like what we’ve done over this past year in a few months with this program. I think we heard a lot of feedback that these same pharma partners did not have the confidence and faith in previous management and maybe I could do this the right way and I think we addressed that. I think at our current valuation of the current economics that would be attached to a deal prior to the data when the data is so close. Again doesn’t make much sense because of they are not going to give us economics that would reflect what we think data set and how much de-risk the program. So I think we have to see where our valuation is post data set will have to see what the interest level is in that post data and again we have look at the economics of interested parties but make no mistake we believe this is the program that we are managing well, we’ve got the right expertise who knows how to do job development in the rain diseases and Duchenne in particular and we have to be compelled with an economic package that makes sense for partnership. So again our job is to keep this program moving, keep creating value for it, and we will see how that’s reflected in many overtures from partners.

Your next question is from the line of Mara Goldstein with Cantor Fitzgerald.

Just a point of clarification on the Duchenne study, the endpoints - even though you are collecting the information the endpoints do not specifically include these functional tests like the six-minute walk test for muscle strength or anything like that that purely for your use and not necessarily as an endpoint? Correct.

Mara, no, not exactly. So we are collecting all of those as endpoints. And - but they are - it’s how we would describe it as exploratory, okay. So we have identified a primary endpoint of dystrophin as a percent of - positive fibers as a percent of normal, okay. Again similar measure we did in our previous UK study. So and we have a key secondary endpoint of looking at the T-cell infiltrate in the muscle biopsies pre and post. We think even with this small sample size that we have a chance to show statistical significance on either of those endpoints or possibly both, and I think that is something we need to have or we hope to have as the foundation of our biologic activity, right. And a foundation of an efficacy point. Now the endpoints that we’re going to be looking at from an exploratory basis, it’s hard to say if any of these could be powered to show statistical significance, but what we’re intending is that at the very least we will see directional data that suggests that there is a treatment effect and maybe compiling data numerically that suggest the treatment affect. And again the study was originally designed to inform our pivotal study and we think that this information will allow us to power and figure out how to size the length of time we need to provide treatment in the pivotal all of these things could be informed. Now as we get the statistical significance on any of those clinical outcomes, I think we have a home run on our hands. So we’ll have to see if the treatment effect is robust enough, I have to show that.

Right. And I just I know this is maybe speculation at this point to some degree because, you think about signing a Phase III which has be done and also looking at INDs further compounded, but when do you anticipate you might be able to look at cocktails of the treatment, cocktails the drugs for treatment?

I think that is what I would call as a step three, okay? Step one is demonstrating that our technology can produce treatment effect with a target exon, exon 51 in this case with Eteplirsen. Step two is to reproduce similar results in terms of safety and efficacy looking at another exon skipping application or tool like this would be our exon 45 and our exon 50 program that we hope to get in to the clinic. I think at that point we hope to be in FDA and show that we have sequence dependent efficacy and sequence independent safety in terms of and so that if we were able to get a pan exon or class approval where maybe submitting in the data tax targeting exon would allow us to have a group multiple exon skipping drugs. I think at that point then it’s a matter of combining those rights for those features with a double skip, okay to restore dystrophin in their genes - in genes translation. So I think again that’s a little further afield but it is something that we’re thinking about, but I think we have to clear the first couple of steps first.

Our last question comes from the line of Richard Deutsch with Ladenburg Thalmann.

Yes. Chris, in one of our previous conversations, I seem to recall that we were discussing whether Eteplirsen platform could be expanded outside of just the Duchenne exon and I think you mentioned to me that it wasn’t able to. Can you review that and explain why you will be able to skip exons in Duchenne, but you wouldn’t be able to translate that to target exons that maybe helpful in restoring other genetic enabled diseases.

Yes. So first, I would clarify your interpretation of what I said. So, let me be clear. We have a full research program that is focused on exploring new chemistries. We’ve advanced one of those new chemistries, PMOplus that I described looking at antiviral targets, no reason we couldn’t explore the PMOplus chemistry to look at non-viral targets as well. We also showed demonstrable proof of concepts with a peptide conjugated PMO, which turned out to show some toxicity when dosed systemically, but we have continued to advance peptide-conjugated versions of our PMO with the interest in getting better cell penetration into different cell types right to go after different disease areas and tissue targeting and to be able to try to start to dial up or down a various PK properties and targeting a different, different cell types. What I’ve mentioned around our PMO chemistry okay, which is the oldest base backbone chemistry we have - we referred it is the naked PMO backbone chemistry. No longer has patent protection. Also the application of our PMO which has worked a well in DMD to date when delivered systemically seems to have better affinity for disease cell types where the cell membrane is compromised where what we described in DMD field is leakier by the cells so, in the case of DMD when we dosed our PMO systemically its get uptake into leaky disease muscle tissue to allow us to ultimately translate protein and restore dystrophin. We do not see the same affinity for healthier cell types, and so what I meant to convey if you interpret it differently, is that we are focusing in other disease areas with our advanced chemistry that have shown better interest for your uptake better affinity for other cell types and again we that PMO may have application for other disease areas and we are exploring that with some academic collaborator along with new chemistry, but we’re not to disclose where those applications might occur.

Okay, ladies and gentlemen, with that we are out of time for our question-and-answer session today. So I would like to turn the call back over to management for closing remarks.

Okay. Thank you, operator. Well, look, everyone at AVI is very excited about the progress we’ve made at the company over 2011 and the beginning of this year. We have an ambitious, but achievable set of goals for this year. We are very close with the DMD dataset and we look forward to reporting on the progress of that on our next call or before then at various conferences and investment conferences throughout the year. So thank you all for joining us today.

Ladies and gentlemen, that concludes today’s conference. Thank you for your participation. You may all now disconnect. Have a great day.