Achieve Life Sciences Inc (ACHV) 2006 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen. Welcome to the Sonus Pharmaceuticals Incorporated second quarter 2006 conference call. At this time, all participants are in a listen-only mode, following the presentation instructions will be given for the Q&A session. [OPERATOR INSTRUCTIONS] As a reminder, this conference is being recorded today Wednesday the 9th of August 2006.

I would now like to turn the conference over to Ms. Pam Dull, Director of Investor Relations.

Thank you Michael. Good afternoon everyone. We appreciate you joining us today for Sonus' second quarter conference call. As a reminder, this call is being recorded and broadcast live on our website at www.Sonuspharma.com. A replay of the webcast will be available through the same line.

With me this afternoon are Mike Martino, Sonus' President and CEO, Alan Fuhrman, our Chief Financial Officer, Dr. Richard Daifuku, our acting Chief Medical Officer and Vice-President of Preclinical and Clinical Research, and Dr. Elaine Waller, our Vice President of Regulatory Affairs and Quality Assurance.

We will use the following agenda for today's call. First, Michael will make some opening remarks. Second Richard and Elaine will give us an update on TOCOSOL Paclitaxel. Next Richard will provide an overview of progress with TOCOSOL Camptothecin, our second oncology product candidate. Then Alan will review. Mike will summarize objectives for the balance of the year, and finally we will be happy to take your questions.

Before we begin, I would like to remind everyone that some of the statements made today may include predictions, estimates and other information that might be considered forward-looking. These statements are based on current expectations and assumptions that are subject to risks and uncertainties.

Actual results could differ materially from our predictions and estimates as a result of various risk factors, including those identified in our Form 10-K for the year ended December 31 2005, and our Form 10-Qs for the first two quarters of 2006. Copies of which can be accessed on our website.

Now I'll turn the call over to Mike Martino.

Thanks, Pam. Welcome everyone and thanks for your participation. I would like to review our progress during the second quarter and first six months of the year.

As a reminder, we had established 3 top objectives for 2006. Including first, to complete patient enrollment in the Phase 3 pivotal study of TOCOSOL Paclitaxel. To collaborate with our partner Schering AG to expand the global development of TOCOSOL Paclitaxel. And third, to advance TOCOSOL Camptothecin into clinical development. Our progress through mid-year continues to be outstanding, and I remain enthusiastic that we're heading into the second half of this year, with a great deal of momentum to achieve these objectives.

To summarize our progress over the past quarter, first, let me start with the Phase 3 trial for TOCOSOL Paclitaxel. As you know we initiated this trial at the end of September last year, with the aggressive goal of enrolling 800 evaluable patients within one year. Enrollment in the trial is progressing steadily, and at the current and projected run rates, I believe we can meet our end of September target. Even at current rates, I don't expect enrollment would continue past the end of October.

Importantly, we remain on-schedule with the anticipated submission of the NDA by the end of 2007. Richard will provide more details on the trial and enrollment in a moment. Related to progress on the Phase 3 pivotal program, we announced at the beginning of July that Sonus reached agreement with the Cancer And Leukemia Group B foundation, or CALGB, to acquire rights to use data from the CALGB study 9840. Which is a Phase 3 trial comparing weekly dosing of Taxol to three weekly dosing of Taxol in patients with metastatic breast cancer.

As previously discussed, we view these data as an insurance policy, should we need to submit data in the TOCOSOL Paclitaxel NDA, that support weekly dosing of Taxol. Elaine will go into a little more detail on this later in the call.

Regarding our collaboration with Schering AG, we remain very pleased with the pace and content of our discussions, to map out and implement a worldwide development and marketing strategy for TOCOSOL Paclitaxel, including plans for Japan and Europe. During the second quarter I'm delighted to report that Schering's subsidiary in Japan, Nihon Schering KK, submitted the Japanese investigational New Drug Application, which has been accepted by the regulatory authorities. Nihon Schering expects to start the Japanese Phase 1 study in 2006. We believe this is an important step forward, that continues to reflect Schering's commitment to TOCOSOL Paclitaxel.

Turning now to the development of TOCOSOL Camptothecin, we reached a key milestone at the end of June with the submission of the IND to the FDA. The Agency completed its review of the IND at the end of July, and concurred that we may proceed with the Phase 1 study, which we expect to begin early in the fourth quarter. We are really excited about the application of our TOCOSOL technology, to a new chemical entity invented by Sonus scientists. We believe this serves to further demonstrate the strength and versatility of both our core capabilities and proprietary technology. Richard will provide an overview of the Camptothecin program in a moment.

Finally, in addition to the achievements with our drug development programs, we also completed a registered direct offering in the second quarter that netted $28.6 million. This raise significantly strengthened our balance sheet. Importantly, it put us in a position to continue to fund aggressive operational objectives through the end of 2007, and have sufficient cash to get through at least the first quarter of 2008.

So that's a recap of key second quarter events. It's now my pleasure to introduce Richard Daifuku and Elaine Waller. Richard and Elaine are seasoned bio-tech and pharmaceutical executives, and their experience and expertise in managing drug development programs, are an important asset for us. Elaine joined Sonus more than three years ago, and Richard has been with us for more than two years. They have played key roles in the development and implementation of the clinical and regulatory plans for TOCOSOL Paclitaxel, including the design of the Phase 3 trial, negotiations with FDA to secure the Special Protocol Assessment, and managing the collaboration with Schering AG.

They have also been directly involved in the development and implementation of the clinical and regulatory plans for TOCOSOL Camptothecin. Since joining Sonus in 2003, and in addition to her Regulatory and Quality Assurance responsibilities, Elaine has been the project leader for the internal TOCOSOL Paclitaxel team, and interfaces directly with the project leader of Schering AG, on the coordination and integration of joint development activities for TOCOSOL Paclitaxel. Prior to joining Sonus, Elaine was Chief Operating Officer for Radiant Research, a nationwide clinical site management organization. Her previous experience also includes senior positions in Regulatory Affairs and Clinical Research at Hoechst Marion Roussel and Marion Merrell Dow.

Richard started at Sonus in 2004. He has authored multiple clinical protocols for TOCOSOL Paclitaxel, and serves as Medical Director for those studies. Richard is the lead clinician on the TOCOSOL Camptothecin project team, and was intimately involved in preparing the IND for that product. Prior to joining Sonus, Richard was Founder, Chief Executive Officer and Chief Scientific Officer at Koronis Pharmaceuticals, where he was the inventor of an antiviral drug currently in clinical trials. Richard has also held senior positions at Targeted Genetics, Amgen Corporation, and Cetus Corporation. I have to say that as a small organization we are extremely fortunate to have professionals with Richard's and Elaine's experience on our team.

With that introduction, I will turn the call over to Richard.

Thanks, Mike. It's a pleasure to join the group today. Let's take a look at enrollment in the Phase 3 trial of TOCOSOL Paclitaxel. As a reminder, the trial is randomizing 800 evaluable patients with metastatic breast cancer.

As Mike said, based on enrollment at the end of July, and projected rate for August and September, we continue to believe that we can meet our end of September enrollment target. Even if we don't achieve the projected rates we wouldn't expect enrollment to continue past the end of October. It's important to remember two points.

One, we continue to expect to have the adjudicated objective response rate results from the Phase 3 trial in mid-2007, which is in-line with our prior guidance. And two, based on the timeline, we also anticipate that submission of New Drug Application will occur by the end of 2007, also consistent with our previous guidance. As you may remember, the initial NDA submission for TOCOSOL Paclitaxel will be based on analyses of data for the primary end point of objective response rate.

In parallel with our Phase 3 activities, I would also like to mention that we are nearing completion of patient enrollment in the Phase 2 bladder cancer study of TOCOSOL Paclitaxel. We anticipate preliminary data from this trial late this year or early next year.

I will now turn the call over to Elaine to provide some details on the CALGB agreement.

Thanks, Richard. As Mike mentioned, we have entered into an agreement with the CALGB to use data from their 9840 study. If we need to submit it in the TOCOSOL Paclitaxel NDA to support weekly dosing of Taxol.

As a reminder, the approved dosing regimen for Taxol is once every three weeks. Since our Phase 3 trial is a head-to-head comparison of TOCOSOL Paclitaxel and Taxol administered on a weekly dosing schedule, the FDA has indicated to us that a New Drug Application approval will require, either, one, demonstration of superior efficacy of TOCOSOL Paclitaxel compared to weekly Taxol in the Phase 3 study. Or two, demonstration of noninferior efficacy as compared to Taxol, plus either a change of the approved label for Taxol to include a weekly dosing schedule, or submission of reviewable data in the TOCOSOL Paclitaxel NDA to support weekly dosing of Taxol.

In the event that TOCOSOL Paclitaxel does not achieve superior efficacy over Taxol in the Phase 3 trial, or the currently approved label for Taxol is not changed to incorporate a weekly dosing schedule, the CALGB 9840 data will be submitted to the FDA as part of the TOCOSOL Paclitaxel NDA, to support weekly dosing of Taxol as the reference arm in the ongoing Phase 3 trial.

With that I will turn the call back to Richard to discuss TOCOSOL Camptothecin.

Thanks Elaine. I am excited to present TOCOSOL Camptothecin to you. Let me point out this is Sonus' first new chemical entity, which is demonstrating the second application of our proprietary TOCOSOL technology, as well as our growing capabilities in drug development.

By way of background, TOCOSOL Camptothecin is a new entry in the same drug class as the approved camptothecin analogs, irinotecan and topotecan, which are currently used for the treatment of colorectal, lung, ovarian,and cervical cancers. Camptothecins are among the most important class of anticancer drugs introduced in recent years. However, the commercially available products have demonstrated toxicities that limit their clinical utility.

TOCOSOL Camptothecin is a proprietary new chemical entity that's a conjugate of SN-38, and is formulated with our vitamin E-based TOCOSOL technology. SN-38 is the active ingredient of irinotecan, compared with irinotecan, and based on encouraging preclinical results, our objectives with TOCOSOL Camptothecin are to demonstrate, one, increased exposure to SN-38 at identical dose levels. Two, a longer circulating half-life of SN-38 requiring less frequent dosing. Three, improved antitumor efficacy. Four, reduced toxicities to the gastrointestinal tract as well as improved patient tolerance. Five, reduced duration of administration. And finally, improved convenience of use by eliminating the need for reconstitutional or dilution.

At the end of June we met a significant milestone with the submission of the IND for TOCOSOL Camptothecin. The FDA completed its review of the IND in July, and agreed we may proceed with a Phase 1 study. I'm pleased to report that we will be initiating that study early in the fourth quarter at two U.S. cancer centers. The Phase 1 study will investigate the safety profile of TOCOSOL Camptothecin at different doses, in order to determine the maximum tolerated dose in humans.

The study is also designed to observe antitumor effects of TOCOSOL Camptothecin, as well as to characterize the pharmacokinetics of the drug. We are excited about the potential of this drug product candidate, and moving it into human studies will mark an important event for us.

I will turn the call over to Alan for a review of our financials.

Thank you, Richard. I will briefly review the financial results for the quarter, which were reported in our press release this afternoon. For the second quarter 2006, we reported a net loss of $4.9 million, or $0.14 per share, compared with a net loss of $4.1 million, or $0.19 per share for the prior year quarter. For the first half of 2006, Sonus reported a net loss of $10.2 million, or $0.31 per share, compared to the net loss of $8.9 million, or $0.41 per share for the same period of 2005.

The higher net loss quarter-over-quarter and year-to-date, reflects planned levels of higher spending, as we continue to execute the clinical developments and regulatory plans for TOCOSOL Paclitaxel, including the ongoing Phase 3 trial. Our losses for the second quarter and for the first six months are offset in part by revenue recognized in the second quarter related to our partnership with Schering AG.

In the second quarter of 2006, we recognized revenue of $7.5 million, which includes $6.1 million in revenue from reimbursable expenses for work related to the development of TOCOSOL Paclitaxel, and an additional $1.4 million in revenue for amortization of the upfront license fee that we received from Schering AG in 2005. For the first six months of 2006, we recognized a total of $11.6 million in revenue, including $8.8 million for reimbursable expenses for the Phase 3 program, and $2.8 million for the amortization of the upfront license fee. As a reminder, we are amortizing the upfront license fee at a rate of approximately $460,000 per month through the end of 2008. We anticipate increased revenue in 2006 due to higher reimbursement levels on the development program for TOCOSOL Paclitaxel.

Our projected gross expenses for 2006 remain at the level we previously anticipated. And that's approximately $55 million. However, our net burn is now expected to be between 30 and $32 million, compared to our prior guidance of 38 to $40 million. I want to emphasize that the anticipated reduction in our 2006 burn rate is a result of the timing of reimbursements between Sonus and Schering, and does not reflect a lower level of spending on our programs. In other words, reductions in the 2006 burn rate will be offset by a corresponding increase in our 2007 burn rate.

We ended the second quarter with $67 million in cash, and we have no long-term debt. With our revised burn rate we expect to end 2006 with approximately 49 million in cash, which will provide us with the resources to operate at least through the first quarter of 2008.

That completes the financial review, and I will turn the call back to Mike for some closing remarks.

Thanks, Alan. In summary the implementation of our drug development and financial strategies is on-track. The second half of this year will be an exciting time for Sonus, and we are very optimistic of meeting our key objectives, which once again can be summarized as follows. First, our most important priority remains to complete patient enrollment in the Phase 3 trial for TOCOSOL Paclitaxel. Second, we will continue our joint efforts with Schering, to implement additional development plans for TOCOSOL Paclitaxel around the world. And third, we will initiate the Phase 1 study for TOCOSOL Camptothecin.

Again, I would like to thank you for joining us today, and for your continued interest and support, and Michael will now open the line for questions and answers.

[OPERATOR INSTRUCTIONS] Just a moment for our first question. That's coming from Mark Monane of Needham & Company. Please go ahead.

Good afternoon and thanks for taking my question. Actually I have two. First of all congratulations on your progress to the team.

Thank you.

Second, could you comment on the spend more time on the licensing of the data that you achieved during the quarter, and how that will help you achieve a potential filing. And if there are other companies that have done this potentially in their filing strategy, in a related area?

Thank you, Mark for the question related to the CALGB data, and the place of that data in our strategy. You know, again, as Elaine has elaborated, our pivotal trial is a head-to-head trial of weekly dosing of TOCOSOL Paclitaxel versus weekly dosing of Taxol, and we anticipate submitting the NDA, and FDA filing under the 505b2 [mechanism]. Weekly dosing of Taxol is not currently included in the label, and as previously discussed, however, FDA agreed with us that the standard of care in metastatic breast has clearly moved to weekly dosing, and therefore, we have an inconsistency between the clinical practice and the label.

There are several possible ways to address that inconsistency, including that we could improve superiority of TOCOSOL Paclitaxel versus weekly dosing of Taxol, and then this is a moot point. What we have done in that case effectively is purchased an insurance policy, which we would not use. The second way to remedy it is, that the label for Taxol could be changed through a variety of mechanisms, that are frankly, between the FDA and companies that have Paclitaxel approved NDAs, or ANDAs potentially.

While we have little visibility on that, we believe based on our discussions with FDA, that they would have an interest in achieving that outcome. What we have consistently said, however, is while that would be a tidy outcome for us, it's not one that we can influence and control, and therefore we can't hinge our strategy on it, and that's where the CALGB data comes into play, and specifically if our trial was noninferiorty of TOCOSOL Paclitaxel to weekly dosing of Taxol, that it would be our intent to submit the CALGB data to support the appropriateness of weekly dosing of Taxol as a reference mark.

And we believe from our review of the data that's been publicized to date regarding the CALGB study, discussions with FDA, that that data would be sufficient to address this issue.

And has any other company, has this strategy been employed in the past by other companies? Are you or the team aware of, I know that every drug approval or regulatory process is unique. But have we seen this before in cancer or other related conditions to the best of your knowledge?

To our knowledge these data have not been licensed for use by any other sponsor. And further, the FDA suggested them as a reviewable data set to us.

Okay. That was helpful. Thank you for the added information. Again, congratulations on the new team members and your progress.

Thank you, Mark.

Thank you. Juan Sanchez, Punk, Ziegel & Co.

Hi guys, how are you doing? I have a short question. Give us some color about the design of the Phase 1 trial for Camptothecin.

The design of the Phase 1 trial? Sure. Richard?

Yes, I would be delighted to do that. There isn't really anything unusual about the trial design. It's a dose escalation study, that we are performing primarily as was mentioned to try to determine a maximum tolerated dose. We also are trying to obviously get kinetics in humans in that trial. And we have also tried to build in some measures of drug efficacy, so that we can get some pointers to lead toward Phase 2 development. There is nothing really unusual about the trial design.

There will be two centers, right?

Two centers in the United States.

How many patients of procurement?

It's difficult to answer, because that depends on how many doses we end up using in these patients. And so I can't really answer that question actually.

Okay. That's great.

I think we could say, though that we anticipate that under a number of different scenarios, it will take about a year to enroll patients in the trial.

Correct.

Thank you very much.

Thank you. I might also add to that, by the way, that the two sites have been identified. That are currently going through the IRB process. One of the changes that has occurred probably over the last couple of years in the process, is historically you could typically submit protocols to IRBs, in parallel with the IND submission to FDA. Increasingly IRBs including the two with the sites that we have selected, which by the way we believe are leading sites, are requiring that the INDs be reviewed by FDA, before the IRBs give their consent.

Great. One last question about the enrollment of the other Phase 3 trial. You are committing to October? Or committing to September?

We still believe September is doable. I think in essence if you look at what we said, we said based on actual enrollment through the end of July, and the projected enrollment for August and September, we should hit our target at the end of September. However, as previously communicated, we do expect a downturn in August. And a corresponding pickup in September. If the August downturn is deeper than we anticipated, and/or the September pickup is slower than we have anticipated, we may miss that target slightly. But we believe that looking at the run rates, that the end of October is doable given our current run rates. In other words, without the pickup in September that we have anticipated.

That's great. Thank you very much.

Thank you. Vinny Jindal with ThinkEquity Partners. Please go ahead with your question.

Hey guys. How are you doing?

Hi, Vinny.

Couple quick questions first getting back to the Camptothecin Phase 1 trial, will it be your typical drill of solid tumor patients, wide ranging solid tumors, who are pretty beat up, and have failed a lot of therapies, or are you going to specify a little bit more and try to get a particular patient type, like colorectal cancer, for example.

This is Richard. No, you are right. It's a former. In other words, it's the usual Phase 1 trial where we are taking patients who have failed other therapies, who may have a number of different tumor types. We have stated that we would prefer to get specific tumor types where we think Camptothecins have demonstrated effectiveness in the past. But we're not narrowing it down, if you will, to colorectal.

Got you. Another quick question was, could you remind us what the trial design is, in terms of centers, et cetera, for the bladder trial that is going to be reporting at about year end?

Yes. I can do that as well. The bladder trial is a trial in patients who have failed one other chemotherapy for meta colonic cancer, so it's second line for metastatic bladder cancer. We are very close to completing enrollment as was mentioned in that trial, and we anticipate again as you mentioned to get the data out toward the end of the year, or early next year.

And that will be top line response rate data? Or survival?

Well, we will have if you can imagine, we will have our response rate data first, and then we will follow that on with other time dependent variables. But those, as you know, take longer to achieve.

All right.

And the size of the trial involves 44 patients.

And how many centers?

How many centers do we have? I think we have eight centers. I'm trying to remember the exact number, but I think that's correct.

Okay. And how many patients were enrolled in the Phase 3 for TOCOSOL Paclitaxel in breast cancer at this point at the end of July?

We are very close to 650 patients currently in the trial.

got you. And I know that the response is blinded, too. Has there been any other feedback from the current investigators in the trial, regarding how TOCOSOL Paclitaxel is differentiating itself from other taxanes, obviously infusion time is one. Are you getting qualitative feedback on how TOCOSOL Paclitaxel might be different than its competitors?

Yes, this is Richard again. That's a difficult question to answer, because as you know we are trying to remain, we are blinded, and we are trying to remain so. While we have that interactions with investigators, they don't deal with differences between the two arms of the study. We are obviously trying to encourage them to enroll patients in the study to complete our accrual as rapidly as possible, but that's really the limit of our interactions with them. We are not really involved in trying to figure out whether one arm is doing better than the other, because it could compromise ultimately the validity of the trial.

Got you. And then one last question. You guys have made the step of getting the CALGB data, to prepare for the possibility that you achieve your end point, but don't have physically significant improvements in response rate.

Let's say that scenario does come to pass, where you win the trial, but aren't differentiating yourself with a statistically significant basis. The marketing message if you hit physical significance is very clear. In that other scenario, how do you view marketing the drug, and what sort of advantages do you view the drug having to make it competitive?

Well, we really think that as Vinny we discussed before with you, a hierarchy of needs related to differentiation of the drug, and clearly at the pinnacle of that hierarchy remains statistically significant efficacy. As we have seen historically in this area objective response rate will be viewed as a good initial indicator, especially in breast cancer.

However, the secondary end points of progression-free survival and survival could also be significant. And as we said earlier, we think there is a possibility with this drug, and I don't know how to handicap it, but there are several possibilities. One, we could prove superior efficacy with objective response rate. Second, we could prove noninferior efficacy with objective response rate, but even in that case, because of the le to aren't of the drug and the ability to give it to patients repeatedly over long periods of time, and that's a conjecture based on our Phase 2 data to date.

But because of that, that even if we demonstrate noninferior objective response rate, that we could still demonstrate superiority on the time-based end points of progression free survival, and/or overall survival. But clearly, efficacy is at the pinnacle of the hierarchy of needs. We think the second level in that hierarchy of needs is safety and tolerability. And our market research continues to support the belief that the area of most interest in that regard, is a reduction in both severity and incidence of peripheral neuropathy.

And as you know based on our Phase 2 studies, we believe our drug will differentiate itself there, although that is to be specifically proven from the results of the Phase 3 study. Finally the base of the pyramid is convenience and ease of use. And there we believe the ready to use feature, the ability to give it as a quick 15-minute infusion in small volumes, will differentiate the drug. I think ultimately the marketing program for the drug, will depend upon how many levels in that value pyramid we are able to claim, based on the results from the Phase 3 trial.

Got you. Great. Thanks so much for taking my questions.

You're welcome, Vinny.

Ladies and gentlemen, [OPERATOR INSTRUCTIONS] Alan Leong of Biotech Stock Research.

Thank you for taking my questions. Congratulations on the quarter.

Hi, Alan. Thank you.

Assuming you are on-track for September 2000 enrollment completion, we really get our first look somewhere in mid 2007, how will it get published? Will you press release the top line results?

Well, it is difficult to conjecture on that at this point, and probably inappropriate to do so. I mean, there are tensions there, that would have to be balanced. On the one hand, clearly results that are material to Sonus, we would have to disclose. At the same time, I would remind everyone that this is a trial designed for ongoing therapy and follow-up of patients.

And what we would not want to do, and what we would have to balance is biasing the ongoing conduct of that study. So, for example, in an aggressive best world scenario, if we are significantly better than Taxol in objective response rate, from an investor relations perspective, that's great news.

We would hate to significantly bias the balance of the trial, by convincing investigators that continuing to treat patients in the Taxol arm is an inappropriate thing to do, or to bias the trial by doing something that tampers with how they treat TOCOSOL Paclitaxel patients for the balance of their participation, based on the presumed knowledge that it's a superior drug.

So I'm not trying to avoid a direct question. I'm trying to indicate that it's going to be a difficult question to answer. Clearly from an investor perspective and from an SEC NASDAQ compliance perspective, we would be bound to release any material news, and our policy has in fact been always to do that. At the same time there are scientific and clinical issues that we would have to weigh in the balance.

Fair enough. I hope life becomes difficult in that way for you.

Thank you for that wish.

Here is a question from Dave Miller, and I will paraphrase the end of it. He asked if the analysis for nonsuperiorty and superiority happen at the same time, and I assumed that the sequentiality of that, you have to do superiority first, and if it's good, then you stop.

Yes. Actually, the way the physical analysis plan is written is reversed. We would do noninferiorty first, and then do superiority. At the end of the day, I don't know that it matters too much in what order you do them. We have sized the protocol for noninferiorty analysis.

I think Alan, from my perspective and I probably should disclose that I'm probably on the fifth version of 'Statistics for Dummies' that various members of my staff have given me.

But I think the important point there, is that the trial is sized such that if we reach statistical significance on noninferiorty, then we are overpowered to support superiority, if in fact the data suggests superiority.

That's correct.

Very good.

A better way of putting it actually. Because actually the analyses could take place simultaneously, but it's somewhat the order of priorities.

Thank you.

We have a follow up from Mark Monane. Please go ahead.

Thank you. Could you comment, could you spend time, Michael, commenting on the Taxol market in general. There are a number of different choices, and the market is getting more and more mature, ABRAXANE recently signed, is now being marketed with AstraZeneca at this point, can you tell us about what your impression of the market overall, and what is the potential for TOCOSOL Paclitaxel if the trials are positive? If the trials are positive to enter this market?

Well, Mark, as you can imagine, Schering and ourselves are spending an increasing amount of time and money studying those issues. What I can tell you at this point is that we continue to believe that, #1, taxanes will continue to be the backbone of effective chemotherapy. Secondly there is a demonstrated need in the market for not only a more efficacious taxane, but also one with a better safety and tolerability profile, and a better convenience and ease of use profile. Again depending upon which levels in that value hierarchy we reach.

We believe that TOCOSOL Paclitaxel has the potential to be the taxane of choice, and we view this globally as better than a $3.5 billion market opportunity. Beyond that, any projections of sales or income, I would have to defer to Schering at this point. It wouldn't surprise you to learn that they are not eager to make those forecasts at this point, for a product still in Phase 3 development. However, I believe that they have publicly stated that they view the potential of this product in the initial metastatic breast cancer indication only, and in the United States market only, as about 250 million Euros, or $300 million.

That's helpful. That's helpful. Thank you.

You're welcome.

Lastly we have a follow-up from Vinny Jindal. Please go ahead.

Hey, guys, some of the other end points you were mentioning, progression free survival, overall and median survival. When you submit your NDA by the end of next year, would any of that data be available, or do you think it's something that would become formalized acknowledgement from the FDA, after the initial review, and/or approval of the NDA on response rate.

Vinny, this is Elaine. The plan as we have stated both internally and with the FDA, is that the original NDA would have the objective response rate data included in it. And then the plan would be that for the progression free survival, and overall survival data, that those would be submitted as supplements to that NDA, for what hopefully would be labeling changes to the original approved label.

Got you. On a generic basis, with your experienced clinical trials for this disease, when do you think that data will be available. If we get response rate data mid-year next year, NDA at the end of next year, when do you think that the investment community would get a glimpse, into what the data is for those other end points?

Well, I think, this is Mike, if you look at our current timelines assuming submission of the NDA and at the end of '07, and we have pretty consistently said that the conservative assumption is for a standard review, so if you anticipate approval at the end of 2008, then, you know, we would expect that the progression-free end point data should be available by mid to end 2008.

And the overall survival data hopefully wouldn't be available until mid to late 2009. And what I mean by that, is that if it's available earlier, that is probably not a favorable comparison to the world's experience with Taxol. Those would be the timelines. So mid to late 2008 for the progression-free survival data, and mid to late 2009 for the survival data.

Great. Thanks a lot, guys.

Management, there are no further questions. Please continue with any closing comments.

Thank you, Michael. To wrap up I would like to mention our next opportunity to speak to you will be at two upcoming Investor conferences. On September 12 we'll be presenting at the Bear Stearns Annual Healthcare Conference in New York City. On September 14 we are presenting at the ThinkEquity Partners Growth Conference in San Francisco.

Our presentations at these conferences will be broadcast live and archived on our website. That concludes our call for today. We thank you for joining us.

Thank you. Ladies and gentlemen, this does conclude the Sonus Pharmaceuticals second quarter 2006 conference call. If you would like to listen to a replay of the conference call in its entirety, you may do so by dialing 800-405-2236 or 303-590-3000. Using the access code 11067106. The numbers again 800-405-2236 or 303-590-3000 using the access code 11067106. You may now disconnect. Thank you for using ACT Teleconferencing, have a very pleasant afternoon.