Athersys Inc (ATHX) 2010 Q3 法說會逐字稿

Good afternoon. My name is Caroline and I will be your conference operator today. At this time I would like to welcome everyone to the Athersys Third Quarter Financial Results Conference Call. (Operator Instructions) Thank you, and Bill Bunting, you may begin your conference.

Thank you, and good afternoon, everyone. I am Bill Bunting of In-Site Communications, Investor Relations for Athersys. Thank you for joining today's call. You should have a copy of the press release issued at the close of market. If you have not received it, the release is available on the Athersys website at www.athersys.com, or please call Libby Abelt at 212-759-5665, and it will be sent to you immediately.

Gil Van Bokkelen, Chairman and Chief Executive Officer; B.J. Lehmann, President and Chief Operating Officer, and John Harrington, Chief Scientific Officer of Athersys, will host today's call. The call is expected to last approximately 30 to 45 minutes and may be accessed through the Company's website at www.athersys.com. A replay will be available after this call's completion by dialing 800-642-1687 in the U.S. and Canada, and 706-645-9291 from abroad, and entering access code 18341603.

Any remarks that Athersys may make about further expectations, plans and prospects constitute forward-looking statements for purposes of the safe harbor provision under the Private Securities and Litigation Reform Act of 1995. Actual results may differ materially from those indicated by the forward-looking statements as a result of various important factors, including those discussed in the Company's forms 10-Q, 10-K, and other public SEC filings. Athersys anticipates that subsequent events and developments may cause its outlook to change. While the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. With that, I would like to turn the call over to B.J. Lehmann. B.J.?

Thanks, Bill. Good afternoon, and welcome to the Athersys third quarter 2010 earnings call. I am B.J. Lehmann, President and Chief Operating Officer at Athersys. I will briefly review our financial results for the third quarter ended September 30, 2010, and will then turn the call over to Gil Van Bokkelen, our Chairman and CEO, for a corporate update.

In the third quarter of 2010, we recorded revenues of approximately $2 million, compared to $484,000 for the same period in 2009. Contract revenue increased $1.4 million for the period primarily as a result of our collaboration with Pfizer. We expect our contract revenues related to the Pfizer collaboration in the next few years to reflect the amortization of the $6 million upfront license fee over the estimated performance period, include research and development funding, and include reimbursement for the performance of manufacturing services. Also, we expect our contract revenues related to the RTI collaboration to reflect the amortization of the $3 million license fee over the next several quarters.

Our research and development expenses for the third quarter increased to $4.3 million compared to $2.7 million for the same period last year. The increase of $1.6 million related primarily to increased clinical and preclinical development cost at $1.4 million, an increase in personnel cost of $186,000, and an increase in research supplies of $128,000. These increased expenses were partially offset by a decrease in the stock compensation expense of $132,000. We expect our research and development expenses for the remainder of 2010 to continue to be higher than the comparable period in 2009, though this impact will be largely offset by increased revenues.

General and administrative expenses for the third quarter of 2010 were $1.3 million compared to $1.2 million in the third quarter of 2009. We expect our general and administrative expenses to continue at similar levels for the remainder of 2010.

Our net loss was $3.7 million, or $0.19 per share in the third quarter of 2010 compared to $3.4 million, or $0.18 per share in the third quarter of 2009.

Our cash, cash equivalents and available for sale securities were $17.8 million September 30, compared to $20.1 million at June 30, 2010. For the nine months ended September 30, 2010, our net cash used in operating activities was $8 million. Based on our current business and operating plans, and assuming no new financings or significant business transaction, we believe we have cash available to fund our operations through 2011. With that, I would like to turn it over to Gil for the corporate update.

Thanks, B.J. Good afternoon, everyone, and thank you for joining our call today. I would like to begin with a brief review of our recent progress in our key development programs and several other areas. As we described previously, we are committed to developing a portfolio of programs applying our knowledge, expertise and proprietary technologies across multiple therapeutic areas. We are also committed to developing best-in-class new medicines that we believe have the potential to be safer and more effective therapies than currently available approaches, and that could advance clinical care in meaningful ways.

We are developing these programs both internally and in the context of strategic partnerships with other organizations, including commercial partners in leading research and clinical centers. Through these activities we intend to advance our portfolio, develop therapies to address unmet medical needs, and create substantial value for our shareholders.

At the end of last year we announced an exciting new partnership with Pfizer focused on the development of MultiStem for the treatment of inflammatory bowel disease, a debilitating set of conditions that affect more than two million people across the US, Europe and Japan.

We and Pfizer believe that MultiStem has great potential for the treatment of IBD and could address significant unmet medical needs by overcoming limitations of currently available therapies to treat conditions like ulcerative colitis and Crohn's disease. We also believe that by working together we can unlock this potential in an efficient manner.

Since the partnership was launched, we have worked in a closely coordinated manner with our colleagues at Pfizer Regenerative Medicine and have made rapid progress in several key areas. The members of both organizations are committed to the same objectives, which first and foremost include patient safety and demonstrating therapeutic effectiveness through well designed, efficiently executed studies.

This morning we announced that the FDA has authorized commencement of the Phase II clinical trial in which we will evaluate the safety and efficacy of administration of MultiStem for the treatment of ulcerative colitis. The Phase II study is a randomized, double-blind, placebo-controlled multi-center study in patients with moderate to severe ulcerative colitis. The trial is designed to include approximately 126 patients who will receive multiple doses of either MultiStem or placebo administered over an eight-week period. Clinical efficacy endpoints will be examined through week 16, with follow-up of patients for 12 months. The study will be conducted at clinical centers in both North America and Europe, and we expect patient enrollment to begin before the end of 2010.

Pfizer is acting as the primary sponsor for the study and will bear all costs associated with conducting this trial, and we will be responsible for providing clinical grade MultiStem, which will be produced through our manufacturing partnership with Lonza.

This exciting news of moving directly into a Phase II trial clearly validates our strategy of undertaking extensive preclinical and clinical work in all of our development programs in order to lay a solid foundation of scientific evidence that can be leveraged to move programs rapidly and efficiently into advanced clinical trials.

In addition to the exciting progress in our partnership with Pfizer, we have also advanced other collaborative initiatives. In September, together with RTI Biologics, the leading provider of orthopedic and other biologic implants, we announced an agreement under which Athersys will provide RTI access to specific cellular technologies related to our Multipotent Adult Progenitor Cell Platform for application in the orthopedic area.

Under the agreement, RTI licensed our technology to isolate and preserve cells from organ and tissue donors. The goal is to enable RTI to develop and commercialize MAPC technology based biologic implants exclusively for certain orthopedic applications in the bone allograft area.

With this agreement, RTI expands its capabilities for accessing the fastest-growing segment of the $2 billion bone graft substitutes market, and Athersys extends the application of our stem cell technology platform to an important segment of the orthopedic market, which is outside our core focus area.

Under the terms of the agreement, Athersys will receive a $3 million license fee paid in three installments. $1 million was received at inception, and an additional $2 million will be received in equal payments that will occur at the end of this year and at the end of the first quarter in 2011.

We are also eligible to receive payments up to a cumulative total of $37.5 million as follows -- $2 million contingent upon successful achievement of certain development and commercialization milestones, and an additional $35.5 million contingent upon achievement of certain revenue milestones. In addition, we will receive tiered royalties from the distribution of implants using our technology.

We have also made progress in certain grant funding initiatives. Last week we announced that Athersys successfully secured three Therapeutic Discovery Project Grants by the IRS as part of the Patient Protection and Affordable Care Act of 2010. These grants were awarded to fund Athersys development of MultiStem for the treatment of AMI and cardiovascular disease, as well as for the treatment of multiple diseases causing acute tissue and chronic inflammation.

In addition, one of the three grants was awarded for our pharmaceutical development program in obesity. The Therapeutic Discovery Project Grants totaled more than $730,000 in the aggregate.

We also announced that we have been awarded a $140,000 grant from the Michael J. Fox Foundation for Parkinson's Research, to advance research and development of our MultiStem platform as a potential treatment for Parkinson's disease. The research funded by the grant is intended to confirm and extend previous observations regarding the efficacy of MultiStem in rodent models of Parkinson's disease with a goal of accelerating the potential clinical application of these cells for patients who suffer from the disease.

Now, I would like to briefly highlight a few additional developments during the third quarter. In July, we released the summary of interim top line data from our ongoing Phase I clinical trial involving administration of MultiStem to patients that have suffered an acute myocardial infarction, more commonly referred to as a heart attack. During our last conference call, I summarized the top line data.

In September, Dr. Marc Penn, Director of Cardiovascular Cell Therapy at the Cleveland Clinic, and Director of the Skirball Laboratory for Cardiovascular Cellular Therapeutics, and a co-principal investigator for the study, presented the results of the clinical trial at the Transvascular Cardiovascular Therapeutics, or TCT Conference held in Washington DC. As previously reported, MultiStem was well tolerated at all dosing levels, and there were no dose-dependent effects of MultiStem or adverse events.

Dr. Penn shared the results from additional analysis of echocardio data collected over the first four months of the study which suggested MultiStem administration may also provide improvements in other [measures of] heart function. Specifically, patients receiving MultiStem demonstrated meaningful improvement in left ventricular and systolic volume, and mean wall motion score at four months compared to baseline, though this improvement was not statistically significant.

Interestingly, however, among those patients with more severe heart attacks, the mean wall motion score for treated patients improved over the four-month period, while for registry patients receiving standard of care, it worsened over this time.

Looking forward, we plan to further evaluate the data from the ongoing study and are working in coordination with Dr. Penn, Dr. Warren Sherman, and other study investigators, our partner, Angiotech, and the FDA, to plan a robust Phase II program with the intent to launch the study by next summer while we continue our broader development efforts in the cardiovascular area.

Our second ongoing MultiStem clinical trial in oncology treatment support also made steady progress during the third quarter. In September, we announced that MultiStem was granted orphan drug designation by the US Food & Drug Administration for the prevention of graft-versus-host disease, or GvHD, a common condition associated with a bone marrow transplant in which immune cells from the transplanted marrow recognize the transplant recipient as foreign and mount an immunological attack.

Orphan drug designation is intended to facilitate drug development and will provide Athersys with substantial benefits, including seven years of market exclusivity for MultiStem upon final regulatory approval.

In our ongoing Phase I study, we have two treatment arms. The first arm is a dose escalation study that involves administration of a single-dose of MultiStem shortly after the initial hematopoietic stem cell transplant and involves evaluation of three separate dose levels. We successfully completed dosing in the first five of six dosing cohorts in the single-dose arm of the study, and our objective is to complete enrollment in the final cohort by the end of the year.

The second arm of the study involves treatment with multiple doses of MultiStem administered at weekly intervals for up to a month following the initial hematopoietic stem cell transplant. The primary endpoint for this Phase I trial is safety, such as monitoring for acute infusional toxicity. We are also evaluating multiple secondary endpoints such as monitoring for incidents in severity for graft-versus-host disease survival infection. We intend to complete enrollment of this arm of the trial next year.

We have also continued our planning activities for the initiation of a Phase I clinical trial administering MultiStem to patients for the treatment of ischemic stroke, a leading cause of death and disability. We received FDA authorization to begin the study as we have described previously, and while we have continued our preparations for the initiation of this clinical trial, we have also continued to conduct research both internally and with a team of independent experts.

This work has broadened and deepened our understanding of the multiple ways in which MultiStem can have a profound effect on promoting tissue repair and healing in a range of neurological indications including stroke, traumatic brain injury, spinal cord injury, and other areas.

We are in the process of finalizing certain revisions to the clinical protocol and once these are finalized we will submit the revised study design to the Clinical Institutional Review Boards at the centers that have committed to participate in the trial for their review. Our goal is to complete this process in the next several months so that we can then begin to enroll patients.

In addition to our ongoing and planned clinical studies, we have also continued to advance other internal and collaborative programs. In September, we announced the publication of a key study in the October issue of Experimental Neurology conducted by researchers at Athersys, the University of Texas Medical School, the Michael E. DeBakey Institute for Comparative Cardiovascular Science and Biomedical Devices, and Texas A&M University.

This study demonstrated intravenous administration of MultiStem after traumatic brain injury, or TBI, in an established preclinical model of brain injury, enabled the preservation of the blood-brain barrier and also reduced the effects of the brain injury. Study results indicated that MultiStem could provide multiple benefits in the context of neurological injury and could potentially act to modulate the body's systemic immunologic and inflammatory response following a traumatic brain injury.

We continue to make progress in other internal and collaborative development programs and are excited by the data being generated in a growing number of areas involving MultiStem. Over the past several years we have established collaborations with over 30 leading research institutions across the United States and Europe, which has provided us with a highly efficient way to explore the potential utility of MultiStem across a range of disease and indication areas, and help deepen our understanding of how these cells can dynamically interact with other cell types and organs in the body to promote healing and tissue repair.

Next, I would like to make a few comments regarding our obesity program. Recent events involving drug development programs at other organizations underscore and reinforce the need to develop new therapies that are both safe and effective. Appropriately, the FDA set a high bar with respect to patient safety, and we are committed to developing therapies that are both highly effective and safe for extended use in an obese patient population.

Our focus is on the development of potent selective 5HT2c agonists, which are a key regulator of appetite. The evidence in this area clearly demonstrates that while potency of the 5HT2c receptor offers the potential to achieve meaningful weight loss, compound selectivity at both the 5HT2b and 5HT2a receptors is also necessary to achieve safety and tolerability, as well as maximize efficacy.

We have successfully achieved a major objective and have developed a high quality portfolio of compounds which are potent at the 5HT2c receptor, yet exhibit no physiologically relevant agonist activity in either the 5HT2b or 5HT2a receptors. We believe this represents a substantial achievement and that these compounds have the potential to be best-in-class clinical candidates.

We are actively evaluating which compounds we want to advance into further development while we also evaluate potential partnering opportunities in this and other areas.

Finally, we were pleased to recently announce the new addition to our board of directors, Dr. Ismail Kola. Dr. Kola currently serves as Executive Vice President of UCB S.A., a biopharmaceutical company dedicated to the development of innovative medicine in the field of CNS and immunology disorders, and he serves as President of UCB New Medicines. Prior to joining UCB, Dr. Kola helped senior research and management positions with Schering-Plough, Merck, and Pharmacia. We are confident that Ismail's experience and leadership in successfully taking multiple drug development programs from the research stage through to commercialization will be highly relevant as we continue to advance, and that he will provide unique and valuable insights.

In summary, we continue to make progress in multiple fronts and are excited about the road ahead. With that, we would be happy to take a few questions.

(Operator Instructions) Your next question comes from the line of Jason Kolbert from National Securities. Your line is now open.

Good afternoon, Gil. Congratulations on achieving so much in a short period of time. Could you talk a little bit about what you are thinking in terms of the Phase II trial? What would the entry criteria for patients be? What other co-therapies might they be on? Give us an idea of how this will evolve. Will Pfizer be responsible for opening up the sites or will you be working with them and they will be reimbursing you?

Well, there is kind of a series of questions in there, but I think, Jason, I'm going to let John address the comments. But thank you for the congratulatory remarks.

Yes. John Harrington here. So, first, this study is being led by Pfizer. We are obviously as their partner playing a close role in the planning and execution of the study, but the study is being run by Pfizer. Pfizer will be responsible for opening all the sites and ensuring enrollment of the study.

In terms of the inclusion criteria, as stated in the press release, the patients that we will be studying have moderate to severe ulcerative colitis, which means that they have a Mayo score of 6 or greater. They will have failed at least one of the therapies that are currently used as standard of care. So, they will have been pretreated and will have active disease at the time of enrollment.

One last question which is on the MultiStem that is provided as part of the trial, is that something you will actually be reimbursed for cost-plus throughout the program?

We will be reimbursed for manufacturing costs over the development and commercialization of the product, yes, but we haven't disclosed the particulars of that arrangement.

Okay. Thanks, guys. Congratulations.

Your next question comes from the line of Raghuram Selvaraju Noble Financial Group. Your line is now open.

Hi. Thanks very much for taking my questions. Raghuram Selvaraju from Noble Financial. Just a question regarding R&D going forward. How should we look at that and especially how should we look at that evolving in the context of the Phase II study and how quickly that is expected to ramp? And if you can give us some color on where the major costs of that trial are expected to lie. Is it going to be in the phase when you are actively enrolling patients, or following that period?

No, I can talk about this. As John mentioned and I think as Gil mentioned earlier, with respect to the IBD study or the UC study, ulcerative colitis study, the cost will be borne by Pfizer entirely. We will be manufacturing product, we will get reimbursement for that. So, as a driver of R&D expense, really, the expenses we will have will be related to supporting that study. That includes our personnel and time in planning, in preparing and executing the study. There is a regulatory dimension as well as supportive product manufacturing dimension to that.

In addition, we have an active preclinical or nonclinical program that supports the study as well, and there will be R&D expense on a going-forward basis associated with that.

That is with respect to, like of we contextualized this in terms of the R&D expense for the most recently completed quarter, do you expect that to change significantly to a level above or stay about the same going forward?

Well, the R&D expense will include a manufacturing cost associated with the trial, and that will have impact. It had some impact this past quarter, will be impact over the next year. We will be reimbursed through the revenue line ultimately for costs that we incur with respect to the manufacturing.

I think from an R&D perspective, we are not laying out specific guidance in terms of the way that would go, but in terms of the planning right now, I think the R&D level will be roughly in line with what we have now. One of the questions that we will answer over the next bit of time will be the extent to which we expand our activity and other clinical development activities in the programs.

Yes. I mean, I guess, Rag, if the question is, is there going to be a major ramp-up in expenses associated with costs as a result, as a direct result of this clinical trial?

Right.

Yes, the answer is no, because Pfizer is actually bearing the costs of the study.

Okay, I figured as much. Then with respect to the future development of MultiStem in this particular indication, my understanding is that if you had favorable results from this Phase II study you could potentially go to the FDA and request an end of Phase II meeting. Is that a reasonable assumption?

Yes. Go ahead, John.

It's John Harrington. You know, I think the right way to view this study is it is a proof of mechanism study. It is designed to confirm or demonstrate efficacy and safety of the product. It would be a precursor to additional Phase II work in ulcerative colitis, but then also likely in Crohn's disease moving forward, which is arguably the area of greater unmet need, but an area that is more difficult to establish clean efficacy data as a first step. So, I think the right away to view this is it's a step toward additional Phase II work, dose-ranging work, which would then be the precursor to a formal pivotal program.

Okay. And if you could just give us an idea of how the dosages in this indication differ, if at all, from the dosages that were previously tested in the cardiac indication?

This is again John Harrington. We are not disclosing the doses that are being used in the study. Again, it is a Pfizer-led study and so we are not going into that detail at this time.

Okay, thank you, sir.

Your next question comes from the line of Jonathan Aschoff from Brean Murray. Your line is now open.

Thank you. Hi, Gil. Congrats as well. Is there any reason why your next neurological trial, no matter what the indication it might take, be it stroke or TBI, or whatever, is there any reason why that can't be a Phase II, similar to Pfizer's entry?

Well, I mean, with regard to the stroke study, we mapped out what we think is the right first clinical trial design with lots of input from the clinical investigators that have committed to participate in the study at the clinical centers. And, again it is constructed as a roughly 50-patient double-blind, placebo controlled, dose-escalation study, and we think that the way that study is structured could be very informative.

So, I think that, again, there are different paths to take. We think that is the right first step for the stroke study and we are quite anxious, actually, to get that study underway.

Okay. And still the most accurate time you can give for (inaudible) enrollment is still 2011 kind of year-wise?

Yes, we expect to complete the single-dose phase of the study, finish enrollment by the end of this year and then report out the top line results from that sometime in the early part of next year. And then we expect to complete the multiple dose study sometime next year as well and report out the top line results from that separately.

Thank you, Gil.

Your next question comes from the line of Stephen Dunn from LifeTech Capital. Your line is now open.

Hi, guys. Congratulations and good to see the IBD moving forward. I don't know if this is for Gil or for John, but could you give us some color on the detailed primary and secondary endpoints on the Pfizer trial? And where I'm trying to go, is it similar to the one they just completed? So, we are looking at a Mayo score of equal to or greater than 6. Are we looking for a primary endpoint of three points lower, or 30% lower? What exactly are they considering their endpoints?

This is John, I'll take the question. Again, I would reiterate that this is a Pfizer-led study and we are not going into specific details around the clinical endpoints that we will be looking at. That said, I will say that one of the advantages of working in ulcerative colitis is that the disease is localized predominantly to the colon, which allows one to assess efficacy using endoscopic evaluations, which is an objective approach. Obviously, objective approaches provide cleaner data that isn't as prone to some of the placebo effects that one runs into with the more subjective approaches that one needs to use in a study like Crohn's.

So, again, we are not going into details around the specific endpoints other than to say that we will be taking advantage of some of the objective endpoints that are available to us in the patient population.

All right. Well, let me ask a slightly broader one then. When they were designing the trial, I assume you were participating in that, did it sound like that the trial design was very similar to what they have just done with another drug candidate?

Again, I'm not going to go into the details. I will say as part of the planning process, of course we utilized key opinion leaders. We looked at other studies that have been run in the field, and I think it is reasonable to assume that Pfizer would draw upon its own experience in [this space].

Very good. Thanks so much, guys.

Yes. And just to add a little additional color to John's comments, I mean, frankly I think that the progress that we have demonstrated here in the context of our working relationship with Pfizer is, we are very pleased with it. And I think that one of the reasons why we were excited to have Pfizer as a partner in this particular area is because they have a tremendous amount of knowledge and experience both in terms of the disease, but also their clinical network and relationships with KOLs in the US and in Europe. So, I think that -- hopefully the progress here that we have achieved with them just in the first few months since we launched the partnership, speaks for itself.

Okay, thank you.

Your next question comes from the line of [Li Martin] from [Webb Securities]. Your line is now open.

Good afternoon. Congratulations again on the IBD Phase II approval by the FDA. My question is from your point of view, what are the broader ramifications for Athersys entering into the IBD Phase II now? Do you believe there is a vote of confidence by the FDA? I would appreciate it if you can elaborate a little bit on that.

Thanks, Li, I'll answer this one. So, one, I think as we have talked about publicly, we have worked very hard to forge a strong relationship with the Agency, to make sure we are on the same page with them about what we are doing and how we are doing it. We are absolutely committed, like the Agency is, to patient safety first and foremost. And I do think that by providing authorization and enabling us to move in a Phase II study like this is, I think, a signal of confidence in terms of what we are doing and how we are doing it both in the context of what we're doing just here at Athersys, but also in the context of what we are doing in the context of our relationship with Pfizer.

And I do think it has broader ramifications. One of the things that I think maybe people haven't really fully appreciated from, in the context of the recent results from our Phase I AMI study is, this is an important demonstration of product safety. It was in a distinctly different disease -- indication area, but I would argue that the clean safety profile that we are seeing has broader ramifications and actually de-risks the program in some important ways.

But, again, we are not taking any of that for granted. We want to make sure that we design, well constructed and execute, whether it's our internal programs or in the context of partnerships, well designed, careful and rigorously constructed clinical studies. And we think if we continue to do that, that is going to enable us to advance other programs in a highly efficient manner into mid-stage clinical development and reach important value creation inflection points that much sooner.

Great, and congratulations again.

Thanks, Li.

(Operator Instructions) Your next question comes from the line of Keay Nakae from Chardan Capital. Your line is now open.

Thank you. Appreciate the comments you just made about safety, but give us your thoughts on moving forward with a dose or doses. You haven't made that clear. But now do you get comfortable that you are picking the right dose to go forward in the Phase II?

That's a good question, Kay. Again, it is based on our experience in terms of what we are seeing from some of our other studies, including our ongoing GvHD study, as well as data that we generated from the AMI study, although that was using a local delivery approach as opposed to a systemic delivery approach.

But I think there is a lot of knowledge that we feel like we gleaned from multiple different dimensions, and I think that, again, this is constructed as a dose-escalation study, and I think that our approach with respect to these types of studies is to make sure that we start conservatively and work our way up from there so that we can really approach this from a standpoint of ensuring patient safety. But at the same time conducting a trial on what we think will give us a very good chance to see evidence of efficacy.

Thanks. As far as the time it might take to enroll this study, any thoughts there given the number of centers you are planning to involve?

Yes. We have actually talked about that issue specifically with Pfizer. We can't give a whole lot of guidance there, but I can say that one of the advantages of working with an organization like Pfizer is they have a very broad network of relationships with clinical institutions across the US and in Europe and, frankly, that reaches a lot broader than our own reach.

So, when designing and enrolling a study like this, frankly, we think that is one of the real big benefits, actually, of working with a company like Pfizer, is we can do it a lot faster than if we were trying to do it on our own. It will involve a meaningful number of sites. As we indicated earlier, we expect to report out top line results from the study sometime in 2012, and we think that is a very achievable goal.

Okay. Switching to AMI, as you think about and move forward to Phase II there, have you been able to come up with better clarity about when to administer the therapy relative to the AMI event?

Yes, we actually haven't made a final decision on that yet. We are still working through some options with AMI -- I mean, with Angiotech, I apologize, and our clinical advisor is actually taking a look at a couple of different scenarios. Angiotech has been involved in some activities of their own recently, which we think are going to be very helpful in terms of freeing up working capital. They are a highly committed partner. I know that they are tremendously excited about what we are doing here in AMI and cardiovascular more broadly. And they are excited, as we are, about getting that study up and running as soon as we can, but we want to make sure it is designed the right way, that we are taking a careful look at all the options, that we are getting Agency feedback with respect to the important questions about study design, and that we do it the right way.

Okay. And then finally on the RTI collaboration, can you just walk us through again what part of the revenue tranches, the upfront tranches that you talked about earlier, how will that be treated from an amortization perspective?

I'll handle that one. As we mentioned, there are $3 million associated with the initiation and completion of the license. We received $1 million at close, we will receive another $1 million at the end of December, and the third $1 million at the end of March. There are $2 million associated with development and launch of the product, and we are going to amortize that over the expected timeline associated with that.

The development plan will determine when we launch the product, but I think our target is to be prepared to launch a product in 2012, but that is subject to successful development, any regulatory requirements, etc.

So, if I am hearing you correctly, the $1 million tranches, you recognize as $1 million when received, and $2 million maybe spread out over six to eight quarters?

I think that is conceptually right.

Okay, thanks a lot, and congrats on the progress.

Thanks, Kay.

And there are no further questions at this time, so I will turn the call back over to the presenters.

Well, if there are no further questions, we would like to thank everybody for participating in the call today. We certainly look forward to keeping you updated with respect to our progress as we continue to move things ahead. We are excited about the momentum that we have here on a number of different fronts, and we thank you all for continuing to follow us, and we look forward to speaking to you again soon.

This concludes today's conference call. You may now disconnect.