施貴寶 (BMY) 2008 Q1 法說會逐字稿

Greetings, ladies and gentlemen, and welcome to the ZymoGenetics Q1 2008 conference call. (OPERATOR INSTRUCTIONS)

It is now my pleasure to introduce your host, Susan Specht, Director of Corporate Communications.

Thank you. You may begin.

Good afternoon, everyone. I'd like to welcome you to the ZymoGenetics 2008 first quarter conference call.

Before we begin, I need to remind that we will be making forward-looking statements as part of our prepared remarks and in answering your questions. These statements are subject to many risks and uncertainties that could cause actual outcomes to be much different than we predict. So please look at our SEC filings, in particular the Form 10-K, for more information.

And now I'll turn the call over to our CEO, Dr. Bruce Carter.

Thank you, Susan.

Good afternoon, everyone, and thank you for joining us today.

I'll begin with a progress report on the RECOTHROM launch; then I'll turn it over to our Chief Scientific Officer, Doug Williams, to discuss progress with our pipeline; and then Jim Johnson, our CFO, will then briefly review our financial results for the first quarter; and after that we'll take your questions.

The RECOTHROM launch has been progressing according to the plans we discussed with you at our analyst meeting last December and is meeting our expectations. We are seeing a high level of interest and enthusiasm for RECOTHROM among health-care professionals. Pricing of the product is being viewed as appropriate given the product profile as reflected in the label and the Phase 3 clinical data.

Our field teams are functioning effectively and making a good deal of progress with key accounts in getting through sometimes lengthy pharmacy and therapeutics committee review process that we mentioned at our analyst meeting in December.

The U.S. co-promotional relationship with Bayer is working smoothly, and there is a collaborative spirit among the two sales teams. RECOTHROM is readily available at the wholesalers, and the supply chain is working effectively.

We reported net sales of approximately $1 million for the first quarter, which represents initial wholesale stocking and just over two months of selling. However, this doesn't reflect the progress we're making in the market, and it will take time for our efforts to bear fruit.

Previously, we have communicated our expectations regarding the long selling cycle that leads to the conversion of usage from bovine thrombin to RECOTRHROM. This process involves, first, enlisting the support of surgeons, nurses, and pharmacists; then getting on the agenda for upcoming pharmacy and therapeutics committee meetings; then getting positive P&T decisions for formulary addition or replacement; and then, of course, circling back to the surgeons and getting the pull through.

Our research indicated that on average it could take six months or more to work through this process at each hospital, and what we are seeing in the field is consistent with our expectations. It takes time to work through these processes. But we're making good progress, and we do expect that work to pay off in the second half of the year.

It's still too early to estimate RECOTHROM sales in 2008 or 2009, but we do recognize that we need to give our shareholders insight into the progress we are making. So here are some very important metrics as of late April related to our 1,200 focus accounts, and all of them are very encouraging.

Approximately 2,000 surgeons have agreed to be advocates for RECOTHROM; that is to say, asked to use RECOTHROM. That represents 63% of our targeted institutions; that is to say, 756 institutions we have surgeons asking for our drug.

Additionally, around 1,000 pharmacists, hematologists, or blood-bank representatives have agreed to advocate for RECOTHROM and ask for it.

A total of 421 P&T committee meetings have been scheduled, of which 60 have taken place through April, and 150 more will be held in May. Interestingly, of the 60 P&T committee meetings held to date, we are in the process of making the complete conversion from bovine to RECOTHROM in 22 accounts and have 27 accounts where RECOTHROM has been added to the formulary. Eleven P&T committee outcomes are still pending.

In other words, of the P&T committees that have met, 37% have agreed to completely convert to RECOTHROM, 45% have added RECOTHROM, and 18% have not yet decided.

As of mid-April, 65 hospitals have purchased RECOTHROM, with approximately 50% of them already reordering on a routine basis.

We've also been pursuing contracts with group purchasing organizations and large hospital networks. Negotiations are in process with the six largest hospital GPO's, and we are on track to have most of these completed by the end of quarter two.

In early April we executed a master agreement and a pharmaceutical pricing agreement with the secretary of Veterans Affairs, making RECOTHROM available to the federal agencies through the federal supply schedule.

And in late April we entered into an agreement with Kaiser Permanente to supply RECOTHROM to all of their hospital network.

Another factor that will be very important in driving sales is the availability of our 20,000-unit stand-alone vial and spray kits. These 20,000-unit configurations account for only 25% of unit sales but 60% of sales dollars for the existing thrombin market.

And you will recall that we filed a prior approval supplement with FDA in January to gain approval for these configurations. Our FDA action date for this filing is May 25, and I'm pleased to report that we received no questions from the FDA mid-cycle review on our filing package and are optimistic that we will gain approval in late May.

In summary, things are going well. We continue to expect great things from RECOTHROM. We firmly believe we have the best-in-class product, it is priced appropriately, and the market is receptive.

And now I'll turn it over to Doug Williams, who is going to tell you about the progress we are making with our clinical pipeline.

Thank you, Bruce, and welcome, everyone on the call.

We continue to make progress with our pipeline, and we have a number of meaningful data and progress milestones ahead this year.

As we discussed last December at our investor-day presentation in New York, our R&D efforts are focused on molecules in which we maintain significant ownership.

I'd like to talk first about PEG-interferon lambda, a molecule we have worldwide rights to.

We're excited about this molecule's potential in hepatitis C because we believe it has the opportunity to become the cornerstone of combination drug regimens as the interferon of choice. This novel member of the interferon family was discovered at ZymoGenetics and is being developed as a PEGylated recombinant molecule. This is not just another modified interferon alpha.

Interferon lambda is an entirely different molecule from interferon alpha, yet it has comparable antiviral activity against a host of viruses, including hepatitis C. Most importantly, though, it works through a unique receptor expressed on a more limited repertoire of cell types in the body. We believe this will result in fewer off-target effects, meaning improved tolerability for patients.

Hepatitis C is a very large market with a substantial unmet medical need. Eleven million people worldwide and four million people in the U.S. have hepatitis C. The number of patients electing treatment and the duration of treatments are clearly suboptimal, in part because of the side effects of current interferon-alpha-containing regimens. PEG-interferon lambda may be able to change this and provide more flexibility to combine with some of the exciting new direct antivirals. Better combinations with better tolerability will ultimately be a benefit to patients and should drive greater penetration into the market.

Our preclinical experience in Phase 1a study in healthy volunteers support the target product profile of better tolerability. We saw none of the flu-like symptoms, fever, or hematologic effects within interferon lambda that have been documented with a single does of the various interferon alphas.

We've now moved the program to the treatment of patients with hepatitis C and are enrolling in a Phase 1b study. We are administering interferon lambda every other week or every week as a single agent to patients who have responded previously to interferon alpha and then relapsed. This is a 28-day dose-escalation study with single-agent interferon lambda. We will then move later this year to a combination study with riboviron, selecting doses of interferon lambda based upon the observations from our dose escalation.

We're pleased to say that we've seen convincing antiviral activity in our first single-agent dose cohort without the side effects of interferon alpha, supporting our target product profile. We plan to present interim results from the single-agent cohorts at the AASLD meeting in late October. Even at this relatively early stage, there is substantial interest in the PEG-interferon lambda by our investigators, as well as other pharma companies with a stake in antiviral drug development.

Now let's turn to IL-21, another cytokine discovered at ZymoGenetics. We hold the exclusive North American rights to this molecule.

IL-21 enhances CDA-positive T cells and Natural Killer cell activity. We've seen confirmed antitumor activity in renal cell carcinoma and melanoma in single-agent Phase 1 studies. IL-21 has been reasonably well tolerated when administered in the outpatient setting.

Last October we presented data in renal cell carcinoma at the NCI-EORTC meeting, where the first ten patients treated with the combination of Nexavar plus IL-21 showed significant signs of tumor shrinkage, including four partial responses.

In January we began the Phase 2 portion of this study and plan to accrue 30 patients. We will be administering IL-21 and Nexavar in combination and will evaluate safety, response rate, and progression-free survival. We're targeting presentation of interim results at the EORTC-NCI symposium again, which will be held in October.

Renal cell cancer is our lead indication for IL-21. There are approximately 208,000 new cases per year worldwide and 51,000 new cases per year in the U.S. Although there are several new treatments that have been approved over the past few years, none of these can ultimately stop progression of the disease, and alternative treatments are clearly needed. We believe that the combination of IL-21 and Nexavar may help fill this need.

Also, our Phase 2 single-agent clinical trial of IL-21 in patients with metastatic melanoma is also accruing. It is sponsored by the National Cancer Institute of Canada and is exploring a higher dose of IL-21 than the one previously administered in melanoma. Our goal is to present interim results from this study late this year.

Let's now move on to atacicept, a program being conducted in collaboration with Merck Serono.

ZymoGenetics will receive a royalty on sales outside the U.S. for this product. We're operating under a co-development agreement with an option to co-promote atacicept in the U.S. ZymoGenetics has the ability to stop development funding and convert to a royalty-bearing license in the U.S. at our discretion.

As for the development programs, our Phase 2-3 atacicept lupus clinical program is proceeding in both the general SLE and lupus nephritis trials. Both of these studies are being conducted under special protocol assessment with FDA. We expect the first patient in the general SLE study to be treated with atacicept by the end of this quarter. In the lupus nephritis study, we've been treating patients with atacicept since December of last year.

In rheumatoid arthritis, we continue to accrue patients to our Phase 2 studies in TNF naive and TNF inadequate responders and expect to complete accrual late this year in both studies.

We've also initiated a Phase 2 study to evaluate the safety and efficacy of atacicept in combination with Rituxan in rheumatoid arthritis patients. Preclinical combination studies and data from Rituxan clinical studies have provided a strong rationale for exploring this combination. This exploratory Phase 2 study will enroll approximately 50 patients. It will evaluate the safety, biomarkers and signs and symptoms of RA of combination of therapy in comparison to those receiving rituximab alone.

Merck Serono has also recently initiated a Phase 2 trial with atacicept in relapsing multiple sclerosis and started treating patients last week. This is the most common form of MS and a role for B cells in this disease has recently been established. This Phase 2 trial will evaluate the safety and efficacy of atacicept in patients over 36 weeks of treatment. The primary objective of the study is to evaluate the efficacy of atacicept in reducing central nervous system inflammation as assessed by frequent MRI evaluation.

Progress with our research and preclinical programs has also been very strong in the last several months. As we described at our investor day in December, a number of novel candidates are progressing towards development decisions. These include soluble receptors, antibodies, and dual-targeting antibody-like molecules.

In addition, several molecules discovered at ZymoGenetics and licensed for development have progressed in the clinic, including Factor XIII and anti-IL-20 with Novo Nordisk and FGF-18 with Merck Serono. Successful development of these candidates will add value to ZymoGenetics in the future.

But to recap, here are some of the key events you can expect through the remainder of the year:

Presentation of interim data from the PEG-interferon lambda Phase 1b trial in patients with hepatitis C at the AASLD meeting late October.

Presentation of the IL-21 with Nexavar interim Phase 2 data in renal cell carcinoma at the EORTC meeting also in late October.

Presentation of the interim IL-21 high-dose study in metastatic melanoma at our investor-day presentation in December.

Completion of patient accrual to the atacicept Phase 2 RA studies in both TNF naive and TNF inadequate responders.

And we presented our Phase 2 burn results last week at the American Burn Association meeting and expect completion of the Phase 3b RECOTHROM study in the second half of this year.

So to recap, it's been a busy quarter for our R&D programs, and important progress is being made.

That completes my overview, and I'll now turn it over to Jim Johnson, our Chief Financial Officer.

Thanks, Doug.

Our net loss for this quarter was in line with our expectations. The primary factors driving the increase were costs associated with the launch of RECOTHROM and increased clinical development costs mainly related to atacicept.

Our revenues for the quarter increased substantially to $13.5 million from $5.2 million a year ago. There were four major items responsible for this increase: revenue recognized under our recombinant thrombin collaboration with Bayer, milestone payments earned from Novo Nordisk related to the development of recombinant Factor-13 and Interleukin-20, and RECOTHROM product sales.

As Bruce mentioned, we recorded net RECOTHROM product sales of about $1 million for the quarter. These reported sales comprised mainly wholesaler inventory build, although a limited number of hospitals did begin to order small volumes during the quarter. We're encouraged by the trends over the past month. The number of new customers and the reorder rate have both accelerated consistent with our expectations.

Our cost of product sales was 11% of net sales, reflecting only the packaging and distribution costs incurred after FDA approval. Remember that most of the costs of manufacturing this product were previously expensed to R&D in 2007, and it's also important to note that some of our distribution costs are fixed amounts compared to a relatively small amount of sales in Q1.

R&D expense totaled $39.2 million for the quarter, which was about 32% higher than in the first quarter of 2007. However, it is less than the amount reported for the fourth quarter of 2007, and this quarter-to-quarter decline is the more meaningful trend.

We're still comfortable with our R&D expense guidance for the year, which is that we expect 2008 R&D expense to be flat or slightly less than 2007.

Selling, general & administrative expense for the quarter increased to $14.6 million, compared to $9.7 million in the first quarter of 2007. Nearly all of the increase was related to the launch of RECOTHROM, including the cost of the sales force, marketing, and related administrative infrastructure.

We recorded $6.1 million of stock-based compensation expense in total for the quarter. Four million of this was reflected as R&D, and $2.1 million as SG&A.

We ended the quarter with $155 million of cash and investments, and we've been evaluating a number of potential financing opportunities to add to our cash reserves. Based on all these interactions, we continue to believe that we will be able to raise a significant amount of capital this year, and our goal will be to avoid any material share dilution, which we believe is in the best long-term interest of our shareholders.

So with that, I'll turn things back over to the operator, and we will be happy to take your questions.

Thank you. (OPERATOR INSTRUCTIONS)

Our first question is from Han Li with Stanford Group Company.

Please go ahead with your question.

Yes, good afternoon. Two questions. One is on RECOTHROM. You said you have 60 P&T committee meetings took place in the past several months. What has been the sticking point in discussion to the P&T? Is it because of lack of the 20K-unit or spray, or is it resistance from the recombinant bovine product or pricing?

I don't think we do have a sticking point. As I pointed out, of the 60 that have met, 22 agreed to completely switch to RECOTHROM, 27 decided they would add RECOTHROM. As we've said before, it takes time to get on these P&T committee agendas. Even if they meet monthly, there's no guarantee, and indeed we're not necessarily getting on the first month.

I think I mentioned at a previous call that I had been out with a salesman, and we went to visit the University of Washington, were talking to the pharmacist, and I asked are we on the P&T committee, and I was told yes. And when I asked, "Well, when?" they said June. So it simply takes time to go through this process. And what I was trying to point out is that, when we get on those P&T committee agendas, we are having success.

Okay. When you say "added to the list," does it mean they carry both bovine and recombinant product?

Correct.

But will that for long, or is this just a temporary testing period?

I'm sorry. I didn't catch the last part of the question?

Oh, I say should the hospital carry two products in the same category?

I think that will occur for a period of time, but we think that eventually they will only carry one.

I see. And quickly, switching to atacicept, what's your comments on the Rituxan setback in lupus? And also on the lupus and nephritis trial, you have had to have a comparison to against CellCept. What's the rationale of it? Why not a combination?

So our reaction to the Rituxan clinical trial situation -- this is Doug -- is basically that -- I think it's important to note that -- well, actually there are several things to note. First and foremost, even though there is some overlap in the mechanism between atacicept and rituximab, they are two very different drugs that work in two very different ways.

I think it's also safe to say that the trial design between what rituximab was trying to do and EXPLORER versus what we are attempting to do in our general SLE study are vastly different. The primary end points are different, the characteristics of the patients are very different, and I think -- it's our interpretation of the rituximab study that they were really, quite frankly, asking a lot of that drug in the patient population that they were trying to treat. If you think about it, they were treating a population of patients that were experiencing flares against a fairly significant background of immunosuppressant therapy and then adding rituximab over the top of that. It's hard to know whether in that population of patients they really could have seen much of a treatment effect given that population they were dealing with.

I think that the design that we have chosen really sort of plays to the strength of atacicept in terms of its mechanism, where not only do we suppress mature B cells, but we also have an impact on plasma cells, which we think are going to be an important component of the treatment paradigm over a longer period of time.

So while the rituximab data, I think, has generated a lot of questions about B-cell therapies in general, to lump them all together and to assume that the studies are similar would be a mistake.

So we're still very optimistic about the prospects for our drug in our patients with our design.

And the questions on the lupus nephritis trial, I think you have had to comparison of atacicept versus CellCept?

No, actually it's an add on to the design.

It's an add on?

Yes. So it's the combination versus the single agent.

Okay. So it's similar to the LUNAR Rituxan study, which is also add on?

Similar but not identical.

I see. Thank you.

Our next question is from Marshall Urist with Morgan Stanley.

Please go ahead with your question.

Hey, guys. Good afternoon.

So a question on those initial P&T committees' statistics that you guys gave. So of those 22 -- I believe it was -- that you mentioned that had completely converted, can you give us some sense where they fall in terms of size of thrombin accounts? You guys provided some pretty detailed segmentation at the analyst day in the past; so can you talk about sort of where they fall, and are you guys having success at big centers that use a lot of thrombin versus are these sort of smaller hospitals where you're seeing the early success?

I can tell you without any going into any more details than this, we are certainly seeing success in some big hospitals, but some of them are also small.

Okay. And then on the -- this was sort of asked before, but I just wanted to be clear. So on the ones where you're talking about where you've been added to the formulary with the other thrombin, is it explicit that this is a trial period post getting added to the formulary, or is this going to be sort of a wait-and-see and you could sort of sit there side by side with King for a while?

I think that where we're added on we've got to go back to the surgeons, the operating room nurses, and we've got to pull it through. So we will be in competition there.

So then will there be sort of a -- is there sort of a second round of P&T where you can appeal for this to be the only one, or are you just going to have to wait and see what happens?

There is no appeal. We just have to out-compete in those circumstances. Of course, where they're really switching them, then we'll be the only people in the field.

Right, of course. And then, lastly, on the balance sheet stuff, you guys have talked about doing a financing also around some thrombin inventory. I just wanted to get an update on where that stands?

Okay. Hi, Marshall. This is Jim.

Hey, Jim.

We are working on a financing transaction that, I guess, as we envision it today would encompass inventory as well as other financing needs of the company. So our current view is that it's not necessarily a separate transaction.

Okay. Gotcha. And then should we -- timelines there -- should we expect that in the next quarter, next couple of quarters? Can you give us some idea?

I think at this point we're not willing to make specific predictions about timing, but clearly this year.

Okay. Great. And then I just wanted to get your quick comments on you mentioned in your prepared comments about the flexibility around how to fund atacicept. So I just want to understand how you guys are thinking about that, and is there a time when that might make sense? Is that going to be about data, or what could be the factors that drive that?

Marshall, this is Doug. I think that what we were pointing out was simply, I think, a point that not many people had appreciated. The question has come up about atacicept in terms of the sort of growing cost of the program, and I think that there certainly was not a broad understanding of the fact that we have the ability to sort of stay all in and preserve our co-promotion rights or to convert to a healthy royalty on sales. And we certainly haven't made any decisions about that, but obviously it's something that, as the program grows and becomes more costly, we'll look at that in the context of our overall business.

So, Marshall, clearly -- atacicept is a very interesting program in that it has many possible indications. So that's very attractive in the sense of the rewards multiply up. But it also correspondingly means the costs multiply up, and we have to be very careful of where the equation sits all the time.

Okay. Great. Thanks, guys.

The next question is from Ed Tenthoff with Piper Jaffray.

Please go ahead with your question.

Great. Thank you. And congrats on the first quarter of RECOTHROM sales.

Two quick questions, if I may, on pricing. Can you just update us on where pricing is for RECOTHROM and how some of the competitors have responded? And there's -- we've noted very little in terms of noise from Evithrom, and we're not really capturing any of it on IMS. Can you give us maybe something a little bit more qualitative from what you're hearing in the field from the other-human-but-that-one pooled-plasma product?

With the bovine thrombin we're seeing limited discounting. And like your search for J&J, I guess it's fair to say they're out there, but perhaps not as much as one might have expected from the name Johnson & Johnson. In fact, I could go stronger -- surprisingly little considering it's Johnson & Johnson.

Okay. That's helpful color. And just on your guys' pricing?

And our wholesale acquisition cost is with a 20% premium to King, and, of course, there's always some flexibility.

Great. Thank you.

The next question is from David Miller with Biotech Stock Research.

Please go ahead with your question.

Good afternoon, and thanks for taking my questions.

When you looked at the Rituxan failure, did you see anything in there that would cause you to contemplate any amendments to your special protocol agreements or to the trial that's about to launch or even considering any follow-on trials to which you already have set out?

The short answer is no, but we really haven't seen much in the way of the rituximab data other than the sort of top-line version of it. I think we'll learn a lot more when they present the full data set. But, no, given the very different mechanism of action, the very different study design, and the very different patient populations that we've chosen to go after here, we are still enthusiastic about the approach that we're taking. And I'd also point out that we're under a special protocol assessment with the FDA as well.

So we're looking at a prevention-of-flare end point, which is fundamentally different than the treatment of flare end point that rituximab -- and even the HGS molecule -- has chosen to use as their primary end point.

Have you chatted with the FDA about your trial since those data came out?

No, we have not.

Okay. Do you have any cash that isn't currently accessible due to the well-publicized problems in the subprime area?

Hi, David. This is Jim. No, we did not have any -- for instance -- any of the auction rate security investments, and for the most part what we are experiencing with our portfolio is fairly liquid market for nearly all the securities.

Okay. Good. And then you mentioned in your prepared comments that you expect you are going to be able to raise capital -- quote-unquote -- without material share dilution. Can you give us a little bit more color by what you mean by that when you say "material"? I mean, is there going to be an equity offering, or are you hoping to take care of it without having to sell stock?

It's our view at this point in time that we will not be selling stock.

Okay. That's it for me. Keep up the good work. Thank you.

(OPERATOR INSTURCTIONS)

The next question is from Kevin DeGeeter with Oppenheimer & Company.

Please go ahead with your question.

Good afternoon, guys. I want to just follow up quickly on some of the points on atacicept.

I was just hoping, Doug, to get your thoughts. HGS came out yesterday and in some many terms said the problem with EXPLORER was the end point, specifically using BILAG, as opposed to SELENA SLEDAI. Their drug and their experience is a little bit closer, at least in terms of the drug, to atacicept than Rituxan.

Can you just comment on the work you did on an exploratory basis to determine that BILAG was the best method for evaluating efficacy and just get our arms around that?

Kevin, I think the issue of whether BILAG is an appropriate tool or not to use in the setting of lupus, I guess, is one that's open for debate, not only amongst all of us in the individual companies but just as it is amongst thought leaders in the field of treating lupus patients. I think the simple fact is that it is an acceptable measure of looking at active disease in the context of how patients are treated in this day and age, and it's also an acceptable end point from the perspective of the regulatory guidance that's come about.

The way we've set our study up is to essentially look at patients who have a flare as assessed by a BILAG score and then treat them to a point where their disease is, what I'd characterize as, somewhat quiescent, which means to us that these are a population of patients that are in fact responsive to treatment. So the issue that I alluded to about perhaps EXPLORER was asking too much, we have a population of patients as assessed that way that is in fact responsive to treatment, and we're then asking the question of whether or not these patients will flare again using a similar type of scoring system.

So these are patients who flare with a BILAG AB, we bring them down to a BILAG CD, they're on a low dose of corticosteroids -- and they have to be papered or they don't get randomized. So we're basically looking at these patients, we see that they flare, we calm them down, we randomize them, and then we're asking a very simple question of whether or not they flare again. So they come in with a BILAG AB; they go out with a BILAG AB. That's the way scoring system works in our particular trial.

So we think we've chosen a very simple way to assess the efficacy of the drug using a system that obviously the physicians are going to be using for entering patients and also for scoring them as having another flare.

Okay. And if I may follow up on that -- I mean, that's helpful, and I do appreciate the distinction in study design. I guess the comment that struck me from the guys at HGS is they were very explicit that they did not expect their own Phase 3 study to be successful if they had to measure by BILAG, but they obviously thought -- rightly or wrongly -- believe it will be successful measuring by SELENA SLEDAI. And I was just hoping that maybe you can provide us a little bit more clarity in your experience with atacicept in terms of how the drug performs using the different efficacy measures?

Well, again, Kevin, I think the issue here is that, I think, not only do the companies have a different point of view on what an appropriate end point to use is but also you've got the thought leaders in the field. There's a number of thought leaders that feel that the response criteria that have been defined by HGS are a complex system to use that may or may not be relevant in terms of clinical practice.

So I think we've erred on the side of choosing a tool, if you will, that is widely used by treating physicians and one that they seem comfortable with, as opposed to an end point that may or may not have the same level of clinical relevance in the real world, if you will.

Okay. Fair enough. And one last question, and then I'll get back in queue.

We've talked previously about your interest in potentially analyzing things, some additional products, the leverage of sales force you have out in the field calling on the surgical suite. Any kind of evolution you're thinking on what type of products would be interesting, and do you think that's an opportunity to bring in some additional revenue opportunities in 2008?

Well, I think for the right opportunity that overlapped pretty directly with our current sales force calling pattern that that might be an opportunity. We'd obviously be very selective in anything we looked at. We don't want to have our sales force take their eye off the ball with respect to RECOTHROM launch so I can't imagine that it's a situation that would unfold in 2008 as we're going full bore on the initial launch of RECOTHROM.

All right. Great. Thanks, guys.

That ends our quarterly call. Thank you very much. Call me if you've got any questions. This is Susan.

Ladies and gentlemen, this does conclude this teleconference. You may disconnect your lines at this time. Thank you for your participation.