Avid Bioservices Inc (CDMO) 2013 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Peregrine Pharmaceuticals Incorporated third-quarter fiscal year 2013 financial results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time.

(Operator Instructions)

Today's conference is being recorded. I would now like to turn the call over to Jay Carlson.

Thanks, Jamie. Good afternoon, and thank you for joining us. On today's call we have Steve King, President and Chief Executive Officer; Paul Lytle, Chief Financial Officer; Joe Shan, Vice President of Clinical and Regulatory Affairs; and Rob Garnick, Head of Regulatory Affairs.

Steve will begin by providing a brief overview of the Company's progress over the last quarter, including the Company-sponsored trials, as well as the investigator-sponsored trials, or ISTs, and how these events set the stage for numerous near-term clinical data milestones. Joe will then review the clinical developments of the quarter, with Rob then discussing our regulatory plans as we advance our bavituximab and Cotara programs. Paul will then finish with a summary of our financial results for the third quarter fiscal year 2013. After our prepared remarks, we welcome your questions.

Before we begin, we would like to remind you that during this call we will be making forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ. These forward-looking statements reflect our current views about future events and financial performance, and are identified by the use of terms and phrases such as believe, expect, plan, anticipate, on target, and similar expressions identifying forward-looking statements. These risks include, but are not limited to, the risk factors detailed from time to time in our filings with the Securities and Exchange Commission, including, but not limited to, the annual report on Form 10-K for our fiscal year 2012, ended April 30, 2012; and quarterly report on Form 10 Q for the third quarter ended January 31, 2013. Investors should not rely on forward-looking statements, because they are subject to a variety of risks, uncertainties, and other factors that could cause actual results to differ materially from our expectations, and we expressly do not undertake any duty to update forward-looking statements, whether as a result of new information, future events, or otherwise.

I will now turn the call over to Steve.

Thanks, Jay, and thanks to all of you for participating in today's quarterly call.

Since the last quarterly conference call, we have made significant advancements in our drug development programs, and have seen continued solid performance from our manufacturing business, as part of our hybrid business model. We have successfully executed toward our stated goals for advancing our lead clinical programs, bavituximab and Cotara, and have already surpassed last year's manufacturing revenue total with still one quarter to go before our fiscal year end.

Perhaps at the forefront of these advancements was completing and announcing the results of our internal review of data from our Phase II clinical trial of bavituximab in second-line non-small cell lung cancer. The review is prompted by the discovery of bile coding discrepancies in two arms of the study, and was very comprehensive. It involved testing thousands of product vials, patient samples, and a thorough review of data from the study. Results from the review did not indicate any evidence of discrepancies in coding assignments in the high dose, or 3 milligrams per kilogram bavituximab arm of the trial, while there was ample evidence of coding discrepancies between the placebo and the low dose, or 1 milligram per kilogram bavituximab arm.

Based on the thorough review, we chose to move forward with a conservative, and in the end, the least subjective approach to updating the data from the trial, combining the 1 milligram per kilogram and placebo arms into a single control arm, and comparing those results with the 3 milligram per kilogram arm of the study. As Joe will discuss in a moment, the data from this updated analysis shows a compelling improvement in median overall survival for patients receiving 3 milligram per kilogram bavituximab, and we are confident that the overall data from the trial provides a strong rationale for advancing this dose combination in the later stage clinical development. Rob will provide additional insight during his upcoming section.

We also continue to make progress in the rest of our bavituximab clinical program. In addition to the second-line non-small cell lung cancer data, during the quarter we also announced encouraging data from our randomized Phase II front-line pancreatic cancer study. Joe will cover this data in greater detail, but I can tell you that we are encouraged by the early signs of activity we saw in this very sick patient population with advanced disease; and that we look forward to presenting additional data from the study at an upcoming medical conference, and to working closely with our clinical advisors to establish the next steps for advancing the program.

In addition, we and our clinical collaborators are continuing to study bavituximab in different indications and combinations, and we look forward to presenting data from these studies as it becomes available. We are also continuing our clinical evaluation of our PS targeted imaging agent, PGN650, in solid tumors, and look forward to providing results from the study at an appropriate time point.

Our partnering goals for the bavituximab program have not changed. We are pursuing, in parallel with our development efforts, potential partnerships for the program, as we look to move it into later stage clinical studies. This quarter also saw the continued advancement of our Cotara program, following the successful discussions with the FDA on a Phase III trial design announced in December. We are continuing our plans for moving the program toward a pivotal trial, in patients with a current GBM, while we move in parallel with partnering discussions of the program.

On the manufacturing front, Avid continues to have an outstanding year, with record revenues in sight. As Paul will outline at the end of the call, Avid is an instrumental part to keeping our burn rate in check, as well as providing a key strategic role for our internal clinical development programs, and possible future commercial manufacturing needs.

As we look forward, in the coming months we anticipate meeting with the FDA in the second quarter the year to discuss our plans for moving bavituximab towards Phase III development in second-line non-small cell lung cancer; presenting additional data from both our second-line non-small cell lung cancer clinical trials; as well as our front-line pancreatic cancer study; meeting overall survival data from the randomized Phase II bavituximab study in front-line non-small cell lung cancer; great patient data from our ongoing ISTs as well as the imaging clinical program; and continued stellar performance at Avid Bioservices.

I'll now turn the call over to Joe, who will review in greater detail recent clinical developments. Joe?

Thanks, Steve.

The clinical activities during the quarter were highlighted by data readouts from two of our three Company-sponsored Phase II clinical trials. Beginning with our randomized double-blind placebo-controlled trial for bavituximab in second-line non-small cell lung cancer, let me remind you that we updated efficacy analysis that compares that 3 milligrams per kilogram of the bavituximab arm to a control arm comprising the full data from the placebo and the 1 milligram per kilogram bavituximab arm. This analysis resulted in a median overall survival estimate of 11.7 months in the 3 milligrams per kilogram bavituximab arm, compared to 7.3 months in the control arm, representing a meaningful 60% improvement. Bavituximab was also well-tolerated, with no significant differences in the adverse event profiles across the trial arms.

We plan to report additional data from this trial, including updated sub-group analyses and safety data at an upcoming medical conference. In the meantime, these data are compelling and allow us to move with confidence into discussions regarding a Phase III trial design, which Rob will talk about shortly.

The second trial to read out during the quarter was our open-label randomized trial of bavituximab in combination with gemcitabine in 70 patients with previously untreated Stage IV pancreatic cancer. This Phase II trial was our first in pancreatic cancer, and was designed to cast a wide net. Our eligibility criteria were relatively broad, allowing enrollment of adults with no upper age limit, inclusion of different metastases, and ECOG performance status of zero through 2. The combination of bavituximab and gemcitabine resulted in more than a doubling of overall response rates -- 28% versus 13% -- an encouraging sign of anti-tumor activity. In addition, a modest improvement in median overall survival was observed, 5.6 months versus 5.2 months, despite enrollment of older patients with poor performance status and rapid disease progression, as evidenced by the short survival times in the control arm.

Further analyses including sub-groups are underway, which we plan to present at a future medical conference. Meanwhile, we are encouraged by the trial results to date, and are evaluating next steps for how best to advance the pancreatic program. In order to take advantage of bavituximab's immunologic mechanism of action, we are looking to define a patient population that would allow a potentially longer dosing duration. In addition, we are considering strategies which factored in the recent development and treatment of pancreatic cancer, and look forward to sharing these plans with you when finalized.

I'll now to the call over to Rob, who will review our regulatory strategy for the late-stage development of bavituximab.

Thank you, Joe.

The Peregrine Regulatory Affairs group has had a really busy quarter, and as you have heard, the next quarter will certainly be no different. With respect to our late indication, bavituximab in second-line non-small cell lung cancer, we are in the midst of planning for a meeting with the FDA sometime during the second quarter of this year to discuss the size and design of our proposed Phase III trial. What I can tell you is, given their re-analysis of the Phase II data that both Steve and Joe have alluded to, that we anticipate that this trial will be in the 600-patient range and could involve an interim analysis. Our goal is to initiate a Phase III trial by the end of the year.

I would like to point out that our bavituximab Phase II trial accomplished what it was designed to do, and that is achieve the determination of the intended dose for Phase III, expanding our understanding of the favorable safety profile of bavituximab, and produce a clear signal of clinical efficacy. Having accomplished these three critical things, we feel confident in moving the bavituximab 3 milligrams per kilogram dose into Phase III; that this dose has a favorable safety profile, and it has demonstrated promising signs of clinical activity. With this data in hand, we feel that we have a strong package of information ready for discussion with FDA, and are confident that this program should move forward into late stage development.

I'll now turn the call over to Paul.

Thanks, Rob.

Shifting gears now, I'd like to spend the next few moments covering a few financial highlights, and our related financial goals. As I mentioned on the last call, it's important to note that we operate a hybrid business model that includes a revenue-generating contract manufacturing business and an advancing drug development business. Let me first focus on the revenue-generating business, Avid Bioservices.

During the recent quarter, Avid generated $7 million in contract manufacturing revenue, and $17.2 million for the recent nine-month period. This represents a 34% increase in revenue over the prior year nine-month period, and so far exceeds the total contract manufacturing revenue reported during the entire fiscal year 2012. As a result of the mutual successes of both Avid and its customers, we are raising our revenue guidance from $18 million the entire fiscal year 2013, to at least $20 million, representing potential revenue growth of over 35% compared to last fiscal year. In addition to revenue growth, it is important to note that we have a backlog for future services that currently extends through fiscal year 2014. As of January 31, 2013, Avid had customer commitments in excess of $25 million, covering services to be delivered during the remaining quarter of fiscal year 2013, and into fiscal year 2014.

Let me turn to our net loss. Strong revenue growth, combined with an expected decrease in R&D spending, has significantly reduced our net loss for the current quarter and current nine-month period. Our net loss this quarter has decreased 56% to $4.9 million; and for the recent nine-month period, we saw a 32% decrease in our net loss to $21.3 million. In addition, this reduction in our net loss has translated into a 64% reduction in our cash burn rate during the recent quarter to $3.6 million, representing our reported net loss minus non-cash expenses.

Let me now talk about our financing goals. As a backdrop, let me emphasize that we are closely managing our business, our cash position, and our various sources of capital as we prioritize and advance our later-stage clinical pipeline. Investing in our clinical programs is the most important and significant potential value driver for Peregrine. Over the past several years, we have invested in these programs using a balanced financial approach. We have closely matched our capital needs with our various sources of capital, and we always seek non-dilutive capital as a preferred source of capital, such as manufacturing revenue, to reduce our overall reliance on the capital markets.

Looking ahead, we will continue to closely manage our operations in line with our cash position, while balancing our various sources of capital. We look forward to keeping you updated on our progress, and we will now open the call up for your questions. Operator?

(Operator Instructions)

The first question comes from Joe Pantginis from ROTH Capital Partners.

A couple questions, if you don't mind. You've obviously come a long way with regard to answering the questions in the second-line lung study, and now, as you had mentioned, you're preparing for the end of Phase II meeting and talk about the pivotal study with the FDA. Maybe, can you provide a little additional color on how you are preparing for this meeting? Obviously you might be talking to some FDA consultants or what have you, and I guess the ultimate question as part of this discussion is, what is really giving you the true comfort after all your analyses from the study, and the discrepancies in the study, that the comfort that you can really get back to your original plan to move this into Phase III? And then I have a follow-up. Thanks a lot.

Sure, I can take a quick stab at that, and I'll turn it over to Rob to fill in some of the details, but I think this is obviously a very expansive process of going through and reviewing the data from the trial, and making sure that we understood it as well as we possibly could. And I think that really forms now the basis of how we view our clinical experience with bavituximab. Achieving our goals in the Phase II study of identifying a dose for possibly moving forward with the 3 milligrams per kilogram, and then also further establishing the safety profile.

And again it is not just from the second-line study but it's the total experience, so clearly we've treated patients in a lot of different studies, and now have built a very nice safety database for the program. So, I think overall, that's what gives us the confidence moving into the -- for actually advancing the program into Phase III to begin with.

Basically, I think also one of the reasons that we undertook the relatively conservative analysis approach that we did for the second-line data was that it would allow us then to really have a, what we think is a good way to estimate the size of the Phase III clinical study. And so I think, because we are taking a conservative approach, we feel like, with anything, we are at a disadvantage from the numbers standpoint, and if anything should be in the end probably overpowering the study, but we certainly want to take a conservative approach given the nature of what we had to review, and the analysis that had to take place. So I think that is what is giving us the confidence, moving into the discussion with the FDA, and beyond that of course, into starting the study.

Rob, I'll turn it over to you as far as the preparations and what the group is doing.

Yes, thank you, Steve.

And we have quite a whole plethora of regulatory things that we are dealing with right now, to get ready for the end of Phase II meeting with FDA. That meeting, as you know, really encompasses all of the information we have on the drug. We are tying up all the bows right now on the chemistry and the manufacturing control section of the IND, and actually ready to make a submission to FDA shortly to cover that section of Phase II, of which there is no surprises and which has gone extremely well.

So, we can certainly make the material, we can make it reliability and make it at an economical level. And then of course, with the FDA with all the issues on the clinical side, and as Steve said, the three things you really need to know for end of Phase III with FDA is that you need, and the actual purpose of Phase II is to determine the dose that you are going to take forward into Phase III, and certainly we have done that with the 3-milligram per kilogram dose. The next is this summary of all the safety data, and we have really integrated all the safety information from our Phase I and previous Phase II trials, as well as the randomized controlled second-line trial, and we will be presenting that entire summary of safety profile of the drug, which is also extremely good and actually better than we anticipated.

And the third piece, which is important, is the efficacy piece. As I point out to many people, there are very few and far between Phase III trials that ever shows statistical significance and efficacy, that is an absolutely unbelievable hurdle for a Phase II product. And what you are really looking for is an ability to ascribe that you do have clinical efficacy, and as Joe has said, showing 11.7 months for the 3 milligram arm and a difference in the pool data set for the product of 7.3 months, when you combine the control and the placebo, just gives you the indication that in overall survival, we have a potentially highly efficacious product.

I think the three critical things have been identified, and again, we are going to discuss the entire situation of the investigation with the Agency, as well as all the data I just described, and we feel pretty confident that we have enough data to move the product effectively into Phase III.

That is helpful, Rob, thank you. And I guess my follow-up question is, just want to switch gears with staying with bavi, I guess I'll ask this question from a devil's advocate perspective, regarding the pancreatic data. Now, Joe, you started to throw some additional plans in there of how you are viewing the data, but I guess first I would ask the question is, response rates are one thing, but in oncology when you view the gold standard being essentially survival, the study didn't really show a difference in survival.

So, I guess, before we talk about or get some more color about the plans you alluded to, why were you encouraged with this current study on the pancreatic side, and then maybe just a little more color about what you would look to be doing next, as you look to, as you said, identify maybe different patient population, or what have you?

Sure, well, obviously in pancreatic cancer, it is no secret that it is a difficult-to-treat disease and survival is extremely hard to improve upon. I think we were encouraged by what we saw in our trial in that despite a very advanced set of Stage IV patients, we still did see some activity in the response rates. And it did translate to, albeit modest survival, there was still a survival difference in our bavituximab-containing arm.

I think -- as I mentioned previously, what we are looking at is, how can we advance -- what is the best way to advance bavituximab in this indication, given what is going on in the space right now, obviously with sum Abraxane becoming -- with positive data, that's going to shift the landscape, we believe. It is not curing pancreatic cancer, yet. So, there is potential opportunity there, if we can consider adding bavituximab to some of these newer regimens.

The other aspect is, clearly, we had -- because we allowed some of these sicker patients, we ended up enrolling some sicker patients, and one thing we are learning about the drug is that it does have an immune mechanism, and perhaps we have to be a little bit more selective on the type of patients for further development, so that we can give them more of a fighting chance to mount an immune response. So, those are the types of things that we are looking very closely at right now.

Just on that last point, I mean, I guess that makes sense. If you're looking at the immune component of bavi, whether it is some cancer vaccines or immune-related types of therapies, the speculation is for others that have failed in advanced pancreatic cancer, that the immune systems have not had time to essentially be engaged or activated, because the patients were so far in advance, and they would pass away before the immune system could be activated, so that is what you're alluding to?

Yes, that is a big part of it.

Okay thanks a lot.

Again just to expand on that, because I think that is one of the things we've learned over the last few years and further mechanistic studies and all the work that has been going on in the pre-clinical side, is that there is a dual activity of the antibody, and part of it is this ADCC and the kind of activity you might see early on after just the initiation of reactivating the immune system. And so, and I think that is the kind of thing that shows that shows up in tumor response rates. But clearly the survival benefit is probably mediated through more of a boosting the immune system, allowing the immune system to really build up a robust immune response, and as we are talking about here, I think that takes a number of doses to get to that point.

So, this study, and again I think we are looking forward to be able to talk about some of the subset data and how we view the program going forward. But certainly by selecting a slightly healthier patient population, as has been done with most of the other studies, which had recent readouts, you are going to automatically start to extend that time to progression, and thereby the number of doses the patients can receive.

Then, I think one of the other beauties of this drug is for the positive safety profile, and the fact that we believe any of these chemotherapy combinations will help regulate the target, combining this with now more effective combinations, such as the Abraxane combination, now even further extends that runway of getting doses in and stimulating the immune system. So, I think we are really anxious now to get to with our advisors and determine the next steps for the program. But I think there's a lot of real positive things we learned from this study that we can employ in the next study.

Okay, thanks for the added color.

The next question comes from Charles Duncan from Piper Jaffray.

Congratulation on the quarter, on the progress in the quarter, as well as the Avid revenues. My question is on bavi in second-line. You mentioned going to the end of Phase II meeting with the agency and possibly proposing an approximately 600 patient trial. Can you share with us additional information on the powering assumptions that you have there, in terms of at least magnitude of benefit that you would expect to be able to show out of that size of a trial?

Yes, so I think that it is probably a little premature to come out with too many details on what we are considering, here. I think we certainly want to put our best foot forward and put together a plan that the -- present that to the FDA, that they we will be able to accept. So, I think it's -- if you look at the standard powering assumptions of other Phase III trials, it's going to be in the same range as those studies are. Again, I think until we have a chance to get some feedback from the Agency we are probably want to hold off on announcing too much and putting that out there into people's thinking before we have had a chance to fully vet it out.

That said, Steve or Joe perhaps, when you look at the Phase II and the standard idea is to reduce a little bit in terms of the expectations for the magnitude of benefit, have you taken that similar conservative approach, and looked at the magnitude of benefit that you saw in Phase II, and cut it by some amount to design your Phase III?

Yes, there is definitely that factored into the powering assumptions. I think most Phase IIs that are positive that move onto Phase IIIs are not replicated at that magnitude difference. So recognize that you really have to factor in a larger study, and perhaps in some senses a broader total exposure, that you can't be quite as bullish.

Yes, so something just to expand on that. So, basically we feel like we've taken a pretty conservative approach to the data analysis by including in the combined control arm both placebo and patients that were receiving active drug. And so, that probably becomes something of a buffer when considering just that aspect. And then as Joe said, on top of that, we are still going one step further, and that is planning a Phase III trial that would easily meet that goal, plus some buffering additional built-in.

Okay, and then you mentioned possibly presenting a full data set at a clinical meeting coming up. Is it possible that ASCO -- that could be ASCO, or would it be ESMO or something along those lines? I realize you probably haven't had abstracts actually accepted yet, but is that a possibility?

Yes, it is certainly a possibility.

And then, I guess I assumed that with regard to the pancreatic cancer trial that you just spoke of, as well as the first-line lung cancer trial, you use different vendors or CROs than you used in the second-line trial?

Yes, I think while we certainly use some of the same vendors, I think there is just a basic different in the trial design of the second-line study versus the other studies. Second-line study, if you remember, was double-blind and placebo-controlled, which means that there was actually an extra step in which there were vials that were labeled, and every patient received a study drug plus the chemotherapy in the study, whether it was placebo, low dose, or high dose bavituximab.

In the open label studies, the pancreatic study both the front-line non-small cell lung cancer study, while those were randomized, they were not placebo-controlled. So basically, there was only one dosage that was provided for patients. So not the same opportunities for the same sorts of things we saw in the second-line study.

That makes sense. And then finally, my last question on the investigator-sponsored trials. First of all, have you been talking to the investigators about how those are going, and are there any settings that you are particularly intrigued with, and would look forward to reading out at say, ASCO, or something like that?

I think we are definitely intrigued by all the ones we support. We support those that have the potential to lead to some Company-sponsored indications, but I think we are really interested in the one with Sorafenib with HCC, that is a fairly large study at the end of the day. It's enrolling well. And there is our HER2 negative breast study, I think that is interesting, given that we had prior Phase II data in breast cancer that were very promising.

I think the front-line combination with carbopemetrexed in front-line non-small cell lung cancer is also interesting, given our current focus in lung cancer. But, I think, yes, we are constantly getting updates. We do monitor the enrollment and the usage, but whether data are available is really up to the investigators at this point. So --

Yes, and I think Charles, to expand on that, so, again as we think about partnering, and as you know, our steady goals have been primarily ex-US partnering, at least maintaining some commercialization rights in the US, indications like liver cancer become potentially very important, because while it is a relatively small indication in the US, it is a very large indication throughout the Asia where the incidence is very high. So it also creates more value potential in that regard, as well, as we're entering into partnering discussions, and have ongoing partnering discussions.

That is helpful. I appreciate the insights. Thanks.

The next question comes from George Zavoico from MLV & Company.

Congratulations. A question regarding the pancreatic cancer, going back to that, and your discussion about the immune response and measuring the robustness, or speaking about the robustness of the immune response. Was this part of the pre-specified endpoint, and how are you gauging how robust the immune response is? What exactly are you measuring in the pancreatic cancer patients?

Yes, so, we have built into some of the investigator-sponsored trials the ability to go in and look at the maturation of the immune response, and as a better way to gauge that, we did not necessarily build that into the pancreatic cancer study itself. I think we are alluding to the fact that if you look at our trial we had relatively short median overall survival, again probably because of the broad nature of our entry criteria into the study.

And just the fact that we know from, even from pre-clinical studies, that it takes some time to generate and then boost what eventually turns out to be an adaptive immune response in animals that are treated with bavituximab. And so we are just extrapolating from that into the fact that we really want to pick -- ideally combinations that will give us enough, and patient populations that will give us enough doses in patients to potentially achieve that robust immune response.

So are you measuring white blood cell counts, are you measuring antibodies, or is it just an extrapolation of your expectation there, and you're going to come up with some metrics going forward?

Yes, I think it is more of an extrapolation of our experience throughout other studies and pre-clinical studies. And just the fact that again, we are recognizing much more now even than when we did when we very first designed the study, that this immune stimulation component of bavituximab's activity is probably very important, particularly as it relates to overall survival. And that is what you have seen with other immunotherapies, as well.

That is a logical way to interpret it, and to look at it going forward, and it would be really interesting to see that verified. Okay, I have another question regarding the Avid business. You say you've got a little bit of a backlog. Are you running Avid now 24 hours a day? If I came in and said I needed a job I would have to wait until your 1Q or 2Q-letter 2014? And in that regard, are you planning some expansion?

Yes, so, I think we are evaluating expansion, but the way we operate the business is, we have a number of different bioreactors, size reactors, and so at any given time, even with our backlog of business, there is still adequate capacity, depending on the scale, for new clients coming in. So, in fact we seen, we've brought onboard not too long ago, another client. We obviously have our bavituximab production, which is also in the reactors themselves. So there is still capacity that we can continue to generate additional revenues, and create additional projects from. But, it would really just depend on the size of the reactor, and some of them are quite booked up, and other ones are relatively available. But certainly, it's a nice growth business, and I've been extremely happy with the performance this year.

And like you said, you have to make sure that you build enough, manufacture enough bavi for all the trials, ongoing trials, and in the trials you're expecting to start later on this year and next.

Yes, and I think, as Rob alluded to the fact, it's been a lot of the background work, making sure that there are two ways to increase capacity. One is productivity of your existing cell line, which means you are just getting more per batch, and then there is actually scaling up to a different size. We've been looking out for that part of the business also. We feel like we are in a really strong position, going into the Phase III to be able to fully support as many Phase IIIs as we would like to build -- that we are like to run, and also looking in the future at commercialization.

Yes, increased productivity, that would certainly help your cost going forward for sure, conserve costs. The event-driven non-small cell lung cancer trial, the first front-line. These patients, after they progressed have probably had a number of different subsequent therapies, which will also probably reflect, to some extent, and then some of them maybe have even gone into clinical trials, I would imagine. How are you going to evaluate the overall survival of these patients, based on the variety of drugs that they might have taken after they failed the front-line combinations?

Yes, I think that is a great question, and clearly with the survival endpoint, subsequent treatment could affect the outcome. The FDA guidance basically lays the next line of treatment as the primary driver. So our analysis will be looking at or what patients went on next, if anything. And if there's significant differences in between two arms. That is a compounding factor, when looking at survival.

I guess you can group everyone, but I suppose if you have enough patients or multiple patients, I suppose, in any one particular subsequent chemotherapy, then you could maybe, and maybe whether it's two lines or three lines, you may be able to compare those, like you said as a subgroup? Is that correct?

Yes, I mean it is -- the study that we have is not terribly large, but if there are some patterns with different classes of chemotherapies, then yes, we will be looking at pulling those patients.

Of course the most desirable result would be a net difference of survival regardless what subsequent therapy they went on.

That is right.

Yes, okay and finally one last question, the coding discrepancy, are you putting into place in subsequent trials any additional measures to be sure that there is no repeat?

Yes, I mean certainly we will be implementing corrective and preventive actions going forward. We want to make sure that clearly there is no possibility of this happening as much is you can humanly control such things. So, we will be looking at ways in which we can mitigate in future clinical studies any possibility of this happening. It is such a shocking thing to happen in a clinical study, and we certainly don't want any repeat of this experience.

Yes, it is a rare event. All right, thank you and look forward to your continuing news flow this year.

The next question comes from Joe Pantginis from ROTH Capital Partners.

I wanted to follow up on one of my earlier questions, and I want to ask it a little differently. And I'm not sure you're going to answer, but I'll ask anyway. The earlier question I had was, your background activities going on right now, in prepping for the FDA meeting, and the comfort level that you have to move forward, and you did address that, and Rob was very helpful too in addressing that. What I was going to ask is, on the BB side, obviously without naming names, would you be able to provide any level of anecdotes about, during your partnering discussions, the level of comfort your potential discussions are having with regard to moving forward as well?

Yes, sure, so, I think just talking in generalities, I think everyone understands how we did our review of the data. I think everyone agrees that the way we've done the data analysis is again, in the end, the most reasonable way, and conservative way to analyze the data. We haven't tried to take advantage or stack things in our favor. So, I think in general, there's been a comfort level with those activities, with the results. I think, as with all of this, right, they are just now looking forward to continuing the review, continuing their diligence, and looking forward to the FDA meeting next, and then what does the final Phase III trial design look like and all those related activities to getting ready for a Phase III study towards year-end.

And I guess it might be a fair assumption, whether a term sheet is ultimately signed or not, that the visibility surrounding your end of Phase II meeting would be very important to a potential partner?

Yes, I think naturally everyone looks at your next milestone coming up, and that is just seen as the next big milestone. Meeting with the FDA, getting our plans for Phase III in front of them, getting some sort of buy-off and just as a comfort level, it gives people more confidence, as you're moving again towards the Phase III study.

Thanks again for taking the follow-up.

At this time, I'm showing no further speakers. I would now like to turn the call back over to your presenters.

Okay, I would like to thank all of you again today for joining us for the quarterly conference call. As we outlined today, this is an exciting time for Peregrine, and we are in position for several near-term milestones. We hope that you share our enthusiasm, and look forward to updating you over the next quarter. Thank you, again.

Ladies and gentlemen, that does conclude the conference for today. Again, thank you for your participation. You may all disconnect. Have a good day.