Cerus Corp (CERS) 2003 Q2 法說會逐字稿

Welcome to the Cerus Corporation Second Quarter Financial Results Conference Call. During the presentation all participants will be in a listen-only mode. Afterwards we will conduct a question and answer session. At that time, if you have a question, please press the 1 followed by the 4 on your telephone. As a reminder, this conference is being recorded Thursday July 24, 2003. I would now like to turn the conference over to Ms. Sylvia Wheeler, Director of Corporate Communications and Investor Relations. Please go ahead, ma'am.

Thank you. Good afternoon. Before introducing Steve Isaacs, President and CEO of Cerus, I remind you that during this call we will be making forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from results described due to factors that include, but are not limited to, those discussed in our annual report and Form 10-K and quarterly report on Form 10-Q. To request copies of the documents, our press releases, or financials please call call 925-288-6036 or find them on the website at cerus.com. I will now turn the call over it Steve.

Thanks a lot, Sylvia. Good afternoon, everyone. Joining me in the call today are Greg Schafer, our Chief Financial Officer, and Dr. Larry Corash, our Chief Medical Officer. I'll begin with the general business and commercial division overview then Larry will go over our clinical and regulatory progress. Greg will then review our second quarter financial results, which were released earlier today. In closing I will speak to our plans going forward and we will then open the call for questions.

The three months since the last call have been very active with several news announcements. First, as many of you may already know, yesterday we announced robust inactivation of the SARS Virus further demonstrating the power of the pathogen and activation technology to target emerging pathogens that threaten our blood supply. Second, during the quarter we reached agreement with the FDA in getting clarity on the steps required to get approval for the INTERCEPT blood system for platelets in the United States.

We are pleased to have clarity on the approval pathway and believe the added work will be moderate and quite manageable. Larry will provide more detail during his clinical update. Third, we strengthened our cash position with $54 million in net proceeds from our followon stock offering augmenting operating capital that will carry us forward for the next 24 months. Fourth, we received an additional $6.2 million award from the Department of Defense for continued development of technology to improve the safety and availability of blood for the armed forces. And, fifth, we named Tim Anderson to our board directors. Tim, a former senior vice president of Baxter, joins our board with over 30 years of industry experience, including global commercialization of transfusion medicine product.

These events during the past quarter all support our goal of successful commercialization of the INTERCEPT blood system. penetration of European markets where INTERCEPT platelets are approved for commercial use is our first opportunity to show progress toward this goal. Successful commercialization in Europe is the top priority for Cerus and will require our attention and assistance to help Baxter drive uptake over the next few quarters. At this point, the INTERCEPT platelet launch continues [Inaudible] an awareness-building phase. However, things are progressing and I'm pleased to report that a contract for over 1.8 million Euros has been signed with blood centers in Spain. Baxter negotiated this contract during the quarter, but it was not finalized until July.

We expect to record our share of this revenue over the two-year term of the contract. Now, let me share a few insights into the mindset of our European customers. As we mentioned last quarter, the purchase for INTERCEPT involved the complex decision making process which varies from country to country and may include blood centers, hospitals, prescribing doctors, patient groups, and public policymakers. While there is a high level of awareness of INTERCEPT within the blood banking community, work remains to raise awareness among physicians and patient groups.

A recent survey provided of international transfusion medicine experts provided insight into opinions of the INTERCEPT platelet system and the likelihood of its wide spread adoption. In general the transfusion experts queried agreed that pathogen inactivation of platelet concentrates is an important new development and highlighted the potential for brood adoption. However, many remain in a wait-and-see mode until they better understand the characteristics of the product and the cost of adopting the system.

Based on this type of information, we expect Baxter's marketing strategy will place greater emphasis on broad programs which will educate customers on the extensive safety and efficacy data that has been generated on INTERCEPT platelets. We are confident in our data package and believe we can educate our target audience on the in-depth results of multiple rigorous pharmaceutical level studies which were submitted to and accepted by both U.S. and European regulatory authorities.

In short, the studies evaluated both short- and long-term product safety and provided a very acceptable profile for INTERCEPT platelets. With respect to the potential cost savings with INTERCEPT, opinion leaders acknowledge the opportunity to eliminate gamma irradiation and CMB testing, two blood safety measures that are often requested for immunocompromised patients.

In addition, the experts felt that additional savings could be captured with storage of platelets for 7 days rather than the current 5 day storage period. Seven day platelet storage may be facilitated by INTERCEPT since it eliminates the problem of bacterial contamination.

The transfusion medicine marketplace is now approaching adoption of pathogen inactivated platelets using the INTERCEPT blood system, and most thought leaders believe that over time widespread adoption is inevitable once the proven characteristics of these platelets are better understood. Recently, Baxter's outreach efforts to policymakers were enhanced by a European Parliamentary meeting focused specifically on the impact of SARS and other emerging pathogens on transfusion medicine. Our recent report of inactivation of the SARS Virus with our Helinx technology is timely and will further support Baxter's European marketing efforts.

These results add to our existing portfolio of inactivation data, which includes other emerging pathogens such as West Nile Virus and the virus used to vaccinate against small pox, another potential threat to the blood supply. Baxter's marketing focus is to continue to educate on the benefits of pathogen inactivation and channel the concerns around emerging pathogens toward demand for INTERCEPT.

The next major market for INTERCEPT platelets will be the United States. As I mentioned earlier, we have reached and agreement with the FDA on additional tests to gain approve of INTERCEPT platelets as part of our close work with the agency to move these products towards commercialization.

FDA Commissioner, Mark McClellan, highlighted pathogen inactivation in his keynote address at the Biotechnology Industry Association meeting last month in Washington, D.C., stating, and I quote, "There is more potential than ever for advances in blood technology including blood substitutes and new approaches to pathogen inactivation." He went on to say that the agency's biologic center is focusing on new efforts and new collaborations on these technologies and included pathogen inactivation as an advance that could become one of the most important medical breakthroughs of the 21st century.

The importance of pathogen inactivation has been further highlighted by recent reports of hepatitis transmission after apparent nucleic acid failures. In recent articles from Japan, 29 suspected cases of hepatitis transmission were reported from transfusions of donated blood that had undergone nucleic acid testing with false negative results.

Separately, a false negative from an HIV contaminated unit was also reported from a failed nucleic acid test. These cases highlight the shortcomings of testing which despite improved technology still cannot close the window period and catch early infection. Meanwhile, we have been contacted by the Japanese Red Cross to begin evaluation of INTERCEPT platelets in Japan, which which represents a significant portion of the platelet market.

The revolutionary nature of pathogen inactivation presents market penetration challenges, but we believe they are surmountable and the imperative for improvements in blood staff safety, which can only be accomplished with pathogen inactivation, will lead to the INTERCEPT blood system's success. Meanwhile, the limitations of protecting blood solely through testing are becoming more evident as new pathogens continue to emerge to threaten our blood supply. I will now turn the call over to Larry for a clinical update.

Laurence M. Corash, M.D.: Thanks, Steve. This past quarter process validation studies continued in multiple European blood centers. We conducted validation studies in the UK, France, four Nordic center, and four German centers. Currently, studies are ongoing in 31 German centers, 5 additional Nordic centers and in Italy, Spain, the Netherlands, Belgium, Portugal. Austria, Switzerland, Ireland, and several eastern European countries.

Several centers have initiated transfusion of INTERCEPT platelets with good acceptance from clinicians. Importantly in these centers, INTERCEPT pathogen inactivation has replaced bacterial cultures, CMB testing, and gamma irradiation demonstrating the efficiency of the INTERCEPT system to improve the economics of transfusion safety. In the United States, as many of you know, we have been in ongoing discussions regarding the clinical module in our PMA.

We met with FDA and successfully answered a number of questions. During the quarter, those discussions led to our agreement with the agency on additional steps to complete our PMA for the INTERCEPT system. The steps that were agreed upon include: conducting a supplemental platelet transfusion study and performing additional analyses of the U.S. phase III clinical trial data.

The supplemental clinical trial, which we believe will include approximately 200 patients, will be carried out using the commercial set and will provide additional data to address FDA questions related to platelet performance. The commercial set has previously undergone successful European clinical testing and is now being marketed in Europe. We are currently drafting the final design for the supplemental trial and plan to submit it for FDA concurrence in Q3.

Assuming the protocol requires 200 patients. we believe the trial can be conducted in 15 to 18 months. The second step is not rate limiting and involves additional analyses of data in the U.S. phase III trial that showed statistical differences. In addition to our own thorough review, we also had an independent expert analyze these data sets. Both reviews have determined the differences to be due to discrepancies in the manner in which the data were reported by study sites rather than real differences between the two groups. FDA asked us to have an independent panel of experts confirm these observations.

In summary, we believe these additional steps will remove uncertainty around our application, and we're pleased to have the clarity necessary to gain approval. This quarter we submitted or presented 33 papers at various scientific venues in Europe and the United States. At the International Society for Blood Transfusion in Istanbul, Turkey, we presented papers on the prevention of transfusion associated [Inaudible] disease, the inactivation of of mosquito-borne viruses, and the inactivation of the nonenvelope Parvo Virus B19.

Blood centers from Norway, Austria, Germany, and the Netherlands presented papers as a result of their initially experience with the platelet system. Turning to plasma, we continue to experience strong interest for INTERCEPT plasma in Europe driven by the complementary effect of a common platform for treatment of platelets and plasma. This quarter we completed and in vitro study with the hematology Service at University College Hospital in London to further characterize the properties of INTERCEPT plasma for plasma exchange therapy. This study demonstrated excellent preservation of key coagulation factor activities. The data will submitted for presentation at the American Society of Hematology meeting later this year.

This quarter we also completed in vitro testing of the improved design for the INTERCEPT system for FFP. These studies demonstrated optimal removal of S59 [ph] and improved yields of coagulation factors. The improved configuration allows processing of up to 650 milliliters of plasma in a single treatment with flexibility to split the treated plasma into 2 or 3 individual does.

Now the system is capable of processing 3 times the amount of plasma compared to the initial system in 1/3 the time. We believe that this will result in very favorable operating conditions for busy blood centers. With respect to INTERCEPT red cells, we continue to transfuse patients in both phase III studies this past quarter. If the acute study we are enrolling patients at 5 centers and have transfused 121 of the 200 required patients.

In the chronic study, we have enrolled 27 of the required 50 patients compared to 21 at the end of last quarter. We recently added 3 new centers during the quarter, and we expect these changes implemented during the quarter to result further in accelerating enrollment. We submitted and presented 9 red cell papers at various scientific meetings this past quarter.

Our collaborative research program with the Department of Defense continues, and we're now entering the advanced development phase of the program. We received $6.2 million in funding for continuation of research in blood safety and availability. The prolonged armed forced deployment in Iraq has focused attention on the availability and the safety of blood for the military and our programs with the combat casualty care command. With respect to cellular immunotherapy, our collaborative trial with the National Marrow Donor Program is open for enrollment.

This program is funded largely by Department of Defense sources, so Cerus bears minimal cost for collaboration in this multicenter trial. Our collaborative trial of the cellular vaccine against the Epstein-Barr Virus also is open for enrollment at Johns Hopkins University. Similar to the NMDP study, Cerus provides technical support but no direct funding for this program.

In addition, we have received funding under the NIHSBIR program to support studies of Helinx technology for treatment of chronic graft versus host disease. This is a serious complication arising in 30% of related matched stem cell transplants and 70% of unrelated matched stem cell transplants. The clinical trials and research studies using Helinx technology to modulate immune function emphasize the value of our platform technology in the field of cellular immunotherapy, and we will keep you posted on results as we move forward. And now Greg will review the financial results for the quarter.

Thanks, Larry. Our second quarter results were in line with our expectations with a net loss for the quarter of 97 cents. This compares to the net loss of 71 cents for the comparable period in 2002. Our cash balance at the end of the quarter was $135.8 million, compared with a $64.3 million balance at the end of 2002. Recall that in January we drew $50 million from the Baxter revolving loan facility, and in June we completed a common stock offering with net proceeds of approximately $54 million. Our cash use from operations for the second quarter was approximately $14.7 million, and we expect our current funding to be sufficient to support our development activities for the next 24 months.

We reported $2 million in revenue for the quarter, including $8,000 from early sales of the INTERCEPT platelet system in Europe. We reported approximately $1.9 million of development revenue for the quarter, primarily derived from work performed under our agreements with the U.S. armed forces. Our R&D spending of $14.8 million was a very slight increase when compared to last quarter due in part to increased red blood cell phase III clinical trial expenses.

We expect our R&D spending to be flat or increased slightly through 2003 and expect our total R&D spending for the year to be between 60 and $65 million. G&A expenses, $2.8 million for the quarter; and we expect our G&A expense in 2003 to be approximately $12 million.

Net interest expense for the quarter was $1.2 million and included interest expense on the loan facility from Baxter. Recall that no principal or interest payments are due under this facility until 2008. Now, I'll turn it back to Steve for some concluding remarks and then we'll take your questions.

Thanks, Greg. The top priority at Cerus remains supporting Baxter's effort in commercializing INTERCEPT platelets in Europe and successfully penetrating the $115 million European platelet market.

Clearly the conversion of the market to our revolutionary market is taking some time as customers gain experience and comfort with the technology and as the purchasing pathways are created within each country. While presenting challenges for our first pathogen inactivation product, we are confident we will surmount these hurdles and gain wide market adoption. For INTERCEPT platelets in the United States, we are pleased to have clarity from the FDA on the steps required to complete our PMA submission and gain U.S. approval of the platelet system. We are currently drafting a protocol for the supplemental trial which will need to have the trial plan cleared by the FDA before enrollment can begin. We are targeting a 200-patient trial, which could be completed by the second half of 2004 and would position us for completion of the PMA in the first half of 2005.

For the INTERCEPT plasma system, Baxter has completed manufacturing small lots of the new design in its R&D facility and is transferring the process to one of its manufacturing plants. We anticipate the qualification of the manufacturing process can be completed over the next 3 months which will then be followed by another 3 to 6 months to make final product and generate stability data required for our regulatory filing. All in all, this could potentially permit the INTERCEPT plasma regulatory submission in 2004, assuming a positive response from FDA to each of the individual modules.

As Larry mentioned, we are progressing both in the acute and chronic phase III trials for the INTERCEPT red blood cell system and we will keep you posted on the status of enrollment. In summary, we continued to make progress towards capturing the $2.5 billion market opportunity for pathogen inactivation product. Once adoption in Europe gains momentum, we expect a steep ramp up in sales for INTERCEPT platelets. In addition, we continue to work towards regulatory approvals and market introductions for platelets in the U.S. and for plasma in the U.S. and Europe.

We are also well into phase III clinical trials for INTERCEPT red blood cells. While INTERCEPT remains our priority, we are also supporting development of our pipeline therapeutic products primarily using Helinx technology through funding from external collaboration like the Department of Defense. We appreciate your support and look forward to keeping you apprised of our progress. I will now open the call to questions.

Thank you, sir. Ladies and gentlemen, if you would like to register a question, please press the 1 followed by the 4 on your telephone. You will hear a 3-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the 1 followed by the 3. If you are using a speaker phone, please lift your handset before entering your request. One moment, please, for the first question. The first question is from the line of Glenn Reicin with Morgan Stanley. Please go ahead.

Good morning, folks. Or good afternoon, sorry. Just a couple of issues here. Just going through the programs on the platelet side, did you say there was 8,000 revenues in the quarter or 80,000?

8,000.

8,000. Okay. So are you at all willing to commit to a revenue number this year for platelets?

We're not going to give out a specific number, Glenn, but we do continue to expand the reach. As you know, the mandation countries are very important in terms of the hockey stick effect. I think things will pick up toward the end of the year, but we're just going through the validations, working with the regulatory agencies and such and it is very hard to, you know, pin down and exact number. As you know, Baxter has its sales force out there and they are the ones actually doing the selling. We're supporting them with our own marketing efforts specifically in the clinical and scientific arena.

So can we narrow that down? I mean can you help us out at all on that front?

No, I really don't think so, you know, because things -- it is a very, you know, important time for us. As I said we are wrapping up validation studies. We are working very closely with some of the mandation countries, with the United Kingdom was both [Inaudible] and EFS in France. We have made several submissions in Germany now of all the required materials. They're going through the PEI process and, you know it just gets very difficult to predict once we sort of have done our work, done the validation studies, submitted the paperwork, how long the regulatory agencies will take to act. And I think literally there is a swing factor of probably 3 or 4 in the numbers. And so it's just -- I just can't give you guidance on that.

Mm-hmm. Let's move on to plasma. Did we lose a half a year somewhere between last quarter and this?

I don't think so. No. This is was pretty much what we have been saying is that we had to basically -- there was some flex in terms of how much time it would take to get through each of the steps, the redesign, the remanufacturing and the stability and we're pretty much on track. It depends -- you know, the manufacturing lots are -- we're now at that stage. We understand how to fix the problem that we were having with the compound absorption device. That has been in place.

We've manufactured prototype lots and, basically, those have to be evaluated for two general categories of performance. One is removal of [Inaudible] and the other is retention of coagulation protein function. Both of those look good and so now the process has to be transferred and validated to a real manufacturing plant. We are in the process of doing that. Then we have to manufacture 3 lots of material and those have to, you know, pass all the quality standards, and then they have to be evaluated for stability. And we will do an accelerated stability trial and try and submit with that data.

But as you know, the last time when we went through this basically 2 of the 3 lots were fine and the third lot was very close to being fine. And so until you're done, you're not done. And so we are being very, very careful about how we go about this. And I think based on the fix that we've put in place or Baxter has put in place place along with us, you know, I'm confident this is going to work. But it is hard to call the exact time; but, you know, sometime in 2004 looks pretty good.

That is a big number. I mean, that is a big -- sometime number that's pretty wide, wide variance there. Are we talking about first half or second half of '04?

You know, again, until we get the results out of the manufacturing plants, the best I can do for you is '04.

Okay. And then finally, on the red blood cell side on the chronic front, I think you said last quarter that you had about eight centers. Now it sounds like you have 11, but enrollment has only gone up by 7 patients 1 quarter. When should we start seeing an acceleration?

I think in the back half of this year because the changes that we made take some time to basically bear fruit, if you will. You know, we expanded the inclusion criteria, we're getting exchange patients. That is helping, but you know that tends to be a different set of physicians that one deals with treating those patients so they have to be educated and, you know, we're in the process of doing that. Other centers come on as we get through the IRB process. And as we pointed out, we have added additional centers, and the language in the consent form has helped as well. So I think you're going see more improvement in enrollment in the back half of this year. I would ask Larry if he has anything to add to that.

Laurence M. Corash, M.D.: Yeah. Of the 6 new centers coming up, Glenn, 3 of them only recently became active during the quarter and there are 3 additional ones which will become active within the next 30 days.

Is 11 the right number?

Laurence M. Corash, M.D.: I'm sorry?

Is 11 the right number?

Laurence M. Corash, M.D.: 11 is the right total number now, but of the 6 new ones only 3 have been online for a short period of time and 3 more are just finishing -- they actually completed the IRB process and they are in their training phase. They won't be active until some time in August. But then we will have 11 centers out there enrolling. And with the addition of these exchange patients, which we are just starting to approach, we have a large population to go after and I don't think we have come close to seeing the fruits of that yet. Thank you.

The next question is from the line of Ben Andrew with William Blair. Please go ahead.

Good morning or good afternoon as well. A couple of questions for you. When you look at the Japan process, how do you see that playing out? Is that a clinical process or just a review of the data?

I think it is the former. We do expect we're going to have to do some type of clinical work in Japan. As you may know, in Japan in the last few weeks has reported breakthrough of transfusion transmitted hepatitis in 29 cases and they did also have 1 not transfused case but 1 unit of HIV infected blood did slip through and was detected prior to transfusion.

So there's a lot of attention around it. We actually are going to be there next week with a few people presenting to the Japanese Red Cross. And what they've requested is that we begin the validations in Japan so we are providing equipment, disposables, so on and so forth. But our information has been and remains that there will be a clinical requirement. My guess is it is going to be more on the sort of light side in terms of a small patient experience rather than a full blown type phase III. But I think Larry has had a little bit more experience in talking to -- he has been there several times, so I'm going to him to comment a little bit more specifically.

Laurence M. Corash, M.D.: Ben, the last conversation that we had with the Ministry of Health there was that they wanted a phase I study of S59 kinetics in healthy subjects. That is 10 subjects, single transfusion similar to what we did in phase I for platelets and plasma in the United States some years ago, so a fairly straightforward study.

And then they want a small transfusion experience, probably in the range of 20 to 30 patients, with product that are made in their system. In Japan they transfuse small doses of platelets. They tend to have smaller donors because of the population size distribution, and they transfuse smaller doses of platelets. And so they will ask for a small transfusion study, we think on the scope of 20 to 30 patients, not a major issue for us.

Okay. Getting at the penetration, you know, the time frame in Europe, what is your hit rate with centers that have completed validation work that they have told you they need to do that have then turned around and either started ordering or have an indication that they are going to start ordering or those centers that have done the validation work, said, yeah, it works, but, you know, jeez, we're just sort of sitting tight for now.

Well, nobody said no. And we have been in centers representing about 50% of the 1.3 million doses. And that, you know, of course, means that in a place like France we were in two major blood centers doing the validation studies. In the UK we are in two major centers doing the validation studies. But they represent, respectively, 180 and 220,000 units.

We completed validation studies in centers representing about a third of that number. And where we are at is just basically going through the bureaucracy if you will that is required to get the Ministries of Health in some cases, or the centralized government authorities in other cases, to review the data to negotiate, you know, how the reimbursement will work. And it is, you know, it is a fairly complex process, quite honestly. And it involves a fairly large audience. I mean, it is not just the blood center, it is also -- and this is where some of the marketing work that Baxter is implementing I think is going to be important -- is getting out to the transfusing physician.

We, of course, ran our centers with thought leaders in all the different countries but they are a subset of all the thought leaders and we want to get to all of them. It is necessary to talk to the patient advocacy group. There was recently a meeting in Brussels of the European Parliament and we actually had 30 patient advocacy groups there of which 28 came to a follow-up function. And so, you know, the awareness is building the pressures on the Ministries of Health is coming on.

The education on cost savings is very, very important because, you know, if you just look at Europe over all it's a $115 million market. Well, that is a big number for them and so, you know, understanding how they're going to not have to pay that entire bill by eliminating things like gamma and CMB testing and that sort of thing is very, very important.

So we are just blocking and tackling, if you will, our way through all of this now to get signoff from many of these countries. But isn't like countries -- in fact, I can think of no example where a country center has done a validation study and then said no, we're not interested. But it does take time to get through this process. And as we said last quarter, we anticipate this it going to take several quarters.

I guess the basic question everybody is trying to get at is: How should we gauge your progress here and feel comfortable that things are moving on track? And I know it's challenging for you to give us metrics and what not, but I think that is what people are looking for.

Yeah, I know it is, Ben, and I'm doing the best I can to do that within my ability to foresee and extrapolate from existing data. But we have had sales in Portugal, Italy. We did report the order from Spain of over $2 million at today's exchange rate for 1.8 million Euros. We have had sales in Belgium and Norway and small sales in the UK for validation studies and now Sweden as well.

So the momentum is building, but it just, you know, it takes time. And I think in terms of gauging our process, our progress, I would look not only for, you know, revenue, I would look for, you know, additional countries which have ordered for building momentum through the European Parliament. It is a little bit more subtle right now because it is going to take time for the numbers to build. But if you think about the, you know, the overall issues with SARS and West Nile and so on, this is the only approved solution and the only way to solve the problem with respect to protection of blood. So we're very confident we will get there, but it is just going to take time to do.

Okay. And just basically for Greg, what is the rationale for leaving the Baxter loan out there at that interest rate? Because, obviously, you're not getting those sorts of returns internally. Why not just pay that back and take it back down when you need it?

Well that is simply a matter of the premium that the people put on having a strong balance sheet. So, you know, we feel at this point it is important to have the cash reflected on the our balance sheet. We do -- we will think about it strategically. It is a revolving facility so we can, you know, manage it. But given the tradeoffs, we would prefer to have the optics of having another balance sheet at this time.

Okay. Thanks.

The next question is from the line of Arnold Wishner [ph], a private investor. Please go ahead. Mr. Wishner, your line is now open, please go ahead with your question. We are unable to hear you. Please pick up your handset or check your mute button. We're still unable to hear you. We will move on.

Ladies and gentlemen, if you would like a register for a question, please press the 1 followed by the 4 on your telephone. The next question is from the line of Glenn Reicin with Morgan Stanley. Please go ahead with your follow-up.

All right. Real simple. Greg, how many shares outstanding right now; and what is the share count for the remainder of the year?

It is 22 million outstanding right now, Glenn; and we don't have any reason to think that is going to change much between now and the end of the year. Are you talking about the full year weighted, what our expectation is?

This quarter I was looking for 20 million and, then, third quarter 22 but it was --

Did I say 22 million outstanding?

Yeah.

Yeah. This quarter's weighted average is 17.3 million.

Okay. So that was an issue of just timing?

Yeah, it was. We had about 20 days of the followon included in the weighted average calculation.

Okay. Thank you.

I'm showing no further questions at this time. Please continue with your presentation or closing remarks.

Okay. I want to thank everybody for participating in the call, and we look forward to telling you about our third quarter results in October. Thank you.

Ladies and gentlemen, that does conclude your conference call for today. We thank you for your participation, and ask that you please disconnect your lines