Cerus Corp (CERS) 2006 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the fourth quarter and year-end financial results conference call. My name is Tony, and I will be your coordinator for today. At this time, all participants are in a listen-only mode and we will conduct a question-and-answer session towards the end of this conference. [OPERATOR INSTRUCTIONS] I'd now like to turn the call over to Ms. Myesha Edwards. Please proceed, ma'am.

Thank you, operator, and good afternoon. We issued a press release today announcing Cerus's financial results for the fourth quarter and year ended December 31, 2006 and describing the Company's recent business highlights. You can access a copy of this announcement on our website at www.cerus.com.

Before introducing Claes Glassell, President and Chief Executive Officer of Cerus, I would like to remind you, that during this call we will be making forward-looking statements that involve risks and uncertainties including statements about development, research, regulatory process, commercialization, finances and business prospects.

Our actual results may differ materially from those suggested by forward-looking statements we will be making, and we assume no obligation to update guidance or other forward-looking statements. I call to your attention to the disclosure in our SEC filings and in particular our quarterly report filed in our most recent Form 10-Q and a soon to be filed Annual Report on Form 10-K, including a section entitled "Risk Factors." This call will be archived temporarily on our website and will not be updated during that time.

I also would like to remind you that this call is being recorded today, February 22, 2007. I will now turn the call over to Claes Glassell, CEO of Cerus Corporation. Claes?

Thank you, Myesha. I have to start by apologizing for having a bad case of laryngitis, I hope you can hear me anyway. I am joined today by Bill Dawson, our Chief Financial Officer, as well as Larry Corash, our Chief Medical Officer, who is available to answer questions. I would like to start with a review of our commercial metrics. Sales of the INTERCEPT system during the fourth quarter were more than $900,000 and nearly $3 million for the year ended December 31, 2006. We now have 30 commercial customers and we estimate [inaudible] shipments that more than 60,000 units of INTERCEPT treated platelets have been used.

In 2006, we focused on obtaining regulatory approvals and transitioning operations from Baxter. We are now selling the INTERCEPT system under our own brand. As we enter 2007 and look at commercialization of INTERCEPT in Europe, we now control the marketing of INTERCEPT and we have made changes positioning, promoting, pricing and selling the INTERCEPT system.

To begin with, we have created a commercial operation throughout Europe with well chained Cerus sales and customer support representatives whose sole focus is INTERCEPT. Other changes include pricing the platelet and plasma systems attractively, emphasizing platform synergy and promoting the use of platelet system through CERUS funded experienced [inaudible] at European blood centers.

We have also developed a value proposition based on data from these studies. We've also positioned INTERCEPT to be independent from specific collection platforms opening the market to blood banks and employing all major collection platforms and methods. Finally, we are actively promoting INTERCEPT as a Cerus brand within the blood banking community, at the industry conferences including the AABB and ASH conferences in the fourth quarter.

In addition, we have taken over the responsibility for regulatory affairs. This has been a critical value in obtaining major end country regulatory approvals. During the fourth quarter, we announced several major accomplishments. The most notable was the receipt of the CE mark certificate for our plasma system, allowing Cerus to market the plasma system in many countries in the European Union.

More recently, we announced French national approval of the plasma system. That rapid approval was made possible by our use of the French regulatory authority, AFSSAPS in our CE mark review. We have now obtained AFSSAPS approval to sell the INTERCEPT platelet system in France. In Germany, the first blood center has received approval from the Paul-Ehrlich-Institut, or PEI, to sell platelets treated with INTERCEPT. The dossier submitted to the PEI by this blood center contains data on INTERCEPT that can be used as a blueprint for submissions to PEI by other German centers, including those now preparing applications.

We have been told that the PEI and AFSSAPS approvals are very important in influencing other countries and blood banks in their decisions to adopt the INTERCEPT blood system. As a result of our marketing initiatives and these regulatory approvals, we are now actively engaged in several contract negotiations.

For example, we have submitted a tender to the EFS, the French national blood service, for sales of the platelet system to several blood centers. We expect this tender may well become a contractual template for further penetration of French regional blood centers. We are also making good progress in Germany, Spain and the Nordic and Benelux countries.

There is a growing awareness around the world of bacterial contamination of platelets is a more widespread problem than previously appreciated. Over the past few years, blood bankers in Europe have been evaluating whether to adopt bacterial testing for INTERCEPT to address this concern. Data from large studies indicate that a substantial proportion of all platelet units contaminated with bacteria are transfused before detection. These data are influencing the European transfusion medicine community to consider INTERCEPT as the only comprehensive measure available to address bacterial contamination in platelets.

Other factors are driving interest in plasma including the desire to avoid complex logistics and discard rates associated with quarantine, and the need to comply with national mandates for additional safety measures beyond routine testing. We have indications from several large customers in Europe of their interest in adopting INTERCEPT in the 2007 to 2008 timeframe, however, once customers choose to adopt INTERCEPT the contract negotiation and implementation cycle is considerable. In most cases, we are dealing with public sector decision making and contracting practices which can be lengthy.

Even after a purchase decision has been made and commercial terms agreed to, actual preparations to implement the INTERCEPT blood system can take several more months. While this is complete, training and a transition to routine commercial practice require only a matter of weeks.

In summary, I am increasingly pleased with the customer response we are seeing. Our challenges in 2007 will include fully satisfying growing customer demand for the INTERCEPT platelets and plasma systems, as well as [inaudible] adoption.

Turning to our clinical stage efforts, our Phase I red blood cell clinical trial is now fully enrolled and all subjects have completed the first arm of the study. Since this is a crossover design, trial data will not be available until the second quarter. I would like to remind you that this study is being conducted to evaluate the potential effects of our modified treatment process on red blood cells viability. The treatment uses a manual process, significant further system development is required prior to initiating Phase III studies.

With regard to our immunotherapy programs, patient enrollment in our CRS-100 immunotherapy trial has lagged far behind our expectations, with only two patients treated to date. In addition to competing with other cancer trials, we had what we now believe were overly restrictive enrollment criteria. To rectify this slow enrollment, we have made protocol modifications to expand patient eligibility and accelerate dose escalation. These protocol changes have successfully completed FDA and IRB review. We are also qualifying an additional clinical site to increase enrollment.

Our approach to CRS-207 clinical trials is now to move forward independently with our progress of CRS-100. We will be discussing this approach with the FDA at an upcoming pre-IND meeting. CRS-207 is targeted to be tested in a dose escalation study in patients with pancreatic and ovarian cancers, mesothelioma, and non-small cell lung cancer. We hope to begin enrolling patients in the fourth quarter 2007. And now, I would like to turn the call over to Bill to review our financial results.

Thanks, Claes. Revenues for the fourth quarter of 2006 were $14.1 million, up from $5.6 million for the fourth quarter of 2005, primarily due to the receipt and recognition of $9.5 million in milestone consideration received from BioOne Corporation in the fourth quarter of 2006. Product sales for the INTERCEPT blood system platelets in Europe were $926,000 in the fourth quarter of 2006. During the same period in 2005, we recognized $89,000 in product sales which was our share of gross profits under the old Baxter agreement.

Total operating expenses for the fourth quarter of 2006 were $12 million, up from $9 million for the same period in 2005, due primarily to European commercialization activities for the INTERCEPT blood system, costs incurred to initiate and maintain Phase I clinical trials for the red blood cell system and CRS-100 product candidates, and non-cash stock-based compensation as a result of adopting FAS 123-R.

Net income for the fourth quarter of 2006 was $3 million or $0.10 per share, compared to a net loss of $3.9 million or $0.17 per share for the fourth quarter of 2005. For the year ended December 31, 2006, total revenues were $35.6 million compared to $24.4 million for the same period in 2005. Product sales in 2006 were $3.0 million compared to $0.5 million for the same period in 2005. Net loss was $4.8 million or $0.18 per share in 2006 compared to a net income of $13.1 million or $0.55 per diluted share for the same period in 2005.

Results for 2005 were favorably affected by the recognition of a one-time gain of $22.1 million associated with the settlement of a loan dispute with Baxter. The change in results from 2006 compared to 2005 is also attributable to increased expenses associated with European commercialization activities, costs associated with our Phase I clinical trials, and non-cash stock compensation associated with the adoption of FAS 123-R in 2006 offset by the higher revenues recognized during the 2006 year.

At December 31, 2006, the Company had cash, cash equivalents and short-term investments of $93.4 million, as compared with $45.8 million in cash less a $4.8 million outstanding note due Baxter at the end of 2005. We raised a total of $67.7 million in net proceeds from two equity offerings in 2006. Our current cash balance will allow us to operate through 2008 and we will not need to nor do we expect to raise additional cash in the capital markets this year.

For 2007, we anticipate a cash burn from operations of approximately $42 million. The increase in burn from 2006 is largely attributable to our commercialization efforts for the INTERCEPT blood system in Europe, including working capital, and to a lesser degree, to clinical development support for the red blood cell system, CRS-100 and CRS-207 clinical trials, as well as anticipated decreases in government grant funding and development in milestone payments.

We expect a comparatively higher quarterly cash consumption rate in the first quarter of 2007 due largely to increased working capital associated with the transition from Baxter in large payables which we carried into the new year. Now I will turn the call back over to Claes for some concluding remarks.

Thanks, Bill. In 2006, Cerus delivered a major milestone fit during the beginning of the year, and we have already met two of our milestones for 2007 receiving the French national approval for the plasma system, and our first customer in Germany, gaining regulatory approvals to sell INTERCEPT-treated platelets.

Looking ahead in 2007, we will announce quarterly commercial performance metrics. In addition, we hope to announce French reimbursement of our platelets and plasma systems during the first half of the year, signing of significant contracts and tenders, filing of an IND for CRS-207 by mid-year, final data from red blood cells Phase I trial mid-year, and interim data from the CRS-100 Phase I trial, and initiation of a CRS-207 Phase I trial in the fourth quarter.

Thank you for your time this afternoon and for your continuing interest in Cerus. Operator, we are now ready to take questions. Operator?

[OPERATOR INSTRUCTIONS] Your first question comes from Chris Raymond with Robert Baird. Please proceed.

Hey, good afternoon, guys.

Hey, Chris.

Thanks for taking my question. Couple of questions actually. Relative to, and Claes, I apologize, I had a hard time understanding your comments on the AFSSAPS situation. Did I hear you say you have gotten plasma approval and they've begun reimbursing and you are actually selling commercially now in France, is that correct?

No, it is correct that we have the AFSSAPS approval. We still don't have the official reimbursement, Chris.

So, is it safe to say that the lion's share of your product sales are still driven by platelets?

In fact, in quarter four all of our sales were platelets.

All of it was platelets. Okay. It appears you are going to have at least some first quarter momentum here with the plasma business now starting?

Yes, we started shipping quite recently. We are shipping in first quarter of plasma.

Great. That's excellent. Thanks. This may be more of an unfair question, with now, it seems like you have got a nice degree of cooperation there on the plasma side, is it too much of a stretch to assume that maybe there is some benefit spilling over into your platelet efforts to get reimbursement there?

I think it is our current view on the situation in France is that the reimbursement process is moving forward, and pretty much as it is expected to, and I think you heard Professor [Kazenov] at our investor day last year talking about the process in France and we haven't seen anything that would suggest that the process is moving differently.

Okay, great. Maybe a couple of sort of P&L questions. What exactly was that milestone, I was a little surprised by the magnitude and from BioOne?

I will let Bill handle it.

Chris, there was a $5 million equity component and $4.5 million of cash aimed at the consequence of the CE mark approval for plasma.

So that's captured as all revenue, right?

Recognized all of that as revenue one received because there was not other requirement on our part to perform.

Okay. What exactly was the specific milestone that took place?

The mark approval for plasma being issued.

Okay. And then, more on your no need, your comments on financing. You mentioned nothing in '07. Maybe another unfair question here. As I am looking at the way we have got things modeled going forward, it appears that you have enough through '08. Can you comment on that?

Well, we did. I did comment during the call that we do have adequate funds through 2008. We are not going to give guidance on this call what our burn rate for 2008 is. But I, I would also say it would be premature to extrapolate the increase in burn that we have had, that we just guided for '07, over '06 and say that that necessarily is a proxy for what we might do in 2008, particularly in the face of what we see as growing acceptance of INTERCEPT in Europe.

Okay. Thank you.

With Next Generation, your next question comes from Liisa Bayko. Please proceed.

Hi, guys. Congratulations on a successful and busy quarter.

Thanks, Liisa.

I notice you mentioned something about number of paying customers. Could you just clarify how many paying customers you currently have?

33.

33?

30, three, zero, not 13.

I know, 33.

No, three, zero.

3-0. Okay. Thank you. And then with respect to red blood cells, the Phase I trial be sometime mid-year will be completed, do you anticipate going directly to a Phase III trial from the phase I trial?

Yes, we do.

When would the timing of something like that be? Would it be more toward the end of the year or in 2008?

No, we've actually given guidance on the last conference call that it certainly wouldn't be before the fourth quarter of '08.

08?

Yes. Because there is a lot of technical development work that needs to be done.

All right, I remember you said that. Okay. Thank you. And then just a couple of small technical questions. You, when you reported over $900,000, is that total sales, or is that net of the royalties to Baxter?

We owed no royalties to Baxter in 2006, Lisa. We had our royalty holiday kick in this year.

And what rate?

Are the royalties?

Yes.

They are 10% for platelets, 3% for plasma and 5% for red cells.

Okay. Perfect. And then quickly, I noticed that, I think we've talked about this before, but I just wanted to reclarify, COGS seem to fluctuate a lot. They look like they are about 75% of product sales this year. Is that just due to experience trial or what is the reason for that? And how should we think about it going forward?

Experience trials are captured as a promotional expense under SG&A, not in COGS. However, I think two points. One, we have different margins on illuminators which are our [razors] than we do on disposable kits, which are the blades. And we are obviously in a ramp-up or start-up mode and so the fixed cost of manufacturer are currently being spread over a relatively small number.

Okay.

I think we have guided in the past, that we would expect gross margins in our platelet and plasma systems to reach on the order of 50%.

Okay. Great. Thanks.

I will also make one other comment, as you are aware, we often will give the illuminators away.

Right.

So that contributes to a lower gross margin. We get no revenue, but still have the expense.

Okay. Good. Looking forward to a busy 2007. Thanks a lot.

Thank you, Lisa.

And your next question comes from the line of Charles Duncan with JMP Securities. Please proceed.

Charles?

Mr. Duncan, please proceed.

Hey. Sorry, guys. Congratulations on a good year of progress.

Thank you, Charles.

I had a quick question. Kind of as a follow up to the 30 paying customers. Could you, first of all, that's a nice increase in the number of customers over the year. Could you give us some color on what those customers are, kind of regionally? What types of centers and where you think that number could go to by the end of this year?

So, the regions that we have seen growth in are in the Benelux countries, as we mentioned, Spain, Italy, the Nordics and actually even in Russia of all places. Now, this year, of course, with the access to the French market, we expect growing sales in France and in Germany. And the number of customers we should hope, depending on the count, the country of France as one. Or if you count it as the number of centers, it is 20 customers this year.

And then just to be clear, you anticipate French reimbursement in approval to be in the bag by the end of the first half of this year, Claes?

That's is our expectation, yes.

Okay. Can you give us a little bit more color on the tender that you submitted to the French authorities? Kind of what the process is, or do you know enough about that to help us kind of handicap where you are at in that process?

Sure, you know, as I am sure you are familiar, in Europe. A lot of public procurement is done in the form of tenders to ensure competition or free competition, and public entities will send out requests for tenders and you have to fill in quite a lot of information in those tenders, it's not just the product, but it is a lot of specifications and company information and other things.

So, that is taking us some time to do in France. This is the first tender we have received from them. But we successfully did all that and we sent it in earlier this year. And we think that once that tender is accepted, it basically will set the template for further tenders in France, so the information, once gathered, doesn't have to be gathered again. We just can add quantities and additional sites to the tender. And we have submitted a tender, so right now we are waiting for feedback on that tender.

What was the center that requested the tender, was there a certain region?

Yes, it was initially for one region, but it is probably going to be expanded to three regions right now.

Okay. And that was perhaps Dr. [Kazenov's] region?

Yes, he is one of three.

Is that the first step in establishing this reimbursement, broad national coverage of platelets?

I am sorry. Charles, I didn't quite get the question.

I say is that the first step or is that the final step that would establish national coverage?

I am sorry. The tender process is actually independent from the reimbursement process. So that the reimbursement discussion is conducted between EFS and the Ministry of Health, and ultimately actually gets approved by the Ministry of Finance because they have to provide the money. The tender process is between EFS and its suppliers, in this case, Cerus.

Okay. And then Claes, you also mentioned, data emerging on platelet transfusions occurring prior to routine detection, is that specific data that you anticipate being published, and if so, when or is that just kind of an increasing sense that that occurs?

I am going to let Larry take that.

Charles, data on bacterial detection have already been published from a number of European centers going back two and three years ago, and there are additional papers that are continuing to come out. We would be happy to provide you with the actual scientific publications.

No, I am aware of the data that has already been published. I'm asking you, you are talking about it on today's call. Is this new information that you anticipate to come out and help to drive some of these, some of the adoption or--

New studies are continuing to be published about the difficulties of bacterial detection and there is a paper, for example, in press at the Journal of Transfusion which is coming out. Looking at the experience, so, yes, there are more studies coming out that are continuing to influence people's opinions.

Okay. Good. And then, final question with regard to Germany, can you give us any additional information on the timelines that you would anticipate more approvals over there? I believe you have got the one approval. Do you expect the others to occur much quicker or when can we see broader adoption in Germany?

Charles, as you remember, German blood centers require two different approvals. One for manufacturing and one for marketing. For manufacturing, they get approval from a local authority called the lender and to date, there are four centers that have lender approval already.

In addition, they need the PEI approval for marketing, and one center has that approval and two other centers are able to operate under that same approval, if they so choose. But they will apply for separate PEI approval. We think the PEI approval process, which took about a year for the center in Lubeck, will now be much faster for subsequent centers because the PEI now has familiarity with the information in the file. But I can't tell you exactly how fast it will be.

Okay, and then I did have one final question for Bill. There are two lines in the income statement that were greater than our expectations, both COGS and SG&A. Could you give us some sense as to guidance for the two lines. Do we have a new trend line for those? Or was there, you know, call it a one-time bump in those expenses?

Charles, the COGS is probably explained in the same point I made in answering Lisa's question a moment ago. That is it includes illuminators which we give away as part of placing an INTERCEPT system with a customer and we don't get the corresponding revenue. So our margin appears to be lower than it actually is on the disposable kits. With regard to the growth in SG&A, it is largely, if not completely, explained by the increased presence in Europe.

Okay. With regard to those illuminators, is that the case that you are fully, you have placed all the illuminators out there, or is there a time when you fully placed the illuminators and then that expense goes away?

No, we still have many in inventory, but as customers come on stream, our experience is that they take at least one and generally two, sometimes three, illuminators depending on their size. And a few centers have purchased them. Most are happy to take them free of charge. And so that will be an ongoing phenomenon until and unless we fully penetrate the market.

Okay. So we should just anticipate that part of the cost, but eventually that goes away?

It does become less of a drag on margin, obviously, because you only need to put one or two illuminators in a center and then from that point forward it is an annuity of kit sales.

I think as our kit sales goes up, that component in our COGS will go down proportionately.

Yes, that makes sense. It is not a ton of money, but I am just curious to know the details. Also, Bill, can you break out the FAS 123-R?

Yes, there's a total of $2.5 million for the year in 123-R expenses, I want to say $1.1 million of it was in R&D and $1.4 million was in SG&A.

Okay. Cool. Thanks for the added information.

Thanks, Charles.

Your next question comes from Eli Kammerman with Cowen. Please proceed.

Yes. Good afternoon. Can you tell us which individual country we should expect to account for the largest proportion of sales in Europe by the end of the year?

Well, it is going to be between France and Germany, and I think it is going to be driven more by the time it takes to get the agreements in place.

So, it should be Germany?

Or France.

Okay. Secondly, how many new employees do you expect to add in Europe this year?

Well, we have budgeted for about 10 more, but I think we actually, seeing the encouraging signs we see now, we may actually go a little bit more than that.

All right. Thanks very much.

Thank you.

Your next question comes from [Michael Safransky] with Onyx Capital. Please proceed.

Good afternoon.

Good afternoon, Michael.

I was wondering if you are going to have to come back to the public markets this year to raise money for your INTERCEPT rollout?

I think Bill gave a pretty clear guidance on the call on that. He said, no.

Okay. Now, assuming you have to come raise money for anything, in light of how your offerings have been received, are you looking at any other financing options such bank debt, or a debt offering?

Michael, we are not considering raising capital this year. Don't need to.

So you will not be raising any money this year?

Not our intention.

Great, thank you.

Thank you.

Next we have a follow-up question from the line of Liisa Bayko with Next Generation. Please proceed.

Hi, guys. Just one more technical question, will you be booking the total sales and then deducting later on in expenses of royalty to Baxter, or how will that work?

That will appear on a go forward basis, Liisa, in the current period.

So in other words, will you book the total sales or just your portion of what you get?

No, it is top line sales and then royalty will be an expense.

Okay. Great. Thank you.

Now a follow-up question from the line of Chris Raymond with Robert Baird.

Hey, thanks. I wanted to circle back on this paying customer metric that you guys have been talking about for awhile. I want to make sure I have my facts straight.

As I recall, you guys said that when you took over the business from Baxter, the primary management of it, you had, they had signed up 15 accounts and then you had gotten to right around 20 or so by maybe [mid-May-ish], and so now you are saying 30, which is a nice progression, can you maybe talk about, and first of all can you tell me if I've got those numbers right, and, secondly, can you maybe talk about how many of those were signed up since the plasma approval, or driven by that plasma approval, and maybe put some color around what the sort of sales cycle is?

I have always understood it is pretty long. But maybe, and probably also variable. But can you talk about how long from when you first contact an account to when they actually get installation, training and start buying?

All right, Chris. First, let's start with the numbers. I think your recollection of what we have said in the past is pretty correct and accurate. By the way, these customers are, obviously, still only platelet customers, even though, we start selling the plasma, we are not going to double count them, so they will not become both platelet and plasma customers. I don't think we can say any of these new customers have been driven by plasma. They have been driven by platelets.

So your next question about selling cycle, we try to distinguish between selling in the sense that we are convincing people to start using INTERCEPT and what they will then describe as negotiations or contractual discussions, and the selling cycle of convincing people,of course, can vary a lot.

Once someone is will to buy, I think we have seen the fastest adoption taking place in [inaudible] last year which took all of two weeks because it was a very urgent need and high priority. So I think that's an indication of how fast it can go.

When you talk about negotiating with large national operations, like EFS, or with large German operators. They have their own procurement methods that they have to go through and that cycle takes, in my opinion, between three and six months. So, there is, I agree with you. It is a long cycle, but it is a cycle that starts with customers saying we want to buy, now let's just get everything in place to do so.

Great. That's exactly what I was trying to get at so, if you have had this traction without any benefit from your plasma approval, and given the fact that there is a long selling cycle and arguably you are probably along with that process with a number of centers, would we be over the top in assuming that possibly this time next quarter that you could have a much bigger number here in terms of paying accounts?

I think it is going to be bigger, certainly. How much bigger. I don't want to speculate right now. Again, as you know, these contracts take a little while to go through and we are making great progress. I'm convinced that we are moving forward and we are going to get this sales growing pretty fast. But I don't want to give you time by right now. So to me it is not a question of if, it is only a question of how long will it take.

Great. Thank you.

Thanks, Chris.

With Lewis Capital Management, your next question comes from Scott Lewis. Please proceed.

Thank you. Good afternoon.

Good afternoon, Scott.

I just had a couple of questions on the immunotherapy program. One, you mentioned a third center for CRS-100. Is that all finalized or is that something you are hoping to finalize soon, and then can you give a little more color if possible on the modifications you made that you think will help you get more enrollment there? And then just lastly on the 207, now that you are taking an independent track on that. How much of a time hit does that cause you? Thanks.

Okay. Starting with the third center, we have, I think, almost everything in place and most likely they will be enrolling patients when we get to our second quarter. So that is going to be sometime, we hope, not too far away in time.

And with regards to CRS-207, we initially wanted to be able to piggyback on data for CRS-100. But we felt given the slow enrollment to CRS-100, we wanted to make sure CRS-207 can proceed independently, since we are targeting a different patient population. So I don't think it is going to result in a time hit on that. Actually it may move it faster forward.

And finally with regard to the changes in protocol on CRS-100. We have adopted a more rapid dose escalation to get us up closer to maximum tolerable dose faster. And we've also broadened the patient enrollment criteria to include patients who have any form of liver metastasis, as opposed to before we had predominantly liver metastasis and we think those two factors will help us enroll faster.

Okay. Can you just, I am sorry. Can you say that one more time about the modification? I didn't quite catch with the liver metastasis?

Okay, so the original design of the [inaudible] protocol said that we would enroll patients that had predominant liver metastasis, predominantly cancer of the liver and and we have now broadened that to say that they, any patient that has any sign of liver cancer can be enrolled.

Okay. Great. Thank you.

Sure. Sorry for the bad voice.

I understand.

Next, we have a follow-up question from the line of Charles Duncan with JMP Securities.

Hi, guys, another question on immunotherapy, can you give us, Bill, roughly a percentage of R&D that you will be spending on those programs this year?

Just rough guidance, Charles. It is roughly a 2:1 ratio of spending, blood safety versus immunotherapy. On a historical basis, as you know, we do report by segment. So when you see our 10-K which we intend to file within the next 24 hours, if not 12 hours, you will see that for this year.

Okay. Then, with regard to latter trials with the immunotherapy, I know you have spoken to this before, but give us an updated view as to whether or not you'd seek a partner, and when you think you would have added sufficient value to those programs to attract a partner for the latter clinical development of them?

Well, I don't think we can give any much guidance on that, Charles. We would always look upon the partner with favorable light if they bring something good to the table. So, I think we beginning to generate human data, and that's very important for any potential partner and, as you know, we do collaborate with MedImmune and that collaboration is going forward. So I can't give you much more color than that.

Well, I guess what I am specifically asking is do you plan to enter into latter clinical testing of CRS-100 without a partner? Or do you think you know, safety, the kind of safety data and really early efficacy observations that you make out of that trial in the Phase I could be sufficient to attract a partner?

That is certainly our hope.

Okay. Good. Thanks.

All right.

There are no further questions in queue.

All right. Again, thank you all for being on this call, and we look forward to our next quarterly financial results call later in the spring. And, once again, I apologize for the horrible voice. Bye.

Ladies and gentlemen, thank you for attendance in today's conference. This concludes your presentation. You may now disconnect. Good day.