Edap Tms SA (EDAP) 2009 Q1 法說會逐字稿

Good morning. We do apologize for the interruption in the conference call today. Once again, my name is Laura and I will be your conference operator today. At this time, I'd like to welcome everyone to Edap's fourth-quarter and full-year 2008 financial results conference call.

I would now like to introduce Carol Ruth of the Ruth Group. Ms. Ruth, you may now begin your conference.

Thank you again, operator. With us today from management are Philippe Chauveau, Chairman of the Board, Marc Oczachowski, Chief Executive Officer and Eric Soyer, Chief Financial Officer.

Before we begin, I would like to remind everyone that management's remarks today may contain forward-looking statements. These include statements regarding the Company's growth and expansion plans. Such statements are based on management's current expectations and are subject to a number of uncertainties and risks that could cause actual results to differ materially from those described in these forward-looking statements. Factors that may cause such a difference include, but are not limited to, those described in the Company's filings with the Securities and Exchange Commission.

Now, I'd like to turn the call over to Mr. Philippe Chauveau.

Good morning and apologies for this interruption. Let me start by sharing with you three opening remarks. First, it has always been Edap's mission that the quality of life medical advance to treat prostate cancer with HIFU is made available to all those eligible, now in Europe and beyond and soon in the USA. This is my personal mission.

The Board and the management of Edap is committed to the execution of the deliverables of this mission. Today, in response to many on this call and many others, our CEO, Marc Oczachowski, will precisely detail and share Edap's progress with the FDA.

Let me emphasize that Edap's plans in the USA are still on track. The FDA trial timing involving 205 Ablatherm-HIFU treatments remains unchanged and today we will clearly communicate why. Second, our progress in Europe is consistent and substantial. And third, Edap's cash management is careful and conservative, including for the moment paying our bond interest in cash.

Let me now hand over to Marc.

Thank you, Philippe, and thank you, everyone, for joining us on our first-quarter 2009 earnings call. Before reviewing our first-quarter 2009 performance in more detail, I would like to first provide a detailed update on our accretive and proactive US clinical development strategy and the progress we've made to increase the rate of involvement and the success we have had in our discussions and written protocol changes from the FDA. After these comments, I will outline the results of our sales and marketing efforts in new and existing markets and finally comment on our current cash position.

I would like now to address in detail the status and the expectations we have for our US Enlight clinical trial. We are indeed going through a very critical and important stage as we are facing a situation in which the current number of patients enrolled remains below expectations. The Company is devoting a great deal of effort and resources on several changes and improvements in order to achieve our goal and timing targets.

Regarding the HIFU arm of the trial, we have enrolled and treated 65 patients, 32 of which were treated during the past 12 months. We are disappointed with this figure and we have undertaken several initiatives, some of which are already implemented and some of which are in the process of being implemented.

First, central pathology labs. Before going ahead with treatment, patients who had agreed to participate in the trial had to have the tissue biopsy samples reviewed by a central pathology lab to confirm the original pathology reading from the individual investigational center. Pathologists assign a score up to 10, corresponding to the aggressiveness of the cancer cells. This is called the Gleason score and it is well known to be subject to interpretation, with some pathologists being more or less aggressive in their scoring than others. To be included in the study, the Gleason score must be 6 or less.

The central lab we were using was very conservative in their interpretation and was increasing the score for around 40% of the patients previously accepted by the investigator site. This excluded patients from participation and was also very discouraging for the physicians and nurses at the sites.

In December 2008, we requested and received permission from the FDA to remove the central lab review, provided that the pathology was read by an accredited pathology lab. This is a major step forward in moving a patient from initial interest and qualification to participation in the study and treatment. Importantly, this change removes a point of frustration at the site level. This change has now been implemented and is resulting in a 66% increase in our conversion rate from initial assessment and consent to treatment.

Second, the prostate size. One of the strictest inclusion criteria is the prostate size, as the older a man is, the larger his prostate. In January 2009, we requested the minimum age of inclusion be lowered from 60 years to 50 years. The FDA agreed to this change in the protocol in March of this year. We have nearly completed the implementation of this change, which required approval from the institutional review board, or IRB, at each center. Most centers received this approval in May. We are awaiting IRB approval from the last institutional review board.

This is a tremendous improvement as it results in a greater number of potential patients as well as a higher probability of the patient being eligible due to their having a smaller prostate size and greater chance of having low risk disease due to early detection. This protocol change has already had a significant and positive impact on our referral patterns.

Prior to March 2009, we received an average of 23 prescreened referrals per month from the Enlight program. And since March 1st, the average prescreened referrals per month has been 50, which is 117% increase. These patients will also have a higher likelihood of being included because they will have smaller prostates due to the decreased age limit.

Third, more investigating sites. We've also received FDA permission to include and recruit three additional HIFU sites in addition to existing 12 centers to participate through the trial. This means we can increase by 25% the number of sites working on the HIFU arm. We are currently working with those additional sites to ensure an active and motivated hospital staff and an enthusiastic team of investigators so that they can contribute to an increase in patient enrollment.

Fourth, strengthening the team. These three major changes will make a significant contribution to increasing the pace of patient enrollment in the HIFU arm of our clinical trial. In order to further support the execution of these positive changes in our protocol, we made a decision to further strengthen our US team working on the trial.

Thus, in addition to the Edap team and the full team of experienced and expert advisors that we presently have onboard, we will recruit a physician to serve as an additional link between Edap and the participating physicians in the trial. Several individuals have already been identified and we are in the interview process.

We also made the decision to strengthen our monitoring and coordinating team to follow the centers and provide stronger and permanent support to all trial coordinators. Investigator site coordinators are key in the process of enrolling patients, as they are screening, selecting and following patients until they are treated by the physicians.

We would like to take this opportunity on the call to renew and reaffirm our confidence and full support to the leader of our US Enlight clinical trial, our medical director, John Rewcastle. Let me outline our rationale there. One, John has a great experience in prostate cancer. He has in the past 10 years published over 30 papers in peer reviewed medical journals, all on either prostate cancer or tissue ablation. As always, and before being accepted for publication, each of these papers were reviewed by renowned experts and approved for publication.

He has also written four textbook chapters, authored over 125 conference abstracts, and has successfully made presentations throughout the world, including the European Urology Association, the American Urology Association and at all the seven American Urology Association sectional meetings. He also works with the editorial boards of the three top urology journals in reviewing manuscripts submitted for publication that are written and submitted by urologists themselves.

Also, John has a consistent FDA experience. He has actively participated in several IDE studies and 510(k) approval processes, including the Horizon stent, the Cryoguide and the Cryocare CS that are devices in the field of cancer and prostate cancer. And finally, he also has a reimbursement experience as he worked on getting several products and procedures reimbursed, such as cryo-treatment for prostate cancer and also for other devices to treat breast fibroadenoma and perform breast biopsies.

These three important type of experiences are key in getting Ablatherm-HIFU approved in the US, as it gives our medical director full knowledge, capacity and expertise in getting Ablatherm-HIFU US approval and successfully introduced into the biggest prostate cancer market in the world.

I want to emphasize that it typically takes two months from referral to treatment, so we should start to see the full beneficial impact on the treatment rates in the near future. We are already seeing encouraging signs of improvement, with four treatments scheduled and confirmed in the next 10 days, two at M.D. Anderson in Texas, one at Duke University in North Carolina, and one in the medical college of Wisconsin.

To project the number of patients that will be treated in the next 12 months, we start with the fact that we have retreated 32 HIFU patients in the past 12 months. The 40% attrition rate due to central pathology has been removed, which should result in a 66% increase in the number of patients. If we combine this with the 117% increase in referrals, the additional three new centers to the HIFU arm of the trial, the additional 25% increase in the patient recruitment, and the impact of the strengthening of our team directly involved in the trial, we could easily expect to multiply by three or four the number of patients treated.

Concerning the cryoablation arm of the trial and its very slow accrual so far, we have become increasingly concerned that accrual on this arm has become an enrollment rate limiting factor for the completion of the trial. At the end of March 2009, the Edap team, its team of advisors and some of the urologist investigators from both arms of the trial met with the FDA to review alternative options for a study counsel.

We are in ongoing discussions with the FDA on this issue and expect it back from additional information requested by the FDA, which is now under review. The goal is to maintain the scientific and clinical merits of the study without the control arm being a limiting factor of the study. We will be able to provide more information on this approach when we receive further information from the FDA.

To be clear with everyone, let me summarize our important FDA improvement headlines. First, central pathology lab removal. Second, minimum age from 60 to 50. Three, more investigating sites. And four, strengthening of the team. To conclude as of today, let me confirm that with these improvements in progress, the timing of the US FDA trial remains unchanged. This trial remains the main priority of the Company. Everyone at Edap is consistently focused on accomplishing the completion of the trial within the targeted time.

I would like to reassure shareholders, bondholders and investors that the significant and major changes permitted on the HIFU arm as well as the ongoing discussions with the FDA on the cryoablation arm provides us with the full confidence that we should achieve approval within the targeted time.

Let me turn to our business operations outside the US during the first quarter of 2009. We are encouraged by our strong lithotripsy sales growth during the first quarter, driven by the continued penetration of our next generation Sonolith i-sys device. Our lithotripsy division performed exceptionally well following a record fourth quarter 2008.

As mentioned in our earnings release, we sold seven machines, including three Sonolith i-sys devices, resulting in a 47.8% year-over-year increase in sales. As anticipated, we converted much of our fourth-quarter 2008 backlog into revenues during the first quarter. The robust performance of our high-end Sonolith i-sys device continues to raise visibility for our entire product portfolio among both urologists and patients.

As it relates to our current 510(k) marketing application for the Sonolith i-sys, we have, as we stated on previous calls, submitted our application to the FDA for 510(k) approval. The file is currently under review. We are processing with the question-and-answer stage with the FDA and we look forward to obtaining device approval and providing US physicians and patients with today's most advanced lithotripsy system.

We are pleased as well with the progress of our HIFU business and the momentum of the RPP marketing action program I mentioned in our last earnings call. Our customers across Europe continue to be responsive to the new programs and flexible sales offering that complement our current business model. In Germany, France and Italy RPP activity increased as a result of Edap and our direct subsidiary's accuracy of sales and marketing efforts to increase physician and patient awareness of the treatment option for localized prostate cancer.

These initiatives have resulted in growing physician interest for HIFU and significant increases in the number of treatments among existing Ablatherm-HIFU sites. During the first quarter, we experienced a robust 40% increase in the number of RPP treatments across Europe and opened new RPP or pay-per-use sites.

In addition to our European markets, we continue to see increased Ablatherm- HIFU adoption in new geographical territories. Our recently launched RPP site in the Netherlands and Mexico continue to perform successful HIFU treatments with no complications. We are encouraged that more patients are scheduled to receive HIFU in the coming weeks at these centers.

There has been increasing enthusiasm for Ablatherm-HIFU across sites, as recognition grows that the technology offers a noninvasive, safe and proven treatment option, providing the best benefits to both patients and hospitals. Our increased adoption and market penetration have also been supported by our growing presence in the urology community.

In addition to the French Association of Urology recent application, HIFU has been recommended at a center of care for the treatment of localized prostate cancer by the Association of Italian Urologists AURO. We now have two major scientific and clinical communities in Europe that recognize half HIFU as superior minimally invasive treatment options.

The clear and concrete endorsement from two influential organizations will strengthen the position of Ablatherm-HIFU among urologists. This is a major step forward in favor of our strategy to focus on driving deeper adoption of our HIFU technology in Europe.

During the first quarter 2009, we took several steps to increase physician awareness of Ablatherm-HIFU in the United States. Edap had a very strong presence at the American Urology Association annual meeting, which provided us with a unique opportunity to educate urologists about the benefits of the treatment with our minimally invasive technology.

At the meeting, we presented new clinical data that further supported the safety and efficacy of HIFU, facilitated peer-to-peer interactions among urologists, and held product demonstrations. As HIFU adoption gains momentum in Europe, we look forward to expanding awareness in the United States regarding HIFU's potential as a minimally invasive alternative that preserves patient quality of life relative to existing therapies.

At March 31, 2009, we had a total of EUR14.7 million, $19.5 million, in cash and cash equivalents. While it is a solid cash run rate in the context of current economic uncertainties, we are cognizant of our need to conserve existing resources to offset any potential impact of the broader market circumstances on our business.

We are focused on controlling expenses in order to remain sufficiently funded to execute our long term growth strategy. We are confident that our existing cash position and novel technology position us favorably within the current macroenvironment to advance our strategy for expanding Ablatherm-HIFU in Europe, completing the US Enlight clinical trial, and developing a robust project pipeline.

I will now turn the call over to Eric, who will review our first-quarter 2009 financials.

Thank you, Marc, and good morning, everyone. I will now discuss our first-quarter 2009 financial results. Total revenue in the first quarter 2009 increased 19.4% to EUR5.4 million, or $6.9 million, compared to EUR4.5 million, or $6.9 million, for the same period in 2008. Our first-quarter financial results reflected strong lithotripsy sales and a continued ramp-up of revenue per procedure, RPP, treatment volumes, partially offset by the anticipated seasonality for HIFU equipment sales.

In the first quarter 2009, total revenue for the HIFU division was EUR2 million, or $2.6 million, compared to EUR2.2 million, or $3.4 million, during the same period last year. During the quarter, we sold one Ablatherm-HIFU machine compared with two in the first quarter in 2008. In the same period, RPP HIFU revenue maintained a growing trend already initiated in the second part of 2008 and increased 31% in the first quarter 2009.

First quarter 2009 revenue for our lithotripsy division was EUR3.3 million, or $4.3 million, a 47.8% increase from EUR2.3 million, or $3.4 million, during the same period last year. In the first quarter 2009, we sold seven machines, including three Sonolith i-sys devices, compared to five machines and no Sonolith i-sys devices sold during the first quarter 2008. Our current backlog at the beginning of the second quarter 2009 consists of seven lithotripsy machines, including four Sonolith i-sys devices.

During the first quarter, our gross profit was EUR2.1 million, or $2.7 million, compared to EUR2 million, or $3 million, in the year-ago period. Gross profit margin was 39.7% in the first quarter of 2009 compared to 44.1% in the year-ago period, and was based on an increase in sales of lower margin lithotripsy devices.

First-quarter 2009 operating expenses decreased to EUR3.4 million, or $4.4 million, compared to EUR3.5 million, or $5.3 million, for the same period 2008. First-quarter operating expenses, including EUR0.4 million related to the US FDA clinical trials for Ablatherm-HIFU. Operating loss decreased to EUR1.3 million, or $1.6 million, for the first quarter compared to EUR1.5 million, or $2.4 million, in the first quarter 2008. The decrease in operating loss was primarily driven by higher lithotripsy device sales in the first quarter of 2009.

First-quarter 2009 net loss was EUR3.1 million, or $4 million, or EUR0.32 per diluted share compared to net income of EUR1.1 million, or $1.6 million, or EUR0.11 per diluted share in the same period of 2008. The net loss for the most recent quarter included a EUR1.2 million non-cash financial charge to adjust our convertible debt and outstanding warrants to fair value. I am pleased to reiterate Marc's emphasis on our strong cash position. At March 31, 2009, we had cash and cash equivalents, including short term treasury investments, totaling EUR14.7 million, or $19.5 million.

We are encouraged by Edap's cash position during the current economic crisis. We believe that our financial resources provide us with a competitive advantage towards executing our commercial and clinical development objectives, which should allow Edap to weather the current volatility. At the same time, we are conservatively managing our business, maintaining our cash and reducing costs, while improving efficiencies to maintain our strength into this difficult environment.

With that, I would like to hand the call back to the operator to answer any questions you may have. Operator?

(Operator Instructions).

Your first question comes from the line of Matt Dolan of Roth Capital. Mr. Dolan, your line is open.

Hey, Marc. Hey, Eric. How are you?

Hi, Matt.

First question on the business itself, regarding your commentary on the economic environment. Sounds like you still have some lithotripsy backlog going into Q2, but how do you expect this to impact your ability to sell or place systems going forward? And outside of equipment sales, can RPP procedures, which were pretty strong, can they continue to grow at this pace, regardless of the economy?

Well, actually, I mean we all know that the environment is obviously difficult today. As you've seen on the results it has not much impacted our sales in Q1. The only -- I would say the only constraint that is generating from that is that we are having a very low visibility on the business.

But what we are -- I mean one of the way that we have -- I did have to manage the environment and the crisis is to work extremely hard, beyond the field, be close to the hospitals. And again, during the crisis, I mean we can still see in most of the European countries -- the number of new cases on prostate cancer are still increasing and therefore the market is not decreasing for us.

So in terms of the business in '09, you think you can place a similar number of systems to last year, as maybe the slowdown is offset by -- sounds like increasing -- an increasing population of cancer patients? And then, the second part of my question was surrounding RPP, does that go on unabated?

Again, Matt, I think the thing that -- visibility is definitely low due to the environment and we are continuing to focus and work on our marketing and sales programs so that we can continue our growth on the RPP sales. And that's what we've achieved in the first quarter. And we can see that continuing in the second quarter in the month of April, for example. Again, we are pressuring our sales and working hard and again, supporting our marketing and sales program. And we believe we are doing well.

Okay. And then, if i-sys gets 510(k) approval here in the near future, what are your launch plans for that product in the US?

I mean, for competitive reason we won't disclose our marketing and sales strategy in the US once we have the approval for the Sonolith i-sys. But definitely we are working on that and we are taking the opportunity of the recent American Urology Association Annual Meeting in Chicago to strengthen and create contact and relation with the market so that we can make ourselves extremely ready to launch the product in the US when it's available.

Okay. And then on Enlight, as you look at some new potential control options, I'm guessing are those surgery, radiation or does drug therapy fall into that realm? And then secondly, if you do change the control, how does that affect either the FDA protocol or the current IRB approvals that you have from the hospitals already? Thanks.

Well, actually, we are not changing the control arm. I mean, we are discussing with the FDA in, again, making the clinical arm not being a limiting factor of the trial. Again, as I said in my speech, I won't go into more details about that, as we are in ongoing discussion with the FDA.

Again, we've been asked and requested by the FDA for additional information that they are currently reviewing and we are now expecting to get their feedback on that. So basically, the idea there and the goal is that, again, we are extremely aware that this control arm became a limiting factor in term of completion in time of the trial and we are working on solutions together with the FDA.

Okay, but it wouldn't affect the patients you've treated if the control arm was altered?

Certainly not.

Okay. All right, thank you very much, guys.

Okay.

Thank you, Matt.

Your next question comes from the line of [Dean Robinson], a private investor. Mr. Robinson, your line is open.

Good morning.

Morning, Dean.

One question. Since the Board of Directors and the senior management owns so little stock in Edap and how much of management's holdings are stock options, what can you do to show the shareholders that you actually care about the stock price? And basically, do you think it's undervalued?

Can I respond to that, Dean, by saying yes, we agree that it's undervalued. Two, we believe that the best way to improve the stock valuation is to fulfill our commitments to our mission, which is to make sure that this pathology is available on an expanding basis in Europe, which it is, and soon made available in the US. We believe that this, on the long term, will be the right thing to do to raise the share value of the Company.

We are working extremely hard to overcome some of the difficulties that we've incurred in terms of the FDA situation. But we believe we've now caught up with the situation and we're confident that we will achieve our mission of arriving at the execution of this program, which is to keep the USA FDA trial timing absolutely on time.

Thank you.

Your next question comes from the line of [Rich Dack], an individual investor. Mr. Dack, your line is open.

Yes, thank you. Good morning, everyone.

Morning.

Good morning.

Just a question. You may have covered it, but just wanted to maybe get your sense as to what is the exact timing of your goal for FDA approval in the US. I heard that we're on target, we're on target, but what does that exactly mean? What is the aggressive timeframe? And what is the conservative estimate for that?

All right. As we have already communicated on that, the targeted time is to get the approval of distributions of the [five for] approval by the FDA made in 2012 so that we can expect to get the approval of the technology by the end of 2012. And that's the target we've already been communicating on.

And we, as I just mentioned today, we are working on maintaining the targeting time. And we are, again, fully confident according to the recent protocol [verification] and changes that we've got permitted from the FDA and the ongoing discussion that we have on the cryoablation arm that we are on target to this timeframe.

Okay, so three years away from approval?

Correct.

Okay. Thank you very much.

You're welcome.

Your next question comes from the line of [Michael Ladish], a private investor as well. Mr. Ladish, your line is open.

Hi. Good afternoon, gentlemen. This is a follow-up to the last gentleman's question. You talked about the targeted time being 2012. What is the time for the FDA? When must these trials be completed?

Sorry, I didn't get your question.

Well, the FDA obviously has a period when the trials must be completed, I'm assuming. Is that correct?

Actually, they agreed and approved a protocol that is including a two years follow-up after the recruitment of the last patient. But there is no limit in time.

All right, there's no definite cutoff. So, does that meet your goal of 2012 with the rate that you're enrolling patients?

Absolutely.

Pardon me?

Absolutely.

Okay. All right, thank you.

Welcome.

Your next question comes from the line of [Mark Dwindling] of Paulson Investments. Your line is open.

Morning, gentlemen.

Morning, Mark.

I've got a few questions here. Just as a point of reference, on the clinicaltrials.gov site, which is the FDA's site, it's still showing as part of the criteria the age of 60. I would assume that your medical director would want to discuss with the FDA and get that changed to what is the current age. Do you have -- with these new sites, do you have any on the West Coast, in Los Angeles or San Francisco or Seattle and Portland?

Actually, Mark, we are in ongoing discussions with potential sites to be added, as we have the permission to add three more. And since we are in ongoing discussion with those sites and agreement [on this closed] so far, so we don't want to disclose that for obvious reasons.

Hopefully, one of them is going to be in Los Angeles. I know the new chair of urology at USC is coming from the Cleveland Clinic and his area of expertise is robotics. So hopefully, he would be one that you would consider.

Let's see, on the -- given Rewcastle's experience with 510(k) and my understanding being that the normal 510(k) application process for medical devices runs in the vicinity of 90 days and since you put your application in in December of last year, I was just wondering how close you think you are to getting this in and approved in the US.

Actually, I just mentioned that in my speech. I mean, we are processing with the question-and-answer stage with the FDA, I mean we are to give you more details in the second round of questions and answer. And again, I think I don't know if there is a standard time for 510(k). What I just remember is that when we got our Sonolith Praktis approved back in 2001 in the US, it took us approximately nine to 12 months.

Okay.

-- machine as well. They are different devices as well.

Okay.

And we are in the process again of question-and-answer and we are following the normal process.

Okay. Following on a previous question concerning management and the Board of Directors' percentage ownership and also noticing that you've now lost another Board member, given that management and the Board of Directors owns less than 5% of the stock in the Company and, of that, a good portion of management's ownership is in stock options, have you given any consideration to having representation on the Board, since you're down to three, of shareholders and/or bondholders from the US, particularly given that you've raised essentially all of the money from the beginning of this company in the US?

Let me respond to that twofold. One, the ownership of shares by the management. Let me address the fact that if you look at the numbers carefully in the 20-F, which is the annual report of this year, you will see that the absolute total compensation to all the Board and management people is so modest, it's EUR700,000 divided by 11 people, you can quietly work out that this is completely far away from these extraordinary salary levels that we've seen and read about in the US.

And the modest levels of salaries to our people, which has no bonus because there are no bonuses involved, in fact it's extremely sort of modest to allow any of us to buy shares at the moment. And indeed, we could be caught in a conflict of interest situation whereby since we have certain knowledge of certain developments, we are completely out of buy-out or buy-in periods.

Secondly, as far as the members of the Board are concerned, we've been working for some time and we're now ready to tell you, I'm ready to tell you, that we're about to announce the appointment of at least one if not two American Edap Board members, all of whom have the necessary background and experience to add value to our project, including the US. So, we will have at least one if not two new members which are American and are US-based and have a firm knowledge of this business.

Let me further (multiple speakers) address the fact that as far as the number of Board members are concerned, this is an addition that we have been looking forward to. But we cannot -- and we talked to our bondholders as well as our major shareholders, for their different reasons, which to me are quite obvious and I believe to you should be as well, they have -- we have talked to them about wishing or asking them to join us at the Board and they've all said no for a variety of reasons, which I fully understand, which has nothing to do with Edap, which is that as investors, they would be insiders as well as outsiders and which would allow them to have certain conflicts which they don't want to have. So, I think that's answered all your questions.

Yes, it does. It's encouraging to hear that you are going to get some outside Board members. So, that's --

The only --

-- encouraging to hear.

-- person on the board who's not French. And I'd like to increase that to some more people who are not French.

Thank you. That's all I've got for today.

Thank you, Mark.

Your next question comes from the line of [Jon Schwartz], Matrix Management. Mr. Schwartz, your line is open.

Good afternoon, Eric and Marc.

Hi, Jon.

Hi.

Hi. First of all, although some of this is somewhat old news, I think it deserves recognition and I just want to compliment you on the achieving standard of care in France and Italy. I understand that that's a process that probably took a long time, a lot of effort and a lot of careful work and that those things don't happen. And I'm very encouraged by some of the information that you've provided about the changes in the US trials because I can't believe that with the same effort applied and focus over here you won't also have success here.

I have a few questions. I have spoken with some of the investigators and one of the things I've learned is that at Sloan Kettering, the issue is money. The cost of pre-consultations and things that -- tests that need to be done prior to enrollment are expensive and I guess most of the people who apply simply don't have insurance or are outside their network. So as a result, that was given to me as the main reason why Sloan Kettering hasn't enrolled anyone. And as you know, there are other sites where there are no enrollments.

So, the question is would it make sense to eliminate some of these sites, it's lovely to have people with the reputation of Sloan Kettering, but if they don't enroll anybody, doesn't advance the cause, and add additional sites in place of that? Whether you're allowed to do that or not, I don't know. So, that's my first question.

Let me answer the question, Jonathan. I think you're right. That's one of the reasons. That's probably not the only reason as well because, as you know, Sloan Kettering has been one of the most well known (inaudible) for prostate cancer in the world. They are also having a lot of trials and it's -- they are getting difficulties in getting patients for the reasons you mentioned.

But when they get patients, they have to get also those patients in hundreds of trials. But again, we are having very close relation and contact with the team in charge of the trials at Sloan Kettering and they are showing interest and they are showing motivation to the trials. So, we are still believing that we can get them treating patients.

One of the reasons why we asked as well the permission to the FDA to include three additional sites, that was to exactly answer your question, is to get other hospitals so that we don't lose much time without recruiting patients in terms of like Sloan Kettering. So, the idea is to get other centers that have a (inaudible) access for patients and that could make the enrollment go faster.

Now, eliminating and replacing sites is not an easy thing as well because there is a very complex and long administrative way to go through, which may take some time. So, the idea is to go in parallel, to continue working with those sites that have been putting [themselves effort] and investment in the trial because, again, the team there, including the physician and the coordinator, are so motivated and very enthusiastic about the trial and, therefore -- and it would be nice for us as well to have them enrolling patients for the trial. So in parallel, we are putting onboard three additional sites that will give us more and higher source of enrollment.

Thank you. That sounds good and I understand. I assumed it might not be easy to change sites. So perhaps working with them, they'll improve things.

Second question is there was an article on proton therapy in Forbes. And proton therapy, as you probably know, is a procedure which requires an investment by a hospital somewhere on the order of $100 million, $120 million. And from what I know about the field, you can do the same thing perhaps better, probably, in my opinion, better with HIFU, with a machine that's not only less expensive but requires a lot less real estate. So, I know people at Forbes and I'll ask them if they would care to write something about HIFU.

But the question is what can be done to get that kind of publicity? It just seems to me that major publicity in a significant media outlet, it doesn't even have to be something as important as Paris Match, could have a dramatic effect on the number of men who were aware of HIFU and who applied for enrollment and might really help our trials.

My understanding is that we have -- that you have an American public relations firm outside of investor relations. But one, I wanted to confirm that and, two, I wanted to ask you is there anything that can be done to energize them? There's tremendous interest in this subject, obviously. I think men over 40 are interested in prostate cancer and I don't think it's a hard sell to get magazines or other media to provide information about this.

So, wonder what can be done along those lines. Do we have a budget and do you need to increase it? Do you want to increase it? Sort of what's the story on general media public relations for HIFU for Ablatherm-HIFU in the US, in North America, I should say?

Actually, we are working with a company that is Fleishman-Hillard to promote the trial towards patient and we've been working on several axes working with media and internet. We also have a call center to receive the patient that has been approached by the media actions.

We started that last year and one of the thing we realized is that a lot of patients, and that's why again we are extremely enthusiastic by the recent changes, is that we've got a lot of patients that were calling the call center or that were answering and responding to the actions (inaudible) that were out of age. I mean, they were more than 60 -- and they were less -- sorry -- than 60-years-old, so they couldn't access the trial.

So, now that we've got those changes permitted, I mean we are again refocusing in order to get access and to create awareness among patients and patient association groups and patient communities so that we can inform them well that the trial is there in the US and that we have got some changes. So, we may be able to get more fruit out of our communication strategy and actions.

Is there -- is there a PR firm that you hired in the United States for this?

Yes, it's a firm that is -- the name of the firm is Fleishman-Hillard and they are specialized in promoting clinical trials and working on communication and media [plans] towards patients.

Do they -- as part of that, if they're specialized, Marc, do they also seek sort of general media and magazine? I mean --

Absolutely.

-- Esquire, a Gentleman's Quarterly, I don't know what the right media would be, but the Wall Street Journal, I mean -- so they do -- they are interested in that as well?

Yes, absolutely. And we've got actually -- we've got last year several articles on i-sys that were published in journals and magazines as well.

Oh wonderful. Thank you.

You're welcome.

Your next question comes from the line of Mark Dwindling of Paulson Investments. Your line is open.

Thank you. I'm sorry, gentlemen, I thought of another couple of questions and so I thought I would ask while you were still on the line. At the AUA in Chicago, one of the clinical investigators told me that there is in the US that would qualify now approximately 160,000 men annually that would probably qualify under the new criteria.

Given that you have that many and given that you're instituting these changes and some of the others, have you given any thought to gathering the data as you go along as opposed to waiting until the very end and hopefully by doing that moving the trials along that much more quickly?

You mean speaking about the preliminary results that we've got from the trial?

Yes. Don't you have to compile the results and give them to the FDA for them to be able to evaluate and make a decision as to whether or not they're going to go ahead with allowing that, the Ablatherm?

That's not the way it works because they will -- they will see the results. And again, we have to get the two years follow-up. What is true is that we believe it's not very well seen and regarded to publish preliminary results on an FDA trial that is ongoing and that is ongoing in the enrollment stage. So, we don't want to take any risk to get the FDA looking at it badly. And again, we are in constant discussion contact meetings with the FDA, so we are obviously following the rules and we are providing the FDA with all information that is requested and that is part of the normal procedure.

Okay. I guess I only had the one, so thank you.

Welcome.

There are no further questions at this time. I will now turn the call over to Mr. Philippe Chauveau for his closing remarks.

I wish to thank you all for participating in this conference call and for your questions. And look forward to either individually as you follow up with our management with individual questions or also sharing with you our next quarterly results. Thank you very much and have a good day.

This concludes today's conference call. You may now disconnect, and have a great day.