Enzo Biochem Inc (ENZ) 2005 Q4 法說會逐字稿

Good morning and welcome to the Enzo Biochem Inc. fourth-quarter 2005 operating results conference call. Except for historical information, the matters discussed on this conference call may be considered forward-looking statements within the meaning of Section 27 A of the Securities Act of 1933 as amended and Section 21 E of the Securities Act of 1934, as amended. Such statements include declarations regarding the intents, beliefs or current expectations of the Company and its management. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties that could materially affect actual results.

The Company disclaims any obligation to update any forward-looking statements as a result of developments occurring after the date of this conference call.

Our speaker today is Barry Weiner, President. At this time, all participants have been placed on a listen-only mode and the floor will be open for questions following the presentation. I would now like to turn the call over to your host, Mr. Weiner. Sir, the floor is yours.

Thank you. Good morning. Thank you for joining us for our fiscal 2005 end of year conference call. Joining me this morning is Dr. Dean Engelhardt and Mr. David Goldberg. I plan to review briefly our results for the year and to comment on the recent activities of each of our subsidiaries.

On the whole, fiscal year 2005 was one where we experienced good progress on a number of fronts. We maintain a strong financial position today even as we continue to invest in each of our operating units.

The year started off productively with our settlement and licensing agreement with the Digene Corporation regarding a dispute we had over one of our patents related to the binding of labeled nucleic acids to a solid support. This agreement resulted in a $14 million gain as well as a royalty-bearing license to Digene that will provide a minimum of an additional $16.5 million through the year 2009.

We will also be receiving royalties on the sales of covered products, specifically their HPV kit, until the year 2018.

Fiscal 2005 resulted in net income of just over $3 million as compared to a year ago loss of $6.2 million. With Enzo Clinical Labs, revenues were up 15% for the year and the first payment received from the Digene litigation settlement in combination, total revenues increased 5% to $43.4 million.

As we have indicated, because of the ongoing litigation, we continued to not book any revenues in fiscal 2005 from Roche or in the final two quarters from Perkin-Elmer Life Sciences. Gross profit was just over $27 million, slightly below last year's 28.5 million with (technical difficulty) gross profit margin at 65% versus 69%.

Our investment in research and development was up slightly for the year, running about 20% of total revenues. SG&A increased sharply due to heavy expenditures on Sarbanes-Oxley, which as you are probably aware, many public companies have experienced this year requiring conformance to 404, as well as part of the whole Sarbanes-Oxley issues and other governance matters as well as investments and increasing direct sales efforts at both life sciences and clinical labs where we also have continued to expand our informational technology capabilities.

These expenses were offset by reduced legal spending and reduction in the provision for uncollectible accounts receivable at the labs. Revenues in the fourth quarter for fiscal 2005 increased by $2.3 million, or 27% to 10.9 million compared with 8.6 million a year ago reflecting a $1.9 million increase, or a 29% gain in revenues, at Enzo Clinical Labs and a $400,000 increase, or a 20% gain in revenue, at Enzo Life Sciences.

The net loss for the quarter totaled $2 million or $0.06 per fully diluted share compared to a net loss in the comparable year-ago period of $4 million, or $0.12 per fully diluted share, an improvement of $2 million.

Our finances continued strong with working capital at year-end of about $97 million and cash and cash equivalents and marketable securities exceeding $83 million. This is $11 million greater than at the fiscal 2004 year end. Shareholders' equity exceeded 108 million and the Company remains debt-free.

I would like to comment first on the clinical laboratory performance. Enzo Clinical Labs posted strong numbers for the fourth quarter as well as the full year. Revenues for the quarter were up over $2 million from the year-ago quarter to 8.4 million and for the year, were nearly $33 million, an increase of 15%. The gross margin for the quarter rose to 60% from 55% in the year-ago quarter. Gross profit for the year was approximately $20 million versus about $18 million a year ago.

On a bottom-line basis, the division showed a net income of 2.9 million versus a loss in fiscal 2004 of about 1.5 million for a turnaround of nearly $4.4 million. We have continued to expand the Lab's (ph) reach geographically and for the year have made some significant strides in our operations. There are now nearly 300 Enzo direct physician offered (ph) computer systems in the field as compared to 175 a year ago. These systems allow us to be directly connected with clients on a continuous basis. Being able to provide lab reports through Enzo Direct is even more critical given the increases in cost of having couriers hand-deliver each report. We have rolled out and enhanced Version 2 of our system, which allows for electronic add-ons to patients' orders.

In addition, Enzo Clinical Labs just released a Web-based version of our physician interface, called in enzodirect.com. By logging in through our website, physicians can order tests and view results from any Web-enabled computer, providing the ultimate in flexibility. This is also an ideal situation and solution for physicians who have faced constraints who do not want additional computers or who operate out of multiple locations. In order to make it even more user-friendly, enzodirect.com is interfaced with a majority of physician practice management systems, so we are able to give the physician a relatively seamless execution in acquiring his laboratory data.

During the past year, we made substantial upgrades to our billings and collection groups combining this with increasing numbers of installation of our systems in the field to allow us to collect accurate billing information in a much timelier manner. This in turn reduces the number of uncollectible invoices as we are able to capture those invoices with incomplete information at an early stage in the billing cycle. We can then obtain the missing or incomplete data more quickly and, hence, increase our operations and collections.

Additionally, we're in the process of installing electronic payment capabilities so that patients may pay their bills via credit card through a secure Web portal.

During fiscal 2005, we also completed a major investment to upgrade many of our key laboratory instruments in order to be able to handle our increasing volume more efficiently. We've brought in-house a number of tests that heretofore had been sent out to reference labs in the areas of rheumatoid arthritis, infectious disease and genetics, to name a few. The lab received an extension in our College of American Pathologist, or CAP accreditation, through 2007 and we also made significant upgrades to some of our informational technology capability.

We are exploring some strategic alternatives with our laboratory. Our measured geographic expansion has paid off and we're looking to broaden our reach. Additionally, we're also studying the possibility of bringing in more tests to broaden our menu offering and to increase our margins. We have been pleased with the progress this year as we move to strengthen our position in our regional market through both technological and service improvements and we see opportunity in targeting new clients as we expand our geographical location. Overall, we are watching what we believe to be a better tone in the general market of laboratory services and we are looking forward this year to see this momentum continue.

Turning to the Life Sciences division, this year continued to be a building year for Enzo as we shifted away from our distribution model that we had operated under in the prior years. Our revenues on a quarter-over-quarter basis were up about 20% to $2.4 million. This figure represents direct sales as well as royalty revenue. Actual direct sales were up modestly for the quarter and for the year by nearly $800,000. This is reflective of the continuing direct sales effort we are making in order to more effectively market our products. We have identified a number of key geographic areas domestically and are continuing to fill them as we identify qualified individuals.

Our sales effort is somewhat specialized as we are building a team of experienced professionals that as a group have a number of core competencies related to the products that we market. This allows us the flexibility of bringing in an individual with a specific skill set in a given field when a situation arises, resulting in more of a consultive (ph) sell, as you might say. To support this effort, we have expanded our applications laboratory, a laboratory that has been designed to help explore additional uses of our product and service our clientele so that we can respond more effectively to our customers' needs. We're also exploring various sale options to expand our business in Europe; in the Far East as well.

We also made major upgrades to our Life Sciences website so that customers around the world can order and pay for our product online, thus providing convenience to end users while allowing us to process overseas orders in a more cost-effective and efficient manner. The website also has some internal modules to allow our marketing group to more effectively manage our leads.

For the year, Enzo Life Sciences revenues were off by less than $2 million and this is reflective of the two legal proceedings in which we are involved. During fiscal 2004, Enzo Life Sciences recognized revenues from two main distributors of our products -- Roche Molecular Systems and Perkin-Elmer Life Sciences. Both of these companies have continued to sell product that are the subject of litigation and we're not recognizing any revenues from them at this time.

As for fiscal 2005, revenues include -- excuse me -- include royalty earned from Digene. In addition, we recorded a $14 million gain, as I mentioned earlier, on the litigation settlement with them. For the year, Enzo Life Sciences reported gross profit of 8.3 million in fiscal 2005 as compared to 10.4 million last year.

On the product front, we have continued to market our new kit for the labeling of array comparative genome hybridization, or CGH. During the past quarter, we have made contact at leading institutions that are beginning to perform this procedure on a more regular basis. Our marketing group as part of its strategy has identified and engaged key opinion leaders to use our product and become advocates for them in the market.

The CGH technique makes possible the study of the entire set of chromosomes of a given individual at once. A recent article in a leading pathology journal called this approach a generator of tremendous enthusiasm in totally revolutionizing chromosomal diagnosis. Our kit contains the components needed to label these arrays so that such chromosomal changes can be identified. While this technique is still in its relatively early stages, we believe that we are well positioned to be at the forefront of this market.

As we look forward to upcoming quarters, we plan to bring up several more kits and components for researchers that are studying gene expression in a variety of formats. We have in development kits to aid researchers in increasing their target RNA in a more expeditious manner. We are also exploring the possibility of product that could be used in the study of DNA from archived tissue samples, thereby opening up a potential market in retrospective genetic studies.

The applications lab that I mentioned earlier is also charged with assuring that our product can be used in as many different formats as possible.

Over the past couple of months, we have been taking a very close look at some of our strategic alternatives that are available to Enzo Life Sciences. Much of our product line is focused in the area of the study of gene expression; that is, the study of the process by which an individual's genetic makeup is converted into an actual function, that is where a gene is turned off or on under a particular circumstance. Most of this work is carried out by large pharmaceutical companies as they attempt to match up on a genetic basis how an individual might react to a candidate compound or a potential drug. This is the basic definition of pharmacogenomics and we believe this is a direction where medicine is heading.

In order to better serve this market, we will be looking into adding some technology that might help us provide a broader menu of our products in this area and also provide integrated solutions to our customers. We now have core competencies in related areas. Over the past years, we have developed expertise in the production of labeled nucleotides, the building blocks of the DNA and RNA, as well as in the area of the labeled DNA probes. We're examining ways that we can sell individually reagents along with complete kits so that we might serve a wider broad-based market.

We are also exploring business-to-business collaborations where we would be a supplier on either an OEM basis or as a manufacturer of a particular component for a complete system. In the past, we have concentrated mostly on the individual end user, but as our products become more widely used, this is an avenue that we plan to explore as a way of expanding our base of business.

In addition, we are undertaking a comprehensive review of our path (indiscernible) in order to potentially out-license those of our proprietary technologies that we may not wish to develop internally. This is in keeping with our program to explore as many alternatives as possible in order to achieve growth.

Finally, we are considering the option of possible acquisitions. We have a very strong balance sheet and believe that we can utilize this financial strength to allow this division to enter complementary markets that will provide not only a quick influx of products but of individuals with special skill sets as well. Acquisitions have been a long method of approach for research product companies to grow and our strategic plan includes the pursuit of appropriate opportunities that can help us in achieving this goal. We also will be looking at options that can provide synergies across divisional lines between each of our group.

We have continued to develop our proprietary isothermal amplification system. Over the last year, we have been attempting to better differentiate and accelerate the capabilities of our system as we explore our strategic options to best commercialize this product. As we indicated in our last call, the system is the subject of two issued patent and a number of others still pending. We feel the potential for proprietary technology beyond research use lies in patient monitoring and diagnosis of infectious agents.

Additionally, we're exploring the application of this technology for use in a research setting as well, thereby giving us a more rapid path market and a quicker return on our investment. The progress that we're making in our diet (ph) programs as the laboratories allow us to consider this possibility very seriously and we continue to work diligently, both in-house and at the same time, we are engaged in discussions with potential partners.

Turning to legal matters for a moment. We are obviously limited in our comments concerning ongoing litigation, but as many of you may be aware, a Markman hearing was completed on September 30 which involved an examination of the breadth of the claims of several of our patents. The matters in these cases are complex since there are several defendants and several patents involved. We cannot speculate on a potential outcome or even when a ruling might be issued, but you should note that this hearing represents only a portion of the litigation issues involved in these cases, specifically the patents. It does not deal with the contract issues which will be pursued separately and which, in some cases, are the heart of the litigation.

What I can say is that as always, we have pursued these actions when we have been unable to obtain what we believe is an equitable return on our proprietary technologies. Recently, the appellate court returned a decision on the Gen-Probe case upholding a July 2004 summary judgment that was granted against them with respect to the validity of one of our patents that we believe Gen-Probe had infringed involving the sequence for gonorrhea. Obviously, we're disappointed with that decision, which was based on a technicality, and we are currently considering our options in this particular case.

I would like to move to the therapeutic area. Let me first begin by telling you that our therapeutics program has quite a bit of breadth for a company our size and this year, we have spent time attempting to focus and concentrate the product development areas that we believe could have strong commercial promise. While it seems as if we have our hand in many different areas, you should know that many of the targets that we are examining actually have related mechanisms of action and thus by prudently focusing our therapeutic candidates, we may be able to increase our chances for putting out a successful product.

A number of events marked the progress in therapeutics this year. First, our collaborators presented five papers at the annual meeting for the study of liver disease in Boston, and based on the information presented, we believe that our immunomodulatory agent, EGS-21, may have properties in the management of a number of immune mediated disorders.

Our Crohn's Disease treatment, Alequel, was featured in a news conference at the Digestive Disease Week Conference in Chicago this spring. We reported a potentially theragnostic application of this treatment delineating possible biological markers that might identify a subpopulation of Crohn's patients who are more likely to respond to our medicine. This would increase the specificity of the medicine and also potentially reduce the unwarranted use of it as well.

Also, based on our work in the area of NASH, we were able to receive a grant, a $1 million grant, from the Israel U.S. Binational Industrial Research and Development Foundation, which is targeting towards a Phase II study in the area of nonalcohol (indiscernible) hepatitis. We also made advances in our studies for a treatment for Crohn's as well as in the areas of hepatitis in general, and we have formed a significant foundation this year for two new therapies; one to treat various diseases of the bone, an area that we filed two important patent applications in, and another therapy to treat a condition known as uveitis, an eye inflammation that can lead to blindness.

When we began the year, we had a number of goals in mind. During fiscal 2004, we completed the first arm of a Phase II study for Alequel, our treatment for Crohn's disease. And based on favorable data in 2005, we set out to expand this study. We are as a result continuing to enroll additional subjects in order to achieve a critical mass of subjects necessary to validate the efficacy of this study drug and expect to continue enrollment through the end of this calendar year. Additionally, we are looking to expand the number of trial sites for Alequel, including some in the United States, in order to enroll a more diverse population. All of this activity is designed to generate the appropriate data to validate this candidate drug and to move to a Phase III study. Data will be evaluated and reported as it becomes available. To date, we have been very encouraged by the data we have seen and we are proceeding. Estimates for the number of individuals that are affected by this disease topped 1 million in the U.S. and Europe alone.

I would like to turn to HIV. Our clinical trial at the University of California of San Francisco are being processed as we speak. We have received clearance from the FDA and the RAC (ph) Committee and are awaiting the University's institutional review board approval to begin to enroll patients there. UCSF has had experience in manufacturing the final study drug as it is the site of our work Phase I study. And thus, when we do receive this final approval, enrollment should commence.

This study was initiated at the New York Presbyterian Hospital Cornell Medical Center, yet it has not enrolled subjects and this has been due to scheduling problems with the manufacturing of the investigational product at Cornell. As a point of information, we already received FDA approval, Recombinant Advisory Committee clearance, as well as approval from Cornell's IRB.

The purpose of this trial is to look for evidence of restoration of immune function in HIV-infected subjects. Treatment would involve a onetime transduction of blood stem cells with our proprietary anti-HIV-1 antisense RNA producing genes.

We are still following patients from our Phase I trial. Of these five patients followed in our Phase I clinical trial, all are alive at least five years so far after treatment. We're still following four of the five for safety follow-up.

Which (technical difficulty) hepatitis B virus we have developed a proprietary producing cell line. From this line, we have been working this year to produce a master cell bank under FDA guidelines to gain the most effective cost yields. Optimization of this cell line is an important criterion for the potential cost of commercialization since this product is validated would be marketed in parts of the world where price would be a key determinant of distribution. The company is in the process of exploring potential partnerships with companies that have distribution and marketing capabilities in those areas where this drug candidate would be ultimately utilized.

Our small molecule treatment, EGS21, has shown to be safe based on results we reported previously and as I indicated before, we received a $1 million grant to proceed with a Phase II clinical trial for the treatment of NASH in which we have enrolled patients. It is estimated there are over 6 million Americans with this disease and there is currently no -- or I would say there is a limited effective therapy regimen available.

We have also received clearance to use EGS21 in the management of hepatitis C, chronic active (ph) hepatitis. We're planning to utilize the interim results of the NASH trial as a guideline on certain parameters as a protocol before we start this particular trial.

Another of our strategic goals was to increase our pipeline of therapeutic candidates and in fiscal 2005, we were successful by the initiation of two new projects in the area of uveitis and bone growth. Autoimmune uveitis is an inflammation of a part of the eye known as the uvea, and it is believed to result from an immune reaction that leads to inflammation in the eye which can produce progress to blindness. We acquired the rights and the intellectual property to a study drug for treatments of this condition. This drug was granted orphan drug status in Europe and we're in the process of preparing a randomized double-blind Phase II clinical trial in Germany which we hope to commence sometime after the first of the year. The trial is scheduled to be a 12-week treatment regimen.

You should note that a physician-initiated Phase I clinical trial involving this treatment was conducted in Germany. In this trial. nine patients suffering from uveitis were treated with the study drug and the drug had an ameliorating effect on disease activity within the first few weeks of treatment on all subjects. This amelioration was observed on follow-up as well.

It is estimated that more than 100,000 individuals in Europe and an equal number in the U.S. suffer from this condition. There are currently available treatments for autoimmune uveitis, but many of them have side effects. This therapeutic strategy is to slow down or even stop the loss of visual acuity that accompanies this disorder. This is another application of our immune regulation platform.

The other area we have expanded has been our pipeline in the area of bone growth. Recently we reported that preclinical experiments on one of our small molecule candidates, 3C3 (ph), stimulated increased bone mass in laboratory animals. The compound itself appears to work by promoting the differentiation of osteoblasts in bone. We are continuing the development work on this promising drug candidate in the laboratory and we look forward to ultimately proceeding to human trials.

With a full pipeline such as ours, it is important that we consider the various strategic options that are open to us as we move forward. Many of our platforms are based on harnessing the actual processes occurring within the body in order to treat a wide array of disease states. This may have the advantage of medicines with potentially fewer side effects. We will be examining the potential for partnering one or more of our therapeutics as we reach critical decision stages. While I obviously cannot speculate on the type of arrangement that we might undertake, we are considering a number of options to move some of these projects forward, including a collaborative effort or licensing programs.

Our business model has embraced several fundamental elements. One is to remain as much as we can financially self-sufficient. Another has been to utilize our resources wisely. We believe that Enzo, especially given the breadth of the projects we have undertaken and have underway, remains one of the most efficient biotech companies in terms of utilization of capital. Even with the implementation of a number broad-ranging strategic initiatives this year that have benefited the Company, we ended the year strongly. Our company is financially sound, our operating businesses are expanding and our therapeutic prospects are encouraging. We plan to continue to invest this year and we are looking forward to the progress that we can envision over the next few months.

I would like to now turn this over to questions.

(Operator Instructions). Mike Niehuser, Robins Group.

Good morning. A question on the test with the HIV. How long are those tests, and is there a pathway for approval? Can you comment on that?

The clinical trial will last -- the end point that we're using is six months after we initiate the trial. Remember, this is a once-only procedure. We put in stem cells that are labeled with the anti-HIV antisense gene, then over the next six months we track for various markers for the restoration of the immune system and the survival and perhaps even the presence of primary immune responses.

When we move forward, it is our plan to continually use an open-label strategy and use the statistics compared to matched groups to validate the product. We have in this protocol, if the numbers at six months are encouraging for us to move forward, then we will start recruiting additional sites and moving up to get enough data that we can validate the product and move forward into a Phase III. So this would require a second cycle. Again, remember the procedure lasts -- the end point is an six months after the initiation of the trial. Then if our data remains convincing, we would go into a Phase III, according to standard procedures.

So would there be another six-month leg after this six months, or would you be evaluated for the Phase III at the end of this six months?

No. The answer is we are going to know in the course of this six months, and I think we will move as quickly as possible. But in order to get enough patients, we will probably have to do a second cycle. It doesn't have to be at the end of the six months depending upon how quickly the data will come out for us.

Is this a lead therapeutic for commercialization?

Well, we have several high-priority candidates and we're trying to devote equal attention to them. The Crohn's Disease is very important to us, which is currently being run in a Phase II double-blind with much larger numbers at this point than the HIV. In addition, the uveitis, which is at a Phase II level, is being initiated based on the physician-initiated clinical trial data. All three of these are very promising and I'm a little hesitant to which to say which is our lead. We're dedicating a great amount of effort to moving all of them forward.

I'm sorry, I missed that. It's (ph) Crohn's, HIV, and what was the third one?

Uveitis.

I got it.

I think what you have to appreciate is that we have a fairly full pipeline. We have our NASH trial ongoing as well, we have a potential hepatitis B opportunity. We have a bunch of other preclinicals that could move into clinical stages as well, such as the Graph vs. Host Disease product, which was very interesting in preclinical trials. But for a company our size, we have to focus and attempt to triage these products to the areas that we feel will have the fastest and highest return for us as a company. And with the resources we have available, we are -- we have basically been looking at the three areas that (indiscernible) the Crohn's, the HIV, the uveitis. We are looking, as I commented in my text, to possibly partner the hepatitis B. And so we are -- we have a very full plate and I think that's the good news in that we have a lot of opportunities and options.

Great, thank you. Also, aren't you included in the experiment on the short rule? Can you comment on that, whether you have an opinion as to whether that's making a difference in how your stock's trading, that kind of thing?

Oh, yes. It's really difficult to comment on that. We are a participant in the group of companies that was removed from the downtick situation in terms of being able to short (ph). We have been in discussions with the exchange, but I think overall, we just -- we can't comment on the specific trading; that's just not our business. But it is something that we're looking at and exploring.

Thank you.

(Operator Instructions).

Are there any other questions?

Georgina Vaslo (ph), Vaslo Associates.

Can you please expand a little bit more on where HBV will be trialed, the next phases?

We are exploring opportunities for HPV in the Third World sector, specifically in Asia and China and India. Obviously, there is a market for it in Mediterranean Europe and Africa as well. Turkey is another area that seems to have a significant population of HPV-infected individuals.

The issue with HPV, as I mentioned earlier, is that it will require a different channel of distribution than we currently have available to us as a company because of our size and the limit of our capabilities. As a result, we have initiated discussions with parties that have that capability to be able to both execute clinical studies as well as execute the approval process in the parts of the world where this would be a meaningful product.

Also, as I mentioned in my comments earlier, cost is a very fundamental issue on the HBV (ph) product. We have developed a master cell line. There have been and there are continuing efforts to keep reducing the cost of the master cell bank down so that we can get the lowest possible cost. This would become somewhat of a Third World medicine, Third World health medicine, and so we are very, very in tune to the fact that bringing the cost structure down will be a fundamental aspect of its success.

(indiscernible), Smith Barney.

Good morning, Barry and Dean. You had mentioned, Barry, that the Crohn's information will be released as it becomes available. Obviously a difficult question with regard to a timetable, but can you give us kind of a rough timetable as to what you expect going forward with regard to Crohn's?

We have been enrolling in this Phase II trial now. We are continuing the enrollment in the double-blind randomized study that we have been engaged in. In other words, we're increasing the numbers, the population, to move towards a statistical relevance. Obviously you're correct. It is difficult. It depends on the rapidity of enrollment. I would hope sometime after the first of the year, we will be able to evaluate and evaluate that as we see it. We are also looking at U.S.-based sites because we feel that will help to expedite as we move forward in attempting to develop the base for U.S. submission of this particular product. So I would look at sometime after the first of the year.

Thank you.

Mike Niehuser, Robins Group.

Just one more follow-up question. Even on that previous -- on your next conference call, are you going to be able to comment on the progress of Crohn's Disease or HIV? Will either one of those be far enough where you think that you might be able to give us some color on progress?

Well, it's my firm hope that of course we will have enrolled the HIV subjects into the trial by the next quarterly report, but this is a six-month trial. It is open-labeled, so we will be able to track measures of efficacy right out of the gate. But aside from saying that that trial is in progress, I'm not sure we can say anything else about the HIV in that time.

Crohn's Disease, we are tracking an expanded trial and intend to continue doing that. And again, I would expect a quarter from now, you're going to hear us saying the same thing -- that we have -- it is my hope that we have a clearer picture of how many patients we will need and how many sites we have, and we will continue to evaluate patients going forward in the double-blind trial.

So I guess as far as HIV, we should -- if the study gets underway, then we should probably keep a close watch on whether some statistical (indiscernible) is being shown?

I would say also if you want by hint (ph), look for a second site -- look for us to go for a second and third site, which we will do as soon as we have a satisfactory measure of efficacy.

Thank you.

I believe that --.

Thank you. There are no further questions at this time.

Thank you very much. We appreciate your participation in the call. We look forward to speaking with you at the next quarterly conference call.

Thank you. A replay of this broadcast will be available until Monday October 31 at 12:00 midnight. You may access this replay by dialing 1-877-519-4471. The PIN number is 657-4183. This replay is also available over the Internet at www.vcall.com. This concludes today's conference. You may disconnect your lines and have a wonderful day.