Enzo Biochem Inc (ENZ) 2006 Q1 法說會逐字稿

Good morning and welcome to the Enzo Biochem, Inc. first quarter 2006 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 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934 as amended. Such statements include declarations regarding the intent, belief, 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 statement as a result of developments occurring after the date of this conference call. Our speaker today is Barry Weiner, President. (OPERATOR INSTRUCTIONS). I would now like to turn the floor over to your host. Mr. Weiner, the floor is yours.

Good morning. Thank you for joining us for our fiscal 2006 first quarter conference call. Joining me this morning is Dr. Dean Engelhardt and David Goldberg.

I would like to spend a couple of minutes reviewing the results and the accomplishments of the quarter. After that I'm going to discuss the strategic initiatives that we will be implementing over the next year. As you may recall, I have briefly discussed some of these initiatives in previous calls, but now I would like to delve a little deeper into the direction of the Company as a whole.

As you may have seen by our press release last evening, we reported revenues of 10.2 million in the first quarter of fiscal 2006, which were down slightly from the year ago period. Our revenue comparison on a year over year basis was impacted by ongoing legal issues involving several of our former distributors in our Life Sciences division. These were somewhat offset by increased revenue in our Clinical Laboratory division, as well as royalty income received from the licensing of certain of our patents.

In the first fiscal quarter of 2005 we recorded a $14 million gain, as you might remember, as a result of our settlement with Digene Corporation. As a result of that, we recorded net income in the year ago quarter of 7 million or $0.21 per share versus a loss of 3.3 million this past quarter.

Contributing to the loss this quarter was in increase in our selling, general and administrative expenses of 5.5 million versus 4.1 million in the year ago quarter. This increase reflects greater marketing activity across our division, as well as higher expenses associated with Sarbanes-Oxley legislation and new government related procedures, specifically the implementation of the mandatory Rule 404 internal control reporting procedures.

In addition, legal expenses rose by more than 700,000, as we saw increased costs involving not only litigation but added patent costs associated with the continued development of our intellectual property portfolio. This is an important investment as we build this significant asset, and we continue to file new applications in new inventions based in our discovery programs.

Expenses for research and development were actually down a little more than 0.5 million due to the absence of some patent amortization costs incurred last year, as well as the timing of certain clinical trials.

Our balance sheet remains strong. As of October 31, 2005 we had cash and marketable securities of over 81.4 million, and a working capital of over 94 million. Stockholders equity exceeded 105 million and the Company remains debt free.

At Enzo Clinical Labs revenues rose on a quarter over quarter basis by 200,000 to about 8 million, reflecting the continued growth in new geographic areas. Gross profit was off about $400,000 due to higher operating costs, such as fuel costs and the hiring of additional personnel needed to support our expansion.

Additionally, we have increased the number of Enzo Direct Laboratory computer systems in the field to well over 300, and have upgraded most of them to our Version 2. We also have increased the number of physicians that are using our proprietary web-based system, enzodirect.com, which allows these doctors to view our laboratory results from any Web-enabled computer, a very valuable service for our physicians who were in the field frequently.

To help service our expanded geographic market more effectively, earlier this month we moved our New Jersey hub to a new larger location, which more than doubles the previous space. This relocation will allow us in the coming months to open a stat or rapid response lab in New Jersey, which will provide us the ability to turn around results even faster for our clients in that state.

At Enzo Life Sciences revenues were down about 300,000 to 2.1 million, mostly as the result of decreased or lost sales volume from distributors with which we are engaged in ongoing legal issues. Meanwhile, in line with our new focus, we continue to expand our direct sales efforts as we ramp up for the introduction in the near future of several additional products that will help fill our pipeline to serve the gene expression market.

As I indicated in our previous call, we are continuing to seek to expand our direct sales force, which comprises experienced professionals having skill-sets in different scientific fields. This allows us to provide a more consultive sell to our clients and customers.

Currently in beta testing is a vitro transcription system that includes our proprietary dye-labeled nucleotides that allow researchers to conveniently produce large amounts of labeled RNA that they can use to steady gene expression. This kit will provide customers with a fully optimized system for producing their targets, which thereby alleviates the need for optimizing reagents from multiple manufacturers.

We are also developing a system for rapid amplification of RNA so that those researchers that have very little starting material can now produce sufficient quantities of product to complete their analysis in a matter of hours.

In the field of gene expression obtaining samples, especially clinical ones, can truly be an arduous task. The smaller the amount of material that a researcher needs to use to steady which genes are turned on or off, the greater number the analysis that can be performed. We expect to have kits ready to beta test after the first of the year to address this situation.

Additionally, we are attempting to develop products and protocols that allows scientists to better study DNA old or archived tissue samples, which would permit them to undertake retrospective genetic study, another area which is of growing interest in the scientific community.

Certain of our genomics analysis-related products are currently being evaluated by a number of opinion leaders in the field. We are encouraged by the response we have received thus far, and are excited about our role in providing a potentially important product in the study of genetic abnormalities.

At Enzo Therapeutics we continue to enroll additional subjects for an expanded Phase 2 clinical trial for Alequel, our immune regulation product for Crohn's disease. Additionally, we are also evaluating several potential trial sites in the United States in order to provide us with a more diverse population.

According to the Crohn's and Colitis Foundation there are approximately 0.5 million individuals who have this disease in the United States, and there are probably an equal number in Europe. We hope to reach a critical decision point within the next year as to the progression of this product in our therapeutic pipeline.

We are also continuing with a Phase 2 study of EGS21, our immune potentiation product, which we see as a candidate therapy for non-alcoholic steatohepatitis, or what is commonly referred to NASH. This condition is estimated to affect over 6 million men and women in the United States alone. We also are exploring the study of this compound for the management of hepatitis C virus associated chronic active hepatitis. In addition, we may examine this compound as a potential treatment for Crohn's disease. It has a broad array of utility, and we are very, very interested in it, because in the early pre-clinical animal studies we found possible indications for use that were incredibly encouraging.

With regards to our cell sector HGTV43 experimental gene medicine for managing HIV-1 infection, our Phase 1/2 study is awaiting final clearance from the University of California at San Francisco. Once we receive this clearance we will begin to enroll patients.

We are also planning to initiate a Phase 2 clinical trial to test the efficacy of our experimental drug B27PD, a treatment for autoimmune uveitis, which is an inflammation of a part of the eye known as the uvea, and which is a disease that can progress to blindness.

In addition we are continuing developmental work on 3C3, a small molecule that in pre-clinical studies showed increased bone mass in laboratory animals. An increase in bone mass might be useful in the management of postmenopausal osteoporosis, bone fracture healing and bone reabsorption of the jaw. As you can see, each of our divisions has a number of ongoing activities which show considerable promise.

From a strategic standpoint I would like to provide some insight into our planning process as we're going to move forward. As you know, one of the most valuable assets in our Corporation is our patented state. Part of the quarter over quarter increase in our legal expenses is related to the filing and prosecution of a number of patents and claims in the field of genomics, diagnostics, and biopharma. We have built a strong intellectual property portfolio as a result of our inventive capabilities over the years, and it is getting stronger. We believe that the monetization of our patented state is a significant value driver for our Company. And as we forward through 2006, we will attempt to capitalize on this.

Looking forward in therapeutics, we see our pipeline being characterized into several broad categories, personalized medicine, natural medicine, and traditional medicine. We see personalized medicine as those compounds or processes where in part or all of the medicine is prepared from cells or tissues of the patient who will ultimately be the ultimate recipient of the treatment.

Alequel, our immune regulation for Crohn's disease, fits into this category. Current treatment regimens for acute episodes of Crohn's usually involve anti-inflammatory compounds such as prednisone or immune regulating compounds such Immuron, both of which can produce significant side effects. By taking the personalized medicine approach to this disease, we may have an opportunity to reduce the number of the classical side effects of these medicines. In addition, importantly, we have reported that we have identified an immune profile of individuals that may be more likely to respond to our treatments, thereby increasing the possibility of a successful therapeutic regimen.

We're therefore seeking to produce a treatment that has a significantly less side effect profile, which coupled with the unique prognostic profile, could offer a more targeted therapy. According to the American College of Gastroenterology the annual cost of treating patients with Crohn's exceeds $1 billion. Triple that when you factor in lost productivity, since many of those affected are young adults.

By focusing our efforts on a targeted therapy, even a small penetration in this market could be a substantial revenue producer.

Our other personalized medicine is our StealthVector HGTV43, experimental treatment for the HIV-1. Despite the number of regulatory hurdles we have had to overcome, we have continued to pursue this project because of the critical need for additional therapeutic options for this disease. As many of you may know, the standard of care in the management of HIV infection includes medicine that have substantial side effects with long-term use, and with increasing resistance issues over time.

There is a continuing need for new approaches to treat this disease. Estimates are today lifetime cost for treating HIV infected individuals can exceed $150,000. With more than 1.5 million individuals in the U.S. and Europe alone having been diagnosed with HIV-1, and 40,000 new cases in the U.S. alone last year, these costs are extremely staggering.

Worldwide there are now over 40 million HIV infected individuals. Our clinical trials involve a possible onetime procedure whereby we remove from the patient stem cell and transduce them with our proprietary vector. These cells are then reinfused into the patient the next day. The upcoming trials are designed to measure whether our treatment restores early immune responses that are characteristically decreased in HIV infection. If successful, this treatment could augment the immune system's functioning in these patients. We are extremely interested in pursuing this particular product, and are anxious to move this trial forward.

In the category of natural products, which we define as medicines prepared from products occurring in nature, we also have two compounds in clinical trial. EGS21, the Beta D glycoceramide that is a naturally occurring glycolipid, is targeted towards the estimated 6 million individuals in the U.S. and an additional number in Europe that are affected with NASH, or non-alcoholic steatohepatitis.

A percentage of those with NASH can go on to develop cirrhosis. Our approach is to use this compound in an oral form to ameliorate inflammation in the liver. According to the National Institute of Health, NASH accounts for about 10% of all newly diagnosed cases of chronic liver disease.

There are limited treatments for this disease, although certain diabetes drugs may improve liver enzyme levels and slow the progression of NASH, according to some small pilot studies. We feel the approach we're taking may present an alternative, because EGS21 has been shown in pre-clinical studies to act as an immune modulator against responses that can result in liver damage.

As Western countries deal with the ever-increasing problem of adult obesity, NASH is being brought to the forefront. By producing a compound that is naturally occurring, we hope that further clinical trials bear out our belief that we can treat this disease effectively without serious treatment-related side effects. Even a small penetration in this ever-increasing market could also result in a substantial return.

In addition, since this compound has been shown to ameliorate liver inflammation, we plan to study its effect for the treatment of hepatitis C virus associated chronic active hepatitis. Hepatitis C is one of the most important causes of chronic liver disease. It accounts for 60 to 70% of chronic hepatitis cases, and up to 50% of cirrhosis end stage liver disease and liver cancer.

It is estimated that 4 million Americans have HCV antibodies in their system, indicating an ongoing or prior infection with the virus. Hepatitis C causes an estimated 10 to 12,000 deaths in the U.S. annually. Current treatment modalities have the risk for potentially serious side effects, and there is a differential response based on the particular type of hepatitis C virus causing the infection. Additionally, the virus can escape some existing drug scope. We feel that EGS21 could potentially be utilized as an alternative therapy, and thus possibly provide Enzo with another substantial market for this compound.

Another natural product under development is B27PD, our candidate compound for the treatment of autoimmune uveitis. This is actually a portion of a protein that makes up the HLAV27, a surface marker present in many cells in the body. Our planned Phase 2 trial will attempt to measure the efficacy of this compound in tolerizing subjects to this antigen, thereby potentially reducing the inflammatory response in the posterior uvea in the eye.

The third main category of our therapeutic pipeline are what we deem traditional medicines. Our candidate compounds for the treatment of bone disorders fall into this category.

We have developed a therapeutic pipeline having depth and breadth out of several platform technologies or immune regulation in gene medicine. We have developed candidate compounds that we hope will show efficacy against a number of disease states. At each step along the way, that is as we complete each phase we create value, and if we desire a point to explore other strategic directions such as partnerships or joint ventures. Many stand-alone biopharmaceutical companies do not have nearly as an extensive a portfolio as has our therapeutic division. We are fortunate not to have to mortgage our technology or our products prematurely to fund their development, thereby improving the potential return to all of us as shareholders.

In our Life Sciences division we are also seeking to expand our product portfolio in the research product field. As I indicated earlier, we plan to launch additional products with the gene expression in amplification markets in the upcoming quarter. We also are in the process of expanding into other fields, such as immunology, as we seek to capitalize on the proprietary labeling technologies that we have developed over the years.

This diversification of our product portfolio will allow our direct sales force to call upon even more customers at a given institution, thereby increasing efficiencies. We can also tie in such products to our existing productline, as we see increasing crossover in the fields of genomics, immunology and pathology. Our expanded product applications laboratories is charged with developing new uses for our existing technology. In this manner we create value not only by selling products, but by also increasing our user base.

On the diagnostic front we have been engaged in discussions with several groups around the world that are interested in working with us to commercialize our isothermal amplification technology. Such potential arrangements have been made possible due to the issuance of two key patents in the field last year. This could take the form of joint development programs constructed so that Enzo retains key rights to eventual final products.

Our Clinical Labs division, historically a cash generator for the Company, will look to continue its organic growth while expanding its geographic service area. We will look to maximize cash flows. We examine potential opportunities in this division, which can include strategic acquisitions of both companies and specific assets. We also will utilize the combined expertise of the Labs and Life Sciences Groups, as we look to expand the menu test to offer it, especially in the genetics and cancer fields.

In short, we believe we have developed a strong diversified Company, with considerable opportunities for increased value creation. These opportunities can present themselves as potential therapeutic products, research products, joint ventures, just to name a few possibilities. This will be a key focus for the Company as we move forward.

I would now like to open floor up for questions.

(OPERATOR INSTRUCTIONS). Robert Smith with the Center for Performance.

I remember going down to Washington, I think it was in March of 2001, to the RAC Committee hearings with -- and listening to Dr. Conan's (ph) impassioned plea to permit the HIV/AIDS trials to proceed. I guess in the interim perhaps millions have died from this scourge, and I wondering if the Company has any contingency planning or it is thinking of perhaps of changing its strategic direction to approach this from a different vantage point, perhaps through WHO or anti-AIDS advocacy organizations to get this moving to combat this disease?

We have been very frustrated with the pace of the development of this product internally. As a result of many bureaucratic hurdles because of the nature of this product, we have had to do a tremendous amount of work overcoming, and I would say fortunately have overcome the obstacles that have been put in front of us to date to move is into a clinical format.

I believe we are at a stage right now with the University of California in San Francisco where we will be able to move forward. We are awaiting one final approval from the internal review board. And we are prepared to move forward as soon is that is granted to us. It has been a long, arduous process. We feel that we have an important product here that may contribute importantly to an armada of treatments for HIV. It is unique. It attacks it from a different profile, a different approach. We were very encouraged by the initial trial where we were able to demonstrate that we are able to insert our construct and see it -- be processed for a long period of time in the individuals that were given this particular treatment. We are very encouraged. We think we will be able to proceed.

Remember what we have shown so far. And I think we are considerably ahead of any other group working in this area. When Barry says the pace has been frustratingly slow internally, he means internally we're frustrated. The pace has actually been very good internal. What we have done is put anti-HIV anti-sense genes into blood stem cells. And in at least one instance this gene functioned for five years. In several instances it functioned for many years. And these patients have continued to report to us as time goes by for safety issues.

By putting the gene into stem cells, we are allowing new cells, with new immune potential called naive cells -- we are allowing them to -- and also containing our anti-sense RNA, anti-HIV, anti-sense RNA gene to begin to continue to appear. And in this next trial the measure of efficacy for us is going to be the measure of whether or not naive cells, cells that have never been challenged immunologically, begin to appear and maybe even appear in greater numbers, and whether in the course of this trial the immune diversity, which is so lacking in HIV/AIDS, begins to reconstitute itself.

So this is a time of judgment in terms of moving forward with this trial. We are now going to find out whether we can develop new immune diversity within these subjects, which is in fact the primary issue in terms of the pathogenesis as of HIV.

That is just the point. It seems so promising that I certainly wish you guys could see that this happens in the immediate future.

So do we, Bob. Thank you.

Keith Marty of Value Line.

Thank you for taking my question. Actually I have several. First I was wondering, it sounds as if you are expanding your capacity in New Jersey for your Clinical Labs division. I was wondering if you were adding any more patient care centers where you will be drawing the samples?

Yes. We are absolutely expanding patient service centers throughout the areas that we are servicing. In New Jersey already a number have been established. I'm not sure -- we have I think 20 patient service centers in total to date, and we're continuing to increase those.

To put it into a little bit different terms, I was wondering if it is reasonable to characterize the decline in your margins in the first quarter as partly because of the change in the test mix?

You mean at the Clinical Labs?

Yes.

That is correct. Yes. We're moving -- as the lab is expanding its accession rate and growth, we're moving more esoteric tests in-house. Doing that can put a little pressure on the margins until we get them set up. We're also -- the whole test mix of our organization is evolving as we are growing. We are moving more towards high-end esoteric tests. The costs are up associated with the implementation of those tests. But I think at the end of a day the profile and the mix of the lab will prosper because of that.

I was wondering, in terms -- in discussing the isothermal amplification system that you've got, I was wondering if you think you're going to run into much headwinds in terms of -- because of Roche's PCR patent expiration and the widespread use of that technology?

The PCR is of course the standard in the industry, and has been very successfully managed from that point of view. The Inchworm actually has performance and superior performance in certain areas. And those at the areas where I think it is going to have the greatest impact. For example, with two primers in the Inchworm technology, one can perform a DNA amplification that is 1,000, and perhaps even more than 1,000 times more specific, and with two primers for PCR.

So that with this system we can hope to be able to perform an analysis without having to confirm the product, and therefore it might have usefulness in this because of this interesting property in very quick diagnoses. For example, if someone walks into an emergency (technical difficulty) with a dry, hacking cough and in fairly serious condition, we can determine whether this is a viral pneumonia or whether this is a mycoplasma pneumonia, or other kinds of pneumonia. And this is critical for their judgment.

We can do this because of the considerably improved specificity of the Inchworm. It is by the way also -- and this is my assertion -- it is faster and better and cheaper than PCR. And when we get products that are established, of course been then we would be in competition with PCR.

Sure. Would it be reasonable then to think that you're going after the clinical side of the business initially in your discussions with the diagnostic manufacturers?

You're asking for a business issue. I think this is an extremely important area, and it is an area that could yield us significant revenues for the size of our Company. That is Dean's personal opinion.

In the answer, Keith, is yes, the clinical side is the opportunistic side of this marketplace.

Do you have any sense as to the timing of negotiations.

I have been discussions for a long period of time with various parties. As you know, the Inchworm issue has been an ongoing scientific effort here. We have had a variety of executions here (technical difficulty). I'm reticent to give you any timing. I will tell you there are active discussions in place right now.

And then if I could turn to the therapeutic side of the business, can you give us a sense as to the number of patients, and not an exact number, perhaps, but just a guesstimate of the number of patients that you expect to treat at the University of California San Francisco?

The original protocol calls for a limited number of patients. And we're doing that to monitor for the first cycle for safety, because we're adding safety issues, as well as measures of efficacy. However, as you know, and anyone who's engaged in the trials knows, with the completion of the cycle of safety analysis, we can expand this infinitely. The capacity at the UCSF is really quite high, and we have had very little trouble enrolling patients to date. Nor do we anticipate having trouble moving forward.

We're talking in the neighborhood of 10, 20 (multiple speakers).

Yes.

Do you have a specified time frame for ending the safety portion of this study, or a particular and points that you're looking for for concluding the safety objectives of the net?

The endpoint in this trial is 6 months.

And I noticed that from your 10-K that Cornel is still basically in a holding pattern it sounds like because of manufacturing protocol issues. You have resolved those issues at UCSF?

Yes, we have. I don't -- I don't want in anyway to have you go away thinking that Cornell and not be a clinical trial site. As this trial expands, it is a very important center for HIV/AIDS, and we will move forward on this site.

And then regarding Alequel I was wondering how many patients have enrolled so far in that Phase 2 clinical trial? And could refresh my memory as to how many were originally planned on being tested?

You know, your question includes some stuff that we're not actually discussing, but we have, I think it is in that mid-50s in terms of patients who have completed the protocol, continuing to actively enroll.

It sounds as if you're expecting to have results within 12 months in order -- because he said you wanted to be able to make a decision as to go forward or not with that?

That is correct.

When do you think you'll have the U.S. centers involved in the trial? Would that be after making the go, no go decision, or would that be prior to?

Our intention is to have them prior to (multiple speakers) could be in that area.

And then I was just wondering if you could elaborate at all on the immune profile of the Alequel responders, or potential responders that you mentioned?

Actually, we reported this in Chicago in the DDW meeting. We found that the responsiveness is in the 90% range for those patients who actually have an unusual low NKT cell population and a completely altered, including a positive CD4 and decreased DDA population. These are standard markers, immune markers that are used. The interesting thing was that when we made this correlation it was quite astounding, almost 100%.

(OPERATOR INSTRUCTIONS). Robert Duchare (ph) of UBH.

There are two issues. I'm a retired, quite successful business executive. And I have never heard of a firm that doesn't have a suggestion box that could get business suggestions from people in my category who have been successful in running companies.

And secondly, I have never heard of anybody who -- any company that doesn't even respond to correspondence that shows an interest in the development of the Company. Because of -- is it an indifference or is it a lack of respect for the people who have invested money in the Company?

I got into this primarily because of the Crohn's issue. My first wife suffered from Crohn's for many years before she passed away from the disease. I don't have to tell you, my interest in Crohn's goes above and beyond. All I ask of you is, one, have a suggestion box and when -- I'm not looking for any profit from this. I'm not saying, hey, I gave this to you with this idea. I'm only interested in the Company expanding into something that I think is of great value. And possibly using a business procedure that would be very helpful in helping the business expand.

Like I give you just one example. The contracts that you have with companies, there is no what they call a triple clause for violation of the contract. So a person would -- you would have to sue somebody and you would win $1 million. What if they had to pay you $3 million for violating the contract -- it is in the contract. So a lot of things that are done, are done in silence when they could be done with the great help of people who have great knowledge in business procedure.

I'm not questioning your talents and your medical procedure. But I'm saying that in business I have seen nothing but deadly silence and no answer to letters. I think that a lot of frustration has come from that. And I feel that the Company is on the right road. But a little help from people who have been successful in business can sometimes come up with one idea that could clear a lot of problems up.

Thank you for your comments. In terms of the suggestions, we get letters all the time with suggestions. They can come through our website. There's a website where you can forward in an email, and does get forwarded to the appropriate parties. You can also send a letter, which is always circulated and read.

In terms of response to correspondence, there is no purposeful reason not to respond to people, and we attempt to do that. If you have sent a letter and not had a response, I would like to know about that. But we do try to respond, and we certainly due respect the comments of people.

In terms of the development of our contract issues, the one thing our Company does not have a shortage of is lawyers. And we tend to vet our legal contracts extremely carefully. I would like to believe they are done well. But again, I am also willing to listen to any comments that may be reflected. When you look at the contracts or the agreements -- just take a look at recently the Digene settlement, which reflects I think a very comprehensive execution of a legal contract and legal proposition. Please feel free to send directly to me any comments you might have. I would welcome that. Next question please.

Robert Smith with the Center for Performance.

Again, could you give us some color on the issues surrounding the hepatitis B trial, and what you expect in the near future?

We're in the process of manufacturing hepatitis B. And this is an unusual product in that it is going to be suitable primarily for overseas markets. And we have developed a cell line manufacturing strategy that allows us to drop the cost of goods -- production of goods to the point where now we feel would be competitive at a price -- with price consideration in these overseas markets.

We have developed the various steps in manufacturing. And as soon as we can, we're going to initiate trials overseas. The various sites -- there are a number of sites that we have explored relatively extensively. And we will move forward on that as quickly as we can.

Also, I would mention that the hepatitis B product is a product we will most likely partner because of the distribution requirements in parts of the world where this is an important drug. We have had, and we are in discussion with entities in at least two separate countries which could utilize this product. The progress of those discussions will ultimately drive the ultimate emergence of the trials for hepatitis B.

Would you favor partnering at this point in time without further evidence from the trials, or what is your expectations?

Our expectation is we would partner at this point. Because to initiate the next set of trials in countries where -- require very much local controls, such as China or India, it would be preferable, I believe, to have a partner that has run trials in those entities and can oversee and implement them there.

Robert Gould, a private investor.

I'm calling because I was just curious whether there might be any data from the Alequel second arm study from Israel, as a first question? And if not, when that might be available so that we have a sense of where things are going in the Phase 2 trials?

The data on the second arm, the trial is closed. The data have not been tabulated, and they will be released at the appropriate time. And we're continuing at this point actively to enroll subjects in Israel. And as Barry mentioned, we are negotiating for several sites -- more than one site in the United States. So we can expand the trial and make data with the idea of getting sufficiently compelling data that we can have a Phase 3 meeting with the U.S. FDA.

The second question regards the San Francisco trial. Assuming that the IRB gives the go-ahead, and let's for argument sake that that today is the day that they give the go-ahead. From this point, if this was the day that you got that approval, when would -- how long would it take, or when would the first patient actually get the infusion?

This is Dean speaking. I never very good at giving time predictions.

That is a problem.

I understand that it doesn't change the fact that things do happen in the course. Of course it will be done as quickly as possible. And I cannot conceive of a long delay between the approval and the enrollment of the first patient. But I will stand by my statement. When I make predictions I'm really usually wrong enough that I can't be goaded into making them.

We do know that we have a population there that we believe is accessible for enrollment. It is our hope and wish and belief that the time to enroll the first patient will not be a significant amount of time subsequent to approval.

Thank you.

Any other questions? If not, I think I just was -- noticed that (technical difficulty). I would like to thank you for joining us. We look forward to reporting to you at our shareholders meeting, which is at the end of January.

We are very excited about what is going on here. It is a very, very interesting time for our Company. And we look forward to sharing the developments with you as they progress. Thank you for joining us. Have a happy New Year.

A replay of this broadcast will be available until Tuesday, December 27, at 12 midnight. You may access this replay by dialing 1-877-519-4471. The pin number is 6812867. This replay is also available over the Internet at www.investorcalendar.com.

This concludes today's teleconference. You may disconnect your lines at this time. And have a wonderful day.