Enzo Biochem Inc (ENZ) 2007 Q2 法說會逐字稿

Good morning and welcome to the Enzo Biochem Incorporated second quarter 2007 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 obligations 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. At this time all participants have been placed on a listen-only mode and the floor will be open for questions and comments following the presentation.

I would now like to turn the floor over to your host, Mr. Barry Weiner, the floor is yours.

Good morning and thank you for joining us for our fiscal 2000 second quarter conference call.

Joining me today are Drew Crescenzo, our Senior Vice President of Finance, Dr. Carl Balenzetis, the President of Enzo Life Sciences, Dr. Gary Cupit, President of Enzo Therapeutics and David Goldberg, who heads our corporate development activities.

I trust you all have seen our release of financial results which was distributed last night as well as the announcement of earlier this morning detailing a significant milestone in our novel and pioneering personalized medicine approach to the treatment of HIV infection. Dr. Cupit will speak in a few minutes to that particular program.

As many of you are aware we have been involved in this program for quite a long time and we were all very, very pleased in welcoming of the first patient to be treated in the next phase trial in terms of looking at the opportunity that this particular novel treatment represents.

The quarter was noted by a number of different developments which transpired at Enzo Therapeutics. We have made some very significant progress in our clinical trials for NASH and Crohn's disease and in our preparation for Phase II trial in the United States for our proprietary treatment for uveitis, which is an inflammation of the eye.

Enzo Life Sciences is procuring a number of new product introductions while also focusing on bolstering our penetration into foreign markets all simultaneously laying the groundwork for some potential joint venture relationships or partnerships which are based upon our proprietary technology as well as supported by our intellectual property.

Enzo Clinical Labs is undergoing an expansion of its physical facilities in Farmingdale which will also provide additional lab and production space for the Life Sciences and Therapeutics areas. In addition, very importantly testing volume is beginning to reflect the addition of new business which is being obtained as a result of new contracts with Aetna and the United Healthcare contract.

Our intellectual property estate continues to grow with the recent addition of two additional new patents. I might note here that in addition to owning over 200 patents we have almost as many patent applications on file and we are constantly adding to our list as our discovery efforts continue to move forward. It is an area of focus for this company which has been one we have been extremely successful in.

The interference proceeding, which was declared against Princeton University, took a favorable turn recently as the University conceded priority on the two involved patents that are involved in that particular action. The interference against a patent held by Chiron Corporation is still pending. As you may or may not remember these two interferences were linked together.

Enzo's patent application is in a key area of nucleic acid amplification and it impacts markets estimated in approximately $100 million range. By being named the senior party we remain very optimistic regarding the outcome of this action specifically with the Chiron piece that is still outstanding.

On the litigation front we also continue to diligently move towards trial on a number of important cases as we continue to invest in and protect our intellectual property assets.

And finally, for the first time since our initial public offering in 1980 we raised via the equity markets more than $60 million to build our capabilities for the expansion of our operating divisions, also to be focused toward some interesting significant or, I would say, strategic acquisitions. This has brought our cash position today to more than $123 million with a working capital that is in excess of that amount.

We were very pleased to be able to execute this right before Christmas, and some, a little piece of it, little right after the holidays. That financing will serve our purposes very well as we move our businesses into the future.

The activities of the quarter were supportive of our positioning the Company for growth. Specifically the capital [race] strongly positioned us to aggressively pursue our program of strategic acquisitions.

It has increased our activity on the therapeutics front and will be supportive in expanding those areas and more importantly, or I should say as importantly, it will give us proper capitalization as we intensify our efforts on the legal front. In addition, we have added a number of new institutional investors to solidify our shareholder base.

Our operating units continue to expand. We are planning to move the first of our Life Science employees to new facility this upcoming quarter which will provide additional capacity for both research and development and manufacturing. And as we continue to build infrastructure to support our growth we are doing this in a measured manner as we attempt to maximize the value of each of our invested dollars.

Before getting into the specifics regarding our operating results I would like to briefly touch once more on some of the intellectual property matters. As I just stated, we were awarded an interference and named senior party against two patents held by Princeton University and one by Chiron Corporation.

That particular patent was subsequently licensed to Bayer Healthcare. And this is for a technology that is used to label DNA and it is the foundation for a number of products in the molecular diagnostics field. As we announced last week, a judgment was entered in our favor regarding the Princeton patents.

In the interference declared by the U.S. Patent and Trademark Office in August of 2006, Enzo Life Sciences was named the senior party which means we were the party that was deemed in the estimation of the Patent Office the first to invent and Princeton was named the junior party. One of the Princeton patents, again, was licensed by Chiron who subsequently licensed it to Bayer Healthcare.

As you may know, a second interference was declared at the same time as the Princeton action. Enzo Life Sciences was also named senior party in that action which involves a different patent held by the junior party, Chiron, and licensed to Bayer as well.

That interference is still proceeding. It is important to note that the senior party status conveys significant advantages. It is historically represented that in approximately two-thirds of the cases that go to interferences senior party status will usually prevail.

We were extremely pleased with the outcome of the Princeton portion of the interference proceeding and we are looking forward to the resolution of the Chiron action.

Recently we were also awarded two new patents in the field of nucleic acid detection and visualization that can have applicability to the field of molecular diagnostics. These two patents are additional and additive to our broad encompassing estate in the area of gene labeling and detection and this will further strengthen our position as an inventor in the field.

Overall we've had a number of recent intellectual property developments which we believe will have significant business impacts on us as we move into the future and we are looking forward to the resolution of many of the cases which are now in process.

I'd like to just turn the call the over to Drew Crescenzo who will give you the financial performance details for the quarter and then Dr. Cupit and Dr. Balenzetis will also share some comments with you.

Thank you, Barry. Good morning.

I will first discuss the fiscal 2007 second quarter results, then the operating results for each of our three operating segments and close with a summary of the six months results for the period ended January 31, 2007.

Net revenues for the fiscal second quarter increased approximately 5% to $10.6 million from a year ago quarter's revenue of $10.1 million. Our net loss was $4.9 million, or $0.14 per basic and diluted share as compared with a loss of $4.1 million, or $0.14 per share in the year ago period.

The results are directly impacted by the ongoing legal expenses associated with patent protection costs and ongoing litigation matters and investment in R&D, partially offset by declines in selling, general and administrative expenses and improvements in our provision for doubtful accounts. The fiscal second quarter results include the benefits from increased interest income of $500,000 attributed to the higher cash balances and a $700,000 payment from a former Life Science distributor.

Lastly and important to note, we have not recorded any tax benefit from our pretax loss this quarter. In the year ago period we had recorded a benefit which served to decrease the net loss per share by $0.02.

Contributing to the results this quarter was the 29% increase in our R&D cost to $2.4 million attributed to increased clinical trial related activities at Enzo Therapeutics. There was also a $300,000 increase in legal expense over the prior year quarter.

We continue to protect our intellectual property estate and incur costs for ongoing patent litigation. Decrease in selling, general and administrative and [an] improvement in the provision for doubtful accounts of $100,000 offset these increases.

Our balance sheet remains strong. As of January 31, 2007 we had cash and cash equivalents of almost $111 million, which reflects net proceeds of more than $43 million from the stock offering Barry mentioned. Working capital exceeded $118 million, stockholders equity approached $134 million and Enzo continues to be debt free.

At Enzo Life Sciences our segment profit increased $200,000, or 50%, to $600,000 in the fiscal 2007 quarter. Revenues including royalty income for the 2007 quarter were approximately $1.6 million as compared to $2.1 million for the year ago 2006 quarter.

Product revenue declined $700,000 due to the continued competition in the industry. This was offset by an increase in royalty income of approximately $200,000 arising from an ongoing licensing agreement. This licensing agreement continues to show a positive trend year-over- year.

Operating expenses relating to R&D activities increased $100,000 over the second quarter of last year. Segment profit was positively impacted by a $700,000 payment for former distributor.

Turning to Enzo Clinical Labs, improvements were noted at this division. Revenues increased $1 million to $9 million.

The increase being attributed to the increase in specimen counts associated with the new business derived from the previously announced new insurance pay arrange with United Healthcare and Oxford. We expect the high volume levels to continue.

Gross profit at the labs declined slightly to 55% primarily due to higher costs associated with the increased specimen volume. Other operating expenses were comparable to the prior year quarter despite the 12% increase in revenues. Our segment loss declined by $.5 million to $100,000 as compared to a loss of $600,000 in the year ago quarter.

At Enzo Therapeutics our operating loss grew from $1.6 million to one point, from $1.1 million to $1.6 million primarily due to the increased clinical trial activities. The operating results are within the Company's expectation based on the planned and forecasted activities.

I will now comment on the year-to-date results. For the six months our revenues increased 4% to $21 million. Gross profit, including royalty income of $2.2 million, totaled $12.5 million slightly up from a year ago six-month period.

We had increased interest income to $700,000 payment described above and the fiscal 2007 first quarter $2 million gain on patent litigation. This was a settlement with Sigma-Aldrich previously discussed. These items contributed to reducing our fiscal 2007 six-month net loss by $1.6 million to $6.6 million, or $0.18 per share, as compared to $7.7 million, or $0.24 per share in the prior year period.

Barry?

Thank you, Drew.

I'd like to turn right to the operations of the specific divisions. First we'd like to discuss Life Sciences. Dr. Balenzetis, I believe, will have some comments to share with you.

Good morning.

You've already received a great deal of information from both Barry and Drew so this morning I will spend a few minutes highlighting some of the activities of our strategic initiatives. During the recent annual shareholders meeting I discussed the goals of the Life Sciences division and the corresponding strategic initiatives we are executing to meet those goals.

I have previously emphasized that we are in a period of transition focused on new product development, development of new strategic partnerships leveraging our intellectual property and expertise and strategic acquisitions. The recent issue of several new patents and the declaration of interference in two key technology areas, combined with Enzo's already robust patent state imparts significant opportunity to develop strategic relationships with key life science companies which could result in licenses, royalties and product revenues.

We are currently in discussion with numerous companies exploring options for access to many of our key products and technologies. While the timing of entering into strategic relationships is difficult to predict, we are aggressively pursuing these opportunities and expect to make some announcements in the near future.

Life Science revenue may continue to demonstrate some fluctuation as a result as we work towards generating increased licensing and royalty income in the near-term and increased product sales following on later.

We continue to aggressively pursue acquisition opportunities that will allow to us apply our intellectual property and expertise to a broader product offering and accelerate our time to market for new products. We have evaluated numerous opportunities and we are exploring several within this space.

The activities in this area are measured against specific selection criteria and we also want to ensure that these efforts will result in increased shareholder value. Again, the complexity of these transactions makes predicting the timing of an outcome difficult, however, our efforts have resulted in a number of substantive discussions with potential candidates. As soon as it is prudent we look forward to reporting on the results of these ongoing efforts.

We have been diligently working on developing additions to our product line. Based upon technology acquired earlier this fiscal year we continue to release new systems for the study of gene expression which have utility for the pharma and biotech industry as they screen for potential therapeutic candidates.

Finally, we are in the process of developing research products for the study of various inherited diseases and cancers using DNA probes designed with our proprietary labeling methodology.

Barry?

Thank you, Carl.

Looking for a minute at the clinical laboratory activity the results this quarter were favorably impacted by the commencement of the newly expanded contract we secured with United Healthcare and Oxford. Despite the fact that this agreement only became effective on January 1st, and thus only impacted results for only one month of the quarter, we realized an almost immediate increase in specimen count.

The contract seems to be a bellwether for the clinical laboratory industry as we are seeing a shift in the market from exclusive national contracts to a more hybrid model where payors contract with perhaps one national laboratory and then augment their network with top regional providers. This has been the case at Aetna as well and it was recently announced that they, too, would be shifting to one national lab plus several regional ones for their new contract that will be effective in July of 2007.

During the quarter Enzo Clinical Labs became even better positioned for this new market trend. We announced in January the addition of two key professionals to our medical staff that have extensive clinical lab experience, Dr. Karl Lanks, our new medical director has been instrumental in helping us transition effectively to our highest specimen levels while maintaining the high quality of service that we have been known to provide.

Our lab was recently reviewed by the College of American Pathologists and we are confident that we will continue to be accredited by this prestigious organization. Dr. Nena Chin, our new associate medical director, has already increased our specialty pathology menu by developing several cancer related panels for in-depth study of tissue specimens.

We have arrays set up in in-house immunohistochemistry laboratory and as we move closer to completing the work on our new Life Sciences headquarters we will be able to bring in more specialized tests in-house.

I would like to now turn this over to Dr. Gary Cupit who will give us a little briefing on the therapeutics initiatives.

Thank you, Barry.

We've been very active in the Therapeutics division since I joined the Company last October. I'm going to try to the highlight the progress in four clinical development programs, mention our preclinical discovery program, and then bring you up to date on how we are solidifying the Enzo Therapeutics infrastructure to strengthen the foundation for continued and expanded activity.

As Barry alluded to earlier, this morning we announced the latest development in our gene therapy program. Enzo has been a pioneer in gene therapy which is now considered as an early entrant in the growing field of personalized medicine.

The clinical team at the University of California San Francisco, has completed treatment of the first subject in our Phase I/II study. This is the same group of researchers that conducted the Phase I study and those encouraging results were presented at the International AIDS conference last August. This included long-term survival of the anti HIV engineered cells in several patients.

The present study is under the same protocol design as for the previous study but with one important change. Patients will be treated with a single outpatient dose of radiation designed to reduce their total naive CD34 positive stem cell count before they infused with CD34 positive cells engineered to resist the HIV-1virus.

The primary endpoints are the safety of the overall procedure and the extent to which the engineered cell population and grafts or takes and proliferates or reproduces to produce circulating CD4+ immune cells.

We will also measure the relationship between the number of antisense R&A containing CD4 cells, the HIV-1viral load and a CD4+ cell count for six months. We are thrilled to be working again with the UCSF team and look forward to the continued enrollment of additional patients.

Continuing our discussion on personalized medicine I would like to move to Alequel for Crohn's Disease. Crohn's disease is another under treated indication. This disease is a chronic, serious, immune mediated inflammatory condition of the digestive tract that affects at least a half a million Americans.

Most cases are diagnosed from people in their 20s. They face decades of severe abdominal distress, loss of appetite and weight loss. We are applying a personalized medicine approach to treating Crohn's patients.

Enzo's patient specific treatment, Alequel, has been undergoing a Phase II trial in Israel for the past year. The treatment uses an oral administration of proteins extracted from the patients own colon to down regulate, or interrupt, the runaway autoimmune response.

We are preparing for a U.S. based Phase II study of Alequel. To that end, we have scheduled a planning session of the protocol four our gastroenterology advisory board to be held later this spring.

Like our opthalmology advisory board, the GI board is a group of medical experts in biostatistics, clinical pharmacology, gastroenterology, and other medical specialties drawn from across the United States and from our Israeli investigator team. With their help we will be evaluating several additional clinical trial approaches to designing the U.S. trials and expanding enrollment in Israel.

We're also pleased we have been notified that the results of an earlier trial have been accepted for presentation at the Digestive Disease Week meeting on May 22nd in Washington, D.C. This is a national gastroenterology meeting and while the content of this presentation is embargoed until that date, the data support the progression of this therapy to clinical trials in the U.S.

Our other gastrointestinal programs focus on Enzo's proprietary EGS21immunomodulary drug candidate. Based on our preclinical and animal model systems in colitis, fatty liver and other conditions, EGS21 acts on NKT cells to down modulator, down regulate the immune response towards a normal state.

We are currently reviewing the data generated at Hadassah Medical Center in Israel as the clinical trial of the product candidates proceed. At the same time we are preparing additional analogs and combinations for screening and preclinical development and devising new preclinical models to speed the turnaround time for selecting the best analogs for further clinical study.

Our clinical targets for this program are inflammatory bowel diseases, a category that includes Crohn's and other GI inflammatory disorders, and nonalcoholic steatohepatitis, a liver disease characterized by the accumulation of fat, inflammation, and liver damage. It affects 2 to 5% of Americans, particularly the obese, and is therefore a growing medical problem.

Now to address uveitis. Uveitis is an inflammation interior of the eye that is one of the leading causes of blindness in the U.S. There is no known cure and there is need for better treatments than the current topical or oral steroids.

Enzo Therapeutics is developing an amino volulator peptide drug, B27PD, that in preclinical and a pilot Phase I study decrease inflammation and in some patients improved visual acuity. We have recruited an eight-member opthalmology advisory board to help with our autoimmune uveitis program.

Again, this is a group of biostatistics, immunology, neurology and opthalmology experts drawn from prestigious institutions across the United States plus investigators in Munich, Germany, who discovered the B27PD peptide and conducted the pilot Phase I study.

In preparation for Phase II we have initiated further toxicology testing of the study drug. We also have returned from Europe where we met with the EMEA, the European Medicines Evaluation Agency, regarding our plans for Phase II and to introduce them to the concept of a Phase II/III adaptive trial which we hope will accelerate this program.

Based on our preliminary discussions, EMEA will review the submitted material and will be provide further comments and feedback the first week in May.

Let's talk a little bit about our discovery program. Beyond Enzo's clinical pipeline we are progressing in our preclinical wint discovery program. Wint is a protein family important in the gene signaling involved in the development of several important tissues including bone.

We have identified a promising small molecule that in preclinical models stimulates increased bone mass. A research collaboration is ongoing with scientists at St. Jude and at Yale and we are planning to expand our discovery laboratory in Farmingdale to further facilitate basic research.

To support all this activity we are solidifying the Enzo Therapeutics infrastructure. We are building more support for the Alequel and B27PD programs by meeting in the U.S. with potential investigators and clinical research organizations who can initiate trials, collect data and monitor outcomes.

On the business front, we have stepped up our activities and are exploring the potential of out licensing and are partnering a number of our candidate compounds. We have met with a number of companies and ongoing meetings, further outreach and due diligence discussions are scheduled.

Finally, we are establishing support resources for publications, medical meetings and public relations. These are vital to increase the awareness of our research and development activities through more visible participation in industry and scientific conferences and publications.

I'll be happy to field any questions during the Q&A period. Now let me turn the call back over to Barry. Thank you, Barry.

Thank you, Gary.

Enzo is in a very special place in its corporate history. The past months have provided a series of developments that we feel create an inflection point unprecedented in our history to capitalize on our achievements and to position the Company for new opportunities and growth.

Our extensive patent state has been enhanced with key pioneering issuances as well as proceedings that have been put into place to determine our rightful inventorship of technologies and products impacting multibillion dollar markets. As the trends within the industry moving towards personalized medicine and pharmacogenomistic become more and more the fabric of healthcare, Enzo is in the most enviable position.

Not only have we been recognized for our achievements and are working towards monetizing this work both on the diagnostic and therapeutic fronts, but our IP provides us with a very clear path to further technological advancements and product commercialization.

We have been working to build our infrastructure to capitalize on our opportunities through a number of steps. First, we enhanced our management team with seasoned, experienced professionals. Second, we are expanding and upgrading our physical plant to be able to support the expansion and the proliferation of our activities.

And third, we have substantially improved our capital position to give us the access and the ability to take advantage of opportunities and to grow our operations. All these contribute significantly to provide us a foundation to execute on a very aggressive growth strategy.

I would now like to turn the floor over to questions.

[OPERATOR INSTRUCTIONS] Your first question is coming from Vincent Hoban from H&L Global Securities.

Good morning. This question is for Dr. Cupit.

Dr. Cupit, how often are the patients -- how often will the patients be monitored? Is that going to happen every week, every few weeks? And what is the rollout schedule for patients number two, three and four?

And then the second part to the question is, when will you exactly know if the procedure has in fact produced a renewable supply of engineered CD4 cells which effectively boost the immune system? Thank you.

Gary?

Yes, thank you very much.

The patients are monitored on an ongoing basis. They're seen every couple of weeks for the first month and then after that presuming, like I said, these patients have had their disease for quiet some time period they'll probably been seen on an as-needed basis but the next scheduled visit is not till every other month for the first six months and then they're just going to be seen yearly after that.

We anticipate that the engraftment will really be effectively known probably about two to three months out. And that would be the time that we will be able to assess it via laboratory methods.

As far as patients two, three, four and five, part of the purpose of the press release is to inform the community, the HIV community, that this trial is back ongoing. We already have an aggressive outreach program and we're screening patients and have identified with this protocol change a number of subjects who are in the queue and hopefully we will anticipate getting some more in the coming weeks.

Next question, please.

Thank you. Your next question is coming from Jed Parsons from Parsons Capital.

Good morning.

Can you guys talk about the status of the Cal Tech interference? And you were awarded the array patents last summer why don't you go after Affymetrix directly on that? Thank you.

The Cal Tech patent is the subject of an interference which was declared in August of this past year, or actually, it was November, I stand corrected, it was November of this past year.

Just to give those that may not be aware of its status, Enzo was deemed the senior party in interference against the Cal Tech patent which is a patent which covers various aspects of gene sequencing issues. That interference is proceeding.

It is a procedural issue, again, we were deemed the senior party in that activity. Documents are being exchanged and there is a process which is being executed right now in the Patent Office.

I can't really comment too much on the specifics of the activity involved in that particular case but we believe that it will be concluded by the end of this calendar year. So it is being, it's a preliminary phase will be concluded by the end of the calendar year so it is on a [inaudible] track that we feel is somewhat expedited.

In terms of the array patent, Enzo was awarded a very, very important and fundamental patent covering the basic use of microarray technology which is used in microchip development in June of this year. That patent has been the subject of a fair amount of activity at Enzo.

I can't comment specifically on the actions that have taken place but it is a patent or a technology base that today covers a rather significant market and we are, I can assure you, exploiting it at this point in time. We are in discussions with various parties. I can't really get into too much detail over the extent of where that will move but I can assure you that there is a significant activity in process.

May I have the next question, please?

Thank you. Your next question comes from private investor, William Murray.

I would appreciate if you could give us an update on the hepatitis B, C, and a diagnostic platform. Thank you very much.

We have gone through a program -- as you obtained from Dr. Cupit's comments, we have a very extensive program in place for a company our size in terms of therapeutic product development. We have gone through a very detailed process of determining and defining our goals and objectives, trying to streamline our activities.

In a sense we have too many therapeutic programs for a company our size. We had to focus and we've determined to look more strategically at the ones we feel will have the nearest term market potential and are capable of development within the scope of our corporation.

Hepatitis B has been one program that we have deemed to be in the category of an out licensing product and there are processes in motion now exploring the out licensing of the hepatitis B product.

The hepatitis C product you refer to I think is the one that we are developing that is in its early trials targeted towards nonalcoholic steatohepatitis. Those trials are ongoing. That is a relatively long-term trial which has been in process now for a number of weeks and that, the direction will depend on the outcome of that Phase II trial which is now ongoing in Israel.

In terms of the, I believe the last part of your question was the amplification or the diagnostics program. We have been in development of a novel system which it incorporates many of our internal developed technologies and products for doing a very rapid amplification and diagnosis of genetic material.

It is engaged or involved in a lot of different opportunities right now. Some of them are the series of possible relationships with other companies. I can't really comment too much on the specifics but I will tell you that it is definitely active and of high interest and we believe high value to us as a corporation.

Thank you.

Your next question is coming from Robert Smith from Center for Performance Investing.

Good morning and congratulations on moving HIV forward. It's a breath of fresh air. I know it's been a long time coming.

Thank you.

With respect to hepatitis B, what are the yardstick study you're looking at for getting some kind of a joint venture on the international scene? And secondly, what would be the timeline for getting Crohn's to a Phase III trial?

In terms of hepatitis B, hepatitis B is predominantly a third world disease. The majority of the incidents of cased for hep B occur in the Far East, Asia, China is one of the largest populations, though it spreads throughout the Far East and into Africa somewhat.

The determination for hepatitis B has, [our] relationship there has multiple variables. Obviously, it's a product that because of the nature of the population is very much a World Health Organization type of problem.

The economics associated with the cost of delivering or delivering that type of medical approach have to be determined in a very economical and effective fashion that can make that particular product desirable for that part of the world. We've worked very hard to try to reduce the manufacturing cost to a level and we think we have that capability that would be able to deliver this product economically.

Our discussions revolve around the ability to be able to provide to manufacture, provide and actually conduct the trials in the parts of the county, in those countries that really will be the dominant parties. And so part of the characteristics will be the ability to execute an effective clinical program as well as to provide a product that has some economic return for us as a company.

In terms of the, again, the yardsticks, we have spoken to a variety of companies concerning this particular product. There are discussions which are being pursued right now and it's still a little bit early to determine the exact specifics of what or how that could evolve.

I'm sorry, what was the other part of the question?

Moving Crohn's to a Phase III trial [list] timeline.

The Crohn's product, as Dr. Cupit commented on, there will be data which will be released on May 22nd, DDW week conference.

He indicated that the data was, even though it's embargoed directionally gives us the impetus to bring this trial to the United States. I know Dr. Cupit and his team are looking at approaches to expedite the trial designs.

He spoke to you about the possibility of what he calls an adaptive trial. That is a trial which is a II/III type of design which could expedite the results of this type of work.

Again, this is being explored. It's a little too premature to discuss it at this conversation but we are looking at all modes and operations to expedite this particular program.

Obviously all of this depends on the complete outcome of the trials that are in motion right now, but the indications that we have been receiving are giving us comfort that we are starting to press this activity and hopefully bring these trials to the United States and move forward.

Thank you. [OPERATOR INSTRUCTIONS] Your next question is coming from private investor, Robert Gould.

Thank you. My question has been asked and answered but thank you very much.

Thank you. [OPERATOR INSTRUCTIONS] We'll pause for just a moment to compile the Q&A roster.

Thank you. Your next question is coming from Otis Bradley from Gilford Securities.

Good morning.

I'd like to congratulate you on a major step forward in Investor Relations having the conference call Tuesday instead of Monday and releasing the numbers Monday instead of Friday.

Could you tell me what chances there are of specifically of starting a Phase III in 2007 and uveitis? Let me rephrase it. Is it likely you will start Phase III on either of those this year?

I'm unwilling to give you a specific response to that. I will tell you that it is one of our goals to at least get one of those products into a III or an adaptive within 2007, perhaps both of them. Unfortunately, I can't be specific because there are so many issues outstanding that have to be digested but you could be certain that it is a very high priority on our list.

Thank you.

Thank you. This does complete the Q&A session. I would like to turn the floor back over to Mr. Weiner for any closing comments.

Again, thank you for joining us. I think you can ascertain from our comments today we have a significant number of opportunities and projects in motion at this point in time. We're very optimistic about the future and the outcome of many of these events.

We feel the Company is in an extremely productive phase, one that I think will be transitional in terms of the future of our company as we move forward and we look forward to reporting to you at the next quarterly call. Thank you very much.

Thank you.

A replay of this broadcast will be available until Tuesday, March 27th at 12:00 midnight. You may access this replay by dialing 1-877-519-4471. The pin number is 8539569. 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.