Geron Corp (GERN) 2007 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the second-quarter 2007 Geron earnings conference call. My name is Carol and I will be your coordinator for today. At this time all participants are in listen-only mode, we will conduct a question-and-answer session towards the end of this conference. (OPERATOR INSTRUCTIONS). I would now like to turn the call over to Mr. David Greenwood, Executive Vice President and Chief Financial Officer. Please proceed, sir.

Good morning and welcome. I am David Greenwood; with me is Tom Okarma, President and CEO, and Alan Colowick, President of Oncology. This is an earnings related conference call and we will begin with a summary of operating results for the quarter. Our agenda then includes an overview of recent operating highlights at the Company and a summary of our operating plans for the remainder of 2007. Following that presentation by Tom we will have a general question-and-answer session.

First, two informational items. In the event any forward-looking statements are made during this call, please understand those comments are made subject to the Safe Harbor provisions of the Securities Act of '95, any forward-looking statement involves uncertainty and we refer you to the risk factors detailed in our filings with the SEC. Secondly, as mentioned by the call coordinator, all participants are currently in a listen-only mode. The lines will open up for the Q&A and this call will be available for webcast replay until August 31. Please go to our website for more information.

As you can see on the condensed income statement attached to last night's announcement, revenues for the second quarter were up over the comparable three- and six-month periods for 2006, but royalty and license fee income amounts to less than $1 million a quarter. Other cash inflows to the Company during the quarter included $2.8 million of interest income. Second-quarter R&D expenses increased $4.8 million period-to-period. Most of the increase results from higher volumes of purchased drug product, the remainder relates to expanded clinical trials and the 163 program, hiring of additional clinical development personnel and non-cash expense related to equity compensation.

The G&A line item increased approximately $680,000 quarter-over-quarter which is comprised of non-cash expense related to stock options and the ever increasing costs of compliance. We end the quarter with $217 million cash on the balance sheet and I estimate our net cash burn for 2007 at $38 million. Finally I would like to thank everyone who joined us on July 17 for the analyst lunch. We had 45 people in the room, 307 dialed into the webcast and 156 people have accessed the presentation on our website. At this point I will turn it over to Tom.

Thanks, David. Good morning, everyone, and thank you for joining today. What I'll do is give a brief summary of the accomplishments in the second quarter and then we'll turn it over to Q&A.

The second quarter for us was really quite busy. We did four investment bank presentations, UBS and Rodman in May, Banc of America and Needham in June, and, as David just mentioned, we had a two hour analyst and investor day in New York on the 17th of July. And I remind listeners that those of you who have not heard it can still dial in on the conference page on the Investor Relations section of our Geron website to see the slides and hear the commentary.

On the 18th of June we announced that we had increased our stake in our Hong Kong joint venture, TA Therapeutics, from 50% to 75% feeling that the progress in the program warranted a controlling interest on our part which we have accomplished. On the oncology side, on the 12th of June we presented data from the fourth cohort out of a possible seven cohorts in the CLL trial at the Pan Pacific Lymphoma Conference and the data there showed that thankfully the pharmacokinetic properties of the drug continue to be linear with respect to dose.

And we did achieve, although transiently, a therapeutic plasma level of 10 micrograms per mil which is why we have been calling it the so-called first therapeutic dose cohort. That therapeutic level however was only reached very transiently and is at the lower limit of what we had expected to see to be required to inhibit telomerase. So therefore, although we had one patient who exhibited a stable disease and another patient who had a significant drop in lymphocyte count leading to tumor lysis syndrome, we could not correlate that with the drug action because we were unable to show telomerase inhibition.

So we continue to accrue and dose and clearly we will move up in terms of further dose escalation. There are now five sites recruiting in the CLL trial and two in the solid tumor trial. On the 9th of July we announced the initiation of a combination trial in non small cell lung cancer. The first site is UT Southwest, Dr. [Joan Schiller] is the primary investigator. This is the first time in which we've combined 163L in combination with standard chemotherapy, in this case a standard dose of paclitaxel and carboplatin. And because of the safety that we've demonstrated with 163L alone thus far we're able to start dosing in this trial, 163L, at levels comparable to the fourth cohort of the ongoing CLL and solid tumor trial, so we don't have to go back to square zero.

On the 11th of July we announce the initiation of our vaccine trial in a new disease, acute myelogenous leukemia. The lead investigator is John [Daprizio] at Washington University St. Louis and there will be four others joining him. These are AML patients at intermediate or high risk for relapse who are in complete remission at the time of vaccination. This will be the first time that we'll be studying the vaccine with the optimized prime and boost strategy, so during consolidation chemotherapy blood will be drawn to prepare the vaccine from each patient after which time the subjects will get one subcutaneous dose per week times six, that's the so-called prime regiment, then four weeks of rest and then six intradermal injections every other week, the so-called boost strategy.

We are hoping to maintain high levels of circulating T-cells against telomerase for an extended period of time and under those circumstances we hope to demonstrate safety, repeat the robust immune responses we've demonstrated in prostate cancer and hope to have impact on either residual disease burden for those subjects who still have residual disease after chemotherapy as well as looking at remission duration kinetics.

On the stem cell side, in May we announced the acceptance in stem cells in the August of this year issue of a publication describing the production of insulin producing islets from human embryonic stem cells and this work was done at Geron in collaboration with our partners at the University of Alberta in Edmonton, the developers of the so-called Edmonton protocol. So in the paper, which will be out shortly, we demonstrate that these cells are glucose responsive, both in vitro and in animals, they have the appropriate machinery including secretory granulomas and the correct gene expression pattern to identify them unequivocally as human islets. They also make and secrete glucagon and somatostatin so they have both beta alpha and delta cells so it's a complete islets.

We still have a ways to go in terms of increasing the specific activity. 2 to 8% of the cells make insulin, although we now have a scalable process for making these islets, a process that does not use serum or feeder cells of any kind, but we're still optimizing the specific activity of the cell prep. The data for the activity of these cells in animal models with diabetes has been submitted by our partners in Edmonton and you'll hear some news about that. And in a moment I will describe an improved process that we presented at the ISSCR meetings in Australia that shows that we now have about 10% of the cells now making insulin.

I remind you that our proprietary position on islets is quite clear and strong. We own a U.S. patent 7033831 issued in April of 2006 covering these cells. There are also two Geron owned UK issued patents plus a worldwide exclusive license under the [Worf] patents for insulin cells. An important presentation in June was done by [Ross Okumura] at the Federation of Clinical Immunology Societies in San Diego. This is the first demonstration that the OPC1 cell, the cell we are using to treat acute spinal cord injury, evades direct attack by the human immune system. And this is really important. It demonstrated that neither T-cells nor NK-cells nor [alsera] had any effect on the viability of OPC1 cells in vitro.

And we also showed no recognition by these cells even after the OPC1 cells were stimulated with gamma interferon or TNF alpha, the kind of inflammatory environment in which the cells might find themselves when they are injected into the spinal cord. So this demonstrated that we will only need low-dose and short-term immune suppression for this trial as we have been predicting. So this is clearly not like organ transplantation and we remain on track for an end of the year submission to the FDA for the IND for acute spinal cord injury.

And lastly, in May June we did seven presentations at the International Society For Stem Cell Research in Australia on the OPC1 cell, an extension of the original model data from [Hans Kerstedt's] lab, another presentation that demonstrated that the main pathology of acute spinal cord injury demyelination, continues for many months after injury -- at least in that animal model. We also demonstrated that the gene expression pattern during the production of OPC1 absolutely mimics the pattern of natural embryonic development of glial cells just as the story is for the islets cell, again validating that we are simply recapitulating mother nature's way of making viable human cell.

Fourthly, we presented again the data showing the multiple factors of neurotrophic nature that these OPC1 cells secrete which is responsible for the neural sprouting that we see in vivo as well as in vitro, a second mechanism of action of the cells. We then presented the data I alluded to earlier, an improved enrichment procedure to enable us now to have 10% insulin positive cells in our IC1 prep.

Our colleagues at Geron Biomed in the University of Edinburgh, Brendon Noble, presented new data on chondrocyte made from human embryonic stem cells. We have described those cells before, they are bona fide type 2 collagen producing cartilage cells. And this study demonstrated in a rat knee defect model that after 21 days of implantation there was human cartilage at the chondro bone junction in the damaged knee joint. So it's the first in vivo evidence that these cells make cartilage in an animal model.

The main event though at this meeting was a featured presentation on what will be the second cell type to enter clinical development, human cardiomyocytes for infarction. So we demonstrated a serum and feeder free scalable production method of cardiomyocytes that results in a prep that's 70% pure. These cells have the phenotype electrical and pharmacologic properties of ventricular human cardiomyocytes. The studies show that these cells effectively engraft for at least four weeks at which time the animals are sacrificed. We inject the cells directly into a massive left ventricular infarct.

The engrafts express all of the right human cardiomyocyte markers and, most importantly, when the animals, before sacrifice, are analyzed by echo and MRI imaging you see improved, namely smaller, end diastolic and end systolic diameters so we are preventing the onset of heart failure compared to animals that get no treatment or just irrelevant cells. And most importantly, we show significant increased fractional shortening and increased ejection fractions as well as increased infarct wall thickness, all parameters that indicate that the cells are actually contributing to myocardial contractility. You'll hear more about this as the full-length manuscript becomes published in the not too distant future.

So looking forward to rest of year on the cancer side, the next major event will be the initiation of the 163L single agent multiple myeloma study, that's an important study where we've already demonstrated that the drug inhibits not only mature myeloma cells but also myeloma stem cells from multiple patient samples. We have begun the large animal proof of concept study for the cardiomyocytes, that's now ongoing, and we hope to have some evidence in large animals by end of year that repeats what we've demonstrated in the small animal model. And lastly, we are still on track to file our IND for the world's first human embryonic stem cell trial in acute spinal cord injury. So with that we'll open up for questions.

(OPERATOR INSTRUCTIONS). Mark Monane, Needham & Co.

Good morning and greetings from the east -- almost a California like day here. A couple questions on the program. First of all, David, how many people now at Geron and how are they divided among the various activities there?

About 135 in total and it be a higher number at the end of the year because we continue to recruit selectively for some important positions. And there are a number of ways to split that out, R versus D or by programs. And we tend to think of our resources as being talent that we apply to our programs and projects because we're building products here rather than functional departments or even a research versus development designation.

So what is safe to assume is that we're hiring fewer research scientists these days, Mark, than we are development people and that's true on both sides of the Company, oncology and in stem cells. Alan is here and can detail our recent additions in clin ops for the numerous trials that we have outlined going forward. We've obviously built up a quality group. We've built up a regulatory group.

On the stem cell side of the Company we've built up a manufacturing group, as you can imagine. We have to build it here because, unlike the drug that we can order from Dow or [Alonza], we cannot order our stem cell therapies from anyone, we've got to grow them here. And so that's all invention and we've brought on a very talented engineering team to gear up stem cell production which takes place here in Menlo. So 135 is actually a small number of people given the number of balls in the air.

That was well described, thank you. Moving to the stem cell program. Tom, you quoted us a rate of activity that you saw of activated or functioning islet cells with insulin production. Do you expect the same kind of rates as we go forward in the spinal cord program or in the cardiac program or will it vary by the environment?

No, of the islets preparation by definition is a composition of multiple cell types -- cells that make insulin, cells that make glucagon, and cells that make somatotropin. My comment was that we think we can make the islet like cluster product more closely resemble the composition of an adult islet, both in terms of the relative number of cells that make insulin versus glucagon or somatotropin, and the amount of insulin that each insulin positive cell makes.

So just to clarify, we are still in terms of development -- developmentally speaking producing cells that are fetal or pediatric in their activity, they're not pushed all the way yet to full adult activity both in terms of fraction of cells that make the desired hormone and the amount of hormone per cell that they secrete under appropriate circumstances. So that's the issue with the islets.

On the OPC side it's really much different. There the cells are much more homogeneous and we really have optimized and frozen frankly the manufacturing process so all of the IND enabling studies that are now ongoing are by definition being made or done using cells that are made with the standard process that is going to be used for the patient trials next year. So it's a very different state of development of the product.

And should we think of a hit rate or a transformation rate or how should we evaluate the efficacy of the cells that are transplanted in terms of -- you nicely said that there were cells in the arthritis model that made human cartilage, is should we look at percentage or amount, how should we judge the efficacy?

There are two parameters. One is there's clearly going to be a dose response relationship here. So just like with the drug study, when we begin the human study in spinal cord injury it will be a dose ascending trial starting with doses that are probably going to be some therapeutic but are chosen at that low-level with safety considerations. So the end point in addition to safety, feasibility and all of that is going to be recovery of function and since we can biopsy these patients after the cells are injected you're limited to assessing utility as a function of their improvement in their locomotor tests, the Asia scores and so on.

In the case of the cartilage that you mentioned, the impact there would be functional radiographic and there's probably going to be a dose effect there as well. For islets it's even more straightforward, it's the durable correction of hyperglycemia when animals whose own pancreas is poisoned receive these cells they're floridly hyperglycemic and without any treatment die within a few weeks. We have dramatically prolonged the animal's lifespan, we pick up human insulin in their bloodstream but we've not yet normalized their blood glucose. So the end game there is the dose of cells required to permanently normalize blood glucose. So the bottom line is it's always going to be a functional endpoint.

Sure, that makes sense. And in terms of dose response, do you think it's going to be a linear dose response or do you suspect there will be certain number of cells to actually result in a functional benefit?

I think there will be a minimum number of cells required, not just because of the efficacy issue but because we seem to see that there's kind of a minimum number of cells that are required to engraft and function. They like their neighbor so to speak. However, from cell type to cell type there are variations in how mitotic the cells are at the point of injection. So for OPC1 the cells do divide, they do migrate after we inject them because they're precursors to glial cells.

That's also true for cardiomyocytes and that's important, particularly in the heart failure arena because there the amount of tissue that you're trying to reconstruct is much larger in volume than the injured spinal cord and the number of cells that you might think you would need to manufacture per dose is one to two logs higher than what we think we need for spinal cord injury. But to the degree that the cardiomyocytes are mitotic after they're injected, that number of cells in situ automatically increases, reducing the burden on manufacturing.

So all of that is kind of engineerable in terms of when we stop the process, how mitotic the cells are and that's part of the development process. So there will be a lower limit of cells that we need to inject but we want to try to minimize cost and manufacturing burden by enabling these cells to appropriately divide and fill in the space needed to regenerate after injection.

That was helpful, that was helpful. One last question if I may, please. 163L was nicely covered during the analyst day. On the single agent study -- I don't know if Alan is on the call -- in the single agent study how should we interpret the data a priori? Are we looking for efficacy as a single agent or do we see 163L being developed as a combination drug with Velcade or other standard of care there?

This is Alan, I am on the call. Thanks for the question. I think on multiple myeloma, as is likely going to be the case for other settings as well, we believe that there are two possible paradigms for the drug. One is as a single agent and the other is potentially in combination with other therapies where in particular debulking may be an important part of the story. So in multiple myeloma specifically we have terrific preclinical data both as a single agent and in combination thus far with Velcade as one of the standard agents used that shows 163L has significant activity in both settings. So at least for multiple myeloma, at this point we're absolutely planning to go forward in both paradigms, both as a single agent and in combination.

And as a single agent is there a minimum rate that you're looking for before you decide terrific forward? Or is this done after the combination data and then you put it together?

I think obviously we'll use the data that's available to us at the time. We don't have a prespecified hurdle that we're talking about publicly in terms of the single agent study which will be running. I think there will be a totality of the data including various markers of response as well as other issues which we'll be able to look at in terms of the effect on cancer stem cells literally within the patient's receiving 163L.

So I think it will be really a synthesis and integration of those data about will allow us to make a judgment about single agent activity. I think regardless of what we see as a single agent we are committed to moving forward in combination in multiple myeloma as well with standard agents. So we fully expect to move both programs forward.

Okay. Thank you very much, team, for the added information.

Ren Benjamin, Rodman & Renshaw.

Thanks for taking the question. From the oncology franchise if you will, can you just remind us which cohort you're in as far as the CLL trial is concerned? And then also, if you can just remind us -- I know you had the analyst day very recently. But just when we expect the final data to be available?

Ren, this is Alan again. In terms of these CLL study, we're currently enrolling into the fourth cohort and expect that as the summer draws to a close, assuming that there aren't any unforeseen safety issues, that we'll be dose escalating in the near-term in that protocol. For both the CLL study and the solid tumor study, I think there are two important milestones for you to keep in mind. One is that we feel we're very much on track by the end of this year to be able to determine the dose to take forward as a single agent in the next generation of studies, the Phase II studies which we're planning as well as, quite frankly, the bracket of doses that we would take forward in combination therapy.

So we are quite confident that we're on track to identify that dose at the end of the year which is, quite frankly, from a development perspective -- a drug development perspective a really key kind of milestone for us to reach.

In terms of final data per se from both the CLL study and the solid tumor study, we expect and we set the guidance at the analyst day that in the first half of 2008 we will have and will publicly communicate those final data at the appropriate forum be that a professional society meeting or some sort of publication. But certainly prior to that by the end of this year we'll have the data in hand for us to design and move forward with the next phase of the clinical development program.

And Alan, do you think that the 163L combination study with paclitaxel and carboplatin is going to be available at around the same time?

Well, we'll certainly have some data from that study available to us, absolutely. Whether or not we will have reached what will be the maximum tolerated dose in combination with [carbotaxal]. At the same time I think it's too early to call, that's really going to be based on enrollment kinetics as well as what we see from a safety perspective. But having said that, we feel quite confident that we'll certainly have those data during the second half of next year and be able to initiate a randomized Phase II study. Assuming we don't see any safety issues our plan would be to initiate a randomized Phase II study in the non small cell lung cancer setting in the second half of next year.

Okay. And then just regarding the timing. Tom had mentioned three things to look for in the near future, one of which was the initiation of the single agent multiple myeloma study. Can you remind us again when you expect that to begin?

Yes, we said that that will begin sometime this quarter. I can tell you that at the institutions where we're planning to do the study, which are really I think top-notch multiple myeloma institutions here in the United States, that at each one of those institutions the protocol is at various stages of review, whether that be scientific review committee, IRV, and/or contract. So at this point it's really just a matter of letting those administrative wheels turn and we expect that we'll be initiating that study sometime during this quarter.

Okay, great. Thank you very much for that. And just moving on to the embryonic stem cell platform, sort of piggybacking on a couple of Mark's questions, I guess when we talk about the percent of cells that are making insulin -- and Tom, you nicely summarized that some are going to be making insulin, others glucagon and some somatotropin. How many are actually non differentiated cells or cells that either you need to get rid of or are somehow considered contaminants of the whole prep? Or are there any that are left?

I'm not sure that I can answer your question because it's a subject of active investigation now. The breakthrough that we described in Australia takes advantage of the fact that as we drive these cells to differentiate they've actually formed an organelle in the culture. It's a round mass of cells that contain all kinds of cells, those that we want and those that shouldn't be there and those that are on their way to becoming the ones that we want. Then what happens is the actual islet cluster buds out of that round mass and we've determined that in that bud is where the concentration of relevant beta gamma delta cells resides. And we've learned how to remove that bud from the larger mass and that's what contains the higher percentage of desired cells.

Now whether that bud still has wrong cells in it, the point of your good question, remains to be seen in terms of the long-term follow-up when these cells are put into animals, which is in process now in Canada. So the endpoint there, in addition to the human insulin and normalization of blood, is after a couple of months of life you sacrifice the animal and ask the question do we see any unwanted growth in the area of the transplant? In prior preps we have, so there is evidence for the fact that we do in the old preps have cells that shouldn't be there. We don't yet know the story with the newer bud press.

In regards with the ongoing preclinical work for the OPC trial, can give us a status report on what's happening there?

We're going to be pretty close to locking down the IND data over the next couple months. So that means that we're getting into the red zone here, which also means that I'm going to be saying less and less about the data set and where we are as we get closer to a real submission date. So this will probably be the last time you hear me talk specifically about the IND submission. It's really standard practice in the industry to actually talk about the initiation of the trial, not the FDA submission.

And the reason behind that, to be completely transparent, is this is the first time this has ever happened anywhere in the world. And I've mentioned many times that the FDA's bar is extraordinarily high and this is going to be an enormous submission. It may not even be possible physically for the agency to actually complete their review of it in the required 30 days as an example of how extensive the animal studies are. So we want to obviously optimize the likelihood of success and we do not want to put any undue political or investor pressure on the agency. So this will be the last time you hear me say we're on track, so far the data are supportive and the next time you hear me talk about this hopefully we'll have a green light from the agency.

All right, so since I have you talking about it just this one last time, you mentioned that filing the IND is something that we can look forward to, but no particular timeline to it. Is that something that you're still hoping to achieve by the end of this year or is it something more at the early part of next year?

It's still on track for the end of this year.

Terrific, thank you very much.

(OPERATOR INSTRUCTIONS). Dr. [Mark Berger].

First of all I want to congratulate your entire team on very exciting science. It's just thrilling to hear what you're doing. I have a couple of specific questions and feel free not to answer them if there's any conflict. One is the prostate data was very good with the PSA doubling time going to 100 weeks. Is that going to be ever pursued, prostate? And the same sort of question on CLL, is there any desire to pursue that beyond this current study?

The direction that we take the vaccine in terms of disease indications is quite open. We have not at all ruled out going back to prostate cancer. The reason we went to AML as the next step is because we can get shorter term information on impact of the vaccination strategy on tumor burden which, as you know, is very difficult to do in prostate cancer. And of course, PSA doubling time is not an approvable endpoint by the FDA's standard; it's still viewed as a surrogate marker. So the future is still open.

Clearly both the drug and the vaccine attack telomerase through different mechanisms and telomerase is widely expressed on most human tumors. So we reserve the upside for both the drug and the vaccine in terms of the breadth of application. What we're trying to do is demonstrate as rapidly as we can not only safety but impact on disease progression. As far as the impact on CLL, it's too early to call.

The reason for starting the study in CLL is not because we thought we had an indication, but because there were elements of the disease that made it attractive to study for the first time a telomerase inhibitor in man and that remains the case. But until we are further along in the trial and have a better sense of the safety, efficacy profile of the drug in CLL we really can't answer that with certainty.

Having said that, there's no question that within our oncology team here our enthusiasm for myeloma is really quite high based upon the data that we are generating showing the drug as a single agent, as highly active in disseminated animal models in myeloma and as a single agent is extremely effective and killing the myeloma stem cell which, by the way, the approved drugs for myeloma do not do.

And thirdly, the fact that 163L synergizes or at least is additive with approved drugs in animal models of the disease. So there's a much more robust preclinical dossier for 163L in myeloma than there ever was for CLL.

Okay. Two more very brief questions. One is on the cardiomyocytes. I presume you inject them into the left ventricle after an LAD occlusion. Is there a time frame, how does the revascularization work? Do you see more revascularization in animals that have these cells as opposed to the animals that do not have these cells? You can't obviously inject them into an ischemic area?

Great questions. And point of fact, we do inject them into an ischemic area and that's one of the extraordinary elements of excitement about this application. So you're correct, the animals are given a reversible ligation of 30 minutes in duration so the LV is exposed to both an anoxic and a reperfusion stress which models that in a human MI. The control animals have massive left ventricular dilatation scarring in the area of the infarct. We had worked for years to achieve engraftment of these cells for the very reason you're asking in this ischemic necrotic region of the ventricle.

So the trick, which will be published shortly in the full-length manuscript, is a cocktail of what we call of pro survival factors which are absolutely required to be administered along with the cardiomyocytes to achieve durable engraftment. They are protective agents that enable the cells to endure the stress of an ischemic region of the heart.

In terms of vascularization, we do see some blood vessels, but it's a little bit difficult to know how real that is in this animal model because it's short term. It's a four-week experiment, that's one of the reasons we've now moved into the sheep where not only do we have an animal that can be used in terms of a NOGA catheter system, which is how we will inject the cells, but the heart rate of the sheep is much closer to ours as opposed to a rat which is 300 beats per minute. Human cells can only be paced to about 180 beats per minute. So we're actually minimizing the [iatropic] activity that we see in the rodent models. Also, we can't really rule out [arrhythmogenic] foci in the rodent which we obviously will be able to do with standard EKG measurements in a larger animal.

So I think you ask really good question. I think we've solved the engraftment problem. And also, I should mention that like all the other cells these are early in the relative ontogeny of development. So these cells at the time of injection are filled with glycogen which enables them to metabolize in a relatively anoxic environment which is of course, to the point of your question, what they find when they wake up in an anoxic left ventricle. So we've engineered the cell with the right kind of characteristics to endure the kind of stress it has to survive in order to durably engraft and retain function.

Okay. And one last very quick question and that is in terms of a cousin to multiple myeloma, Waldenstrom's. I know it's very rare, I know it would be very hard for recruitment. Is there any consideration of that, would that give you any advantage down the road for fast-track or for orphan drug or for anything else? I'm not familiar with the procedure of interacting with the FDA obviously, but I was just curious about that disease?

This is Alan again and it's a very good question and I think biologically Waldenstrom's is an area where for thinking about inhibiting telomerase there's a real reason to believe that it might be advantageous. There are a host of diseases like Waldenstrom's which I would say are important diseases, biologically make sense for telomerase inhibition, but, as you rightfully say, are quite rare. And from that perspective, at least as an initial foray for us, don't make as much sense as something like multiple myeloma where, not only from a patient recruitment perspective but also just quite frankly understanding the disease and the path to approval, etc., we feel is certainly more straightforward.

Having said that, once we establish the activity of 163L, be that as a single agent or in combination therapy, I think we'll be in a much better position to investigate some of those smaller, more rare types of cancers where biologically telomerase inhibition makes a lot of sense.

Thank you, gentlemen. Congratulations on excellent science.

Thanks.

[Chad Meyer].

One quick question about the OPC model again. Talking about the FDA's high standard, the 2500 models, did you learn anything? Was there a value to that? Did we find any teratomas at all or are we straightforward again and really didn't go anywhere with this? Was it a valuable reference to do these extra models?

There's no question that we would have had to do all of these different kinds of experiments in animals as part of the IND package, by which I mean tumor regenesis, bio distribution, toxicity, durability, effects of immune suppression -- all of the usual boxes would have had to have been checked. What is extraordinary is the size of the ends for each of those kinds of studies and the duration that they've asked us to expose the animals to these cells. And that has been what has been extraordinarily difficult.

You have to understand that in many of the studies, not all but many of them, these are immune compromised rats who have a severe spinal cord injury are then treated with the cells in the spinal cord and they have to be maintained for two, six, nine or 12 months. These animals are maintained in reverse isolation. They have to have their bladders manually expressed three times a day, they die of infections all the time.

So for every 10 animals that you want to have survive for nine or 12 months, you have to injure and treat 25 to 30. So that's what has made it very difficult and that's what I refer to as a very, very high bar. So yes, we've learned a ton. No, we're not going to publicly describe what our results are, that's inappropriate as we get ready to file this IND, but obviously we're filing. So that tells you something about the degree of confidence that we're seeing in the data.

Thank you, doctors. Can't wait for that trial.

Thank you all for joining and we'll visit again next time. Have a good day.

Thank you for joining in today's conference. You may now disconnect and good day.