Geron Corp (GERN) 2008 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Q3 2008 Geron earnings conference call. My name is Kim and I will be your coordinator for today. At this time all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of today's conference. (Operator Instructions)

I would now like to turn the presentation over to your host for today's conference, Mr. David Greenwood, Executive VP and CFO. Please proceed, sir.

Good morning and welcome to the Geron earnings conference call. I'm David Greenwood and with me is Tom Okarma. This is an earnings related call and we will begin a summary of the operating results for the quarter and our agenda then includes an overview of recent operating highlights and summary of our plans for the remainder of the year. Following that presentation by Tom, we will have a general Q&A session.

Two informational items. In the event of forward-looking statements, please understand these comments are subject to the Safe Harbor Provisions of the Securities Act of 1995 and any forward looking statements involve uncertainty and we refer you to the risk factors detailed in our filings with the SEC.

And secondly, we are currently in listen-only mode and the lines will open for Q&A following our comments and the call will be available for webcast for the next 30 days and you can go to our website for more information.

As you can see on the condensed income statement attached to yesterday's announcement, revenues for the quarter amounted to $367,000 which is our quarterly running rate for royalties and licensing fees. For the nine-month period, revenues totaled $2.3 million which includes a milestone payment earlier in the year. Add to that revenue $1.2 million of interest income for the quarter and $4.5 million of interest income for the nine-month period.

R&D expenses are higher for the quarter but flat for the nine months compared to 2007. The number can swing quarter-to-quarter depending on the timing of drug purchases but overall, we have been very consciously managing costs.

G&A expenses are essentially flat for the quarter and the nine-month period. And please keep in mind that about 35% of the G&A number is non-cash expense related to 123(R).

So we end the quarter with about $175 million cash on the balance sheet. Our gross burn is driven primarily by cost of clinical trials. That number will be about $55 million, $56 million for the year. I peg our net burn at about $40 million for the year, so the company will have approximately $165 million cash on the balance sheet at year end. We will go into 2009 with our current running rate budget.

Our job is to progress all programs to milestones within the time frames and with tightly controlled spending. We would therefore anticipate ending 2009 with $110 million to $115 million in cash which is another two years of runway without capital raising.

As you know, many investment portfolios have been impacted by the turmoil in the markets. We have suffered no writedowns or liquidity extensions to date and we do not anticipate losses. We have conservative investment guidelines and we monitor the paper that we buy.

Before I turn it over to Tom for a review of the operating results, I will just comment briefly on the merger during the quarter between Start Licensing and ViaGen. In 2005, we created Start Licensing as a 50-50 JV with Exeter Life Sciences. It was our IP, their cash.

As the name suggests, it's a vehicle company to convey rights to use nuclear transfer cloning technology in animals for a number of applications; the breeding of quality/quantity and disease-resistant traits in stock animals; the development of genetically modified animals as bioreactors to produce pharmaceuticals; production of human disease models for drug testing, etc.

We merged Start Licensing into ViaGen which is a licensee and in fact -- and the premier operating company in the field of providing cloning services. We own a 27% interest in the combined entity and now a user of the technology can approach one company for either a licensed practice or to contract services. And this technology is penetrating the different markets. We of course retain all rights for human applications.

At this point, I will turn it over to Tom Okarma.

Thanks, David. Good morning everyone. Thank you for dialing in. I am going to focus my comments on four major events of the quarter. First, I will expand a little bit on David's comments about our operating company formation for animal cloning. Secondly, I will describe our newly issued US patent on embryonic stem cell derived cardiomyocytes.

Thirdly, I will describe a newly published study that shows our cancer drug, 163L is synergistic with Herceptin and restores sensitivity to Herceptin in HER2 Positive Herceptin resistant breast cancer cells. And this observation actually forms the rationale for a potential additional 163L clinical trial in breast cancer in '09. And then fourthly, describe our two new initiated clinical trials for 163L.

As David mentioned in his comments earlier, we and Exeter merged Start Licensing with ViaGen which resulted in a 27% ownership of ViaGen for Geron. As David mentioned, the transaction combined Start which managed and licensed a broad portfolio of IP rights related to animal reproductive technologies including cloning with ViaGen which was a leading animal genomics and livestock cloning company.

The rationale for the merger is based upon the recently issued FDA report that concluded food products from cloned livestock and their offspring are safe to eat. The impact of the merger is that we now combine the full breadth of intellectual property for nuclear transfer containing such patents as the Dolly the sheep portfolio with state-of-the-art breeding services and expertise and advanced reproductive technologies. This provides a one-step shop for customers to either secure a license to practice or to contract for cloning services.

The agricultural applications of nuclear transfer are quite broad and include copying desired animal traits such as disease resistance, improved meat quality or yield, or increased quality or yield of milk and incorporating those traits into cloned livestock that are then used for breeding. This approach introduces desirable genetic traits into herds much more rapidly and with greater certainty than can be achieved through conventional breeding.

This is actually quite close to home for me. I grew up on a dairy farm in New Jersey and my father was in charge of breeding the Holstein heard. And it literally took him his virtual career of 20 years to improve the butter fat content and yield of the herd through conventional breeding. So I can speak to this from some experience.

So an impact of this approach is that it can result in significantly decreased use of antibiotics, growth hormones and other additives by producing disease resistant and healthier animals. And remember that adult clones from nuclear transfer procedures can produce normal offspring by natural reproduction which is the mode that would be most likely practiced.

So in January of this year after six years of study, the FDA concluded that meat and milk from cattle, pigs, and goats produced by nuclear transfer and naturally reproduced offspring of those clones are as safe to eat as food from conventionally bred livestock. FDA scientists at the Center for Veterinary Medicine analyzed the data which included over 100 peer-reviewed publications, all of which supported the FDA's decisions.

And lastly, as David also mentioned, this technology includes applications in the production of biopharmaceuticals such as therapeutic proteins in milk and antibodies in blood.

In September of this year, we announced the issuance of a US patent for cardiomyocytes derived from human embryonic stem cells. This issued patent contains very broad claims to embryonic stem cell derived cardiomyocytes as composition of matter. This means the claims are independent of whatever method is used to derive them. The patent runs until at least 2025 and is of course subject to patent term extensions which is a practice we widely utilize here.

This protects our use of embryonic stem cell derived cardiomyocytes for both cell therapy and for drug screening applications. These cells are currently in a large animal studies and we are exploring their potential for various drug delivery and discovery rather applications.

You will recall that the proof of concept in animals for the treatment of post-myocardial infarction heart failure was published in the September '07 nature Biotech in which we showed significant engraftments of these cells in a rat model of myocardial infarction. That engraftment resulted in the prevention of the animals going into heart failure and also we observed that the cells induced post angiogenesis, that is the cells caused the host animal to regrow new blood vessels to maintain the engraftment of the transplanted cells. And we now understand the mechanism for that.

So this patent brings to our total of 35 issued US patents on embryonic stem cell technologies, 70 issued patents in other countries and over 200 applications pending worldwide.

In October of this year, we published studies in breast cancer research and treatment showing that 163L, our polymerase inhibitor is effective as a single agent in HER2 Positive, meaning amplified breast cancer cells, and moreover, our drug is synergistic with Herceptin in these same cell types. Most importantly, the paper showed that 163L was stored sensitivity to Herceptin and HER2 Positive Herceptin resistant lines. And I will comment some more about that in a moment. This was authored by Dr. Brittney-Shea Herbert and her colleagues at Indiana University in collaboration with Geron scientists.

A little bit about the background of HER2 amplification. HER2 is the common name for epidermal growth factor receptor 2 which as you may or remember is a transmembrane tyrosine kinase that is found in about 20% of patients with breast cancer and is associated clearly with a much more aggressive disease, a greater likelihood of recurrence, a poorer prognosis and decreased survival. HER2 Positive over expression through gene amplification is also associated with resistance to various chemotherapy and endocrine therapies.

Herceptin is a monoclonal that binds to the extracellular portion of HER2 and disrupts downstream signaling. It's widely used for treating advanced metastatic disease but unfortunately resistance develops rapidly in a large number of Herceptin treated breast cancer patients.

The rationale for the study was that people have noted that HER2 amplification is also associated with elevated expression of telomerase, even over the normally amount of telomerase present in non-HER2 amplified breast cancer cells. So because of that association, we did the obvious exploring the activity of both drugs on various HER2 Positive breast cancer lines in vitro, two lines of which were Herceptin resistant.

And the findings were again that 163L was active as a single agent in all the lines; that 163L was synergistic with Herceptin in all of the lines; and most importantly, 163L restored the sensitivity to Herceptin and the Herceptin resistant lines in as little as five days. So clearly this is a different mechanism than the traditional telomerase inhibition leading to telomere attrition.

So this obviously forms the rationale for the use of our telomerase inhibitor in the treatment of breast cancers that have required resistance to standard therapy.

Lastly, we announced the initiation of two new trials of 163L. In August, we initiated the trial to 163L in combination with paclitaxel and Avastin in patients with breast cancer. As with the rest of our studies, the primary endpoints are safety, establishing the maximumally tolerated dose, as well as objective response rates of the drug in combination with paclitaxel and Avastin. These are studied in patients with locally recurrent or metastatic breast cancer.

The lead investigator is Kathy Miller at Indiana University and as you know, paclitaxel Avastin is a current standard treatment for metastatic breast cancer. The doses of 163 will be ascending in ascending cohorts like most of our other study designs. We have begun at the low dose of 160 mgs per meter squared which is about 3.2 mgs per kilo. We administer 163L on days one, eight, and 15 of a 28-day cycle.

The paclitaxel Avastin doses and administrations are standard. Paclitaxel is given on day one, eight and 15 along with 163L in a 28-day cycle and Avastin is given on days one and 15 of that same 28-day cycle.

We finished enrolling the first cohort with no deal tease, the second cohort which will introduce 163 at double the dose, 6.4 mgs per kilo is currently now in screening.

In October, we initiated a trial of 163L in combination with Velcade and dexamethasone in patients with multiple myeloma. This is the sixth 163L trial in the United States and these trials are now recruiting from 18 US medical center and as you recall, this is our second study of 163L in multiple myeloma. Again the primary endpoints are safety, maximumally tolerated dose and objective response rates of 163L given with this drug combination.

Recall that 163L is unique in its activity against myeloma stem cells and Velcade in a direct comparison has no activity on the myeloma stem cell, So again, the rationale here in the combination is to use both drugs to hit the mature myeloma cells and 163L to hit the myeloma stem cells which are resistant to Velcade.

Again, the doses of 163L will be ascending starting at the 3.2 mg per kilo given on days one and eight of a 21-day cycle and Velcade is given at standard dose of 1.3 mg per meter squared twice a week for two weeks with one week rest. T

The principal investigator for this study is Bill Bensinger at the Fred Hutchinson Cancer Center and there are three more centers that will come online by year's end.

With that, I'm happy now to open the call to questions and answers.

(Operator Instructions) Mark Monane, Needham & Company.

Good morning and thanks for taking our questions. Best wishes from the East. Let's start with a financial question. My colleague Glen has a question.

I noticed in the third quarter that you had a slightly higher R&D expenses for expenditures I believe on GRN163L. Is that purchases for ongoing studies going to continue or do you think that you will be done with those costs by the year end?

Well, they will continue. They will again fluctuate from quarter to quarter. It depends on not only drug purchases but some of the starting material that actually goes into the drug which we purchased separately. So there is a little bit going on there. And we started two new trials. We've initiated new sites obviously for those trials, but new sites for ongoing trials. You also have tolling arrangements and contracts as patients are enrolled. You have ongoing CRO costs and regulatory costs so it's a mix of a number of line items and all of which recur each quarter, but again in variable amounts.

I would add to that in terms of the cost issue which is a fair question, that we have a very active program both within Geron and with our various manufacturing contractors to improve the process of manufacturing the drug, to reduce its cost and increase its purity and yield as well as a very creative program to alter the way in which the monomers, the building blocks, are actually originally synthesized.

A great portion of the cost of the 163L is actually the cost of some of the monomers which we are impacting significantly and that program will continue for the distant future.

That was helpful, thank you. In the CLO trial we saw I believe earlier, we saw two more license [enrollment] in the patient and here we see in a rapid period of time after starting the drug. And here also in the breast cancer data that you talked about and reviewed today, we saw a patient had a response within five days. And we saw responses within five days which is much quicker than one expected telomerase [or] the mechanism. Could you postulate what else could be going on at this time or do you think these are related effects across cancers?

Let me first correct the impression that I may have mistakenly given you about the Herceptin 163L synergy. That paper is in vitro, it's not in vivo. So the five-day effect which is unusual even for in vitro incubations was the result of an in vitro incubation of breast cancer cells with the two agents, okay. So that probably has nothing to do with the single episode of tumor lysis syndrome that we saw last year in the CLL study. We have never seen that again frankly have no good idea as to why that occurred.

It clearly was associated with a transient decline in the CLL burden. The thought but not substantiated by any data is that might have been patient whose critical Telomere length was unusually short in his CLL cells leading to a rapid and sudden lysis of a significant portion of his tumor burden. That could recur I suppose in theory but has not yet in quite a few patients exposed now to higher doses of the drug since then.

So in retrospect, it was an isolated event. It hasn't recurred and we have no insight as to this mechanism.

Any way to postulate right now about the Herceptin trial on another mechanism -- have you seen another mechanism of action for 163 in the lab?

The two prevailing thoughts about mechanism of action are as follows. One is direct inhibition leading to shortening of Telomeres and the gradual onset of apoptosis.

The second is a more complex effect called uncapping of the Telomere. And this is caused by the drug and is an immediate effect to the point of your question in which the drugs binding to the template region of telomerase not only shuts the enzyme down enzymatically but prevents the binding of telomerase to the Telomere thereby uncapping it or removing a major protecting RNP from what is now a deep proteinized telomere end, the significance of which is that it means that the single-stranded region of the single-strand overhang on each telomere is now exposed to the cell's ability to detect single-stranded DNA which it interprets as a danger signal a DNA damage signal.

So the thought is that that is an immediate effect and if that occurs in a context where other DNA damaging agents or other DNA repair pathways are inhibited, you may see a more rapid onset of tumor cell lysis. So that is the thought here. Even though we try to do experiments to directly determine if that was the case in the Herceptin story and they were kind of inconclusive.

So I honestly don't think we know what the mechanism of the synergy is nor do we fully understand the restoration of sensitivity. But the prevailing notion is that it's in some way related to the uncapping effect.

That was helpful. On the stem cell program, are you able to provide us with an update on the current stats of the IND application for the spinal cord program?

I'm so surprised you asked me that, Mark. Yes, I can give you a little bit of guidance. We continue to make what I characterize as excellent progress with the agency. It is slower than we would like but it is moving into the correct direction. So currently we have been asked to process some additional tissue from animals that we already have so there is no new animal studies involved at all. We are engaged in that. We have to have these tissues analyzed histologically and with some sophisticated DNA tests and those reports are written by an outside contractor.

And so once those reports are done, then we are pretty much ready to submit the final response to the whole letter which then triggers another FDA review period. So while I am not going to give you any guidance on timing, I can tell you that we are coming to the end of what has been a very thorough and collaborative series of conversations with the agency, their review has an extremely thorough, it is not political. They certainly had a steep learning curve to undergo in terms of going through 22,500 pages of submission which was the largest IND the FDA has ever received for anything. And they've done an admirable job. They've looked at absolutely all the primary data, have had lots and lots of questions and I think again, our program will be substantially enhanced by the fine-tuning that has resulted from the review.

Thank you for the added information reviewing with us.

You are welcome.

Ren Benjamin, Rodman.

Good morning Tom and David. Thanks for taking the questions. Just by way of update, you mentioned obviously we know there are several other 163L trials that are ongoing. You mentioned two in this conference call but can you give us an update as to the other trials? What is their status and probably more importantly, when might we might be seeing updated results from those (multiple speakers)?

Sure. So we have three trials currently undergoing testing 163L as a single agent and three trials testing 163L in combination with standard chemotherapy. The single agent trials are slightly ahead of the combination trials and that is deliberate because in an ideal world, you would like to fully understand how the drug operates as a single agent before you begin combining them.

So in the Phase I CLD, and it's now CLD not just CLL because we've expanded the indications, we are now recruiting from seven sites in the US and we are adding two more to increase enrollment to take this study to conclusion. We're currently dosing patients at 5.4 mg per kilo and expect to escalate early in January to 6.8 mg per kilo and this is still a once a week two hour fusion multiple cycles.

And again, its rationale is that it is the most straightforward way to achieve an understanding of the PK-PD relationships because in this case the tumor cells circulate in the bloodstream which is the same source of our measuring blood levels and blood PK levels. And those analyses continue to be ongoing.

And for all of these studies and single agents, all of our modeling suggests we are getting close but not quite yet there to levels that should result in hitting the target. So obviously each month we are evaluating samples as they come to us for telomerase inhibition at these increasing doses.

Same story for myeloma. We currently are analyzing as we speak two bone marrow samples from patients at a fixed mg per kilo dose. We have seen in multiple myeloma thrombocytopenia which we have also seen in a solid tumor trial which I will return to in a moment. And in myeloma, again, these are heavily pretreated patients which is a key here, that will probably lead us to alter the dosing schedule in the same way we've altered it in solid tumors. And we will be presenting some data on the myeloma study at ASH as you know.

The solid tumor study is a very important study for us not so much for PK-PD, although we are drawing peripheral blood and hair follicles as a surrogate marker in that study, but mostly to understand in the worst case of patients who are pretreated with as many as 12 chemotherapy cycles before they see 163 for the first time, what is the tox profile there. And that is where thrombocytopenia first appeared as an early dose limiting tox.

So what we did was we changed the dosing integral from every week to two weeks on and one week off. And at the EORTC meeting two weeks ago in Switzerland, we presented -- our investigators presented a poster describing the impact on thrombocytopenia of that altered 163L dosing regimen which was to show that we have eradicated thrombocytopenia by the simple addition of a one-week off in the regimen.

You may know that all of the combination studies involving 163L in non-small cell lung, breast and myeloma employ an alternate dosing schedule which was one of the learnings from the Phase I single agent. The importance of that is some of these combination studies 163L is combined with other agents that are known to have thrombocytopenic effects so it's important that we monitor that carefully and do whatever we can that is rational to limit the thrombocytopenic effect of our drug in that combination.

The non-small cell lung is currently in four sites. We are at the 4.8 mg per kilo cohort and early in December, assuming there are no DOPs thus far, we will escalate to 6 mg per kilo again in December.

The breast study we are currently at 6.5 mg per kilo. That is going very well. We are currently in one site, we have three sites that are ready to go and we plan to escalate that dose in January.

The myeloma study, as you know, just began. We are planning to escalate to 6.5 mg per kilo in January. We are currently only recruiting from one site but have four in line to be initiated.

So the take home message is, we continue to optimize how we use the drug as a single agent to achieve two effects, getting more drug on board for a longer period of time but doing so in a way that eliminates any adverse effects like thrombocytopenia. And those lessons are directly applied to how we are dosing the drug in the combination studies. And obviously the single agent studies by definition are studying patients at a much more progressed state of their tumors than are the combination studies because we are combining the drug in them with first or second line therapies.

So these are very different patient populations which is important because again, we are looking for pan-cancer drug here. So we really need to understand how this drug is handled by a very wide variety of patients and tumor types with very different pre-163L exposure histories in terms of prior chemotherapy.

Got it. Regarding milestones for the next 12 months and this will give us an idea as to when you think some of this data would be coming out. But can you just take us through -- you mentioned that there will be a presentation at ASH both for the oncology and the stem-cell programs. What are the next drivers that we should be looking for?

I think the two main events are demonstrating in a rigorous way biological activity of the drug in man, meaning demonstrating telomerase in addition. That is really key because without that, we are forced to make empirical choices about changing dosing regimens. So once we hit levels in the body that give us reliable inhibition of telomerase, then we have in a sense a biomarker to really optimize how to give the drug both singly and in combination.

So I can't really give you a specific guidance as to when we are going to have that because it will probably vary from trial to trial because we are at different dosing levels. And there is some evidence now from our validated TI assays in peripheral blood, hair follicles and bone marrow that the IC50 for the drug may actually vary a bit in those different tissue types.

So that is obviously a really important practical objective for us in '09 and is a fundamental that we need to achieve in order to rapidly and appropriately advance the dosing in all of these trials.

I guess just very quickly, what is the level of telomerase inhibition you are seeing right now? And I can understand it can be variable from indication to indication and in various combinations. That is a little bit tough to answer. What sort of inhibition do you want to see or what would you be happy with?

Two good questions. We are seeing trends in the hair follicle assay in the solid tumor patients but nothing that we have concluded is really statistically significant consistent inhibition. Again, those are predicted based on the IC50s of this drug in various tumor lines which as you know, is only an approximation to what really happens in a heterogeneous tumor mass in people.

I think the most dramatic evidence for hitting the target we hope will be in the bone marrow of the myeloma patients because as you remember, we know that this drug accumulates in marrow because of the fat composition of the drug and of marrow. So that is a prime target for this.

So I am not trying to evasive, I'm just trying to say that we are not there yet but we are heartened by the predictive value of the modeling that says we shouldn't be there yet. So we shouldn't be expecting to see significant inhibition until we begin to dose escalate one or two more cohorts and that is why I emphasized where we are in dose escalation over the next couple of months.

Okay. I guess just following up on that. I understand that you wouldn't expect to be at this particular level of inhibition at these dose cohorts, but can you help guide us -- is a 50% inhibition what you are looking for? Is it -- do you have to be closer to 80% or do you have to just wait until you have the clinical response as well to draw that correlation?

I'm sorry, I forgot to address that in your prior question. The simple answer is we are not sure. In all of the in vitro studies, it is very easy to achieve 80%, 90% inhibition of telomerase because you are studying a homogeneous population of cells that is exposed continuously to the drug in the in vitro assay.

We are currently doing dose limiting studies now in vitro to get a better handle on that to see whether 50% inhibition of telomerase gives an equally robust and rapid apoptosis result. We simply don't know the answer to that. And again, all these in vitro assays are only approximations so the real answer comes from how much telomerase inhibition do we observe in the patient samples and what tumor burden loss does that degree of inhibition result in?

That is a complete unknown in heterogeneous tumor samples. That is one of the prime objectives of these Phase I single agent studies. So that result will give us a lot of insights as to how much inhibition we really need to see in order to result in a reduction in tumor burden disease type by disease type. It's a great question, Ren.

Terrific. Thank you guys very much and good luck.

Jeff Elliott, USB Securities.

It's actually UBS, but who's counting? Could you guys give me a little bit update on the VAC1 program and if we are still expecting to see some preliminary data before at the end of the year on that?

Yes. The simple answer is you won't see preliminary data. We don't have enough patients followed long enough for us to do a joint release with our investigators. We are liking what we are seeing anecdotally in a small group of patients and that turns on the primary therapeutic objective of that one which is to in a sustained way reduce or take to zero residual tumor burden in AML patients.

You will recall that this protocol takes patients who are at least in CR1 who have bad cytogenetics and tend to be older all characteristics which argue statistically for a rapid relapse. So said the question is, when we administer the vaccine after the second or third cycle of induction consolidation chemo, do we significantly reduce AML tumor burden which we measure by the WT1 assay and does that in fact -- is that stable long-lasting and does that correlate with increased remission duration?

While this is not a controlled study, we have the obvious opportunity to compare the vaccine associated remission duration with prior chemotherapy-only induced remission durations in the same patients. Generally speaking, CR2 is shorter than CR1. CR3 is shorter still. Now that is the good news.

The downside is sometimes the CR2s can be a year. So before we really know that the signal we are seeing on reducing the minimal residual disease is really translating into a statistically meaningful increase in remission duration, we have to follow these patients for a while.

Also you will recall that we've had some manufacturing issues as there is no guidebook as to what the release criteria should be for antigen-loaded dendritic cells from AML patients. So we apply very stringent Qa release assays derived from our previously published study of this process in prostate cancer and it turned out that those release specs were much too tight. So we had a number of process failures although when we tested the functionality of those failed dendritic cells from AML patients, they worked just fine. That allowed us to relax the quality control parameters and so we think we have solved those manufacturing issues.

We have increased the number of sites. We have engaged a patient recruitment firm and we now have I think five or six patients whose vaccine is in manufacturing ready to go. So I do think that we will have an increased rate of not only recruited but treated patients in 2009 and would hope that by the end of 2009, we will have sufficiently followed the patient's remissions associated with vaccination to have a statement as to whether we are moving the ball down the field or not. Does that help?

Yes, I was just wondering because I know you had talked it about before but maybe some preliminary safety and immunological data. Is that also impacted by the enrollment challenges?

Yes, absolutely. If you haven't got treated patients you haven't got immunological data to talk about.

Right, I am just saying I mean you wouldn't expect to have to get that longer follow-up for that necessarily -- but I understand what you are saying.

You still need enough patients to make a consistent story.

Thanks.

Very sensitive to not getting ahead of our investigators who are a very good group of people. So the immune responses are important but as you may know from a pretty rigorous review of the literature that we have done, most cancer vaccine studies do not actually see immune responses. And those that do do not show correlations between patients with an immune response to vaccination and a clinical impact of the vaccine.

There is a terrific meeting going on now in New York where some folks doing dendritic cell vaccines have actually looked at that problem and have come up with some very interesting findings regarding the absence or presence of IL10 secretion by the antigen-loaded dendritic cells. And interestingly although the monocyte derived VCs in our Phase II in AML, the process is not optimized to maximize IL10 secretion VAC2, the embryonic stem cell derived vaccine is.

So we may be sitting on the VAC2 technology which obviously is where we are going with this whole program in terms of commercialization that is ideally suited in terms of incorporating all of the academic work that is being done in many centers on dendritic cell vaccines to further optimize the immune response component of dendritic cell vaccination.

So it's an interesting story and it is clearly where the whole field is moving,

Great, thanks very much.

Ladies and gentlemen, time has expired for today's question-and-answer session. Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a great day.