Geron Corp (GERN) 2009 Q4 法說會逐字稿

Good day, ladies and gentlemen. And welcome to the Q4 2009 and year end Geron earnings conference call. My name is Caitlyn, and I will be your operator for today. At this time, all participants are in listen-only mode. Later we will conduct a question and answer session. (Operator Instructions).

I would now like to turn the conference over to your host for today's call, Mr. David Greenwood, Executive Vice President and Chief Financial Officer. Please proceed.

Good morning, and welcome to the Geron earnings call. In particular, thank you for joining us on what is a difficult weather day in the Northeast. I am David Greenwood. With me is Tom Okarma.

This is an earnings-related call, and we will begin with a summary of operating results for the fourth quarter and the year. Our agenda then includes an overview of recent operating highlights of the Company and a look forward to our operating plans in 2010. 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 that comments are made subject to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements involve uncertainty and risk, and we refer you to the risk factors detailed in our filings with the SEC. Secondly, we are in a listen-only mode to begin. The lines will open for the Q&A. And this call will be available for webcast replay until March 31. Please go to our website for more information.

Revenues for the comparable three and 12 month periods attributable to royalty and license fee income were relatively unchanged, adjusted for a milestone payment in 2008. This amounts to about $2 million a year. Other cash in-flows to the Company included $1.4 million of interest income during the year, and $46 million proceeds from an equity issuance in the first quarter of 2009. Annual R&D expense increased 7% reflecting the cost of expanded clinical trials in the 163L and cancer vaccine programs, and hiring of additional clinical development staff in ClinOps, regulatory, and quality. The G&A line item was down 11.4% in 2009, reflecting cost controls.

We ended the year with $167 million cash on the balance sheet. Add to that the $10 million proceeds from the block sale to an investor in January. Our net cash burn for 2009 was $43 million. Our burn in 2010 will be higher, perhaps $50 million driven by the funding of four Phase II trials with our telomerase inhibitor. Closeout of the AML trial with our vaccine and reinitiation of the spinal cord injury trial with our OPC1 cell therapy. There were no issues with the year end audit, and our investment portfolio remains unimpacted by the continuing uncertainty in the markets.

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

Thank you, David. And good morning, everyone. Thank you all for dialing in this morning. I will follow the usual formula. I will go through briefly the highlights of the fourth quarter, and then we will open it up to Q&A. As you probably know, we presented at two conferences in the first quarter of this year. On the 13th of January at the JPMorgan Healthcare Conference in San Francisco, and on the 9th of February in New York at the BIO CEO Investor Conference.

I will first summarize some important announcements on the degenerative medicine side of the Company. In November we announced an important publication in the journal Stem Cells by our collaborators at the Keirstead Lab. They demonstrated that our OPC1, our glial progenitor cells, reduced tissue damage in the lesion, and improved locomotive function in a cervical model of spinal cord injury. This is extremely significant, in that it extends the data that we have published together in the thoracic injury to the cervical model, and importantly in the cervical region, OPC1 injection after the injury not only preserved axons by the remyelination activity, but also preserved cell bodies, or grey matter.

These data demonstrate the biological activity of the neurotrophins that OPC1 secretes in vivo. Importantly, the animals were demonstrated to have preservation of motor neurons after injection of OPC1. This supports Geron's ongoing studies in the cervical model of spinal cord injury, and will be part of the dataset used to support our transition to cervical patients, after completion of the low-dose safety study in thoracic patients which is still on-track for reinitiation in the third quarter of this year. You should note that as we shortly will begin our formal negotiations with the Agency, I will not be providing any further guidance about the timing of the initiation of the trial, until we reach final agreement with the Agency.

In January of this year, we announced a collaboration to study OPC1 in Alzheimer's Disease models with Dr. Frank LaFerla at UC Irvine, and this collaboration will be jointly funded by the UC Discovery Research and Training Grant program. The collaboration is based on a publication from the LaFerla lab in PNAS in August of last year, that showed improved memory in the transgenic mouse model of Alzheimer's Disease, after transplantation with mouse neural stem cells. The memory improvement was accompanied by strikingly increased synaptic density in the basal ganglia, now thought to be the prime mechanism of action or pathology in Alzheimer's Disease. The only transplanted cells that were present in the brain of the animals at the study end were glial cells.

The effect on memory and increased synaptic density could be mediated in part by the neurotrophin BDNF, which is known to be secreted by OPC1, along with many other factors. So the collaboration will inject GRN OPC1 cells into the brains of these Alzheimer's models, and then measure their effects on memory and brain histopathology. If these studies are positive, we would have the rationale for a line extension of OPC1 into Alzheimer's Disease.

In December of last year, we announced that the US patent office granted Geron's request for an interference with a patent awarded to Novocell. The patent filings cover technology for the differentiation of embryonic stem cells into endoderm precursors, including pancreatic islets. The subject matter claimed in the Novocell patent was disclosed in a Geron patent application filed more than two years before the corresponding series of Novocell patent applications. The patent office has already determined that the claims of the Novocell patent are patentable to Geron. If the patent office concludes that Geron invented the subject matter first, then the claims will be awarded to Geron. In our assessment, no other company including Novocell has the freedom to operate the commercialized and hESC derived Diabetes therapy. To remind you that Geron's embryonic stem cell patent estate includes 37 issued US patents, 94 issued patents in other countries, and over 200 patent applications pending worldwide.

Turning now to the oncology program. In December of last year we presented interim clinical data on VAC1 our telomerase therapeutic cancer vaccine, from our ongoing Phase II trial in patients with AML at the ASH meeting in New Orleans. First of all, we met the endpoints of safety and tolerability as well as manufacturing feasibility. But more importantly are the interim clinical results presented at that meeting. 14 out of the 20 patients in the study remain in complete clinical remission. The median duration of their clinical remission is 12 months, which includes patients who relapsed. Of the 14 patients in complete remission, 6 of them are in the extended boost phase, so their remission lasts nearly now two years for some of those patients. Four of the six patients in the boost phase are actually from the high-risk group, high risk for relapse, due to age and/or bad cytogenetics, and the fact that they entered the study in CR2.

Importantly, all 14 patients that are in clinical remission are negative for WT-1, which is a PCR assay performed in bone marrow that gives evidence for minimal residual disease. Nearly all of the patients who relapsed, were of course positive for WT-1. Interestingly, one patient who was positive for WT-1 before vaccination, became negative after vaccination and has remained so. We are also seeing immune responses to vaccination in slightly over half of the study patients. And a recent look again at the same dataset shows that the patients who were in remission in December, remain so now in February. So the study is now closed to enrollment, and we are awaiting follow-up at the year end this year, at which time if the patients remain in clinical remission I think we will have something very interesting clinically, and that will help and form the direction of developing our second generation vaccine VAC2, which is based on human embryonic stem cells.

Also in November of last year we presented interim data on our imetelstat Phase I trial, in patients with advanced solid tumor cancers who did not respond to standard treatment at the AACR-NCI-EORTC Conference on molecular targets in cancer therapeutics in Boston. The main take home message from that presentation is that we have met all of our Phase I objectives for imetelstat, which have enabled the initiation of four Phase II studies this year. Significantly we have achieved exposures to imetelstat that exceed the levels that have been associated with efficacy in Xenograft models of human cancer. We have observed telomerase inhibition in tissue samples, and we have minimized the immunologic toxicity through the development of an alternative dosing schedule. From these studies, our recommended dose for our single agent Phase IIs is 9.4 mgs per kilo.

In January of this year we published, or announced the publication of a preclinical study that demonstrates that imetelstat inhibited telomerase activity and reduced tumor size in a Xenograft model of glioblastoma, and the drug inhibited the activity of glioblastoma stem cells in culture. This study brings to a total of nine the number of cancer stem cell types that have been shown to be inhibited by imetelstat, including of course, the clinical data in our Phase I single agent myeloma study, in which we demonstrated telomerase inhibition in both the bulk and tumor stem cells containing fractions of patient bone marrow for as long as 21 days after a single IV dose of imetelstat.

The nine cancer types in which the stem cells have shown to be inhibited by our drug, include myeloma, breast cancer, melanoma, pancreatic cancer, pediatric glioma tumors, neuroblastoma, glioblastoma of adults, non-small cell lung cancer, and prostate cancer. The significance in this study of the in vivo portion of the study, is that imetelstat crossed the blood brain barrier in mice bearing human glioblastoma tumors. The drug was given intraperitoneally, and three days after administration telomerase was inhibited in the brain cancer stem cells by 60% to 70%. The in vitro work shows that the clonogenic and proliferative capacity of primary human glioblastoma initiating cells, or stem cells, was dramatically decreased following imetelstat exposure. The telomerase activity and telomere lengths were significantly reduced leading to cell death. And furthermore, the imetelstat was synergistic with temozolomide and ionizing radiation, which is currently the standard treatment for glioblastoma after a surgical resection.

Those conclude my prepared remarks. We are now ready to move to the question and answer session.

(Operator Instructions). Your first question comes from the line of Steve Brozak of WBB Securities. Please proceed.

Well, good morning, gentlemen. I hope you are having good weather in California. I am here on the East Coast, so I will make things brief, because we are looking to head home soon. I have got two questions and a follow-up. On the first one, on the safety study that you are talking about right now, since you are dealing with a safety study that will transcend something that FDA has not seen before, in theory will this safety study be a template for other work that you would do in the future, and provide for a more expedited safety program dealing with FDA on the stem cell side? I would like your opinion on that first.

In a sense the answer is yes, Steve, in that what we have discovered in the sense of these new markers that we believe will predict and eliminate actually, production lots that cause these microscopic cysts, those release specs will be generally useful for all of our subsequent IND applications for other cell types. However, it is clear that the FDA will rightly view the cardio myocyte IND, the islet IND, the chondrocyte IND, as standalone separate applications, and that will require unique types of safety studies that are relevant for the way in which these different cell types are delivered, and the tissue in which they are injected. Yes, we do generally speaking expect the bar to be lowered with subsequent IND applications, but there will still be product-specific safety studies that we will have to do, regardless of the advances that we have made with OPC1.

But the follow-up on this one and I will go to another question is, now all of sudden you will have a prototype model for how you would go and assess safety, whereas none has ever existed before for anything in this area?

That is true. This is the first approved IND for an embryonic stem cell based product. I think we have successfully traversed many of the Agency's notions of possible toxicity, that frankly were derived from the scientific literature during the Bush years, when funding for academia was really very hard to come by. I think we've definitely advanced the ball, both for John and our relationship with the Agency, and for the field in general. I think eliminating the widespread concern that teratomas were going to be a big problem for these therapies, and clearly they are not.

Okay. Last question and then I will jump back in the queue. The nine cancer stem cell types -- the nine cancer types that you've talked about here, they transcend pretty much differently than any other company that has ever attempted this before. So you are looking at something that frankly has general application in all different types of cancer tumors, solid and otherwise.

I mean this is something that would have applicability in a whole host of other cancers. We are not talking about one pill fits all, but how do you feel about that because all of the successes we have seen have been cancer-specific, and/or have had limited applications in other forms of cancer. You are going after something that will now literally be able to address an issue across a broad spectrum. How do you see yourself differentiating in the future when you start to see results coming back? And I will jump back in the queue after that.

Well, I think Steve, you are right in the underlying hypothesis of your question. What we are discovering here is that cancer stem cells are highly telomerase positive. The result in some ways should not actually be surprising, given the potency and specificity of imetelstat with regard to telomerase inhibition. As the molecular biology of oncology has advanced now having confirmed the existence of cancer stem cells in most major solid and liquid tumors, it is fortunate that molecular biology has included last year's Nobel prize-winning technology of telomerase.

So this is -- Imetelstat is the only compound we are aware of, that has this broad anti-cancer stem cell activity in addition to its broad activity against the bulk tumor cell. Absolutely this does create an enormous amount of excitement amongst the investigator community to move this drug into our randomized Phase II studies. Specifically, if you would recall the design of the non-small cell lung Phase II study is designed to absolutely test the stem cell hypothesis in non-small cell lung, and that we are using imetelstat in that trial in the maintenance setting after chemo reduction by standard first line therapy. We expect to demonstrate a doubling of the progression-free survival by using imetelstat in this maintenance setting, which is designed to allow the drug to wipe up the, destroy the residual remaining non-small cell lung stem cells, which standard chemotherapy is known not to attack.

Great. Well, we look to being able to write up on it in the near future. I will jump back in the queue, thank you.

The next question is from the line of Joel Sendek of Lazard Capital markets. Please proceed.

Thanks. Just wanted to clarify the timeline on a couple of things. So for OPC1 you said in the third quarter of this year, you will be reinitiating that study, and that is in cervical patients. Is that right?

No, it's in thoracic patients. Yes, it is Q3.

Okay. And then when, so you need to finish the preclinical, the animal model to go into cervical, is that right?

Let me clarify. The original program was to require Geron to not only do the low dose safety study in thoracic patients, but to also do the dose escalation study in thoracic patients. The new positions that the Agency has agreed that we need only do the initial safety study in thoracics, and we can move to cervicals, where we will do the dose escalation, and that is significant for two reasons.

First, the thoracic patients are sicker, and they are much rarer than cervicals, and secondly, cervicals is the main part of the marketplace. So all of the work that we and our collaborators are now generating showing the activity of OPC1 in the cervical model obviously bears on that transition. And it underscores the dual mechanisms of action of this cell, because the sparing of cell bodies in the cervical model is due to the secretion of neurotrophins, not to the myelinating activity that we have demonstrated to be primarily important in the thoracic region, where there are no cell bodies.

Okay. Thanks. And then in the AML study, can you talk about why you only got 50% of the patients with an immune response? Obviously that is good but I am wondering what is the explanation for the people who don't have an immune response?

First of all, as you know, the frequency of immune responses generally speaking in all of the immunotherapy trials is extraordinarily low, more than 50% is an outlier frankly, and the reason why it is not 100% is probably several fold. First and this applies to all of the immunotherapy studies. We are looking for the key under the lamp post, not necessarily where we lost it, in that all of these samples are taken from peripheral blood, some time after the actual vaccination has taken place, and the action of the immunology is really in spleen, lymph nodes, and bone marrow, which are quite difficult to reproducibly sample.

Secondly, in the AML case we are dealing with patients who have a malignancy of the hematopoietic system, and who have been heavily treated in one or in many cases two rounds of induction chemotherapy, with obvious impact on their ability to mount an immune response, even though part of the QC release of the product is to demonstrate that their dendritic cells that we harvest and modify with the telomerase plasmid, do in fact behave normally. We know that the DCs we are injecting, even though they are coming from AML patients appear to function normally in vitro. What we, of course, can't assay is the ravages of the disease and prior chemo on the patient's immune response after the DCs are injected.

Okay. All right. And then just a financial question for David. The $15 million, I just didn't have my notes correct. Is that -- or clear here. Is that burn or higher spend in 2010 versus 2009?

It is both, Joel. I mean the gross burn is going to go up, and so is the net. The net will go up to a lesser extent in percentage terms. It is principally driven by these Phase IIs for imetelstat.

Having said that, I am suggesting that the net burn will go from about $43 million, to probably $48 million or $49 million, maybe $50 million. I think that is a manageable number. And that assumes the trials have an aggressive start in the summer timeframe. And that is what we are planning on, and a substantial number of sites for rapid enrollment. I mean as we have costed those trials, we think that is a very acceptable and manageable cost.

Okay. All right. Thanks a lot.

Your next question comes from the line of Mark Monane of Needham & Company. Please proceed.

Thank you. Greetings from the East. It's said that no two snowflakes are alike, so when you are thinking about the different cancer opportunities here, now nine I guess that you have shown some potential efficacy in the mechanism of action on the stem cells, how are you deciding which ones to bring into Phase II, and could you just briefly review for us the Phase IIs that David just mentioned that are planned for 2010?

Yes. I guess it as combination of unmet need and demonstration of feasibility from our Phase Is, and the rigor of the demonstration of the cancer stem cell biology in the tumor. Your underlying point is well taken, Mark, there probably are four or five other cancers, particularly pediatric brain cancer, that we are really very interested in initiating, and that will require some funding from the outside, and we are looking at that. So we are not able to take advantage of all nine cancer stem cell findings.

So non-small cell lung is our first major randomized Phase II, and I went over that a moment ago for Joel, in that here we are taking patients with Stage 3B or 4 non-small cell lung, who have not been previously treated with chemo, they get up to four cycles of standard first-line chemotherapy, and then they are followed by either observation or imetelstat maintenance, and those patients are randomized two to one in the imetelstat arm. The study is powered to have a hazard ratio of 0.5, which means we expect to move the progression-free survival from 2.6 months in the control group, to 5.2 months in the imetelstat group. That would obviously be a major sign of clinical utility for the drug.

So the rationale for non-small cell lung is our Phase I data, the hardness of the studies that show non-small cell lung does have cancer stem cells, the terrible course that these patients have post front-line chemotherapy, read unmet medical need, and the dramatic data showing our drug hitting the non-small cell lung cancer stem cell. So it is sort of all of those factors combined. A similar analysis on the other randomized Phase II on breast cancer, where again you have a huge unmet medical need, and we have already begun to demonstrate some responses in our combination study in our Phase I in breast cancer, where we are able to reduce the does of paclitaxel and still see a complete and partial response rate of 38.5%.

In this study we are powering for a hazard ratio of 0.7. We hope to significantly move the progression-free survival from 11 months to over 16 months. This will require about 160 patients, about 50 sites. And it will be randomized one to one. These will be recurrent or advanced metastatic breast cancer, again not previously treated with chemo. They will receive induction chemo of paclitaxel/Avastin in the standard arm, versus paclitaxel/Avastin plus imetelstat in the two weeks on/one week off dosing regimen that we optimize in our Phase I study. Again, huge unmet need. Some demonstration of utility in our combo Phase I, and again the rigor of the breast cancer stem cell data that shows the tumor type does have cancer stem cells, and the rigor of the data showing our drug eliminates the stem cell activity.

So that was very helpful details, I appreciate that. We should concentrate on these two programs then for 2010 initiations?

Those are the two big ones in terms of demonstrating clinical utility of imetelstat. The other important one is the Phase II in myeloma.

Right.

Where we are intending to extend the data that we generated in the Phase I single agent where we showed telomerase inhibition in the stem cell fraction of bone marrow, we would now like in a small focus study in the Johns Hopkins group and affiliated hospitals, to demonstrate that telomerase inhibition in the bone marrow stem cell fraction translates into reduced clonogenic activity, and we were unable to do those studies in the Phase I for technical reasons. If we demonstrate that, then we will move into a randomized study of a single agent imetelstat in myeloma, because that will provide the data that the investigators really want to see, in order to get behind that kind of a randomized study.

And that would be in second and third-line multiple myeloma?

Probably. That is still being discussed.

And we know that the molecular structure is that of the oligonucleotide. Do you think that some of the effects are mediated from DNA, being immunostimulatory or any toll-like receptor effects?

No, first the nucleotides are more RNA-like in imetelstat, not DNA-like. We have no evidence in animals or in man of any immunostimulatory activity of imetelstat. Doing work in silico, the reason we settled on a 13-mer and not a shorter one, is that there is no redundant hybridization with any RNA sequence in the human genome by this 13-mer.

While certainly there could be mechanisms that we are not aware of. But this is a pretty specific interaction between this drug and the template region of telomerase. A lot of people have been using this drug in animal models and in the clinic. And we just haven't seen any evidence of second or third mechanistic pathways that could be involved in the activity we see.

That was helpful. What about the -- I would be remiss if I didn't ask about the telomerase activating program in the Far East. Could you go over the stats of that program?

We hope actually to have some news about that in the near future. We have generated an orally active version of the original molecule that was discovered from an analysis of a traditional Chinese medicine library. That molecule while very active in upregulating telomerase in so-called telomerase competent cells, which pretty much means adult stem cells in the body, was variably orally available between different animal species, making an IND submission difficult. So our chemists went to work and have come up with a chemically derivitized version of that original molecule, which is very well absorbed orally in all of the species that we have tested it in.

That compound is now finishing pilot toxicology in a primate study, and assuming that it comes out clean, which we will know within a month or so, then we will have what we believe to be an IND candidate, an orally active telomerase activator, and we will obviously give a lot more detail about that program if these animal studies are positive. The initial indication for this compound will be idiopathic pulmonary fibrosis, which is an animal model in which we have shown striking biological activity of the drug, and for which we understand the mechanism. I would say generally that the combined impression we have from multiple collaborators who are working with this compound, is that what we have is a molecule that will be broadly useful for fibrotic diseases.

Lung as I mentioned, possibly liver cirrhosis, and also fibrotic diseases of the bone marrow, where we know this drug in animals does in fact upregulate telomerase quite well. What it really does, Mark, is it enables parenchymal regeneration, and that is the signal that turns down the fibrotic reaction. As you may know, the pharmaceutical industry has been searching for an anti-fibrotic compound for 20 years, and our hope is that we may actually have one.

That is very helpful. And David, what about stock-based compensation please, and how many people now at Geron and going forward?

We have got about 180 people here. And I think any numbers you have seen in the past, Mark, that are expense numbers for stock-based compensation, are pretty good indicators of what you will see going forward. Our option plans and so on are in place, and we apply them fairly consistently year-to-year. I think our -- those programs are plain vanilla, and sized about right.

Very helpful added information. Thank you, and we look forward to 2010.

Your next question comes from the line of Ren Benjamin of Rodman. Please proceed.

Hi, good morning guys, and thanks for taking the questions. Starting off on the regenerative medicine side, can you talk to us a little bit about the additional work or characterizations that have been done with the new lots of OPC cells, and just give us a sense as to how successful you have been, and what your current thoughts are regarding the characterization of those cells?

I can't really go much into that, Ren. At the last conference call, we spent a lot of time on the plan and the notion going forward. Some of this work is still in progress, and we will not be disclosing the results, because we will be in active conversations with the Agency. So the highlights are what I've said before publicly.

We have discovered important new markers that have thus far accurately predicted prospectively a cyst-less animal study, an animal study with zero cysts, and it has correlated with all animal studies in the past, where we have ever seen cysts, and we are currently in life with a cervical large study, using a lot that has been analyzed by the same markers, which we expect to also be cyst-free. There are other things we are doing for the Agency, qualifying these new release specifications, setting release spec numbers, all that sort of thing, and a number of non-hold related issues, which is really standard fare, and that is really about as much color as I can give as this is confidential information, both in terms of it being proprietary to the Company, and as we are entering now into conversations on this dataset with the Agency, we will withhold from giving any further guidance.

Fair enough. Switching gears to the imetelstat program. You nicely outlined the Phase II trials that will be initiating. I am assuming the solid tumor program is now complete, and at least on my notes I have five additional trials that are ongoing, and I probably have outdated sort of dosing regimens that are being tested. Could you give us an update on all of the trials that are ongoing right now, and where you are regarding those trials, and when we might see additional data presentations this year?

The simple answer is that they are all winding down. Four of them have been closed to enrollment for months, and the other two that are still active are closing down now. And that is the combo breast, and I think the non-small cell lung. So the take home message, Ren, is that the Phase I program is over. We have declared victory in that we have learned what we needed to learn from that program, specifically we determined the PK, the bioavailability, the tolerability over multiple cycles, and demonstrated pharmacodynamic activity in three different tissues. We have learned how to use the drug in both solid and liquid tumors, as single agent and in combination, which is important obviously for the Phase II that I described.

We validated the alternative dosing schedule to optimize drug exposure while reducing toxicity, and that has enabled us to achieve an area under the curve that is higher than what was required to demonstrate tumor growth inhibition in all of our xenograft studies, and we have demonstrated for the first time telomerase inhibition in the cancer stem cell containing fraction of bone marrow in the single-agent myeloma trial. We have established our single-agent dose for imetelstat in the Phase IIs being 9.4 mgs per kilo, and the combination will probably be a little bit less, probably around 7 to 8 mgs per kilo.

Two specific trials, and maybe I missed this. Have we seen the results from, any sort of response data from the combination lung cancer study, or the combination multiple myeloma study?

The multiple myeloma was a single agent, and there will be an abstract that is published on the combination breast study, which I mentioned earlier in this call, where we have a complete and partial response rate of 38%, despite the fact that we were able to lower the paclitaxel dose due to toxicity, and the imetelstat compound covering that reduced paclitaxel dose. The reality here is that the Phase I program was not designed to demonstrate efficacy, and quite honestly even if we had seen some, like what we are seeing in the breast cancer study, by definition since it is uncontrolled it is anecdotal. So we are powering and designing the breast and non-small cell Phase IIs that are randomized that will start this year, specifically to demonstrate not just some signal, but a clinically meaningful signal, that would lead to a registration trial.

Fair enough. You mentioned that these results at least with the breast cancers in an abstract, is that for the ACR or ASCO conferences?

I am actually not sure, Ren. I have to get back to you on that.

Okay. One final question regarding the cancer vaccine program. The results seem very promising and it seems that with this configuration you should be able to just move forward, and evaluate this in larger groups of patients. What is the rationale for going with VAC2, or spending more time with VAC2? Why not move forward with this generation, and get a lot more solid data in a lot more patients, and potentially partner it, before ever even considering VAC2?

Well, the simple answer is the degree of difficulty associated with any patient-specific cell therapy. So we have said for a long time that we really never had plans to commercialize VAC1 because of that. I mean every single production run, because it is patient-specific, has its own quality control release process. That makes the process, frankly, expensive. We think that any patient-specific cellular therapy, vaccine or otherwise, will suffer from that drawback.

Secondly, obviously the potency of the vaccine, the cell that you use to vaccinate, since it comes from a patient with a disease, cancer, who has been treated heavily with prior chemotherapy, that impacts the efficacy and tolerability of the vaccination, so all of those issues are avoided by VAC2, which is scalably produced, transduced with the RNA of telomerase in the plasmid on [nos], and it's shipped and stored frozen for off the shelf use. It is also partly allo -- allogeneic, in that it will be half-matched and half-mismatched, because of the number of lines that we have, and that is likely to increase its potency, because it will result in both direct and indirect antigen presentation in the patients. We would probably to the point of your question, Ren, have to do a bridging study to demonstrate equivalence from a safety perspective of VAC2 versus VAC1, but the feasibility, the cost of goods, the margin of this product is dramatically improved over VAC1, and we think it will be more efficacious.

Also because we are making the dendritic cell from embryonic stem cells, we can create either mature dendritic cells, which can be specialized to deal with an antigen in cancer or infectious disease, whatever antigen we want by the transfection mode, and secondly, we can make immature dendritic cells, by a slight change in the manufacturing that could be used for antigen restricted polygenicity for auto-immune disease or organ transplantation. That we think is the platform that would be more attractive for partnering than the VAC1, with the obvious drawbacks. We pursued VAC1 simply to be sure exactly what characteristics the dendritic cell needed to exhibit in order to achieve the kind of clinical and molecular efficacy and immune response that we are now seeing in AML.

You mentioned the potential bridging study. Can you give us a sense as to what is happening right now with VAC2, and when do you think those studies might begin?

No. VAC2 is really on hold. We finished the characterization work. We published that last year. We are poised to scale it up, but we are really waiting for the confirmation that by year's end, that the remission rates and duration are clinically significant, before we decide what direction to take VAC2 in. And the results of the Phase II AML study will in large measure determine size and structure of any bridging study we have to do.

Got it. Thank you very much. And good luck in 2010.

Thanks, Ren.

This ends the Q&A session. I will now turn the call back over to Mr. David Greenwood for closing remarks.

Well, thank you all again for joining the call. It is difficult in the middle of a snowstorm. And we will look forward to visiting with you again soon on the first quarter results, and we will see you at the upcoming investor conferences. Bye.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a great day.