Geron Corp (GERN) 2010 Q2 法說會逐字稿

+++ presentation Good day, ladies and gentlemen, and welcome to the second quarter 2010 Geron earnings conference call. My name is Crystal, and I will be your operator for today. (Operator instructions). I would now like to turn the conference over to your host for today, Mr. David Greenwood, Executive Vice President and Chief Financial Officer. Please proceed, sir.

Good morning, and welcome to the Geron earnings call. I am David Greenwood. Tom Okarma is with me. This is an earnings-related conference call. And we will begin with a summary of operating results for the second quarter. Our agenda then includes an overview of recent operating highlights of the Company, and a summary of our plans for the remainder of the year.

Following that presentation by Tom, we will as usual have a general Q&A session. Two informational items in the event of forward-looking statements. Please understand those comments are made subject to the Safe Harbor Provisions. Any forward-looking statement involves uncertainty, and we refer you to the risk factors detailed in filings with the SEC. Secondly, all participants are currently in listen-only mode. The lines will open for the Q&A, and the call will be available for webcast replay until the end of August. You can reach that off of our website.

Revenues from license fees and royalties were up over the comparable three-month period in 2009, and the comparative for six months year to date is up over 2009. But at the $1.9 million level for six months, these numbers are not overly significant. Other cash inflows to the Company during the quarter included just under $200,000 of interest income, which only reflects the positioning of the yield curve. Our marketable securities portfolio remains intact, and no writedowns or provisions for writedowns.

Q2 R&D expenses were down period-to period, in part driven to timing differences in purchasing drug product, and funding clinical trial sites, and lower costs attributed to our AML trial with VAC1 once the trial was fully enrolled. Six month R&D expenses were also slightly lower than in 2009 for the same reasons. G&A expenses were up somewhat for the quarter and six-month period due to some higher consulting expense, and principally non-cash stock-based compensation expense.

We ended the quarter with $156 million cash on the balance sheet. Our current running rate net burn number is going to be -- is in the $48 million to $50 million range, annualized, so the Company continues to be funded for the near term.

Finally, a comment on one of the subsequent events mentioned in the press release, Tom will speak to the other, which is the Non-Small Cell Lung Phase II with our telomerase inhibitor.

Long-term shareholders will recall that we established TA Therapeutics in Hong Kong in 2005. The Hong Kong government was our venture partner, and their objective was to attract biotechnology to Hong Kong, in collaboration with UST, that's the University of Science and Technology, and Hong Kong University researchers, and we worked productively with those basic research scientists, screening libraries of natural product extracts for telomerase activators, but we are now working with one chemical series and a potential IND candidate, small molecule, we're engaged in preclinical metabolism and tox studies. The academic researchers in Hong Kong cannot help us with that. The Hong Kong government made a decision to not invest further in the program as our partner, insofar as there was no employment or engagement going forward on the Hong Kong side and limited knowledge and technology transfer.

We had of course provided for this possibility in the formation agreements, and we at this point retain full ownership of the asset. Our intent going forward is to move the current lead compound, or a next-generation compound into the clinic for one or more indications, and we will do that on our balance sheet, and at some point we will partner again. Tom?

Thank you, David. Good morning, everyone, and thank you all for joining us this morning. This has been a very significant quarter for Geron in that we have advanced each of our three therapeutic franchises, Regen Med, Oncology, and Telomerase Activation.

So I will comment this morning on six events. We'll start with today's news the FDA concurrence for us to proceed with the world's first human clinical trial of embryonic stem cell therapy in spinal chord injury. I'll then turn to our announcement of the initiation of our randomized Phase II clinical trial of Imetelstat in non-small cell lung cancer, thirdly, I'll speak a bit to the telomerase activation program, and remind folks of the world's first in-vivo proof of concept of telomerase activation in an animal model of idiopathic pulmonary fibrosis. I will then turn to our Imetelstat presentations at AACR and ASCO. Fifthly, I will remind folks of our very important data in guinea pigs on our CM1product, our cardiomyocyte, that demonstrated the absence of any arrhythmias, and finally, a comment or two on our two new additions to the Board of Directors, Hoyoung Huh, and Bob Spiegel.

So let's start with today's announcement. Our ability now to proceed with the world's first embryonic stem cell trial in complete thoracic-injured patients. We're obviously very pleased that the agency has agreed that our new release specs and the support of animal data support the initiation of the trial. The clinical protocol is essentially the same as before. We're exactly using the same dose, the same timing, the same inclusion and exclusion requirements. The primary and secondary end points are unchanged. We already have two IRB approvals, and the only change is that we do expect to be able to dose escalate in cervical patients after completing this safety study in thoracic injuries.

Because of the much higher incidence of cervical injuries over thoracics, that change will enable us to save significant time in the clinical development of this program to achieve the doses required to hopefully demonstrate efficacy. And I would remind folks that the objective of the trial is to frame shift the outcome of the complete spinal chord injured patient from one of no hope for any recovery to an outcome much like the incomplete patients, who can respond to physical therapy. If we were to achieve that, it would be a very dramatic demonstration of utility. So the extra work that it took us to reinitiate the trial is obviously important for getting back into the clinic, but it is also very supportive of the line extensions for this same cell type. So we are now collaborating actively with US academic researchers for three possible line extensions. The largest opportunity is in Alzheimer's disease. We're injecting monkeys with multiple sclerosis, and we're also looking at a third leukodystrophy, Canavan disease.

Secondly, we in July initiated our randomized Phase II clinical trials in Imetelstat in non-small cell lung cancer. Joan Shiller, at the University of Texas Southwest, is our lead investigator. This is actually another worldwide first, because this is the first randomized study ever, testing an anti-cancer drug that targets both the mature, and the stem cell fractions of the leading cause of cancer mortality in the world. It's an open label, multi-center, randomized Phase II that tests the safety and efficacy of maintenance treatment with Imetelstat in addition to standard of care, versus standard of care alone. In patients with advanced Stage IIIB or IV, non-small cell lung cancer who do not progress after completing first-line induction chemo, which is essentially platinum doublet therapies.

The standard of care in non-small cell lung for induction is cisplatinum and paclitaxel, although there are three other combinations of taxol and platinum, which are essentially equivalent in survival of both median and one year, which is dismal. So the induction is four cycles of the platinum doublet. Some of the patients who have non-squamous form of non-small cell lung will also be eligible for Avastin, and those people will be stratified in the design of the trial. Post induction, the standard of care is either observation or Avastin for those patients with non-squamous who were put on Avastin in the induction. The patients are being randomized two to one to Imetelstat versus standard of care. Imetelstat dose would be 9.4 mg/kg on days one and eight of a 21-day cycle, the induction with the platinum doublet will be standard. The end point is median progression-free survival, secondary end points are objective response rates and time to all-cause mortality.

We expect to enroll about 96 patients from approximately 20 US participating sites. We expect, based on the enrollment projections that this study will take 20 months to complete. As you may recall we are looking for a very significant clinical effect size, actually it's powered for a hazard ratio of 0.5, which translates into improving the progression-free survival from 2.6 months, where it is today, to 5.2 months, which would be a very clinically significant result.

Thirdly, I'll turn to the Telomerase Activator program. And this is again another worldwide first. So we presented at the American Thoracic Society in New Orleans in May the first positive proof of concept data for our orally available telomerase activator, GRN153, in an animal model of idiopathic pulmonary fibrosis which is a disease that affects about 100,000 people in the United States with an incidence of between 30, 000 and 40,000 new cases per year in the United States.

The model is a rat, which is given bleomycin intratracheally and that creates severe lung inflammation, infiltrates of inflammatory cells, a lot of collagen deposition, and fibrosis, which is a very good model of the pathology of IPF, and that is followed within weeks with significant decreases in pulmonary function testing. We gave our drug twice a day for three weeks, and had dramatic results, including a 40% decline in the inflammatory cell infiltrate, significant declines in fibrosis and collagen deposits, and on pulmonary function testing, a 30% increase in compliance which is the elasticity of the lung, and also about a 30% decrease in airway resistance.

We also demonstrated in that study, a two-fold increase in telomerase activity in the lung tissue of the animal. So 153 as David mentioned is now fully being developed by Geron. It's an orally available proprietary molecule. We are also looking at it currently in animal models of liver fibrosis, bone marrow failure, and aplastic anemia. Along with this, as David mentioned earlier, the activities of the joint venture with Hong Kong, TA Therapeutics, are now being fully integrated into Geron. You may recall that the joint venture was begun as a 50/50 JV in 2005 to capitalize on our basic collaboration between Geron scientists and the scientists in the Hong Kong University of Science and Technology. In 2007, we increased our ownership interest to 75%, and with the completion now of all of the basic screening, and our selecting of 153 for an IND candidate, the current arrangement is now 100% at Geron.

Turning to our presentations on Imetelstat, back in April, at the AACR meeting, and in June at ASCO. The AACR meeting we had five presentations on Imetelstat. First a collage of five different US investigators, who presented data, again confirming that Imetelstat inhibits multiple forms of human cancer stem cell types. The list now of human cancer cells whose stem cell pool is inhibited either in vitro or in vivo is now nine. It includes non-small cell lung cancer, of course, the rationale for our current Phase II Trial, breast cancer, part of the rationale for our upcoming randomized Phase II in breast cancer, myeloma, melanoma, pancreatic, pediatric glioma, neuroblastoma, and glioblastoma, and prostate cancer. A second plenary talk by our collaborator Jerry Shay illustrated that in addition to telomerase being a validated cancer target for mature tumor cells, it's now clearly a validated candidate for cancer stem cells. We had a third presentation demonstrating that at the plasma levels that we achieved in all of our Phase I studies, we can demonstrate telomerase inhibition and effect of tumor growth in xenograft models, another presentation again demonstrating the activity of Imetelstat in a variety of non-small cell lung cancer lines, and finally data supporting the combined use of Imetelstat and Fludara, in chronic lymphocytic leukemia.

We also presented at ASCO in June, the pilot study of the combination of Imetelstat with front line paclitaxel Avastin in locally recurrent or metastatic breast cancer. This is really the pilot study to enable our randomized Phase II that is on schedule to begin later this year. So patients with locally recurrent or metastatic breast cancer were giving Imetelstat by a two hour infusion on days one, eight, and 15 of a 28 day cycle. We escalated the dose of Imetelstat from 160 mg/m2 to slightly above 375 mg/m2, accompanied by standard doses of taxol and Avastin. At the presentation we described 14 patients with regard to safety parameters, and an additional 13 for preliminary efficacy parameters. The efficacy parameters were kind of encouraging. The preliminary overall response rate was 54% by the standard RECIST criteria and the median duration of those responses was 22 weeks.

The significance of that is enhanced by the fact that many of the patients actually received lower doses than standard of paclitaxel, so the investigators were actually rather encouraged by a potential impact on response rate due to Imetelstat. Importantly, we found no alterations in the PK of Imetelstat in the presence of taxol and Avastin, and again we demonstrated therapeutic exposure at doses of 240 mg/m2 or higher. That translates to about 7.5 mg/kg. In terms of safety, the infusions were all well tolerated. We did get neutropenia and thrombocytopenia at higher doses because of the cumulative toxicity of taxol and Imetelstat, and that's actually led to our continuing the study with altered dose regimens of Imetelstat to minimize that in preparation for our randomized Phase II.

Turning to cardiomyocytes from embryonic stem cells, our University of Washington collaborator, Michael Laflamme, presented very important data at the Annual Society of the Heart Rhythm Society in May. This data showed that CM1 does not cause cardiac arrhythmias after transplantation into a guinea pig model of chronic heart damage. This was assessed over a four-week period after transplantation, where we saw absolutely no increase in premature ventricular contractions or VTAC in the treatment group compared to the two controls, which were injected with either the vehicle or non-cardiac embryonic stem-cell derived cells. In addition, the animals were given heart damage by a cryoinjury one month before the injection of the cells, so the animals were followed for a total of two months.

Also as part of the study, we attempted to induce arrhythmias by electrical stimulation under anesthesia, and again, there were no differences in the rates of ventricular arrhythmias between any of the groups. So this is important in that most of the other attempts at cell therapy in cardiac scenarios are associated with significant arrhythmias, and as you know, we are currently testing this product in large pigs for both arrhythmogenicity and improvements in heart contractility. Obviously the upside market for this is huge, there are 1.2 million people in the United States that have heart attacks each year.

Lastly, we added two very interesting and experienced folks to our Board of Directors. Hoyoung Huh and Bob Spiegel. Dr. Hoyoung Huh is currently the chairman of the board of directors of BiPar Sciences, which is a wholly-owned sub and West Coast innovation center for Sanofi-Aventis, since the April 2009 merger. He serves on several other boards, and was formerly the President and CEO of BiPar. Before Bi-Par, he was the Chief Operating Officer of the PEGylation business unit of Nektar, and for many years was a partner at McKinsey and Company. He holds the MD and PHD from Cornell, and an AB in biochemistry from Dartmouth. So we kind of like the guy.

Bob Spiegel has been with Schering-Plough Corporation for 26 years. He retired last year, from the position of Chief Medical Officer and Senior Vice President of Schering-Plough Research Institute, which is the pharmaceutical research arm of Schering-Plough. He is a board-certified medical oncologist, and prior to his career in industry at Schering-Plough, he completed a fellowship at the NCI, and holds adjunct assistant professorships at NYU. He's an MD from the University of Pennsylvania, and a BA from Yale.

Looking forward in September and October, we have a number of speaking engagements. I'll be giving a plenary lecture at the Biospine Conference in Amsterdam, which is the world meeting on spinal cord injury. We'll be presenting at three investment banker meetings in September. The Rodman conference on the 13th, the Tom Weisel conference in Boston on the 16th, and UBS on September 21st. And then on the fifth of October, I'll be giving a plenary address at the World Stem Cell Conference in Detroit. So with those comments, we're happy now to turn to the Q&A.

(Operator Instructions). And your first question comes from the line of Mark Monane with Needham & Company. Please proceed.

Thank you, and good morning from New York City, bright and sunny day here, and a good day to wake up and find out that the spinal chord program will move forward. Congratulations.

Thank you.

Please can you refresh our memory, Tom, and update us on any timeline that you expect in the goals of this Phase I trial? How many patients would be enough to answer the questions on safety and what is your anticipation of the timeline?

Sure, Mark, that also is unchanged from last year's intent, so we have approval to treat up to ten patients. I think initially we would expect about one patient a month to be recruited. That will increase as more of the centers come online. I do not think we'll need any more than ten. In fact that's our plan.

Each of the patients will be followed intensely for a year, with, I believe nine MRIs. The follow-up period will extend beyond the year, but the important primary end points of safety are to be collected within that first year. So as that program continues, of course these same sites will be our clinical-trial sites for dose escalation and cervicals. We have not actually yet plotted out how long it will take before we can initiate the dose escalation. Part of that obviously depends on our predictions of enrollment in the first ten. So once we get our feet wet with that, we'll be in a better position to give some guidance on that.

That is helpful. We'll look forward to that timeline. And then on follow-up of the 163L, Imetelstat. Would you talk about any dose considerations that change in terms of the maintenance therapy, in terms of using the drug either as primary therapy and then continuing it in maintenance, or just on maintenance therapy in terms of what is the proper dose here?

Well, the protocol in non-small cell lung is only using Imetelstat in the maintenance setting, so the induction does not include Imetelstat. This is different from the plan for breast cancer, where Imetelstat will be integrated into the standard of care of induction. So there are significant differences in those two protocols. We have picked the 9.4 mg/kg dose, because we're quite confident that as single agent, or in combination with Avastin, it is extremely well tolerated, particularly at the two-one, one-off cycle. So, again, that's all based on the Phase I experience, where we have really piloted this. There are built-in abilities to delay or reduce Imetelstat dose in subsequent cycles should there be a reason to do that. But we frankly don't expect that to occur.

That is helpful. And then allow me one more question on the TAT program. We live in a world that is full of inhibition and blockers and -- but here we're -- here you are using an activator, and I guess the question for those cyclist enthusiasts out, how would it be possible to have a break in this program, a break in the clinical trial to potentially offset any unintended side effects using the activator program which is truly much more ambitious than the inhibitor program?

First, we have already done quite a bit of testing of this drug in tumor-induction models, and there is absolutely zero evidence that chronic exposure of this agent in those tumor-induction models, has any impact on the frequency of tumor induction, and that is consistent with the mechanism. This is a reversible pharmacologic induction of telomerase in so-call telomerase-competent cells, which are more or less the so-called resident adult stem cells in organs that self-renew throughout life, like skin, the lining of the gut, and bone marrow. And it is reversible.

So the telomerase activity goes back to zero within 48 or 72 hours of withdrawal of the drug. That mechanism is quite different from the constitutive, permanent up-regulation of telomerase that occurs late in the process of malignant transformation, so as cells go from the normal epithelial category to a malignant line, there are multiple genetic abnormalities in growth control which precede the constitutive, permanent up-regulation of telomerase activity. So the mechanisms are quite different, and again we have not -- although it is a very valid concern, and we will do more of this kind of work -- we see no evidence that TAT up-regulation with 153, would have any impact on inducing malignancy. It's a good question, Mark. Thank you.

Thanks for the added information, and congratulations on the progress.

Thanks.

Your next question comes from the line of Ren Benjamin with Rodman & Renshaw.

Hi, good morning, this is [Hidalna Humavitz] standing in for Ren. I just want to add my congratulations on the clearing of the IND.

Thank you.

Maybe we could just dig into that a little bit more in terms of the specific timing. You mentioned that two of the seven clinical sites have received IRB approval. Are you going to wait for all seven to receive approval before enrolling the first patient or will this be more of a staggered approach?

No, as soon as the sites are initiated, they are eligible to start screening, recruiting and treating patients, so it will be a accumulative increase in the number of sites and accordingly the number of patients subject to screening. IRB approval is only one of multiple steps required, though, to initiate the sites. There is training of the bone marrow lab for the dose preps. The bone marrow labs are the only labs in the hospital environments that are capable of the aseptic presentation or preparation of the cells for infusion.

There are other committees that have to review the protocol in the investigator brochure. There are training sessions for the radiologists to read the MRIs the same way, for the surgeons, and for the physiatrists who will be applying all of the neurologic exam instruments before and after the patients are treated. So there are a lot of moving parts to the protocol which is why, frankly, the number of sites will be limited ultimately to seven, because of the amount of energy required to apply and evaluate the therapy uniformly across the seven centers over time. The seven centers, though, are the major referral sites for central nervous system trauma, and spinal cord trauma, in the United States, so we're in the very best places, and we will keep them, obviously, as part of the clinical trial program going forward, as we dose escalate into the cervical patients.

So is the expectation then that we could see the first patient enrolled and treated within the current quarter?

Well, possibly, but until we're in the air and recruiting patients, I would be speculating.

I understand. So then just turning to the trial design, you mentioned that it is essentially the same primary, secondary end points. Some months or years ago, you mentioned that there would be a period of immunosuppression with the Tacrolimus. Is that still part of the study design?

Yes, that's unchanged. So for the first 45 days, the patients get very low dose daily Tacrolimus. The dose is so low that the peak level, which you draw every couple of days, in this trial is equal to the trough in patients who get the drug for organ transplantation. Starting in day 45, the Tacrolimus is then tapered to zero by day 60. So it is a brief burst of low-dose Tacrolimus immune suppression, which is primarily designed to attenuate the inflammatory response that occurs in the injection site due to the trauma of the injury, as opposed to really being worried about immune recognition of the injected cells.

Remember we published that invitro OPC1 is not recognized immunologically by a whole panel of allogeneic subjects in terms of sera, T-cells, B-cells, or NK-cells. We cannot induce class 2 on these cells, even if we incubate them with gamma interferon or TNF Alpha. So -- and this is a property also shared by the undifferentiated ES cells and by our cardiomyocytes. And we think we understand the reason for that, which is a very important principle why we do not worry about the public concern out there about the need for autologous cells for cell therapy. This is very different.

Thanks. And just on the animal studies, the nine-month study to assess the new release specifications is completed. But are there any additional animal studies ongoing for the --

Sure, we are constantly in animal studies as we move into the cervical region. We will be required to submit a full battery of safety and tumorigenicity studies in order to move from thoracics to cervicals and those are all in life currently being done.

Okay. Let me just move on to the Imetelstat study in non-small cell. The primary end point is PFS, and as you say there is going to be a stratification based on Avastin treatment in the induction phase. Will you be assessing PFS independently for the Avastin patients and then separately for the observation patients, or will it be lumped up together?

Well, of course it is separate, because we are stratifying as to whether they have squamous or non-squamous which determines whether the patients are eligible to get Avastin or not in the induction phase.

So you will have two separate PFS readouts.

Yes.

Okay. Thank you. And then lastly on the other studies in Imetelstat, could you discuss perhaps some of the details of those study designs such as essential thrombocytosis. I don't think we have heard much about that study in particular.

Well, that's because we haven't started it yet. So let's start with breast cancer first, and, clearly with the recent setback with Avastin, the -- our intention was to combine in both induction and maintenance, Imetelstat to what had been frontline therapy in breast cancer, Avastin and paclitaxel. So we're obviously reconsidering what the standard of care to which we'll add Imetelstat will be as a function of what the FDA decides to do with the labeling of Avastin in breast cancer, so that's clearly up in the air. But the basic design is unchanged. We'll have about 160 patients. We are looking at 50 US sites.

This will be, again, a progression-free survival primary end point study, studying the drug in metastatic or recurrent, not previously treated breast cancer patients. We have powered this to have a hazard ratio of about 0.7, again, trying to document a clinically significant effect, which translates into a median progression-free survival from 11.3 months, which is the current standard, to a little over 16 months. Again, like the lung cancer study, a clinically significant result.

We expect the study to require about 24 months for completion, a little longer than the non-small cell lung, in part because of the larger size and the larger number of sites. So that plan is pretty much in place, other than deciding what we're going to do with the Avastin unknown. The essential thrombocythemia, we are in the midst of writing that protocol now. It will be a single-arm study with two arms with roughly 33 patients in each arm for a total of about 66. The stratification will be on patients who do and do not have the JAK2 mutation in their bone marrow.

We expect to dose patients on the two on, one off, 9.4 mg/kg regimen, exactly the same as we're doing in lung cancer, and we're looking for a response rate of greater than 50% as well as in the strata of the patients that have the mutation, decreased frequency of that mutation, essentially confirming the elimination of that clone. This is an interesting application of the drug, primarily because the telomere length in this disease is extraordinarily short. So it's really for us a demonstration of, perhaps, a more rapid registration pathway in this disease than we might be able to effect in the two larger studies.

There are 20,000 new cases per year in this disease. There are about 10,000 deaths. Most of the patients we do expect to generate a normal platelet count, which is obviously the criteria for response, and then we would maintain the dose at some schedule, probably less than the induction, while we attempt to show that we maintain patients with normal platelet counts.

Thank you, those were very detailed and helpful. (Overlapping Speakers) Just one more broad picture question on the Imetelstat Phase II program. You have got four trials now either underway or beginning shortly. Is the long-term thinking there to take potentially all of them forward if they are successful, or would you select perhaps one or two of the most promising indications to move forward into registrational studies?

Well, it depends on the results, obviously.

Okay.

It depends on whether we continue to develop this drug on our own or whether we partner it. All of those opportunities are in the air. Clearly, we are focusing on lung and breast, the number one and the number two cause of cancer mortality in the world. So we are trying to demonstrate the upside of this telomerase inhibitor compound in the largest tumors for obvious reasons.

Thank you very much, Tom. And congratulations, and good luck.

You are welcome. Thank you.

Your next question comes from any line of Joe Pantginis with Roth Capital Partners. Please proceed.

Maybe just a quick housekeeping question for David, and then I have a spinal cord injury study question as well. David, is it possible to break out the licensing and royalty line with regard to the GE alliance?

Yes, it will be, but the GE sales have not initiated yet. So I'm not sure, Joe, that we'll routinely report that as a line item. There's no real reason to do that. So it will be combined. But there will be some information flow. There will be some disclosure on what the GE product sales look like.

Okay. Great. And on OPC1, presumably you guys have had, I guess, quite a bit of benefit already, prior to this hold, in that you have had the ability to identify sites, educate doctors, presumably maybe get some of the training going. So over the course of the time of starting that, and now getting the study approved again, has there been any benefit in the ability to attract patients, screen patients at these sites, and get them enrolled potentially any faster?

Well, I do think there's a subjective positive overhang, in that the awareness of this approach, this trial, has certainly increased over the past year. However, your hypothesis is not the way the world works. We are not allowed to do any of the heavy lifting site initiation until after the FDA gives us the clearance. Part of that is mechanical, because there are changes in the investigator brochure for example, which don't affect the protocol, but before and IRB or an escrow or a clinical safety committee will review the package, including the investigator brochure, it has to be blessed by the agency. So unfortunately we can't do what both of us would like to do. That is have everybody ready to go when the green light comes from Bethesda, but that isn't the way the world works. You have to wait until you get the approval from the agency.

Sure. Thanks, Tom, and if I could just ask a quick question for your overall strategy with the oncology program, as you are getting these Phase IIs going, a lot of companies might look for potential data, so maybe some concept on what your overall partnering strategy is for Imetelstat.

Well, again, we have no comment on any of that. It is too early, and if there were conversations going on, we wouldn't even be talking about them, Joe. We just don't do that.

Sure, understood.

So could it be partnered at some point? Sure. Is that our plan, frankly not. None of our programs are partnered, and we want to retain the upside commercial value, and partnering value, if we should do that, for as long as possible, and we both know when that inflection point occurs.

Thanks, Tom.

You are welcome, Joe. Thank you.

Your next question comes from the line of Steve with WBB Securities.

Congratulations and good morning, gentlemen. Since the topic everyone cares about is obviously the stem cell trial, I'll focus on that, because there really hasn't been any significant improvement in treating spinal injuries in probably a generation. So the first question I would like to go over is, obviously this is a safety trial, so you are going to go out there and dosing is going to be -- you are not going to expect efficacy, but one of the things that actually I'm kind of curious about is security of information. Because barring tabloid interest, people are really going to want to know about treatment of patients with stem cells, especially in this area. What are some of the plans that you have got, as far as making sure that you can contain the information, because obviously everybody is going to care about the use of stem cells. What are you doing there? And the other part is, can you give us a little bit of background for -- into the future as to how the ASIA scale works? Because a lot of people aren't familiar with that. And I will have one follow-up question after that.

Okay. First of all, you are correct that the primary end points for this are safety. But remember that these are living cell, and they are progenitors to glial cells. And we have shown dramatically and elegantly in all of the animal studies, that after the cells are injected, they numerically expand, they divide, and they migrate north and south from the point of injection, and fill the lesion space. So it's true that this is a low dose, but it is quite possible that the degree of amplification -- numerical amplification and migration will be significant enough for an efficacy signal to take place and to be detected. That frankly is important in our calculus of the risk-benefit ratio. This is not a simple experiment for safety. There are finite reasons, and odds, of why we might see improvement in sensory or locomotion in these patients, even at this low dose.

So having said that, the concern about security and patient integrity is very important, and we learned last year that most of the major news media organizations would be interested in knowing the identity of the sites, and camping out in the waiting room to follow the patient home after the injection, and that's the reason why we are keeping the identity of the sites pretty quiet. All of the sites have agreed that they will not allow the press into the hospital. We will maintain the confidentiality of the subjects enrolled in the study. We both hope, right, that people are interested in what goes on.

But this is important in terms of not losing control of the integrity of the study, and the privacy of the subjects who have taken the risk of getting these cells injected. So we will erect as many walls as we possibly can, to ensure the security of the information that will in turn protect its integrity. The inclusion, exclusion criteria are so rigid, as to be absolutely certain that every patient who is admitted to this trial is absolutely a complete ASIA-A patient, so that if there are any improves in function or sensation, we can be sure to ascribe them to the therapy and not to some spontaneous recovery.

Which leads into the answer to your second question, the ASIA scale. That's the American Society of -- I forget what it is now actually -- Spinal Cord Injury, and it's a standardized scale that uses multiple standardized instruments or survey tools to quantify, identify, the level of the injury, which is important, and to document the extent of the injury, so they are a series of very extensive neurologic exams, that categorize patients into four large buckets, A through D. And the ASIA-A with the complete patients, and part of the classification is the last segment of neurologic activity which for this trial is T-3 to T-10. In the incomplete patients, B, C, D, there can be some change in the ASIA ranking over time as the patients improve from the physical therapy exercise, but ASIA-A patients are known to be quite stable. They don't change because the degree of the injury is so severe.

Okay. So in terms of the quantification, this is one where an improvement that is detected will be pretty much black and white, so as far as any kind of medical analysis that we would do into the future, there wouldn't be any -- there's always room for some equivocation, but wouldn't be any room for any meaningful equivocation as far as when you see improvement in this group, in this category that we're talking about, is that true?

I think it depends on the magnitude and the duration of the improvement, right? I mean, if it's a very tiny improvement in sensation or locomotion that is not durable, we would not score that as an improvement. So there is both the magnitude of the response, and its duration. I mean every instrument has an error bar, so we would not call an efficacious end point without there being multiple independent documentation of same, and demonstrating the durability of that. So it's a pretty high bar.

Great, well I look forward to your being able to report on your passing that high bar. Again, congratulations, gentlemen.

Thanks, Steve.

Ladies and gentlemen, that does conclude today's question-and-answer session. I will now turn the call back to David Greenwood for closing remarks.

Unfortunately we're out of time. Thank you for joining us on this Friday in the summer, the investor conference season reopens in September, we will be there, look forward to seeing you all. Thanks again.

Ladies and gentlemen, that does conclude today's conference. Thank you for your participation. You may now disconnect, and have a great day.