Geron Corp (GERN) 2011 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the first-quarter 2011 Geron Corporation earnings conference call. My name is Alicia, and I will be your operator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions).

I would now like to turn the call over to Mr. David Greenwood, President and CEO. Please proceed, sir.

Thank you. Good morning, and welcome to the Geron first-quarter earnings call. I am David Greenwood. Steve Kelsey, our Executive Vice President and Chief Medical Officer for Oncology, and Jane Lebkowski, Senior Vice President and Chief Science Officer for our Cell Therapy programs, are with me for the Q&A session.

This is an earnings-related conference call, and we will begin with a summary of the operating results for the quarter. Our agenda then includes an overview of recent operating highlights at the Company, and following that update, we will have a general Q&A session.

First, two informational items. In the event of forward-looking statements during this call, please understand those comments are made 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.

Secondly, participants are in a listen-only mode currently and the lines will open for the Q&A. And finally, this call will be available for webcast replay until the end of May.

Financial results. License fee and royalty revenues were $1.5 million in the first quarter, which is an increase over the comparable 2010 period. Other cash inflows included approximately $300,000 of interest income.

The increase in R&D expense for the first quarter was due to clinical trial related costs, including startup and enrollment of Phase 2 trials with imetelstat and the OPC1 trial in spinal cord injury, as well as higher drug purchases and manufacturing related to imetelstat GRN1005 and our cell therapy programs.

The G&A line item was up substantially in the first quarter, made up primarily of non-cash stock-based compensation expense. The increase also reflects higher legal costs for the class-action and derivative cases filed against the Company, which have now all been voluntarily dismissed.

The Company ended the quarter with $207 million cash on the balance sheet. Our net use of balance sheet cash in 2010 was $46 million. Our use of cash in 2011 will be significantly higher, driven by the funding of the trials mentioned and initiation of Phase 2 trials with GRN 1005.

There were no issues with the first-quarter audits and there are no issues with our marketable securities and investment portfolio.

I would now like to turn to the Company highlights for the quarter. We hosted two webcast meetings in the last month to provide a diligence opportunity for investors and analysts and to introduce senior operating management. We had approximately 700 participants on the oncology webcast and almost 800 on the cell therapies webcast. We are obviously very pleased with this following. The webcasts are archived and available for replay on our website.

The Phase 2 clinical program for imetelstat, our telomerase inhibitor drug, is underway. The program includes two larger randomized clinical trials in non-small cell lung and breast cancer that were initiated in 2010, and two smaller single-arm Phase 2 studies in multiple myeloma and essential thrombocythemia, initiated in the first quarter of this year.

Our goal for the imetelstat program in 2011 is to enroll patients in these Phase 2 trials. Patient enrollment is key to enabling timely reporting of the trial results, which we are targeting and managing for the fourth quarter of 2012.

We have reported enrollment ahead of our projections for the two larger randomized trials in non-small cell lung and breast cancer, and we remain ahead of those curves today.

In other news relating to imetelstat, with collaborators at The Hospital for Sick Children and the University of Toronto, we reported preclinical data in the journal Clinical Cancer Research demonstrating that imetelstat selectively targets cancer stem cells in pediatric tumors of neural origin.

Imetelstat has now been shown to have activity against cancer stem cells from all nine tumor types that have been tested pre-clinically to date by us and by our collaborators. What is important to note is that these nine tumor types span adult, pediatric, solid, liquid, epithelial and non-epithelial derived cancers. And you will recall that our Phase 2 clinical program is focused on malignancies in which cancer stem cells are believed to play an important role in disease progression and relapse after therapy.

These published findings also support the rationale for conducting an investigator-sponsored clinical trial in pediatric tumors with Susan Blaney at the Children's Oncology Group. This is one of three sponsored clinical trials of imetelstat; the other two being in HER2+ breast cancer with Kathy Miller at Indiana, and in newly-diagnosed glioblastoma with Jeff Raizer at Northwestern.

We also outlined for the first time our Phase 2 clinical development plans for GRN1005, the compound that we in-licensed in December last year. As you will recall, 1005 is a novel derivative of paclitaxel. It uses proprietary receptor-targeting peptide technology to cross blood-brain barrier.

Based on encouraging results from the two completed Phase 1 clinical trials, we believe that the drug will enable treatment of tumors in the brain, either primary tumors or cancers that have metastasized to the brain. We are planning for our 1005 Phase 2 program to initiate at the end of 2011 in patients with brain mets. Additional studies in primary brain tumors are under discussion.

Turning to our cell therapy programs. We presented new data on three of our four programs, OPC1, CM1 and IC1. Starting with the program in the clinic, OPC1, our oligodendrocyte progenitors. We presented safety data from the Phase 1 clinical trial in spinal cord injury.

In short, the first patient in the trial completed the 180-day follow-up visit in April with a clean safety profile. There were no serious adverse events. There were no adverse events related to either the injection procedure or the cells. The two mild AEs that were reported related to the immunosuppressive drug, tacrolimus -- nausea and low magnesium count, which are both known side effects associated with tacrolimus and were minor.

There was no significant change in the patient's neurological status. Repeat MRIs showed an absence of a lesion cavity in the spinal cord, which is important, because it is consistent with what we saw histology in our animal studies with OPC1. Finally, there was no evidence of immune rejection through day 90, which is 30 days post withdrawal of the immunosuppressive drug. This is a very good safety profile, probably the best safety profile we could hope for, so we are very pleased.

To date, we have enrolled one subject in this trial. We have tightly constrained inclusion and exclusion criteria, which are part of a very conservative approach to safety with regard to design of the trial. We are addressing the enrollment challenges right now. We have five clinical sites open for enrollment, and we are working to open two additional sites. We have also expanded our recruitment area around each site. The entire Eastern half of the US as well as California is now within the catchment area.

We have discussions ongoing with FDA to evaluate certain eligibility criteria that we know limit enrollment. We would like to expand our inclusion criteria to include patients with a neurological level at T11, which is a substantial percentage of thoracic injuries. We have also proposed a reduced stagger between subjects.

The next opportunity to present data from the Phase 1 trial will be at the joint International Spinal Cord Society and American Spinal Cord Injury Meeting in Washington, D.C., which will be held in June.

CM1, our cardiomyocytes, we reported new preclinical data from two studies. First, our collaborator, Michael Laflamme at the University of Washington, presented preclinical efficacy and safety study data showing positive effects of CM1 in a small animal model of acute heart damage. In that study, CM1 positively impacted cardiac function, leading to both increased cardiac output and decreased arrhythmias.

In the second study, in a chronically infarcted large animal pig model, which we developed to test CM1 in a cardiovascular system of similar size and structure to humans, echocardiography showed statistically and clinically significant functional improvement measured by ejection fraction four weeks after treatment compared to controls treated with vehicle. The treatment effect observed as comparable to the magnitude of improvement observed in pivotal trials of beta blockers, which have had significant mortality benefits and have become standard of care in heart failure.

Currently, the safety data from this pig study, which is incidence of arrhythmias, is being analyzed. The safety and efficacy results from this study will be presented at the American Heart Association meeting later this year, in November. Positive data from this large animal study would be the triggering milestone for initiating IND-enabling studies.

The third cell therapy program for which we presented new data was our islets programs, IC1 for diabetes. The new data showed that IC1 could restore and maintain glucose control for up to 180 days in a rodent model of type 1 diabetes. In contrast, the control animals showed a lack of glucose control, which led to death within 20 days.

With these positive data, we believe we have the therapeutic cell for the treatment of diabetes, and we are now focused on improving the cell prep for purity and yield.

That is our programmatic update, and with that, we welcome your questions.

(Operator Instructions) Mark Monane, Needham & Company.

It's Brad (inaudible) for Mark Monane. Thank you for the review. That's a very good quarter. I just have a couple questions. For the (inaudible) program, you have set a pretty high standard for yourself. I was wondering what kind of results would you expect to see to declare a success.

In which program?

In oncology (technical difficulty) non-small-cell lung cancer and breast cancer, you said it has like a doubling of PFS. So I was wondering what kind of results you would expect to see to declare success. Would you see PFST not doubled, but improve like 30%, would you still consider (technical difficulty) going forward?

I think that as we discussed at the investor meeting we held in New York last month, we would not set absolute criteria at this stage to success or failure, because the decision to move to the next stage of development with imetelstat in either of those indications is going to be a balance between efficacy and safety.

So at this stage, the primary endpoint of both studies is to estimate the treatment effect in the treatment arm. And the comparator arm is there to ensure that the patient population that is being entered into the study is a relatively representative patient population and not biased in some way by the study design, which we clearly don't expect, but which may happen under unusual circumstances.

So if there is a compelling treatment effect and the tolerability profile is acceptable, then we will almost certainly make the decision to move to the next stage of development. But I don't think we can put absolute numbers around the improvement in progression-free survival that we would need in order to determine that.

The other thing, of course, as you know, is that the absolute size of the trial means that any treatment effect is going to have fairly wide confidence intervals around it. So even if we observe a 30% improvement in progression-free survival over the comparator arm, if we were to repeat the experiment, that improvement may be 20% or it may be 50%. And that is why we do Phase 3 trials. So --.

Right. Yes, I guess that makes sense, yes.

What we are looking for -- I think the bottom line is what we are looking for -- we deliberately set out to target a patient population in which we hoped to see a compelling treatment effect. And that is what we set out to see and that is what we are hoping that we will see at the end of the study.

Okay. Then quickly, just on the financials, the G&A expense for the first quarter, I was wondering how much of that is a one-time cost and what should we be expecting in terms of run rate for the rest of the year?

A very substantial amount is -- about two thirds of that number is a one-time event. And if you look at past quarters, other than the first quarter of this year, you will have better guidance for what our running rate is in G&A.

Okay, great. Thank you so much.

Joe Pantginis, Roth Capital Partners.

Good morning. Thanks for taking the question. David, a few months ago, obviously, you outlined the new management initiatives at Geron. Just recently you also hired someone for corporate development. So if you look specifically at the -- or even at all of the programs -- but right now specifically on your cell therapy programs, how are you looking to prioritize these programs? And what are the steps you are looking at in sort of driving potential partnering catalysts for these programs? And you have obviously several of them to look at.

There is an overwhelming priority, and that is OPC1 and spinal cord injury. It is -- our deliverable is to enroll that trial and report the safety data, which is a gating event for the cascade of follow-on cohorts in the trial. As you know, we need to move from thoracic complete to cervical completes. We need to step up our dosing from 2 times 10 to the 6th to 2 times 10 to the 7th cells. And we need to eventually move to incomplete injury, less severely injured patients.

So that is a progression, all of which is important in order to address the total incidence of spinal cord injury, which is a sizable market of about 1000 patients per month in the US alone. So that is our lead program, and it is critical that we execute.

The other programs, which you are also familiar with and which I just reviewed, all deserve to go forward on their merits. That is a little more than our balance sheet can realistically fund. So for that reason, as well as our interest in aligning ourselves with strategic partners that can contribute intellectually in their respective fields -- be that cardiovascular disease, diabetes, tissue repair in our chondrocyte program -- is important in order to adequately resource those programs. And by adequately, I mean fully resource those programs so that we can accelerate progression to the clinic. So that is our goal with partnering discussions.

Now, this is still new technology. We've demonstrated a lot our ability to work with the cells, our ability to create the enabling technology platform to conduct preclinical studies, our ability to take a program to the Agency and to initiate trials. But we need to bring back -- to repeat that for each cell type for respective indications, including step-out indications in the CNS with OPC1, will require a partner's resources.

So that is our ambition. It is uncertain, and until we are successful with any partnering, we will have to allocate our capital in the priority that I just described.

Great. Thanks a lot, David.

Yigal Nochomovitz, Rodman & Renshaw.

Good morning, and thanks for taking the question. If I could start with the spinal cord study. David, you mentioned some of the eligibility criteria are being re-examined. Could you give us a sense as to when those revised criteria could be put in place, and what is the expected impact on enrollment, assuming they are all approved?

This is Jane Lebkowski. We are looking at taking up many different measures to increase the enrollment in this particular trial. I think the first is just completing the enrollment of all our sites. You've heard that there are five sites that are up and running. We're expecting, actually, some of our highest enrolling sites to come on board in May. So really, we've been focusing a lot of attention on opening our sites.

We've also been working on increasing the referrals to the sites, really looking at widening the restrictions that we had earlier on the catchment area around a particular site. Originally, it was -- we were looking at having people -- patients and subjects live within two hours of the particular sites. We have now opened that up considerably. So we're really looking at increasing referrals to each of our individual sites and broadening the area in which they cover.

You also had mentioned inclusion criteria and exclusion criteria. We have now -- as we've talked about at the analyst meeting in New York last week, we looked at increasing the inclusion to patients with T11 -- T11 injuries. We expect that approximately 17% of thoracic injuries are at T11. And we expect that will increase enrollment at least by two- to three-fold.

The last thing we are looking at is working with the FDA to reduce the stagger. We were on a 30-day stagger. We are looking at -- or in discussions with them right now to reduce that stagger. And we will keep you posted.

Okay, thanks. And at the analyst day, the Company had also discussed the status of the first patient at 180 days. Is there anything beyond that update that is relevant to that patient -- any further safety or efficacy that you've accumulated? Or is that the most recent one?

That is the most recent one. That was pretty up-to-date at that point.

Okay, and just a clarification on the dose escalation. You are going up in an order of magnitude. Is it my understanding that the next highest dose is the 10 to the 7th, or are there intermediate doses between where you are now and the 10 to the 7th dose?

We have been looking at -- obviously, this is something that we are going to have to discuss with the Agency -- but we are talking about the next dose cohort at 5 times 10 to the 6th cells.

I see. Okay. So a little bit higher. Switching gears, if I may, to the brain targeting platform. I just wanted to get a sense in terms of the thinking behind the development of this drug. You are going into the brain metastases indications first in lung cancer and breast cancer. But David, you mentioned that you are considering a primary glioblastoma study as well.

Could you just discuss a bit what was the thinking behind pursuing the metastases to the brain indications first, as opposed to going into a primary brain tumor indication? Is there a reasoning there that's of note?

This is Steve Kelsey. I can address that. I think there are two reasons. One is, numerically, brain metastases represent a far greater unmet medical need than primary brain tumors. That is in no way to underestimate or demean the unmet medical need of patients with primary brain tumors. But at the moment, there are currently no approved therapies for brain metastases, and there are at least two approved therapies for primary brain tumors.

So numerically, as well, brain metastases represent just a huge patient population, with really no approved or even very good therapy, other than radiation-based therapy.

The second reason is that from a mechanistic basis, the epithelial malignancies that commonly metastasize to brain, which are predominantly lung cancers, but also breast cancer, ovarian cancer and colon cancer, are typically sensitive to taxanes, whereas primary brain tumors are less sensitive to taxanes in general.

And the third reason is that in the Phase 1 studies that were sponsored by AngioChem, the activity in brain metastases was actually much more compelling than in the primary brain tumor population, although there was clear evidence of activity in the primary brain tumors. Numerically, there was a higher percentage of responses in patients who had brain mets.

So for those three reasons, we have decided to prioritize Geron's internal resources on development in brain metastases, and we are currently negotiating with one or two partners -- not commercial partners -- but, for instance, NCI-based cooperative groups and other investigators who might want to pursue a development plan in primary brain tumors.

Okay. Thank you very much. That was very helpful.

Just two questions on the telomerase program, if I may. David, you mentioned that the multiple myeloma study has initiated. Could you tell us if that is still screening patients or if you've enrolled the first patient in that fourth study?

The first patient has been enrolled in that study. And we are also discussing with the site about amending the study to expand the eligibility criteria so that we can increase the pace at which enrollment proceeds in that study. There have been some -- since the ASH meeting at the end of last year, there have been some shifts in the standard of care for patients with multiple myeloma, which may require us to amend our eligibility criteria. But the study is up and running and enrolling, as well as actively screening more patients. We have patients for the study.

Okay, thank you. And just one final question. A program we haven't heard much about recently is the telomerase activator program in idiopathic pulmonary fibrosis or fibrotic diseases. Could you provide some general status update there with regard to the decision -- go/no-go decision on an IND?

Yes, happy to do so. It is an important program and you will hear more about it when we have good news to report. As I think everyone knows, we are working with our third-generation compound, which is a variant on the chemical series that we initially discovered. But it seems to not have the same metabolism issues in preclinical testing. So we are hopeful.

The compound now is in preclinical efficacy studies, and those studies will be completed during the summer months. And we -- so we are looking at sort of third quarter to have a go/no-go on initiating IND, enabling tox studies. So that is the timing.

Great. Thank you very much.

You mentioned, by the way, IPF. And that is an indication where in preclinical, in academic studies, we have seen some interesting results. That is not necessarily a selected first indication. We will make that judgment call when we get there.

Brian Klein, Lazard Capital Markets.

Thanks for taking the question. Just quickly, are you still targeting 2013 for the CM1 and IC1 -- for the IC1 programs?

Yes, but I have to refer back to Joe's question, which was the partnering question. Those are aggressive timelines, and in order to hit them, we need to boost our -- there is a brute force equation working with these cell therapy programs. And we will need to ramp our investment in those programs to hit that timeframe. So that could be subject to successful partnering -- whether or not that successful partnering relates to those specific programs. Ideally it would. But we are looking for a general balance sheet effect.

Great. Do you anticipate that the FDA will view those products similarly to the OPC1 product and have very strict development criteria? Or would you expect that given the disease indications, you might see some leniency?

Yes and yes. I think we have to assume -- the only thing we can assume is that FDA will continue to be conservative. They are different cell types. It is a different product, and it is a different indication.

So while we might look for some halo effect from OPC1 --and there is certainly an education curve that has been -- an experience curve that we can realize -- I think you still need to presume that the FDA will expect a similar preclinical program.

Great. Thanks so much.

Chris Schaefer, UBS.

Thanks for taking my question. Could you provide us with an update with the ongoing launch with your partnership with GE Healthcare? And could you tell us approximately what the revenues that you recognized for royalties from that partnership were for the quarter?

Yes, I will give you a summary level. Obviously, it is -- there is a longer answer. But for these -- which I'm happy to follow up, Chris.

The short answer is that GE, as we've described before, planned a two-phase launch program for -- and the first product, I will remind everyone, is our cardiomyocytes for cardiac tox studies. And this is tool development for ADME/Tox in drug screening and development. So a very purposeful endeavor here with GE, and we think they were clearly the choice of partner.

So the first step was sort of a soft launch phase, where they went to certain pharmaceutical companies, delivered the cells and set up a number of studies -- and principally retrospective studies. So where you have a drug that has known profiles with respect to ADME/Tox, you can use these cells and see if you can replicate that known profile. So those obviously make some sense. And then to develop new assays, and explore the utility, the breadth of utility of these cells.

So that soft launch was initiated last year, 2010, in the -- around the end of the third quarter, fourth quarter. And this year, very soon, GE expects to utilize the information gained from there to bracket the marketing, if you will, of the cells more generally, as both catalog items, as well as subscription services and different packaging of the product. So we are hopeful that in quarters going forward that we will be reporting royalty income.

Okay. Thank you very much.

Steve Brozak, WBB Securities.

Thanks for taking the call, gentlemen. Actually, that is -- one of the interesting points that you just raised is the first question, and then I have a follow-up after that.

Right now, there is this gap between preclinical and clinical, where you are just not sure what is going to happen between the different animal models and a Phase 1. How have your discussions been with FDA in terms of bridging that gap? Because you never know what is going to happen and the hepatocyte type of interest in terms of what happened with toxicity. Can you give us any more granularity on what their thoughts are?

Because it sounds like this is one of those things where you can actually go out there and get greater intervals of confidence with the FDA by showing them that this is a remarkable tool to analyze that. And then I've got one more follow-up question after that.

Thanks, Steve. It is an interesting idea to think of a standard that FDA might adopt. That may be -- that may be a -- I don't know how reasonable of an expectation that is. Because as a practical matter, what pharmaceutical and biotechs do that are engaged in drug discoveries, they run every assay they can possibly get their hands on, right? And you would too.

So in fact, if you talk to them about running cardiac tox assays, they will say no, there is no one cardiomyocyte that we would want to run in a screen. We would -- finish cardiac light cells, so different cell preps. So they are looking to collect volumes of information from different assays using different cells. And that applies for cell-based assays as well as non-cell-based assays, as you know.

So I think the good news of that is there is opportunity for some remarkable breadth in how they would employ these cells. And we are not in a position to share the numbers obviously, but GE is very thorough in their market research and sort of scoped all of that out some while ago, as we were negotiating the license with them. So I hope they are right in terms of the potential use of these cells. I don't know that we can have them declared standard at FDA.

Okay, that will then -- and then I'll hop back into the queue. Right now, the large pharmaceutical model has pretty much been a pill a day is the industry standard, whereas you're actually talking about your therapeutic approaches are where you actually provide cures. What kind of feedback are you getting?

Because obviously, when you're talking about a departure from the industry standards, where you are going out there and the end goal is for you to be able to say, you apply this treatment protocol in however fashion, you are going to actually see outcomes that will not last for a week, 30 days, six months, but be, for all intents and purposes, permanent in terms of the treatment of whatever indication. What kind of feedback have you gotten from the industry and from the regulators on that?

Well, we are all very enthused about the potential for these cell therapies for the reason that you mentioned. They are not targeting specific symptoms or endpoint measurement. What they are doing is bringing functional properties into a tissue repair context.

And if the functional properties of these cells -- for instance, with the oligodendrocyte progenitor cells -- if indeed the cells remyelinate, but they also occasion new axonal sprouting and they have an angiogenic effect, that is tissue repair. And if that tissue repair restores function, then we may have what you are describing as a cure.

Our ambition is to restore function, measurably, in an organ system. And that has tremendous upside, and that is why we are so dedicated to this platform.

That is not lost on anyone, whether it is patients or patient advocacy groups or our collaborators in the clinic, with the OPC1 cells, and our KOLs that we are working with with the other cell types. Everyone appreciates the potential, if not the promise, of T cells, if I can be that aggressive.

It's just a matter of doing, taking -- accomplishing the steps to get there. And that is -- there is -- it is the same track. You have to do what you need to do pre-clinically and you need to take that to the Agency. So demonstration is what is required. There are no shortcuts. And that is why we want to fully resource these programs.

I look forward to that first proof of concept where you get it and reporting on it. Thank you.

Mark Monane, Needham & Company.

Thank you. Good morning, and we appreciate the review. Pretty much everywhere in the nation now, spring is coming up all over. So that brings me to my question about which of the stem cell programs will spring forward into clinical testing? I know that you have data on a chondrocyte model in preclinical testing, as well as, I believe -- as a cardiac model as well.

I'm wondering if you have any insights which will be next into the clinic and whether the spinal cord program has informed your decision in any way.

I think there is a little difference in timing with the two large animal studies. The pig study with cardiomyocytes has completed. And so we are in the data assessment phase of that, and we reported a week ago at the analyst lunch the ejection fraction data. And now we are looking at the arrhythmia data.

So that is at hand, and I think that will be informative for determining next steps in a development program with CM1, as well as to the point of stage-setting partnering discussions.

The large animal study with chondrocytes, which is in sheep model in the UK, is still nine months out. So by the end of the year, we should have -- we will have treated the animals and we will have followed them and have collected sort of three-month data. And that follow period, obviously, continues into 2012, so we will get longer-dated readouts in that model. But that is when that data will start to become available.

You asked the larger question of -- so what comes next in the queue. That will be both data-driven, meaning just progress along a development work plan, as well as our -- again, I know I'm repeating myself -- but our ability to resource the programs.

That's a fair answer. And if I may ask one follow-up question. On the -- there has been a number of questions on the CNS metastases program. And I'm sorry, I don't -- I just have one more question on that. And that is there are a variety of tumors that will metastasize to the brain and many of them are different cell types. They are from different locations, they are different histologies, they have different biomarkers associated with -- and cell signaling properties that are associated with their growth.

Can you help us -- can you help me -- can you help me understand the rationale of 1005 on these metastases, and what groups of tumors might be more or less amenable to treatment?

That's a really great question, Mark. Let me answer it in two ways. Firstly, the reason for focusing the attention of the initial Phase 2 program on metastases from lung cancer and breast cancer is purely a numbers game. We have to enroll a certain number of patients who have ostensibly similar biologic and clinical characteristics in order to maximize the probability of detecting a signal. So we can't really have an all-comers trial and have a Phase 2 program which is populated with patients who have 10 different types of metastases, because the likelihood of detecting the signal will become much lower doing that.

From the perspective of trying to make sense of what unifying biology will ultimately predict whether a patient with a metastasis to the brain from any tumor type does respond to 1005 or does not, we do have a very active predictor diagnostics program associated with the clinical program. And there are essentially three broad buckets of biologic mechanism that we are investigating.

One is the uptake of the drug into the tumor through an LRP-1-mediated mechanism. Because the peptide itself binds to LRP-1, and there is evidence that tumor cells themselves express LRP-1, and that the drug gets into the tumor cell by binding and being endocytosed through an LRP-1-mediated mechanism.

The second is the ability of the cell to dissociate the active warhead from the peptide once it is in the cell through various esterase-mediated cleavage mechanisms.

And the third is essentially the endogenous sensitivity of any tumor cell to the Taxol warhead itself, which is not something that Geron can really pursue independently, but which is -- the question of Taxol sensitivity in tumors is something which a lot of other companies and academic groups have pursued, and we can leverage that expertise.

So we are trying to look for characteristics that may predict clinical benefit from any tumor type. And at the point of which we are confident we have an active drug and a tolerable dosing schedule, which I hope will come fairly early on in the Phase 2 program, we will probably then expand the clinical program to include patients with brain metastases from tumor types other than breast or lung cancer.

Thank you for your thoughtful answer.

No problem. Thank you, Mark.

Ladies and gentlemen, this does conclude your question-and-answer session. I would now like to turn the call back over to Mr. David Greenwood. Please proceed, sir.

Thank you for dialing into this call and for the good questions. Our next update will be in six weeks at the Jefferies Investor Conference in New York. We look forward to seeing you there. Have a good day.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the presentation, and you may now disconnect. Good day.