Geron Corp (GERN) 2012 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Q1 2012 Geron earnings conference call. My name is [Laura] 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)

As a reminder this conference is being recorded for replay purposes. I'd now like to turn the conference over to your host for today, Dr. Anna Krassowska, Head of Investor Relations. Please, proceed.

Thank you. Good afternoon and welcome to the Geron first quarter earnings call. With me on the call this afternoon are Dr. John Scarlett, our Chief Executive Officer, Graham Cooper, our Chief Financial Officer, Dr. Stephen Kelsey, our Head of R&D and Chief Medical Officer and Olivia Bloom, our Chief Accounting Officer.

Today's call is being webcast live on the Company's website and will be available for replay until May 31st.

I would like to remind listeners that except for statements of historical facts, the statements in this conference call are forward-looking statements under the Safe Harbor provisions of the private securities litigation reform act of 1995.

These include, without limitation, statements regarding the timelines and plans for Geron's research and product candidates and financial or operational projections or requirements, including the need for additional cash. These statements involve risks and uncertainties that can cause actual statements to differ materially from those in such forward-looking statements.

Information concerning factors that could cause actual results to differ materially from those in the forward looking statements is contained in Geron's periodic report filed with the Securities and Exchange Commission, under the heading risk factors, including the annual report on form 10-K for the year ended December 31st, 2011.

Undue reliance should not be placed on forward-looking statement, which speak only as of the date they are made and the facts and assumptions underlying the forward-looking statements may change. Except as required by law, Geron disclaims any obligation to update these forward-looking statements to reflect future information, events or circumstances.

I will now hand over to Graham Cooper, our CFO, to cover the first quarter financial results.

Thank you, Anna, and good afternoon. We will begin the call with a summary of our operating results for the quarter ended March 31st, 2012. Our agenda then includes and overview from Chip Scarlett of recent operating highlights. Following his updates, we will be pleased to take your questions.

In the first quarter of 2012, Geron reported a net loss of $18.7 million, so $0.15 per share as compared to a net loss of $24.4 million or $0.20 per share for the first quarter of 2011. Revenues were $1.3 million for the first quarter of 2012 compared to $1.5 million for the first quarter of 2011. Revenues for the 2012 first quarter primarily reflected royalty and license fee revenues under various agreements.

Total operating expenses for the first quarter of 2012 were $20.2 million, compared to $25.9 million for the first quarter of 2011.

Now, on cash operating expenses for the first quarter of 2012 were approximately $2.3 million and approximately $9.8 million for the comparable quarter in 2011. Non cash operating expenses consisted primarily of stock based compensation and expense for stock issued for services.

R&D expenses for the 2012 first quarter were $15.1 million, compared to $16.8 million during the same period in 2011. Decreased overall R&D expenses reflect reduced personnel and related costs and lower supply expenses as a result of discontinuation of a stem cell programs, partially offset by increased trial expenses for enrollment of our four phase two clinical trials of Imetelstat and the start up of the two phase two clinical trials of GRN1005.

G&A expenses for the 2012 first quarter were $5.1 million compared to $9.1 million during the first quarter of 2011. Reduced G&A expenses in the first quarter of 2012 primarily reflected a decline in personnel related expenses, including noncash stock based compensation expenses.

We ended the quarter with $136.9 million in cash and investments. We've provided guidance of cash spend of approximately $65 million for 2012 and we continue to support that estimate.

Given our balance sheet and our projected spend for 2012, we continue to expect that we'll be adequately funded through and beyond the data readouts for all six of our ongoing phase two clinical trials which are expected to occur between now and maybe 2013. Our projections do not depend on any funding gain from the divestiture of the stem cell program since we do not yet have an outcome from that process.

I would like to now hand the call over to Chip to review highlights for the quarter.

Thanks, Graham. Good afternoon, everyone and thank you for dialing in to our first quarter call. I'm going to try to keep my comments brief as we provided a relatively thorough business update on our fourth quarter call.

Starting with Imetelstat, at the beginning of February we completed enrollment of our randomized phase two clinical trial with Imetelstat in patients with metastatic breast cancer.

This is the first of two randomized controlled phase two studies of Imetelstat. We completed enrollment of 166 patients in this trial in just over a year, ahead of our projections.

We believe this reflects the need for effective treatments for metastatic breast cancer and was driven by the interest among clinical investigators and patients for compounds with novel mechanisms of action against new targets in metastatic breast cancer, such as telomerase inhibition.

This randomized clinical trial in her two negative metastatic breast cancer has been designed to study the effect of Imetelstat in combination with Paclitaxel chemotherapy and that treatment will be compared to the progression free survival of patients treated with Paclitaxel alone.

Approximately a third of the patients enrolled in this trial are also receiving Avastin and the results of the trial will be stratified for the concomitant use of that drug.

Our other randomized phase two clinical trial of Imetelstat is in patients with advanced non small cell lung cancer. This study has just completed enrollment and that's new news. It is designed to study the effect of Imetelstat in patients receiving the drug as maintenance therapy, following the induction chemotherapy with the platinum based doublet regimen. The comparator arm in this study receives standard of care, which following platinum based induction chemotherapy currently is observation and supportive care.

Patients with non squamous tumor histology who received Avastin during induction therapy are continuing to receive Avastin maintenance during the course of this trial in both arms of the study and we will stratify the results for Avastin treatment. For both the metastatic breast cancer trail and the non small cell lung cancer trail, the primary end point is progression free survival, or PFS. Since PFS is event driven, release of top line data will occur after a prespecified number of progression events have occurred and the initial analysis of the studies has been completed.

Based on our latest analysis of the rate at which events are occurring in both trials, we continue to expect to release top line data for both by the end of this year.

I'd like to shift gears for just a moment and also mention a Geron poster that was presented at the American Association for Cancer Research and that was at their annual meeting that was recently held in Chicago and this poster related to predictive diagnostic programs that we're developing in parallel for Imetelstat.

Considering the possible mechanism of action of telomerase inhibition in general and Imetelstat in particular, we and others have proposed that tumors with short telomeres may be more responsive to treatment with Imetelstat.

A presentation at the AACR meeting reported that we have developed a proprietary quantitative polymerase chain reaction, or QPCR based assay and this assay can measure telomere length in tumor samples from patients.

Our objective is to use this assay on patient samples from our phase two clinical trains in both metastatic breast cancer and non small cell lung cancer in order to look for a correlation between telomere length prior to treatment and clinical outcomes after treatment with Imetelstat.

If such a positive correlation is observed in the future, it could allow us to enrich clinical trial populations in patients who have tumors with short telomeres who would thus presumably be good candidates for Imetelstat treatment.

I'd like to move on to an update of our two single arm studies of Imetelstat in hematologic malignancies Essential Thrombocythemia or ET and multiple myeloma. These studies are primarily mechanistic studies assessing the effect of Imetelstat on the malignant progenitor cells driving these diseases. This is made possible by using assays designed to measure such progenitor cells in samples of peripheral blood and bone marrow, taken before and during treatment with Imetelstat.

With regard to the ET trial, the safety data obtained from using Imetelstat in patients with ET in the ongoing study has now enabled us to expand the patient population to include patients with another type of myeloproliferative neoplasm, which is polycythemia vera, known as PV. While ET is characterized by an increase in platelets, patients with PV primarily have an increase in red blood cells, also driven by malignant hematopoietic progenitor cell in the bone marrow.

Patients with PV will start being enrolled in this study pending IRB approval of the amended protocol at our clinical sites.

In this ET and PV study, we are assessing two things. First, we're looking for hematologic response which is a reduction in the number of platelets or red cells in the blood after treatment with Imetelstat. However, hematologic response alone will not tell us whether Imetelstat has a general effect on the bone marrow or whether the drug can impact the underlying disease by specifically inhibiting the malignant hematopoietic progenitor cells that are responsible for ET or PV.

Therefore, we're also looking for a molecular response. Patients with myeloproliferative neoplasms can have certain gene mutations, often the JAK2 gene, which can be detected in circulating blood cells. About half of the patients with ET, and approximately 95% of patients with PV have the JAK2 mutation. We can measure the change in allelic burden of this JAK2 mutation in peripheral blood cells as an indication of disease modifying drug effect.

A molecular response will indicate that Imetelstat is specifically inhibiting the malignant progenitor cell. Positive results from this study would allow us to consider further developing Imetelstat for myeloproliferative neoplasms such as myelofibrosis or other hematologic malignancies.

This trial has been slow to enroll because the study requires that patients must have failed or must be intolerant to conventional therapies. Because we're looking specifically at molecular changes and because those changes would not be expected to occur in the absence of drug effect, we believe that we'll be able to draw conclusions based on approximately eight to 10 patients with the JAK2 mutation and expect such data to be available from that number of patients by the end of this year.

The multiple myeloma trial is a small exploratory study in which the number of circulating B cell myeloma progenitor cells are being measured in the blood and bone marrow, allowing us to estimate the effect of Imetelstat on the production of these cells.

If a significant reduction is observed after treatment with Imetelstat, it would suggest that Imetelstat is having a disease modifying effect on the malignant progenitor cell responsible for the myeloma.

As we've reported previously, this study has consistently enrolled behind expectations, largely because the study requires patient samples to be handled promptly at the laboratory at Johns Hopkins where the analysis is done

We have therefore recently opened a second site at the University of Maryland where patient enrollment has begun. We plan to complete enrollment, review and report preliminary data for approximately six to 10 patients by year end which we believe will give us sufficient data to evaluate whether or not Imetelstat is having its intended effect on the malignant myeloma clone. If that is suggested by the study results, it may encourage us to plan a trial in one or more hematologic malignancies using Imetelstat.

Finally, I'd like to end with an update on our second clinical stage product candidate, GRN1005. 1005 is a novel peptide conjugate designed to utilize the physiologic molecular transport mechanism, known as LRP1 to deliver Paclitaxel across the blood brain barrier where it can treat brain metastasis.

As we've reported previously, phase one data and solid tumor brain metastasis showed encouraging single agent activity. Patients receiving 1005 had a 20% overall response rate using measurements of both intercranial and extracranial disease. Approximately 24% of patients with brain metastases had a greater than 30% shrinkage in brain lesions and 50% of patients with lung lesions had a greater than 30% shrinkage in those lesions.

These data strongly suggest that GRN1005 has activity against cancers inside and outside of the brain compartment, both of which can cause death in patients who have brain metastases.

In the fourth quarter of 2011 we initiated two 1005 clinical trials, one in patients with brain metastases from non small cell lung cancer and second trial in patients with brain metastases from breast cancer. The non small cell lung cancer trail was a single agent, single arm study that evaluates overall response rate which includes both intracranial and extracranial disease as the primary end point.

The breast cancer trail is also a single arm study which includes two cohorts. Patients with HER2 positive and HER2 negative disease. Each of these cohorts has 50 patients. The patients with HER2 positive disease will also be treated with Herceptin, the primary end point for the metastatic breast cancer trial is intracranial response rate. Although both of these trials have just begun enrollment, investigator interest in early patient enrollment appears strong and we continue to expect top line data by the end of the second quarter of 2013.

So, that covers the clinic program updates, I'd like to end by noting that during the first quarter we announced the appointment of Dr. Bryan Lawlis, an expert in drug manufacturing to our board. Dr. Lawlis was previously the Vice President of process science at Genentech and the CEO of Aradigm, a publicly traded biotech company and is currently also on the boards of BioMarin Pharmaceutical and Sutro Biopharma.

In the first quarter, we also announced the appointments of Graham Cooper as CFO and Executive Vice President of Finance and Business Development and Stephen Rosenfield as Executive Vice President and General Counsel and Corporate Secretary.

That concludes my prepared remarks, thank you for your attention and your interest in the Company. Operator, we'd be happy to take questions now.

Thank you. (Operator Instructions). Your first question comes from the line of Brian Klein from Lazard Capital Markets. Brian, please proceed.

Hi, thanks for taking my questions. So, first to start, I'm just wondering, in the Imetelstat trials in breast cancer and non small cell lung cancer, is the rate of progression between patients that are on Avastin versus not on Avastin, are those rates the same or is it possible that you're going to see the patients not receiving Avastin progressing first?

Brian, are you talking about the data from the trial or the historic progression free survival for Avastin versus [Taxol] alone?

I guess my question really is in regards to the fact that you're waiting for a certain number of events to occur, which is a smaller number than the total number of patients who are enrolled and so I want to understand if there is the possibility that a larger cohort of the patients who are not on Avastin are going to be the ones that drive the primary endpoint?

Certainly all the assumptions are based on the basis that progression on Taxol alone would be faster than the progression on Taxol plus Avastin. And so you are correct in that you might expect a fewer -- a smaller proportion of the events that drive the overall analysis to come from the Avastin subpopulation.

Having said that, the two primary analysis that we've intended to perform are for the overall population which includes the patients with Avastin and the patients not getting Avastin and then the subpopulation that's not getting Avastin. That was -- that was always built into the trial in the first place, but took on greater importance when the FDA removed the approval for Avastin in the United States.

Right. Is there a hypothesis that the interaction between Imetelstat and Avastin would be synergistic?

There's no data to support synergy, but there is data to support additive effect.

Great. Then moving on to 1005. Can you give -- can you give us a sense if the enrollment is meeting your expectations?

Yes, so far enrollment is in keeping with expectations, although albeit at a somewhat premature early stage of both trials, but we've no reason to be concerned about enrollment at this stage.

Can we expect an update on the original phase one trial at this year's ASCO?

No. we finalized the analysis for the phase one -- both phase one trials of the data was presented at the EORTC-NCI-AACR meeting in November of last year and both manuscripts have now been completed and have been -- in fact, I believe one of them has been published and the other one is either in press or about to be -- or has already been published and the second one is just about to be submitted for publication.

Great, thanks for taking my questions.

No problem.

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

Hi, good afternoon, everyone, and thanks for taking the questions and congratulations on the continued progress at focusing Geron as an oncology company.

Couple of questions, just regarding Imetelstat and Graham, I think you mentioned that the latest analysis -- or maybe it was Chip who mentioned it was the latest analysis that allows you to expect that results to still occur in the fourth quarter of this year. Can you tell us when that was conducted and who's conducting the analysis? Is it an outside data and safety monitoring board, an internal board? And how often is everyone meeting? Or is it pretty much in real time?

Maybe I'll take it and let Steve glare at me if I get it wrong and correct me. Fundamentally, Ren, it's just a -- looking at the accumulation of the events. We're blinded with regard to treatment arm, et cetera, et cetera. We're just simply looking at the accumulation of events and then applying that to a typical kind of model for figuring out when you're going to reach the number of events that you prespecified in the protocol.

So it's not terribly complex and we look at it on a regularized but not every day basis and we just recently looked and that was the -- just at the accumulation -- pure accumulation of events and that gave us confidence to reaffirm the guidance. That makes sense?

And do we -- I know in the past we've talked about what the -- what's the delta that you're looking for, but have we ever talked about how many events your -- will trigger the unblinding?

No, we've not disclosed the actual number of events.

Okay, and then just switching gears quickly to the ET program. Can you give us your thoughts, especially given how enrollment is proceeding has there been any internal discussions or even discussions with the regulatory bodies regarding a potential combination study with an approved JAK1-2 inhibitor and how that might play into sort of the development plan of Imetelstat in ET?

I'll let Steve take a crack at that.

There've been discussions with investigators and with other hematologists. We've not had any discussions with the regulatory authorities. As far as I'm aware, the way things stand right now is that there is a JAK2 inhibitor that is approved for myelofibrosis but there are no JAK2 inhibitors approved for the treatment of Essential Thrombocythemia.

What we are doing is, as you already heard, we wanted to safety date for (inaudible) in order to justify expansion of this program into other hematologic malignancies. But we have expanded the program into Polycythemia Vera and we're also considering expanding the program into other chronic hematologic malignancies such as myelofibrosis and myelodysplastic syndromes. And when we do that, we'll have to consider whether or not we -- the placement of Imetelstat in the context of what is currently the standard of care.

And Steve, do we have any preclinical work that might give us some evidence one way or the other how that combination could fare?

Actually, at the moment we do not. We have -- I would say relaunched the preclinical assets surrounding Imetelstat and hematologic malignancies largely on the basis of the data that was presented at ASH by Gabriela Baerlocher which we felt was sufficiently encouraging to want to significantly expand our preclinical efforts there. But as of today, we don't have any data on combination of JAK2 inhibitors of Imetelstat in preclinical models.

And speaking of data, just looking out over the next six to nine months, maybe ending it around ASH -- the ASH Conference, can you give us a sense will there be any more data presentations, anything that we should be looking forward to?

I think at this stage there is -- there's an intent to release data by the end of the year and certainly ASH would be a very good forum for that. So, if we submit abstracts for ASH and they are accepted for presentation, we'll let you know.

Okay. And just one final question, Chip, I know you don't like necessarily commenting on it, but I'll ask it anyway, how are things progressing with the divestiture of the stem cell side of the business? Any color you can provide?

Confidential program -- confidential discussions are underway and that's all I can comment on.

Okay, well congratulations and good luck.

Thanks.

Your next question comes from the line of Cory Kasimov from JPMorgan. Please, proceed.

Hi, this is Rashie. I was wondering if you could provide us --

We can't hear you very well. Could you speak a little closer?

Hello, can you hear me now?

Much better, thank you.

Okay, hi, this is Rashie in for Cory today. I was wondering if you could provide us an update on potential partnership plans for Imetelstat and 1005 and at this point for Imetelstat do you think it would be better served to see the data first? Thank you.

Yes. I think it's absolutely clear that it will be better -- we will be better served to see the data first and that's our intention. Reaching out and speaking with a variety of different potential partners certainly occurs long before that. We can't really comment on any of that today, those are obviously confidential discussions, but the answer is absolutely yes, you need to have -- you need to have data in order to be able to have a meaningful conversations.

Okay, thanks a lot.

Surely.

Your next question comes from the line of Chad Messer from Needham & Company. Please, proceed.

Hi, and thanks for taking my questions. Just regarding Imetelstat in solid tumors, I was wondering if you could give us any idea of what possible next steps would be assuming that one or both of the trials gives us a positive read out near the end of the year. Is a pivotal trial on the boards for next and any idea what that could potentially look like? Thanks.

Sure, Chad. The -- we had every intention of moving into pivotal trials if the -- if our internally prespecified criteria for success are met in phase two and at this stage, with some minor modifications, based on changes in standard of car that have occurred in the United States and throughout western Europe and in the period of time that these trials have been running, we would expect the phase three trials to look very similar to the phase two trials.

Okay, fair enough. And any idea when those potentially could get started? Sometime in 2013 I would presume? Or is there a reason to expect it to take longer?

Well, there's no reason to expect it to take longer from a development perspective, the only reason it might take longer for Geron is if there are any issues surrounding the funding of those trials that may come out of the steps that we take on the back of receiving the data. But from a straight forward development perspective, it would be perfectly reasonable if we get phase two data at the end of 2012 to expect us to be starting pivotal trials by the end of 2013.

Okay, thank you very much.

Your next question comes from the line of [Tony Rector], private investor.

Yes, good afternoon. As a lay person, I apologize for the questions that I'm asking and I've been a shareholder since '07 and certainly have been within the peaks and valleys of Geron and quite candidly I'm holding this in trust for my six year old grandson's college.

But the bottom line is, these are things that I don't understand. On the class action suit that was initiated regarding the [Lie 210] matters of the board diluting the stock of however it might be characterized, what's the status on that please?

It was dismissed.

Terrific. And then, on the matters of -- in watching the stock daily and seeing the press releases daily, forgive me -- and this is not a degrading question because I want you guys to succeed. But I see -- and your announcements, I see many, many, many people coming on board with great initials behind their name and title and whatever and I don't understand that. Why is there either such a turn over or so many people joining Geron and leaving Geron?

Well, we had a large scale departure of people as we divested the stem cell business and in turn, as we are continuing to reemphasize and we are reemphasizing the oncology business, we have a need for people skilled in those areas and that's fundamentally who we're hiring and I think we're very fortunate to have been able to hire some great people. So, that's what we're doing today and why you see that relative turn over, as you say.

And the other aspect of that, almost on a parallel is your making a great many presentations at investor's conferences, etc. and whatever becomes of those? I mean the stock has remained steadily down and gain, the was action and activities taking place, shouldn't this be reflected?

Well, I think that's in the eyes of the beholder, and as we know, individual investors, institutional and private investors make those choices. Our job is to go out, make sure that people have as full an accounting of what's going on as possible, and to make sure that the markets are fully informed of our activities and our efforts in this area.

So, that's all we can do. I think you will continue to see that level of commitment on the part of management to getting the story out. Beyond that, we will hope that our results will justify people's interest in the Company.

Well, I'm all for it and it's -- on the upcoming shareholders meeting, you asked for approval to go from 200,000 to 300,000 common stock, what will this do to my shares?

Graham, you want to comment about rationale and reason for this and so forth?

Yes, it -- the increase in authorization of shares.

Yes, sir.

Should not have any impact on you in so far as it doesn't actually increase the number of shares outstanding. The rationale for it and the reason we're doing it is to improve flexibility down the road. The time to do things like this are when you don't need to raise money and when you've got a strong balance sheet and that's where we are now, and so the -- it's better to do these things earlier than later in general. And we have about 160 fully -- 160 million fully diluted shares outstanding with 200 million authorized and so we feel the desire to have flexibility down the road should we decide to raise additional capital.

Just one other comment about that, for clarity sake, absent special meetings and a lot of very expensive things, you only really get one chance a year to do this, which is at proxy time, so that's the reason we've taken this action this year. It just - from an efficiency perspective, raising the total number of shares on the cap table makes sense right now.

I'm in southern California and should I desire, is it possible to attend the share holder meeting in person?

So, our shareholder meeting I certainly -- I think it was last year, but certainly this year will be an entirely virtual meeting. We think that that really serves the benefit of everyone because many people don't have the opportunity to come up. So we're doing it all completely virtually, but I think you'll find it to be as informative as it would be if it --and perhaps even more informative than it would have been in person.

Okay, the last question -- and I really feel privileged about your candid answers in addressing these issues.

Sure.

I feel privileged to talk to you gentlemen and ladies. Is it possible to get a shareholder report in person? I have your email address here.

The proxy?

The proxy you mean?

No, no, it's just -- yes, the actual -- the actual annual report.

Yes, you should have received it as a shareholder. Did you not?

No, my shares are being held through JPMorgan and I got notice of these shareholder meetings through them.

Yes.

You can actually just send an email to me, to Anna, and send it to investor@geron.com with your mailing address and we'll make sure you receive one.

I really appreciate that. Guys and gals, I've hung in there since '07, I'm going to hang in there longer and I really wish you guys Godspeed.

Thank you very much for your sentiments, we appreciate it.

We appreciate it.

Take care.

Your next question comes from the line of [David Wasserman], private investor. Please, proceed.

Hi, Dr. Scarlett. I was on the last call, last quarter, you were very professional. I was actually talking to you about the stem cell the progress we're making on divesting our stem cells.

I remember.

I don't know if you remember the call. And you were very professional, I appreciate you, I've been a stockholder for seven years. Dr. Ann has known me five and I was also a stockholder at Tercica, five, six years ago when you sold it. So I know what you can do for shareholders. I have lot of confidence in you. That said, with all due respect, can I just ask you a couple of -- not difficult questions but I know you're limited, but it's stuff I really was hoping you could give some color on.

You had a call earlier -- a question earlier where someone stated they asked you about the progress on selling the stem cells and you said it was confidential and you were limited on what you could release, and I understand that. But I want to try to weave one thing in, if I may, we are a plaintiff in a lawsuit with [Viosite] and that's -- that seems to be in the eighth or ninth inning. We're wrapping that up. We're the plaintiff and I hope we get good news on that.

So, here's my question, it's a general question but it's important. Is that case having any effect on us selling our stem cells? Meaning, any possible buyer would want to see the outcome of that case because they basically want to see what they're buying. So, can you at least generalize and say if that at least has an effect, not in the price, but in the timing? I hope I'm making sense on that.

And then I have a follow up.

I understand the question, I wish I could answer it. But I'm afraid all of the questions around the stem cell divestiture, whether they be with respect to timing, price, people involved in the activities, bidders, non bidders, you name it. We're just really not in a position to be able to answer any questions about.

It's for the protection of the Company and the protection of the process. So I apologize. I look forward to the day when we are able to give a full rendition of whatever comes out of this, but as of today I can't say anything else, so I'm sorry.

Okay, and I have two quick flow ups if I may. I'll try to word it a different way and if you can't, you can't. Let's say we were trying to buy a company. Let's say we were attempting to buy a company, but they were in litigation and they were the plaintiff and we wanted to see if their patents were protected, would that have a bearing on us going forward until the litigation is settled? I'm talking about if we were a purchaser.

I understand your question.

Just trying to get the mindset.

Yes, I understand the question. I honestly think that it's better for me just not to say anything. Its -- these hypothetical questions have a way of coming back and haunting CEOs who make them on public calls. So I'm sorry, I'm just going to have to -- forgive me, but I'm not going to be able to answer.

No problem. And I got actually two last questions. I'll --

Sure.

Be concise. The CFO, I believe, mentioned to the previous caller that there were 160 million diluted shares right now. Does that sound right?

Around that.

In round numbers, yes. Okay.

It's around that.

And I appreciate that. When I do my own calculations though on the market cap of the Company, I'm more like about 130 million. Like if you took -- so where am I -- can you help me with my math on this please?

Yes, so we have about 131 million common shares outstanding and then we have options and warrants that are not -- don't -- they're not issued common shares, but they represent potentially dilutive securities in so far as they could become common shares that you use what's called the treasury stock method to calculate their contribution to the overall share count and hence the definition of fully diluted shares.

No problem. But if I want to do the math today on the market cap, we closed at I think [156] times the number of shares, I would use 131 million shares?

Depends on if you're trying to calculate basic market cap or fully diluted market cap.

Market cap.

Yes, so if you do it the way Yahoo Finance probably does it, I think it'd be 130 million, yes.

130, perfect. And this is the last question, and you guys are really doing a wonderful job by the way. It's tough out there, I know you're doing the best you can. Dr. Scarlett, this is the last question for you and legal.

I know you're limited on the stem cell, but can you give us shareholders -- again, I've been a shareholder over seven years and can you give us some color on the Biosite lawsuit? What -- I'm breaking -- I'm separating that from the stem cells, but what can you tell shareholders about this pending litigation. Where are the plaintiff. Will we actually stand to enhance shareholder value? So that's important.

So, David, here's the deal, unfortunately when you -- I know that -- and actually I'm rather touched by the fact that many of our private shareholders like yourself and others who communicate with me a lot, view themselves as very much the owners of the Company, and they certainly are.

But on the other hand, because we're a publicly traded company there are real limitations on that which we can share with individuals. That's why I can't tell you anything more. If you call me up, then I can tell you on this line.

So, it's just a fact of life that you do share in the ups and downs of our company, but with regard to information, we still are not in a position to share information about ongoing litigation, as we've talked about extensively the disposition of the stem cell business and so forth.

So really, the -- we're limited in the type of information that we can give. We're giving you all that we can give. I think in all that is certainly responsible for us to give. And that's pretty much it. So, with regard to any pending litigation, including the litigation that you referenced, we're just going to have to decline from any comments. I apologize that that's the way --

And this is only five seconds and I'll get off the line. I understand, doctor, and you know I have a lot of respect for you. I'm not asking for an outcome or a prediction, but when do you think we'll have closure either way? That's all I'm looking for. I'm not asking respectfully not for the outcome, not a prediction, but as a shareholder, litigation -- you want to get closure. So can you at least give us some sort of timetable on when this might come to an end? Without a prediction of the outcome.

I'm sorry, David. I think we're just going to have to leave it that we're not able to make any comments about this. I apologize.

Well, thank you doctor. I look forward to talking to you in three months.

Okay, thank you.

Thank you.

Your next question comes from the line of [Stanford Trom]. Please proceed.

Hi, folks. Glad you can take my call. I've been a stockholder I think since 1996. I just have a quick question, what's happening with our arrangement with GE Health in the cardiomyocyte to -- I remember when [Dr. Conner] first, that would be a big money producing arrangement. Are we still involved with GE? Are they using our cardiomyocytes?

Yes, so I think all we can really comment on which is the publicly available information is that the products being sold on the market, but beyond that, I don't think we can really go into it in any detail.

All right, so when we might receive revenue, pertaining to the sales of the product?

I don't think we've got any comment about that today. Sorry.

Is there a reason why we can't comment on that?

I think it's back to the confidential nature of the arrangement between us and GE Healthcare.

Okay. Thank you very much for taking my call.

My pleasure.

Your last question comes from the line of [Mark Berger] from Mark Berger M.D.

Okay.

Hello, thank you for taking my question. I'm not asking about the divestiture of the stem cell line, but I strongly do believe that stem cells will have a significant impact upon medicine in the future.

The chondrocytes, the myocardiocytes, even the podocytes, they all will have significant benefit and why since there is not going to be an immediate sale of these assets -- I'm not asking about the sale of the assets, why since there's not an immediate sale of the assets that would fund the Company, that would help the Company in the oncology limb of the Company, why sell it at all?

Why not see if the oncology side of the Company is successful, if it is, the stock price will go up, you'll be able to generate more revenue and then you could reactive that -- the stem cells.

Well, I think that first comment is that I think we've made the decision from a strategic perspective to move away from the stem cell space and to commit the Company to the oncology business. So I wouldn't want anyone to think that we were going to revisit certainly any time in the near future. It would be very unlikely that we would revisit the issue of whether to become involved again in stem cells. With regard to the rest of the divestiture, the timing, monies that might or might not be available, I have to repeat my comment --

No, no, no, no I'm not questioning the divestiture itself, I was just questioning since there's no -- there's not going to be any immediate revenue stream from the divestiture and the patents don't expire for another 10, 15 years, why not sit on it? I just don't understand that.

Well, those are your assumptions about timing et cetera. We're not making any public predictions in that regard. So, I think again, let's see what happens and then we'll be -- when we're able to report any results or non results of the process, then I think we'll be in a better position to address those questions.

But right now it's a confidential process and any kinds of commentary that I might make on timing or other elements of that nature, just really not appropriate for me to do. So I'm going to have to again say sorry that I'm not able to answer your question.

Okay, thank you so much.

Thank you very much.

There are no further questions at this time, I'd like to turn it over to Dr. John Scarlett, CEO, for closing remarks.

Thank you very much, everyone, for dialing in. I appreciate everyone's contributions and questions. We certainly do appreciate your continued to support and I personally look forward to future communications as we continue to chart our progress throughout the year. Everyone, I hope you all have a great day. Thank you. Bye-bye

Ladies and gentlemen, that concludes today's conference, thank you for your participation. You may now disconnect.