Genmab A/S (GMAB) 2008 Q4 法說會逐字稿

Good day and welcome to the Genmab Conference Call. Today's call is being recorded. During this telephone conference you may be presented with forward-looking statements that include words such as believes, anticipates, plans and expects. Actual results may differ materially, for example, as a result of delayed or unsuccessful development projects. Genmab is not under any obligation to update statements regarding the future in order to confirm such statements in relation to actual results unless this is required by law.

At this time I would like to turn the call over to Dr. Lisa Drakeman, Chief Executive Officer of Genmab. Please go ahead.

Thank you, operator. Hello and welcome to all of you who are joining us for the Genmab 2008 year-end results conference call. As a first item, I would like to highlight some key results for the 12 months ended December 31, 2008. These are the recognition of revenues of DKK745 million which is approximately $141 million and also reporting a net loss of DKK965 million, approximately $183 million.

The increase in net loss this year is primarily due to greater clinical trial activities. A key measurement for us is our year-end cash position, and we ended the year with cash and marketable securities of DKK1.8 billion, approximately $333 million, which was in line with our guidance. Of course, the highlight of the year was the positive interim results from the Phase III ofatumumab study in refractory CLL. At the ASH conference in December we reported a response rate of 58% in patients' refractory to fludarabine and alemtuzumab and a 47% response rate in fludarabine refractory patients who were considered inappropriate candidates for alemtuzumab.

Following this extremely encouraging data, we submitted a licensing application known as a BLA to the US FDA in January, and only six days later submitted the European Marketing Authorization application. We are focused on maximizing the value of ofatumumab and are working with our partner, GSK, to run 14 studies including some recently announced. We will soon begin enrolling patients in our sixth Phase III study. This will use ofatumumab in combination with fludarabine and cyclophosphamide for second-line CLL patients.

As we look forward we have some other important events to consider. We now have 229 patients included in the Phase III pivotal study of zalutumumab in head and neck cancer. This is up from 212 at the beginning of January. The final analysis will be conducted once 231 deaths have occurred. We expect to report results of the study by the end of this year.

I would also like to give you a further update on the ofatumumab program. As you know, we expect to announce results of the Phase III non-Hodgkin's lymphoma study, as well as two Phase II front-line studies in non-Hodgkin's lymphoma and chronic lymphocytic leukemia later this year.

We currently estimate that headline data from these studies will be available in the third quarter, as there are still patients being evaluated in all of these studies. After the evaluations conclude, it will take significant time to perform data cleaning, independent review committee meeting, and preparation for the statistical output. This is why we are projecting the headline data in the third quarter. I would like to move now to our 2009 guidance.

We expect our revenue to increase by about 60% to approximately DKK1.2 billion, which is approximately $227 million. This revenue is based primarily on milestone income and assumes the positive outcome for ongoing studies and the US FDA approval. When we discuss projected operating expenses for 2009, it is important to remember that this will be our first full year running the manufacturing facility, and we also will be investing significantly in clinical development activities. Consequently, we expect operating expenses of approximately DKK1.6 billion, that's around $303 million, and an operating loss of approximately DKK400 million, which would be about $76 million. 2009 cash burn is estimated to be DKK500 million, approximately $95 million. And we expect to end the year with DKK1.2 billion or about $237 million in cash.

In summary, 2008 has been a pivotal year for Genmab, as we presented positive Stage III results for ofatumumab leading to the first US and European approval applications for a Genmab antibody. We also have many things to look forward to in 2009. We hope ofatumumab will reach the market, and we expect a series of important clinical trial results from both ofatumumab and zalutumumab. All of us at Genmab are working hard to build value in the company as we move toward an exciting new stage in Genmab's development.

We now look forward to answering questions from all of you. Joining me on the call today are Dr. Jan van de Winkel, our President of Research and Development and Chief Scientific Officer, and David Eatwell, our Chief Financial Officer.

Operator, could you please open the call for questions now.

Sorry about that, my line was muted. (Operator Instructions).

We will take our first question from Yasir Al-Wakeel from Credit Suisse.

Hello, and thanks for taking my questions. I've just got a couple of questions. Thank you for giving us some clarity on the timeline expectations for the oncology-based trials. But just in terms of the autoimmune side, I presume from your 2009 top line guidance that the RA trials are not expected to readout until 2010? And also, when can we expect data from the subcutaneous autoimmune trial?

My second question is regarding some comments that GSK has made about the possibility of running head-to-head clinical trials against Rituxan. Would I be safe in saying that that's unlikely to happen prior to the Q3-Q4 readout of the oncology trials?

Let me start by answering your questions about RA. As to the subcutaneous study, that study is still ongoing, so I can't predict at the moment when we will see data from it. And the two RA Phase IIIs are ongoing as well, so we haven't made any comments about exactly when the results will be available.

In terms of head-to-head, I don't think we've offered any guidance. I understand that GSK did make a public statement recently that they are very willing to do that, so we can only refer you to them for any details.

Okay, thank you.

We will take our next question from Mr. Richard Parkes with Piper Jaffray.

Good afternoon. Thanks for taking my questions.

I've just got a couple on the guidance. I just wanted to clarify a couple of things so, firstly, in terms of the revenue guidance, just to clarify; have you assumed both success milestones for the NHL study and approval milestones for CLL in that guidance?

And I am just wondering whether you can give us some kind of approximate split of the revenue guidance between pre-approval, post-approval milestones and manufacturing income?

Richard, we have in that guidance assumed success in the Phase III NHL program and also we've assumed US approval for the CLL indication. I think I am not really in a position to give you any more details on the split in the milestones because we have an agreement with our partner that we cannot provide you any additional detail on that.

David, I don't know if you've made any comments about manufacturing income, though.

On the manufacturing income, we don't talk too much about the detail there. As a matter of fact we will expect some manufacturing income from PDL, although they have now changed their name to Facet Biotech, but as you saw in the 2008 results, you can identify the cost of goods sold relating to that manufacture. So we don't really want to talk too much about the manufacturing income because then we would be declaring the profitability on that business, which wouldn't be something that our customer would like, or would be good for us if we have other contract manufacturing at future points.

Okay.

But it's not material in size of the total revenue for 2009.

Yes, okay. And in terms of -- I remember the guidance last year you gave guidance that you expected pre-approval milestones of about DKK1 billion, it might have been DKK1.1 billion over 2008, 2009. Does that guidance still stand or have things changed with timing of certain events?

I think we referred to approval -- pre-approval milestones coming through between the end of 2008 and going up to the end of 2009 of $169 million. At that time, the exchange rate was about five, so it would equate to about DKK845 million, and predominantly that is the same type of number that we have in our current guidance. So no significant changes.

Okay. And then in terms of the operating cost, I just wondered if you could give us a split of approximately the R&D split between ofatumumab and the rest of the pipeline?

I don't think we've really given that level of detail any place in our annual report, have we, David?

No, we haven't got to that level of detail. Obviously you can tell from the number of clinical trials that we have ongoing that the majority of our R&D spend does relate to ofatumumab, and they occupy our next most important product at this stage is zalutumumab, so it does take up a fairly large proportion of our R&D spend. But we haven't given any further detail than that.

Okay. And then just one on the pipeline. I just wondered if you could run through for us again what you're looking for from the refractory NHL study in terms of response and duration of response.

I don't know if we've given any real details on that. Jan, can you make any comments on the NHL study?

No, we haven't discussed any details yet.

I think that when we started the study we believed that these patients had very little possibility of response and consequently didn't believe that the hurdle was quite as high. I think it's fair to point out that since then [Triend] has been approved in a similar patient population to the one that we are testing. Having said that, of course, an antibody is a different type of therapy than a chemotherapeutic.

Okay. Great. Thanks. And then the final question was just related to the Phase II front-line CLL and NHL studies, are -- I was under the impression they were open label trials, so I'd kind of hoped that we might have data for ASCO. I know that the abstract deadline was in December. But given that they're open label studies, I didn't expect there to be a lengthy time for analysis and data audit. So I just wondered if you could correct me if that's incorrect?

Sure. Well, there are two points. One of them is that the patients are still being evaluated. If you look at the protocols you can see that in addition to the treatment period, there's a lengthy evaluation period for them. So the patients have not -- the last patients have not completed the study at this point in time.

Then there's another really important point besides the fact that we need to make sure that the data is clean and that the database is in the appropriate condition. The same team of people who are working on the US and European licensing applications are also working on these projects. So one of our important responsibilities is to make any questions that come in from the European or the US authorities our absolute first priority. So we have to allow some time in there to make sure that we're handling ongoing, normal, expected BLA and MAA activities too.

Okay. Great. Thanks very much.

And we will take our next question from Michael Novod with Handelsbanken.

Yes. Hello. It's Michael Novod from Handelsbanken. Two questions. One is, can you address the announcement made by Genentech last night about the Cabilly patent; what kind of implications it will have for Genmab and for GSK, and what feedback you have from GSK on this specific issue?

And then secondly, maybe, David, you could try to outline some more background info for your net financial position and the financial impact in 2009, so that you took a major hit in 2008, what do you expect for 2009?

Okay. What I can tell you is that the office action by the US Patent Office confirming the patentability of the Cabilly patent is a complete reversal of the decision prior to this. So we'll be assessing and reevaluating the prospective impact and our options. And we're talking to our partner about it. I don't have any more information for you than that since this news just came out, and we've just seen it ourselves in the last few hours. I think that at this point, David, do you have any comments on financial income?

Yes, I can just talk around that because obviously that was one of the disappointments for 2008 in terms of comparison to our guidance, and we did have a loss on our net financial items of DKK95 million. Now that's made up of interest income of about DKK121 million but we did have a fair market value adjustment of about DKK216 million on our marketable securities. Just to keep that in context overall, you can see on note 13 of the financial statement that the marketable securities at cost are about DKK1.9 billion and that at fair value they're just under DKK1.7 billion. So we've got a below cost by about 11.5%. This compares to the end of '07 which was about 2.3% down. So we have lost some ground in 2008.

Now the good news is, if you do look at note 13 that you can see that we do have a mix of portfolio. We use four different investment managers; we're spread over three different currencies. The area where we've had some sort of damage, if you like, for 2008 was within our euro portfolio, specifically within literally a couple of handfuls of bonds that were in the financial sector. Obviously the markets have been particularly unkind to banks at this stage, and even though they've got high credit ratings, their bonds have also been marked down.

Now in terms of 2009, I think it's very difficult to give a prediction of exactly where that will go because of the international uncertainty, particularly within the banking sector. So really what I'm assuming for 2009 is the net financial items will be pretty close to zero, in terms that we could see further losses within the banking sector but we'll also gain interest as well. So I'm assuming a breakeven point for that financial items 2009. Of course, if we can hold some of these securities to maturity and that there is no Lehman-type situations, then we would be able to get back to par if we can hold them to maturity.

Now, based on our current projections we're not under any need to sell the financial institution bonds in 2009. Is that correct, David?

Yes. If you look at -- it's actually note 13, page 54, we do give a breakdown of the bonds and the different types of what are in corporate bonds, what are in government bonds. In total, the various government bonds account for about 20% of marketable securities, or about DKK350 million. So with our burn rate of DKK500 million in 2009 we could support all of that pretty much from just the (inaudible) government bonds. Also, I think it's important to note that not every one of our bonds is actually below par, that most of the concern is within, as I say, literally, a couple of handfuls of financial bonds. So we're not in a situation that we're having to liquidate those losses or crystallize those losses, I should say, for the corporate financial sector.

That's very helpful. Lisa, can you perhaps try to -- can you confirm that if you need to pay a royalty to Genentech on the Cabilly patent, is it in the ballpark of 4%, 5%?

You know, there's no way to talk about what a royalty might be because there's no licensing agreement between us -- or between GSK and Genentech. I can tell you that any third-party royalties are shared between the parties and there is a maximum that Genentech can be charged -- excuse me, that Genmab could be charged by GSK. So there's a maximum offset provision, which is very common in licensing agreements.

Okay. Thank you.

We will take our next question from Mark Clark with ING.

Yes. Good morning, good afternoon. A question on non-Hodgkin's lymphoma -- in fact two questions on non-Hodgkin's lymphoma. I think early third quarter or thereabouts last year, you announced several studies were to start by the end of 2008. One of those was a retreatment study and maintenance study in NHLs for those same patients who were in the pivotal. But as I understand it, this study has not been started and it's not listed on clinicaltrials.gov, so can I ask what's happening there?

And secondly, more broadly, in your strategy for NHL, if I look at what you're doing in CLL, you've got two randomized studies -- one in front line, one in second line, either started or soon to start. In NHL the studies are, as far as I can tell, quite small, generally -- well, in all cases not randomized. Why is the strategy in NHL not to go so belt and braces as in CLL? Thank you.

Jan, do you want to comment on the retreatment studies? Do you have anything to add to that?

No. I've nothing to add there. It's still on the schedule, Mark. With regard to the plans for non-Hodgkin lymphoma, I can assure you that we are in the midst of discussing a large number of trials also on non-Hodgkin lymphoma which we haven't announced yet, but they're firmly in the planning stage. So we are very active also at the non-Hodgkin lymphoma front, I can tell you, as well as on a number of other tumors which we will soon talk about with (inaudible) positive. But it's true that indeed the B-CLL studies are ahead of the non-Hodgkin lymphoma ones, but we are currently in the planning stage, both in Japan as well as in Europe and the US, also for non-Hodgkin lymphoma and, in fact, more than one study.

Okay. Thank you. Actually --

They are large studies, Mark, not smaller.

Okay. And I've got a supplementary question regarding the review of the Group that took place in October. Has that completed? Have all the affected staff left and have all the clinicals that were underway that were due to be stopped, has all that been completed?

Yes. The reorganization was completed very shortly after it was announced.

Thank you.

We'll take our next question from Peter Welford with Jefferies.

Thanks. A couple of financial questions and then one question on partnering. First of all on the financials, can I just ask, is there any reimbursed costs at all you're expected from GSK this year in your revenues? And I presume the DKK845 million pre-approval milestones that were stated, that excludes the payment for selling the co-promotion rights back to GSK?

Next question is on the cash burn and operating profit. There's only about DKK100 million difference between the two, yet if I take depreciation and share payments, etc., that adds up to DKK200 million, DKK300 million. So I'm just wondering what it is in the cash burn that there's such a significant cash cost relative to operating profit this year.

And the third financial question then is on the tax losses. It looks as though now these -- there's no limitation on their expiry at all. Has there been a change in Danish tax law or can you just talk a little bit about the tax situation?

And then the one partnering question is on the HepC program. It looks as though you've now decided you're going to out-license that and not start Phase I trials, as previously you've talked about perhaps running the Phase I and then out-licensing. You've got some proof of concept there. What led to that change in the thinking behind that? Thank you.

Why don't I start briefly with the HepC? I think that we have just decided, based on all the data that we have, it doesn't make sense for us to invest currently in this program, and we will make it available for partners. So we made plans at the start of the HepC study, before the reorganization, but have changed our minds since then about investing in the program.

And then I think some of the other questions I want to hand off to David. I think that maybe one of the differences may be that we do have some non-cash income in the deferred revenue. David, would you like to handle some of these?

That's absolutely right, Lisa. Yes, included within our revenue is the deferred revenue from GSK. That amount as shown in the financial statements is DKK217 million for 2008. So pretty much you're right with depreciation and the warranty charge being non-cash, they pretty much match out with that deferred revenue item. So the cash burn from our profit and loss statement is pretty similar to the operating loss at the end of the day.

In terms of the co-promote, that was a fairly small item at the end of the day and, yes, the revenue does include a reimbursement of costs from GSK.

But it wasn't in the original comment on possible pre-approval milestones. That was a new payment.

Correct. In terms of the tax losses, we do, as you see in the financial statements, have a fairly large deferred tax buildup. Of course we don't recognize that at this stage within the balance sheet. We reserve for all of that deferred tax because you really have to be very certain about the timing of certain profitability, and therefore we don't recognize it at this stage as an asset on our balance sheet. But no significant changes in Danish tax law as far as I know.

Okay. Sorry, could I just come back on the cash burn a minute, because if you take DKK400 million operating loss and take off the DKK200 million you roughly get to DKK600 million if you assumed you didn't recognize that deferred revenue. But then you're adding back DKK100 million depreciation and DKK150 million or so [ESOP] you're getting to DKK350 million; so there's still about DKK150 million to get from that DKK350 million to the DKK500 million burn. So is there another below that, another DKK150 million or so in the burn number?

One of the things that will be within that burn number would be capital expenditure. It's not large for us; it will be in the region of about DKK40 million. So that will be one item. Also the accruals were fairly high at the end of 2008, just to do with some timing on accruals for clinical trials and some of the accruals and some of the costs that we reimbursed back to GSK. So I'm expecting some small amount of working capital movement in the year as well. So that will be the difference between the DKK400 million and the DKK500 million burn.

Okay. That's great. Thanks.

Thanks, Peter.

We will take our next call from Peter Sehested with SEB Enskilda.

Yes, hi there. Thank for taking my call. Just two questions. Could you firstly give us an update on -- not an update, but just specify the patent situation for HuMax-CD20? I think the base patent expires in 2023, but besides that is there any geographical differences between that and what can you expect -- or any patent extension strategies that you can employ?

And secondly, I just wanted to know your geographical employee split.

And I just have actually one last, a bit technical question that I'm not certain of, but in terms of the Dutch operation, I think that in Holland they still run with defined benefit pension schemes. Would there be an impact in 2008 if there was such -- if that is true? I mean 2009, actually.

Okay. Let me start with the patent extension. I don't think we have any comments beyond acknowledging that you're correct; that the ofatumumab patent runs until 2023. And I'm not aware of any differences in the geographies because this was a post-GAAP patent, so I think that the timing should be the same every place. Obviously you're right; there are some opportunities to extend patents based on review times and things like that.

Then geographical split in employees, I don't know if we ever talk too much about that. But in Europe and the US we have -- in the US we have the manufacturing facility which has a significant number of employees plus a small US operation. Having said that, there are more employees in Europe than there are in the United States.

And then defined pension benefits, I actually thought these were defined contribution schemes. David, do you have any comments on that?

That's right. They are defined contribution schemes, so they won't be an issue for us.

Okay. Jolly good. Then I had something else as well. Just one last question, actually. In how many countries do you expect to have, if everything goes on schedule, to have revenues from HuMax-CD20 in, let's say, one year after its launch?

I think that's a difficult question for us to answer right now. Maybe that's the kind of thing we can give you an update when we hopefully receive an approval later this year.

Okay. Thanks.

We will take our next call from Martin Wales of UBS.

Good afternoon. Can I ask a couple of quick clarifications? Firstly, are we right in thinking that 90% of your operating costs are going to be on R&D spending again this year? I assume yes, but I just wanted to check that. Can we start with that?

I'm sorry, Martin. I didn't hear that completely clearly. Did you hear it at all, David?

No, sorry. I didn't. Could you repeat it, Martin?

Okay.

Your operating costs. Are we correct in the assumption that 90% will be R&D again?

It will be in that region, yes. We ended -- 2007 was 88%, 2008 came out the same at 88%, so I would imagine that it will be pretty similar to that. That's the largest part of our spend.

Okay. Very quick question on financials going forward. I presume that you'll be taking a slightly more conservative approach on future inflows, in terms of how you try to realize some value from them. No more corporate bonds, I'm guessing. Is that a reasonable statement?

Yes. I think with the -- it's easy with hindsight to look at the past investments in, but I think when new cash comes through I'll be looking to make sure that it's even more conservative in terms of investments than past decisions. We'll make sure it stays highly liquid. Any investments we'd make would be in things like corporate government treasuries. We're also looking, with the help of our external portfolio managers and some independent financial advisors, really conducting an in-depth review of the current investments at the various portfolios and looking at detailed plans on individual securities. Obviously if I've got one that is below par then I would like it to mature and get back to par. But then I also don't want to just keep following a particular security down until it gets to a Lehman-type situation. So we'll be keeping a very careful eye on it but we'll be very conservative with our investment strategy going forward.

Okay. Have there been any change in thoughts on the prospects for rheumatoid arthritis in the light of the revelation from Genentech that Rituxan sales in that indication were relatively modest, a few hundred million dollars, as I recall? Have you had any discussions with Glaxo about this?

I think we've said before that we have ongoing discussions with GSK about the best way to develop ofatumumab in indications like RA. I don't have any specific comments on those, although I think that you noted that this came as a surprise when they reduced the sales amounts and, of course, we have to be thoughtful about that.

Okay, and my final question is -- really relates to manufacturing. I note from Lonza's annual reports that they will have excess manufacturing capacity and they want to complete their current build-out. It seems that the yield's improving phenomenally in the industry but we may not see or need the same level of build that we've seen in the past, that, if you like, manufacturing plants will be more freely available. To what -- how does that affect if at all the way in which you view your own plant in terms of your ability to use it for your own projects as well as obviously where you think your contract manufacturing, such as it is, goes?

Yes, we did not buy this facility to become contract manufacturers. As part of the purchase, we agreed with the existing owner that we would continue to make their products for them, which was reasonable because we all know that it takes time to transfer product to a different facility, and it also helps us offset some of the costs, especially in the early years where we're transferring our projects there but still using some outside manufacturing services.

So I don't think it has an effect on any plans we made because our contract manufacturing service is so limited. I think for us this facility, as I understand it, this year is probably very close to breakeven compared to what we would have spent externally, because even though we are starting to see some comments that perhaps there's some excess capacity, contract manufacturers do charge quite a bit more than the costs of actually producing the material.

So as we look forward, we hope that we can utilize our facility pretty fully for projects like zalutumumab and in so doing, not only have control over our supply chain and flexibility about when we start new projects like new antibodies, but also hopefully have some ability to control our costs compared to using an outside service.

Okay. Thanks very much.

Our next question's from Sachin Soni with Kempen.

Hi, good afternoon everyone. My question is regarding the UniBody platform. Could you please comment on what's your plan for the platform? Are you planning to out-license it or anything?

And my second question is regarding HuMax-CD38. Can you comment on that product as well? Yes, thank you.

Oh, thank you for those questions. The UniBody platform, as you probably recall, is likely to be useful in diseases that we're not concentrating on, like inflammation. So we have always had plans to make this platform available for people and companies outside Genmab. Having said that, there are some potential oncology indications and we are also pursuing those internally.

Jan, would you like to add anything to that and would you like to add anything on the CD38 antibody?

Absolutely, Lisa. What I can tell you, Sachin, is that we have actually recently got us some very good proof of concept with UniBody against cancer targets which we are thinking of for sure ourselves. And also I have active discussions with potential partners about making available the technology to others for other disease indication areas. So you will hear more about it within this year.

That is, I think, all I can say on that right now, but we are actually very encouraged about the potential of that platform even for an oncology -- for select oncology targets and areas.

With regard to HuMax-CD38, this is a very exciting antibody, again it's a signaling molecule. We are in the midst of a multiple myeloma clinical studies and we are now doing a lot of pre-clinical work on combination therapies, so that antibody -- the different types of new multi-cancer therapeutic small molecules have (inaudible) so we see some very good synergies. So we are actually also preparing to write protocols for combination studies which we'll hopefully launch after the [finishment] of the Phase I which is going quite well. It's well on the way at this moment.

So we are continuing to be very enthusiastic about HuMax-CD38, especially because this target is co-expressed (inaudible), it's also expressed as molecule like CD70 or CD32B, which is another one of our cancer therapeutic targets and would be ideal also for combination type therapies, and that is definitely the area where cancer -- antibody treatment regimens move to is to combination of different biologics or combination of biologics with chemotherapeutic and other agents.

Yes, that's very helpful. Just to follow on, can we expect any news flow from HuMax-CD38?

I don't think we're in a position to say just yet. With an ongoing trial, it's very hard to predict exactly when recruitment will finish.

Okay, thank you. Thanks a lot.

(Operator Instructions).

We will take our next question from Brigitte de Lima of Bank of America.

Hi, I've only got three questions left. The first one is on the revenue guidance. Could you just confirm please that it excludes any royalty revenues derived from Arzerra sales once it gets approved?

The second is again on Arzerra. When do you expect to hear from FDA whether the antibody has received priority review? Is this likely to be around late March, early April, i.e., the time when you expect to hear from FDA that the package has been successfully filed?

And the third one is on milestone income. Is it reasonable to assume that you get milestone income for positive data in early lines of therapy for an indication where you have already received milestones? For instance, if we're looking at the Phase II study in CLL, is it reasonable to assume that you'll get a milestone when you report data for that one if it's positive? Thank you.

Let me answer the FDA question. To the best of my understanding, we have 60 days from the time the BLA was filed, and that was on January 30, for the FDA to come back and respond about whether they're accepting the file or, if they don't respond at all, then we know that they've accepted the file.

I'm not sure there's a specific timeline on answering the priority review question as there is on the filing question. Jan may want to add something to that.

And then, on milestone income, I don't think that we can give you any more guidance, I'm sorry to say, than we already have.

David, could you answer the revenue question and then Jan, if you have anything to add on the priority review or the timing I'd appreciate that too?

Yes, I think in terms of the royalties, it's very difficult to give any guidance on expectation for royalty income at this stage. So I'm not assuming any large or significant royalties in 2009.

That's not necessarily because we have a position on the approval or the sales but just because it's just too hard to predict, is that correct?

Yes, which is why also I just presumed the guidance excludes any royalty revenue, is that fair to assume?

There's nothing material in that guidance nonetheless.

Okay, yes.

So with regard to the priority review, there is not, I think, a fixed time for that. It's usually in cases like this, you will hear that also within the 60 days whether you're not (inaudible).

Okay, thanks.

At this time, we have no further questions in the queue. I would like to turn the call back over to you, Dr. Lisa Drakeman.

Well, thank you all for joining us today. We appreciate the chance to talk about the year-end results and the guidance looking forward into 2009.

We look forward to talking to you again in the future. Thank you and goodbye.

Then, ladies and gentlemen, that does conclude today's conference call. We thank you for your participation and have a great day.