Imunon Inc (IMNN) 2004 Q1 法說會逐字稿

Good day ladies and gentlemen, and welcome to the Celsion Corporation Shareholders conference call. My name is Amanda and I will be your coordinator for today. [OPERATOR INSTRUCTIONS]

Celsion wishes to inform participants that forward-looking statements during this conference call are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.

Participants are cautioned that such forward-looking statements involve risks and uncertainties, including without limitation, unforeseen changes in the course of research and development activities and in clinical trials by others, possible acquisitions of other technologies, assets or businesses, possible actions by customers, suppliers, competitors, regulatory authorities and other details detailed from time to time in the company's periodic reports, filed with the Securities and Exchange Commission.

I would now like to turn the presentation over to your host for today's call, Dr. Augustine Cheung, Chief Executive Officer, and Mr. Tony Deasey, Chief Financial Officer. Please proceed, gentlemen.

Hi. Good morning. I'm Augustine Cheung. Welcome you to the shareholder conference call. Celsion has made huge progress since our last shareholders conference call in September, 2003.

Since then, we have focused all our attention in obtaining the PMA approval from the FDA for Prolieve, our BPH treatment system and to introduce this product in the United States commercially immediately upon receipt of regulatory approval.

As all of you know, we received the PMA approval from the FDA on February 19th, and I'm pleased to report that Boston Scientific Corporation, our distribution partner for Prolieve shipped two systems with 20 catheter kits to a customer on February 23rd.

In the big picture, the approval of Prolieve is only one of the many steps outlined in the strategic plan defined as shared with our stockholders in spring 2001.

The plan is to transform Celsion from a small research and development company with an exciting technology portfolio into a successful biotechnology company with a balanced and well-diversified pipeline of quality anti-cancer products at a great position to move the products forward and close strategic collaboration with major pharmaceutical and biomedical partners.

Our plan consists of four elements. The first, obtain the FDA approval for our BPH products, commercialize it and use the proceeds to fund the product development of our cancer treatment technologies.

Second, develop quality anti-cancer products based on our heat-activated gene and drug delivery platform. Third, put the company on a sound financial footing.

And finally, reposition the company from being a medical device business into a fully fledged biopharmaceutical company.

So where do we stand today. As some of you might have recalled, on January 23rd, 2003, we signed a licensing distribution agreement with Boston Scientific Corporation for our BPH product.

Under the agreement, Boston will make milestone equity investment and pay a licensing fee to Celsion in exchange for the rights to distribute Celsion BPH products and an option to purchase the BPH assets.

Boston Scientific Corporation also made an initial $5 million equity investment on signing of the agreement. As all of you all know, in February 2004 we received the FDA approval for our BPH system and we name our BPH product the Prolieve Thermodilatation system.

And Boston Scientific Corporation shipped two Prolieve systems and 20 catheter kits to our first customer in Shreveport, Louisiana one week later. As a result, we expect to receive milestone payments, totaling $8 million from Boston today.

Half of this money is in the form of an equity infusion of $4 million in return for approximately 2.1 million shares of our stock with an issuance price $1.90 per share. The balance of the $4 million will be - the balance of $4 million of the $8 million will be for payment of a licensing fee.

Under the agreement, Boston will also make another milestone equity investment of $2 million at a price based on closing price of our stock 30 days post-approval. Over the next couple of months, Boston plans to install Prolieve systems in up to 10 additional sites ahead of national launch, which is timed to coincide with the Annual American Neurological Association meeting in early May of 2004.

We believe that we have the best product on the market and we are confident that Boston's marketing might - with Boston's marketing might behind it, Prolieve will deliver the growth which is the current, with the growth which the current in minimally invasive BPH treatment others (ph) have promised but never delivered.

As we and Boston share the revenue from sales of Prolieve product, we should see early positive cash flow from our BPH product.

At this point, we believe that the Celsion management team has delivered against the first step (ph), which was outlined in our plan. However, this achievement would not have been possible without the hard work and dedication of our employees and the team of consultants that we have assembled to help us through the FDA process.

They all deserve sincere thanks from you, our stockholders. For the last 12 months, Dan Reale and Tony Deasey have been working with me and providing the leadership to ensure the successful approval of Prolieve and the continued progress of our cancer development.

I want to recognize their contribution and thank them for this effort. Unfortunately, last Monday we announced the resignation of Dan Reale. Dan was hired in April 2001 to get the BPH product approved and commercialized as quickly as possible.

He put in a tremendous effort into the program and we have reached this point largely through his leadership. However, during that time and particularly over the last year, Dan has been dealing with a very difficult personal situation.

Despite the fact that he lives in Massachusetts and we're in Maryland, he has devoted himself to delivering the goal he accepted when he joined us. Now that we have obtained approval and he has reluctantly decided that he must step down and give his full attention to his personal situation.

I would like to thank Dan for all he has done for Celsion. We are very sorry to lose his service but we respect his situation and we wish him all the best for the future.

To ensure that Celsion move forward without interruption, I decided to immediately promote Tony Deasey to the position of Chief Operating Officer of Celsion. Tony has been a major support to me in the separation of business and financial strategy.

He and Dan were instrumental in closing the Boston Scientific agreement. He succeeded in raising significant funding for Celsion in very difficult financial market conditions during the year 2002 and 2003.

He headed the integration team that went with Boston Scientific to ensure that our policy system had the FDA scrutiny and our products were manufactured to the stringent quality standards.

Additionally, Tony and I have been working together to develop the strategy of developing quality anti-cancer drug products based on our heat-activated drug and gene delivery platform to allow Celsion to become a successful biopharmaceutical company.

I am confident that under Tony's leadership we will continue to make excellent progress.

Now I'm going to ask Tony to update you on the recent progress of Celsion's business. Tony?

Thanks, Auggie, and good morning.

Over the last two weeks, we've traded over 25 million shares. I am sure that that has resulted in many huge shareholders joining the Celsion family. Several of them could be on this call.

To their benefit, I'd like to recap the BPH market. There are currently at least nine million men in the United States who suffer with this condition, which causes older men to have difficulty with urination.

There are several ways of treating it. The most drastic is a transurethral resection of the prostate, whereby the obstruction caused by an enlarging prostate is surgically removed.

This used to be the standard treatment. The most common alternative to surgery is a drug regimen. However, the drugs have side effects and the surgery is quite drastic. And as a result, most of the patients, actually a number estimated to be around seven million or close to 80 percent of the patient population, choose to modify their lifestyles to deal with the symptoms.

This has allowed the emergence of a category of minimally invasive therapies to emerge, which deal with the problem in the doctor's office. This segment, where we will now be competing, has been growing rapidly.

But the current treatments have their drawbacks in that they are painful and almost invariably require catheterization for three days to three weeks immediately after the treatment.

Our product overcomes these issues. In our trial, almost all the patients left the doctor's office without a catheter and the treatment was performed without any sedation. A very attractive reimbursement is in place for the procedure, averaging around $4,000.

Revenues are generated from sale of control units and disposable catheter kits. Under our agreement with Boston Scientific, we split the profit on sale of the control units equally and we split the revenues from sale of catheter kits equally also.

In our view this is a classic razor-and-blade business and since every treatment requires a new catheter kit, we and Boston Scientific will focus on building the market through maximizing utilization of machines.

We are very excited at the prospects for this business. Now let's look at other developments within our business.

The seasoned management team is essential for the success of any biotech company. Having completed the approval process for our BPH device, we must transition our staffing towards a biopharma orientation.

With Dan's departure, we must recruit a replacement from the biotech or pharmaceutical industry with extensive experience in the development of cancer products. We have initiated a search.

Over the past few months, we have already begun to transition our organization. We hired a Vice President of Regulatory Affairs, Dr. Carolyn Sinkol (ph). Carolyn also has extensive experience in the development of new drugs and genetic compounds through pre-clinical and early-stage developments and will be a major help to us as we establish a core capability in the area of clinical development.

Hiring Carolyn enable Dr. Bill Gannon, our Medical Director and Vice President of Clinical Affairs, to focus on designing and completing clinical trials for our portfolio of products.

We have recruited a specialist in the area of formulation and manufacturing of liposomal drug compounds. Since joining Celsion, he has been working with Northern Lipids, our liposome manufacturing consultant, to scale up the production of ThermoDox and set up the processes and systems critical for controlling of production of ThermoDox.

He is also in the process of setting up Baxter as a manufacturer of our commercial-grade ThermoDox. We have also hired an experienced product development executive to manage the breast cancer program.

We proved on the BPH product that without dedicated, focused attention, programs stagnate. We are confident that this person will manage this program effectively so that we get the earliest, optimal commercial results for the product.

We have also strengthened our business development capability by hiring a director of corporate planning and development, who has gained his experience working for Venture Capitalist in the biotechnology area.

He will help us build business plans, which can help us focus our efforts and pursue additional corporate partners. It is possible that over the next few months other resource needs will surface within the organization.

Now that we're adequately funded, we will fill those positions as they are identified and justified. With a seasoned management team in place, we will be in a position to implement steps towards our second objective, the development of a pipeline of quality anti-cancer products.

It is our belief that the technology which holds the most promise for Celsion is the heat-activated liposome technology, which we have licensed from Duke University. We have encapsulated a common cytotoxic cancer drug, doxorubicin, in this liposome.

The resulting compound is being developed as ThermoDox. We are currently in a prostate cancer Phase I trial and will shortly start a Phase I trial for liver cancer. Beyond these two trials, we have the capability to move the product into breast cancer trials, and once we have proved that this liposome is an effective, drug-delivering medium, we can expand and encapsulate other water-soluble drugs, of which there are many in the cancer arena.

In mid-March, we will complete the surge cohort of patients in our prostate cancer Phase I study using ThermoDox in combination with Prolieve with which we heat the prostate to 41 degrees Celsius, the release point of the drug.

Enrollment of patients in this trial has to-date been difficult, but as a result of the allowance in January of a protocol amendment broadening the patient population and the addition of a new clinical site in Myrtle Beach, South Carolina, we hope to complete the Phase I study in the summer of this year and to start a Phase II study in 2005.

We have also filed an IND in partnership with the NIH to study the treatment of liver cancer using a combination of Radiofrequency Ablation and ThermoDox. We are currently on clinical hold pending completion of some additional pre-clinical studies required by the FDA.

But we expect to complete that work shortly and start treating patients soon after the work is completed. If we can show efficacy early in Phase II for either of these studies, we will have the opportunity to explore broadening our relationship with Boston Scientific or establishing a relationship with another major player in the oncology market.

At the same time, we are continuing our Phase II, Phase II breast cancer trials and we expect to reach a mid-point of the early stage study in the summer, at which point we will analyze the results.

We are hopeful that we will see great results. We are also considering whether we can expand our ThermoDox studies to include breast cancer using either our APA technology or the advanced phased array radio frequency system, which we licensed from Duke during last summer, to provide the heat.

Currently we're focusing our resources into proving through the ThermoDox studies that the Duke heat-activated liposome technology can successfully deliver drugs to targeted regions of the body.

Once that has been proved, we can turn our attention to encapsulating other drugs for additional cancer application. In December, we announced the formation of joint venture in China.

Many of you were expecting instant results. Let me outline the strategic implications of this venture. We believe that we can submit our U.S. FDA-approved data for Benign Prostatic Hyperplasia to the Chinese regulatory authorities and get a rapid approval for the product possibly by the end of the year.

We also believe that particularly for our liver cancer and other heat-activated genetic drug products, that we'll be able to perform human clinical studies in China faster and at a lower cost than would be possible in the United States based on a larger patient population and a lower cost economic environment.

At present, we're setting up the infrastructure with our partners. The first piece of the puzzle is to recruit a first-class general manager. We have a search underway and expect to hire a well-qualified candidate shortly.

We are unlikely to see quick results from this venture but will be well-positioned to supplement our U.S. clinical efforts and to take advantage of one of the most attractive markets in the world.

Our third goal was to put the company on a sound financial footing. Taking into account the cash currently on-hand, warrants that we can call and the Boston Scientific milestones that are due, we currently have cash resources of around $28 million available to us.

At our projected net average burn rate of between $800,000 and $900,000 per month, that equates to around 30 months cash. The company's cash balance, or the company's balance sheet is currently the strongest it has ever been.

If Boston Scientific exercises its option to purchase the BPH asset in the next 30 months, we will have sufficient cash to develop the breast, prostate and liver cancer programs to the point where we can bring in a commercial partner.

We are convinced that successful completion of these programs will ultimately be reflected in a very substantial valuation for this company. However, no matter how good our results, we must make the larger business community aware of what we are doing.

Over the last year, we have started that process. We increased our institutional ownership from zero to around five percent by the end of last year. The addition of Boston Scientific and Duke University as major shareholders has increased the institutional holding by around 10 percent.

It's also stabilized our shareholder base. We will continue our efforts to attract nationally recognized analyst coverage. We will also continue our program of institutional presentations aimed at increasing our institutional holding.

On Wednesday this week, I will be presenting at the Red Chip Conference in San Francisco. Red Chip targets small cap stocks and investors interested in that space.

Our final objective was to transition the company into being a fully-fledged biotechnology company. We believe that we are now a long way down that path and many of the component parts are in place.

We have Prolieve, an approved, versatile product in the market, which has the potential to be used not only for the treatment of BPH but also for prostatitis and as a component for our prostate cancer treatment.

We have a very promising drug delivery mechanism in human trials. We have ThermoDox, a potentially very effective drug, also in human trials. We have a very powerful cancer repair inhibitor in late stage, pre-clinical trial.

We have an experienced team of engineers capable of developing effective heating systems. We have a clinical and regulatory team experienced at taking products through the clinical process.

And finally, we have a very strong cash position. As we look ahead, we are very excited by our prospects. We will now hand this back to Amanda and take your questions.

Thank you.

[OPERATOR INSTRUCTIONS]

And your first question comes from Joshua Anderson (ph) of Brookstone Street -- of Brookstreet Securities.

Hey, guys. How are you doing today?

Good, thank you.

All right. Actually, you pretty much answered all my questions but I did want to congratulate everybody there for getting the BPH through. I know you guys took a lot of heat because it didn't come by that first of the year so it looks like Dr. Cheung was correct in his statement that he made a few months back.

Again, I just want to congratulate everybody and I also would like to specifically thank Dan Reale for all his help that he has put in and I hope everything works out OK for him at home.

That's all I have to say.

Thank you.

Thank you. And we echo your feelings towards Dan.

And your next question comes from John Gibboney (ph) a private investor.

Good morning.

Good morning.

Good morning.

Congratulations on the BPH. I was one of those anxious investors waiting for the first of the year but that was great news.

My question has to do with the milestone schedule for all of the products in the pipeline, and I'm wondering if the company will be putting out an occasional update on all of those pre-clinical and clinical trials so that investors know, you know, like on a quarterly basis, where we stand with all of them.

Well, it is definitely our intention to keep updating the shareholders on the progress. That's why we have this. Normally we have quarterly shareholder meeting, I guess the last quarter because of the really big pressure to get this PMA approval done.

We really did not have a conference call. We're waiting for it to happen before we have one. But you will be informed regularly and updated regularly on the progress, I promise you.

Thank you.

Our next question comes from Rick Stearns (ph) of Lebard (ph).

Good morning, guys.

Morning.

Rick.

That's - hi, guys. Congrats once again.

Thank you.

Obviously job well done. I'm wondering, I just wanted you to clarify something about the Boston Scientific relationship. You had mentioned that of the $8 million, $4 million is coming at $1.90 a share? Is that correct?

Actually, it's $1.92 and the wiring instructions have been initiated today.

OK. And then you had also mentioned that there is another payment some time in the future whereas the price that they get in at is based on the 30-day average prior to that time? What does that trigger?

There's a, there were two basic equity milestone payments. One was on approval and one was based on launch. We'd anticipated the approval would precede the launch and the approval milestone was based on 30 days post-approval because we thought we'd take advantage of an increase in the stock post-approval.

The launch was anticipated to take about 45 days after the approval. So the second payment is the launch, is the approval milestone and it's based on the stock price 30 days post-approval.

Wouldn't it be nice if we could get it back over the $1.90. The last question is you had mentioned that they have the option to potentially buy out your 50 percent interest, it sounded like, or basically buy the entire BPH at some point in the future.

When is that and are you willing to disclose what the payment would be?

Yes. They have a five-year option to purchase the BPH assets from the date of launch and the minimum purchase price for the BPH assets was $60 million. It was a multiple of sales or $60 million.

OK. Thank you.

Thanks.

Thanks.

Your next question comes from Marvin Porter, a stockholder.

Yes, add my congratulations as well. Several questions and thanks for answering a lot of them already that I had.

Concerning manufacturing capability for the BPH roll-out, could you address what size of roll-out you can, you think you can support, particularly in the near-term?

Yes. We have the product manufactured from two sources. The product is made up of a control unit and a catheter kit. The control unit is made by a unit from Sanmina Corporation, which is a major electronics subcontractor.

And they have the capacity to build really as many machines as we want. It's anticipated that by the end of the year, we should have placed somewhere around 100 machines in the U.S., and that is well within their capability to produce.

In terms of catheter kits, currently they're being produced by a company called CRI, which is a subsidiary of BioMed, and they too have the capacity to meet the forecast or what we anticipate that Boston Scientific will need by the end of the year.

And then we have the capacity to ratchet up production as demand surfaces.

OK. Thank you. I wanted to ask if you could be a little more specific about the small tumor breast cancer trial. For example, the total number of patients you expect to enroll to complete the clinical and how many have been enrolled so far and what the outlook is for the remaining ones.

We have two breast cancer studies underway right now, one using heat alone into the treatment of early stage tumors. We have to treat 222 patients in that study. We've treated 80, 88 patients so far. We are able to do a midpoint analysis when we get to somewhere around 100 to 110.

At that point we will see what the results look like and decide what to do from there, you know, whether we try and submit or just keep going. The other studies for later-stage cancers, and that is using heat in combination with chemotherapy, in that trial we have to also do approximately 220 patients.

Right now we've only treated 31 patients. The issue is that with mammography, et cetera, there's fewer late-stage patients and it's very difficult to recruit them.

What's your anticipated rate of recruitment for the early stage?

You know, we had a spurt in July/August, and then it slowed down again. The patients tend to come in spurts and it's very difficult to predict when they come. You know, we have 10 sites treating patients and it, you know, it just depends which patients come in that qualify.

OK. Thank you. Two other questions here. What is your status relative to being in the Russell small cap index?

I think actually when the Russell was adjusted last year, we qualified on a market cap but we didn't quite, our stock price was still below $1.00. So right now if they were reformatting the index, we would be in it.

OK. And last question, do you have a set or anticipated annual meeting date?

Yes. It's May the 25th at 10 o'clock at the Sheraton Hotel in Columbia.

OK. Thank you very much.

Columbia, Maryland, that is.

Thank you very much.

Thank you.

Your next question comes from Steve Seagal (ph) of JMF.

I'm relatively new to the story and I didn't hear all of the call. I could hear you talk a little bit about your cash position and milestones.

If you don't get any additional milestones, how long will your cash last approximately? And are there any convertibles that come due in between that could make it shorter?

The milestones - we only have milestone payments due from Boston Scientific and we will get all of those. When we receive those, we'll have approximately $28 million cash available because we also have $3 million in warrants that we can call at any time.

We have no convertible debt on the books. We haven't, we also have no debt at all. So ...

OK. So you could force them to invest $15 million at some pre-arranged formula. Is that correct? When you said they have warrants that you could call in?

The Boston Scientific, we get $10 million from on two milestones. One of them, six million is on its way today.

OK.

Or eight million is on its way today and we get two million in about 30 days. Separate from that ...

That's because the milestones are already completed.

Yes, the milestones are completed.

OK. Right. OK.

Separate from that, we have around $3 million in warrants that are callable right now.

And what's their strike price?

Sixty cents.

OK. How much do those, that 10 million plus the warrants, how long would that take you until ...

We have about ...

In case you don't get other things ...

We have about 30 months cash on hand.

About 30 months.

Yes.

Thank you.

Your next question comes from Chris Vasta (ph) of RBC.

Hey, guys. Congratulations on the news. I was just curious, are there any projections internally or in conjunction with Boston Scientific for Prolieve sales in fiscal '04 and fiscal '05?

We are not giving out any numbers in terms of projections, Chris.

OK. As far as the Duke relationship you have, you made an announcement in the latter part of last summer where you obtained exclusive rights to the APA technology. So they completed the phase one; they're currently in phase two.

Can you tell us how far along they are in phase two and are those results your results because you have the exclusive license to that technology?

Just to clarify, Chris, APA technology, we licensed ...

From MIT.

from MIT and that's what we're using in our breast cancer study. We are, we licensed a different, a Radiofrequency technology from Duke, which is an institutional IRB in which they've been using other drugs.

The main drug they got good results on was Myocet. They have not used ThermoDox in any of those trials. They would like to and they would like to initiate trials using ThermoDox but at this point they haven't and we're in conversations with them.

OK. And in that press release also you talked about an option to acquire heat-inducing genetic anti-angiogenesis with Avastin and anti-angiogenesis being the key theme word in cancer these days. When does that option expire?

We have that option and I do know - the option, you know, we have renewal and we are funding additional pre-clinical research on that program. So you know, we have, you know, they have published paper and, you know, they have submitted patents potentially (ph) on those technology.

So we'll keep the option and I think until they receive a patent we probably will not institute a license agreement until we get additional information. But the option has been extended.

OK. Thank you very much.

Thanks.

Your next question comes from Steven Marcos (ph), a private investor.

Congratulations, guys, on the approval and best wishes to Dan Reale. You had mentioned the term "early positive cash flow," Tony.

Yes.

Could you elaborate on that?

Well, the way the deal with Boston Scientific works is that when we sell a machine we get 50 percent of, you know, we get reimbursed for the machine and we get 50 percent of the profits.

And on the catheters we get 50 percent of the revenue generated from the catheters. So within a year, we should be cash-flow positive in terms of having funded inventory, et cetera.

Would that also cover the burn rate?

No.

No.

It would be just cash-flow positive on BPH.

On BPH as a separate business. OK.

Yes.

Second question, on prostatitis, you mentioned that, could you explain the relationship with Boston Scientific, if there is one at this point on that, and where are we going with prostatitis.

In terms of prostatitis, we, at this point in time, we are not doing anything on it. We know that Boston Scientific see that as a potential line extension and they're interested.

But to-date our focus is being let's get the BPH approved first ...

Launch it.

and launch the product and then we will start exploring prostatitis. But it is a huge opportunity. We believe that the prostatitis market is at least as big as the BPH market.

OK. Thank you. And my final question is do you have any, can you give us any idea what the revenue per machine you expect to get?

You know, we would like to see the machines used very frequently, you know, maybe 10 times a month. And if we had a machine that was used 10 times a month that would be 120 catheters a year that would generate $120,000.

One hundred and twenty thousand per machine?

Per machine.

Thank you very much.

Your next question comes from James Cole of Cole and Company.

Congratulations on the great work, gentlemen. I would like to ask the time span as far as the training of the urologists when it might be in general use, and also where one might be able to get information on the urologist who will have the equipment available.

And finally, where there might be a source where I can read the study test results on the Prolieve studies. Thank you.

At this point in time, Boston Scientific are planning to place around 10 machines in the next couple of months and that those, you know, iron out any issues in terms of training and what have you.

And then in early May they plan to launch the product nationally and roll it out relatively rapidly. In terms of knowing where the machines are, if you call our 800-number, we will be able to point you in the right direction really in a couple months from now.

Initially, the sole site is Shreveport and then the other 10 sites we can talk about. So if you call the 800-number then we will put you through to somebody who can give you the information you're looking for.

Now that was part one of your question. What was the second piece?

The efficacy result, I think ...

Oh, yes.

The source of information.

The results of the study are published on the FDA site. And again, if you called in, we can give you a Web site where you can get, where you can see the results.

Thank you very much. And good luck.

Next question comes from John Gibboney (ph), a private investor.

Yes. I have a follow-up question, if I might. It's really two questions. The first has to do with the breast cancer, which if you can clarify, that, I believe, is the next pipeline drug and could you clear up, at least in my mind, what the trial schedule and FDA submission review forecast is on that?

Yes.

My second question - excuse me. My second question is the total dollar value of Prolieve to the company. I'm hearing that it's 10 million is the top but is there additional income forecast for that?

Thank you.

OK. In terms of the breast trial, first, it's a device, it's not a drug. Second, it is the next, potentially the next milestone in that we should reach the midpoint in the early-stage tumor study in the summer, at which point we will read the results so far.

So you know, hopefully when we have our next shareholder conference call we'll be able to elucidate more on that. The second thing you asked about was on the BPH product, there was a cap of $10 million.

That is not right. First, Boston Scientific could buy the BPH assets for $60 million but then you have to look at that and say that the Prolieve device could also be used for prostatitis and it's also used as a heating mechanism in our prostate cancer treatment.

And at this point in time, Boston Scientific has arrived at the first offer but it does not have an option on those. So if we were to successfully undertake prostatitis trials and see good efficacy on prostate cancer, then potentially we could do a further collaboration with Boston Scientific on those assets and obviously we'd want substantially more value if we did that.

So is the next drug in the pipeline breast cancer or is it prostate cancer?

I - go ahead.

First, we keep talking about breast as a drug. Breast is not a drug. It's a device. And it could be the next. If the results look good, then we could take the results and submit to the FDA.

Then beyond, the next thing that we would seek in there is, if we can do that it's the next item in the pipeline. If it's not, then on prostate cancer we should establish a safe dose for ThermoDox during the summer and beyond that we would hope to see efficacy in early Phase II.

So you're looking around some time in potentially early in 2005.

Thanks very much.

Thank you.

Your next question comes from John Hatton (ph) of A. G. Edwards.

Hi. Could you guys explain the reimbursement rate for the physicians who will be using this?

Yes. There's a CPT code, I think it's 53850, which is TUMT, and the average national reimbursement is about $4,000 per procedure.

What percentage is that of the procedure, please?

That is the whole procedure.

Thank you.

Next up is Robert Kushkarian (ph) of Kairos Partners.

Hello, gentlemen. A couple of quick questions. In recent months, people have submitted and gotten approval for Photo Vaporization type laser-based procedures.

I'm wondering, does your indication compete directly with that or is it a different specific indication, perhaps based on prostate size or whatever it might be?

The laser, mostly they are considered surgical procedure.

Yes.

Ours is a different type of treatment. We're using heat in combination with thermodilatation, which is the dilation balloon, a combination of heat and the pressure generated balloon give the BPH patient immediate or a very rapid relief.

And then the application of heat will also eventually cure some of the cell in prostate to give patients a longer-term relief. So it's a non-surgical procedure.

I think additionally the equipment costs for our procedure is substantially lower than the equipment costs for the laser equipment. And as Dr. Cheung said, that's a surgical procedure.

In our procedure, which is totally automated, the doctor can see the patient, insert the catheter and then leave the procedure under the supervision of a technician. And then he can come back and see the patient at the end of the procedure.

So there's productivity with our procedure is much higher than it would be for a laser procedure.

OK. Second question, I certainly don't want to get personal related to Dan Reale, but in the initial press release it kind of sounded like a personal issue had arisen and in today's call it sounds a little bit more like he's had a temporary living relationship and kind of commuting from afar, if you will, for a long period of time and decided not to make the move permanent, which has just a slightly different flavor.

Is there any color you can add to that at all?

No. It's a combination of the two. He has a personal issue, which was more difficult to deal with because he was commuting.

OK. Thank you. Thank you very much.

And your final question comes from John Walter, a private investor.

Hello, guys. Again, thank you for navigating the company through some difficult times and congratulations on the BPH hurdle.

My question is, you mentioned the China, the market. What about the other country that you have the revenue, I guess, rights to, other than what Boston Scientific is not entitled to. Are you going to submit the same results?

Yes. Interestingly, three of our people today are meeting with, we have a distribution agreement with a company in Mexico and they had originally anticipated that they would have to treat patients in order to get the approval in Mexico.

But now it seems that we can just submit U.S. data to the Mexican authorities and get approval there. So, you know, things won't happen overnight but the process is underway in Mexico and hopefully these guys can roll the process out from there.

In Hong Kong, or what I call Greater China, we would submit the FDA data to the Chinese authorities, and that will be the basis of an approval in China. And we'll also pursue it in Hong Kong and Taiwan and Macau.

So we're actively working on that. I wouldn't expect to see revenues generated on any of those initiatives until around the end of the year, I would think, at best.

And one last thing, Tony, you had, a couple years ago you had hired, I guess, an investment banking firm to help you find a partner for BPH. Would that be the same strategy for, such as the breast cancer treatment, to find a strategic partner to once, if and once this thing is commercialized.

I think that depends to a large degree on the circumstances. When we hired Legg Mason to find a partner on BPH, the objective was, you know, we were very thinly staffed at the time and the objective was for them to find us competitive bids.

We are better staffed now and I think we can do a lot more of the research ourselves. So we would attempt to do any deal on our own and then, you know, if we needed to, we would bring an investment bank in there if it would result in generating a greater value.

But right now I think we have more staff and we're better equipped to look for strategic relationships on our own.

Thank you very much and all the best in 2004.

Thanks very much.

At this time, there are no further questions.

All right, well let me thank all of you, you know, for calling in and I look forward to updating all of you again in the company's growth process, progress during our, progresses during our shareholder meeting in May and then every quarter.

Thank you.

Thank you very much.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes your program.