Infinity Pharmaceuticals Inc (INFI) 2008 Q1 法說會逐字稿

Good day, and welcome, everyone, to the Infinity Pharmaceuticals first quarter 2008 financial results conference call. This call is being recorded. At this time, I would like to turn the call over to the Vice President of Finance, Mr. Steve Kafka. Please go ahead, sir.

Thanks, operator, and good afternoon, everyone. My name is Steve Kafka, Vice President of Finance for Infinity; here with me today are CEO Steve Holtzman; Chief Scientific Officer; Julian Adams; and Chief Business Officer, Adelene Perkins. Before we begin I need to remind you that today we will be discussing our recent R&D and business progress and review our financial results for the first quarter of 2008. The press release detailing our results was issued this morning and is available on our website at infi.com. In addition, the slides that we are using today to accompany this call can be accessed now on our website, infi.com. You can find them on the events page in the investors section of the website. A webcast of the call and slides will be archived on the website for 30 days.

On this call, we will be discussing our future discovery and development efforts, our collaborations, our financial position, and other future expectations. These remarks constitute forward-looking statements for purposes of the Safe Harbor provisions of the Private Securities Litigation Reform Act. It is possible that our actual results may differ from what we project today, due to the factors which are described in the risk factors section of our most recent 10-K filed with the SEC in March. While these forward-looking statements represent our views as of today they should not be relied upon in the future as representing our then current views. We may update these statements in the future but we are not taking on an obligation to do so. With that, I will now turn the call over to Steve Holtzman.

Thanks, Steve and good afternoon, everyone. Thanks for joining us today. We're four months into the year and it's been four months of flat out and flawless execution at Infinity, I'm happy to say. A lot of it, if you will, below the water line, not immediately evident. On the other hand, the recent AACR began a rollout, if you will, of important public announcements of milestones that will occur over the remainder of the year here at Infinity. And it's going to be an exciting remaining eight months.

Now with today's call we are doing a bit of an experiment with WebEx and slides and, again, as Steve mentioned, if you would like to look at them, go to our website, www.infi.com and I encourage to you do so because we are going to focus on R&D and science today. And it will help you to follow the discussion. And with that, I'm going to turn it over to Julian Adams who is going to take you through a lot of the exciting things going on here in our scientific efforts. Dr. J?

Thank you, Steve and good afternoon, everyone. We are really excited by the progress we've made in this first quarter. First, in the development of IPI-504 or retaspimycin hydrochloride. We are moving ahead with the registration trial. We also are pursuing many additional trials, and looking for new trials on the horizon. Second, we've made impressive progress in the development of our oral Hsp90 inhibitor, IPI-493, which is on track to enter clinical trials mid-year. And third, we've made great strides with our Hedgehog candidate, IPI-926.

Notably and as Steve said, we announced our First Data on IPI-926 at the recent AACR meeting in San Diego. So I would like to spend a little more time relaying those data to you and share with you why we are so excited about this molecule. As many of you already know, the Hedgehog pathway is associated with embryonic development, specifically key to the developing fetus and is largely quiescent in adult life, that is, it is shut down in most adults. The pathway features two important receptors. One is the Smoothened receptor, by which the pathway signals and the second receptor is called patched. The role of patched is to inhibit Smoothened or to repress Smoothened and to block its signaling. And as I have said in adult life, this pathway is on in cells but it is largely quiescent because of Hedgehog ligand.

Now should the Hedgehog ligand be produced, Hedgehog binds to patched and derepresses Smoothened. That is blocks the effective patched inhibition of Smoothened. Smoothened is now free to signal into the cell and translates to the activation of a transcription factor called glee. So a readout of the pathway is to monitor glee activity.

Now, several years ago, James Chen in [Phil Bechies] lab, at John Hopkins discovered that a natural product cyclopamine which is a steroidal alkaloid derived from a plant is a specific and selective inhibitor of Smoothened. So it can shut down the pathway by binding to Smoothened. So that even if Hedgehog is expressed cyclopamine can shut down the pathway by binding to Smoothened. So what does this have to do with cancer?

Well, Hedgehog is very important now in cancer in three distinct, different manifestations. The first is -- involves genetic mutations in the receptor patched. So if patched is damaged, it can not block Smoothened and Smoothened is free to signal in constitutive manner and is very active in the diseases of basal cell carcinoma and childhood medulloblastoma. Another way in which Hedgehog is manifest is that it becomes aberrantly expressed and the pathway is activated in more common cancers such as pancreatic, gastric, prostate, and glioblastoma. In this manifestation, Hedgehog, normally quiescent is now aberrantly expressed, it binds to patched, it releases the activity of Smoothened and signals into the glee transcription trend.

More recently we have been studying Hedgehog in a very novel setting and that is in the setting of tumor progenitor cells. What we find is that Hedgehog is particularly important in supporting a subpopulation of cells that are allowing for the cancer to grow and thrive. These tumor progenerator cells also known as cancer stem cells have the properties of asymmetric division. They can divide to make themselves, but they can also differentiate to make the bulk cancer which grows and eventually consumes the patient. Our interest in the Hedgehog pathway actually stems from looking at the molecule of cyclopamine, natures endogenous inhibitor of the pathway. We set out to obtain cyclopamine have harvested it in multi kilo amounts and this became the starting point for our medicinal chemistry efforts. Here I must say the chemists did an unbelievably creative job of taking the starting material, cyclopamine and turning it into a more drug-like molecule, ultimately resulting in IPI-926.

IPI-926 has superior oral bioavailability, a very long half life in multiple species and very excellent in vivo activity. In fact, it's about 50 to 100 fold more potent than the initialed molecule cyclopamine. It's more selective against a panel of many different receptors and enzymes and it has both increased metabolic stability and chemical stability compared with cyclopamine. As such, we have been issued a composition of manner on a broad genus of molecules which encompass 926. This was all discovered in Infinity and as a result is 100% owned, royalty-free on a worldwide basis at our Company.

If we look at IPI-926 in a cellular binding assay, to Smoothened we can see that IPI-926 is about a hundredfold more potent than cyclopamine. So we have really made an improvement on nature's endogenous inhibitor. We began some of the experimental activity by looking at a murine model of medulloblastoma. In this model we implant the cells subcutaneously in mice and we give it a single dose of IPI-926. We look at the pathway readout, as I have mentioned looking at glee, messenger RNA in the tumors and at doses of 20 milligrams per kilogram, we can see at least three logs of diminution of glee expression. Virtually completely abolishing the activity.

So how does this translate in a normal xenoograft, traditional xenoograft like experiment? We implanted it in mice, allowed them to grow and they grow very aggressively, indeed. In a dose response relationship, we can block the growth of this tumor. In fact, frankly regress this tumor with three weeks of treatment and at the highest dose of 20-milligram per kilogram going after 60 days, half the animals were cured of this tumor. We went one step further, since medulloblastoma grows in the brain, we stereotactically implanted the cells in the brains of mice. Left untreated none of the animals survived and succumbed within 20 days. The treatment group was 100% survived during the treatment period, however at the end of treatment, these animals too succumbed given the very aggressive nature of this genetically defined tumor. What this teaches us is that we need tonic and chronic exhibition of the pathway in the genetic study.

Let me turn to a very different type of tumor, one that is perhaps more commonly making use of the Hedgehog pathway. If we turn to the activation of Hedgehog pathway, for example, in small cell lung cancer, the human disease is characterized in heavy smokers. Initial treatment with chemotherapy, the patients respond extremely well to chemotherapy and these tumors are regressed. However, no one is cured. And the cancer comes roaring back and now is resistant to chemotherapy.

So we developed a small cell lung cancer model, with a cell line derived from patient, prior to chemotherapy. We implanted these cells subcutaneously in mice and left untreated they grow very aggressively. Paradoxically, when we treat with I PI-926, we actually see no activity. And in, fact, the Hedgehog pathway is almost undetectable in this initial phase. As with the clinical setting, we treat these animals with two cycles of eitopicide platinum, the standard chemotherapy regimen for this disease and we can completely regress these tumors to almost minimal residual disease where the tumor is barely detected.

At this point, we then divide a hoard of animals in two groups, one left untreated and the second treated with IPI-926. Now we see the profound effect of the Hedgehog pathway inhibitor where we see very much delayed time to tumor regrowth, or as we would say for patients time to relapse. And out to 60 days we see that the cancer is 82% inhibited over the untreated. This has me particularly excited because this has really a new way of changing the face of cancer. Treating the minimum residual disease, the disease that comes roaring back and eventually takes over patients. This gives us new hope in treating this disease in a very different way. There are many other diseases that are chemo responsive, just like this and we are conducting experiments in our laboratory to get a broader expansion of the phenomenon.

So to wrap up the Hedgehog program, we saw all of these impressive data at AACR. The preclinical data, we are right now in the process of filing the IND and shortly thereafter plan to initiate Phase I studies this summer. And so that would expect to see preliminary Phase I data in 2009, and, of course, initiate Phase II trials.

Why am I personally excited by the Hedgehog program? For the first time we see a different treatment modality in cancer. Really a different way to get at the underlying progenerator cells that can cause tumor regrowth, even in the setting where the patients have had profound response to key therapy. And marrying these regimes with chemo can make a real difference in the future of patients' lives.

Back to our Hsp90 programs we continue to make steady progress. We also announced some new data on our lead Hsp90 inhibitor, IPI-504 at AACR, and the data demonstrates that IPI-504 is active in many other diseases that have developed drug resistance with standard TKI therapy. And in addition, we can see that the combinations of TKIs are going to be effective TKIs available on the market today.

The first experiments were done in non-small cell lung cancer where we see that the Retas resistant cell lines are now sensitive to IPI-504. I will remind you that 50% of EGRF expressing patients develop this single point mutation P7090M which evades TKI therapy, however, 504 is very effective in this setting. Another away to avoid TKI therapy is with the expression of CMED and in collaboration with [Tafiyanni] at the (inaudible) we demonstrated while [erasa] has a modest effect on this particular cell line, we can very profound effects with IPI-504 given alone and even more impressive effects given in combination where we can frankly regress these tumors.

And finally, one of the best studies client proteins of Hsp90 is the HER2 receptor. HER2 is a very sensitive client protein and shows initially sensitive to herceptin, but eventually, even in the -- even in the resistant setting of herceptin shows very much -- shows extreme sensitivity to IPI-504. Finally, we can combine herceptin and IPI-504 and again, effectively regress these tumors.

Hsp90 has really moved aggressively in the first quarter in 2008. We are on track with a potential to enter the trial designed for registration in GIST. We start in the third quarter of 2008. I will remind you that an update in the Phase I data of IPI-504 in GIST will be reported in an oral presentation of ASCO by Andy Wagner. Mark your calendars, it is May 31, early in the morning. It will be standing room only, so please get there early. Clinical trials of 504, non-small cell lung cancer, hormone refractory prostate cancer, and in combination with Taxotere are also ongoing and so you can anticipate data later this year at appropriate meetings.

Finally, I'm really excited we have made this tremendous insight into developing an oral Hsp90 inhibitor exemplified by IPI-493. This continues to advance IND enabling activities and we anticipate starting a Phase I study in a few short weeks.

So in closing, I want to, again, relay my enthusiasm, how well we are doing across the board on all of our programs. The team at Infinity is extremely productive, and both insightful both scientifically, as well as in clinical translation. I believe we are likely to be successful on all fronts. This first quarter has been all about execution. Execution, execution. And with that, I would like to turn over the floor to Adelene Perkins to discuss the financial updates. Adelene?

Thanks, Julian, and good afternoon, everyone. I would now like to provide you with a brief update on our progress on the business and financial fronts. Starting with the business update, the most significant highlight is the ongoing success of our strategic alliances. First, we have successfully transitioned the BCL-2 program to Novartis. We fulfilled all of our obligations on this program in February 2008 and the program is now in their hands thanks to IND and beyond. We look forward to receiving milestones and royalties on the successful development of the BCL-2 program by Novartis.

Secondly, relates to our strong partnership on the Hsp90 program where we are building a great relationship with the AstraZeneca team. As part of the MedImmune/AstraZeneca integration it was decided that AZ with its global small molecule oncology expertise should be our primary partner for Hsp90.

I would like to share several indicators of the quality of our developing relationship with AZ. As a reflection of the level of the importance of the program to AZ, the three members of the joint development team with IPI are the global head of the oncology and infectious disease therapeutic area at AZ, the global vice president of oncology and infectious disease discovery and the global vice president of oncology development. AZ's three most senior oncology executives. In addition, we've been extremely impressed by the quality of the entire AZ team under the leadership of these executives.

In what is perhaps a reflection of the level of mutual respect, the joint AstraZeneca and Infinity development team have decided given the demonstrated experience of the Infinity team quickly bringing drugs to NDA (inaudible) will lead the GIST registration trial for 504. This allows to leverage AZ's late stage oncology capabilities and expertise in executing on the expanded clinical development program for Hsp90.

Let me turn now to our financial results for first quarter to highlight our strong balance sheet and cash runway. We finished the quarter with $105 million in cash. We had revenue of $11.4 million. The increase for first quarter of '08 over '07 was primarily due to recognizing the remaining deferred revenue from Novartis related to our BCL-2 collaboration. We had R&D expense of $8.5 million, which is net of $4.4 million of MedImmune reimbursement, such that our total R&D investment in the first quarter was $12.9 million. Importantly, over a third of our total R&D expense is offset by MedImmune AZ, which is a key factor in ensuring we can develop IPI-504 broadly to fully capture its potential, while at the same time, ensuring that our current cash takes us into 2010. We had G&A expense of $3.8 million and net income of a positive $400,000. I probably don't need to highlight that this profitability is driven by accounting rules on revenue recognition but I will remind you that you should not expect us to remain profitable for the remainder of the year.

I would like to reiterate our guidance that we project to burn 35 million to $45 million of cash in 2008 which is well controlled as I mentioned with the cost share with AstraZeneca and cash takes us into 2010, where we will have the ability to achieve some of the key value creation milestones that Julian referred to. And with, that I will turn it back to Steve.

Thanks Adelene and thank you Julian. Just a related quick wrap-up here. What can you look forward to in terms of key milestones between now and the remainder of the year? Well, in the remainder of the first half of this year, ASCO, as Julian mentioned, you will get an update on the Phase I data including the full expansion of the trial, which included an additional 22 patients, all of whom have been enrolled at this point. We expect to -- in and around the mid-year, initiate additional Phase II trials with IPI-504 Retaspimycin and last but not least and very importantly before the sun sets on June 30, this year, IPI-493 will be in human clinical trials. That's our oral Hsp90 inhibitor.

Turning to the second half of the year, of 2008, it will see us launch into a full registration trial of Retaspimycin and refractory GIST. It will see us launch the Phase I trial of IPI-926, our Hedgehog inhibitor and then in the latter part of the year at appropriate scientific meetings you will get updates on preliminary Phase II data in both non-small cell lung cancer and hormone resistant prostate cancer treated with IPI-504. So two INDs and the launch of the registration trial coming in the remainder of this year. We look forward to continued interactions with you and with that, I'll turn it over for questions.

Thank you. (OPERATOR INSTRUCTIONS) And we'll take our first question from Eun Yang from Jefferies & Company.

Thanks very much. On the Hsp90 program, Biogenetic has this oral formulation for Hsp90, and they are running Phase II study in GIST. It seems like the patient population that they are going after is quite similar to what you are planning for your Phase III for GIST. I'm just wondering, whether Biogenetic study might affect your patient enrollment for your registration trial? And second question is assuming as you pointed out, that Retaspimycin trials start in the third quarter. I know that you mentioned previously that the study might -- may enroll about 200 patients. The question is how long you may take to enroll 200 patients?

Eun, that's a long and very good question. We are aware of Biogenetics activities in GIST. I think they are just getting started. What I can tell you is that we've had 63 patients in our soft tissue sarcoma and GIST trial and have a very good handle on the design of our Phase III trial which is due to start as Steve has said later this summer. We are in extensive discussions with the agencies, both in the U.S. and in Europe. We also have the international group of GIST investigators with the PI led by -- with the PI being George Dimitri leading the charge and we are sizing the trial just as you said, to approximately 200 patients, and sizing the number of sites required to hopefully enroll this trial as quickly as possible. We are hoping that we will give you more guidance on the enrollment rates as the trial begins. But we are very confident that we can execute this trial and so are our GIST investigators, otherwise we wouldn't take on this endeavor.

Eun, I would just add to that, really without hubris that this is all about execution and the kind of things that make a difference are having as our PI, the person, in George Dimitri, who led the worldwide registration for Gleevec and SUTENT in this setting, being able to pull together all of the KOLs, which Julian and George were able to do. Having the clinical trials coordinator and director on this project here as an employee of Infinity who ran that, they had that same role for the SUTENT trial for Pfizer. So there are a lot of things that are not headline making, but make the difference in terms of the execution on this kind of trial within a reasonable period, which we project is on the order of two years.

Okay. And if I may, I would like to ask one more question on the Hedgehog program. Today (inaudible - highly accented language) announced that they entered into Phase II with their Hedgehog program in metastatic colorectal cancer. I'm just wondering, just looking at the preclinical profile that you see with your product, and comparing to (inaudible) is there kind of a difference or kind of advantageous -- advantages or disadvantage that you can point out?

Eun, I'm going to start by answering your question and then kick it over to Julian for some insight into the real science behind this. But I think that ACR this year was a watershed in terms of the importance of the Hedgehog pathway in cancer per se, and the potential that it represents for a new paradigm of treatment at getting at the cells which are responsible for the recurrence of cancer. I mean, it's the reason that Julian was indicating a real, real excitement and there was really good data from Genentech, which is collaborating with [Curous] as you know which I think really is indicative of how important a pathway this can be. I just think we should be really happy as a community that there's a new avenue open to drug discoverists to tackle the problem with cancer relapse. And that kind of opportunity comes along once in a lifetime and there is a role here for multiple players to do great science to try to develop the best drugs for the patients. So with that, Julian?

Eun, again, it's an excellent question. I was thrilled to be at the AACR. I was in the room when they announced both the structure of their molecule, at Genentech and listened to Dan Von Hoff's presentation. To me it felt just validating the whole field. I feel exactly how Steve has said. What I can't tell you is much about the comparison between our molecules, it's just too new. I do feel very confident about the pharmacology of our molecule, the potency of our molecule, and the spectacular activity we've seen in preclinical models. We also have a very robust IND package that's being assembled and I feel yes, we are a little by behind Genentech, but look out for us because we are going to catch up very quickly. I feel very confident about our program.

Thanks very much.

And next we'll go to Derek Jellinek with SIG.

Thanks for taking my questions, guys. Maybe the first one on the GIST data that presented at ASCO this year, can you give me an idea of the 22 patients that were on the extended phase, how many were GIST and how many were soft tissue sarcoma?

What I can tell you is, as I said, we've treated 63 patients overall. 45 patients with GIST. That includes the dose escalation phase and the expansion phase. 21 patients were treated with GIST at the 400 milligrams per meter squared dose. And let me just conclude by saying the full data set, including the safety, the responses, will be fully highlighted on May 31, at ASCO. Again, I would invite you to attend the presentation.

So the 21, once again, that's patients treated at the full 400 mgs per meter squared dose--?

Correct.

--would move to Phase III?

Correct.

Can you give me an idea of the update of your SPA for the Phase III? How is that going.

We haven't commented on the SPA. We said we will be seeking on the SPA but we haven't made any formal comments on it yet. Stay tuned.

Okay.

We will hope at ASCO to describe our Phase III trial in some more detail.

Maybe one more if I may, on 926, I was at AACR myself. I thought it was very promising data. It seems, Julian, that you seem to be targeting small cell lung, it seems very interesting. Maybe, can you comment if that is the indication you are going for? If you have other indications possibly? You mentioned a couple there. As well as maybe your thoughts on why does it take a tumor to be debulked first before it's able to be treated with this drug and how do you look at the second line small cell lung with maybe Topotecan?

So, you asked a few questions there. We are actually looking at a number of different models in the lab. They include ovarian cancer, prostate cancer, pancreatic cancer, bladder cancer. So we are looking on a multiple front. In each of those cases that I mentioned, those are all initially chemo responsive tumors. And unfortunately, upon relapse, they become very chemo resistant.

The question is, what's the underlying mechanism that -- that is going on here. How is it that initially the Hedgehog pathway seems to be seemingly unimportant in the bulky disease, whereas if you regress the tumor to minimal residual disease, we now have extreme sensitivity to the Hedgehog pathway. And I can only theorize that what chemotherapy is able to do is to kill the susceptible population for slow cells into apoptosis in the bulky disease and what is left behind is the tumor progenitor cells or the cancer stem cell, which has the property like many stem cells, normal stem cells of being very chemo resistant, very radiation resistant and apparently very dependent on the Hedgehog pathway. So we are continuing doing a lot of science and translation work, both in our laboratory and collaboration with many academics, notably folks at Hopkins, and University of Colorado and many other scientists as well.

I think it's important to remember that in contrast with that type of setting, in something like basocell carcinoma would is a genetically defined disease you would expect to see single agent activity without having to debulk first.

Indeed. We were not at all surprised to see the very elegant data presented by Dan Von Hoff on the first few basocell carcinoma patients. That's a pathway addicted due to the genetic lesion in patched.

Maybe one more, sorry. Maybe you can go into your partnership strategy quickly on 926? Thanks.

Sure. Now that we have full rights to the Hedgehog program, we're viewing that as an asset that we may choose to partner at some point in the future. Fortunately for us, we are not in a need today of the -- either the capital that a deal might bring in for the expertise in that we can take this trial easily through Phase II. So it puts us in a position of strength to entertain strategic partnerships and therefore we'll only do it if it makes great sense in terms of the long-term value retention that Infinity has.

Wonderful. Thanks for taking the questions.

Thank you.

Thank you. Next we'll go to Phil Nadeau with Cowen & Company.

Good afternoon. Thanks for taking my questions. My first is 493. Could you give us just a little bit more detail on what needs to be done before that gets into med?

Yes. Just a little bit of waiting. Sunrise, sunset. The IND package is prepared. We don't -- we don't typically announce filings. We do announce first patient in. Again, stay tuned. We have been very active and very busy with this molecule.

Okay. So really, there's -- as you say, there's nothing. Just the sun needs to set a few more times.

Correct.

Okay. And then second, I thought your presentation on the importance of Hedgehog was very convincing. Can you remind us where AstraZeneca's Hedgehog program, and the economics that you will get on that, as well?

Yes. AstraZeneca's program is still in discovery and we have structured a relationship such that Infinity has the right to opt in at various points in time up through the completion of their proof of concept, Phase II studies in humans at preset specified terms for a 50/50 worldwide profit share. So they're still in the discovery lead optimization phase.

Okay. And have they provided any guidance when their program could enter the clinic?

Not to our knowledge.

No.

Okay. And--?

We should point out we are actually doing some collaborating with them on that as well at this point. Where as we left it open as a theoretical that those were kind of backups for our 926. In fact, they're taking on a reality now and we are investing some resources to make sure that those have an opportunity as well.

Okay. And last question is a follow-up to I think Eun's question. She talked about Biogen's oral Hsp90 inhibitor. Could you compare and contrast your inhibitors, maybe just briefly. What is it that differentiates yours from theirs or vice versa?

Well, as you know, our inhibitors are of the an anthromicine class so again, it's derived from a national product. Their inhibitors are totally synthetic. Again, we don't like to comment on other people's data. We are profiling their molecule, as well as our molecules in our laboratory and probably towards the end of the year, maybe at t he EORTC conference in Geneva we may have something more to say about mechanism of action of the various molecules.

I think one similarity is their molecule and our molecule both -- neither of the molecules suffer from any of the historical problems that were associated with galbanimycines. Theirs because they're not a galbanimycine and ours because we engineered all of those issues out.

Okay. Fair enough. Thank you.

And next we'll go to [Julie Philen] with Robert W Baird.

Thanks for taking the question. I was curious as to 493. I was wonder what patient population you will be targeting when you first enter into demand.

So the initial trial will attempt to define safety and a recommended Phase II dose. We want to get through the dose escalations fairly quickly so we are making this an open labeled solid tumor trial. We will also explore hematologic malignancies in a separate trial.

That's the phase one which is, again--.

Right.

But beyond that, Julian?

Beyond that we are very much guided by where 504 has shown activity and some of our laboratory data and particularly looking to go to earlier lines of setting, especially in combination with TKIs where we think we cannot prolong the time in which patients can be disease free and really delay the emergence of resistant by combining these two drugs. That's what our laboratory data suggests.

Great. Thank you.

(OPERATOR INSTRUCTIONS) Next we'll go to Jason Kantor from RBC Capital.

Thanks for taking my question, most of my questions have been asked, but could we go back to that Hedgehog program for a second and maybe if you could outline a little bit what you think your development plan for this drug might be given kind of unusual activity? And are you going to go after the obvious, which is BCC and if so, what do you think the market opportunity is in that indication? How should we think about that?

Well, first of all, you know when they start a Phase I trial, we are obligated to do a dose escalation in patients and most important is to define the safety and the recommended Phase II dose. So we will be going into -- and try to do as expedited as Phase I as possible. We certainly are allowing perhaps encouraging certain types of tumors to be included in the trial. We are not excluding solid tumors and hematologic tumors. But obviously if a basocell carcinoma patient were to show up we'd be delighted to treat them.

I think that, Jason, you need to think about this in two buckets, if you will, the genetic diseases basocell carcinoma and medulloblastoma, where you can see single agent therapeutic regimes, medulloblastoma, childhood medulloblastoma from a market perspective is a tiny market but extremely compelling in terms of the needs the patients and if we have an active agent, we would actively explore the opportunity to make a difference in those patients' lives.

Basocell carcinoma, that's going to come down to the therapeutic index that is associated with Hedgehog inhibition pathway, for how large a population who take the drug as opposed to getting the surgery. Now, in contrast, when you go to the bigger diseases, the small cell lung cancer and the other indications, Julian, talked about there you have a different kind of therapeutic modality probably in play, in combination, debulking followed by going after the stem cells and those are very large diseases. And the science is going to have to leave us here to what is the right therapeutic regime, and we'll learn as we go on this one.

You don't care to speculate on what kind of market opportunity there is in basocell?

The basocell carcinoma is largely treated with surgery. This is not a lethal disease. Dermatologists typically treat this disease. The patients that were described by Don Von Hoff, were very rare patients with metastatic disease with multiple lesions and life debilitating conditions that are, in fact, very rare patients, indeed. So the numbers of those patients really are very, very small that require this kind of modality of treatment. Again, we don't ignore any patient population. Anyone who would benefit from our drug is certainly going to be sought. We will find a way to treat them. We will find a way to improve their lives.

Jason, that's why I pointed you to what we have to all look for Genentech, ourselves in this setting is the therapeutic index, because if someone has the surgical removal alternative, and it's on their foot, they will do it, right. If it's not a safe drug. If it's a really safe drug, it will be widely used. We just have to follow the science here, speculation is probably not useful.

All right. I guess the reason I was bringing this up is that, I mean the data at AACR was extremely impressive but for a really small group of people. I guess we really don't have proof of concept yet for these other mechanisms that you are talking about. At least not clinically.

We would fully agree with you and we eagerly await further information that will come out in future meetings, such as ASCO and we will provide our own data as well.

Thanks.

And due to time restrictions this concludes our question-and-answer session. I will now turn it back over to Mr. Kafka for closing remarks.

Thank you very much, operator, and I just want to say thanks again to everyone for joining us on the call today. We appreciate your continued attention to our progress and updates and as always, we are available and happy to answer any additional questions that you have after this call so feel free to be in touch. Thanks again and have a great evening.

That concludes today's call. We appreciate your participation. You may now disconnect.