Microbot Medical Inc (MBOT) 2015 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Q4 2015 StemCells, Inc. earnings conference call. At this time all participants are in a listen-only mode. Later there will be a question-and-answer session and instructions will follow at that time. (Operator Instructions). As a reminder to the audience, this conference is being recorded.

Now I would like to hand the floor over to Greg Schiffman, Chief Financial Officer. Sir, you have the floor.

Thank you. Welcome everybody and thank you for joining us today. With me today are Ian Massey, our President and Chief Executive Officer, and Dr. Stephen Huhn, our Vice President of Clinical Research and Chief Medical Officer.

Before we proceed I would like to remind everyone that during today's call we will be making some forward-looking statements which reflect our current views and are based upon certain assumptions that may or may not ultimately prove valid. We assume no obligation to update these forward-looking statements any time in the future and our actual results may differ materially from anything projected during today's call due to risks and uncertainties to which we are subject.

These risks and uncertainties are described in our public filings with the Securities and Exchange Commission and at the end of our earnings release which you are encouraged to consult. Let me now turn the call over to Ian.

Good morning and thank you, Greg. As many of you know, I was appointed as Chief Executive Officer of StemCells in January of this year and so this is my first quarterly meeting with you as CEO. By way of background, I have almost 40 years of experience in the pharmaceutical and biotech field. I have held senior positions at Syntex and Roche where I was head of research and development for its Palo Alto site in California.

In 2006, I cofounded and was the President and Chief Executive Officer of Synosia Therapeutics, a company focused on the development of treatment for neurodegenerative diseases. Synosia undertook a reverse merger with Biotie Therapies in 2011 and Biotie was recently acquired by Acorda. After leaving Biotie Therapies, I spent time at Versant Ventures, a leading healthcare venture capital group as an entrepreneur in residence.

I was brought into StemCells as President and Chief Operating Officer in March 2015 by Martin McGlynn, our previous CEO. As COO, I was responsible for all aspects of product development including clinical development and operations, manufacturing, quality and regulatory. Martin brought me into the Company with the expectation that I would succeed him as CEO.

The Company's shift in strategy at the end of last year leading us to focus on our spinal cord program with a corresponding reduction in the size of the organization created a natural transition point.

I have a history of building and leading science driven business focused organizations that have created value by delivering robust clinical proof of concept data for novel therapeutic agents. Over the years I have been associated with bringing over one dozen products to the market including CellCept to prevent organ rejection following transplantation, Naproxen for treatment of pain and [Ticlet] for prevention of stroke.

Personally, I am driven by the development of novel therapies and therapeutic approaches to treat important and serious unmet medical needs especially in the area of central nervous system disorders. I believe that rigorous science, creative translational medicine approaches based on robust preclinical data and strong teamwork are essential for the successful development of novel therapies.

It was therefore an easy decision for me to join StemCells early last year. I was compelled by the depth and quality of the science and by the high degree of correlation between the preclinical animal data and the human clinical data. It is indeed exciting to join a company that is well on the way towards generating key clinical data to validate a cutting edge stem cell therapy for the treatment of serious central nervous system disorders especially ones that currently have no treatment options.

During my first nine months with the Company, the senior leadership team and I took a very hard and detailed look at the Company's strategy, programs and portfolio. From a high-level perspective considering the Company's cash burn and history, we decided that we needed a strategy that would deliver a major value inflection point within the next two years.

We agreed that at this stage of our Company's development the most meaningful value inflection point would be the generation of clinical data from a well controlled Phase 2 proof of concept clinical study in at least one indication. We expect that statistically meaningful Phase 2 data would create value for our stakeholders from two perspectives. First, it would demonstrate that our neural stem cells have a therapeutic and commercial potential in at least one specific indication. And secondly, it would substantially enhance confidence in our stem cell-based platform for the treatment of other central nervous system disorders.

When I joined the Company we had two Phase 2 clinical programs underway, one for the treatment of spinal cord injury and one for the treatment of geographic atrophy, the most advanced form of dry age-related macular degeneration, the leading cause of blindness in elderly patients. Each disease indication represents a large unmet medical need, both are multibillion-dollar opportunities.

However, we felt that it would be extremely difficult to fully fund and resource these two programs given our current market valuation, the state of the financial markets, and the challenges of raising capital for regenerative medicine companies in general.

Furthermore, we believe that running two programs if sub optimally resourced and financed could significantly increase the risk of delaying the completion of both studies and jeopardize our key strategic objective of achieving a value inflection point within the next two years. For these reasons, we believed it was in our stakeholders' best interest to fully focus our resources on one program only.

Based on a consideration of the scientific rationale, available clinical data, current clinical status, potential timelines and the probability of success of our two programs, we decided that the best approach forward was to focus our efforts on our program in spinal cord injury in order to increase our confidence that we will successfully deliver convincing Phase 2 proof of concept clinical data from our Pathway Study by the end of 2017.

With this we made the difficult decision to suspend enrollment in the Radiant study, our Phase 2 study in AMD even though we will continue to follow the patients already transplanted.

As you probably saw following this decision to focus on spinal cord injury we undertook a careful evaluation of our organization and staff and we restructured to create a company with a laser like focus on A, completing the pathway study as soon as possible and by no later than the end of 2017; and B, ensuring that we have a process for producing the cells that will support moving into a Phase 3 program as quickly as possible following a successful completion of the ongoing Pathway study.

By doing this, we expect to reduce our cash requirements to achieve this key value inflection point by $20 million.

With our efforts totally focused on spinal cord injury, we are now well-positioned to generate convincing proof of concept data within the next 24 months, a critical value creating milestone in the Company's history.

As a reminder, the Pathway study is a study in patients with chronic cervical spinal cord injury that is designed to evaluate the effects of our neural stem cells on upper extremity motor strength, function and improvements in motor level of injury. All patients enrolled in the study are in the chronic phase of injury. In other words, patients who are between four and 24 months post injury. The Pathway study has three cohorts. Cohort one is an open label cohort that enrolled six patients with motor complete spinal cord injury.

Cohort two is a single blinded 1 to 1 randomized controlled cohort in 40 motor complete patients. Cohort three which can be initiated at our discretion is an open label cohort in six motor incomplete patients.

Treated patients are transplanted with our neural stem cells above and below the level of injury and are then allowed -- and then followed for one year post transplant.

Motor function is assessed at baseline and three, six, nine and 12 months post transplantation using two scales. First, the International Standards for Neurological Classification of Spinal Cord Injury, known as the ISNCSCI. And second, the greater the assessment of strength, stability and prehension known as GRASSP. These are two independent and complementary scales.

The ISNCSCI assesses upper motor strength using five key muscles and also assesses the neurological level of injury. The GRASSP assesses upper motor strength using 10 key muscles but also measures upper extremity, dexterity and fine motor skills.

The primary purpose of cohort one, the open label cohort, was to get an initial read on the safety of transplanting cells into the cervical cord above and below the level of injury and to select the highest dose for use in the second cohort of the study. Cohort one would also permit us to get some early readouts on efficacy that could help optimize the design and selection of endpoints for cohort two.

In cohort one, two patients receive 15 million cells, two receive 30 million cells and two receive 40 million cells. All doses were safe and well-tolerated and the 40 million cell dose was selected for use in cohort two.

In November of last year, we reported the a six month data from the six patients in the open label cohort one. It is important to note that these six patients entered the study between 10 and 23 months after injury, a time period well beyond when most spontaneous recovery would have occurred. The efficacy measures showed that five of the six patients had improvement of upper motor strength. Four of these five patients also showed a meaningful improvement in tests of dexterity as determined by GRASSP. Four patients had an improvement in the unilateral motor level of injury of at least one level as assessed by the ISNCSCI.

The improvements in upper motor strength and dexterity observed for cohort one patients are significantly different from what would be expected based on what we know about the natural history of the condition. The natural history data would suggest that for patients 10 to 23 months post injury that were enrolled in the study, only 10% would be expected to show any meaningful improvement in motor function, in other words, no more than one patient in a group of six versus the five patients for which we actually demonstrated a meaningful improvement. We believe that these data are the first to ever show it therapeutic effect of a cellular intervention on motor function in chronic cervical spinal cord injury.

Previously in the Company's spinal cord program we reported last May the results of our study in chronic thoracic spinal cord injury. This Phase 1/2 study enrolled 12 patients with either complete A to A spinal cord injury or incomplete A to B spinal cord injury.

Seven of the 12 patient showed improvements in sensory function to multiple segments below the level of injury as assessed by pin prick, light touch, electrical or thermal stimulation. Indeed, two of the patients converted from complete to incomplete spinal cord injury. These clinical changes were first seen at three months post transplantation and were sustained or even enhanced at 12 months post transplantation.

The incomplete patients had a somewhat better response than the patients with complete spinal cord injury. These results are particularly exciting because the patients enrolled in the study were four to 24 months post injury and are not expected to show any significant degree of spontaneous sensory recovery.

These are the first and only data generated showing a clinical improvement in patients with chronic thoracic spinal cord injury after a cellular transplantation. Furthermore, the treatments in the study were safe and well-tolerated.

Looking forward with our new laser focus on spinal cord injury, we can expect several key milestones and news flow events over the next 18 to 24 months.

First, the Pathway study is well underway and we are enrolling patients into cohort 2, the single blind randomized cohort. Currently we have 13 centers in the US and Canada that are actively enrolling patients. We have now enrolled nearly half of the 40 patients required. We are planning to complete the enrollment of all 40 patients by the end of Q3 this year.

Second, we will have the 12-month data from the open label cohort one patients by the end of Q2 2016.

Third, we plan to have a blinded interim analysis for cohort two patients in the second half of 2016. The interim analysis is currently based on a superiority threshold and is planned to be performed when approximately half of the patients in cohort two have completed their six-month evaluation. We are still targeting to release final data for the Pathway study in the second half of 2017.

While our very clear focus is on driving on completion of the Pathway study with final data expected by the end of 2017, we also have an initiative to maximize the value of other assets through either partnering or strategic transactions. In this regard, we have two assets that we are attempting to leverage. First, our AMD program to test our proprietary human neural stem cells in patients with retinal diseases. Second, our program to create genetically modified human neural stem cells as a potential therapeutic.

First, in our AMD program, we reported last June clinical data from our Phase 1/2 study in geographic atrophy, the most advanced form of dry AMD. It is important to recognize that this first clinical trial was designed to demonstrate safety and many of the patients enrolled in the study were very advanced in the disease progression. These patients have very large and complex lesions and as such are not patients that would be enrolled into a study focused on efficacy. The data from our Phase 1/2 study shows that the sub-retinal transplantation of our neural stem cells was safe and well-tolerated. In addition, the data showed that in a subset of patients with GA lesions that would have met the criteria established for entry into the efficacy focused Phase 2 Radiant study, these patient showed a substantial rate of reduction of the growth of geographic atrophy in the treated eye versus the fellow eye.

Because the reduction in the rate of the growth of geographic atrophy is considered to be an approvable endpoint, these were indeed very encouraging data which for us supported moving forward with the Radiant study.

Furthermore, 11 of the patients from the Phase 1/2 study enrolled in a long-term follow-up study and outcomes continue to be collected on these patients. Data from this long-term follow-up continue to suggest a beneficial effect of our neural stem cells in terms of slowing the rate of geographic atrophy which appears to be maintained at least for up to two years.

We are also starting to see some very interesting indications of an improvement in visual acuity in the treated eye as compared to the untreated eye as we examine the longer-term outcomes.

In relation to this, we now have evidence that in preclinical models, sub-retinal transplantation of our neural stem cells results in proliferation of the retinal pigmented epithelial cells which could represent an important regenerative mechanism of action. This is a novel finding that we are presenting for the first time today and which could have a very important implication for the treatment of geographic atrophy. These data will be presented in detail at an upcoming scientific conference.

As stated previously, dry AMD is an area of major unmet medical need. Because we have already generated preliminary data showing safety and evidence of efficacy in our Phase 1/2 study in dry AMD, we are currently in discussions with potential partners about how best to advance and monetize this asset.

The second major asset that we want to partner is gene modified neural stem cells. We have been able to demonstrate that we can stably gene modify our cells so that they are able to deliver specific neurotrophic factors and other key proteins while still retaining all their properties to self renew and graft, migrate and differentiated into neurons, astrocytes and oligodendrocytes.

As such, this creates a cellular platform with a proven safety profile for pursuing a gene therapy approach for the treatment of serious disorders of the central nervous system. This could encompass the modification of cells to produce enzymes that are known to be deficient and the cause of various orphan diseases related to lysosomal storage facilities and leukodystrophers, all modifications of the cells to produce neurotrophic factors for the treatment of neurodegenerative diseases such as Alzheimer's, Parkinson's and Huntington's and various disorders of the eye.

Along these lines you may recall that we have previously conducted studies with our neural stem cells in patients with advanced Battens disease. This disease is caused by a deficiency in the enzyme palmitoyl protien thioesterase 1, PPT-1. Our cells modify to produce PPT-1 could provide a major therapeutic improvement over the unmodified cells for treating this fatal inherited disorder.

To conclude, I summarize the current state of the business as follows. Stem cells now has data in spinal cord injury from two clinical studies with 18 patients showing a therapeutic benefit both in patients with chronic thoracic spinal cord injury and patients with chronic cervical spinal cord injury.

We believe this is the world's first clinical program involving cellular transplantation that is showing a clinically therapeutic effect on chronic spinal cord injury patients.

Our Phase 2 Pathway study in chronic cervical spinal cord injury is well designed to generate robust proof of concept data by the end of 2017. Enrollment is taking place at 13 sites in the United States and Canada and nearly half of the required 40 patients in cohort two have been enrolled to date.

We believe strongly that statistically significant data from cohort two of Pathway confirming the improvements in motor function we saw it six months in the open label cohort one would be transformative for the Company and the field of spinal cord injury.

Based on the scientific and clinical strength of the spinal cord injury program and the interesting focus Company resources, at the end of last year we made a strategic decision to focus all our development efforts on our more advanced program. We have therefore suspended patient enrollment in our Phase 2 Radiant study in the AMD program and this reduces our cash burn to the completion of the Pathway study by over $20 million.

Meanwhile we are in active discussions with partners, both with the AMD program and our genetically modified neural stem cells. And both of these opportunities provide the potential for bringing non-dilutive capital into the Company.

Given our growing clinical data, our recent operational changes and our laser like focus on spinal cord injury, we feel increasingly confident in our ability to execute our plan between now and release of statistically meaningful Phase 2 data in 2017.

I will now turn the call back to Greg.

Thank you, Ian. Today I am going to speak mainly to the full-year 2015 results and if there are specific questions you have about Q4, we can cover those in the Q&A session.

For 2015, total revenue was down year-over-year, total of approximately $895,000. In 2014, we had a milestone payment of approximately $500,000 which was received under a licensing agreement with ReNeuron Limited and in connection with their divestiture of the SE proven business, a licensing fee of approximately $400,000 from licensing agreements entered into with Takara Bio Inc. Licensing revenues received in 2015 were not significant.

Operating expenses were up year-over-year by approximately 15% or about $4.9 million. This increase was driven primarily by expanded clinical activities supporting both our Phase 2 study in cervical spinal cord injury as well as costs associated with our Phase 2 AMD study prior to our decision to suspend enrolling patients into that study.

In addition, there were approximately $392,000 of expenses incurred to wind down some operations as part of our efforts to focus solely on our spinal cord injury program. Similarly, loss from operations increased by approximately 19% or approximately $5.8 million.

For the full-year 2015, we reported approximately $305,000 in net other expense below the operating line. This was primarily comprised of approximately $914,000 of income associated with the change in the fair value of our warrant liability; $239,000 of expenses associated with the impairment of intangible assets; and approximately $370,000 of interest and other expense.

The change in the fair value of our warrant liability was a non-cash income item driven by a change in the value of our stock price.

Just a reminder, under warrant liability accounting, an increase in share price leads to an increase in the warrant liability while a decrease in share price leads to a decrease in warrant liability. Changes in warrant liability are passed through the statement of operations as income or expense.

For the full-year 2014, we reported approximately $1.4 million in net other expense below the operating line. This was comprised of approximately $2.4 million of income associated with a change in the fair value of our warrant liability, approximately $2.4 million of expense associated with the impairment of goodwill and other intangible assets associated with the disposition of our SC Proven business and approximately $1.3 million of interest and other expense.

We reported a net loss from continuing operations of $0.38 per share in 2015 or an aggregate net loss from continuing operations of approximately $36.4 million. In 2014, we reported a net loss from continuing operations of $0.52 per share or approximately $32.3 million.

Given the number of substantial non-cash charges flowing through our P&L in 2014 and 2015, we believe that it is useful to look at a non-GAAP loss adjusted for the major non-cash charges including stock-based compensation, depreciation and amortization, impairment of intangible assets and changes in the fair value of our warrant liability. We have therefore included a reconciliation table for these adjustments in our press release issued yesterday.

For 2015, the Company had net non-cash expenses totaling approximately $4.7 million. This consisted of approximately $4.2 million associated with that-based compensation, approximately $1.1 million associated with depreciation and amortization and approximately $200,000 associated with the impairment of goodwill and other intangibles and approximately $914,000 of income associated with the change in the fair value of the warrant liability.

For 2014, the Company had non-cash expenses totaling approximately $3.4 million and this consisted of approximately $2 million associated with stock-based compensation, approximately $1.3 million associated with depreciation and amortization, approximately $2.4 million associated with the impairment of goodwill and other intangibles, and income of approximately $2.4 million associated with the change in the fair value of our warrant liability.

The non-GAAP net loss excluding the non-cash items detailed previously for the full-year 2015 was approximately $31.7 million or $0.33 per share compare to the full-year 2014 of approximately $29.4 million or $0.48 per share. The increase in the adjusted net loss of approximately $2.3 million was primarily associated with the increased spending associated with our clinical programs.

Our cash usage for the full-year 2015 excluding cash inflows from financing and licensing activities was approximately $37 million or approximately $3 million per month.

Our year-end cash and cash equivalents including restricted cash were approximately $14.5 million. Our pro forma year-end cash number including the recent financing was approximately $22 million.

Looking forward, our net cash usage is expected to decrease as we focus all of our resources on our spinal cord injury program and supporting activities. Over the next two years we expect to spend approximately $50 million. Spending will be higher in 2016 as we expect to complete enrollment and transplant all of the patients in our Phase 2 Pathway study in spinal cord injury this year. We would expect to see the expenses split about 60% or $30 million in 2016 and 40% or $20 million in 2017.

I would now like to discuss the capital markets and our most recent financing. Last year was very challenging for micro cap companies and even more challenging for regenerative medicine companies. Valuations of regenerative medicine companies are at all time lows. This was why we decided to suspend enrollment in our AMD Phase 2 study.

Earlier this month we completed an $8 million financing. This brought in some very critical capital to the Company and we were pleased to be able to raise this necessary capital today despite a very challenging capital market conditions.

We structured the financing with a short-term warrant component which expires 24 months after issuance. This will hopefully bring in an additional $4 million over the next two years. Given that we started the year with a pro forma cash balance of approximately $22 million, we require approximately $28 million of additional cash to complete our study. We hope to bring in non-dilutive capital over the next two years reducing our complete reliance on the equity capital markets to raise this additional capital.

It is very disappointing that the capital markets have not been recognizing the Company's clinical progress we have made or the clinical potential for its therapeutic platform. We have seen strong industry recognition this year. StemCells, Inc. received the Buzz of Bio award this year for example. This award recognizes the most innovative company in the biotech sector at one of the more prestigious industry conferences.

StemCells is also currently one of five finalists for the new economy awards, Most Innovative Stem Cell Company. And we have recently thing news articles about our Pathway study in Texas and Pennsylvania.

We remain confident that if we continue to execute on our plans and see positive data from our spinal cord injury program, the market will come to see the value propositions presented by StemCells, Inc.

We will therefore continue to focus on executing on our clinical programs and communicating our progress. As Ian indicated, if the Pathway study is successful next year, we believe that will be a significant value creating opportunity and transformational for our Company.

Let me now turn the call over to the operator for questions.

(Operator Instructions). Jason Kolbert, Maxim.

Thanks a lot. I would like to talk a little bit about the spinal study and once you have data and where you are with regulators in terms of what the final approval pathway might be? What I mean is have you had any thought or discussions yet based on this data on whether you are going to require a larger pivotal study to follow this one if you have compelling results?

Hi, Jason, this is Stephen. So these are good questions and very much on our minds right now as we think about the transition from a Phase 2 study into a pivotal study. I think we are looking forward to a number of interactions with the FDA in the near-term as we think about what the Phase 3 study and what the pivotal strategy would look like in spinal cord injury.

The most important of all of that is thinking about the applicable endpoints and we are learning a lot about that as we acquire the emerging data in our Phase 2 study. So that is helping us understand the questions that we are going to For the FDA and we are getting close to the point now because we have some data from our cohort one that is sort of informing our perspectives on this. So we are looking forward to interactions with the FDA where we are going to address those exact questions, Jason.

Thank you, Stephen. And a question for Ian about partnering. There has obviously been a lot of activity with the Astellas acquisition of OCATA and I know that ReNeuron was recently talking a lot about their eye program. So can you help me understand what the strategy is in terms of BD for how you are going to reach out to these companies for what is a very large unmet medical need in AMD? Thanks.

Yes, thank you, Jason. Basically at this point we are in the process of talking to a number of companies both within the US and outside the US that have potential interest in the ophthalmic programs. That is an activity that we are undertaking internally ourselves at this point and we are thinking about whether we need to start to get some other assistance in that regard. But as I say, we have identified a number of companies that have interest in the ophthalmic area and those are the companies we are going after at this point.

Okay. One last question for Greg. I just want to talk a little bit about the guidance and particularly the split between 2017 and 2016. I would assume that the majority of that split is really going to fall in a differentiated R&D line that the SG&A line will probably be reduced from 2015 and flat, somewhat flat actually between 2016 and 2017. Is that fair?

Absolutely. I mean the reason for the substantial reduction in costs year-over-year is the fact that will have enrolled, transplanted all of the subjects this year and you are just at that stage dealing with the ongoing visits to the physician which are a lot lower cost and as well as the manufacturing operations which will not be as busy next year. So SG&A you are completely in line. The saving should be predominantly in the R&D.

Thanks a lot for the very comprehensive update. We really appreciate the guidance in terms of the enrollment and the catalyst and data points coming ahead. Thank you so much.

Keay Nakae, Chardan.

Thanks. With respect to Pathway, how close are you to adding any additional sites? And just could you speak qualitatively about the pace of enrollment over the last couple of months?

So our target was somewhere between 13 and 15 active sites in North America with the majority of those sites being in the US but potentially two sites in Canada. We are very close to activating the final center in Canada. We don't immediate plans to go beyond the 13 to 15 sites that we have targeted in total for this study. We think that will be adequate to support our enrollment targets.

With respect to the second part of your question, enrollment is very variable at different sides depending upon different times of the year. There is always variables that impact that activity particularly around the holiday season but we are very pleased with the enrollment rates that we are seeing and the support that all the sites are giving us for the study so far.

Okay. Second question related to the potential partnering opportunities. Obviously it is always difficult to predict when you might be able to finalize something like that but I will ask the question anyway. Given your future capital needs, how quickly could you put something like that in place?

I think as you say, it is very difficult to give a specific on timing. I mean I think when you start dealing with partnering activities you can think of it akin to a relationship or marriage and one partner can be extremely motivated but it takes two close to close a deal and you don't know exactly where the other side is sitting until you have a deal closed.

From that standpoint, we have active discussions. We are excited about some of the dialogues we are underway and having the discussions around. AMD program is certainly the large asset that we are focused in on although we are extremely excited on the recent findings that we have had on the ability to gene modify the cells and are having some discussions on that side as well.

But I think in terms of giving a specificity on timing, I just don't think that is something you can do because you just don't know until a deal is signed.

Okay, very good. Thanks.

Ed Woo, Ascendiant Capital.

Thank you for taking my question. Going back on Keay's question about enrollment, how long has it been versus your expectations on the (inaudible) or two?

Well, covering new ground here in terms of our intervention and the timing for that in the patients of course are recovery so most spinal cord injury studies are targeting patients in the acute or very early after the spinal cord insult. So you have a better sense of the number of patients in the prevalence there.

We are targeting a patient population that has now emerged from that acute hospitalization or in the chronic stage of their disease or their injury.

When I think about the enrollment in that context and it is really very much projections based upon the number of patients that these centers get and what you think the total denominator of the available patients are that we are particularly seeking which are cervical patients that have a very specific area of injury. When we calculate all that, then you get to a certain projection level and we started this about 2.5 years ago as we thought about the Phase 2. And it turns out that we are pretty close to what our projections were so I am pleased that our back of the envelope calculations as best we could for a trial that has never been conducted before in patients at that stage of injury is actually showing very, very close alignment with our projections.

Great. What about the extent of the injuries and the type of injuries of the patients that you have already enrolled, was that also matching with your expectations?

Yes, we recognize that again not having a lot of data in particular patients that we are seeking which are the cervical patients who have ASIA B status and ASIA B status as a patient who is motor complete but sensory incomplete and that is a better patient population to think about a regenerative approach because you know that there is sufficient continuity of the spinal cord function that crosses the epicenter of the area of injury.

When we started this study we weren't certain about the prevalence and level of interest and availability of that particular patient population and as the studies have gotten underway, we have been very reassured by in fact that these patients are interested in joining this study, that we have safety when we administer the cells to that particular group of patients. And I think again from a regenerative potential is very exciting.

So I have been pleased with the population that we targeted and their availability based upon what we would have predicted when we began the study -- began planning the study a number of years ago.

Great. Thanks for answering my questions and wish you best of luck.

(Operator Instructions). Yi Chen, H.C. Wainwright.

Thank you for taking my question. Could you give us the updated outstanding shares -- outstanding common shares and the outstanding warrants currently?

You know, on that one, in terms of the full cap table with the ones that were just issued I am going to apologize, I don't have that one right in front of me. I will get that to you via email. I apologize. I just don't have that one right in front of me.

That is all right. Thank you.

Jason Kolbert, Maxim.

You have now had a lot of time to really think about what is happening mechanistically with these cells and I'm very interested in the time when you are implanting these cells and it is unusual because you are planting them -- implanting them several months after the initial injury but before you get into that chronic scarring. I am just wondering if you think there might be utility if you were to implant them earlier? And if you could just talk a little bit about what you think the cells are actually doing in these patients.

So a lot of what has formed our thoughts about the timing is based upon the preclinical data that we have in the animal model indicating that application of the cells at time points beyond the acute insult are probably more efficacious and in many ways that makes biological sense because the acute injury is associated with a lot of inflammatory changes in the cord, a lot of edema, a lot of other mechanical insults to the cord which ultimately is not a very good environment to place neural stem cells. So it is a much more hostile environment if you will.

So a lot of this was directed as a result of our preclinical research. The other aspects of it from a clinical perspective are that these patients have acute injuries. From a medical perspective, they are better candidates for surgery and transplantation once they have recovered from the acute insult.

And then the final aspect is that statistically if you intervene in patients soon after injury, you are then challenged by the spontaneous rate of recovery that those patients can have and the further you are from injury, the lower that rate becomes and so an intervention is going to be able to detect an efficacy signal much better in patients who have plateaued neurologically.

So I think those are the aspects that all align for us to think about patients at least know earlier than four months after injury.

If you add into that the fact that patients and particularly ASIA B patients do have a degree of recovery because of their continuity. We know that is a better regenerative window in which to apply the cells and so that is why we extended the window out to 24 months particularly for patients who have incomplete motor or incomplete sensory status.

And then the last part of your question about mechanism of action, I think we are still led by what we have seen in the animal model which is that the cell after it is transplanted as a neural stem cell differentiates into two main cellular types. One is the oligodendrocyte which is responsible for the myelin or the insulation around axons. The other are neurons. And so it is not hard to imagine that the mechanism is most likely is multifaceted and that the cell can not only become a neuron which can replace or augment central gray function of the cord where all the circuitry is but as well myelinate axons or tracks that have been traumatically de-myelinated by the injury. And I would venture to say that not every injury is exact in each patient. When you look at the MRIs, you see variability and I suspect that variability is true at the cellular level as well.

So the fact that the neural stem cell can interpret the environment and provide more than one mechanism of action is a good thing when you are looking at patients who have these types of injuries.

Could there be mechanisms of action that are beyond cell replacement? I think there could be. We know just in general properties the cell has immunomodulatory components. There is also trophic factors that are supported by the cell. So at the end of the day we don't know but as we study more patients we might have a better sense of what the mechanism is and that is obviously the purpose of our clinical program.

And you can imagine what I am thinking that if the spinal trial is successful and I think we can see evidence that there are signals now already. And when you talk about the potential to re-myelinate some of those frayed connections in the circuit, the potential for indications beyond SCI in areas like MS might start to look attractive to you. Are you kind of thinking the same thing?

Yes, and I think it is a very good point and in many of our strategies have involved showing some type of clinical effect in human disorder. Some of them are more rare. Obviously spinal cord injured AMD are larger unmet needs but if you can show statistically different outcomes that speak to efficacy in any of these patient populations then I think that proves the point if you will that neural stem cell transplantation can have a therapeutic affect particularly for something like spinal cord injury. And then I think that would really support thinking about this again in other indications were either myelination or neuronal replacement might be important.

So it very much is a proof of concept that could well apply to other disorders and that is why we think it could be very transformational for the Company.

Absolutely. Thank you so much for the update.

There are no further questions. I would now like to hand the call back to Ian Massey, Chief Executive Officer, for closing comments.

Thank you. I would like to thank you for joining us early this morning for our quarterly call and I look forward to updating you on our progress as the year progresses.

Ladies and gentlemen, this does conclude today's program and you may all disconnect. Everybody have a wonderful day.