Ocugen Inc (OCGN) 2014 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Histogenics fourth quarter and full year 2014 earnings conference call. At this time, all participants are in a listen-only mode.

Later, we will conduct a question and answer session and instructions will be given at that time.

(Operator Instructions)

As a reminder, this conference is being recorded.

I would now like to hand the conference over to Elissa Cote, Histogenics Vice President of Marketing and External Relations. Please go ahead.

Thank you operator, and good morning everyone. The press release announcing Histogenics fourth quarter and full year 2014 financial and operational highlights was issued this morning. For those of you who have not yet seen it, you will find it posted in the investor section of our website at www.histogenics.com.

Joining me for the call today are Adam Gridley, President and Chief Executive Officer; Kevin McArdle, Chief Financial Officer, and Stephen Kennedy, Senior Vice President of Technical Operations.

Before we begin our prepared remarks, I would like to remind you that various statements we make during this call about the Company's future results of operations and financial position, business strategy and plans and objectives for our future operations are considered forward looking statements within the meaning of the Federal Securities Laws.

Our forward looking statement are based upon current expectation that involve risks, change in circumstances, assumptions and uncertainties. These risks are described in the Risk Factors of Management's Discussion and Analyses of Financial Conditions and Results of Operation section of our Registration Statement on Form S-1 which is on file with the SEC and available on SEC's and our website.

Additional factors will also be set forth in those sections of our Form 10-K for the year ended December 31, 2014, to be filed with the SEC in the first quarter of 2015. We encourage all investors to read these reports and our other SEC filings.

All the information we provide on this conference call is provided only as of today and we undertake no obligation to update any forward-looking statements we may make on this call on account of new information, future events or otherwise. Please be advised that today's call is being recorded and webcast.

And now, I would like to turn the call over to our President and CEO, Adam Gridley. Adam?

Thank you, Elissa.

Good morning, everyone, and welcome to Histogenics' First Quarterly Conference Call as a publicly traded company.

As many of you know, Histogenics completed its IPO in December of 2014 including the partial exercise of the underwriter's overallotment option. In January 2015, we raised approximately $70.1 million in gross proceeds.

Net of expenses, we raised approximately $62.8 million and the funds raised in this IPO provide us with a capital needed to execute against our strategy plan as identified in our prospectus.

With these funds, we expect to complete enrollments and submit our primary endpoint/ biologics license application (BLA) filing for our Phase 3 clinical trial for our lead product, NeoCart. In addition, we plan to scale our manufacturing processes and preparations for potential launch upon approval of NeoCart and augment our planned reimbursement dossier to support robust pricing and expand our pipeline activities, most notably our collaboration with Intrexon Corporation.

Since this is our first call, I wanted to step back and start by providing a quick overview of those who may be new to the Histogenics story. I'll then provide an overview of some of the recent operational highlights in 2014 and then hand the call over to Kevin McArdle, our CFO, to review the Company's financial position and recent performance.

After Kevin takes us through the financials, we'll provide our thoughts on some expected 2015 milestones and then we'll open up the call for Q&A. So, a brief overview then.

First, on the Company and then on NeoCart. So, Histogenics is a late stage regenerative therapies companies focused on developing and commercializing products in the musculoskeletal segment of the marketplace.

Our goal is to revolutionize the way that physician and patients are thinking about the treatment of these injuries, in particular, knee cartilage repair and the associated recovery for these injuries. We're treating a significant problem for our patients who are hindered by pain and loss of function due to these cartilage injuries. We believe our lead product candidate, NeoCart, will provide better long-term outcomes and better recovery dynamics than the current standard of care and surgical procedures.

Now, the Company was founded in 2000, it was merged with ProChon, another competitive biotechnology company from which we acquired cash and IP and that allows for the combined company to be recapitalized in 2012 by Sofinnova Ventures, Wilmslow Estates, Split Rock Partners along with several other investors.

We headquartered in Waltham, Massachusetts, with an additional raw material manufacturing facility up the road in Lexington, Massachusetts and we currently have 43 employees. We have a strong IT portfolio with 46 issued patents extending to 2030 and we're bolstered by a strong board of directors and management team.

Now, what is NeoCart? NeoCart is a cartilage-like implant created using the patient's own cartilage cells through a series of tissue engineering processes. First, the patient's cells is separated from a tissue biopsy specimen extracted from the patient via surgeon in a standard procedure. Then, shipped in an isolated and multiplied in our laboratory in Waltham, Massachusetts.

The cells are then infused into our proprietary collagen scaffold that provides a unique porous structure. The porous structure is columnar in nature which is how chondrocytes are going to grow and create matrix ultimately leading to cartilage regrowth. Effectively, we're creating a natural host environment for cartilage regrowth.

But before NeoCart is implanted into the patient, the cell and the scaffold construct undergoes a bioengineering process in our tissue engineering processors or TEP. Think of the test as a knee simulator. This is designed to mimic the conditions found in the joint so that the implant is prepared to begin functioning like normal, healthy cartilage prior to implementation.

After six to nine weeks, the NeoCart is shipped back to the physician who scheduled the patient for implant. The patient procedure and the possible site, the NeoCart is trimmed to fit the defect and proprietary bioadhesive, or a glue, is used to anchor the NeoCart in the place where it integrate with the surrounding cartilage tissue and without complicated suturing.

It's a 30- to 40-minute procedure, skin to skin, no special tools or techniques required and we think that this improves upon the lengthy and complicated procedures associated with the commercially available products.

Our goal is to create a fully functioning tissue implant with biomarkers of cartilage prior to implantation in the patient and this is what sets us apart from other competitors. We are making cartilage before implantation versus a variety of techniques and products that rely on the body's ability to make new cartilage after implanted.

Our new cartilage will continue to integrate and grow within the patient providing durable results, most importantly, the best things in patients is the quick recovery and to get back on their feet and we expect to see a demonstrable improvement in recovery times versus the standard of care. I will move briefly to our market and then our clinical protocol before touching on our 2014 milestones.

So, who are we treating? This is a large and growing of active and healthy adults who are seeking a better alternatives to current standard of care, otherwise known as microfracture.

Now, microfracture is a surgical procedure where surgeons drill tiny holes or fractures into the subchondral bone underneath the injured cartilage. The injured cartilage. The hope is to create a clot in the affected area, the blood and bone marrows that form the clot contain stem cells which are thought to grow in the cartilage building cells. Microfracture, as demonstrated in the literature often produces [variable] results, a lengthy rehabilitation process and in some cases, a 30% reoperation rate.

Other surgical procedures which are less commonly done have additional limitations including safety and lengthy procedural challenges and with the same lengthy rehabilitation. Despite the current procedure limitations, there's still greater than 500,000 procedures done each year in the United States.

At our early potential price point estimate, this could be a $10 billion market opportunity and we think it will grow substantially once a superior alternative presented to patients.

Many patients are simply opting to hold and wait with the current therapies rather than having a subpar procedure done. We believe the data from our Phase 1 and Phase 2 clinical trials provide a compelling evidence for both the safety of the NeoCart implant and potential improvement in pain and function and treat the patients.

These data from our Phase 2 studies shows statistically significant superiority to these lines and standard of care on almost every functional and pain measure utilized. The Phase 2 clinical trial data was published in the Journal of Bone and Joint Surgery as Level 1 evidence despite the fact that the study was not powered to show any sort of statistical significant. That Phase 2 study led the design of our Phase 3 protocol which largely replicates the design of the prior trial.

We indicated we're currently actively enrolling our Phase 3 clinical trials under a Special Protocol Assessment or SPA as agreed to with the FDA and we are targeting completion of enrollment in the second quarter of 2016.

With our one year primary endpoint, we expect to be in the position to file a Biologics License Application or BLA with the FDA in mid-2017 with an FDA decision in 2018, potentially positioning us as first to market and what we believe will be the highest hurdle study endpoint potentially creating further varied entry to our competitors.

As a reminder, the Phase 3 clinical trial is enrolling 245 patients designed to show superiority against microfracture as the standard of care with a two to one randomization of NeoCart and microfracture. The literature and the feedback from physicians and patients indicate that this is the best that we have in terms of standard of care. There are still many limitations particularly the variability and results and the lengthy rehab.

This provides a little background for those of you who are new to Histogenics story. Hopefully, this provides some context for our review of the 2014 milestones.

Last year, really, was one of transition of us and thanks to the dedicated efforts of our employees and investors, we accomplished a number of noteworthy milestones that we believe will position Histogenics for future potential commercial success.

Now, into the highlights for 2014. So, as of December 31st, we've enrolled a total of 55 patients in our NeoCart Phase 3 clinical trial that includes 30 patients who enrolled in the clinical trial prior to our historical process to raise funds and that create our internal systems.

With the restart in early 2014 and we've now updated our protocols, received all of the IRB approvals and then fully trained and certified approximately 30 investigator sites and we've enrolled an additional 25 patients since the restart in the spring of 2014. At this time, we expect to enroll the remaining 185 patients by the second quarter of 2016 as originally planned and highlighted in our prospectus.

Our focus in 2015 per clinical enrollment really now turns to a joint effort to increase awareness national and locally to our patient recruitment efforts which include social media, ad targeting, 800 number to screen patients. We do intend to combine those outreach methods with a side by side support for our clinical operations team.

These team members are working very closely with the site coordinators, the nurse practitioners and the like to deploy many of these local recruiting efforts but also to mine the physician's busy practices for leads.

We believe that this combined effort of targeted local recruiting and awareness efforts with our internal clinical operations teams partnering with each of the sites is going to be fruitful where we're trying to remove either insurance or people with [barriers] but also how do we build these from a practice management perspective to call the investigators practice in the internal network.

Clearly, for trial of this nature, a one-size-fits-all approach will not be as affective and as we completed much of our training, our upscaling education and IRB activities in 2014, we're now turning to practice management and supporting our sites to identify those patients applicable for our Phase 3 study.

We also identify their critical raw material technology transfer project in the spring of 2014. The purpose of this was to internally store some supplies and critical raw materials used in the manufacturing of NeoCart. We're doing it for several reasons.

Sole sourcing and control supply is an obvious one. However, the enhanced quality and regulatory standards applied to these programs under our control also potentially increases are approvability upon the preapproval inspection by FDA. Long term obviously drives attractive gross margins and ability to supply, expand, and develop products out of our core platform technology.

Steve Kennedy, our head of technical operations and his team kicked off his project last spring, identified the second building in Lexington, Massachusetts, and we took occupancy in July 2014.

All build outs including clean rooms were completed in the fall and we have now completed our initial engineering runs and initial validation studies for many of the critical raw materials.

We're very pleased with the technical results thus far and these accomplishments may start to ameliorate any outstanding supply risk associated with completing our clinical trial and as an aside but an important aside, this strategic integration of full product and process development capabilities also further bolsters our pipeline projects and capabilities that did not exist previously.

Associated with the raw material project and our continued improvement in commercial scale of efforts, our head of regulatory, Laura Mondano, and her team work closely with the FDA over the last year and this fall providing key data from this technology transfer for their reviewing consideration. We then held a Type C meeting call with the FDA and received preliminary feedback and general acceptance from the FDA with this overall strategy in December of 2014.

Based on that constructed feedback, we continue our efforts to complete the tech transfer and scale up activities. Our goal is to rapidly complete our clinical batches later this year for integration into the Phase 3 clinical trials and generation of additional equivalence data.

As a reminder, our long-term goal is to expand based on demand with the modular submissions approach for doubling capacity in our submissions to the FDA. We think this is responsible and we're not going to require massive brick and mortar investments to support our launch and subsequent expansion. We're thinking about commercial readiness and scale and to that end, we're also thinking carefully about reimbursement and pricing.

Elissa Cote has led efforts to submit a protocol amendment in November 2014 to the FDA and this amendment augments our trial with additional health economics outcomes research data. Our intent there is to collect further key economic data and outcomes associated with quality of life, productivity and return-to-work status as well as healthcare resource utilization related to direct and indirect cost.

The real difference for these patients is the ability to get back on their feet, return to work more quickly and we are going to be tracking that through this amendment. As noted, the FDA approved this amendment in January 2015 and we're integrating those into the sites immediately.

Reminder that there is already a solid reimbursement environment in place with existing CPT codes and DRG in place providing coverage although we're not stopping there. We intend to bolster this further, particularly given the exemplary results we found on the Phase 2 clinical trial.

Looking at our pipeline, our September 2014 agreement with Intrexon reflects excitement around our cartilage platform just not to the NeoCart. But looking in the future of next generation products both in the knee and in other joints.

To that end, in September, we entered into an exclusive channel collaboration arrangement with Intrexon where the parties will work to develop next generation products to NeoCart. Our primary goal is to create a ready-to-use or an off the shelf NeoCart in a one-step procedure.

Now, how would we go about doing that? We're seeking to eliminate the initial patient biopsy and create an allogeneic universal chondrocyte or a master cell bank where we have established a consistent, reliable, and controlled supply of cells which we then use to make NeoCart.

Steve Kennedy and his team spent a lot of time looking at second and third generation technologies both in our existing cartilage platform, knee and beyond but then also in the musculoskeletal layers that are complimentary to NeoCart.

Through that process, we identified Intrexon as the clear leader and pioneer of some novel technologies that may accelerate our good development processes and significantly improve our manufacturing capabilities and their business model is to identify leaders in various indications and technology applications and our goal is to marry our expertise in cartilage repair and complex biologics manufacturing with Intrexon's expertise.

You'll see the financials and the structure of the of the collaboration in the press release so I won't cover those in detail, but in summary, it calls for reimbursement of R&D expenses back in milestones and royalties associated with success.

Importantly, Intrexon led by RJ Kirk is very much aligned with Histogenics, not only through our collaboration but also through their significant equity investment in the Company in our recent IPO. Since signing the collaboration, we've been impressed with the speed and the robust planning process by both teams and in January 2015 completed initial project plans focusing on the assessment of the immunogenicity of chondrocytes and then several pathways to developing a universal donor of chondrocytes or a master cell bank.

We expect that additional data generated midyear necessary to further define the project plan and potential pathway and we look forward to updating investors on our progress.

Finally, I would like to welcome to David Gill to our board of directors and chairman of the audit committee. Dave is currently the CFO of EndoChoice, a medical device company which provides devices, diagnostics, infection control and imaging for specialists treating a wide range of gastrointestinal diseases.

David's financial and necessary expertise and experience make him an excellent choice and we look forward to David's contribution.

At this point, I'll turn the call over to Kevin to discuss our financials. Kevin?

Thank you, Adam.

As we've discussed earlier, the fourth quarter was highlighted by our initial public offering of 5.9 million shares of common stock at a price of $11 a share. Subsequent to the quarter's end, there was an additional 465,000 shares issued as part of the overall allotment.

The net proceeds raised from these two events was roughly $62.8 million. For the fourth quarter of 2014, we reported a net profit of $900,000 or roughly a $1.70 per fully diluted share.

This included one-time $10 million gains from the market adjustment, fair market value adjustments, extinguishment or cancellation of certain liabilities related to our shareholders. This compared to a net loss of $14.2 million for $73.35 per fully diluted share for the same period of 2013.

For the year ended December 31st 2014, we reported a net loss of $22.8 million or $6.85 fully diluted and this compared to a net loss of $25.7 million or $96.58 per fully diluted share for the same period of 2013.

On a liquidity standpoint, as of December 31st 2014, we ended the period with a cash and cash equivalents of $58.1 million which compared to $8.7 million for the same period of December 31st 2013. This increase of $49.4 million was primarily driven by the net proceeds of our IPO which were $58 million as well as gross proceeds from a convertible bridge financing of a million, capital equipment loan we took out from the fourth quarter of $1.75 million and also a $10.3 million Series A convertible preferred equity issuance in the middle of 2014.

These proceeds are partially offset by cash used on operating activities of $18.4 million as well as the purchase of $3.3 million of capital equipment to outfit our Lexington facility for raw materials.

Research and development expenses for the fourth quarter were $4.6 million as compared to 3.6 million for the fourth quarter of 2013. Research and development expenditures for the full year of 2014 were $25.9 million which compared to a $11.9 million in 2013.

The increase in the fourth quarter of 2014 as compared to the fourth quarter of 2013 was primarily from the cost of our currently enrolling NeoCart Phase 3 trial with the US FDA which restated in the first quarter of 2014.

For the full year of 2014, research and development expenses increased primarily from a $10 million technology access fee paid to Intrexon which came in the form of a convertible promissory note. This was an upfront fee for commercial license rates to the intellectual property granted under the collaboration agreement. In addition, the incremental cost of the overall patients in the NeoCart Phase 3 added to the gain rise in research and development expenditures.

General and administrative expenses for the fourth quarter of 2014 were $1.9 million as they were in 2013. General and administrative expenses increased $1.9 million for the full year 2014 to $6.7 million as compared to $4.8 million for the fourth quarter of 2013.

For the full year, general administrative cost increased primarily due to support cost for initial public offering, which accounted for $1.4 million of the rise in general administrative expenses as well as some additional facility and IT-related expenses to support headcount to enroll the Phase 3 clinical trial as well support many of our manufacturing needs and recruitments.

As we discussed within other income and expenses, the fourth quarter showed a $7.5 million net gain as compared to an $8.6 million net expense for the fourth quarter of 2013. For the full year 2014, other income and expense was a $9.9 million net gain as compared to a net $8.9 million for the same period in 2013.

For the fourth quarter at full year of 2014, there was included a $6.1 million and $12.6 million noncash gain from the fair market value adjustments of a liability to one of our shareholder and license holders which is under an exclusive sublicense agreement. In addition, there was a $1.5 million noncash gain from the adjustment of a net sales distribution liability due to our Series A preferred shareholders.

The other liability -- the liability to our license holder was settled for the terms of the agreement at the initial public offering as was the net sales distribution liability.

I would now turn the call back over to Adam. Thank you very much.

Thanks, Kevin, and thanks for the commitment and efforts of our employees, investigators, partners and board of directors, 2014 was a year of significant accomplishment. I want to make sure that we recognize and thank the multitude of stakeholders that contributed to our success last year.

We, as an organization, are intently focused on executing against our plans to bring NeoCart to the market as quickly as possible so that we may build the unmet need in cartilage repair for patients. And from there, we're building upon our robust technology platform to explore other areas and indications where our proprietary technology may be applicable.

To conclude the call, I'd like to highlight some key expectations to the coming year. We continue to expect completion of enrollment by the second quarter of 2016 as our efforts move from training and start up at sites to execution and exemplary focusing customer service by our team supporting with clinical trial.

We intend to identify our next potential indication for proof concept, clinical studies. Initially, we're targeting other areas of the knee or the ankle based on our research thus far and our research can development efforts are focused on our Intrexon partnership where we may generate additional data to determine the best pathway for continued development of a universal chondrocyte or a master cell bank that may be used for our next generation product.

In the laboratory and in partnership with our clinical and scientific advisors, we intend to generate additional data and publications to further demonstrate the mechanism of action and utility of our technologies and along those lines, we have targeted submission for publication of our five-year data from our Phase 2 clinical trial of NeoCart in the middle of 2015.

Lastly, on the investor front, we are expecting to present several upcoming investment banking conferences in the coming months and our focus is to continue to tell the story to our existing and potential investors to generate additional interest in the Histogenics story. Similarly, we are targeting additional analyst coverage in 2015.

With the IPO complete and continuing progress in both our NeoCart Phase 3 clinical trial, our Intrexon collaboration, we're excited about the future for Histogenics. We believe that we're well-positioned to execute on our current business strategy. We have the funding in place to do so and we look forward to reporting our progress in future press releases and calls.

Thank you, everyone, for joining today's' call. We'll now open up the line for any questions.

Operator, please open up the line.

Certainly.

(Operator Instructions)

Our first question comes from the line of Josh Jennings from Cowen.

Hi, guys, this is Chris Hamblett in for Josh. Congratulations on the 2014 milestones and I just have a question about, you know, in terms of that patient enrollment, it looks everything is tracking well and is it still at a rate of 0.4 to 0.5 patients per site per month and anything that could expedite that or is that really kind of the ideal rate to get the optimal patients? And just to follow up, you know, what is the optimal sized chondral lesion that you guys are targeting in the Phase 3 study? Thank you.

Sure. Thanks, Chris. Appreciate the question and welcome to the call.

So, let me address the first one. The rate of 0.4 patients per month per clinical site obviously comes from the literature. Much of the research we did over the last couple of years as we're preparing to enroll this trial instructed us that it was a combination of making sure you have enough patients that were coming in to the pipe and then, of course, making sure that you could consent them appropriately.

Based on the numbers that we've seen thus far, we believe that that trend will continue and we have completed much of the initial startup work where we should be tracking to that and all the investigators to come on board. With that, we'd of course, reiterate our goal that we expect to complete enrollment in the second quarter of 2016.

If we look at the optimal lesion side, we look at our actual clinical protocol and we can treat up to certain sized lesions but our target is that 2-3 cm squared lesion here where most of the injuries are coming for patients in our patient population.

Typically, larger lesions or concomitant lesions indicate a more serious injury. We're very much going after that first line of primary indication where those smaller lesions will arise. Some of the second, third, and fourth salvage procedures for products that are out there for approval really are targeting are larger lesions and that's a much smaller market.

So, we're really going after the bulk of it and based on our experience thus far, we've been pleased with the consenting process in identifying those patients.

And it sounds like you've had -- will you be publishing and presenting at a meeting that five-year data on the Phase 2 or is that just targeted for a publication midyear?

We're actually targeting both. Typically, I'm a big proponent of getting data in the publications, making sure that they've made it through the peer review process. So, we're working very closely with one of our primary investigators and actually several, led by Dr. Crawford as well as a number of others and just completed some of the data log activities, still a lot of work to go to the next couple of months but we would, in fact, be targeting one of the medical meetings.

Probably AAOS is going to be tight from an orthopedic conference presentation, but we'll be working closely with investigators. Then, of course, we'll release that data once it's published.

And then just lastly, you know, it sounds like you'll be providing updates on the Intrexon collaboration and things are progressing there but what are kind of the near-term milestones in that collaboration and how might you, you know, tell us, I guess, press releases or earnings calls?

Absolutely. So, yes, that's correct statement. We do expect to update the investor based on the collaboration with Intrexon as we indicated in January of 2015, we have our initial planning meeting. We've had a near term target that's looking in, sort of, last days around immunogenicity and that will then inform our product plans.

I'd ask Steve Kennedy. He's our head of technical operations and really the architect of the Intrexon collaboration as well as the key sponsor to add any other thoughts he may have. Steve?

Yes, I think the -- to answer it basically, you know, we're kind of in a mode of collecting initial data to really fully design the project and I think that that data will be in place by the middle of the year in which to have a really kind of focus our project plans and our resources on our goal which is to provide some proof of concept of what we're working on by the end of the year.

So, we're, you know, well on a way with that, I think the teams are working very well together. It's very nice and matches our skills which is what impresses me the most where we have been utilizing the Intrexon's synthetic biology capability together with our tissue engineering capability and it's a real nice match and the teams have come together well.

Thanks, Steve.

So, Chris, you should absolutely expect that we'll report against this and as we get through some of the preliminary assay work and start to define that project, we and Intrexon will start to provide some additional visibility on what those project plans look like. You can imagine that we'll have multiple pathways that potentially get us to a spot as quickly as possible and we will instruct investors as we move forward on what those pathways look like.

All right. Sounds great. Thanks for taking the question.

Thanks so much, Chris.

Thank you. Our next question comes from the line of William Plovanic from Canaccord Genuity.

Hi. Great. Thanks. Good morning. Can you hear me okay?

We absolutely can. Hello. How are you?

Good. Good. Good. So, the questions I have, just two, one is you're at 30 sites, you can go to 40. Are you going to stop at 30 sites? And then the second part of that question is how many of those sites have actually enrolled and treated the patient at this point?

Sure. Great question. So, currently, we are at approximately 30 sites, that's correct. Under the FDA, we can go up to 40. We continue to evaluate selective additions and/or transitions within the clinical trials. We think that we've got a pretty good group now, as you know. There were several groups that started many years ago and then have come back into the trial.

Once that startup has completed, we're feeling pretty good that the 30 range is still going to be the effective number of investigators to get the trial done. We'll continue to look at where we may be able to augment geographically, for example, or in certain areas where there may be a lot of competition among investigators.

But we are feeling pretty good that we've got a preeminent list of investigators out there, some of the top cartilage repairs, surgeons out there and we'll continue to also update the investors as we have any selective adds or subtract there. But right now, we're feeling pretty good about that number.

And then the second question, I believe, was how many of the open sites had consented a patient and how many of those had enrolled the patient. So, 18 of the sites have actually consented the patient and as of yesterday, I believe 14 sites had actually enrolled the patient.

We're continuing to bring a number of sites on board, several came on just in the last quarter as I indicated and are now ramping up and we expect to see that number of those consenting enrolling to actually match those that are actually open. So, that's most of our goal is to go deep and we're starting to see numbers of the investigators that we brought on board in the fourth quarter start to bear fruit.

Great. And then actually that was a two-part question. My second question is just, you know, simply you mentioned there was an amendment to the original filing that was in December or January. I think it was for data collection. Just, what exactly was the change? And that's it for me. Thanks.

Great question. Thanks, Bill, and let me actually have Elissa answer that since she was the architect of that particular protocol amendment, very much focused on the health outcomes.

Hi, Bill. Thanks for the question. Bill, as Adam mentioned, we are looking to make sure that we were collecting health economics data that would support our basically, our payer argument for what we would hope would be potential for our broader access and reimbursement at the point of commercialization of NeoCart. So, much of this data included the addition of two validated health economics forms and surveys that we could implement and make sure that we are collecting that data about return-back-to-work status, productivity, et cetera, but more specifically quality of life.

We also have switched one of the forms, our standard Form 36 to standard Form 12 to make sure we continue to collect the outcome data that we needed to support a strong robust package that would be submitted for support for our payer and the payer dossier submission. So, this data collection, as soon as the protocol amendment is implemented, will take place at all of the sites in which we are currently enrolling patients.

Thank you.

Thank you. And again, if you do have a question, please press start then one on your touchtone telephone.

Our next question comes from the line of Esther Pang from Needham and Company.

Hello, Esther.

Hi. Congrats on your first few months as a public company. I just have one question-- you mentioned that you would have proof of concept in the rest of the knee or ankle on designing humans and when will that hit the clinics?

Great. Thank you for the question and, Esther, let me repeat it. You're breaking up a little bit to make sure that I've got that. The question was on next indications and when we should expect to see additional progress whether it'd be human or preclinical data. Is that correct?

Correct.

Great. Thanks for the question. So, yes, we're doing some work right now around probably two key target areas. One is going to be potentially in the ankle and then the other is looking at the patellofemoral joint. These are obvious next indications, both from a market size perspective and as well as from sort of complementary to our current NeoCart product.

One of the things that we're looking at is the best clinical strategy whether it'd be sort of overseas or here in the United States to get a small number of patients, proof of concept in human clinical trials. I think we've got ample preclinical data for any of the next indications, it would be our existing NeoCart product or potentially a slight denervation to the NeoCart product.

One of the benefits of all the work that Steve has been doing on our raw material pipeline is we're now able to start thinking about life cycle management, new product development initiatives and for example, ankle may require a slightly smaller or it could be a larger NeoCart scaffold. In the past, working through some of our third party manufacturing folks, that was a long validation process. Now, we're able to source that internally, hence the recent turn to starting the look at these new indications.

So, in summary, I believe that you should expect to have an update on the overall strategy and timing probably about midyear. We are targeting a regulatory strategy and starting to identify potential sites towards the end of the year. But those would be the two initial indications before we start looking more broadly in some of our second generation therapies.

And our goal is that if we can fix cartilage in the knee, you should be able to fix cartilage in the ankle, in the hand, or the shoulder. Now, we've got a lot of work to demonstrate the safety and the efficacy of NeoCart in those indications by keeping our mechanism of action and the ways that the product works, we think it would be responsible to start looking at some of those other indications and start thinking about where the second generation and Intrexon potentially collaboration starts to fit in to these indications as well.

So, we'll keep everyone updated there.

Thank you. And that concludes our question and answer session for today.

We thank you for your participation in today's conference and you may now disconnect.

Thanks, Karen.