Oruka Therapeutics Inc (ORKA) 2004 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to Nuvelo's conference call, moderated by Dr. Ted W. Love, President and CEO of Nuvelo. At this time, all participants are in a listen-only mode. We will be conducting a question-and-answer session and will provide instructions for asking a question. Should you require any assistance during the call, please press the star, then 0 on your touchtone telephone.

This conference call contains forward-looking statements regarding our anticipated use of cash in the fiscal year 2005. Our success in concluding collaboration agreements for our research and development programs and the timing of any such agreements, and the timing and progress of Nuvelo's clinical stage and internal research programs, which statements are hereby identified as forward-looking statements for purposes of the safe harbor provided by the Private Securities Litigation Reform Act of 1995. Such statements are based on our management's current expectations and involve risks and uncertainties. Actual results and performance could differ materially from those projected in the forward-looking statements as a result of many factors, including, without limitation, uncertainties relating to drug discovery, clinical development processes, enrollment rates for patients in our clinical trials, changes in relationships with strategic partners and dependence upon strategic partners for the performance of critical activities under collaborative agreements, the impact of competitive products and technological changes, uncertainties relating to patent protection and uncertainties relating to our ability to obtain funding. These and other factors are identified and described in more detail and available filings with the SEC, including, without limitation, Nuvelo's recent Form 8-K filing of January 24, 2005, annual report on Form 10-K for the year ended December 31, 2003, and subsequent quarterly reports on Form 10-Q. We disclaim any intent or obligation to update these forward-looking statements.

At this time, I'd like to turn the program over to the President and CEO of Nuvelo, Dr. Ted W. Love.

Thank you, and thank all of you on the phone for joining us today as we take this opportunity to look back to the accomplishments of 2004 and what we have to look forward to in 2005. My name is Ted Love, I'm President and CEO of Nuvelo, and I'd like to begin by reviewing some of our key achievements in 2004. I will then turn the call over to Gary Titus, Vice President of Finance and Chief Accounting Officer, who will review our financials for the fourth quarter and year-end 2004 and provide guidance for 2005. Dr. Michael Levy, the newest member of our management team, will walk you through each of our clinical development and research programs. Dr. Levy comes to us most recently from Amgen and Tularik, and serves as Nuvelo's Senior Vice President of Research and Development. Finally, I will address what lies ahead in 2005 in terms of both milestones and strategy, and we will close by taking questions and answers.

Let's begin by reflecting on 2004. I think 2004 truly reflects Nuvelo's commitment to execution. First, we transformed into a late-stage product company, with multiple development opportunities focused on acute hospital-based cardiovascular medicine. Second, we made significant progress advancing our acute cardiovascular franchise. Specifically, we completed and presented positive data on 2 Phase II trials with alfimeprase, 1 trial with an acute peripheral arterial occlusion and the second one in central venous catheter occlusion, and we have worldwide rights to this exciting lead compound. For our second clinical compound, we acquired worldwide rights to rNAPc2 and quickly reinitiated a Phase IIa trial in patients with acute coronary syndromes. And finally, to round out our cardiovascular franchise, we entered -- we entered into a 50/50 collaboration with Archemix for ARC183 and initiated a Phase I program focused on coronary artery bypass surgery. Third, we advanced our first internal research candidate, NU206, into IND-enabling studies, and -- and we look forward to talking further about this exciting compound very soon. Fourth, we strengthened and expanded our management team and board of directors, adding key people such as Lee Bendekgey, our CFO and General Counsel, Dr. Michael Levy and Dr. Steven Deitcher to our research and development team, and bringing in Simon Allen to head our business development group. Finally, with our most recent offering, we continue to maintain a strong financial position.

Now, to speak more to our financials, I will turn the call over to Gary Titus, our Vice President of Finance and Chief Accounting Officer.

Good afternoon, everyone. At this time, I would like to discuss the financial results for the fourth quarter and the full year of 2004 and the financial outlook for 2005. This will include the financial impact of our Phase III clinical programs and results of our recently completed public offering. Turning to our fourth quarter 2004 financial results, for the 3 months ended December 31, 2004, we reported a net loss of $13 million, or $0.40 per share, compared to a net loss of $9.4 million, or $0.37 per share for the same period in 2003. For the full year 2004, we reported a net loss of $52.5 million, or $1.70 per share, compared to a net loss of $50.2 million, or $2.37 per share for the same period in 2003. The increase in net loss for the 12 months ended December 31, 2004 of $2.3 million was primarily attributable to an increase of $10 million in research and development expenses, offset by a decrease of $6.4 million in general and administrative expenses. The increase in research and development expenses was primarily related to increased spending on our development-stage drug candidates, including license and collaboration fees and the advancement of our preclinical research programs. The decrease in general and administrative expenses was primarily due to decrease -- decreases from the costs incurred in 2003 related to a facility lease termination and the merger with Variagenics in January 2003.

Nuvelo is a biopharmaceutical business and as such, our strategy has been to monetize assets outside of our core business. Included in the fourth quarter and full-year loss described previously, on December 3, 2004 we entered into a stock purchase agreement with SBH Genomics and Affymetrix, pursuant to which we sold all of the stock we held in our subsidiary, Callida Genomics, to SBH Genomics. As a result of this agreement, we recognized in the fourth quarter a $1.6 million one-time loss on disposal of this discontinued operation. In addition, for the fourth quarter and full year 2004, this discontinued operation had net losses, excluding loss on disposal, of $504,000 and $1.9 million, respectively. The number of shares used for calculation -- the number of shares used for the calculation of year-to-date earnings per share is based upon weighted average shares outstanding during the year-to-date period, which was 30.9 million shares in 2004. In terms of our revenue, we recognized $43,000 in revenue for the quarter and $195,000 for the full year from our continuing operations. Our operating expenses from continuing operations were $10.8 million for the quarter and $48.8 million for the full year. In terms of our operating expenses, $40 million was spent on research and development for the full year, which includes expenses associated with completion of our 2 Phase II clinical trials, for our lead product candidate, alfimeprase, expenses associated with licensing our second drug candidate, rNAPc2, as well as reinitiating the ongoing Phase IIa trial with this compound, and Phase I development expenses, including a collaboration fee paid to Archemix for our third drug candidate, ARC183.

In terms of selected balance sheet information, I will focus on cash flow and our cash balance. We ended 2004 with cash in investment balance of $50.6 million. We began the year with $34.2 million and added approximately $69.4 million related to our previous public financing, which completed in March 2004. Our net run rate for the full year was approximately $53 million, which included $3.5 million in cash payments for license and collaboration fees related to our rNAPc2 and ARC183 drug candidates, $8.5 million for manufacturing alfimeprase needed for our Phase III trials, and approximately $2 million in prepaid Phase III clinical trial costs.

At this time, I'd like to give some financial guidance on our cash burn rate for 2005 and results of our recent financing, which was completed in February. We -- we anticipate a net cash burn rate of $60 to $70 million for 2005. Key drivers behind this burn rate is the ramp-up of our clinical development operations for alfimeprase, Phase III trials in acute PAO and catheter occlusion, and significant costs associated with manufacturing of alfimeprase for our clinical trials and future commercialization. In addition, we will continue to incur costs associated with our ongoing Phase IIa trial with rNAPc2 and our Phase I program with ARC183. The variability of our 2005 cash burn rate is due to our clinical trials and the nature of potential business development agreements. Given our year-end cash balance of $50.6 million and anticipated net proceeds of $68.3 million from our recently completed public financing, we expect that we will have sufficient cash resources to fund operations through 2006.

I will now turn the call over to Dr. Michael Levy, Senior Vice President of Research and Development.

Thank you, Gary, and let me begin by saying what a real pleasure and a privilege it is to be working with Ted and the rest of the team here at Nuvelo. For the next few minutes, I'll walk you through each of our clinical development and research programs and share with you our excitement for these programs.

Let's begin with alfimeprase, our lead product candidate. As you know, alfimeprase is a direct-acting thrombolytic, or clot dissolver. Its unique mechanism of action, rapid clinical effect and safety profile to date give it the potential to offer a significant advance in the care of patients suffering from a number of important medical problems where the underlying pathology is the obstruction of blood flow by a thrombus, or blood clot. We are currently advancing alfimeprase in 2 clinical problems, 1 investigating acute peripheral arterial occlusion, also known as leg attack, and the other investigating central venous catheter occlusion. As Ted mentioned earlier, in 2004 we presented positive Phase II data for both of these clinical indications.

Let's spend a few minutes on acute peripheral arterial occlusion, or PAO. In the Phase II acute PAO program, alfimeprase showed the potential to break up blood clots in up to 76 percent of patients, restore arterial blood flow in up to 60 percent of patients, and up to 69 percent of patients were able to avoid open vascular surgery within 30 days following treatment. These results were all achieved within 4 hours of initiation of dosing, compared to the 24 to 36 hours seen on average with plasminogen activators in published studies. The safety profile seen in Phase II is very encouraging as well. There were some cases of growing hematoma at the catheter entry site, but no evidence of systemic bleeding and, in particular, no intracerebral hemorrhage or death. There's been widespread excitement about these results and about the potential of alfimeprase to change the risk-benefit ratio of treating acute PAO and potentially other clot -- clot disorders, such as stroke, by offering rapid resolution of a clot while minimizing the risk of bleeding complications.

We have the go-ahead from the FDA and are now ramping up to begin the first of 2 trials in our Phase III program in acute PAO, and expect to enroll the first patient this quarter. The program will consist of 2 overlapping trials, with a total of up to 700 patients. We're targeting over 100 centers, predominantly in the United States, but also in Europe, Australia, South America and South Africa. The trial will be randomized and double-blind, comparing 0.3 milligrams per kilogram of alfimeprase versus placebo. The primary end point will be avoidance of open vascular surgery within 30 days of treatment. Open vascular surgery includes procedures such as surgical embolectomy and peripheral artery -- arterial bypass grafting, but does not include less-evasive procedures, such as percutaneous angioplasty or stinting. We'll also look at a variety of secondary end points, which will yield important information for the marketplace, such as the incidence of bleeding, as well as pharmocoeconomic data, such as the length of stay in intensive care unit or the hospital. We've been asked about the practicality of running a placebo-controlled trial in this indication. As there are currently no approved drugs to treat acute PAO, surgery is an acceptable treatment option for these patients. In this trial, for those patients receiving alfimeprase, our belief is that surgery can be avoided in a majority of cases, but those patients who do go on to receive surgery will be -- will be receiving an appropriate standard of care. Our conversations with the FDA on this program have been very collegial, and we'll be going back later this year to discuss the second trial in the acute PAO Phase III program, which we plan to begin by year end. We'll update all of you once our discussions with the FDA are complete and the trial design is finalized.

Let's turn now to catheter occlusion, our second indication in development for alfimeprase. In the Phase II catheter occlusion trial, we compared alfimeprase versus Cathflo Activase. Alfimeprase showed activity in restoring blood flow to blocked central venous catheters in as early as 5 minutes. For example, at 5 and at 15 minutes, alfimeprase opened up 40 percent and 50 percent of catheters, respectively, versus 0 percent at both time points with Cathflo Activase. Based on these exciting findings, we're preparing to meet with the FDA in the first half of this year to discuss the Phase II results, as well as to confirm our Phase III study design, which we're aiming to begin the second half of the year. The Phase III program should be straightforward, as it will simply be measuring the success rate of alfimeprase in restoring flow to occluded catheters. We look forward to updating you with further details once we have met with the FDA and finalized the protocol.

On the manufacturing side, we have recently announced that we've chosen Avecia, Ltd. to manufacture the commercial supply of alfimeprase. We are in a strong position. We have enough material to complete our Phase III program and look forward to working with Avecia as we move forward towards commercialization. At this time, we do not anticipate that there will be a need for a bridging study comparing Phase III clinical material and commercial-scale material. The FDA has accepted our process changes to date for alfimeprase on the strength of biochemical characterization. Nonetheless, we will continue to partner with the FDA on a strategy for BLA filing, and if the Agency does require a bridging study, we will be able to complete one without impacting the critical path for submission.

Now let's take a moment to discuss how we're thinking about the market. The first point I'd like to make is that the formation of thrombus, or blood clot, is an important medical problem. For example, blood clots leading to myocardial infarct or stroke are responsible for more deaths annually in the U.S. than any other cause. Everybody knows somebody who has suffered from a heart attack, a stroke or peripheral occlusion, such as deep venous thrombosis or acute PAO, and in the case of blood clots leading to acute PAO, there is no approved rapid-acting, safe treatment currently available. If the risk-benefit profile that alfimeprase has shown in Phase II continues in Phase III, the potential exists to open the market to patients who would not have been candidates for thrombolytic therapy as it stands today. For example, with alfimeprase, physicians may be able to treat patients with an urgent need for restoration of blood flow to an endangered limb, those unable to wait 24 to 36 hours during a prolonged infusion with current agents, or just as importantly, treat patients who are unable to receive the current thrombolytics because of the risk of severe bleeding complications. There are some numbers, as well, that can guide us in terms of looking at market potential. With over 100,000 acute PAO patients in the United States each year, depending on assumptions about market penetration and pricing, peak sales for this indication could reach plus or minus $400 million in the U.S. alone. With the market opportunity for catheter occlusion in the U.S. being approximately $100 million annually, the estimated market potential for these first 2 indications together is $500 million in the U.S., and beyond that there are other indications to pursue down the road, such as chronic PAO or ischemic stroke.

And finally, on the partnering front, we continue to have conversations with parties interested in alfimeprase. As stated in past calls, we do have the clinical development expertise and the financial resources to manage the Phase III program on our own, and are doing so now. However, we continue to evaluate all of our partnering options and to assess how best to realize the full commercial potential in each territory. At this time, our strategy is to focus on finding a high-quality partner for commercialization outside of the U.S.

Moving on now to rNAPc2, our second clinical drug candidate, rNAPc2 is an anticoagulant that inhibits the factor VIIa/tissue factor protease complex, which is responsible for the initiation of the coagulation cascade, the process leading to blood clot formation. We now have a database with over 500 treated patients, confirming that rNAPc2 is a powerful anticoagulant in a variety of indications. We are currently studying rNAPc2 in a Phase IIa trial with Dr. Eugene Braunwald and a TIMI group, investigating the safety of rNAPc2 in combination other anticoagulants in patients with acute coronary syndromes, or ACS. Our plan is to complete enrollment in this Phase IIa trial in ACS the first half of this year and announce top-line data at that time. We plan to present the full data set at a major medical meeting during the second half of the year. ACS is a very large and exciting marketing opportunity. It's also an indication that will require large and expensive trials, and our intent is to secure a strategic partner to support further development and commercialization in this indication.

Our third clinical drug candidate, ARC183, is a direct thrombin inhibitor that is currently being developed as an anticoagulant for coronary artery bypass graft surgery, or CABG surgery. ARC183 is an aptamer, a natural DNA fragment, which is why it is rapidly created in the blood. Because of this, it must be given by constant intravenous infusion. It has a unique pharmacokinetic profile, which allows for the rapid onset and offset of anticoagulation. This profile makes it ideal for a number of indications, such as anticoagulation during CABG surgery, where it's important to restore normal coagulation function as the surgery is completed. In August 2004, we announced the initiation of a Phase I program with ARC183. This initial Phase I study in healthy volunteers will complete the first half of this year, and we will announce top-line results at that time. Because ARC183 is not treating a disease, but instead is designed to alter the capacity of blood to coagulate, the data we generate in Phase I should provide a good indication of proof of concept.

Now let's turn to our internal research efforts. Towards the end of last year, we nominated NU206 for preclinical development and had -- have now begun IND-enabling studies. We're particularly proud of this achievement, since it represents our initial discovery research efforts coming to fruition. NU206 has proven highly effective in animal models of human disease, and we expect to be announcing strategic development partnership for this program in the near future. And at that time, we'll also provide more color on the initial indications we plan to pursue.

And finally, our discovery research efforts as a whole are progressing well. We're focused on 2 major programs. The first evaluates novel human-secreted proteins as therapeutic candidates through knock-in and knock-out studies. In particular, our collaboration with Kirin is continuing to yield leads, and several candidates are now undergoing advanced testing. Our second program is investigating monoclonal antibodies against novel antigen targets in oncology, and we have a number of targets ready for validation in animal models. In summary, let me say we're very excited about the progress we're making in our key R&D programs and excited about our plans for 2005.

I'll now turn the call back over to Ted.

Thank you, Michael. Now, let's turn to 2005. Let me begin by taking a moment to summarize what we intend to accomplish in '05. As Michael described in detail, we have an exciting Phase III clinical program for alfimeprase in 2 indications this year. We are aiming to begin the first of 2 Phase III alfimeprase trials in acute PAO in the first quarter of this year, and we expect our second Phase III trial -- our -- our --with catheter occlusion to begin enrolling in the second half of '05. In the first half of 2005, we expect to complete enrollment in the Phase IIa rNAPc2 trial in patients with acute coronary syndromes being conducted with the TIMI group, led by Dr. Eugene Braunwald of the Brigham and Women's Hospital and Harvard Medical School. Also in the first half of 2005, our Phase I ARC183 program for use in coronary artery bypass surgery should complete enrollment. We are planning on announcing a primary indication for our preclinical candidate, NU206, in 2005 as well. Our commitment to execution and building shareholder value we hope will be evident this year, as we continue to focus on moving development programs forward and pursuing strategic partnerships, where appropriate, to enhance and accelerate our ability to develop our acute cardiovascular franchise and our further emerging research programs. Operator, can you please open the call for questions?

Yes. At this time, if you would like to ask a question, please press the star and 1 now on your touchtone telephone. To withdraw yourself from the queue, you may press the pound key. Once again, to ask a question, please press star, 1 now on your touchtone phone. And we will take our first question from the site of Matthew Geller of BIBC.

Hi, Ted.

Hi, Matt.

Nice progress this year. On PAO, can you talk a little bit about the difference in end points between the Phase III and Phase II trials, and what the relationship between those 2 end points is, why we might feel comfortable with the design of the Phase III trial? And is -- is this the design that the FDA really wanted? How did you decide to choose this particular end point? Are you -- how comfortable are -- are you that this is the appropriate end point?

Sure. I -- I'll take a stab at it, and if Michael wants to add something, feel free to, Michael. The first thing I would say is that in the Phase II trial that we conducted in acute PAO, the end point was really restoration of blood flow, because if you think about it clinically, the reason that these patients are in distress is the lack of blood flow, and the reason that you administer the drug is to restore blood flow. And in the Phase II program, we were studying several doses to understand what the profile of each of those doses would be for restoration of flow. In the Phase III trial, we are now moving on to a clinical end point, but it's the clinical end point that, quite frankly, ties right back to that angiographic end point. The clinical end point that we are looking at is reduction in the need for surgery. So we begin with a patient who has an angiogram demonstrating an occluded vessel, and a clinical situation where the surgeon has determined that in order to restore blood flow, surgery would be performed. And in this case, alfimeprase is administered, and if there's restoration of flow, obviously there should be a reduction in the need for surgery. So, we think that while it's a different end point, it's an end point that, quite frankly, ties very directly to the end point that we were investigating in Phase II. Michael, do you want to add more to that?

I would just echo Ted's thoughts and perhaps add that our discussions with the FDA here were very collegial, and this is one of the happy instances where we were of a similar mind with the Agency and we agreed pretty readily that this was a sensible end point for the Phase III study.

Great. Thanks a lot.

We'll take our next question from the site of Mark Monane of Needham & Company.

Good afternoon. Congratulations to -- to you, Ted, and the team.

Thank you, Mark.

A couple questions here. Let's start with a couple concrete questions. In the -- in the milestones, you listed completing enrollment. How quickly will the team be able to present results after completing enrollment, as I think this will be something that investors will be very interested in?

In -- in which trial were you describing --?

I'm -- I think you said both the -- completing enrollment of the rNAPc2 and acute coronary syndrome and completing enrollment in the ARC183 will both take place in the first half. How about reporting data, which -- which I think a lot of investors are concentrating on?

I -- I would expect that will be in the second half of the year. What we would plan to do is, upon completion of those trials, to release some top-line information to give people a sense of directionally what we've learned, but obviously not to compromise the integrity of a proper presentation at a scientific meeting. And as you well know, there are a variety of meetings in the second half of the year, the TCT, the American Heart Association meeting, a variety of other meetings, and I would think that those meetings would be the -- the target, but it's hard to say for sure yet, not having completed and presented to those forums yet.

Sure. Thank you. In the -- in the Phase III trial with PAO, how are you going to deal with surgeons and/or interventional radiologists and/or everybody else who has a catheter these days, using heparin or TPA or Angiomax or anything else off the shelf which is currently available, in addition to your study drug, either because they're -- they feel a sense of urgency or because they didn't get the result they wanted sooner rather than later?

Let me -- let me come back to that -- because I think the first point I -- I would make is that when a patient presents with an acute peripheral arterial occlusive event, obviously their limbs, their leg usually, is at risk of being lost, or part of it being lost. And the -- it's well accepted that surgery is a proven and high-quality way to approach and deal with that patient. What is also recognized is that surgery done on an emergent basis for these patients often brings more complications than surgery done in a more elective format. So, the role of thrombolytic therapy, in part, is to simply deal with the acute program so that one can come up with a less invasive or a delayed surgical approach to these patients, if necessary. The use of heparin is not a problem at all. In fact, I would suspect these patients will get heparin. The use of other anticoagulants, whether it be Angiomax, even IIb/IIIa inhibitors, are totally permissible and acceptable. The uses of devices in a -- an adjunctive use with alfimeprase, as long as it's a percutaneous approach as opposed to an open surgical approach, all of those things are perfectly approachable, and, in fact, that's what we're trying to do with alfimeprase, is abort the need for jumping in and doing an extensive open surgical procedure. The only thing which is not permitted is the use of open surgical procedure in a vessel which has opened with alfimeprase, and obviously, if the vessel had opened with alfimeprase, the need to do that surgery should have been mitigated by the drug.

And -- and so thrombolytics are going to be allowed, I'm sorry?

Thrombolytics would not be allowed.

Not allowed.

That is correct.

Okay.

And just -- just to -- just to put a -- a highlight on that point, you know, ultimately, to really demonstrate the benefit of a thrombolytic, one needs to do what we are doing. That has not really -- that has not been done with any of the available thrombolytics, and it is very clear that surgery is an acceptable form of therapy for these patients, so in our goal, in our trials, the strategy is to try to provide them with an opportunity to forego surgery, but if they simply fail to open, they get the appropriate surgery that would have been indicated.

Terrific. Thanks for the added information and, again, congratulations.

Thank you.

We'll move next to our next participant, to Jennifer Chao of Deutsche Bank.

Great. Good afternoon, everyone.

Hi, Jennifer.

Just -- just following on the alfimeprase Phase III questions on leg attack. Ted, I was just wondering if -- could you talk about the number of centers to be included in the Phase I -- in the first Phase III trial and then the second Phase III trial, and then when you plan to start the second Phase III?

Sure, be happy to. We are planning on using approximately 100 to 150 sites in the first acute PAO trial. The second PAO trial is not as far along in terms of its planning. As Michael said, our intent is to go back to the Food and Drug Administration and talk to them about the appropriate designs that we might employ in that trial. One thing that we obviously could do is simply duplicate the first trial, and if we did, I would anticipate that it would be of a similar size, but depending upon the outcomes of the FDA conversations, both the timing of initiation, as well as the -- the size of that trial in terms of sites, could change.

Okay, so if -- if -- I'm trying to understand some of the subtext, are you saying that you want to see how the trial enrollment goes, and if that proves to be challenging in any way, you might be able to alter the design of the second Phase III in order to accommodate for that kind of a situation?

Not -- not quite. What I'm getting at, really, is that depending upon the discussions with the FDA, the second trial might look somewhat different than the first trial. We think -- obviously, we put a great deal of effort into planning the first trial, and we have a protocol, we have a clear design fully worked out with the Food and Drug Administration, and we think the sample or the site size of 100 to 150 is appropriate for that trial. At this point, we don't have that clarity about the design, the content of the second trial, and that's why it's a little bit harder to give you a specific answer.

Okay, but just -- just so that I understand it perhaps a little bit more, so you're saying that the second trial may have different end points, as well as it could be of a different size trial?

That -- that's absolutely correct. It could be a different size. It -- it -- it could have additional end points. I mean, we don't want to, obviously, make any kind of commitment because at the end of the day, you know, the Food and Drug Administration would like for us to have those discussions with them before we have them with others.

Okay. And then in terms of the anticipated rate of patient enrollment, what -- what do you guys estimate that's going look like for the first Phase III?

Well, what we've been telling people -- and I think we want to make sure that we maintain this -- we would like to give people informed guidance, and informed guidance is based upon some information, obviously, and to date we have not enrolled our first patient there, so there's no enrollment rate that we can project from to give you any clear guidance yet. What we have done is the very best that you can possibly do at this point, which is base some estimates on our experience in our previous trial and also based upon experience that we've seen in other trials done in patients with acute peripheral arterial occlusion, and it's been based upon that that we've been trying to work very much toward the kinds of things that you write about, Jennifer, in terms of us trying to get revenues in late '07 or early '08. So we are designing all of this to try to meet those kind of objectives, but we don't want to confuse that as guidance, because guidance really should be based on some information, which we don't have yet.

Okay, got it. And then lastly, just on the clinical side, IRB approval status, what -- what percent do you estimate out of the 100, 150 do you -- do you have in hand?

I -- I don't think we want to go down the pathway of -- of giving too much insight into some of those details. What I can tell you is that we think that we are on track to do what we're trying to do. And what we're trying to do is in a broad way, kind of meet up to the expectations that you and others have set for us in trying to get alfimeprase to a point where it might enjoy some sales in late '07 or '08.

Okay, got it. And then on the modeling side, just 2 quick questions. The first is, what's a good figure for estimating the cost per patient in the -- the first Phase III, and then the second is how do we think about R&D and SG&A burn in '05 as it compares to '04?

I -- I'll -- I'll defer the second part to Gary, but to the first part I -- I'll say that we -- we've generally told people that we will a -- not reveal the exact cost of our trials, but for the modeling purposes that you request, Jennifer, we've told people that we think that these acute PAO trials on a fully loaded basis, you could expect to be in the range of $10,000 to $20,000 per patient.

Okay, great. And then on the R&D, SG&A?

Jennifer, hi, Gary. What -- following up on that, I think it's -- it's important to -- to keep in mind that our G&A expenses will probably not change significantly in 2000 -- 2005 from 2004. Regarding R&D expenses, we do expect fairly significant increases year-on-year. The primary reason for that is obvious, related to 3 Phase III trials that we will be initiating this year.

Okay, so significant meaning -- meaning what?

I -- I won't be able to give you too much more guidance on that at this point. We haven't actually broken down that guidance externally at this point.

Okay, so just suffice it to say, though, when -- when you discussed having enough cash through '06, that's assuming full-throttle burn, plus an increase over last year?

That is correct.

Okay, great. Thanks a lot, guys.

Thank you.

We'll move next to Maged Shenouda of UBS.

Hi, thanks for taking my call, or my questions. This is Maged Shenouda with UBS

Hi, Maged.

Hi. Just a question on the rNAPc2 trial. What are the end points we'd be looking for from that trial?

I think it's important to remind everyone that the rNAPc2 trial, the Phase IIa trial which is completing in the first half of this year, was designed really as a safety initiative. And that was very much at the request of the Food and Drug Administration, that felt it was important, and I agree, to prove that rNAPc2 would be safe in a setting where it's given on top of the currently available agents widely utilized in the treatment of patients with acute coronary syndromes. So that would include heparins, whether they be low-molecular weight heparins or -- or -- or -- or SubQ heparins. That would include direct thrombin inhibitors, such as Angiomax. It would also include IIb/IIIa inhibitors, and it would also include orally available drugs such as -- such as clopedigril, which is widely utilized. So when you add all of that up, you actually are talking about a person that already has a very potent anticoagulant regimen on board, arguably, a real propensity to have a bleeding diaphysis which could be greatly frustrated by the addition of rNAPc2. So, this trial was really focused on understanding the bleeding risk when it's added on top of that, and that's what we are out to do -- do primarily. Then, with that information, we will be well positioned, we believe, to move into efficacy trials, and that really is the plan.

Okay, great. Thank you.

We'll move next to Cory Kasimov of Oppenheimer.

Great. Good afternoon, guys. Thanks for taking the -- the questions. Two questions back to alfimeprase and the Phase III study. I just want to make sure I'm clear in terms of the patient numbers, that -- this is 700 patients altogether between the 2 Phase III studies? I'm a little confused, because you don't sound exactly sure of the total patient number for the second trial to be enrolled -- or to be initiated later this year.

Yes, so basically, the 700 number, just to be very clear, is a number that you could get by essentially repeating the first trial, and it's based largely on getting an appropriate safety experience. And obviously, if you pursue a one-to-one randomization of placebo versus our drug, you end up putting half those patients on placebo. But you could easily imagine that if you change the design around, where you end up with a higher rate of patients receiving study drugs, that 700 number could come down. So that's really the basis of the uncertainty. The uncertainty is not due to anything that we don't understand. It's actually uncertainty that we fully understand and perhaps can leverage to our advantage, assuming that the FDA is supportive of that.

Okay. And then from a regulatory standpoint, is it your anticipation that you need both of these trials for approval, or is -- if this first trial is a successful study, you can go ahead and file -- you can go ahead and file the NDA based off of that first study, and then the second one takes on a little more of a confirmatory study?

Well, what we try to do is set an expectation that both of these trials will be required. You know, it is certainly conceivable, theoretically, that one trial would suffice, but I think that's a dangerous expectation for us to be setting, for a variety of reasons. And -- and the practical reality is that the way we are setting these up is that they would be finishing so close together, that trying to use one really wouldn't make a lot of sense anyway. So we really are setting these up to be [inaudible] 2 trials, and at the end of the day we think that will represent the most compelling approval strategy, the lowest-risk approval strategy, and it will also represent that strategy for launching the product for commercialization.

Okay, but as -- as -- as it stands right now, having a Phase III study start in late 2005 does not set back your internal time lines at all?

That's correct.

Okay, thank you.

That's correct.

We'll move next to David Wood of Rodman & Renshaw.

Hi, good afternoon. Thanks for taking my call.

Hi, David.

Just one question, Gary. On -- on the net cash burn guidance for the year, $60 to $70 million, what -- what is in that? Is that -- does that include any potential economics from a partnership for rNAPc2?

The assumptions we have in the Company at -- at the ranges we've given you do not necessarily assume any business development or collaboration additions to what we currently have in place.

Okay. The other question I had is for alfimeprase, in terms of the material needed for the Phase III program. Ted, is that sufficient for both the PAO and the catheter occlusion studies?

Yes, it is.

Okay. And then the other thing I wanted a little more clarity on is you said that you didn't think any bridging study would be needed, seeing that -- I -- I -- if I understand it correctly, that biochemical analysis would be -- would be suitable. Is that -- is that correct, or -- or am I off on that?

That -- that is correct. In fact, you know, it's -- it's -- there are well-established standards for what is generally within the boundaries of changes that one can make in a manufacturing process which would not trigger the kind of bridging studies that have been raised. We think that this fits well within those boundaries. All of our interactions with the Food and Drug Administration so far supports that conclusion, and as Michael also said, even if we changed our position, or the FDA changed their position, there's adequate time in the plan to go and do that kind of study.

Okay, great. And then my last question is on ARC183. Who is the development lead, is -- is it you or Archemix? And -- and can you give us any more -- any more color on what you think happens with the program in the second half? Can we look for a Phase II program? Can you just give us any more -- any more detail on that?

Well, I think, you know, at the end of the day, obviously anything we say about the next steps would be dramatically enhanced by talking about what we've learned in the first step, and we're -- we're not there yet. But to your question about who's leading, the collaboration with Archemix is absolutely exceptional. It's 2, you know, relatively small companies that are very focused on running an excellent partnership, and we are doing that very well. Right now, in terms of the execution of the Phase I trial and operations, Archemix is taking the lead, and as a result of how we formed the relationship we've entertained the option of changing that, but as of today, the Phase I program is really being led by Archemix, with a great deal of support and interaction by Nuvelo.

Okay, thank you.

Our next question comes from Charles Duncan of JMP Securities. Mr. Duncan, go ahead. We'll move next to Clay Wilson of Needham & Company.

Thank you for taking the call. I just had a question about the end point for PAO, which is reduction in the need for surgery, and it's really a clinical question and I'm just wondering if you have the answer to this. Is there a gray zone where in PAO cases it -- it's not necessarily -- you -- you don't do surgery or you've got to do surgery, it's, well, maybe you can do surgery in these cases? And do you expect that that could complicate matters for you?

We have thought a lot about that issue, obviously. It turns out that there are some very well-described publicly available surgical guidelines for who does and who does not need surgery, and those guidelines are designed to address your very question, and that is how do you resolve the gray zone for who does and who does not need surgery? We are using those published, well-accepted standard guidelines to drive the decision about who does and does not need surgery.

Okay. Do you -- do you think -- is there any sense that that would be pretty clear clinically, that -- that clinicians actually dealing with this -- has there been any feedback on that score, obviously, just the concern that -- that there could be enough latitude there that ultimately it could -- could make the results difficult?

I don't think that there is that much latitude. We would be happy to provide you with those surgical guidelines offline, but these are the guidelines that have been generated by a consensus organization of the Vascular Surgical Society.

Okay, thank -- thank you very much.

It appears that we have no further questions. At this time I'd like to turn the call back to Dr. Love.

Right. Well, I'd like to end by thanking everybody for participating in today's call. We hope that your sense of excitement about Nuvelo's prospects for 2005 are as high as ours. Our lead product candidate, alfimeprase, is in late-stage trials for 2 indications, and we have 2 other promising products in trials as well. Finally, we maintain worldwide rights for all of our product opportunities and will strategically seek collaborations to help us advance these products to make them available for patients and build value for our shareholders. We look forward to discussing our continued progress with you throughout the year. Thank you.

Thank you. This does conclude our call this afternoon. You may now disconnect your lines, and everyone have a great day.