Oruka Therapeutics Inc (ORKA) 2006 Q1 法說會逐字稿

Good day ladies and gentlemen, and welcome to Nuvelo's first quarter 2006 results and accomplishments conference call. My name is Jackie, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. However, we will be facilitating a question and answer session towards the end of today's conference. If at any time during the call you do require assistance, please press star followed by zero and a coordinator will be happy to assist you. As a reminder, ladies and gentlemen, this conference is recorded for replay purposes. On the call today we have Dr. Ted W. Love, Chairman and CEO; Gary Titus, Acting CFO and Chief Accounting Officer; Dr. Michael Levy, Senior Vice President of Research & Development. Also on the call to participate in the Q&A session are Lee Bendekgey, Senior Vice President and General Counsel, and Shelly Guyer, Vice President Business Development and Investor Relations.

Before we begin today's presentation, the Company has asked me to read the following statement. Presentations by Nuvelo's management on this conference call will include statements regarding our anticipated use of cash and financial results for the fiscal year 2006, the success of our collaboration with Bayer HealthCare AG, the timing and progress of Nuvelo's clinical stage and internal research program, the potential market for our clinical stage compounds and the expenses, revenues, and potential for profits and sales from any drug products resulting from such programs, which statements are hereby identified as forward-looking statements for purposes of the Safe Harbor provided by the 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 related to drug discovery, clinical development processes, enrollment rates for patients in our clinical trials, changes in relations set with strategic partners and dependence upon strategic partners for performance of critical activities under collaborative agreements; SEC review of registration statements that we file to authorize public offerings of our securities, stock market conditions, the impact of competitive products and technological changes, uncertainties related to patient protection and uncertainties relating to our ability to obtain funding. These and other factors are identified and discussed in more detail in Nuvelo's filings with the SEC, including without limitation, Nuvelo's Annual Report on Form 10-K for the year ended December 31, 2005, and subsequent filings. We disclaim any intent or obligation to update these forward-looking statements.

At this time, ladies and gentlemen, I'd like to turn the presentation over to your host for today's conference cal,l Dr. Ted W. Love, Chairman and CEO.

Thank you all for joining us today. We are very pleased to share with you our first quarter financial results and accomplishments. Today's call will follow our usual format. Following my introductory comments, Gary Titus, our Acting CFO and Chief Accounting Officer, will provide an overview of our first quarter 2006 financial results; and then Michael Levy, our Senior Vice President of R&D, will discuss our clinical programs. Finally, I will conclude with an overview of our scheduled [INAUDIBLE] milestones that are still ahead of us in 2006. Nuvelo entered 2006 with a series of important milestones that provide a plan work for future success as a commercial enterprise, and it's put the Company in a position of significant financial strength. I will quickly review these milestones.

Last month, we initiated the NAPA-3 trial with alfimeprase, the second of two Phase 3 trails in our acute peripheral arterial occlusion. or PAO program. We also initiated SONOMA-3 trail last quarter, the second Phase 3 catheter occlusion trial. With the start of these two trails, we now have four trails Phase 3 trial ongoing with alfimeprase. In February, we successfully completed a secondary offering, with gross proceeds of approximately $120 million. On the regulatory front, alfimeprase was granted fast track status by the U.S. Food and Drug Administration. And finally, in January, Nuvelo and Bayer HealthCare entered into a global collaboration agreement to develop and commercialize alfimeprase. With this agreement, Nuvelo retained full U.S. commercialization rights and received a $50 million upfront payment from Bayer.

In addition, we will receive Rest of World royalties, additional milestones totaling $335 million, and development funding. Let me now turn the call over to Gary Titus to discuss the specifics of our first quarter 2006 financial results.

Thanks, Ted. Hello, everyone. The first quarter has been exciting financially for Nuvelo. As Ted mentioned, we completed a successful public offering in February and executed a collaboration agreement with Bayer. These accomplishments have been instrumental in achieving our goal of building financial strength. Let me begin by reviewing our cash balance, run rate, recent collaboration and financing events. We began the first quarter with approximately $7 million and ended the quarter was approximately $200 million in cash and investment balances.

Our net cash provided by operating activities was $18.1 million, which includes the $50 million upfront license fee payment received from Bayer. With the $50 million received included, our cash burn was a $17.9 million increase in cash. Excluding the effect of this receipt, our cash burn would have been a $32.1 million decrease in cash. We define cash burn, a non-GAAP financial measure, as the net cash used in operating activities as determined in accordance with GAAP, adjusted for the effects of purchases or sales of equipment, property and software, payments on debt obligations and proceeds from the exercise of options, warrants, and share purchases under the employee stock purchase plan all being determined in correspondence with GAAP.

In January, we received a $50 million upfront cash payment from Bayer upon entering into a license and collaboration agreement for alfimeprase. In addition, we incurred $13.8 million in alfimeprase global development expenses in the first quarter, leading to a receivable from Bayer of $5.6 million for their 40% share of these collaboration expenses. We anticipate receiving payment for the development cost sharing in the second quarter. For the full year, we anticipate billing approximately $30 million to Bayer for our global development reimbursements and a $10 million milestone payment for initiating a Phase 2 trial in stroke later this year. In February, we completed a successful public offering resulting in gross pros of approximately $120 million, or $112 million after deducting underwriters fees and stock issuance cost of approximately $8 million from the sale of 7.5 million shares of our common stock. We have focussed on building financial strength, and we have achieved this goal.

Turning to our first quarter results of operations, we recognized revenue of $1.1 million in the first quarter of 2006 as compared to $42,000 in the same period in 2005. The increase is primarily due to the upfront payment received from Bayer. This upfront license fee will be recorded as deferred revenue and recognized on a straight line basis over the term of the agreement, estimated to be until September 2020, when the last significant alfimeprase related patent has expired. Other amounts billable to Bayer for milestones achieved or for sales of alfimeprase to Bayer for use in their country-specific trials or commercial sales outside the United States will also be recognized in this manner. The method of revenue recognition changes once the development of alfimeprase has been substantially completed.

After that, any remaining deferred revenue will be recognized at that point, and any milestones in sales of alfimeprase that are available to Bayer after that point will be recognized as they are earned. We are continuing to evaluate the appropriate revenue recognition for royalty payments we anticipate receiving from Bayer in the future. Our operating expenses were $22.3 million for the first quarter of 2006. Starting from January, we are recognizing employee stock based compensation expense in our statement of operations as required by Financial Accounting Standard 123-R. For the quarter, the non-cash employee stock based compensation expense recorded under this new standard was $3.1 million, consisting of $1.3 million in research and development expenses and $1.8 million in general and administrative expenses.

We recognize $200,000 in employee stock based compensation expense in the same period in 2005 under previously adopted standards. We incurred expenses of $12.1 million on research and development during the first quarter as compared to $11.1 million in the same period in 2005. The increase was primarily due to consulting and outside service expenses related to our clinical trials and drug manufacturing, an increase in research and development personnel expenses in support of these activities, including stock based compensation expense. These expenses were offset by amounts billable to our collaboration partners under our cost sharing arrangements, primarily to Bayer. Our general and administrative expenses, which include precommercialization costs, increased to $10.2 million in the first quarter of 2006 as compared to $3.8 million in the same period last year.

The changes were a result of increased expenses associated with building our infrastructure to support our growing development organization, preparation for the planned commercial launch of alfimeprase, noncash employee stock based compensation expense, and a $2.9 million non-cash expense associated with our Kingsbridge capital warrant, which is reevaluated each quarter as required by Generally Accepted Accounting Principles. Focusing now on our consolidated statement of operations results, for the quarter ended March 31, 2006, we reported a net loss of $19.7 million or $0.40 per share compared to a net loss of $14.7 million or $0.39 per share for the same period in 2005. The number of shares of common stock used for the calculation of first quarter earnings per share is based upon weighted average shares outstanding during the quarter. This was 48.9 million shares for the first quarter of 2006 and 38 million shares in the same period in 2005.

On March 31, 2006, there were 51.8 million shares outstanding. At this time, I'd like to reaffirm our financial guidance on cash burn for 2006. We anticipate a cash burn rate as previously defined of approximately 33 to $43 million, which is reduced significantly from 2005 due to the approximately $90 million we anticipate receiving this year as a result of our collaboration with Bayer. Key drivers behind this burn are the continuing ramp-up of our clinical development operations for our alfimeprase Phase 3 programs in acute PAO and catheter occlusion, our planned Phase 2 trails in ischemic stroke and costs associated with manufacturing alfimeprase drug products for our clinical trials and future commercialization.

In addition, we will continue to incur costs associated with our ongoing programs with rNAPc2 and NU206 thrombin inhibiting aptamer program. We issued our quarterly results release earlier today. Please refer to this release for additional details. And now I will turn the call over to Dr. Michael Levy, Senior Vice President of Research & Development.

Thank you, Gary. Over the next few minutes, I'll provide you with an update of our development pipeline, Focusing on our acute cardiovascular programs and emerging oncology programs, as well as share with your our excitement about the progress we've made. Let's begin with an update on alfimeprase, our lead cardiovascular product candidate. We started the first quarter of 2006 with the announcement of our global collaboration agreement with Bayer in January. The companies entered into this partnership with a shared vision of alfimeprase's potential to change the treatment paradigm for a wide range of conditions due to thrombosis, including acute peripheral arterial occlusion, or PAO, catheter occlusion, stroke and deep veinous thrombosis. We are well on our way to achieving this vision and are off to a great start our new partner.

The [UN] committees are meeting regularly, and we're actively working with Bayer on our new global development programs, including preparing for the Phase 2 stroke trial, as well as collaborating on them with our manufacturing efforts as we prepare for the commercial production of alfimeprase. In addition, we've transitioned responsibility to Bayer for managing activities relating to the [EAA] and other foreign regulatory agencies after having received confirmation from the [EAA] that our Phase 3 program in acute PAO is appropriate for drug registration in Europe. On the clinical front, with the initiation of NAPA-3, we now have four Phase 3 alfimeprase trials ongoing and are on track to complete the first of these trials, NAPA-2 and SONOMA-2, in the second half of this year. As Ted mentioned, NAPA-3, which started this April, is the second of two Phase 3 trials in our acute PAO program for alfimeprase.

Under our Special Protocol Assessment, or SPA, with the FDA, NAPA-3 will essentially replicate the NAP-2 trial, and is also a randomized double blind study containing 0.3 milligrams per kilogram of alfimeprase with placebo. It will enroll 300 patients with the primary end point gain of [INAUDIBLE] open vascular surgery within thirty days of treatment. The NAPA program, which as a whole enrolled 600 patients, received fast track designation from the FDA in 2006. Fast track is designed to facilitate drug development and can lead to a priority review of a biologic license application, or BLA, which according to the FDA may reduce the total review time from the standard 12 months to 6 months.

In addition, under the fast track program, the FDA is committed to working more closely with a sponsor, and the BLA can be submitted as a rolling submission, which allows certain sections of the BLA to be submitted and reviewed while other sections are being finalized. We continue to be on track to complete enrollment in NAPA-2, the first Phase 3 trial in this program, in the second half of 2006. Typically, the time required to lock the data base, analyze the data and then provide top line results is a few months. And subsequently, we expect that one of our investigators would present a more complete analysis of the full data at an appropriate medical conference as soon as possible thereafter. Our second target indication for alfimeprase, catheter occlusion, is also progressing well.

We achieved our milestone of initiating the second Phase 3 catheter occlusion trial, SONOMA-3, in the first half of 2006. This open label single arm trial will evaluate the safety and efficacy of 3 milligrams of alfimeprase in 800 patients with occluded central unit catheters. We continue to be on track to complete Sonoma-2, the first trial in this program, in the second half of 2006; and depending on the exact timing of the completion of SONOMA-2, we expect to be able to provide top line data shortly after enrollment of the last patient, and full data to be presented at an appropriate medical conference by one of our investigators. Finally, we're working closely with the FDA and our partner Bayer on a Phase 2 of alfimeprase in stroke and remain on target to begin enrollment in the second half of 2006. In addition, a Phase 2 trial in deep venous thrombosis, or DVT, is scheduled to begin in 2007.

Now let's turn to our second cardiovascular candidate, rNAPc2. In November of last year, results from the Phase 2a dose escalation trial of rNAPc2 were presented at the American Heart Association Meeting. The data shows that rNAPc2 has been an acceptable safety profile, and is well tolerated up to the highest doses evaluate in patients being treated for acute coronary syndromes, or ACS. In addition to the safety data from this trial, we are currently finalizing the review of the efficacy data that we have generated based on starting end points, which we expect at an appropriate medical meeting later this year.

Currently, we are enrolling patients in a Phase 2 heparin replacement trial, where we are decreasing and ultimately eliminating the use of heparin in patients with ACS. This study should give us an indication of rNAPc2's potential to replace heparin in this patient population. This trial is going well, and we expect to complete enrollment in the first half of 2006 and to present data from this trial at an appropriate medical meeting in the second half of the year. Now let's switch our focus to our emerging oncology pipeline. Earlier this year, we announced plans to expand the clinical development program of rNAPc2 into cancer.

The Factor VIIa/Tissue Factor protease complex has been shown to play a role in the cellular signaling of both metastasis and angiogenesis in a variety of cancers. The Company plans to investigate the role of rNAPc2 as a potential cancer therapy in 2006, and we look forward to elaborating our plans for this program at Nuvelo's first R&D date, scheduled for June. Continuing with our oncology pipeline, we're developing a NU206, a novel and potent growth factor that is a highly specific stimulator of the ethothelial cells that line the gastrointestinal tract to induce cancer therapy induced mucositis. Gastrointestinal mucositis is a condition that causes extreme discomfort in patients undergoing radiation therapy or chemotherapy and there are few treatment options available. NU206 program is progressing well, and we are on track to initiate a Phase 1 study on the second half of 2006. I'll now turn the call back over to Ted.

Thank you, Mike. As you can see, we have a number of exciting milestones in the coming months, including for alfimeprase, completion of patient enrollment in the NAPA-2 trial; completion of patient enrollment in the SONOMA-2 trial; and initiation of a Phase 2 trial in ischemic stroke, all expected to occur in the second half of this year; for rNAPc2, completion of the Phase 2 heparin replacement study in patients with ACS in the second quarter of 2006; and the presentation of the efficacy data from this trial and our previous Phase 2a trial in the second half of this year; and for NU206, initiation of a Phase 1 study in the second half of 2006.

Nuvelo will be hosting an R&D Day for investors and analysts in New York City on June 16 to review our clinical development plans for alfimeprase and the treatment of stroke and DVT, and for multiple candidates in the pipeline for the treatment of cancer and cancer related conditions. Speakers, including a leading expert in stroke, will discuss the clinical issues and current treatments for stroke and DVT. We will also discuss multiple compounds in Nuvelo's oncology franchise, including the plans and rationale for developing rNAPc2 in cancer. In closing, this was an exciting quarter for Nuvelo, as we hit all our clinical milestones, continues to build a commercial capability with a terrific partner and significantly strengthened Nuvelo's financial position. We remain on track to successfully complete each of the milestones we've established in 2006, and we look forward to updating you on our progress on our next quarterly call. Operator, can you please call poll for questions?

At this time, we will open the lines for questions. [OPERATOR INSTRUCTIONS]. And the first question comes from Mark Monane from Needham. You may proceed, Mark.

Thank you very much, and congratulations on your progress to the team. A couple of questions. One is, could you go over a little bit more about what you feel is the emerging or state of the art in stroke therapy right now? A lot of the drugs that are out there have benefit, but they also have a large risk profile. In addition, many of the patients, especially elderly patients, who should get therapy don't get therapy because of the risks associated with therapy, even though they stand to benefit most from the disease. Can you address these issues, and tell us how Nuvelo will move forward with this? I don't know what happened? I didn't hear anything.

Hello, speakers?

Yes, can you hear me?

I can hear you, ma'am, hold on please.

Okay.

Ladies and gentlemen, please stand by for just a moment.

Operator?

Yes, your line is open. Are you okay?

I've been speaking. Can you hear me now, Mark?

Yes, thank you. But this is the first time I've had the pleasure of hearing you.

Okay,well, I'll start at the beginning. So thanks again for your question. And really what I was describing is the fact is the fact that, you know, stroke is a very exciting area where people think that we may be able to make some significant break throughs and obviously alfimeprase is part of that excitement. If you look at how people are approaching stroke, the approaches are coming in only twofold: One is, the approach that focuses on reprofusion therapy, essentially eradication of the clot, which is the primary basis for the stroke -- in ischemic stroke, anyways. And that essentially is an extension of what we at [INAUDIBLE] CPA, by trying to do so with therapies that would be safer and would also extend the treatment window. So that's where alfimeprase falls.

The other area, as you know, in stroke relates to the neuroprotectants that are essentially focused on trying to reduce the injury associated with probably the reprofusion that goes on in strokes. If you think about it, those two areas are synergistic in all likelihood. So we're very excited about the areas of neuroprotection, even though that's not our focus, because we think it will in fact be highly compatible with our effort to extend the benefits and the treatment window with alfimeprase.

That makes a lot of sense. And then I have a more concrete follow-up question on alfimeprase. It seems to me that the CO program is actually moving on very successfully. And it could be a possibility CO could with lap PAO, potentially with some -- with some good results. Is the Company indifferent to which indication is [INAUDIBLE] different? It's interesting, it seems that everything might come together about the same time. How do you view the ongoing race and/or completion of these trials?

Hi, Mark, Michael Levy here. Thanks for the question. You're right, the CO program is progressing well, but then so is the PAO program. They're both progressing well, I'm pleased to report. And at this time, it still looks as though they'll complete around the same time. And it's very difficult to say which will complete first. With respect to Bayer and our ourselves, we view both programs as important, both goaled towards meeting an unmet medical need, and we'll progress each of them as rapidly as we can as priorities for both companies.

It's a nice problem to have. Thanks for the added information. Congratulations on your progress.

Thank you.

Okay, your next question comes from Jim [INAUDIBLE]. You may proceed, sir.

Hi, guys, just got a few questions. Just first, just wondering whether you can give us any further detail on timelines for completion of enrollment in NAPA-2 and SONOMA-2, whether we should expect that in 3Q or 4Q '06?

Hi, Jim, thanks for the question. So what we've said so far is that it will definitely be the second haft of the year, and we really haven't given guidance beyond that; so those are still our expectations for both trials.

And then just focusing on PAO specifically, could you just describe what measures you've taken in that trial to make sure docs stick to protocol when it comes to deciding who gets open vascular surgery? Whether there's been some assumptions based into the trial around protocol violaters and whether there's been any [AA] surprises in the terms of the percent of docs that are sticking to protocol here?

So you asked two questions. I'll answer the statistical one first. Yes, we took a very conservative case when we prepared the trial. Obviously in an ideal world, everyone who received placebo wouldn't respond to therapy and require surgery, and the vast components of people who received alfimeprase would respond But we took a conservative case scenario and allowed for a certain percentage of patients to be deemed to respond to placebo; and as we've discussed in past conferences in particular, the statistical power is still overwhelming for this trial, and we have 90% [INAUDIBLE], 22% difference in the ultimate rate between the two therapies, placebo and alfimeprase.

So in terms of making sure that doctors follow the guidelines, what we've done for Phase 3 is, first of all, of course, been very careful in our site selection that we have -- that we're working with the best and most appropriate sites. And we've also got the sites to agree to work with the task guidelines, which are international consensus guidelines developed by American and European Vascular Surgery Societies detailing what sort of lesions require what sort of treatment. And so far we are very pleased that physicians are following the guidelines appropriately.

Great, thank you. One final question, just on rNAPc2, in the heparin replacement study, obviously there's been an absence of proof of concept there. I was wondering if you could elaborate on what would be the added benefits of eliminating heparin in favor of rNAPc2?

Well, clearly, we believe that rNAPc2 has a unique mechanism of action; unlike any other anticoagulate, it works right at the top of the coagulation cascade, blocking interaction of Tissue Factor/Factor VIIa, which is the initial signalling event for the cascade. And if you ask me what we would like to see, I mean, ultimately what we'd like to see, of course, is that through this mechanism of action we have improved efficacy and a desirable safety profile in comparison to the existing agents.

Great. Well, thanks for taking the questions.

Thank you.

And your next question comes from Caroline Stewart from Morgan Joseph. You may proceed.

Hi. Just some clarification. On your guidance for the cash flow outflow from operations, that does not include the 50 million upfront and 10 million milestone, but does include the 40 million from the reimbursement from Bayer, is that correct?

So to be clear -- this is Gary Titus, Caroline -- I think we're talking about the annual guidance, the 33 to $40 million?

Yes.

So yes, that includes all components of the receipts from Bayer, $90 million total for the year consisting of three components. The first one is the $50 million which you referred to upfront. Also, $30 million anticipated in global development cost sharing, and we anticipate initiating a stroke trial by the end of the year which would result in a $10 million milestone statement. So it's all components from Bayer.

Oh, and that's included in the cash outflow guidance?

That is included.

I see. Okay. And then the reimbursement from Bayer, can I always -- can we expect that to always be on a one quarter lag?

It will be, per the contract.

Okay. And then I guess the Kingsbridge charge that's reevaluated every quarter, is that something that's going to kind of spring up and down, or is that kind of like a run rate, or what can we expect from that?

Unfortunately, that is a bit of a challenge. The key reason for that big change in the first quarter was a significant increase in our stock price, our market capitalization in the first quarter; as you have noted, it has increased significantly. In terms of going forward, it will be revalued every quarter, it's not a run rate. So each quarter we will have to look at the value of that warrant at that point in time, so it will change each quarter. But certainly, we don't anticipate a jump of that magnitude on a quarter by quarter basis. But we do hope it goes up.

Okay, and then lastly, can I take this quarter's nonstock compensation expense and kind of an approximate run rate for the year?

I think that's correct. I would look at that as a good signal going forward.

Okay, thank you very much.

The only thing I would probably keep in mind is that we do have annual grants that happen in the third quarter of the year. And that will have an impact; and perhaps we'll consider whether we can give you some guidance on that perhaps on our second quarter call.

And your next question comes from Jason Zane from Prudential Equity Group. You may proceed, sir.

Thanks Questions on the regulatory front alfimeprase PAO managed. I know you are going to complete the trial completion phase second half and hopefully [INAUDIBLE], since we don't have a very long follow I think the data should be pretty soon after patients are getting through the trial. But you are still going to do the second phase three although you have the fast track, what's your thinking right now? Do you need to have two trials definitely to get a drug approved, or is there any some alternative path that you are thinking or what's the balance between you and the FDA?

Thanks for the question. We get asked that question a lot. And we believe that the prudent case to plan for is two trials for approval. That's typically what's required by the FDA. And really the driver here is not the statistical power for approving efficacy, because we believe that can be done with a relatively small patient sample; but we need to generate a reasonable size patient safety database to seek approval. So that's certainly the way we're planning.

So, in other words, you are really trying to finish the trials and then --

That's our best thinking, yes.

Okay, then back to the trial design a little bit, are you just thinking that, you know, in an ideal world the patient who have a placebo should not respond, and all of them by protocol should obviously have open surgery, but isn't it true that patient will have very different baselines, these and some of them will have open surgery, some may even not even if they don't have response. So I want to just from a historical point of view in the placebo group, what kind of percentage of patients will not have open surgery? What would you -- what have you already cultivated or [INAUDIBLE] we have that also --

Okay, I think what I hear you asking is, can you tell me about the exceptions to the case of patients who are successfully treated and who will require surgery and the converse as well?

Right, right.

So, I mean, the thing to remember with alfimeprase is that it is an acute thrombolaic. But sometimes upon treatment of an acute problem you can highlight and discover underlying peripheral vascular disease above an beyond what was seen, and that's because from a treatment stand alfimeprase can act as a diagnostic agent by clearing away the key problems that are masking underlying issues. And so in those cases, patients may still sometimes require surgery even though the acute clot is removed.

Right.

Now, on the other hand with placebo patients, sometimes for whatever reason, you know, before surgery is performed, the surgeon or the family may decide that the patient because of, for example, other medical conditions, is a poor surgical risk and avoid surgery and take a wait and see attitude, even though there is an underlying issue, just because of the risks of surgery. Those are the sort of things that can make our results deviate from an ideal world. But as I've mentioned, even taking those issues into account, we believe we still have overwhelming statistical power to detect the difference between and active therapy such as alfimeprase -- which is indeed very active based on our Phase 2 studies to date -- and placebo.

And Gary, if you look at some of the old clinical trials instead of just combining all open surgery in one category, there are actually different types of surgery; there are most invasive and there are less invasive, and I remember seeing some clinical data actually looking at drugs that effect on reducing the severity of the surgery performed. I wonder, do you have that also incorporated into you trial? I certainly don't think it's [INAUDIBLE].

That's a very good point; you raised another secondary end point. We are looking at the types of surgery that would be required and have graded them in priority on a scale of severity, whereby something like amputation would obviously be most severe, and open surgery required to remove a blood clot, for example, would be least severe. So we will look at that and have that data as well upon completion.

And then I may, could you also talk a little bit about your trial for the stroke. I know we're not at that point, but at least we could get what are you thinking and how are you [INAUDIBLE], and what are you going to accomplish?

So we're looking forward to hopefully being able to provide more information on that as the year progresses; but very briefly for now, we're looking at a Phase 2 trial in stroke, which we need to discuss the exact details with partners Bayer and of course with the FDA. But we'd anticipate a relatively small trial, looking at a different number of dose groups, and looking at technical success -- removing of a clot I think by angiogram is the final end point rather than looking at clinical interims in order to help us choose an appropriate dose for Phase 3. And then our goal with everything being successful would be to move into Phase 3and do the definitive trials.

Alfimeprase would be low, [INAUDIBLE] right? And I wonder if you could [INAUDIBLE] talking about [INAUDIBLE]?

I didn't hear the second part of your question.

Are you trying to deliver alfimeprase in this case a low [INAUDIBLE], and this is not like ETA

No, I mean, we believe one of the huge advantages of alfimeprase versus other therapies is that it can be delivered locally; and hopefully -- and this needs to be borne out in clinical trials, of course -- have an improved risk benefit profile. And we hope to discuss that in more detail at our R&D day in June.

Okay, thanks.

Just to emphasize on point. In our PAO trials, all the patients that enter in the trial have the same baseline situation. They all have been deemed to need an open surgical procedure. And the goal here is to give placebo or give alfimeprase. We obviously expect alfimeprase should open up more vessels and thus reduce the incidence or the need for open vascular surgery. Patients who need non-open vascular surgical procedures because they have had an improvement with the drug would be counted as a win. There should not be a baseline issue, because we are basically making all the patients get into one category using the task criteria at the beginning of the trial.

Okay, that's good, thanks.

And at this time, we will conclude the question and answer portion of this call.

Well, we'd like to conclude by thanking all of you for joining us today. We hope to see many of you at our annual shareholders meeting on Wednesday, May 24, to take place in the Bay area, and our first R&D Day on June 16 to be held in New York. Both of these meetings will be webcast for those of you who can't make it in person. Information on these and other meetings can be found on our website. Thank you, again, and have a good day.

Thank you, ladies and gentlemen, for your participation in today's conference. This does include today's presentation. You may now disconnect, and have a wonderful day.