Plus Therapeutics Inc (PSTV) 2007 Q2 法說會逐字稿

Good morning ladies and gentlemen, than you for standing by. Welcome to the Cytori Therapeutics and Green Hospital Supply cell banking partnership and second-quarter results conference. During today's presentation all parties will be in a listen-only mode. Following the presentation the conference will be open for questions. (OPERATOR INSTRUCTIONS) This conference is being recorded Tuesday, August 14, 2007.

I would now like to turn the conference over to Mr. Chris Calhoun, Chief Executive Officer. Please go ahead, sir.

Thank you and good morning. Welcome to Cytori's second-quarter conference call. It's been an eventful few months for Cytori and we're excited to update you on our progress. First and most importantly, I'll update you on the Green Hospital Supply partnership just announced this morning. Second, I'll update you on our progress to commercialize the Celution System in Europe for reconstructive surgeries and update you on our clinical trial progress. To finish, I'll provide some important general updates in our Q2 financials.

Today Cytori and Green Hospital Supply announced the formation of a significant partnership to bring stem and regenerative cell banking to Japan, a market that is largely untapped for cell banking. It is our collective belief that the combination of certain key societal factors with Cytori's technology and Green's business model and strong market share could make this a future billion dollar market opportunity in Japan.

So, how will this unique cell banking model work? Cytori and Green together will sell the StemSource cell bank which includes a system of products, two hospitals in Japan so that the hospital itself can provide adult banking services to their patients. At the core of the banks are the Celution System and family of consumables that automate the process of isolating and concentrating stem and regenerative cells from adipose tissue for cryo preservation.

The automation provided by Celution fundamentally changes the economics and distribution models by which cell banking is performed. Since these cells banked are from adipose tissue, they are more plentiful and useful than other cell types currently being banked increasing the potential market and for cell banking exponentially.

Cytori has spent years developing not only the Celution System for cell processing but also proprietary cell banking protocol, cell tracking software, and marketing materials which will form the basis of the product offering. Green on the other hand has established an estimated $800 million per year business building and managing hospital facilities as well as selling and installing state-of-the-art medical equipment and hospitals throughout Japan. Green's relationships with hundreds of hospitals provides a foundation of a powerful distribution model.

We see this business opportunity in two parts. The first part is the sale of the StemSource Bank to hospitals. We expect this could be a high-value institutional sale with significant revenue opportunity for both Cytori and Green. The revenue will be shared equally.

Second part of the business is the hospital sale of the banking service to individual patients. Each patient bank will result in the sale of Celution consumables. Cytori and Green will share this revenue equally. The revenue sharing arrangement is such that each hospital is incentivized to make banking a profit center in the hospitals by targeting distinct patient groups in their hospital and community. This portion of the business will leverage the clinical therapeutic development work in which Cytori is investing around the world.

Cytori and Green Hospital expect to begin selling and installing StemSource banks in the first quarter of 2008. Green has established the goal of to sell and install 250 banks during the next four years. As a result, installations in 2008 could have a material positive impact on our near-term revenues in cash flow. Following the next few months of market preparations with Green, we expect to provide further guidance as to the expected impact of this significant opportunity during Cytori's Q3 conference call.

And equally exciting opportunity for Cytori is our upcoming international commercialization of the Celution System. We've made tremendous progress in the last few months and are on track to introduce our second generation Celution System. The first units began rolling off our assembly line in July. They are undergoing final testing and will be installed within the next few months in key breast surgery centers in Europe that are participating in the RESTORE II trial.

Our European commercialization plan for plastic and reconstructive surgery is on schedule and our scope is expanded to include key countries in Asia. We now have appointed experienced distributors covering nine European and Asian countries with several more in process. Our plan is to introduce the Celution System in selected centers focused probably on soft tissue applications. We will provide more guidance on the estimated 2008 revenue impact on our Q3 conference call.

The cornerstone of our commercialization plan for plastic and reconstructive surgery is our RESTORE II breast reconstruction post marketing study. The trial protocol has been finalized and will be an open label study intended to achieve specific regulatory claims for the reconstruction of partial mastectomy defects and reimbursement approval in key European markets.

The principal investigator will be [Dr. Emanuel Dulay], who is the chief of plastic and reconstructed surgery at the Leon Berard Cancer Centre in Lyon, France. Dr. Dulay is the ideal PI for the study as he has more experience with autologous fat transplantations into the breast than any other surgeon in Europe. Thus far we have identified four additional centers besides Lyon including two centers in Spain, in Madrid and Valencia and two centers in Italy, Milan and Florence. We anticipate another two centers will be added soon in northern Europe to round out the clinical trial sites.

The trial will treat 70 patients who are more than one year post-partial mastectomy and will measure primary endpoints associated with patient satisfaction, physician satisfaction and improvement in overall breast deformity. Six- and twelve-month time points will be evaluated. The twelve-month time point is generally considered the best. Site training and installation will begin next month and enrollment will begin when IRB approval is achieved, anticipated in early fall.

Additionally, key data from RESTORE I safety trial in Japan will be released and presented later this year. Enrollment in this study was completed in October of 2006. Safety was determined and announced by the principal investigator [Dr. Sutamachi] at [Fuscia Central Hospital] in Fukuoka Japan. This trial also demonstrated clinical improvement in these patients.

Until this Olympus-Cytori version of the Celution System is ready, Cytori will leverage its in-house development and production capabilities and manufacture the Celution System and consumables. We believe we have the capacity to meet the initial demand for both the cell banking opportunity and the commercialization and plastic and reconstructive surgery.

Cytori's 36-patient PRECISE trial which is investigating adipose-derived regenerative cell processed via the Celution System in patients suffering from chronic myocardial ischemia started in Europe in January. Enrollment of the first 12 patients at the lowest dose is complete.

Cytori's 48-patient APOLLO trial which will investigate adipose-derived regenerative cells processed via the Celution System in heart attack patients is expected to begin soon. We continue to see positive though slow progress toward approval but are still waiting for the final approval from the two centers involved, Rotterdam in the Netherlands and Madrid in Spain.

On a separate note, I am very pleased to announce that Ronald Henriksen, our longtime Director, has been named Chairman of the Board following our annual meeting earlier this month. Ron has brought tremendous experience, perspective and board leadership to Cytori. Ron is considered to be one of the pioneers in the biotechnology and pharmaceutical industry. While directing Eli Lilly's business development activities spanning three decades, he formulated many of the earliest biotechnology pharmaceutical partnerships that helped shape both industries.

Moving to our financials. Second-quarter development revenues were $1.8 million compared to $45,000 for the prior quarter and $0.9 million for the same period in 2006. These revenues are recognized when select predefined milestones related to Olympus-Cytori's joint venture are met which we expect to continue to achieve throughout the year.

Research and development expenses for the quarter and six months ended June 30 were $4.4 million and $9.4 million respectively compared to $6 million and $11.2 million in the same periods in 2006 respectively. The decline in research and development for the second quarter and the six months ended June 30, 2007 is largely attributable to lower costs associated with preclinical studies which were partially offset by clinical trials related expenses.

G&A expenses for the quarter and six months ended June 30 were down to $3.4 million and $6.6 million respectively compared to $3.6 million and $6.8 million in the same periods in 2006. Net loss for the quarter and six months ended June 30, 2007 was $4 million and $12.7 million respectively.

We ended the quarter with $26.6 million in cash and cash equivalents slightly above the $24.5 million we had at the end of the first quarter. This increase in cash position was due to a $6 million strategic equity transaction with Green Hospital Supply and the sale of our legacy HYDROSORB business. We continue to expect operating losses for the year to be approximately $25 million.

Thus far in 2007, our team has accomplished a tremendous amount and already reaching many of our stated objectives for the year. Specifically we formed a major commercialization partnership with Green Hospital Supply for our technology that we believe will result in near-term revenue. We treated the first heart patient ever utilizing the Celution System in our PRECISE clinical trial for the treatment of chronic myocardial ischemia patients.

We developed and where needed expanded our in-house manufacturing capabilities to meet anticipated near-term Celution System demand in advance of the joint venture production schedule. We formulated and began executing our plastic and reconstructive commercialization strategy in Europe and signed key distribution agreements in Europe and Asia covering nine countries. And we strengthened our balance sheet $30 million while minimizing shareholder dilution.

For the remainder of 2007, we intend to supplement these accomplishments by laying the commercialization groundwork to achieve the first sales revenue of the Celution System to our partnership with Green Hospital Supply; treat the first patient in our APOLLO heart attack safety and feasibility trial; report the results of our completed RESTORE I trial in Japan for breast reconstruction; and treat the first patient in our RESTORE II trial in Europe.

We would now like to open up the call for questions.

(OPERATOR INSTRUCTIONS) Ted Tenthoff, Piper Jaffray.

Thank you very much. I guess I had two quick questions if I may. I saw that you've dosed the first cohort in the PRECISE trial. Just wanted to see if there was any safety issues or anything along those lines that we should be aware of and just maybe you can give us a little more detail on how that is proceeding? And then also congrats on the Green Hospital Supply deal. What kind of pricing should we anticipate and maybe you can give us just a little bit more detail in what to expect from that transaction?

Good morning, Ted. This is Alex Milstein and I will answer the first part of your question and then I will turn this over to Mark Saad. With respect to PRECISE study, we have completed dosing of the first cohorts, the first 12 patients. We had customary normal (inaudible) upon completion of the first 10 patients as we originally planned. Based on this review we got a go-ahead to initiate the next dose cohort and now given the [ligation] period in Europe, we are getting ready to start enrollment in the second cohort early in September. And the second question.

Ted, it's Mark Saad. How are you? I believe the second question was about the pricing related to the Green Hospital relationship in Japan. As Chris said, we see that this as two products. The first is the installation of the StemSource trademark cell bank in hospitals, target hospitals around Japan. And the bank itself is definitively an institutional sale. It involves specific equipment including, as Chris mentioned, the Celution System at the core of that. Without being able to give a specific number, we would target the sales price to hospital in the low seven digits. And think installing these banks is going to drive the general revenue of this opportunity over the next five years.

The second component, as Chris mentioned, is the sale of consumable products and these are the Celution consumable products that go with each patient that is [banked], just like in the Celution System, each patient treated would have one Celution disposable set, the same goes for cell banking. And these per patient consumable products would be in the low four digits which is consistent with our expectations for some of the other non-cardiovascular applications.

Very helpful, thank you.

Steve Brozak, WBB Securities.

Good morning gentlemen and congratulations. I will cut right to the quick. Unfortunately a lot of biotech companies, medical device companies go out there and use biotech dollars which is billions and billions. But you're going out there and you are saying, look, we've got $1 billion market opportunity here. You just went over the fact that you've got this razor blade razor model. Can you give us some insight as to how you basically assess the billion dollar market? And also when you would start to expect revenue recognition and start to go out there and say, okay, this is what we are looking at going forward?

Steve, hi, it's Chris Calhoun. The billion dollar market is easy to calculate in Japan. The way that we did it was we estimated that within the next 10 years, we bank about 1% of the Japanese population. If you set aside the set up and installation of the cell banks in the hospitals, which on its own gets you probably halfway there, just based on the projections that are already on the table for the next four or five years. That annuity stream begins to really generate a significant amount of revenue, I think crossing the billion dollar per year mark on a growth scale in the seven- to ten-year time point. And so we also estimate it based on some adoption curves that it would be in the eight to nine years that we would actually cross that threshold of 1% of the Japanese population.

So what is compelling? Why the patients in Japan, why would they want to bank? And what is going to drive that adoption curve? And I think there are multiple factors here that are really specific to Japan. First, you've got a population that is becoming rapidly the oldest population on the earth. Secondly, you've got a population that is well-educated, that has significant disposable income and it's focused -- it is sort of a culture of savers if you will. So there is a group of people that are invested in their own healthcare, that are living longer and this is a way of saving for their own healthcare in the future.

And that goes to the final point that in Japan there's a cultural bias against allogeneic tissue. And so being able to provide your younger healthier cells and store them and save them for when you may need them for your healthcare in the future I think is an important value proposition to the Japanese people. So there's I think 42% of the population in Japan are over age 60 and 60% are over the age 40. So there is an enormous amount of target audience there that has the disposable income and the interest and the ability to preserve their cells.

And so the final question then is, well why bank your cells when the Celution System may be real-time available? And the answer is simple that our cells age right along with us. And so the sooner we store them, we can cryo preserve them at that age that you bank them so they stay younger and more powerful. And then you can use them later when

So you basically have pointed out to these consumers that the telomere length is going to be to their advantage that they basically get these cells banked and have telomere length as long as possible so that they can be more useful?

Yes, that is one part of it. And we've also studied cells from different age populations and we've seen clearly -- and this applies to really any kind of a stem cell -- that as stem cells, as we get older, the number of stem cells in our body, the frequency of stem cells go down and their ability to differentiate and their ability to do the kind of things we want them to do also declines. So they are just simply more powerful and more available the younger we are.

And that's sort of -- if you think about it when a six-year old breaks his arm it heels very well and yet when an 80-year old grandma falls and breaks her hip, it doesn't heal very well. This is partly a function of the availability of cells and also the capability of the cells.

One last question and I will jump back in the queue. On the margins here, we are talking about these are the typical biotech medical device margins that you would expect. So in addition to the revenue being significant, you are talking that -- and just one quick word on that -- I know you're not going to give us details but what kind of margins are we looking at here?

Hey Steve, it's Mark Saad. To tie into that and to go back to the point that there are two different sales and the early part of that is not necessarily driven on the patient banking or the customer banking. Its driven by several years of institutional sales to hospitals so that they become leaders in regenerative medicine and then can offer that service therefore to their customers to their patient/customers at timeframes when ideally clinical data and other scientific data is more and more plentiful. So that is the strategy of the rollout.

No of the two components once again, when you are looking at the deal we are sharing things equally with Green Hospital and of the framework of the proposed pricing which we'll see exactly where that shows up in the market but we suggest that we expect it to be in the low seven figures per hospital. I would propose we expect to see in the low to mid six figures in profit per gross profit per bank on Cytori's end ideally.

So that is what I'm expecting on that in and on the consumable products, we've thought talked before about what our expected internal cost of goods are for each consumable product and that is going to be consistent in probably the area of high-tech medical technologies that have strong med tech oriented margins on that.

Great, thanks again gentleman and congratulations.

Ted Tenthoff, Piper Jaffray.

Great, thank you very much. I saw in the press release that you guys mentioned that lower R&D in the quarter was primarily a result of decreased preclinical costs. With APOLLO kicking in in the third quarter here, how should we be looking at R&D line through year end?

Ted, it's Mark Saad again. Things obviously vary quarter to quarter and the last -- the same quarter last year happened to be a particularly high quarter in preclinical study costs. As you know, we invested quite a bit in large animal models to ensure that we had to our ability the best package to deliver to the IRBs for these robust clinical trials. So we did a lot of intensive preclinical work so the comparison quarter over quarter with significant preclinical study a year ago certainly impacted that.

Going forward I think three things are going to happen. Number one, you are correct with APOLLO coming online we expect that that will as we expect and hope it to will cost some money so that is going to certainly increase R&D on that front. However, on both the basic science side and on a product development side, we expect to see further compression in those areas as we move from developing a product and some of those activities are deferred more toward manufacturing. And so I think product development will continue to compress as we move forward our product into the marketplace.

And then on the basic science side, we're doing important work there but it's really targeted toward application specific, supporting of our commercial launch. You're not going to see us do too much deep long-term science. It's going to be very functional science, application oriented. So the weighting of that R&D is going to be more clinical, less basic science and less product development. So overall, I think that adds up to holding the line to the best of our ability as we move forward.

Great, thank you.

Brian Gagnon, Gagnon Securities.

Good morning, gentleman, and congratulations. You talked about it being in the low seven figure range for the banking system. Can you give us a better ballpark? Is that between 1.5 in 2 million or 1 million and 2 million?

It could be. Brian, we don't want to be cute on this at all and I think we just -- we have an idea and are working with our partner to launch this but at the same time, we certainly don't want to commit to something without really seeing the market experience. So I think you're in a territory that I would say is -- isn't something that we would argue with with the ranges that you talked about there. But at the same time, I think we really want to get more into this. We've had a lot of work with Green already getting -- working with them, planning. But I think over the next three months, we should have a much clearer and more specific idea. And we will do our best to give you that guidance in a couple of months. But I think the general ranges you are talking about are not out of the realm.

Okay, and on the consumable side, most of the problem with people using stem cells in the future has been the cost of using these stem cells. And you've always discussed that your products would be the disposable would be substantially less expensive. Do you have a thought as to where the range might come in with the disposable on the banking side of things? Is it a couple thousand dollars per unit?

That is correct. We are thinking upwards of $3000 per unit per bank customer is the territory we are contemplating.

Okay. And if you would, can you talk about who is going to be responsible for marketing, installation and service for these banks?

Brian, this is Chris. The way that we've laid this out with Green Hospitals, we will provide sort of the turnkey bank in terms of the equipment and the Celution System, the database that's necessary to link these patients and to keep all that together which we already have. And then Green will leverage their existing relationships with more than 350 banks -- I'm sorry 350 hospitals around Japan and they will drive the marketing installation effort. And we will support that as well from our side. But they will take the lead on that.

So they are going to be spending most of the money doing the marketing and servicing and installation of all this?

That is exactly right.

Okay, all right. As far as your ability to manufacture these machines depending on what their requirements are going to be before Olympus gets up and running, you guys are comfortable that you've got the ability to manufacture as much as they are going to need?

Yes, I mean we've really built out our current capacity to meet what we expect to be reasonable demand scenarios related to both the PRS commercialization as well as the GHS banking opportunity until the JV Celution System comes online sometime in late '08 or possibly into '09.

Okay. And lastly and then I will get back in queue, you've talked about partnerships this year. This obviously is a very large one that we weren't expecting. Can you talk about some other partnerships that you might be working on instead of each specifics on them, maybe the number that you're working on and how that number has changed over the last six months?

Hi, Brian, it's Mark Saad again. We certainly cannot promise that we will not do another for us material partnership this year. As you know, we continue to work on those. And to the comment on the number, it certainly varies. We've had in terms of ongoing discussions that will range between very active to not so active and then a few months later you'll look at that same list and the weren't so active become active and the ones that were active sometimes have a bump in the road. And that is how these things move forward and that's how it has been going for several years.

And I think is to be expected but the overall message is that the overall interest and number of discussions that are I think substantive in various areas is increasing I would say around a dozen today if we were to take a sort of snapshot of the field. Some of those are more active than others certainly some of those are largely are then others. And we've talked before about what we're looking at in terms of some that are earlier stage and what we'd expect if it something that is later stage.

And so we're not going to -- we could have rushed into one or more transactions with household name players. I think at the same time for us it's about doing the right deal with the right party that is really focused on making this disruptive technology. So we've set the bar high internally and it's not just a dollar number. It's a dollar number plus quality of a partnership, quality of a partner, level of commitment.

So those are the things that we really look at. And as I said before, some are more active than others at any given time and the overall news is that it's moving forward we think quite well. And the overall level of interest out there is increasing and it's our job to make this compelling and we think we are doing that.

All right I lied, one more question. RESTORE I information data, when do you expect that to come out and at what conference?

The latest that this will be presented would be mid-December in San Antonio. There is a breast cancer symposium and we have an application filed there, a manuscript filed there. But it's possible that this could be actually even presented earlier at another big conference.

Possibly the ASPS?

There is a possibility. I wouldn't promise that we're going to do it but we're looking at a variety of meetings and as you know, it's not entirely up to us. It is partly dependent on the committees and the timing of applications and so forth.

Excellent. Congratulations, guys.

Thank you.

Ken Arnold, Everglades Capital Management.

Good morning, gentlemen. Congratulations. I may have missed this but a couple questions about RESTORE II. Are you still planning on commencing that in Q3?

Yes.

Okay. Do we have -- can you give us any details about the marketing plans in Europe vis-a-vis financing, distribution, repairs of Celution machines, funding, that sort of nature, commission payments to distributors? Do you guys have any guidance on that?

Hi, Kenny, it's Mark. Just to take the first part of your question with regard to RESTORE II. So we are still on track to start RESTORE II in the second half of the year. Planning is proceeding well. We're signing up one of the Cadillac centers within Europe and we've got a PI that is incredibly experienced. And so I think that the third quarter conference call we'll have a -- be able to give you more guidance as to finalizing the centers and exact start dates. But we are on track with respect to that.

We also mentioned that the PRS commercialization and really building off the RESTORE I data from (inaudible) Japan that Chris alluded to earlier, we've really set out a fairly straightforward four-step commercialization process. And I may not be able to answer all the details but to give you a flavor of that, the first part was to really identify a key introductory market which is really a beachhead to bringing this technology forward. And that we believe that is breast reconstruction for women who've had partial mastectomies which is an unmet medical need. And as there's no better market to enter with a disruptive technology than unmet medical need. And that is done and we're moving forward there.

The second part of the commercialization plan is really to develop a regulatory clinical trial and reimbursement plan. We are doing that for Europe and we're on track with respect to that. The third aspect is to select world-class network distributors for that market. And as you know, our Senior Vice President. Bruce Reuter, has effectively set up the almost identical distribution market for probably the most closely related product which are breast implants in his previous days at another employer. So we are on track with respect to putting together that world-class network of distributors.

And the fourth step is really a targeted launch, where we build and broaden the indications beyond just breast conservation therapy reconstruction or lumpectomy reconstruction into other soft tissue reconstructive and cosmetic needs. The great news about that is it is just a cash pay opportunity and you are not constrained by reimbursement authorities throughout Europe. And that promises potentially to generate near-term revenue for the Company.

So that will be something we will be targeting in the future and we'll look forward to giving you more detail on that later.

Okay, thank you. Two more questions if I may and then I will get back in queue. Going back to the Green deal, congratulations again. You talked about the low seven figures, Mark, and I'm -- you know that Green is responsible for the marketing support. I think Brian answered this question, service -- further stem cell bank. So basically if I understand this, you guys are just the front-end providers of the equipment? And then you will split the revenues evenly with Green. Is that accurate?

Hi, Kenny, it's Mark Saad again. I think that is fairly well stated and because there is a lot that Green is bringing to the table here, it's a very important point. From the marketing to the specific sales and sales support, installation, service, they have an incredible infrastructure and service oriented team for their network of customer hospitals. That is an exciting resource to tap into and that is exactly what they're bringing which is certainly not something that we could touch. So we are letting each other do what we do best and that is a big part of the equation and really an optimal channel to tap into.

On our end, certainly we are giving them a turnkey StemSource Bank and that StemSource Bank has very specific equipment and protocols and standard operating procedures. It is anchored by a proprietary system that makes this all possible and makes it all cost efficient. And so it's a package that we deliver and then we support them through our team which is a far smaller team, as you can imagine, but we support them really train the people that are going to be out there doing their jobs across all those functions that we just touched upon.

So we are intimately involved with them and we will stay that way both on the front end marketing support with data and all the things we can do to help them there. On the installation support, this is something that we have here, something that we are really replicating elsewhere so we have the experience in that area. And then as the other area of ongoing support, once again we work with them to train them with our small team but really they've got the big team to then roll that out. So we are very excited about being able to leverage that experience.

Okay, great. The last question and we haven't really talked about it -- it is so exciting about the various developments various developments SurgiWrap and then MHLW approval for that line that has been pending. Can you give us any color on that?

Ken. It's Chris. There's no real change from last quarter. As you know, the application was filed a little over two years ago in Japan and we are looking at some different clinical data alternatives that's what were looking for right now. There is clinical data available in Asia and now some emerging in the U.S. And the question is whether that will satisfy the Japanese Regulatory Agency or if they'll want specific Japanese data.

And if they do want that, Marc Hedrick has been working with a group in Japan to put together a very short trial there, study there to get that data. We should have an update I think by the next call on which way that is going to go and what the timing will look like.

Okay, great. Thank you. Congratulations.

(OPERATOR INSTRUCTIONS) [Buzzy Northern], Thompson, Davis & Company.

Congratulations, guys, on a fabulous announcement this morning. Chris, I'd like to ask you if possible, could you with all the opportunities that you see in front of you in the near future and going out, which opportunity excites you the most as CEO of the Company?

Hi Buzzy. Thanks for the question. I think what excites me the most is really that the Company is finally on the brink of commercialization in introducing our first products not into just one market opportunity but into two. And with this it really makes our technology available to begin helping patients around the world and at the same time, it's going to strengthen the Company as Cytori posts revenue, increases cash flow, and ultimately moves the Company into profitability in being a stand-alone self-supporting Company. So it is getting this technology out of patience and commercializing it is the most exciting part for me.

Could you comment on any other applications that really excite you?

I think that there are medical needs across the board that many of which we think this technology is going to work. And we've seen it already for the breast reconstruction opportunity. I think it's great to be able to help these patients who have gone through cancer and cancer therapy and then now they are left with these deformities. If we can correct that, sort of erase those scars and reminders of that dramatic event, I think it's going to be important for these patients and their psychology.

And that is something I think we can do right away and I'm very excited about that. And looking downfield, I think that certainly the cardiac is the leading killer in the Western world and growing in its prevalence and incidence. It's another very, very exciting opportunity that nothing has really been there to show that they can turn that curve around, that once patients have heart attacks and the heart begins to get into a decline, that it's a slippery slope that ultimately leads in a bad direction.

If we can intervene and our technology can help those patients extend their life, bring them back and restore some of their heath and function, that is incredibly exciting not only on the financial side but more on the human side. This could have a major impact on medicine on people's lives and that is the most exciting part. You can make money doing anything but to do it and be able to help patients and help people is really, really exciting for me.

That is great. Congratulations again.

Thank you, Buzzy.

Thank you. (OPERATOR INSTRUCTIONS) Management, at this time we have no further questions. Please continue with any further remarks that you would like to make.

Today Cytori is very pleased to have announced an exciting and important partnership with Green Hospital Supply in Japan as well as another strong quarter as we demonstrated solid progress, reduced expenses and strengthened our balance sheet. There are several upcoming near-term milestones that we believe to be material and most importantly, we are preparing to begin selling the Celution System into two significant market opportunities and strengthen our Company with product revenue. Thank you for your time today.

Ladies and gentlemen, this concludes the Cytori Therapeutics and Green Hospital Supply cell banking partnership and second-quarter results conference call. If you would like to listen to a replay of today's conference, please dial 303-590-3000 and using the access code of 11093251. (OPERATOR INSTRUCTIONS)

We thank you for your participation on today's conference. And thank you for using AT&T Teleconferencing.