Plus Therapeutics Inc (PSTV) 2010 Q3 法說會逐字稿

Good day, ladies and gentlemen. Thank you for standing by. Welcome to Cytori Therapeutics Inc. Third Quarter Earnings Conference Call. 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)

Before we begin, we want to advise that over the course of our call and question and answer session, forward-looking statements will be made regarding events, trends, and business prospects which may affect Cytori's future operating results and financial position. Some of these risks and uncertainties are described under the risk factor section in Cytori's Security and Exchange Commission filings, which Cytori advises you to review.

Cytori assumes no responsibility to update or revise any forward-looking statements to reflect events, trends, or circumstances after the date they are made.

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

Thanks, Jeremy. Good afternoon. Welcome to Cytori Therapeutics' Third Quarter 2010 Conference Call. I'm Chris Calhoun, CEO.

Cytori's accomplished three key objectives during the third quarter which we'd like to highlight today. First our Celution system receives significant claims expansion from our regulatory body in Europe. These new claims specifically include breast reconstruction, soft tissue application, and certain types of wounds such as Crohn's fistulas. To date, European sales have predominantly focused on the private pay constrained cosmetic surgery clinic market. These new claims now open up the door to our target hospital based customers.

To begin expanding our region to hospitals we also need to discuss reimbursement. We've selected the UK and Italy as our two beachhead markets to evaluated reimbursement models. In the UK our team working with regional reimbursement specialists and local surgeons have identified existing codes that we believe can be used that would not only provide reimbursement sufficient to cover the cost of the case and consumable products but would likely provide a surplus to the department for post lumpectomy or mastectomy breast reconstruction procedures. We're continuing to work towards Celution procedure specific coding which is being supported by the RESTORE II data as intended.

In Italy the Tuscan government has just approved a grant that will cover Celution based breast reconstruction. We anticipate additional regions within Italy will follow suit with champion physicians driving the process to bring grants and reimbursement supporting adoption of Celution technologies into their hospitals for their breast reconstruction patients.

We're actively evaluating codings to expand into radiation necrosis and other non-healing wounds in these initial markets. We're evaluating coding for other DRT based reimbursement systems such as in Germany as we expand our hospital based sales into broader geographic markets. And we're seeking to expand our European labeling to include additional indications.

The second key objective is continuing to make progress with our US regulatory processes. After several meetings and discussions with the FDA and significant internal work, we've identified multiple therapeutic markets that we may target with an IDE TMA strategy on IDE submissions with the target to initiate a US trial in the first half of 2011. We will provide more detail as this progresses. Winning US approval remains one of our highest priorities.

Finally, we completed a follow-on public offering with significant participation from both existing and new investors that secures our capital position. This allows us to do two things; focus on growth by measured and targeted sales and marketing efforts and drive our pipeline including funding advanced pivotal trial for acute heart attack patients.

Looking forward there are many exciting milestones for Cytori. Our efforts with establishing key corporate partnerships are maturing and we believe we're making meaningful progress in this regard. We'll continue to report data from our three clinical trials, both PRECISE and APOLLO trials will be featured at the upcoming American Heart Association meeting in Chicago in a few weeks.

And from a macro level, we see continued and accelerating growth as we continue to expand our product portfolio, labeling, reimbursement, geographies covered, sales and marketing efforts, and clinical data and experience which we now believe to be in the thousands of patients treated worldwide.

Jeremy, we'd now like to open up the call for questions.

Thank you, sir. (Operator Instructions) Our first question comes from the line of Jason Napodano with Zacks Investment Services. Please, go ahead.

Hi, guys. Thanks for taking the question. So, looking at the--let's jump into some metrics. As you're looking at the consumables ship during the third quarter it was down pretty sizably from the second quarter and even first quarter 2010. So I'm wondering if you could talk a little bit about consumable orders and what you saw in the third quarter and maybe why that number was a little bit below expectations.

It's Chris Calhoun. I should've introduced Mark Saad, our CFO, and Marc Hedrick who's our President here. I'm going to ask Mark to answer this question.

Hi, Jason. There's no question it's our intention to grow in terms of consumable usage every quarter. And frankly we've done that for six quarters in a row. But what may not be apparent is there's actually a seasonal trend both in Japan and Europe with respect to consumable use and there's a clear tendency for those units to drop off in terms of the summer. I think that's part of it. Another part of it is the number of investigator initiated studies in Europe over the past two years have begun to wind down as they go to the next phase. That's also contributed to the decline. So, I don't think this is anything other than those two factors. There were no offsets to the as well. So, we're looking forward to continued growth going forward.

Okay. And just as a follow-up, the reorder rate just in terms of percentage wise looked about consistent in the 70%. Can you give us a sense of the amount of consumables that's out there right now in the hands of customers that are I guess maybe let's say on the shelf?

Yes. I can tell you that there's very little inventory in this business. You get a very direct measure looking at these consumable ship numbers to what's going on in the market. While there's no way to know that exact number because we now have so many customers around the world that it's difficult to keep track of the inventory. We don't do consignment selling. But it's a very tight inventory control and we look into the level of the physician office.

Okay. Thanks, guys.

Thanks.

Thank you. Our next question comes from the line of Steve Brozak with WBB Securities. Please, go ahead.

Hi. Thanks, gentlemen. Just one quick question with a lead in. In terms of--obviously a lot of people are waiting on the cardiac because that's--pardon the pun--a critical indication. But there are other indications that people are starting to look at that are earlier stage that have a lot of other investigators in the hopper. Can you give us any granularity with that? Because obviously success breeds success. What do you expect to see from that? Because it's possibly no coincidence that you start to see good results or the results you expect and you could see people flying across the continent to have procedures done. One follow-up after you do that.

Steve, it's a good point. One thing to keep in mind is that the Celution system is not just a therapeutic way to treat patients, it's also an innovation platform. If you look at our breast cancer work that really came from an investigator initiated study using the system as a platform for doing clinical research.

Kidney work has been started preclinically. The importance of that today is that futility in the treatment of ischemic renal disease. Now, while that's not ready for primetime from a clinical perspective, it needs some more development work, the early work suggests that the mechanism that's at play in our cardiac work is consistent to other solid organ ischemic states like a kidney perhaps with a liver or perhaps even with the brain as well. All of those are important contributors to human disease and are also important markets for the system.

So, while it confirms the utility for ischemic disease, if we had another way, as if we needed another one, the reality is that we're focused on breast reconstruction and the related aesthetic area and then also cardiac. That's plenty for us. We can be very successful in those limited markets.

Okay. And just one quick follow-up. On the cardiac side you're talking about there is the possibility and the thought behind it that we're not talking about just acute but the chronic setting as well is something that would open it up and obviously make it an order of magnitude greater as well. I'm not looking for any specific comments because I didn't want to put you in the hot seat but I'll end on that note. What are your thoughts there?

Steve, it's Chris. I'm going to jump in on this. The cardiac data, we presented both acute and chronic back in I think May and the data from both the trials was very positive, very promising and exciting. And if you remember, the significant data, that means statistically significant data was really found on the ischemia trial. To remind you, this was for patients who really had no other option.

They're basically dying of heart disease, ischemic heart disease and they're not eligible for any other invasive or restorative procedures. And what the data showed was that in key functional data there was a statistically significant improvement in those patients at the six month time point and for our acute study we saw this massive reduction in the amount of infracted tissue at six months that was compelling enough for us to go into the pivotal approval trial that we're now beginning.

But on the chronic trial what we wanted to do was wait to see the 18 month data to see if that statistically significant functional improvement, really the key outcome in that trial is persistent over 18 months. And once we have that data, then we'll define for you the path forward to get that into the market. So, I think this next data point of 18 months that we've now said we're going to report sometime in the upcoming month will really be important to watch and see if we continue to see a statistically significant benefit in that key mass volume of oxygen functional data.

Great. Congrats again and I look forward to hearing that data. Great job. Thank you, gentlemen.

Thanks, Steve.

Thank you. Our next question comes from the line of Ren Benjamin with Rodman. Please, go ahead.

Hi. Good morning, guys. Thanks for taking--or afternoon. Thanks for taking the question. I guess maybe can you give us a sense or give us some comments as to what's happening in the stem cell banking arena and sort of what are your thoughts regarding the stem cell bank sales going forward?

Hi, Ren. It's Marc Hedrick. We continued to see interest in the field with respect to stem cell banking. That's global interest not limited to any particular market. Key customers, i.e. hospitals or universities, but also more at the physician level were physicians recognize that banking could be a part of the way in which they can treat patients in a way that they can't today.

That's related in part to the fact that physicians, particularly plastic surgeons, but others, take out fat and throw it away and they recognize there's value in what's in there. I would say there's growing interest. We continue to talk to a variety of accounts throughout the world that are interested in potentially adding banking and we really have the only comprehensive soup to nuts banking offering on the market in this area and I think we'll continue to see growing interest in that area.

But should we be thinking about things just sort of plateauing for now while interest sort of builds or should we be thinking about one or two systems per year still? Have you just kind of modified your thinking about that?

This quarter we didn't have the cell bank but we did the two prior quarters. There are continued, growing number of institutions in our sales force for banking but they're long lead time items. I think with the denominator so low it's difficult to project but it wouldn't be crazy to think we could get to a point where there's maybe a bank a quarter, something like that, with a lot of variability in terms of both the long lead time on the sales cycle.

Okay. And then just regarding the investigational device exemption and sort of the discussions with the FDA. Can you give us a sense as to what's happening there and just what your thoughts are regarding the PMA approval pathway and how should we be viewing that?

I think I would say think about first what have we achieved? We have some current things that are on sale in the US including PureGraft and some of our other ancillary products that are FDA approved. We're leveraging those fully. The StemSource system for research and cell banking, we'll continue to do everything we can within the regulatory limitations to drive utility for that product.

And then to look out more intermediate and long-term which is kind of what you're referring to, there are things that we're trying to do with the FDA to crack the market in a more near-term way and we'll discuss those when we have clarity on those and then starting to get to this kind of at the end but to your question with respect to the IDE PMA, we have submitted. It is in the soft tissue field. There isn't good clarity to present to you today so we'll refrain. Soon as there is we will. But I can tell you that just from a corporate objective perspective there's nothing more important than getting FDA approval as quickly as possible.

Okay. And just regarding the clarity do you have any idea as to when--just when we might be able to get some or you guys may be able to get some?

We're going quarter to quarter but I would say early to mid next year we're likely to provide some clarity. Maybe fantastic clarity or maybe just more incremental clarity. But I think you can look a quarter or two ahead and anticipate you might hear something definitive by then.

Great. Thank you, guys, very much.

Jeremy, before you move to the next caller, we actually had an email question to follow-up along the lines of Ren's question. That is based on the discussion with FDA, is it conceivable that we'll be able to use any of the clinical data from RESTORE II to shorten the FDA approval process for the same indications in the US?

I'll turn that over to Marc Hedrick.

The short answer is "yes". As that data becomes more clear, for example, we put together 12 month data and we work out the statistics from our CROs and so forth, that data becomes packaged in a way that's useful for the FDA. That's absolutely our intention.

Next question?

Our next question comes from the line of David Musket: with ProMed. Please, go ahead.

Hey, guys. How are you doing? Just trying to--can you give us a little more color on the strategic partnership discussion? The presumption is with the capital raise that you did you certainly can cover the soft tissue issues but probably not the cardiovascular. So, is this AHA in the long-term data there crucial to your partnering discussions and how should we think about that?

Hi, David. It's Mark Saad. I'll take the point that you introduced at the tail end about what the money gets us and I'm going to let Chris chat a little bit about at a high level what's going on in the partnership side.

You said the soft tissue, we're in good shape on, maybe not the cardiac. I actually disagree with that. If you look at where we were from a clinical point of view a year ago running three Company sponsored prospective clinical trials, those have all completed enrollment and the clinical part of our budgets are really winding down from that. You've seen there was a lot of data follow-up over the last few quarters from those but as those continue to wind down we're talking about replacing those three clinical trials with a single pivotal trial for ADVANCE which has end points that we've gotten clarity on that are fairly shorter-term end points with modalities that we looked at the budgets on and over a three year period are comfortable that that clinical trial does not change dramatically our historical clinical budget. And so, actually one of the many benefits of the ADVANCE study as it's been designed and as it looks to be accepted for moving forward is that's not a trial that's a break the bank trial and we can get a lot of leverage out of that. So, with that point made I'd like to switch it over to Chris.

On the partnership front, as we've announced for a number we're talking to a variety of different partner opportunities in a variety of different areas. Some are therapeutic. Some are research. Some are more commercial. I think there's a whole variety of ways that we can partner the technology maybe global, maybe regional. So there's a number of discussion going on around the world in different areas. Certainly on the cardiac front that would make sense to really bring this into the US market and run definitive trials and get this going. Having a partnership for that would be helpful.

As Mark said, we're not waiting for that on the acute. We're moving full steam ahead on getting that trial underway and we now have the resources to find it all the way through. I think that gives us some negotiating leverage in talking to the partners that we're talking to. Getting some of this 18 month follow-up data I think will be very helpful in ongoing discussions with the groups that we've now kind of refined the list down to and there's a number that we're working on. And I would say, as I said in the opening, there are several activities that we're working on with key partnerships that are kind of nearing the late stage part of the process and we feel good about getting some of this done.

So, there's a number of different things and everything from small things all the way up to global, major therapeutic partnerships that we're working on. The latter is going to take a lot longer but will be very meaningful and there's active discussions that are continuing to go on and mature and then there's other things that we're working on that are pretty near the end of the process we believe. We feel good about our partnership opportunities and I think at the same time we don't feel like we're under pressure to take any partnership just to hit a milestone. I think we're financially in very good shape. We're seeing growth. We're really driving and running the Company for the long-term value.

If I could just follow-up. I appreciate that answer. I think my issue is more about the ability to move forward with US trials. I recognize that ADVANCE may not change your clinical budget dramatically but I think will be--some of us might be disappointed to see very positive data at the AHA and yet have no ability to advance that in the US market. That was number one.

Number two on the IDE discussions on soft tissue I know this is sort of a strategic discussion we've had back and forth, there's one strategy that says, "Let's go for some small indication, small number of patients, not terribly expensive and go ASAP to try to get a quick approval." And then there's the other argument that says, "Well, yes, you could do that, but let's make sure we have multiple shots on goal and let's not ignore the fact that there are bigger opportunities to pursue." So, is your strategy with respect to the US cardiovascular program to seek a partner? That's a more specific question than the first one I had. And secondly, with respect to the soft tissue, why would you not submit multiple applications IDEs anyway even you got a green light with the first one.

It's Chris again. Let me start with your second question first. I think our strategy right now is in the US to--we're looking at multiple indications that we're in discussions with FDA about and preparing IDE and PMA applications for. I think you're right. We want to go in with a couple of different options and as you kind of get that process really granular with the FDA and you're defining the end points and the timing and the number of patients and the power and all the statistical stuff, we can really evaluate not only what are key markets but also what's your fastest to market approaches and make a decision based on the right balance of those different variables. And so we've got multiple shots on goal in the US and I apologize if we didn't suggest otherwise. We have multiple things that we're doing in the US as you've mentioned in a hedging strategy.

For the US cardiac opportunity, I think we're in a very good position because as I've said, we're talking to a number of partners about a global cardiac partnership. We understand what the value of that technology is once it's in the market and we have a very strong sense about what that value would be to form a partnership and I don't think we feel that we're under some tremendous urgency to rush into a partnership that may not be mature enough or at the stage that's meaningful enough for us to partner that.

Let me explain why. For the acute study we had 14 patients in Europe which the data was dramatic and compelling enough that we're able to now go into a pivotal trial in Europe. There are two parts to that trial. Part one is to gain the claims expansion on our CE Mark. For the claims expansion we need to have clinical end point and physiologic end points. So, we're looking at the reduction in the infarct size as the key end point in that trial for a regulatory point of view. So, based on a reduction in infarct size we believe from the statistics and what we've learned from the APOLLO trial, we can hit that end point and get approval in 2013 based on the ADVANCE trial.

The second part of that though is to gain reimbursement. To gain reimbursement we need more clinically oriented end points. We need to understand not only that we're seeing a physiologic improvement but we're also seeing an improvement in things like mortality, recurrent heart attack, or what they might call major adverse cardiac events--MACE events--that these patients might go on to have heart failure, recurrent heart attack, or die. And this study's powered for that as a secondary end point that's really geared for reimbursement. So, we're going to lean that from the European ADVANCE study.

To get into a pivotal US study we need both of those end points to be able to power for US trial. So, for a US regulatory trial to get the regulatory approval and of course reimbursement we need to power it for the clinical end point as well as the physiologic end point and we just can't power a US trial based on the APOLLO trial. So, we'll learn everything we need to from the ADVANCE trial to be able to embark on a pivotal US trial.

And we looked at trying to combine a US-European pivotal trial but the potential delay in timing of getting that going would've been probably another year and when we penciled out the economics and the opportunity, it really made more sense to do exactly what we're doing--get ADVANCE going, get approval in Europe, get reimbursement in Europe, and not only Europe but that leverages many other countries around the world from Canada, India, probably another 30 or 40 countries around the world that we can either bridge off or build off that CE Mark to get in.

So it really becomes kind of US strategy and rest of world strategy. Then we can kind of go back to the US and do a pivotal trial and gain the US market. So, the decision about having to fund a US trial for a cardiac, we can probably put off a little while and hopefully by then we're in a position where we can really have a definitive choice of whether we want to go this independently or bring in a partner for all the obvious reasons that brings.

Thank you very much. It's very helpful.

Thank you. Our next question comes from the line of Brian Gagnon with Gagnon Securities. Please, go ahead.

Hello, gentlemen. A couple of questions. First, can you talk about Q4 little bit and give us your insights as to what you're seeing. It sounds like Europe was a museum during Q3. Are you seeing a pick up there? How's the rest of the world looking? Can you give us any thoughts?

Hi, Brian. It's Chris. So, two points. I know we said this last quarter as well but Q4 is starting out pretty strong, mostly driven by Asia. We're over 100 consumables. We've got a number of devices that have been sold. So, so far the quarter looks pretty good. The funnel looks pretty good. As Mark mentioned there's a number of banks in there. Of course we can't time those. They may come in Q1, Q2. They could come in Q4. So, there's a lot of stuff in there that are working their way through the process.

We think that overall we're going to see pretty good growth. We've already surpassed revenue from last year. And where we stand today in Q4 is we're feeling pretty good about it and the funnel looks pretty good and there's still a lot of work to do and there's some big opportunities with some banks, international banks that we're trying to pull through and we wake up every day trying to move this forward.

Okay. We have 135 systems in the field as of the end of Q3. Can you get to 150 by year end? Is that a reasonable shot?

I think it was 125 at the end of the quarter. 135? Yes? I don't think it's out of the question. We can definitely--it's achievable and we're working toward that goal.

Okay. My next question, AHA, what exactly do you think you're going to be presenting there. I'm not looking for the data but what should we be looking for?

I think what's exciting is American Heart Association meeting is really the largest and most prestigious heart meeting in the world and we've got two different things going on. Dr. Duckers is the PI for our APOLLO trial. We'll be presenting a poster on the six month data. Dr. Perin who's the co-PI on the PRECISE trial actually has a podium presentation and will be giving an update on the PRECISE trial and I don't know exactly yet what he's going to be able to present and whether or not we'll get some new data in there but we would certainly love to see some new data get presented at that meeting.

On the Tuesday morning there's a special analyst meeting that we're holding and it's kind of a teach in. [Tom], maybe you can tell us a little bit more about that? Tom has kind of the facts here on it.

It'll take place at 7:00 AM Central Time on Tuesday morning. So, if any investors are interested, please, contact us and we'll get you the details on how to participate and attend.

This will be Dr. Duckers and potentially Dr. Perin presenting some of the data and Q&A.

Duckers doesn't like to get up that early though.

Getting the visibility at a meeting like AHA in fact a podium presentation is very important. We've also seen the AHA really featuring this data. So, we're very excited and honored to be part of this meeting.

That's great. You mentioned Canada and India. Are those markets you'd like to be in?

Yes. As we look at expanding around the world those are obvious opportunities. Moving this technology definitively into North America, I think we'll be in India when we accomplish that and I think particularly when we look at cardiovascular disease, India represents one of the largest cardiac markets in the world and over a billion patients, the growing incidence of heart disease there makes it really one of the most important epidemic zones in the world for a disease and it's foundational cardiovascular disease is just rampant there. So, yes, we think India is going to be a big market for us.

How would you think you'll enter that market?

We're working on a variety of strategies but the idea there is really to focus on the hospital based sales and really bring the technology into hospitals with the beachhead around the cardiovascular applications and then expand the use just like our strategies in the rest of the world. But I think that because heart disease is so compelling there's opportunities to really work with large hospital groups to bring regenerative medicine into India and make it available nationally through some of these large hospital consortiums.

Now the large hospitals, they own--the biggest ones own 50 to 100 hospitals throughout the country. Can you get in and be a part of those systems in multiple hospitals?

Yes. When you look at India there's really an emergent class of leaders there in the market. You've got Apollo Group who we're highlighting which has 50 hospitals around India, more than half a dozen of them are JCI approved hospitals. They do more heart work than anybody anywhere. These are really leading centers and key hospitals groups within India. You've also got Fortis which has a couple dozen hospitals. It's also a leading center. They're both rapidly growing and really setting the standard for Western style healthcare and a global flat world in India. So, yes, you obviously would expect that we would want to target these leading centers to bring regenerative medicine into India.

Okay. Last question. Can you use ADVANCE as the pilot to be able to move forward with a US pivotal trial?

Absolutely. It's more than a pilot. It would be more like an interim trial. It's going to be a 360-ish patient multi dose 30 center blinded placebo controlled trial. It's going to be a very significant trial. And we've designed it to be able to power for the US pivotal. We'll be talking to the FDA about the ADVANCE trial and what we're doing over there to get them involved.

As I said earlier we kind of made the decision not to try and make this a US-European trial. But really to focus on the European opportunity independently so we could get it going quickly and that's been a good strategy for us. But it doesn't mean we're going to leave the US out. We certainly want to include the FDA. We want them to understand what we're doing and to be a part of it so when we bring the pivotal trial to the US they're not surprised and they already kind of know the technology and are following what we're doing. So, we're actively working on that.

Your partners that you're talking to for cardiac, do they like the strategy you're implying? Would they change anything?

Overall I would say that they do. I think that we have opportunity to take the ADVANCE trial for example and do a smaller sub trial in areas like maybe Japan or India. We can run some of the trial in other places. For example Canada, Australia, New Zealand. Those things we're going to do but if you really wanted to leverage that trial by having an arm, let's say, an independent arm so you're not risking the overall trial data but adding a small arm in places like India or Japan you could do that.

It's something worth thinking about. But there's a lot of budget issues around that. We want to be very careful with how we manage our finances and resources. So, I think if we were a bigger Company with bigger resources, we might go a little more broad but other than that across the board as far as I've been involved, been very supportive of our overall strategy.

Chris, last thing. This is the first time I've heard you mention the world "global partnership". Is that something you'd like to do at this point?

If we're talking about cardiovascular opportunities, the conversations, the companies that we're talking to, you'd expect are global companies. They're the major companies. And they would want to talk about a global opportunity. So, the conversations typically start at a global level. That doesn't mean that would definitively be where we'd end up but it's certainly the interest and it's certainly, I think, where this becomes very compelling to partners.

It doesn't mean that there's not other opportunities to do more regional deals. I would--you don't have to exclude cardiac from that conversation but likely would be something different than cardiac and to really get a meaningful cardiac partnership you're probably looking at a global thing.

Alright. I lied. Last question. Is it possible we could see a partnership for an indication that has yet to be discussed yet?

Absolutely.

Thank you, guys.

Thanks, Brian.

Thank you. Our next question comes from the line of Jason Napodano with Zacks Investment Services. Please, go ahead.

Hi, guys. Thanks for taking the follow-up. I was just wondering if there was any update on PureGraft in the US and how those conversations are going with physicians on PureGraft and then potentially leading into expanding StemSource and Celution when it's around in the US?

Hi, Jason. It's Marc. The PureGraft sales are going well. I suspect next quarter we'll start reporting those numbers separately. The importance of PureGraft, it's three-fold.

Number one is the standard of care for fat grafting out there is pretty low. So, as a substitute across the board for fat grafting which we've looked at the market numbers upside down and backwards and globally that's probably a $1 billion market. There's a substitution directly between PureGraft and what's done in the field right now. So, there's a revenue implication to that.

Secondly, every PureGraft customer--and it's a great product. Surgeons, dermatologists have been using it, like it. We're starting to get reorders, provide us with the opportunity then to have a conversation with those doctors about our more premium products--StemSource and Celution and banking. That's the second strategic importance of that.

The third is it's actually an improved Celution cell and rich fat grafting process by solving one of the core outstanding issues with respect to that process which is how you take care of the fat graft part. So, numbers probably next quarter, strategically and impactful and it's impactful from a revenue perspective going forward and in combination all these products really address what we field is about a $1 billion aggregate market.

I appreciate that. I think it's an excellent lead in strategy in the US. So, I like what you guys are trying to do there. Just a question for my own kind of education in terms of soft tissue defects, in the eyes of the FDA does it matter to them how the defect manifested? Meaning the patient population for your soft defect trial--will it be limited to ne kind of patient population, either radiation damage or lumpectomy? Could you have patients that have soft tissue defects from a number of different causes?

The answer to that question is yes, it's possible; however, practically speaking and really from a clinical trial planning perspective you want to narrow that group you treat to the narrowest possible way because it makes your data cleaner. So, there's a balance there between enrolling enough patients and narrowing the data. That kind of comes in the trade offs from a clinical trial planning perspective which is part of the interaction we're involved with the FDA at this point. But the broader issue is does the technology work for soft tissue reconstruction generally and the answer is yes we believe it does. So, then it becomes a real clinical trial planning question.

Okay. And does limitations that patient population then limit the claim?

Yes.

Okay. Thank you.

Thank you. Management will now read a question they received via email.

The question came in from an investor, when will the Celution One be approved in Europe. I guess I'll go ahead and answer that. The filing was made over the summer to our notified body for the Celution One system. It usually takes anywhere between six months and 12 months to get approval. So, we're expecting that some time in the late part of the first half of next year. With that said we're also planning to include Celution One really to use--only the Celution on our ADVANCE trial. So, it'll be treating patients under the trial exemption starting sometime early in the first quarter. So, approval sometime during the first half. Jeremy, back to you.

There are no further questions in queue. Management, please continue.

Thank you. Very good questions today. And we appreciate all your time. Just in summary I want to say that we have three major goals; first is to continue to generate significant growth as we establish the first cell therapy platform worldwide and gain market share in that field; second is we expand our current approvals in the US market to include the Celution products; and third we want to advance our pipeline, particularly focused on acute and chronic heart disease which remains today the world leading killer.

Cytori has continued to plant a flag in cell based regenerative medicine, establishing the standard source for our point of care and helping patients around the world today. Thank you for your support and your interest in Cytori. Have a good day.

Ladies and gentlemen, this concludes the Cytori Therapeutics Incorporated Third Quarter Earnings Conference Call. You may now disconnect. Thank you for using AT&T conferencing.