Plus Therapeutics Inc (PSTV) 2012 Q1 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to Cytori Therapeutics First Quarter Earnings Conference. Before we begin, we want to advise you that over the course of today's call and question-and-answer session forward-looking statement 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 Securities and Exchange Commission filings, which Cytori advises you to review. Cytori assumes no responsibility to update or advise any forward-looking statements to reflect events, trends, or circumstances after the date they are made.

I will now turn the call over to Chris Calhoun, CEO. Please go ahead.

Thank you, Anthony. Good afternoon and welcome to our quarterly business update. I am joined today by our President, Dr. Marc Hedrick, CFO Mark Saad, and Executive Vice President of Sales and Marketing, Clyde Shores.

Management is executing to deliver strong results in each of our three business areas and achieving the goals established for 2012, setting the foundation for leadership and growth in the cell therapy field.

To review, the three principal objectives are to advance our cardiovascular disease pipeline, flow of the commercial business, and achieve our operational and financial performance goals.

We have provided a shareholder letter that discusses our progress in greater detail. This is available on the home page of the Investor Relations section of our website.

I'd like to briefly touch on some of the highlights from the quarter. Let's start with our cardiovascular disease pipeline. We have an application to expand our solution system CE Mark to include no-option chronic myocardial ischemia patients, which is under active review.

During the quarter we conducted multiple meetings with our governing regulatory authority and provided responses to their requests for additional information. Most open items have now been resolved. There are three key open items remaining including the details of a proposed post-market patient registry, a request for additional supportive data to further assess the risk/benefit ratio of cell therapy in this patient population, and agreement on the specific indications for use and claims.

Our response to these remaining items will be submitted shortly followed by an in-person meeting in the upcoming weeks. Due to the complexity of the evaluation process, requests for additional information and the landmark importance of this first-in-class approval, we now anticipate the decision coming in the second half of the year.

We are confident in our ability to supply our notified body with the requisite information to address the remaining open items.

The US ATHENA trial for refractory heart failure, including chronic myocardial ischemia patients, is ahead of schedule. We received FDA approval in January to begin the 45-patient double-blind, placebo-controlled trial. Five trial centers have been selected including Texas Heart Institute and the Minneapolis Heart Institute.

All sites were chosen based upon their experience in cell therapy-based trials, academic and clinical leadership in interventional cardiology, and their practice demographics, which include their ability to rapidly recruit target patients.

Patient enrollment will begin this quarter and is anticipated to be completed by mid-2013.

Our Pan-European ADVANCE pivotal trial for acute myocardial infarction is being amended to meet current regulatory standards, improve the trial design, and to expand the utility of the trial toward reimbursement. You'll find this includes longer-term analysis of cost-effectiveness data, modification of inclusion and exclusion criteria to accelerate enrollment, and with a single dose versus a standard-of-care control.

The primary endpoint for market approval in this trial remains the reduction in infarct size as measured by MRI at six months.

Let's move to our commercial business. The commercial business based on changes enacted last year starting with the hiring of Clyde Shores is demonstrating it is doing more with less. Based on first quarter sales in our sales funnel, we reaffirm our $9 million product revenue target for 2012.

First quarter product sales were $1.5 million compared to $1.4 million in the first quarter 2011, an increase of 9%. As stated in the 2011 year-end release, 2012 sales are expected to be weighted toward the second half of the year.

Our strategy to drive hospital-based selling and consumable utilization is working. Celution consumable sales were the highest of the last five quarters and second-highest in Company history. In addition, we achieved record PureGraft sales in the quarter.

Now turning to our operational and financial performance. We are executing on our stated operational and financial performance goals. For the quarter, Cytori achieved the planned improvement in our operational efficiency and financial performance.

Total operating expenses were reduced by 31% in Q1 compared to the same period in 2011, down from $13 million to $9 million. Correspondingly, operating cash burn was reduced by 27% in the quarter, down from $10.6 million to $7.7 million.

Improvement in total operating expenses and net cash used in operating activities is due, in part, to reduced sales and marketing costs and slightly lower clinical trial expenditures.

We are actively negotiating strategic partnerships to develop and commercialize Celution cell therapy in specific indications in markets. While a number of these transactions are progressing, management is particularly focused on closing one or two of the most advanced opportunities, which we believe can be completed in the near term.

The Company ended the first quarter with $34.4 million in cash and cash equivalents plus $1.4 million in accounts receivable.

Recently we terminated the financing agreement with Seaside 88. The Company raised approximately $18 million through that agreement.

Cytori now has 46 issued patents with more than 75 additional applications under review. Our intellectual property position was strengthened during the quarter with the receipt of two US patents including a composition patent for ADRC-enriched fat grafting for soft tissue applications and a device-based patent for using cells to accelerate the healing of wounds.

We anticipate our IP portfolio of issued patents worldwide will grow by at least 15% this year.

In summary, significant clinical, regulatory, commercial, and corporate accomplishments sets the stage for a milestone-rich year.

So far this year, we have already achieved many of these milestones including approval to initiate the ATHENA trial, PureGraft 850 FDA clearance, and the CE Mark approval, publication of the APOLLO trial primary endpoint data at six months, publication of RESTORE II trial results at 12 months, and submission of the UK breast reconstruction medical technology assessment application.

The remaining value-driving milestones that we expect to achieve between now and the end of the year include the following -- completing a strategic partnership, initiating enrollment in the ATHENA trial, expanding CE Mark claims to include no-option chronic myocardial ischemia, publishing the APOLLO 18-month data, publishing PRECISE six-month and 18-month trial data, and achieving $9 million in product revenue for the year.

Before I open up the call for questions, I want to follow with a few personal comments. I know there's some nervousness out there. On the one hand, we have this promising technology, but on the other hand we're not there yet in terms of being positive cash flow and self-sustaining as an organization. From my perspective as CEO, we've never operated as efficiently as a Company as we do today. We've never had as much assurance that our core technology really works, and we've never had more aggregate deal value and third-party interest this close to the goal line in our history.

I believe 2012 is our year, and we're well on the way to delivering strong results and increasing shareholder value. I want to thank you for your support and confidence. And now I'd like to take this opportunity to take any questions you have for me or my leadership team. Anthony, please open up the call for questions.

Thank you. (Operator Instructions) Steve Brozak, WBB Securities.

I'll ask one question that probably is on the top of everyone's mind, and that has to deal with the ATHENA US study. Can you give us what the clinical ramifications are for "a successful study," and then I'll follow it up with a question concerning the financials on that side.

Chris did a good job talking about the importance of the trial from a big-picture perspective. Being able to move forward rapidly in the US, is a place we haven't been before, and why is that? The FDA has been very responsive, we've gotten very fast turnaround from them. We've shown that we're a device regulated in the US, it's not a cell therapy, and I know some people had some questions about that. So the subtext of that is things are going well with respect to the FDA, and we're happy to be in that place.

Scientifically, if you look at this study, you see leading cardiology stem cell doctors in the US coming onboard with this study, and behind the scenes there's a lot more interest. It's a shame that we only have five sites that we can get up and running at this point, because there is a tremendous amount of interest.

From an enrollment perspective, as Chris said, I think we're going to move relatively rapidly through this study, and we'll continue to update you. From a clinical perspective, in some ways this trial is the mirror image trial from the PRECISE study in Europe. But it has that US rigor, scientific characterization and meets the FDA clinical bar, and it's meant to lay the foundation for a pivotal trial in the US to follow up on that.

So I think, in summary, what it does is it illustrates the benefit of being in the US. When there's a clear regulatory path, which I think we have, we are able to move, I think, very quickly. And I think you'll continue to see that over the year.

Okay, that gives us the groundwork in terms of what you're looking at. Now, one of the things I don't think a lot of people appreciate and certainly not visible in your stock price is what type of a market potential are you talking about, especially considering how debilitated these types of patients are and the future of what you're looking at in terms of the current standard of care.

Just give us -- I know you can't say what you are going to be looking at, but just gives us a current standard of care model that you've obviously run and give us some general ideas on that number.

The big picture, Steve, is that this treatment is for patients that have no-option myocardial ischemia, or stated differently, refractory heart failure. So the heart failure patients that have run out of options. They don't have good interventional options, they don't have good options in terms of surgical therapy, and they really are at the max of what pharmacologics can do for the heart. As you know, there are only about 5,000 cardiac transplants around the world right now, so there are not nearly enough hearts.

This is a gigantic, multi-billion market. There really aren't good options for these patients, and there's not only approximately, let's call it about 250,000 patients a year going into this from an incidence perspective, but there's a prevalence that's probably 10x so it represents a critical market, and there really aren't good therapies out there to address this need.

John Putnam, Capstone Investments.

I was wondering if you might elaborate a little bit on what's going on in Europe and why it seems that the regulatory bodies over there are kind of shifting what it is that they're looking for. Is this something you'd anticipated, Chris, or is it something that's new or evolutionary?

Hi, John, it's Marc Hedrick. Let me field that. The core issue is in each country they have a variety of different regulations and then their European body regulations. So we are able to navigate the APOLLO trial and the PRECISE trial relatively readily through those different regulatory landmines.

So, for example, our current ADVANCE trial is approved, and we are enrolling patients in the Netherlands. But the Dutch health inspector -- after the trial had begun, and we were enrolling the patients, raised issues about good manufacturing practices and how they uniquely apply in the Netherlands and asked us to justify what's being done.

So play that out throughout all the countries in Europe including the G5 -- Germany and Italy and France and so forth, and so you've got different countries applying both European and their own regulations in different ways. So it really caused us, starting at the end of 2011, as we noted this difficulty to seek ways to harmonize these various interpretations throughout Europe, which that meant a lot of meetings, face-to-face, with an alphabet soup of country authorities throughout Europe.

And then based on those meetings, we think we've learned kind of what their hot buttons are and not only where the regulations are today but how they are evolving in Europe. And we are in the process of amending the trial to ensure, to the degree we can, that we can speed those individual country approvals in the trial.

Now, there are other things that we're doing by taking advantage of this lull in the trial to improve the trial from the clinical and scientific perspective and from the perspective of beefing up the supply chain relative to the device.

So -- break it all down, the goal of the trial hasn't changed. The goal is still to go back to BSI, our notified body, and get expanded claims to treat acute myocardial infarction in Europe. The first approval for that for cell therapy in Europe.

The budgetary impact, all in, is not significantly impactful. It might even push out the spend. But I think, in aggregate, what we've done is we've completely, to the degree we can, removed some of these regulatory ambiguities that are in Europe and put those into the trial and done as much as we can to de-risk the trial to ensure that we meet the trial's endpoints.

Okay. Can you remind me how large this trial is; b, and has that changed?

Yes, that will change. The protocol is not final. Originally this was meant to be about 350-plus patients. We think that that will be reduced somewhere in the neighborhood of about 40% in terms of numbers of patients.

There probably will be no net positive variance on the budget side. In other words, the budget is going to be about the same, but it will reduce the number of patients, and we've improved the -- our ability to enroll patients quickly in this trial by changing the inclusion/exclusion criteria we think in a positive way, based on emerging science in the cell therapy field. So the regulations help us get sites onboard and improving the enrollment criteria helps speed enrollment at those individual sites.

Jason Colbert, Maxim.

I wondered if you could just talk a little bit about mechanism of action and product consistency from patient to patient and how that fits in the current treatment paradigm?

So the benefit of having a cultured cell therapy is you effectively turn that cell or group of cells into a drug, and you can have very strict lot release criteria, and you can very much apply manufacturing constraints that are applied to drugs.

So while that's a good thing if you're a regulator, it's a bad thing if you're a patient because when you culture cells, the tendency, no matter where the source of the cells are from, you tend to lose their potency.

So one of the core, if not the primary benefits of our cells, and this gets to the question, a mechanism of action, is because they're fresh, because it's a mixed population of cells because these cells are -- [if you've ever] seen tissue cultured plastic and haven't gone through that artificial process of cell culture, the potency is much higher than it would be if you were culture it and lose that potency.

The downside of that is that you get a lot more patient-to-patient variability than you would expect in a culture of cell therapy. But, in aggregate, in our view, the benefits strongly outweigh the negatives because you have a more potent cell population, you're regulated as a device, the cells are all autologous, in other words, they're not rejected, and you take away the cost structure of building a big plant to manufacture cells.

The mechanisms of the cells are related to their ability to create blood supply in the fat tissue, and that actually translates over into the heart and that facet is preserved in our process.

Thank you, that's an excellent answer and, by the way, the economics associated with this are obviously very compelling when you compare it to a manufactured product. But what I'd like to understand a little bit better would be -- I'm aware that, for example, that Baxter is pursuing a similar indication, and it's obviously a highly processed target cell population enriched for a specific cell type. I think, in their case, CD34.

And so I'm just wondering, if you're not sorting, if you're not enriching, from a volume point of view, how do you know what you're putting into a given ischemic heart?

It's a great question, and you have to go back to the development program that we've been on for the last almost 10 years in this field. And because we're a device, we've had to develop our device and reagent technology based on human fat tissue. And so we're -- we processed and tested over 3,000 patients' fat tissue over the course of the year.

So by doing that, we've developed verification and validation data around our device. So with all those patients we know that if we take that tissue, put it in the device, I can tell you with statistical certainty what kinds of cells we can get, what the distribution of those cells are around the mean with a standard deviation, and then what -- and can tell you some of the key differences between patients that are male versus female, old versus young, smokers, non-smokers, diabetics, and so forth.

So all that's built into not only our device development program, but it's built into the software, and it's built into our clinical therapy protocols. So while -- just like with an aspirin, there's a good chance if you take an aspirin your headache is going to go away. But there's about 20%, 30% of a chance it won't impact your headache.

So we're still subject to that dynamic in terms of the variability of these cells and their impact when we put back into the patient. So that's the purpose of the clinical trial -- to show that we can do better even with this mixed cell population than standard of care.

Thank you, I really appreciate that, and I look forward to spending more time with you to better elucidate that mechanism. One last question -- you talked a little bit about the fact that it's likely we might see a partner or a license deal. Can you give us any idea of what indications out there look very attractive in the marketplace?

Jason, hi, it's Chris. So let me start by saying "we" and by "we" I mean collectively the Board and management, realize the importance of completing one of these active partnerships as soon as possible.

As I noted earlier, there is more activity and interest and real tangible deal processes going on than we've ever seen before. And while we have many more discussions that are going on, there are really seven distinct deal processes that are underway currently.

So to provide some color on that, and I can't go into too much detail, but I think I can give you more color. These include approximately three large pharma companies, a medical device company, two government groups, and at least one philanthropic organization. So we're talking about a variety of people. They also represent organizations from around the world. There are some that are in Europe, some that are in Asia, and some that are here in the US.

So it's looking at deals globally. As you asked specifically, the opportunities range, as well, and these include core and noncore indications, both regional and global focus-type deals. And now including several that are really new areas, and these are areas beyond things that have either been clinically treated or that we've even discussed to date. So there's even some new things that people are interested in that we think the technology could be very powerful at.

So I think when you kind of hear all of that, it sounds like a lot of opportunistic effort that's going on, but I would say that it really reflects what we know in seeing the technology that the application of these ADRCs are broad, significant, they're big markets and it's far-reaching. I guess you could say it's really the quintessential platform technology.

So now with all of that, how do we get something done? So while we continue to move kind of each of these through toward success, the management team is intensely focused on the two that are the furthest along, and while I can't say exactly which day we're going to get one of these things completed, to be clear, it's my highest priority, and we're working expeditiously to get one of these things done as soon as possible. So we understand the priority, and we understand the importance, and we're really working to get this thing done. I have also said that we're very confident that we're going to deliver one of these in the very near term.

So, hopefully, that gives you an idea of kind of the range of things that we're talking to people about around the world, and there's interest in a lot of different indications. But there's a couple that are really very close, and we're focused on getting those done.

Ken Arnold, Merrill Lynch.

I have a question on the change in the protocol in the ADVANCE trial. You stated in the shareholder letter you're going to more of a single dose versus a standard-of-care control design. Can you maybe expand on that a little further, please?

As I said earlier, the principal reason for going back and amending the trial and the protocol, other regulatory issues. But that's created a time window that we could go back and look at some of the areas of the trial to try to speed it up, better manage the cost, and end up, at the end of the day, de-risk it as much as we can and still keep our eye on the ball, which is to get regulatory approval.

But one of the things that we've, since the trial was planned, is keep track of the clinical and scientific data that's coming out of other trials and in the field. And we think that we can achieve our objective, which is to get claims without the second dose so we can effectively have a one-dose trial.

We think that the tradeoffs are in our favor to doing that. An added dose is simply a hedge. This isn't a dosing study or a Phase IIb. It really is a pivotal study. We've been struggling over whether to study two doses are single dose in this trial from the get-go. But kind of reading the data, some meta analysis in the field and some data from other companies who have accomplished trials, we think we can get where we need to go with a lower risk in this trial by going through a single dose, which is 20 million cells in a 2-to-1 randomization against standard-of-care.

So you're going to go with one dose and a smaller dose versus a larger escalate --

Yes, we're going with a smaller dose. The original trial had a dose escalation that went up from the 20 million up to 30 million, or a 50% increase. So we're going with the 20 million cells, which is what were shown -- to show the strong efficacy indication in the APOLLO study.

So it's kind of contrary to the standard former trials we see where we try to get them the highest dose for efficacy.

Right, well, this isn't a former trial. This is a cell therapy trial (multiple speakers) --

Right, as compared to a former trial, we should look at it differently?

Exactly.

[Buzzy Norvin], Thompson Davis Asset Management.

Chris made a comment about the medical technology assessment application for breast reconstruction, and could you expand a little bit on that, or explain it? And any implications, should we get a favorable review on this process?

Hey, Buzzy, I'm going to let Clyde Shores answer this one.

So, yes, this is a significant milestone for us in the publication of the RESTORE II data because it validates the technology, the safety and efficacy in breast reconstruction. But it was a key piece that we needed to go ahead with the impact submission, which, as you know, is the medical technology assessment committee of NICE -- of the NHS in the UK.

And, really, there are two key things about this. One is that it helps us progress formally toward getting that formal reimbursement and toward validating the technology in the UK market. But it also is really much broader than that. It's a proxy for a cost-effective and innovative therapy that improves patient care versus the standard of care for breast reconstruction today, which is either flaps or, increasingly, it's serial fat grafting, and that's growing at very rapid pace.

So with the impact submission and their approval of this technology, it will not only open up our market for us in the UK but that kind of proxy will also enable us to expand our market access in Europe, Canada, and many other countries around the world.

So the near-term implication, once we have that approval, will be increased sales and movement toward getting formal reimbursement, which will really open up the market for us in that indication.

Keith Singer, Keith Singer Wealth Management.

It seems like the technology of Cytori and the patents could be so valuable, yet the market cap is only $120 million, which, I guess must mean that the market is discounting the possibility that the Company won't be able to execute before it runs out of money.

I know you're working on some partnerships. Could you describe in an ideal world the kind of structure that an ideal partnership would look like?

Hi, Keith, it's Chris. I would tell you that you're kind of dialing in on some of the core things here, and I think that the intellectual property part is a major component of the due diligence and the interest from a lot of these companies. As you kind of watch the press, and you're reading about all of the stuff going on around the world now with stem cells from fat, it's interesting, having been involved with Marc early on with this and watching it develop that, in the early days, when we'd go out and talk to people and scientists and venture capitalists and whoever, most of the time we were laughed if not thrown out of the room because it was so crazy. The business model was so different, and our approach really broke all the paradigms.

But today what you see is it's kind of becoming the most commonly reported-on source of cells both from a clinical point of view but also in the research world. So it's kind of becoming the go-to source for cells just because of the value of these cells. There are so many of them, and they're so easy to get, and they're so powerful.

I think the uniqueness here for us is that, luckily, I met Marc early on, who was smart enough to figure this out and begin patenting it back in the late '90s. And so we really have the earliest landmark IP in the field, and now with 46 issued patents, and that's growing significantly, and these patents are pretty new. I think our earliest patent dates only back two or three years, Marc, 2004? 2008? So -- this is a fairly new patent portfolio. So you've got a long runway.

So when you're looking at pharma companies that are really struggling with patents that are expiring and technology that's going generic, I think there's a tremendous opportunity to see not only an emerging new segment in medicine in a new field, but one that has the kind of -- almost across-the-board protection that we think we've got and a long runway for that IP.

So now try to framing some deals around there, I think the thing -- if you look at our history, we have executed partnerships. We had, early on, a pretty good partnership with Medtronic. We've had one with Olympus, we've had one with GE, Green Hospital, Senko, so it's not -- we have created multiple partnerships over the years. But what we've done intentionally and probably at some time almost to our own demise was to protect our market rights, and we wanted to do that to get the ball downfield until the value kind of caught up with what we think of as these different market opportunities. And we're getting closer to that.

Every day we have clarity on the regulatory pathway, more published data out there, and more clinical experience. I think that the validation of the technology and the business model and what we're doing goes up. So, I agree, there is a mismatch in valuation, so it's probably a strong buy right now. It's an opportunity, but from a partnership point of view, I think that we want to focus partners onto particular indications and that could be geographically limited as well. So you might do a partnership just for America, or just for Europe, or just for Asia [for specific] -- and probably not just an indication but more for field, because you've got this device.

We think of partnerships typically in certain categories where it might be an operating room-based partnership or a cardio cath lab-based partnership because having multiple parties selling into that same environment is going to be challenging. So we kind of think of things more in that bucket.

So of all the lists of partnerships that we're working on, even given what I just said, most of them are not mutually exclusive. So in a perfect world, we could probably deliver most of those partnerships in terms of what people are looking at in terms of scope, indication, and geography.

So I think we've got a lot of different opportunities that we're pushing along here that, for the most part, don't overlap. A little bit they do, but, for the most part, they really don't. So the ideal partnership at this stage, for us, comes within three fronts. One front is core -- or things that are on the market. And that's kind of more of a commercialization partnership, and that would be around some of the approved products, approved technologies, soft tissue-type applications in Europe and America, and that is more to help stimulate market access and drive the commercial platform.

The second is for kind of deep in the pipeline core applications, and this is probably vascular, cardiovascular, wound -- those kinds of things where we have good clinical data, even some completed trials, now moving into later-stage trials. And this would be more of a kind of late-stage development and then commercialization-type trial, and that would be up-front money and some milestones and then a commercialization structure.

And then the third possible partnership is kind of around the stuff that's earlier and is a platform. We've only been able to focus on a few things because each one of these takes a significant amount of resources and you really just can't do everything. So we've kind of selected a couple of things that we thought were the right things to go after, and we've been focusing on those.

But this technology of the platform can really apply to a lot of things. So you could see a partnership that's a little earlier that's more developmental in nature but ultimately turns into a commercialization partnership. And this is an example of what we put together with Astellas, and so they took an option on a market that was early. It's liver -- this is in the public domain, and I think that would be an earlier partnership that could move into an earlier clinical trial and then a regular clinical trial and then ultimately a commercialization partnership.

So there's probably a lot of those kind of partnership potentials out there, some of which are now supported by the [translational] work that's going on around the world. So there may be even some level of clinical data out there that could support an indication that's outside of what we typically think of as Cytori core indications right now.

So -- I don't know if that helps kind of clarify things, but there's a lot of ways to -- to part of the technology. We've tried to protect the value to move it downstream. We think there's now a lot of clarity around our regulatory, our patents, the markets, and the clinical data and the indications and the mechanisms and all of the science -- all of that stuff is really coming together that this is now a very partnerable technology.

Would it ever be feasible that you would say well, the best thing to do is sell one of the technologies to create funding for the rest of the company?

Yes, absolutely. I wouldn't count anything out. I think if we had the right partnership, we could. It gets a little messy because you do have this core device.

Right.

That's certainly contractable, and I think we could figure out terms on that. But I think our ideal -- and I guess, in either way, you're going to get your value. Either you're going to get it through a revenue-sharing model and some milestones to fund the development work, or you're going to get a royalty type structure.

So I think you ultimately end up capturing that value. We'd like to see the value -- the technology move as far downstream as possible to maximize the shareholder value, since we've really invested the last decade bringing it to this point.

(Operator Instructions) Les Schultz, Schultz Capital Management.

Hey, Marc, when you were first talking about the potential capital -- I mean, the potential market size, I think you were mostly talking US, right?

Yes.

And so if you're talking worldwide, would it be something like three to four times that?

Yes, I think -- they're mind-numbingly big numbers. When you look at refractory heart failure and then you look at acute myocardial infarction. Heart disease is the leading killer. It's about a third of the deaths worldwide. The number of patients with refractory heart failure is actually a difficult number to come up with any degree of certainty, but we think it's -- in the US in the neighborhood of 250,000 patients a year in terms of incidents and prevalence is 10x that. And then heart attack is about in the neighborhood of 1 million to 1 million and change per year in the US.

And US, Europe, Japan are roughly equal in size. That gives you sort of a general overview of the marketplace. So this is -- we're talking about $10 billion-plus markets.

Okay, great. The other thing was -- do you want to add some color to the heart partners that you have for your FDA?

(inaudible).

The clinical, the heart clinics that you're going to be working with.

I'll reiterate the key points that Chris made, and that the trial is approved for five sites, 35 patients. There are sites that are -- that I would call "clinical stem cell cardiologists" that have a well-known reputation built around living cell therapy through clinical trials and in the market. But the two most well-known centers that are early contributors to the trial in PIs are the Minneapolis and in Houston, Texas Heart Institute. There are another four sites that we've identified in the US that are of equal stature in the field, and those will be coming online immediately following the sites in Minnesota and in Texas.

And these are important bellwether sites, and I would refer you to the Web and the Netscape link that can be found by searching. You can call me, and we'll illustrate the kinds of investigators that we have in the trial that are talking about the potential upside of our technology in the US cardiovascular market to see the kinds of individuals and key opinion leaders that are onboard.

Pete Wells, EGA.

Can you clarify the timing of the last financing -- if it was before or after March 31, 2012?

Hi, Pete, it's Mark Saad. The most recent financing was the equity commitment we had with Seaside, and that commenced in the summertime of 2011, and we recently accelerated the termination of that at Cytori's discretion. So that has been completed, and that raised an aggregate of about $18 million of non-warrant, pure, clean equity that was allowed -- allowed us to positively modify our loan agreements and have better standing now going into the partnership discussions.

And was that accounting done as of March 31, 2012?

I believe that's correct. I believe there was one closing in early April. It would have been about 250,000 shares but, other than that, yes, it was complete as of the end of the quarter.

We have no further telephone questions, however, we did receive an e-mail question.

Hi, yes, it's Marc Hedrick. We received a question regarding the EU approval for no-option CMI refractory heart failure. The question is how do you intend to monetize the approval? And do you have any related revenue projections that you can share?

Let me start the question by reviewing the cardiovascular strategy, because, for some, you see a European part of the strategy, and you see this emerging US part of the strategy for two different cardiovascular indications. And the strategy itself might not be fully apparent.

So from a near-term commercialization perspective, the strategy is really about heart failure. It's about these no-option patients, the unmet medical need, the fact that there aren't enough hearts to transplant and no good treatments for these patients.

And so the reason we have the ADVANCE trial and the claims initiative going through our notified body, is the idea that we would marry the refractory heart failure claims with the 35 ADVANCE trial sites that, although they're for acute myocardial infarction, that pre-places 30-plus systems around Europe with physicians that are trained to use them and, strategically, we're making sure that they -- as many of them as possible will have the ability to deliver cells for the chronic indication.

So if we can marry those two, we think it would really give us a jump start on the commercial activity related to treating heart failure in Europe.

And in the second part of the strategy is that in leveraging what we've done in the PRECISE study and our -- the risk/benefit ratio for this very difficult patient that we've been covered in our data in Europe, then in bringing that to the US where we think we have the opportunity getting through our ATHENA trial and then into the pivotal trial to be first to market with the heart therapy in this typical group of patients.

So the idea, from a monetization perspective, is, yes, we do have a plan. The goal is to get the claims in Europe. We already have the KOLs identified in Europe. They're early adopters, and we need to make them successful and users of the technology in treating patients. And that's step 1 after we get the claims.

The second part is to expand the consumable side to these ADVANCE sites that I mentioned before when I was reviewing the strategy, and part of that strategy is to pick ADVANCE sites, of heart attack sites, that have the ability to deliver cells with respect to [NOGAR], some other delivery technology that we've talked about in previous calls.

So ADVANCE is important for this commercial activity, even though we may not get claims in the very near term. And in the third part of this is a registry. And so it's likely that if we are to get claims in Europe for refractory heart failure, or no option, there will be a registry. But, in fact, we want a registry because that helps to drive throughput of the system's adoption and drive cases to build our KOL base and then, ultimately, that registry data can potentially -- although not fully -- but can potentially help us support reimbursement downstream.

So the second part of the question is -- is there revenue built into 2012, and the answer is yes. We do have some revenue both into our 2012 revenue assumption and then all that would (inaudible) to talk about, we have that growing into 2013 and beyond, based on the sites that we've outlined for CMI.

Gregory Huston, OPCO.

I'm not sure if I'm pronouncing this correctly, but the Okyanos Institute has indicated they're going to start accepting and treating patients in August for the same no-option patient population that you're going to be treating in the UK. I'm just wondering how that dovetails with what you're going to be doing? Will you have to include the data, the outcomes from their patient population? How do you monitor that? How that may affect applications you may later make in the US? And then, finally, whether you've built anything into that $9 million revenue estimate that accounts for what success they may have in treating that population?

You're referring to Okyanos in the Bahamas --

Yes.

-- and our relationship with them. And to address your second question first, we have built in -- built that into our revenue assumptions and discounted that because there's uncertainty both from the regulatory claims perspective and for the rate of enrollment. But, yes, that particular thing is built into our revenue projections.

I think, from a regulatory perspective, obviously, the number-one goal is to protect what we're doing in the US and we have a great relationship with the FDA. We're moving quickly, and we're strictly following FDA regulations. So that's number one.

But we also had customers around the world, and Okyanos is one of those that can legally acquire the technology and, under the appropriate local regulations, treat patients as part of an IRB-related study as part of the registry or as part of full commercialization. The Bahamas is more aligned with the UK and the CE Marking process rather than the US.

So we think that it's entirely possible to have successful, safe, utility of the no-option chronic ischemic therapy for patients in those areas where there is a clear regulatory path. That's why we're pursuing it so aggressively in the European community, because we think the data supports the utility of these patients who are dying at 20% per year. There is no good option for these patients. It's the humane thing to do to try to treat them, and we think the data and outreach shows we can do it successfully. And customer partners such as Okyanos, we think, are treated to be able to live with that therapy in a US high-level type of way.

I understand that, and I look forward to their success. I was just wondering whether their data becomes part of any future submissions you make for that indication. How the regulators would look at that?

Well, I think we can, and would like to take data like that as part of a registry. I think that helps build the database around the utility of the therapy, the patients, and that would be our goal -- is to capture any of that data not only in their -- whatever database that Okyanos or any other customer might have -- but capture that data as much as we can into our data dossier and leverage that for Cytori shareholders, for enhanced regulatory approval, driving KOL adoption, driving studies, and more clear clinical benefit and the data behind that for our technology.

Are there any other institutes out there that are looking at similar ventures that you're aware of at this point?

Yes.

And at this time, we have no further questions, so I'd like to turn the conference back over to Chris Calhoun for any additional or closing remarks.

Okay, well, at the end of the day, we just want to thank everybody for your time and support and all the great questions today. For the remainder of the year, we remain committed to executing across all three core areas of the business -- that's advancing our cardiovascular disease pipeline, growing our commercial business, and, importantly, strengthening our balance sheet through strategic partnerships. Thank you all and good day.

This does conclude today's conference. We thank you all for your participation.