Spectrum Pharmaceuticals Inc (SPPI) 2008 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the third-quarter 2008 corporate update and pipeline review. My name is Sandy, and I'll be your coordinator for today. (Operator Instructions). I would now like to turn the presentation over to your host for today's conference, Mr. Paul Arndt, Manager of Investor Relations. Please proceed.

Thank you, Sandy, and good morning and welcome, everyone, to Spectrum Pharmaceuticals' third-quarter corporate update and pipeline review conference call. I'm Paul Arndt, Manager of Investor Relations for Spectrum. With me today are Dr. Rajesh Shrotriya, our President, Chairman and CEO, and Shayam Kumaria, our Vice President of Finance.

Let me give you an agenda for today's call. First, Shayam is going to give us an update and an overview of our third-quarter financial highlights. Second, Raj will then go over the third-quarter achievements, including the filing of the supplemental new drug application for Fusilev and details on the Apaziquone partnership with Allergan. Then we'll open the call up to questions, and then Raj will offer his final comments and wrap up.

Before I hand the call over to Dr. Shrotriya, though, I will like to remind -- to Shayam -- I'd like to remind everyone that during this call we'll be making forward-looking statements regarding future events of Spectrum Pharmaceuticals, including statements about the safety, efficacy, development timelines and clinical results of our drug product candidates that involve risks and uncertainties that could cause actual results to differ materially. These risks are described in further detail in the Company's reports filed with the Securities and Exchange Commission. These forward-looking statements represent the Company's judgment as of the date of this conference call, Friday, November, 7, 2008, and the Company disclaims any intent or obligation to update these forward-looking statements. However, we may choose to update them, and if we do so we will disseminate the updates to the investing public. For 10-Ks, 10-Qs, press releases, corresponding 8Ks and additional information, including other SEC filings, please visit our website at www.spectrumpharm.com. I would now like to hand the call over to Shayam.

Thank you, Paul. On November 6th, the Company had cash and equivalents of approximately $90 million. During the third quarter, R&D expenses were approximately $6 million, and selling and G&A were approximately $3.1 million. We continued to maintain strong vigilance over expenditures; and consequently, cash used for operations during 2008 has averaged approximately $7.8 million per quarter.

Including the $20.7 million cash received through September 30th, net cash used in operations was only approximately $2.8 million for the nine-month period. After receipt of the $41.5 million at the third quarter from the recent Allergan collaboration, we currently have approximately $90 million of cash and equivalents, which we believe is sufficient to fund our operations for the foreseeable future. On that note, I'll turn the call over to Raj.

Thank you, Shayam, and good morning, everyone. We all know how bad the economy is. The lifeline of a small biotech company is traditionally has been the ability to raise cash, which has almost dried up in recent months, and the future looks even more bleak. According to the Biotech Industry Organization in the US alone, 38% of 370 biotech companies are operating with less than one year's worth of cash.

Nearly 100 publicly traded biotech companies have less than six months cash, and there is effectively no ability for them to raise capital. As Steve [Burral], CEO and founder of [Berlin] Company, earlier this week said that there are more 200 publicly traded companies that are trading below $1 per share. For the first time in the history of NASDAQ, NASDAQ has suspended the minimum bid price delisting rule.

Unlike many biotech companies, and despite the current financial melt down and the bleak economic outlook in 2008, we at Spectrum have strengthened our financial and strategic foundation. Spectrum has no debt, and has no long-term liabilities. Spectrum is more financially sound now today than it has ever been in its history. Not many companies can say that today, and I'm very proud of that.

We believe not only will we weather the current economic and financial storm, but we will come out the other side a much stronger Company. Here is why: Number one, we have nearly $90 million in cash, as of today; we have no need and no plans to raise cash in the near future. Let me repeat. We have no need and no plans to raise cash in the near future.

Number two -- and this is important -- we have generated more than $62 million in cash this year alone without issuing a single share of the stock or warrants. Not many companies can say that.

Number three, we received approval from the FDA for and launched our first proprietary oncology drug, Fusilev. We've continued the Phase 3 clinical development of EOquin, and found a fantastic and strategic partner in our own backyard -- Allergan.

Speaking of Allergan, let's talk about what qualifies them as a fantastic strategic partner. Last year, after we started the second Phase 3 trial, I gave the business development team the instructions to begin the partnership efforts. I told them that we are not looking for the biggest company or the largest dollar amount that we could receive. Instead, we wanted a partnership -- and also we didn't want to sign a partnership purely for partnership's sake like we had done in 2002 -- or I would say like we had to do in 2002. This time around, we had the time, we had the money, and we had the people and wherewithal to take EOquin all the way to launch ourselves, and therefore it was very important for us to find a right partner.

I gave the team the following three criteria in their quest for a partner: Number one, find a company that has a serious and strategic commitment to urology and will make EOquin a top priority; number two, find a company with an excellent core capability in global sales and marketing; and third, find a company with a culture of collaboration and people with whom we would want to work.

Here is why Allergan is the right partner. Criteria number one: In 2007, Allergan created a dedicated urologics division to focus on urology. Allergan quickly acquired Sanctura XR for overactive bladder, and also they are investigating Botox, their flagship drug, for various urologic indications. They have a standing urologic salesforce, and therefore EOquin fits perfectly in their portfolio.

Criteria number two -- Allergan is number one or number two in all product categories in which it sells. Allergan possesses the vision and resources to consistently realize new opportunities. They have been successful in creating and leading multiple new markets for the disciplined application of three fundamentals. Number one, steady investment. Number two, scientific innovation. And number three, global expansion.

Criteria number three -- Finally, they've demonstrated their collaborative approach with us over the last 11 months to this partnership. During the month of due diligence, more than two-dozen people from Allergan visited our offices on a regular basis. Even before the deal was signed, both our employees and their work -- they were working together on plans to expedite the development of EOquin.

Finally, last but not the least, their global headquarter is only exactly 8.1 miles from our offices. Not only are they our corporate neighbors, but they are [residential] neighbors as well.

Many of our and their employees live in the same neighborhoods, have kids that go to the same school and play sports together. Because Allergan is so close, we can meet ad hoc when necessary with a simple phone call. "Hey, we need to talk about a few items. Are you free for a lunch in an hour?" We don't need to worry about time differences, setting up meetings weeks in advance, delayed flights, et cetera, et cetera.

I'm now pleased to tell you about a collaborative agreement with Allergan. Under the terms of the agreement that we signed on October 28th, we were to receive $41.5 million within ten days of signing, the money which we have now received. Allergan will make additional payments of up to $304 million based on the achievements of certain clinical, regulatory and commission milestones.

We've retained exclusive rights to EOquin in Asia, including countries like Japan, India, China, et cetera. Allergan will also pay Spectrum royalties on all of its EOquin sales outside the United States.

Importantly, Spectrum will continue to conduct the EOquin clinical trials, with Allergan bearing 65% of these expenses. To the best of my knowledge, this is the first time that Allergan has entered into a partnership with a partner continuing to conduct the clinical trials and they foot the majority of the bill. This speaks highly of the clinical capabilities and quality of our clinical team, which I'm very proud of.

In the United States, Allergan and Spectrum will co-promote EOquin and share in its profits and expenses equally -- 50/50. This will give us the ability to further build our commercial capabilities here in the United States.

Finally, and very importantly, we at Spectrum have the ability to opt out or walk away from the co-promotion agreement over the next three years. That's before January 1, 2012. If we do so, Allergan will pay us up to $245 million in additional milestones. So that's $304 million plus $245 million. Upon the achievement of certain sales milestones in the United States, part of the aggregate development costs and marketing expenses incurred by us since January 1, 2009, shall be reimbursed by Allergan in the form of a one-time payment. And instead of sharing our profits and expenses, Allergan will pay us royalties on US sales.

Now, let's change gears and discuss Fusilev. Let us start with our filing of the supplemental NDA for Fusilev in advanced metastatic colorectal cancer. Over 90% of racemic leucovorin used in the United States is for colorectal cancer. Assuming the FDA accepts the filing, we expect a standard end-month review, so we should have the FDA's response sometime in the fourth quarter of 2009.

We also received notice that the Center for Medicare and Medicaid Services, CMS, under the Medicare Part B benefit, has assigned a unique product-specific billing code or J-code for Fusilev. The J-code becomes effective on January 1, 2009, and it should help provide us updated reimbursements for Fusilev.

As we have mentioned before, we continue to expect sales under the currently approved indications to ramp up slowly until the full range of indications and formulations are approved. Earlier this year, we completed the filing of an amendment to the new drug application for Fusilev tablets.

The Oncology Drug Advisory Committee, or ODAC, has already voted affirmatively that the oral formulation is safe and effective when used in the rescue of high dose methotrexate. We expect the FDA's decision on Fusilev tablets in mid-2009.

So let's quickly talk about what you can expect from us over the next few quarters. We plan to remain focused on our efforts towards the two currently enrolling Phase 3 clinical trials of EOquin to meet our enrollment target date of year-end 2009. As we announced in our press release, we now have more than 100 sites enrolling patients, and we continue to add more sites as we speak. In addition, we plan to initiate some additional studies to expand the possible indication into [busy] and refractory patients.

Lastly, we have been careful, judicious and vigilant in watching out for our investors' interest in protecting cash at hand. For example, at the first sign of trouble at Lehman more than ten months ago, when the bulk of our cash was managed by Lehman, we quickly moved our cash within 24 hours out of Lehman and invested it in US Treasuries at three different banks -- Bank of America, Citibank, and Wachovia. With this, I would like to thank you, very much, for your time this morning, and I would now like to open the call to your questions.

(Operator Instructions). And your first question comes from the line of Ren Benjamin of Rodman. Please proceed.

Hi, good morning. Can you guys hear me okay?

Can you hear us okay?

Yes, I can hear you guys. Good. Thank you very much for taking the questions, and congratulations on a deal, especially in this market. A couple of questions. One having to do with the Allergan deal, you know, are there any provisions or anything in the deal that could, you know, lead to a cancellation of the deal if -- you know, if the trials aren't conducted on time or you know, if there are any sort of delays that sometimes you can't predict in clinical development?

I don't believe so. I don't believe that there are -- again, I'm trying to think, this is a -- almost a 100 page agreement, so the question you're asking me is unusual. I know that the $41.5 million that we have got is non-refundable no matter what happens, that's number one. And number two, can they cancel for any reason? Well, I have our corporate counsel sitting here. Do you remember anything? So these are standard (inaudible) provisions, there's nothing that's unusual about this clause.

Oh, terrific. Okay. That's what I wanted to know. And then regarding Fusilev, you also announced today that you've got a J-code designation. Can you talk through the implications of the J-code designation, and you know, is there a potential for off-label use? And then, can you give us an update as to how -- you know, you have your salesforce in place -- how sales are going right now for the approved indication?

Ren, I thought you were a friend, and you don't want me to go to jail about talking about the off-label use of any drug -- any of our drugs.

You don't have to, then -- maybe the on-label indication?

We never want any of our drugs to be promoted off label. We don't want to promote them. We don't want them to be used. With this, I would like to ask George Uy, who is our VP of Marketing & Sales, to comment upon the J-code. George?

Yes, Raj, thanks. Ren, this is George Uy, I'm with the commercial team. Yes, so just to get back to your question about the practical implications of having a unique J-code. What this essentially means is that starting January the first, when the unique J-code takes into effect, every time the practices -- the community practices or the hospital patient departments, for example -- prescribes Fusilev and files a reimbursement claim, they use this unique J-code. And because of this unique J-code, what it means is that these claims -- these claims for Fusilev reimbursement -- will go through the system automatically.

So it's not a manual review, and the effect of this is that reimbursement used within the label would be generally assured, and the fact that it's automatically processed, that means to say that these practices will get their reimbursement very quickly, usually within 1 to 2 weeks. Currently, what the physicians are using is a miscellaneous code, and miscellaneous codes are processed manually and practices will have to wait for the reimbursement to come through, and sometimes it could take about a month. So there's a practical utility to this.

Okay. Great. And George, since I have you on the phone, can you talk to us a little bit about how the launch is going, you know, right now? Again, for the approved indications? You know, is there -- do you have to get this onto a formulary in the hospitals? Can you give us just some color? What's the field salesforce saying about their interactions with physicians?

So far there has been -- because first of all, we have to remember that we are only promoting within label, right? And that is the osteosarcoma indication and a few cases of lymphoma, for example, which requires high dose methotrexate therapy. So the patient population is quite small, it's quite a niche indication. And our salesforce are visiting especially the large community practices to try to capture those sarcoma -- osteosarcoma and high dose methotrexates, usates among the practices.

And so far, what we have started now is a pilot reimbursement program, and so far we have enrolled quite a few practices already who are part of this reimbursement program. What it means is that these practices will then start to put patients on Fusilev and submit a claim and make sure that the claims are processed. And they receive the adequate reimbursement that they're looking for, right? So it's in initial step practices who have put a few patients first, get the claim processed by the different payers. Once they got their reimbursement, then that's when practices will feel more comfortable in putting in more claims.

Have you -- has anyone been reimbursed so far?

Yes. Yes, so far. Yes.

Okay.

So far, quite a few claims have been submitted and they're being reimbursed.

And so, you know, what's been the feedback? You know, have the salesforce -- has the salesforce encountered any push back? You mentioned that you were getting quite a few, getting -- you know signing on, but can we get maybe some of the positive interactions as well as any negative interactions, if there are any?

The positive interaction has been that practices -- you know, those practices that have put patients on Fusilev, they have been getting their claims reimbursed, so that would ease a lot of their anxieties. The negative -- and some sort of a push back -- is the fact that we currently don't have colorectal cancer indication, and we are not promoting in colorectal cancer indication, and of course, these practices would like to use the drug in combination with 5-FU because that's where leucovorin is most oftenly used, right? And the fact that we don't have that indication, you know, is a bit of a push back. So there's a lot of anticipation out there waiting for Spectrum to get the approval in colorectal cancer.

Okay. Great. And I guess just finally, Raj, back to you, you know, you have -- there's obviously quite an extensive pipeline beyond just EOquin and Fusilev; but at the same time, you do have to manage your burn and your leading cash position right now and make sure, you know, you're able to extract shareholder value, especially as we go through these times.

Can you give us an update or status as to the other programs that are ongoing? And I guess more importantly, which ones we kind of want to slow down or put on the shelf until there's just a better environment? And I guess as a follow-up to that, you know, clearly I think you guys have established yourselves as a leader in being able to conduct deals and partnerships with, you know, big pharma, big biotech, specialty pharma companies, and so you know, is there another product in the pipeline that you're looking at next?

Ren, that's a very good question. Let me just say the following, that we are -- just because we have $90 million in cash, this puts even more responsibility on our shoulders to manage our burn judiciously, and you can trust that's what we're planning to do. You know, Andy Sandler, who is our Chief Medical Officer, he is currently going through the review of the entire portfolio. All the drugs are being reviewed right now, and within the next three months or so we will decide as to what the next priorities should be.

We have Ozarelix, we have Ortataxel, we have RenaZorb with 1620, we have Lucanthone -- we have all of these drugs. And right now, based on the outcome of this review, we'll further prioritize and decide as to how to spend money. We are very cautious and careful the next two or three years are going to be very tough for the industry. So trust me that we are going to watch our dollars that we now have, that we are fortunate to have, that we're going to watch -- spend them very wisely, cautiously and judiciously.

Okay. And so just going along with that, I can assume that other programs will be -- I mean, I know you've going to be reviewing it in the next three months -- I guess you answered the question, but how about as far as other deals -- or in term of news flow coming out besides FDA decisions for Fusilev, what else can we be looking forward to?

Well, the first thing is that EOquin -- our plan is that we now have -- now we are in discussions with companies in Asia. We're talking to potential partners in Japan -- there are no offers on the table at this time, but we've just started the process after (inaudible) has been completed. So what you expect is perhaps some more deals related to EOquin partnership in countries where we've not yet partnered, and we expect -- we're always looking for drugs that are on the market, that are currently selling in the oncology field, so that our sales team can have more than one drug in their bag. So those are the things that we are strategically and carefully looking for.

Perfect. Thank you very much, and good luck.

Thank you.

And your next question comes from the line of Shiv Kapoor of Morgan Joseph. Please proceed.

Thanks for taking my question, and my congratulations on the Allergan deal, and a lot of progress in the quarter -- the SNDA and the J-code. I've got a couple of questions that seek clarification on this -- the deal that you signed, and then I've got a couple others. So first on this deal. You seem to have generated $60 million in cash this year without raising any cash and without any dilution to shareholders; and you said you're looking at possibly more outlets for EOquin in Japan, and India and China. Is that -- how long do you think that process could take, based on your experience with the US process? Or could it be faster because now you have a deal?

I hope it is faster, Shiv, but just to give you in perspective that we have been looking for this partnership that we have just signed for well -- good about 15 months, but for the last 11 months we have been in very serious due diligence process, so that just tells you how long it takes. The multiple times, multiple people digging into each correspondence with the FDA, looking at each data -- animal data, clinical data. CMC data, so -- and then discussing and debating the deal terms. So all of this has taken us close to a year to conclude this deal. I'm hoping and praying that the next deal on the heel of Allergan deal would be a bit easier, a bit faster, but there are no guarantees.

Sure. A quick question on your cash burn. It seems like you've been burning around $8 million, a little less than that, per quarter. Will that decrease going forward because of the Allergan partnership? Because as far as I remember, a majority of the costs were due to the EOquin R&D and that will now be shared in a greater part by Allergan.

Again, Shiv, that's a good question. I would be in a better position to share with you what the burn rate is going to be once we have had this internal review. But we are -- as I said, that we are not going to increase our burn rate just because we have the cash. In fact, we are going to watch every dime we spend very carefully. We've already put some strategic initiatives in the Company where we are trimming down our expenses where we can, So we plan to be even more cautious and even more judicious, given the economic turn that the country has taken.

So it's fair to say the burn could be either equivalent or lower than what it had been?

It's possible.

Okay.

But as I said, it will depend -- much depend on what kind of opportunities we have. We are always looking for adding value to the Company.

Sure. A question on that aspect. Can you remind me how much you paid for EOquin in 2001?

You don't want to know that. I don't know (inaudible) people or anybody on the call to misunderstand that. You know, keep in mind that we acquired these assets when they really were under appreciated. They're sitting on the shelf and collecting dust. EOquin was an excellent drug in pre-clinical trials. They had -- EURTC, which is equivalent to LCI in US, they developed it for many, many years -- five, six years -- treated over 300 patients. And while the drug had excellent pre-clinical activity, in clinical trials the activity was marginal. And therefore, they were very frustrated, disappointed and the drug was sitting on the shelf and we have a wide network.

I think one thing at Spectrum we are very proud of is our network. Our -- Gino Linaz, our Chief Scientific Officer, who just retired in June this year, but is still fully engaged, ad is working for us almost full time, and various other people. We had experts in Netherlands -- Dr. Bob Pinedo, who in fact brought this drug to our attention. And immediately, Gino and Bob Pinedo) and I thought of it, that if this drug is very good, maybe we can turn it around by using it in a topical application. So we decided those studies way back in 2002 -- late 2001, 2002. We didn't know what we will get into. So we paid $100,000 for all rights to EOquin.

Well, that's an exceptional value addition of you've been able to assign this deal, you know, after acquiring that drug in 2001 for that amount. But given that you have been able to create such value, doesn't it make sense for you to continue doing that and in-license some more earlier stage compounds rather than later stage compounds?

And you're right, we're doing that -- in fact, we also acquired Satraplatin for $100,000 that we turned into $12 million, so we have a track record -- actually, when this team -- Gino and Bob and I were there at SuperGen, we had acquired [decitabine] for almost nothing for a pharma company. And today, both SuperGen and MGI Pharma lived on decitabine. SuperGen has made hundreds of millions of dollars on a drug that we acquired for almost nothing.

So we have a track of record of having demonstrated that many, many times. And trust me, our pipeline that we have built of many drugs, they -- most of them come like this. And we're always looking for drugs, and we have some drugs that we are constantly looking. We have a big business development team. We have a wide network, and we are always, always looking for drugs. We are never satisfied with the pipeline that we have, because we don't know where the winner will come from.

That's great to hear. I'm sure there's a lot more opportunities at this point than there have ever been.

A couple questions on Fusilev. Based on your interaction with the FDA, could you get an answer from the FDA on the colorectal -- I'm sorry, indication -- before the ten months?

I wouldn't like to guess that at all, Shiv. And I would hope and pray that that happens, but I never like to second guess a government agency that has been performing -- that has been working under staffed. They are not even honoring PDUFA dates now. You know, this is unheard of. But they're not. So I would say I'm empathetic to the FDA that they say they're over burdened, they're over worked, they're understaffed. So looking at all that, I hope this happens, but I'm not very hopeful.

My last question, one for George, how important is the J-code to eventually get private reimbursement? And is -- and would you need -- let me stop there, because I don't want to ask an off-label question again.

Yes. The J-code is very important, and I would say it is the holy grail of getting reimbursement at the rate that you want, right? So that's very important. Without the unique J-code behind your product, we could easily be reimbursed at the rate of a generic calcium leucovorin rate, for example, which is not fair because Fusilev is obviously a branded drug, and we have our own pricing structure, right?

So that unique J-code would guarantee that the drug will be reimbursed at the manufacturers' set price -- average sales price. So that's very important. And the second practical aspect to is if you get a unique J-code, then the processing of the reimbursement claims are automatic, so the practices would get their reimbursement within one to two weeks. So there's a great sense of relief among the practices that if they use Fusilev they will get reimbursed. So it's very important for those -- yes, for those reasons.

I'm going to ask you one last follow-up. Now is that true -- I found my research that these private practices are actually losing money on leucovorin; is that true? And if that is true, then it's sort of a no-brainer to you, this drug, where it is reimbursed and you actually make money out of it, and it's better for patients.

Yes. I won't go into comments regarding spread, et cetera, right? But to address your first question whether there are losing money in -- when they use generic leucovorin, and that is mostly true, yes. It depends on the practices if they're able to negotiate a very low price with the manufacturers, then maybe they will break even. But most of the practices, I think, are losing money when they use generic leucovorin.

Okay. Thanks.

Okay. You're welcome.

(Operator Instructions). And your next question comes from the line of Chris Holterhoff of Oppenheimer. Please proceed.

Hey, good morning, guys. Thanks for taking my question. First question is just on the revenue recognition policy for Fusilev. Was there something specific that happened this quarter, or are you just kind of being conservative here because the product just launched?

Shayam, do you want to talk about just being extra cautious, extra conservative, or -- ?

Exactly. We launched the product August 15th, barely 45 days into the quarter. There isn't enough time or data to do all the things that are necessary to satisfy our revenue recognition. Again, just being cautious.

Okay. So then we can probably assume that you will recognize that $140,000 in, I guess, the fourth quarter?

Yes.

Okay. And then just a quick question on your partnering strategy you know, in the colorectal cancer setting. Is this something that you might start to talk to partners before you get that additional -- or assuming you get the additional approval from the FDA -- or can we expect that you kind of -- you know, you need to wait until after you get that approval?

Okay. Chris, I didn't understand the, the connection between colorectal cancer approval and partnership discussion, because partnership discussions we're talking about is for EOquin in Asian countries. That's I think we talked about. Fusilev is, we're launching ourselves, we're not partnering, we don't have any plans to partner Fusilev with anybody. We have our own sales force at this time, consisting of our regional business directors with oncology experience, commitment, dedication, experience. So our plan is that we're getting ready, in fact, that should the colorectal cancer application be accepted and approved, then we will proudly launch this drug ourselves. So we are counting on that.

Okay. Thanks a lot. That answers my questions. Thank you.

Thank you.

(Operator Instructions). I'm not showing any further questions at this time, so I will turn the call back over to management for any closing remarks.

Well, thank you very much. Thank you for your time today and your continued support. I would like to leave you today with a takeaway message from today's call, and that is that at Spectrum we have cash, we have marketed oncology proprietary products that has already proved to be successful in Europe and Japan. We have later-stage products in development. We have strategic partnerships with successful companies. We have a team of dedicated professionals who have done it before. And we have the wherewithal to carry out our business plan.

In closing, let me remind you, once again, that we have no debt, we have no long-term liabilities, and we have no plans to raise capital at these shares prices at these times.

A couple of more points. We're not in a business where the results of our strategic hard work can be seen and appreciated on a daily basis. Drug development takes many years, hundreds of millions of dollars and involves hundreds of talented people's hard work. We are barely six years out of the gate at Spectrum, and I'm very proud of our accomplishments to date. I believe we have laid down a solid foundation on which now we can build a successful Company and grow.

One fact that is not much appreciated is the fact that our team at Spectrum is indeed unique. In this year alone, we have attracted many employees who have an impeccable record of success and work here day and night with passion, commitment and dedication that's rarely seen.

And there's one last point I would like to make that there's some misunderstanding about my compensation. Some people think that I'm paid close to $3 million a year, and that is just not correct. I believe this is because the way the stock options are valued -- so if I'm giving -- I'll give you an example.

If I'm given 100,000 Spectrum options, and if the price of the options was $7, that could show up as hundreds of thousands of dollars in my compensation. There is a formula by which they are calculated, and all the options that have been given to me over the last six years are added to that number. In fact, my wife sometimes questions what is it that I get paid $2.7 million and she doesn't see a dime of it?

So just to put it in perspective, my cash salary currently is at $600,000 per year. Those of you who always talk about my compensation and say that my compensation is higher than Amgen CEO salaries, please take a note of it that there's some misinformation about this that I would like -- I hope -- I would like to put it straight and talk about the cash compensation that I make.

Thank you very much for your time today, and I look forward to working with you over these next years as we build this Company into a successful Company that is -- that has sales, profits and revenues. Thank you for your support, and thank you for your time today.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation, and you may now disconnect. Have a great day.