Sarepta Therapeutics Inc (SRPT) 2010 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the second-quarter 2010 AVI BioPharma earnings conference call. My name is Jasmine and I will be your operator for today. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. David Walsey, Senior Director of Investor Relations. Please proceed.

Thank you, Jasmine, and thank you, everyone, for joining today's call. Earlier today, we released our financial results for the second quarter of 2010. The press release is available on our website at www.AVIBio.com, and the 10-Q was filed with the SEC.

First, I need to inform you that during this call, we'll be making a number of statements that are forward-looking. These forward-looking statements include statements about our expectations regarding future expenses; funding from government and other sources; the development of AVI's product candidate, including preclinical development, filing of an IND application, completion of a Phase I human safety clinical trial, clinical developments, and FDA approval; the ability to refine the scale of manufacturing processes; the efficacy of our PMO-based chemistries and other RNA-based technology; our ability to partner with others with respect to the development of our product candidate; and the timing of future announcements regarding our business and product candidate.

These forward-looking statements involve risks and uncertainties, many of which are beyond AVI's control. These forward-looking statements involve risks and uncertainties -- any of such risks could materially and adversely affect our business, results of operations, and the trading price of our common stock. For a detailed description of risks and uncertainties we face, you are encouraged to review the official corporate documents filed with the Securities and Exchange Commission.

With that said, let me turn the call over to Dave Boyle, AVI's Interim President and CEO and Chief Financial Officer.

Thank you, David, and good afternoon, everyone. Thank you for joining us on AVI's 2010 second-quarter earnings call.

AVI has enjoyed its many successes over recent months, and I am pleased to be able to share those with you. These include our recently-announced data in our clinical trials for AVI-4658 in Duchenne muscular dystrophy; the opening of the U.S. IND for AVI-4658, which allows us to begin a clinical trial in the U.S. later this year; the receipt of a $4 million award for study of our influenza drug candidate AVI-7100 against other influenza strains, including Tamiflu-resistant H1N1, avian flu, and seasonal flu; the receipt of an $18 million contract for the accelerated preclinical and Phase I development of AVI-7100 for influenza; publication of data from our antibacterial work with Burkholderia Cepacia; and, of course, our award for up to $291 million for the advanced development of AVI-6002 and AVI-6003 for Ebola and Marburg, respectively.

When you put all of these together, I think it puts into perspective not only the accomplishments achieved here at AVI recently, but also the potential to do even more with our programs and platforms in the future. AVI today is re-energized and refocused. Our employees, management team, and Board of Directors are unified and focused on a refined strategy.

The basic elements of our strategy are to bring forward product candidates, focus on rare orphan diseases and anti-infectives; to leverage our platform technology through support of appropriate business collaborations and partnerships, including the U.S. government; and to build on our successful portfolio by bringing forward additional product candidates in the areas noted above.

Operationally, we are today more proactive in seeking appropriate business partnerships and collaborations. And we will continue to leverage internal resources with external experts and organizations to give us the flexibility to meet the requirements of our now several development programs.

We will continue to build on our key core capabilities without overbuilding our permanent infrastructure and we will be attentive financially to reducing the net burn. I believe that when you put together the team, the strategy, and the operational approach with the powerful platform technology and successful programs, the potential here at AVI is tremendous.

Over the remainder of today's call, I will review in more detail the recent highlights, provide a summary of our financial results and guidance released earlier today, and provide a review of upcoming milestones, before opening the opening the call for your questions.

Recent achievements from the start of the second quarter through to today include several important programs. In our Duchenne muscular dystrophy, or DMD, program, our successes include topline biopsy data from the Phase I(b)2 clinical trial of AVI-4658, our lead PMO-based therapeutic candidate being developed as a systemically administered treatment for a substantial subgroup of patients with DMD.

The data demonstrates the first-ever reported generation of new dystrophin-positive muscle fibers of more than 50% in a patient with DMD following systemic administration of the therapeutic candidate.

Following the FDA review, the opening of an IND allowing for clinical studies in the U.S. with AVI-4658; and presentations in July at the International Congress of Neuromuscular Diseases in Naples, Italy, highlighting the results of the recently completed Phase I(b)2 clinical trial of AVI-4658. I believe there is considerable excitement and increased support for our DMD program based on our promising data to date.

In consultation with key opinion leaders, including recent discussions at a meeting we held with our expert consultants in Boston, we are working to finalize the design of the U.S.-based trial that we are planning to start in the next few months. We anticipate that the planned U.S. trial considering the generally well-tolerated nature of the drug candidate as exhibited in the clinical and preclinical studies, and the substantial but variable increase in the dystrophin measurements observed in patients in the UK-based Phase I(2)b trial, will explore increasing doses of AVI-4658, subject, of course, to FDA and IRB review and approval.

We are also continuing to advance AVI-5038, our lead preclinical PPMO DMD drug, intended to skip Exon 50 in the gene coding for the dystrophin protein. As previously reported, we noted toxicology findings in the primate kidney as part of our series of GLP studies. Based on these findings, we are conducting additional preclinical work to help clarify the therapeutic index of AVI-5038, which will guide decision-making on continued development of this candidate. We expect to provide another update for AVI-5038 later this year.

Moving to anti-infectives, recent successes in our influenza program include the expansion of our influenza program in June with the award of a new contract under the Transformational Medical Technologies program, or TMT, of the U.S. Department of Defense for up to approximately $18 million. This new contract is for the advanced development of AVI-7100, our lead influenza therapeutic candidate, and includes studies enabling an IND application with the FDA, study of an intranasal delivery formulation, and the funding of a Phase I clinical trial to obtain human safety data to support potential use under an emergency-use authorization.

The announcement of this new $18 million contract followed the award of an increased funding for AVI-7100 of up to $4 million under pre-existing contracts under the TMT program. This increased funding supports continued preclinical development of AVI-7100 against H1N1 and expanded preclinical evaluation against Tamiflu-resistant H1N1, H5N1, or avian flu, and H3N2, or seasonal flu.

AVI-7100 uses our PMOplus chemistry, and it targets a region of the virus that we believe is well conserved across multiple flu strains.

With these two awards, total funding to date for our influenza program adds up to a potential $26 million.

One of the most important recent events for AVI involves our hemorrhagic fever program. On July 14, 2010, we were awarded a new contract for up to approximately $291 million to the TMT program for advanced development of the Company's hemorrhagic fever virus therapeutic candidates, AVI-6002 and AVI-6003, for Ebola and Marburg viruses, respectively.

If TMT exercises all four sequential phases that comprise the contract, activities undertaken by AVI would include all clinical and licensure activities necessary to obtain FDA regulatory approval of each therapeutic candidate, in order to provide for a total funding award to AVI of up to approximately $291 million over a period of approximately six years. The first phase of the contract began on July 14 and provides for approximately $80 million in funding over a period of about 18 months.

Recent support for our anti-infective programs against influenza, Ebola, and Marburg viruses brings potential U.S. funding awards this year to AVI of up to over $300 million.

These contracts with the government, we believe, provide benefits beyond their financial support and the individual scope of each contract. For example, under the Ebola and Marburg contract, there's a considerable amount of work related to building AVI manufacturing capabilities and partnerships, as well as improvement of our processes and scale up of production. This is work that is relevant and applicable to all of our programs.

Another example from that contract and the new flu contract is that we will obtain experience with our PMOplus chemistry in healthy volunteers to the clinical trials supported by those contracts. This will be valuable to other drug candidates that employ our PMOplus technology.

During the quarter, we also announced as part of our anti-infective program efforts the publication in the Journal of Infectious Diseases of new data demonstrating the potential utility of our PMO oligomers as antimicrobial agents. The publication describes preclinical studies demonstrating the in vitro and in vivo efficacy of peptide-conjugated phosphorodiamidate morpholino oligomers, or PPMOs, against the Burkholderia Cepacia Complex by targeting AcpP, a protein known to be important for bacterial growth.

Published in conjunction with the study is an editorial entitled New Horizons in Treating Burkholderia Species Infections which addresses these studies and the underlying PMO technology opportunity in antimicrobials. Antibacterials developed through our platform represent a potential new drug class and have demonstrated activity across multiple bacteria evaluated to date, including both gram-positive and -negative bacteria and had no known cross-resistance to current anti-infective classes.

The final event to note in the second quarter was a leadership transition at AVI, which included my appointment as interim CEO, and resulted in the additions of Tony Chase, Chris Garabedian, and Dr. Hans Wigzell to our Board of Directors. The transition was smooth, and everyone at AVI is focused on the possibilities represented by our current programs, as well as the broader potential applications of our RNA-based therapeutic technologies.

Now let me turn to our financial results and guidance update. For the second quarter of 2010, AVI reported an operating loss of $7.7 million, compared with an operating loss of $5.1 million in the second quarter of 2009. The increase in the operating loss is the result of a $2.6 million one-time charge for the severance and stock compensation costs related to the April 2010 departure AVI's former Chief Executive Officer.

Research and development expenses were $6.9 million in the second quarter of 2010, compared to $5.8 million in the second quarter of 2009, an increase of $1.1 million. The increase was due primarily to increases in research and development costs related to the Junin and H1N1 programs.

General and administrative expenses in the second quarter of $4.7 million, compared to $2.2 million in the second quarter of 2009, an increase of $2.5 million. The increase was primarily the result of the $2.6 million one-time charge related to the April departure of AVI's former CEO.

Revenue for the second quarter of 2010 increased to $4 million from $2.9 million in the second quarter of 2009 as a result of a net increase in revenue from government research contracts.

In the first half of 2010, the operating loss was $15.4 million, compared with an operating loss of $8.6 million in the first half of 2009. The $6.8 million increase in the operating loss was primarily the result of a $0.9 million decrease in revenue, a $2.7 million increase in research and development costs, and the $3.2 million increase in general and administrative costs.

Research and development expenses were $13 million in the first half of 2010, compared to $10.3 million in the first half of 2009, an increase of $2.7 million. The increase was due primarily to a $1.7 million increase in clinical trial costs for a Duchenne muscular dystrophy program and a $1 million increase related to the Junin and H1N1 programs.

General and administrative expenses in the first half of 2010 were $7.6 million, compared to $4.4 million in the first half of 2009, an increase of $3.2 million. The increase was primarily the result of, again, the $2.6 million one-time charge related to the April departure of AVI's former CEO and a $0.4 million increase in legal expenses and a $0.3 million increase in rent expense related to the relocation of a portion of AVI's operations to the Bothell, Washington, facility.

Revenue for the first half of 2010 decreased to $5.2 million from $6.1 million in the first half of 2009 as a result of the net reduction in revenue from government research contracts.

The net loss for the second quarter of 2010 was $16.7 million, or $0.15 per share, compared to a net loss for the second quarter of 2009 of $19.7 million, or $0.23 per share. The $3 million decrease was primarily due to the increase in operating loss, offset by a change in the valuation of certain warrants described below.

The net loss for the first half of 2010 was $17.2 million, or $0.16 per share, compared to a net loss for the first half of 2009 of $20.6 million, or $0.25 per share. The $3.4 million decrease was primarily due to the increase in operating loss offset by the valuation of certain warrants.

In connection with AVI's 2009 equity financing, it issued warrants that are classified as non-cash liabilities. The amount of the warrant liability is primarily affected by changes in AVI's stock price between each financial reporting period, and causes the warrant liability to fluctuate if the market price of AVI's stock fluctuates.

In the second quarter of 2010, the warrant valuation increased $9 million relative to the first quarter of 2010. In the first half of 2010, the warrant valuation increased $1.9 million relative to the valuation at December 31, 2009.

AVI had cash and cash equivalents of $36.7 million as of June 30, 2010, a decrease of $11.6 million from December 31, 2009. This decrease was due primarily to cash used in operations during the first half of 2010 and cash used for property and equipment and patent-related costs of approximately $1 million.

For 2010, I am updating guidance for expenditures for operations, net of government funding and other collaborative efforts, to be approximately $21 million to $25 million. This is a reduction from our previous guidance for expenditures for operations, net of government funding and other collaborative efforts, of $23 million to $27 million.

We believe we will continue to receive funding from government and other sources to pursue the development of product candidates and have assumed certain revenues from these awards in providing this guidance. If AVI does not continue to receive the funding from its current contracts, this guidance may change.

I want to talk to you a minute about AVI's versatile RNA-based platform technologies and our PMO chemistries. We believe these provide unique benefits to our therapeutic candidates. These benefits stem from our distinct mechanisms of actions and proprietary PMO-based chemistries.

Our RNA-based technology platforms have broad utility against a range of therapeutic categories, due to differentiated targeting abilities. Our oligomers can target both pre-mRNA and mRNA to up- or down-regulate target proteins, as well as direct alternative splicing to create completely novel proteins. Also, our advanced PMO-based chemistries have been specifically designed to enhance the drug-like properties' self-penetration and tissue-targeting of our therapeutic candidates.

We are particularly pleased by the success we've had with our PMOplus chemistry, which appears to be well suited to a broad range of therapeutic applications, especially the antiviral applications. We are also encouraged by the data we are developing with our newest advanced chemistry, which we refer to as PMO-X. PMO-X is intended to realize even greater potential of the core PMO framework by introducing novel side-chain functionality to enhance tissue targeting, self-penetration, and in vivo potency. It is intended to take advantage of the highly stable and malleable blank slate of the PMO backbone to install new side chains, improving drug-like characteristics to enhance a therapeutic candidate's overall profile.

With all of this good news in hand, I look forward to sharing our plans and future developments with you as we continue to advance our programs. Updates for you to look forward to include clinical data from 7028, the UK trial of AVI-4658 in patients with DMD, that will probably be disclosed at the World Muscle Society meeting in October; the initiation of the U.S. AVI-4658 clinical trial for patients with DMD; data from our preclinical studies of AVI-7100 against multiple influenza strains; a potential IND filing for AVI-7100 later this year; updates related to our work under the announced Ebola and Marburg contract; and the potential for partnership.

In short, we believe there is a significant potential for AVI to advance, to create novel therapeutics for patients who have no or limited treatment options, and to create value for our shareholders by appropriately advancing these opportunities both independently and with partners. As we move ahead, I look forward to sharing our progress with you in a clear, consistent, and timely manner. Thank you very much for joining us on the call today.

We will now ask our operator, Jasmine, to open the line for questions.

(Operator Instructions). Yale Jen, Maxim Group.

Thanks for the update. Just two quick questions. The first one is about the U.S. trial that you are about to start later this year. Could you give us a little bit more color in terms of some details in which you can present right now?

Okay, sure. I'll be happy to. I assume you are referring to the U.S. trial for Duchenne muscular dystrophy for AVI-4658.

Yes.

And I think if you have listened to some of our recent presentations, you probably understand what we're thinking. I think it's very interesting to note that we've seen some very exciting results out the UK trial with dystrophin-positive fibers of up to 55% in one boy.

But we feel that it's important to get a more consistent response across all of the patients. With the good safety record that we've seen, both from the clinical trial recently completed in the UK, but also the preclinical package that was submitted and resulted in the open IND, we believe that we will be able to dose up to even 100 mg per kilogram versus the top dose of 20 mg per kilogram in the UK trial that was recently completed. We believe it is important to answer the question about what would be the impact of higher dose.

So as I mentioned -- referred to in the script, we actually had a meeting in early July with a number of the opinion leaders, including investigators from the recently completed UK trial, investigators from the planned U.S. trial, and other thought leaders in the field to discuss the data and the design. Currently, we are anticipating we'll probably look at two very much higher dose levels, likely 50 mg and 100 mg per kilogram.

And we are also thinking about looking at two different dosing regimens. Although we anticipate the trial will be once-weekly dosing for 12 weeks, we believe it will be interesting to do two different cohorts at each dose level. One would be the IV sole infusion over one hour, which is consistent with what we did in the UK trial, but the other is a bolus dosing, which is actually supported by our preclinical work. So we're thinking about that type of trial design.

I do want to mention, of course, that all of these plans that are currently under works are subject to both FDA and IRB approval before we will be able to initiate the trial.

Is there a potential size for the -- patient size for this study, or is that still under -- being discussed?

We will likely do does dose groups about the size of the UK trial, which was four patients in each of the highest two dose groups. We think that will probably provide meaningful data for us to go forward in planning.

And the second question is for some more detail on the 5038, and I know there is additional work need to be done. Could you elaborate a little bit more on that?

Sure. So the issue on 5038, as we were developing our preclinical package for potential U.S. IND submission, was that we saw renal tox in particularly the nonhuman primate work that was being done at some of the higher dose levels.

Although we did have clean toxicology findings at some of the lower levels, what we are evaluating currently are the ways to either mitigate that or to better understand by looking at some of the efficacy or likely efficacy effect as well whether or not we will have adequate therapeutic windows to support taking the product forward.

So we have a number of additional small studies and analyses that we are currently undertaking. And as I mentioned in the script, we would anticipate providing an update for that program later on this year.

In terms of the toxicity that has been seen -- in the renal talks have been seen, was there more sequence specific or can you guys identify any of those factors contributing to that?

We really haven't commented on that publicly, although I don't believe that it is sequence specific. Again, keep in mind that 5038 is a PPMO, a peptide conjugated PMO, versus AVI-4658, currently in the UK trial, is the basic PMO chemistry. So, the arginine-rich peptide, which is part of AVI-5038, really presents a different challenge with respect to the toxicity profile than our basic PMO chemistry.

So was there any sort of fundamental changes, maybe, already in place or contemplated for the PPMO or -- at the moment?

We continue to look at additional chemistries. I mentioned our work around the PMO-X, so we continue to look at a number of different chemistry options, as I've indicated. We've actually had some very promising early results and we evaluate those in different early models, and of course what we're looking for is a very high therapeutic effect combined with a good toxicity profile.

So you can imagine that we're looking at a number of different things. We haven't given out specifics of what those are, but again, those programs are progressing nicely at this point.

Great. Thanks a lot. And I'll get back to the queue. Congrats on the good quarter.

Yigal Nochomovitz, Rodman & Renshaw.

Congratulations on the progress, especially the biodefense contract. I just wanted to follow up, firstly, with a question regarding what Yale was asking. In terms of the design for the B-US study, you mentioned four patients per dose groups. So are you saying that it's going to be 16 because you have two cohorts, depending on which way they do the IV infusion, or will it be eight?

We currently anticipate that it will be 16 patients. So we would anticipate two dose levels, probably 50 mg and 100 mg per kilogram, with four patients each and two per each route of administration. So there would be eight patients that would receive 50 mg per kilogram, four of those via IV slow infusion and four via bolus dosing. And then the same for 100 mg, so we would anticipate 16 total patients.

I might add by the way that the patients are lining up and waiting. So, recruitment will not be an issue in this trial.

And in terms of the timing, should we assume that this study will start after the UK top data -- the clinical data for the UK study is released or there is not necessarily a connection there.

At this point, we don't really believe there is a correlation. We are currently analyzing some of that data right now.

Again, I think the important thing for -- particularly for initiating the U.S. trial is the safety data. We've seen the biologic data. We are currently looking at the clinical outcomes. So I don't think that the disclosure externally of the rest of the data that is in the UK trial will be a limiting factor at all with respect to initiation of the U.S. trial.

Okay, got it. And then, turning to the biodefense program, as I understand it, you are in the process or you have commenced the Phase I safety studies in healthy volunteers, as well as a range of studies in the nonhuman primates. I was wondering if you could get into a little more detail regarding what hypotheses are shared amongst the human and the non-primate studies and what hypotheses for these studies are specific to humans and specific to the animal models, and if there are any other animal models being evaluated, other than nonhuman primates.

Well, a couple of things. First of all, we haven't actually started the Phase I studies yet. We've started to work under the contract.

And the initial phase of the contract that will happen over 18 months certainly does include the Phase I clinical studies in healthy volunteers, both single- and multi-dose studies, as you might imagine, but it also includes things like manufacturing, scale-up process development, validation of certain processes around the manufacturing, but also a number of non-clinical studies in some of the animal models. I think it -- we certainly think it's likely at this point that the validated animal models that will be relevant for approval will probably be the nonhuman primate models.

But there is some other work that we're doing in terms of additional studies for tox, as you might imagine, nonclinical in nature that will be part of that Phase I work as well.

Now with respect to the going-forward plan, really what we need to do is establish the nature of the validated animal model such that we really see the disease progression mimics as closely as possible what would happen in human. But then, between the studies in the animal model and the humans, we need to establish a relationship between the PK, so we'll be looking at PK from all of these studies as we go forward, really hoping to establish a correspondence or correlation of what's happening in the validated animal models versus what's happening in humans, of course, to gain the approval.

Then again, the assumption -- the overriding assumption for both of these therapeutics is that these development programs are based on the animal rule, and if you want to learn a lot more about that, I really should probably get my CMO or one of my regulatory people here, and we can have a much more in-depth discussion about it.

Sure. Thank you. That was good detail. In terms of the IND for 7012 for the Junin virus, is that something that should be on our calendars for the coming -- for 2010?

Not for 2010. Junin's program is in preclinical development. We actually haven't guided as to when the IND filing will be, but we've continued to move that program forward under the current contract, which is funded out through 2011.

Then turning to some of the comments you made on the call in terms of the antibacterial program, could you just give us a sense what the goals are there and what the pace of that program could be? What additional clinical -- preclinical studies may be needed before you could potentially move forward into an IND filing?

The antibacterial programs are early stage, really not even into preclinical development. We've done a number of initial studies, proof-of-concept studies in various in vitro and in vivo models. We have not given any specific guidance, and I'm not going to do that right now, with respect to the development timeframes.

We do believe that we have a number of interesting research-stage programs which we will be able to bring forward very rapidly as we've done, for example, with our influenza program, which started really with no lead candidates about a year ago and, of course, we're expecting to file an IND by the end of this year. So, we think with good results, we can move these forward quickly.

I might mention, as I've noted as part of our strategy, partnering of some of these programs we think would be very beneficial to leverage both infrastructure and financial resources to help accelerate the development of multiple programs in some of these areas.

One last question. We hadn't heard before of this PMO-X chemistry. What is that -- can you give us any sense in more detail as to what's going on there? And is there any IP associated with that program yet?

There's not IP associated with the program yet, so as you might imagine, I can't give you very much detail at all. What I can say is that we've actually tested a number of variations on our base platform chemistry in different models and seen some very exciting, encouraging results, and stay tuned. You'll hear more about it as we get further down the line with it.

Terrific. Congratulations, and we look forward to the progress.

(Operator Instructions). Matt Duffy, Black Diamond Research.

Thanks for taking the questions. Just couple -- could you talk a little bit more about the next couple of steps on the influenza program, and also, when we're going to be able to start to see some data coming out of that, whether it's animal work or more in terms of IND filing and moving ahead in Phase I?

Sure, I'd be happy to. Well, let me take your second part of the question first. With respect to influenza data, the only thing we've said publicly so far is, basically, trust us. It's very good. It's statistically significant, better than Tamiflu in the repeated ferret studies.

We actually do have a press release that's currently working its way through the bureaucracy, if you will, of the government. Working with the government, we need to get our details of the press releases approved before they are released. That is in the works. We would expect to see that release, which speaks to the data from the initial H1N1 ferret studies very soon. I can't give you an exact timing, but we do know that the DOD has an obligation to respond within a period of time, so it won't be very long.

There will be yet a series of other influenza data sets come out. We are currently performing additional studies, preclinical studies, against the Tamiflu-resistant H1N1, avian flu, and seasonal flu strains, and we will do similar types of releases for those data sets over the balance of this year.

We also have information that's been submitted -- abstracts to both IPSI and ICAC. So you can expect to see some different -- additional data, rather, around those conferences.

With respect to the first part of your question, the next steps, we are currently engaged in finishing up those additional efficacy studies in the ferret model that I just mentioned. But we are really working through our accelerated preclinical program right now, again with the objective to file the IND for influenza with an ID formulation before year end. Also doing some initial development work on the intranasal formulation, and we would expect to start the Phase I clinical testing of the drug in early 2011. Again, the objective of this project is to have the drug potentially available for emergency-use authorization in early 2011.

Are you looking at the emergency use as potentially useful beyond the first two or three days where Tamiflu and Relenza might be effective? Is that a possibility, do you think, based on the work you've seen done so far?

You know, we haven't provided data. We've actually done a delayed time to treatment study. Let's say we're optimistic about that. But once we get that data compiled and disclosed, I'll be able to speak with you in more detail about that.

Okay, thanks. On the antibacterial side, wonder if you could just give us a little -- to follow on to the previous question. Are you thinking about this as potentially active against some of the multidrug resistant gram-negative or gram-positive organisms, or is it primarily biodefense? And do you believe that there will be -- it will primarily be IV or is there potential for an oral formulation?

Currently, we are looking at an IV formulation, but yes to the first part of your question. We do believe it will be potentially useful against the multi-drug-resistant forms of several of the bacteria.

[John Huss], [Eurocata].

I am interested to know when you're going to become profitable.

We haven't provided any guidance with respect to a targeted profitability date. So, we'll decline to answer.

I will say, however, that we are continuing to look to control our cash burn. One thing I would say is that if you look at our pipeline, and I invite you to look at any of our recent corporate presentations, all of the antiviral programs that are on there are actually fully funded and provide financial benefit to the Company. So far from being -- increasing the net burn, they are actually helpful in that regard.

Also, our Duchenne muscular dystrophy programs benefit from several million dollars in foundational funding from multiple sources, so those actually help keep the burn relatively low. We are committed to keeping the burn low and reducing the burn. Profitability will depend on a specific sort of set of circumstances.

Again, we haven't provided guidance -- things like partnering some of our programs, like Duchenne muscular dystrophy or others, continued government contracts will all have an impact.

We do believe it's important to utilize our resources carefully, and again, through funded programs, but also through careful management of resources. By utilizing core resources here and leveraging with outside organizations, we were actually able to avoid building a huge infrastructure and fixed burn. So we're very cognizant of the financial impact of reducing burn, driving towards profitability, but as of yet, we have not set a date for expected profitability.

I hope you watch those administrative costs.

We'll be watching it. Thanks for your comments.

At this time, there are no further questions. I would now like to turn the call back over to your host for today, Mr. David Boyle, for closing remarks. Please proceed.

Thank you all very much for spending your time listening to us today. We're obviously very excited about what's happening here at AVI. We hope you share our enthusiasm and excitement for what's going on and we look forward to sharing the upcoming events with you over the balance of this year and into 2011. Have a good day.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.