Talphera Inc (TLPH) 2013 Q3 法說會逐字稿

Welcome to the AcelRx Pharmaceuticals Third Quarter 2013 Financial Results Conference Call. (Operator Instructions) As a reminder, this conference is being recorded today, November 5, 2013. I would now like to turn the call over to Jim Welch, Vice President and Chief Financial Officer. Please go ahead.

Thank you, Amy, and good afternoon and welcome to today's call. Joining me on the call today is Richard King, AcelRx's President and CEO. Earlier today, AcelRx issued its third quarter 2013 financial results, which we will discuss in more detail on this call. In addition, we would like to provide you with a corporate update and a review of our commercial preparation for ZALVISO, our sufentanil sublingual microtablet system that has been evaluated for the treatment of moderate to severe acute pain in the hospital. The financial results press release has been posted on our website at www.acelrx.com. Also, a replay of this conference call will be available later today on the Investor page of our website.

Please keep in mind that uncertainties involved in the Company's business may affect the matters referred to in forward-looking statements made by management during today's call. As a result, the Company's performance may differ from those expressed in or indicated by such forward-looking statements, which are qualified in their entirety by the cautionary statements contained in the press release and the Company's Securities and Exchange Commission filings. At this point, I will turn the call over to Richard King.

Thanks, Jim, and welcome, everyone, to this afternoon's call. The submission of AcelRx's first New Drug Application on September 27, 2013 for ZALVISO was the most significant event of this third quarter. It is also further demonstration of the transformation that is underway at AcelRx from a clinical development stage company to one with full commercial operations. That transformation to commercial capability began in earnest in the third quarter with the addition of David Chung as our Chief Commercial Officer, and the transformation is expected to continue throughout 2014.

Our lead product, ZALVISO, also known as the sufentanil sublingual microtablet system, is a patient-activated, noninvasive analgesic system which delivers 15 micrograms of sufentanil per dose as needed for pain control, subject to a 20-minute lockout period between doses. The proposed indication for ZALVISO is the management of moderate to severe acute pain in adult patients in the hospital setting.

The NDA submission is based primarily on data from a Phase 3 clinical program that included two double-blind, randomized, placebo-controlled clinical trials, in addition to an open label active comparator trial comparing ZALVISO to intravenous, patient-controlled analgesia or IV PCA, for short, with morphine conducted in patients following either major abdominal or orthopedic surgery. ZALVISO successfully achieved the primary efficacy endpoints for each of these studies.

In the course of these Phase 3 studies, ZALVISO has consistently demonstrated an ability to achieve rapid onset of pain relief faster, in fact, than IV delivery of morphine, thereby enabling patients to manage their moderate to severe acute pain both early, after the start of treatment, and over a 48- to 72-hours post surgery.

In addition, noninvasive delivery of ZALVISO and the preprogrammed nature of the ZALVISO delivery device showed strong ease of care and satisfaction scores from both patient and nurses, higher in fact than the IV PCA with morphine alternative. Treatment-emergent adverse events were typical of opioid usage postoperatively, generally mild to moderate in nature, and similar in both active and placebo treatment groups for the majority of adverse events.

If approved by the FDA, ZALVISO could provide hospital and patients with an attractive alternative to the management of moderate to severe pain in the hospital setting. We expect to hear from the FDA later this quarter regarding whether or not they deem the ZALVISO application as sufficiently complete to permit a substantive review, at which point the Agency will file the application. At that point we anticipate a 10-month review cycle, putting the PDUFA date for ZALVISO in the third quarter of 2014.

As AcelRx continues to build commercial capability, we are engaged in a number of ongoing initiatives that I would like to review for you. These activities include a presentation schedule of the ZALVISO Phase 3 clinical data at a variety of medical meetings that are attended by the pain treatment community and hospital decision-makers. In addition, we have embarked on the formation of a commercial team that will become the largest part of our organization by the end of 2014, with the sole focus of preparing ZALVISO for market and indeed preparing the market for ZALVISO.

We are also continuing our efforts to secure patents on a global basis to protect our proprietary technology. And finally, as you are aware, a key strategic business objective for AcelRx is to obtain an ex-US partner experienced in commercializing products in the hospital environment. We continue our efforts in this regard to ensure that this valuable treatment option can be made available for patients around the world.

Presentation of the results from the ZALVISO Phase 3 program at major medical meetings began late last year and will continue throughout 2014 as we educate anesthesiologists, surgeons, nurses, and other relevant hospital staff on the clinical profile and benefits of ZALVISO.

In November, we will be presenting data for ZALVISO at the American Society of Regional Anesthesia and Pain Management meeting, or ASRA, in Phoenix, Arizona. And in December we will be presenting data at the PostGraduate Assembly, or PGA meeting, in New York City.

We have already attended a number of key medical meetings for anesthesiologists and surgeons throughout the year, including the American Society of Regional Anesthesia and Pain Medicine Annual Meeting in Boston in May. Most recently, October, we presented data for the first time at medical meetings from our Phase 3 studies of ZALVISO in the treatment of postoperative pain in patients following either knee or hip replacement surgery at two different meetings -- the American Society of Anesthesiology Annual Meeting in San Francisco, and at the European Federation of IASP Chapters in Florence, Italy.

In total, in 2013 we will have attended 22 significant medical meetings, presented 32 different poster presentations of the ZALVISO data, including six oral presentations of the data. And we will also have supported five satellite symposia. In 2014, I anticipate an even higher number of medical meetings attended and an expanded support of satellite symposia in particular. Now let me turn to our planned commercial capability expansion.

In the third quarter we established a small commercial team that will expand over the coming year as we prepare for the potential launch of ZALVISO in the US, assuming FDA approval. In September, David Chung joined the Company as our chief commercial officer. Over a 20-year career, David has extensive hospital focused sales and marketing experience with both medical devices and pharmaceuticals. Most recently he served as chief commercial officer at Conceptus, which was recently acquired by Bayer.

Now at AcelRx he is responsible for establishing, developing and leading our commercial operations. David has already initiated a quantitative market segmentation analysis which we expect will define the early adopting population, both at a hospital and a physician level for ZALVISO. This work is key to defining our sales force deployment metrics and ultimately the geographical locations and focus for our planned 65-person sales force and their management team across the US.

Also in the first half of 2014, David will develop strategies for ZALVISO positioning, messaging and brand identity. David has also initiated a pharmacy and therapeutics committee and hospital C-suite executive research as we establish the needs and structure of these gatekeeper groups to ensure we present our compelling clinical data in appropriate format to each constituency.

Working with our clinical group, David is also focusing on building a pharmacoeconomic model that will underpin the value that ZALVISO offers in the management of patients in pain in the hospital.

Also getting underway in the first half of 2014, we plan to hire and establish our internal group of medical science liaisons for the purpose of education in the hospital and at major medical meetings. These personnel, along with our regional sales managers, will begin initial contact with hospital decision-makers following ZALVISO's anticipated approval in the third quarter of 2014.

Over the last year and a half or so we've established a broad portfolio of both drug and device patents covering a substantial majority of the potential markets for our products. AcelRx now has 19 issued patents worldwide, and we believe we have established strong protection in both the US and in Europe, which will be the initial areas of commercial focus for AcelRx.

The issued patents cover the sufentanil NanoTab, medication delivery devices, and our platform technology. In addition to nine issued patents in the US, which are expected to provide coverage through 2031, we have found an additional 13 US patent applications which if issued will further strengthen the protection of our product pipeline.

To ensure sufficient results to fund our commercial buildout, we completed a public offering of approximately 4.4 million shares of common stock in July of this year. The total gross proceeds of this offering were approximately $50.9 million, with estimated net proceeds to AcelRx of $47.9 million after deducting underwriting discounts and expenses.

AcelRx intends to use the net proceeds from this offering to fund potential [regulatory] approval of ZALVISO both in the US and in Europe, to continue preparation for the potential commercial launch of ZALVISO in the US, and for working capital and other general corporate purposes. Jim will provide you with an update on our cash position later in the call.

The demand for pain treatment and the size of the market continues to grow. Postoperative pain treatment is already a large, attractive market that exceeds $5 billion in annual sales based on estimates for the US, Japan, and the five largest EU countries combined. In the US, we believe there are over 12 million surgeries per year where moderate to severe postoperative pain occurs, and approximately 95% of these patients will be candidates for treatment with ZALVISO. Within this postsurgical group, about two-thirds of the population is admitted as inpatients to the hospital, where we will be attempting to IV PCA as the current standard of care for managing postoperative pain.

In addition, about one-third of the population is ambulatory, meaning they are in the hospital for less than 23 hours, where IV PCA is too cumbersome to set up right now, but a simple-to-use, noninvasive patient controlled analgesia such as ZALVISO may be very attractive and appropriate.

Our market research also indicates that there are in excess of $7 million hospital inpatients with moderate to severe pain that is not procedure-related, but rather they are in the hospital for other painful medical conditions, and that over two-thirds of this patient group may be candidates for treatment with ZALVISO. This group would include hospitalized patients with a variety of clinical conditions that result in moderate to severe pain such as diverticulitis, burns, sickle cell disease or cancer, and a myriad of other medical conditions.

Outside the US, in countries that have advanced healthcare systems, we believe there are three to four times as many patients undergoing surgical procedures that result in moderate to severe pain each year. ZALVISO could provide effective and well-tolerated pain management for these patients. And given the low capital intensity of our product we believe represents an affordable technology for many countries to access.

With our positive clinical trial results of ZALVISO, the large market opportunity represented by the number of patients recovering in hospitals worldwide after surgery, and the attractiveness of the economics of our technology, we continue to explore partnership options for ZALVISO in Europe, in Asia and elsewhere, seeking out partners with the right set of capabilities to launch ZALVISO into their markets to meet the needs of this patient population.

Now, let me update you briefly on ARX-04. Earlier this year, AcelRx reported positive top line data showing the primary endpoint was achieved in a placebo controlled, dose-finding Phase 2 clinical trial of ARX-04 for acute pain. This study randomized 101 patients following bunionectomy surgery and found that patients treated with a 30 microgram dose of sufentanil NanoTabs had significantly greater pain reduction as measured by summed pain intensity difference to baseline during the 12-hour trial period than placebo-treated patients with a p-value of 0.003.

The clinical study and associated research activities for ARX-04 have been fully funded by a grant from the US Army Medical Research and Material Command, or USAMRMC. This product is designed to address the need for a rapid-acting strong analgesic where IV access is not possible. ARX-04 could potentially provide short-term treatment of moderate to severe pain for wounded soldiers on the battlefield, for victims of roadside traffic accidents, or for patients in medically supervised settings, such as the emergency room or for short stay ambulatory surgery patients.

According to CDC data, there are more than 45 million injury-related emergency department visits and 43 million ambulatory surgery procedures per year in the US alone. We are on track to complete an end-of-Phase-2 meeting with the FDA by the end of this year, (inaudible) feedback on our proposed Phase 3 development plan for ARX-04. We expect the meeting will provide us with the parameters such as Phase 3 trial design and what the clinical program will need to demonstrate. The outcome of the meeting with FDA and the level of further interest expressed by the Department of Defense and its willingness to provide additional funding will determine whether or not clinical studies will be conducted for ARX-04 in 2014. With that overview, let me turn the call back over to Jim, who will review our financial results for the third quarter 2013.

Thank you, Richard, and good afternoon, everyone. AcelRx reported a net loss for the third quarter of 2013 of $11 million, or $0.26 per share compared to a net loss of $8.6 million, or $0.38 per share for the third quarter of 2012. Common shares used in calculating basic and diluted earnings per share were $41.5 million in the third quarter of 2013, compared to $22.6 million in the period one year ago.

During the third quarter of 2013, AcelRx recognized revenue of $548,000 compared to $166,000 in the third quarter of 2012. The revenue resulted from reimbursement for work completed under a research grant from the USAMRMC for the development of ARX-04, a sufentanil NanoTab for the treatment of moderate to severe acute pain.

Research and development, or R&D expenses for the quarter ended September 30, 2013 totaled $6.5 million compared to $6.9 million for the quarter ended September 30, 2012, and compared to $6.1 million for the second quarter of 2013, which ended June 30, 2013. R&D expense for the third quarter of 2013 included an NDA filing fee for ZALVISO of approximately $1.95 million. Without this filing fee, R&D expense would have been $4.6 million. Not including the NDA filing fee, the decrease in quarterly R&D expense from the second quarter of 2013 primarily reflects completion of the ZALVISO Phase 3 clinical development program.

The $1.95 million NDA filing fee in the third quarter of 2013 was an unanticipated R&D expense. FDA regulations allow for the waiver of an NDA filing fee if a company is filing its first NDA and qualifies as a small business with less than 500 employees. The FDA requested the SBA, our Small Business Administration, to determine of AcelRx was a small business, and the SBA ruled that AcelRx could not qualify as a small business.

General and administrative expenses were $2.3 million in the third quarter of 2013 compared to $1.4 million for the third quarter of 2012. The increase was due primarily to an increase in ZALVISO commercial preparation activities. Other income and expense includes a $2.4 million noncash charge for the third quarter of 2013, resulting from the liability accounting related to the warrant issued in connection with the PIPE financing completed in June of 2012.

The primary determinant of this charge is an increase in share price during the third quarter of 2013 and its resulting impact on the Black-Scholes valuation of these warrants. If the $2.4 million noncash charge in the third quarter is excluded from the GAAP earnings per share calculation, our third quarter 2013 net loss per share would adjust down to a loss of $0.21 per share.

As of September 30, 2013, AcelRx had cash, cash equivalents and investments of $76 million, compared to $59.8 million at December 31, 2012, and compared to $36.8 million at the end of the second quarter of 2013. Our net cash burn for the third quarter of 2013 excluding the $47.9 million of net proceeds from the July financing was $8.7 million. Now I'd like to provide you with some guidance regarding our financial expectations for the balance of 2013.

AcelRx records the reimbursement received from the $5.6 million USAMRMC grant for funding the development of ARX-04 as revenue. We have recorded $5.4 million in revenue from this grant through the end of the third quarter of 2013, and expect to record the remaining $200,000 during the fourth quarter of 2013. We anticipate research and development expenses for the fourth quarter of 2013 will be lower than the third quarter due to the one-time charge for the NDA filing fee of $1.95 million that was recorded in the third quarter.

Additionally, AcelRx anticipates a modest increase in the fourth quarter of 2013 general and administrative expenses due to costs associated with commercial preparations for the launch of ZALVISO in the US and expansion of its corporate infrastructure to support a commercial launch. Total operating expenses in 2013 are anticipated to be modestly higher than the $32.1 million recorded in 2012.

Other income and expense in future periods is expected to include a noncash charge that results from the liability accounting related to the warrants we issued in connection with the PIPE financing completed in the second quarter of 2012. Since the primary determinate of this charge is share price change during each quarter and its effect on the Black-Scholes valuation of the warrants, the impact in future periods is very difficult to predict and is not included in our guidance.

At the closing of the PIPE, we issued $2.6 million warrants, which is the basis of these noncash charges. In the third quarter of 2013, $1.1 million of these PIPE warrants were net exercised, leaving $1.5 million PIPE warrants outstanding as of right now.

AcelRx believes its current cash, cash equivalents and investments including funding from the recently completed public equity offering are sufficient to fund operations into 2015. We expect our use of cash will decrease over the fourth quarter of 2013 compared to the first three quarters of the year, as expenditures related to R&D clinical activity have been completed and many of the final payments to our contract research organizations have been made. With this, I will now turn the call back over to Richard.

Thanks, Jim. And before we answer questions, I'd like to summarize our major goals and potential milestones looking out over the coming months. We anticipate feedback from the FDA on the submitted ZALVISO NDA linked to this quarter, looking to the Agency to confirm acceptance of the submission, and also to confirm our PDUFA date in the third quarter of 2014.

We are continuing to present data from all ZALVISO Phase 3 studies at major medical meetings in 2013 and through 2014, with the goal of ensuring awareness of the clinical data and the awareness of the patient experience with ZALVISO among physicians, surgeons, nurses and pharmacists both in the US and in Europe.

In addition, we plan to add medical science liaison personnel in mid-2014 to support educational initiatives around the management of postoperative pain in the hospital as well as to be able to provide information to pharmacy and therapeutics review committees on ZALVISO after approval of the product.

We will complete an end-of-Phase-2 meeting with the FDA later this quarter for ARX-04, helping us to define the Phase 3 program for the product candidates and supporting identification of funding for the Phase 3 program.

The buildout of our commercial capabilities is underway with a focus in 2013 on establishing marketing capability. In mid-2014, we plan to add a sales management team and will add key account managers after approval late in 2014. We will add the remainder of the sales force after approval of product and expected early in the third quarter of 2015 to support to the launch nationally as [formal] approvals are achieved.

Licensing discussions with potential partners regarding ex-US commercial rights to ZALVISO is a high priority for AcelRx. A key strategic objective for the Company is to obtain an ex-US licensing agreement with a partner experienced in commercializing products in the hospital environment outside of the US. So, with that, I'd like to open the call for questions. Amy, if you can, we're ready for the first question.

Thank you. (Operator Instructions) Our first question comes from Louise Chen, Guggenheim Securities.

Hi. This is [Claudine] in for Louise. So, I had a couple of questions. The first one is about the postoperative pain market. There are several products being developed and currently on the market. Do you feel this is a market that is big enough for more than one product and why? Can you please speak with respect to Exparel and Ionsys? And the next question I have is that if you are successful with ZALVISO, how do you think entrenched competitors, specifically pump manufacturers, will react?

Okay, thank you. So, first question, is it big enough for more than one product? I think the short answer is yes. Given the scale of procedures that are undertaken in the US on an annual basis, about 12 million procedures resulting in moderate to severe pain. That's a lot of patients requiring support while they're in the hospital to manage that extremely painful time for them.

Speaking specifically to the two products that you referenced, Exparel is a longer-acting bupivacaine product that is used to provide local site relief at the site of the wound. Traditionally, bupivacaine has been around as an agent for use in managing postoperative pain for a long time now. And as is the case historically and will be in the future, Exparel will form one part of a multimodal analgesic regime, which will include opioids and likely include acetaminophen and likely include gabapentinoids, and a variety of agents to manage pain effectively from a host of different pathways. And certainly I don't see Exparel as being competitive. I think it's adding to the armamentarium for surgeons and anesthesiologists to manage pain effectively as we will do, and our goal is to be that product of choice when they're looking for an opioid to manage that pain, particularly because of the patient controlled analgesia mechanism that we offer.

In contrast, Ionsys is a competitive product to ourselves. There will be a choice between either Ionsys or ZALVISO. I think that should both make it through into the commercial marketplace, that's a challenge that I feel pretty comfortable with. Some of the differences between the two products, they are both patient-controlled analgesia devices, but delivering product sublingually versus transdermally creates differences in onset of pain relief, create differences in local irritation for patients, and also on the wastage process of patients. Where you can completely utilize all of the drug in the ZALVISO device, you have to throw a way a lot of drug from the Ionsys device. I feel comfortable in that comparison.

To the other part of your question, how will pump manufacturers react? It's a great question. Difficult to predict, obviously. There is an installed base of pumps that is out in the hospital community. Many of them are now leased because of all of the withdrawals of pumps that have occurred over the last five years or so due to FDA concerns of functionality. So, at the hospital level, I think there is a relatively comfortable process to relief. Those pumps and access of the technology at the manufacturer level more difficult to predict what we might actually do. I hope that addresses your question.

Our next question comes from Mario Corso at Mizuho.

Yes, thank you. Good evening. Thanks for taking my questions. Maybe you can talk a little bit about what your commercial preparations and market research thus far have revealed? And I'm wondering, related to that, when you talk about potential in nonsurgical pain treatment, I'm wondering what you're thinking about in terms of clinical trial plans versus is it more a matter of where a hospital formulary is going to allow usage? And then secondarily, on ARX-04, what type of confidence do you have at this point about some or all of Phase 3 being potentially funded by DOD? Thanks very much.

Okay, thanks, Mario. So, market research to date, obviously I'm going to talk about what we have in the public domain. There is a host of research that we've conducted that is not in the public domain and is proprietary as we prepare the product for launch.

Universally, what we see when we present ZALVISO to surgeons, to anesthesiologists, to a variety of different nurses in the hospital, pharmacists, is a very strong, positive reaction to the product. People like patient-controlled analgesia from a variety of perspectives. But they also like the technology, that it's preprogrammed, noninvasive delivery technology. Surgeons like the noninvasive part of it. It allows patients to get up and ambulate, which allows them to get to recovery and out of the hospital faster. It's good for patients and for surgeons. Nurses like the preprogrammed nature of things. It reduces their time required to program and the risk and exposure that they experience. And patients like the fact that it is a noninvasive delivery. They're not having to walk around with an IV and infusion, a line in their arm, that they can basically use their postoperative pain med as they need to, put it down and go to the bathroom or the physical therapy as required. By the way, physical therapists love it as well, because the challenge of trying to actually get somebody through a rehabilitation process whilst they're taking a pole with them and a swinging IV PCA pump and tubing and so on, is very challenging indeed.

So, it has a whole variety of different positive connotations to a host of different patients. That also applies, by the way, in the nonsurgical patient population. So, the indication that we have proposed to the Agency, as I referenced, is for the management of moderate to severe acute pain in the hospital setting in adults. It doesn't reference postoperative. We anticipate that that will be -- allow us to commercialize in that broader indication in the hospital setting for a host of different patient types that I alluded to during the comments.

Some comments I can give you, Mario, for example, in our Phase 3 program, we had a lot of interest from nurses in burns units as we were in our Phase 3 clinical program. Because at the moment they do use IV PCA. It's a challenge for them. The risk of infection in a burns patient and indeed the ability to keep the IV line in damaged tissue is very difficult. Now our noninvasive delivery presents them with a very attractive option for managing a very acute and painful situation.

So, I do believe that from the get-go we'll be able to look at that broader patient population. We might do some additional work really on experiential basis in hospitals with individual investigative-sponsored studies, but I wouldn't anticipate a broader program.

With ARX-04, difficult to tell. We have a dialogue ongoing with the Department of Defense, and obviously there is an end-of-Phase-2 meeting that will define the scope and scale of our Phase 3 program that we will talk to the Department of Defense about. Given the challenges of funding at the governmental level, it's difficult to know just how able they are. We know they're enthusiastic, we just don't know how able they are. So, that will be a question that we'll broach towards the back end of this year and early in '14.

Our next question is from David Amsellem of Piper Jaffray.

Hi, guys. This is Trevor Davis on for David. Just a few questions. Can you provide some color in your partnering discussions? And is finding an ex-US partner for ZALVISO a year-term priority or a post-FDA approval priority? And are there any updates on partnership talks on 02 and 03? Thanks.

Okay. So, I'm not going to comment on the status of partnering discussions. I think there is logic to -- the primary goal for us is identification of the right partner in whose hands we feel ZALVISO could be brought to a strong commercial success in whichever geography we're focused in on. From a timing standpoint, it could be, with all the Phase 3 data in hand presents a set of information that is available to partners and obviously post [directory] approval presents an additional set of information. I think that at this stage, I would say the primary focus for us is that right partnership and getting to a place where we feel that ZALVISO can be brought to a successful conclusion in any given market that we're focused in on.

ZALVISO has been the focus of our partner discussions. I don't have any specific updates to give you on 02 or 03. We have had some interest in partnership around 02 and 03, particularly following the 01 data. We always felt that the 01 data would be helpful to partners looking at those two programs, but nothing more specific than that to offer you.

Great, thanks. And just one quick question. Can you remind us how many hospitals you guys are going to initially target with the sales organization given ZALVISO is approved later next year? Thank you.

Sure. So, the focus will be within the top 2,000 hospitals in the US. Exactly how many of those we actually do ultimately focus in on initially at launch will depend on that work that I described earlier on, that David Chung has embarked on, segmentation, looking at both the hospital level and also at a surgical level as to where the significant opportunity and the early adoption opportunity is going to exist. We will obviously push our -- and target our sales organization at that hospital set. At this stage I don't have an exact number. It will be within the top 2,000 hospitals in the US.

Your next question comes from Raco Patel, private investor.

Hi, yes. My name is Raco Patel, and my question is more around how cost competitive your pricing strategy will be to compete and convert the hospitals you plan to target?

Okay. So, great question. Obviously, hospitals are very, very price-sensitive. Our goal is to be able to offer a comparable price point to the hospitals, to their current IV PCA usage on a per-day basis or for patients in the hospital post-surgical, and also on a broader patient population, but on a day-by-day basis to offer a comparable price. And ultimately to be able to demonstrate that from a pharmacoeconomic standpoint, the value of a delivery device which is noninvasive, the value of a drug which provides a rapid onset of pain relief and doesn't push patients towards excessive dosing of the product, the value of not having an IV-delivered medications, but actually having patients untethered from an IV presents significant positive upside for hospitals. So, that will be how I would describe it.

In so doing, as well, I would also add that one of the areas of focus for us is with a drug device combination, our ability to leverage the device component of our product at a substantial cost reduction compared to current technology, IV PCA infusion pumps specifically, is quite an attractive leverage point. So, we are conscious of the marketplace and we're conscious of pricing such that we can offer a very competitive price point to hospitals.

Just a follow-up. How would that compare cost-wise to the Ionsys product?

Difficult to tell, because Ionsys hasn't priced, so that will obviously depend on where the medicines company chooses to price Ionsys. I will point out that from a cost perspective, a cost to manufacture perspective, with a product such as ours, which has a reusable component and a small part of it is disposable, you can recycle the reusable component and not add cost on a per-patient basis. Where the Ionsys product is fully disposable, every patient gets a fully new product, which probably means that cost of manufacture is going to be higher than ours on a per-patient basis, which will, I'm going to guess, translate through into a price point as well. But that will obviously remain to be seen.

Okay, great. Thank you.

(Operator Instructions) There are no further questions at this time. I'd like to turn the conference back to Richard King for closing remarks.

Thanks, Amy, and thanks to everyone for your questions and for joining us on the call today. If you have any additional questions that you'd like to ask, please feel free to contact either Jim Welch or myself. In the meantime, have a great rest of the day and a great evening, everybody. Bye-bye.

Your conference has now concluded. Thank you for attending today's presentation. You may now disconnect.