Veru Inc (VERU) 2018 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to Veru Inc.'s Investors Conference Call. (Operator Instructions) Please note, this event is being recorded.

The statements made on this conference call that are not historical in nature are forward-looking statements. Such forward-looking statements reflect the company's current assessment of the risks and uncertainties related to our business. Our actual results and future developments could differ materially from the results or developments in such forward-looking statements. Factors that may cause actual results or developments to differ materially include such things as the risks related to the development of the company's product portfolio, risks related to the ability of the company to obtain sufficient financing on acceptable terms when needed to fund development and company operations, risks related to competition, government contracting risks and other risks detailed in the company's press releases, shareholder communications and Security (sic) [Securities] and Exchange Commission filings. For additional information regarding such risks, the company urges you to review its 10-Q and 10-K SEC filings.

I would now like to turn the conference over to Dr. Mitchell Steiner, Veru Inc.'s Chairman, CEO and President. Please go ahead.

Thank you, operator, and good morning. This is Dr. Mitchell Steiner, Chairman, President and CEO of Veru Inc.

And joining me are Michele Greco, CFO and CAO; and Philip Greenberg, Executive Vice President, Legal.

Today, we will provide an update on the clinical development of our drug pipeline, commercializations of our products as well as provide financial highlights for the second fiscal quarter 2018. Veru, a urology and oncology biopharmaceutical company, is executing on its strategy for near-term revenue growth by having several drugs under clinical development progressing at the same time to ensure that we have several NDAs and commercialized multiple drugs in urology and oncology. In fact, we expect to file 3 NDAs for 4 drugs over the next 18 months.

First, we have a proprietary new slow-release granule formulation of Tamsulosin in 2 drug products: Tamsulosin DRS, extended-release granules for oral suspension; and Tamsulosin XR capsules. These 2 new drug formulations address the administration concern of FLOMAX. FLOMAX has a food effect, which means that according to the label, that a greater amount of drug, up to 70% more, gets rapidly absorbed, which results in higher than 30% higher blood drug levels when given on an empty stomach. As a precaution to prevent unwanted side effects like dizziness, fainting, orthostatic hypotension, the FDA label states that FLOMAX must be given 30 minutes after a meal. Our novel slow-release granule formulation does not appear to have a food effect based on 2 bioequivalency studies that we have already conducted. This lack of a food effect provides a major clinical advantage for Tamsulosin DRS granules and Tamsulosin XR capsules in both drug administration and compliance compared to FLOMAX and its current generics. Furthermore, Tamsulosin DRS granules has an additional important benefit of providing an alternative for the underserved population of men with BPH who will have difficulty or who cannot swallow tablets or capsules. Poor compliance by men with dysphagia leads to increased risk of acute urinary retention, urosepsis and death. We expect final bioequivalence clinical data and filing of an NDA in 2018.

As for the NDA, we recently announced that the U.S. FDA granted our application for a small business waiver of the drug application fee of approximately $2.4 million for the company's Tamsulosin New Drug Application. The launch is planned for 2019.

Our third urology drug in late clinical development is a new proprietary Tadalafil 5 milligrams finasteride 5 milligrams combination tablet formulation. This proprietary fixed combination formulation contains the active ingredients of CIALIS, which is Tadalafil 5 milligrams, approved for the treatment of symptoms of BPH and erectile dysfunction; and PROSCAR, finasteride 5 milligrams, approved for shrinking enlarged prostate to treat BPH. The Tadalafil/finasteride combination tablet formulation will allow us to offer a portfolio of BPH drugs that have different mechanisms to treat the different symptoms and signs of BPH. For example, Tamsulosin treats urinary symptoms of BPH quickly in men with smaller prostates, whereas Tadalafil/finasteride combination tablet formulation quickly treats urinary symptoms of BPH while it also shrinks the size and prevents the progressive growth of the prostate in men who present with enlarged prostate. It also has the added advantage of having an erectile dysfunction medicine as one of its active ingredients. We anticipate for Tadalafil/finasteride combination tablets formulation final bioequivalence clinical data in 2018 and filing of an NDA in 2019.

Our fourth urology drug in late-stage clinical development is called Solifenacin DRG, a proprietary delayed-release granule formulation of Solifenacin, the active ingredient in VESIcare, a popular drug for the treatment of overactive bladder, which is urgency, urge incontinence and frequency in both men and women. Similarly as instructed for Tamsulosin, the FDA package insert states that Solifenacin tablets must be swallowed whole and are not to be crushed or chewed. There are no granule formulations available for these selective M3 muscarinic receptor antagonist class of drugs for men and for women who have the common condition of overactive bladder and who have difficulty or who cannot swallow tablets. Our proprietary Solifenacin DRG formulation uses the same delivery technology platform as our Tamsulosin DRS slow-release granule formulation. The overactive bladder market is a multibillion-dollar opportunity. According to a recent study conducted by the Department of Health and Human Resources, 37% of short-term and 70% of long-term nursing home residents did not have complete bladder control. Consequently, the initial target population would be men and women in long-term care facilities with overactive bladder symptoms who have difficulty or who cannot swallow tablets. We expect for Solifenacin DRG slow-release granules for the treatment of overactive bladder in men and women final bioequivalence clinical data in 2018 and filing an NDA in 2019.

We are well positioned to offer numerous urology drugs and take advantage of the multibillion-dollar BPH and overactive bladder opportunities. These 4 products, Tamsulosin DRS granules, Tamsulosin XR capsules, Tadalafil/finasteride combination tablets and Solifenacin DRG granules, will allow us to file several NDAs as well as launch and partner when appropriate multiple urology drugs over the next 2.5 years.

As for our other proprietary drugs in development, first, VERU-944, which is a pure form of cis-clomiphene citrate, is being evaluated for the treatment in hot flashes in men who are in hormone therapy to treat advanced prostate cancer, is close to initiating a Phase II clinical trial. We plan to file the IND this month, and the first patient should be dosed with the drug by July 2018. The clinical trial is a Phase II randomized blinded placebo-controlled dose finding study, is a 4-arm study with 30 men per study arm for a total of 120 men that will be conducted in 10 clinical sites in the United States. We plan to test 3 different doses against placebo. It's a short study, as the treatment period will be only 12 weeks. The primary endpoint is the change in the frequency of moderate to severe hot flashes from baseline to 4 weeks and 12 weeks in the study. We expect final Phase II clinical data for VERU-944 in early 2019.

Dr. Domingo Rodriguez has joined our team as Executive Vice President of Clinical Operations to manage our clinical development studies. Dr. Rodriguez has over 30 years of pharmaceutical experience and 17 years in clinical operations. He was recently VP of Global Development Operation and Clinical Operations in Mallinckrodt Pharmaceuticals. It should also be noted that the U.S. patent for VERU-944 was recently issued and has an expiration date in 2035. Currently, there are no drugs approved by FDA for this indication of hot flashes in men with advanced prostate cancer caused by hormonal therapies, also called androgen deprivation therapy. Androgen deprivation therapies include drugs like Lupron, Eligard, Firmagon and Zoladex. Over 600,000 men are on androgen deprivation therapy in the United States. Up to 80% of these men experience hot flashes and 30% to 40% have moderate to severe hot flashes, making hot flashes the most common side effect of androgen deprivation therapy.

Second, we are also developing VERU-111, a novel oral anti-tubulin therapy that targets alpha and beta tubulin subunits of microtubules for the treatment of metastatic prostate, breast, ovarian, endometrial and other advanced cancers. We will begin the Phase I2 clinical trial by the second half 2018. And in the Phase I2 open-label clinical trial, we will initially target men with metastatic castration-resistant prostate cancer who have become resistant to or who have failed to respond to ZYTIGA abiraterone or XTANDI enzalutamide and may have failed one of the taxane therapies such as being treated with docetaxel or cabazitaxel. An open-label study means that each patient will be dosed with VERU-111, and so we will have early evidence of safety and efficacy in late 2018. Scientific preclinical data for VERU-111 were presented at the American Society of Clinical Oncology Genitourinary Cancers Symposium in San Francisco on February of 2018 and the European Association of Urology in Copenhagen, Denmark in March of 2018, and have been accepted for future presentations and publications at the American Urologic Association Meeting in San Francisco in May of 2018 and the American Society of Clinical Oncology, also known as ASCO, Annual Meeting in Chicago, June of 2018. In addition to prostate cancer, VERU-111 can be developed as an oral therapy for other tumor types that are currently being treated by intravenously given anti-tubulin chemotherapies, which broadens the market opportunity to well over $5 billion.

We have a full and advancing pipeline of drugs. We will also continue to be opportunistic by internally developing and/or finding new pharmaceutical products to license in urology and oncology. We have accomplished quite a lot this past year by obtaining regulatory clarity and advancing the clinical development of our pipeline of drugs. We paid for these activities this past year in part by the revenue produced from our commercial products, the FC2 Female Condom business and PREBOOST.

The Female Health Company division has revenue from both the global public health sector and the U.S. markets. In the global public health sector, FC2 is the world's leading female condom. This is the channel where FC2 is purchased in bulk quantities by governments and nongovernmental donor agencies for public health distribution. This past year and first and second fiscal quarters of this year, we have felt the impact of 2 of our largest customers, Brazil and South Africa, who did not place orders this past year due to their normal procurement cycles. We believe we will receive new orders from these countries in fiscal year 2018 and 2019, as we expect Brazil will be awarding a 50-million unit tender for this year and South Africa is expected to award this year a 40-million unit tender per year for 3 years totaling 120 million units. We expect to hear the results of these government tenders in early summer.

As for the U.S. market, FC2 is uniquely positioned as the only FDA-approved female condom to prevent both unwanted pregnancies and the sexual transmission of STIs. Our challenge has been to create the distribution and marketing to serve this U.S. market. We have seen traction with our efforts, as there are increasing revenues in these new areas of market access. FC2 is reimbursable with a prescription by both public and private payers under the Affordable Care Act and under the laws of numerous states prior to the Affordable Care Act. We now have the pharmacy distribution, market access and reimbursement infrastructure in place so that FC2 is available in over 98% of female -- of retail pharmacies across the country. We have eliminated the middlemen FC2 distributors, and we now sell directly to the departments of health and community organizations with better margins. We have signed a master service agreement to sell directly to 340B covered entities. There are approximately 56,000 of these entities such as HIV and STD clinics. We have partnered with the HeyDoctor telemedicine application so that an FC2 prescription can be obtained by the patient via an Apple or an Android smartphone where the prescription is sent to the local pharmacy or shipped to their home by a specialty pharmacy. We have an uninsured -- or underinsured assistance program where the individual can purchase FC2 at a discount from the website. And finally, we have an active colleges and university program that continues to grow. As I mentioned, we are seeing new revenue being generated and growing in the U.S. market. Historically, the average annual revenues for FC2 over the past years -- past 3 years has been approximately $2 million a year. I'm pleased to report because of these new market and selling efforts, in just the past 6 months alone, revenues for FC2 in the U.S. were approximately $2 million. Because of this progress, we have refocused and expanded our marketing and sales efforts by converting the fixed-cost internal 12-person sales force into a variable-cost external independent contracted sales force. We have entered an agreement with this group, who will initially utilize 40 people but is expected to expand to 100 salespeople by next year. This independent sales group will use salespeople who have established relationships with primary care and OB/GYN offices. And as this is a contracted sales force, our company should incur no additional expenses when additional representatives are added, as the group will be compensated only on FC2 sales.

Our other revenue opportunity is PREBOOST, which is 4% benzocaine wipes for the prevention of premature ejaculation. We have entered into a copromotion and distribution agreement with Timm Medical Technologies Inc., a specialty urology sales organization.

I will now turn the call over to Michele Greco, CFO and CAO, to discuss the financial highlights. Michele?

Thank you, Dr. Steiner.

As we have mentioned in the past and the reason for our diversification strategy, we've seen a marked decline in public sector volume over the past 7 quarters for the FC2 product. The decline experienced in fiscal 2018 is due to the timing of public sector tenders and lack of orders from our 2 main customers in Brazil and South Africa. As Dr. Steiner mentioned, we are optimistic about the upcoming Brazil and South Africa tenders as well as the new revenues from our U.S. FC2 marketing and selling efforts.

Looking at our fiscal Q2 results. FC2 unit sales totaled $4.1 million, which is 9% lower than the $4.5 million from Q2 2017. Net revenues for the quarter totaled $2.6 million, an increase of 7% from the prior year quarter. Gross profit decreased 6% to $1.2 million for a margin of 47% compared with $1.3 million for a margin of 53% in the prior year quarter. The decrease in the gross margin percentage is primarily due to the unfavorable impact of the currency exchange rates on our cost of goods. Operating expenses increased $2 million from $3.9 million for the prior year quarter to $5.9 million. The increase in operating expenses was primarily due to increased research and development costs for our clinical development programs of $900,000, increased salaries related to our U.S. commercial team, increased corporate personnel and severance expense. The bottom line result was a net loss for the quarter of $3.8 million or $0.07 per diluted common share compared to a net loss of $1.8 million or $0.06 per diluted common share for the prior year quarter.

Now for the results for the 6-month period ended March 31, 2018. Unit sales totaled $8.5 million, which is down 22% from the prior year of 10.9 million units. Net revenues for the period totaled $5.2 million, a decrease of 9% from the prior year period. Gross profit decreased 14% to $2.5 million for a margin of 49% compared to gross profit of $2.9 million for a margin of 52% in the comparable prior year period. Operating expenses increased from $7.4 million for the prior year to $14.6 million. Included in operating expenses is the $3.8 million related to the settlement agreement we entered with our Brazilian distributor, Semina, during December of 2017. Excluding the settlement agreement, the increase in operating expenses is primarily driven by increased research and development costs of $2.7 million, and the increased salaries for the U.S. commercial team, the additional corporate personnel and severance expense. The bottom line result was a net loss for the 6 months of $8.1 million or $0.15 per diluted common share compared to a net loss of $3.1 million or $0.10 per diluted common share in the prior year. For the 6 months, we recorded a tax benefit of $4.5 million compared to a tax benefit of $1.4 million in the prior year period.

Moving on to our balance sheet. As of March 31, 2018, our cash balance was $9 million and our accounts receivable balance was $3 million. We remain focused on our cash position and liquidity. Our net working capital was $5.6 million as of March 31, 2018, which is up from $4.8 million as of September 30, 2017. We used cash of $4.2 million in operations during the 6 months ended March 31, 2018, compared with using $1.1 million of cash in the prior year 6-month period.

During the second quarter, we completed a $10 million synthetic royalty financing on FC2 product sales, which provided immediate funds to support our drug development program and operation. This transaction was nondilutive. Our plans have been and continue to be to advance our clinical programs. We're optimistic about the U.S. market for FC2 and securing orders from the new tenders in the global public sector. We work to expand our customer base in our markets and expect these opportunities to allow us return to historical volumes.

Now I would like to turn the call back to Dr. Steiner.

Thank you, Michele.

We have established the foundation to make Veru a leading urology and oncology biopharmaceutical company. We have several near-term and midterm products progressing at the same time to have multiple shots to have applications for approval of new drugs filed and launched in urology and oncology. We aspire to file at least 1 NDA each year for the next 5 years. This will provide the engine for growth as we continue to develop and plan the commercialization of new drugs and commercialize the company's existing products in our portfolio. We're also looking forward to advancing VERU-944 for the treatment of hot flashes in men who have advanced prostate cancer and are in hormone therapy into a Phase II clinical trial soon. We're excited about VERU-111 as a novel targeted oral anti-tubulin therapy for multiple types of cancer and look forward to starting the Phase I2 clinical trial this year for the treatment of prostate cancer as well as to share additional preclinical data at the multiple future scientific meetings. We will drive shareholder value through the lower costs and expedited clinical development for large market opportunities in urology and oncology. We're committed to becoming a leading urology and oncology company.

With that, I now open the call to questions. Operator?

(Operator Instructions) Our first question will come from Kumar Raja of Brookline Capital Markets.

So first, I wanted to understand how the -- this change from fixed to variable. What is the timing that it will take impact? And how it is going to impact the marketing efforts and when do you see the results from those efforts? And as well as the timing of the tenders for Brazil and South Africa, I heard that you will hear about it first in early December. Is that right? Is it -- is that the timing for both Brazil and South Africa? How does that impact the timing of the revenues?

Great. So your first question -- thank you, Kumar, appreciate that. The first question is the -- to provide a little more clarity on the fixed versus variable. So as -- the initial strategy was to look at 6 different markets -- market access channels and see which of these channels would have traction. So examples would be would you use telemedicine, would you use salespeople, would you do online, would you go after just public health, would you go after 340B clinics. So we went after a lot of different ways to see where we could have traction in the U.S. market. Our hunch all along was that based on the Affordable Care Act where the insurance companies, both private and public, had to pay 100% with no co-pay, that having a prescription may be the best way to do it, and we just didn't know. So as I told you on the last call, it looks like all 6 channels generated revenue and particularly the sales force. Now the sales force was small. We didn't want to put a lot of money behind it. So when we say fixed cost, we had to pay salaries, we had to pay bonuses, we had to pay for their expenses and their selling expenses. And so that was for 12 people. And then what happened, it became very, very clear that this was a way to go. Now, the next decision is, do you expand it? Well, to expand it, you're going to go from 12 to 40 or 12 to 40 to 100. It's not what we were intending to do alone. So the idea was can we convert those 12 fixed folks into a variable model in which we have a deal with a distributor, kind of like what we did with PREBOOST with Timms Medical, and go with sale -- a

Let's say, it's not a distributor, it's a service agreement.

So it's a service agreement with salespeople. Of which, we have initially 40 that would then be expanded to 100 by next year. And the difference there is that they're being compensated as they sell the FC2 product. And we are not providing them salaries and bonuses and all this other stuff that you would in a fixed situation. So we essentially converted the fixed into a variable so that we can have more people out there selling. We get -- we take advantage of the revenue that comes in for our bottom line, and we have less exposure to this fixed cost. So when would -- the other part of your question is when would you do that. The answer is, we've already done it. We started in February with an initial -- a pilot launch and we've expanded that appropriately. And we're very, very pleased with the results of this approach. And I think it will affect our overhead because we got rid of the fixed. And as we sell, we will be paying for the sales force that are out there selling for us. Second question was related to the timing of South Africa and Brazil. As you know with governments, you never know 100%. But what I can tell you that we know right now is that Brazil is expected to -- Brazil is a Dutch auction. So we expect that tender, which is 50 million unit order, to be decided or the auction to happen sometime in the June time frame. And the hope is that we will hear something June, July. So that has not changed. And then the second one, South Africa. South Africa, we've already applied. They've already announced their tender, 40 million units a year for 3 years. And based on what they have guided us, we're looking for a June, July answer as well. So it's both about the same time. In terms of the timing of the orders, all I can tell you is we know that Brazil and South Africa are running out of product. And so I think that that's good for us. We just have to see how that translates into now orders versus soon orders.

And so when do you see these results coming in, in terms of increasing revenues, especially the U.S. marketing efforts? When do you see the results for that?

I'll answer and then I'll have Michele answer as well. So we're seeing results now. And so we'll be able to provide more information by our next call. But Michele, would you like to comment?

No, I would agree with Dr. Steiner. We're seeing results from the U.S. marketing efforts, and we're going to continue to see that and that's going to continue to increase. And once the tenders are announced and as orders get placed, we'll see those orders will probably come in a month or so after the tenders get announced. So we'll see them probably in the summer.

Okay. I also had a question for VERU-111. So what remains to be done before you guys can go ahead and file the NDA? Do you guys have enough clinical drug supply for starting the clinical trials? And also, the potential in other oncology indication, like what are your plans for that?

Yes. So I think you meant to say IND, not NDA, so -- for VERU-111, right? So when we -- when to file the IND. Correct? Or are you thinking of (inaudible)?

That's right. Yes. That's IND. Yes.

Okay. IND. Good. I just want to make sure I answer the right question. Yes. So the answer is that we're on target to file the IND by the summertime so that we can have a third quarter start of the trial. So we have drug, we have drug supply. We had to create our -- it's a brand-new drug. So we have a manufacturer that's fully GMP. We've got plenty of drug to start the trial. The initial thought was that we would start the trial in men with metastatic castration-resistant prostate cancer that have failed abiraterone and enzalutamide; and they could have failed at least 1 taxane, whether it's cabazitaxel or doxitaxel. So the thinking behind that is because PSA response, which means greater than 50% reduction in PSA over 12 weeks or 3 months is a pretty good predictor of activity, that we would be able to start seeing within 3 months these patients that are being rolled into the trial, enrolled into the trial, some of the efficacy activity. And of course, we're looking at safety. And so the thought was get that done with prostate cancer first because then you can make a comment on safety and then even make a comment on efficacy. Even though the medical oncologists that we're working with -- and Hopkins is -- it looks like it will be the lead group, that they're telling us that this should have activity in other taxane sensitive -- quite frankly, taxane sensitive that became taxane-resistant tumor types. And you will be seeing some new data coming out of ASCO showing you some of the additional tumor types that we have activity -- that if we did a study where everybody came in, then we wouldn't have enough of any 1 tumor type that we saw a signal. So with that said, get past prostate 1, get into Phase I2, get into II and then begin to expand VERU-111 into other tumor types where having an oral anti-tubulin therapy would be preferable. So that would be the plan. Our hope is that by the time we start showing the prostate cancer results, particularly the efficacy, that we'll be in a good position for a potential large pharmaceutical partnership and that certainly would influence the number and types of additional trials that we would do. But we could certainly broaden the market.

Our next question will come from Yi Chen of H.C. Wainwright.

Regarding VERU-944, can you provide some color as to when can we expect to see the Phase II protocol? And how many patients will be enrolled once you start in July? And when can we expect to see the top line results?

Yes. So I had made -- so the question is on VERU-944, which is the product cis-clomiphene. It's about -- greater than 98% pure cis-clomiphene, which is a nonsteroidal oral estrogen for the treatment of hot flashes in men on an androgen deprivation therapy. The question is when we will see the protocol? So what I had been guided in the calls that we plan to file the IND this month. What I -- once the FDA has had a chance to review the protocol, which we have to give them 30 days, then at that point, we'll provide full details on the protocol. And you can even go to clinicaltrials.gov. And I think there's information that's registered there to give you some specifics on the protocol once we move forward with it. At a very high level, we're looking at 3 doses versus placebo. And the endpoint is the -- looking from baseline to week 4 and week 12, the number of or the frequency of moderate to severe hot flashes and what that changes. The reason that's important is because this is, in fact, the same endpoint that the FDA uses for postmenopausal women that have hot flashes and drugs that have been approved for those -- for that indication. And so we're -- the FDA has allowed us to use the same endpoint, as mentioned in there -- and still I think the draft guidance, the draft guidance for treatment of hot flashes in women with estrogen products and that guidance is of 2003. So that's the endpoint. It's a 12-week treatment period. So we know it's a short study. And the results we're expecting in first part of 2019. And again, 120 patients total, approximately 120 patients will be in the study. So we'll give you more information. So in summary then, it's 120-patient study enrolled in 4 arms, 3 doses versus placebo, endpoint similar to postmenopausal women, hot flashes and the date is expected first part of 2019.

Got it. Second question regarding Tamsulosin DRS NDA filing. Is this still on track to occur in the second half of calendar 2018?

Yes. So we're still on track and -- we're still on track. One of the things I keep telling folks is that we ended up getting some interesting news when we did the first 2 bioequivalency studies. And that sort of changed our approach. Initially, we thought we'd come up with an alternative to FLOMAX that will allow patients with dysphagia to have an opportunity to take granules. And that was a big niche market. And that alone would have been quite profitable. During the 2 studies, we found out, it turns out that this new slow-release technology, in fact, changed the attributes of the drug product by providing us now a drug that doesn't have a food effect. And so now that you don't have a food effect, then we said, "Well, gosh, not only could we be beneficial in patients who cannot swallow, but we now have access to the 22 million prescriptions that are written a year for FLOMAX and its generics." And providing something that doesn't have a food effect could have clinical advantages, both for administration -- because patients never listen, tell them to take it on a full stomach, they take it at bedtime and they stand up and get dizzy and they can fall down and break their hip or something of that nature. So to be able to have something that will change the administration and compliance would be a big deal. So we added a capsule. So now the NDA has 2 drug products. The first drug product will be the slow-release granules. And then we took those slow-release granules and stuck them into a capsule. And so we just want to make sure we kind of do it all right. And we're on track and we're excited with this new change because I think this is going to make this even more successful drug and needed in the marketplace. And just to also add, it also turns out for the alpha blockers, which is the class that Tamsulosin falls under, there are no granule formulation. So it's not just we would provide something for Tamsulosin, which is 85% of the market, but it means 100% of the market could be served by having a granule formulation.

(Operator Instructions) Our next question will come from [John Costello], shareholder.

Dr. Steiner, just kind of as a follow-up to that. Do we have a hard start date for the Tamsulosin Phase II trials, which I was -- think it would occur this month sometime in May? And also just in your opinion, what are the chances for success in the second phase of the Tamsulosin trial?

Right. Well, John, thank you. Good to hear your voice. So the answer to your question. So we're -- this is -- and I'm saying this just for purposes of other people listening to be sure we're clear. So this is a bioequivalence study. And the bioequivalence study means that you have to show that you have the same drug levels with your new formulation as compared to the reference, which, in this case, is FLOMAX. We just have the added benefit of comparing it to FLOMAX fed and fasted. Because FLOMAX has a food effect, we want to match FLOMAX fed, which is the safer version of it, okay? We have done Phase I, Phase II. The way you think of Phase I and Phase II, don't think of it as a Phase I, Phase II as in clinical development, but Phase I being trial 1, trial 2. Trial 1 was to pick a formulation at which we picked a formulation that showed us that we didn't have a food effect, and we matched the general attributes of the PK or the pharmacokinetics of FLOMAX fed and fasted. And in retro, we found that we didn't have a food effect. Phase II is really the second bioequivalency study in which we announced we hit bioequivalence for drug levels both fed and fasted versus FLOMAX fed, and we were excited about that. So that met that. But we did not hit on Cmax. Cmax means how quickly did the drug get in initially and we were off. And so the next trial that we're doing, John, is the trial where we fix the Cmax and the ADCs are already in place and what is happening in terms of the timing. And the question is, for that trial, which will be the final trial, there are 2 questions: one, when is that going to start; and two, what are the chances for success. Okay. In terms of when it will start, we had chosen a model in our company where we didn't want to have our own labs. And so as a result, we outsourced these activities. And in part, that introduces an element of uncertainty in timing. And because we have to get in line with everybody else who is using the same facility that outsourced. And so everything that's in our control, we have moved very quickly. Everything that's out of our control, it's out of our control. So we are slated to have this data in 2018. There's no hard start at this time until I get word from the facility. Because the facility is not just the manufacturing facility that makes the formulation. Then they have to take that formulation and ramp it up so that it's fully GMP so that you can give it to patients, a fancy way of saying it's clinical grade. And then, the next thing is you're going to have to go to a Phase I unit, which is a separate unit that actually runs the clinical trial, brings the patients in and actually does the study. And then once the study is done, it's a feed and bleed, meaning you feed a patient a dose and then you take blood samples at different times, then it takes time for the people to analyze those samples to also come back with their results. So it's a -- that introduces a lot of uncertainty. But what I can tell you is I believe we're on track and what I can also tell you is I think the chances of a success are high. And now that we've had 2 studies under our belt, we know more about what we're going to do with this formulation than ever before. And the formulators are telling me that adjusting the Cmax, which is the beginning part of it, is a tweak that they're comfortable that they're going to be able to do. So long answer but it kind of gives you a sense of all the moving pieces behind the scenes.

(Operator Instructions) Ladies and gentlemen, this will conclude our question-and-answer session. I would like to turn the conference back over to Dr. Mitchell Steiner for any closing remarks.

I appreciate you joining us on today's call, and I look forward to updating you all on our progress at the next investors call. Thank you for the questions. Appreciate it. Have a good day.

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