Vaxart Inc (VXRT) 2002 Q2 法說會逐字稿

Good afternoon, and welcome ladies and gentlemen to the Nabi Biopharmaceuticals second-quarter 2002 earning release. At this time I would like to inform you that this conference is being recorded and that all participants are in a listen only mode. At the request of the company we will open the conference up for questions and answers after the presentation. We have been asked by Nabi Biopharmaceuticals to point out that remarks made in this conference call and Webcast may contain forward-looking statements. Within the meaning of the Private Securities Litigation Reform Act of 1995 [indiscernible] cautions that any such forward-looking statement are not guarantees of future performance and involves significant risks and uncertainties. Actual results may vary materially from those in the forward-looking statements as a result of any number of factors, including, but not limited to, risks relating to the cost of research and development, the company?s dependence on third parties to manufacture its products, the impact of the current industry supply and demand factors on the company and its products. The future sales growth prospects for the company?s biopharmaceutical products, and the likelihood that any products in the company?s research pipeline can [technical difficulty] regulatory approved in the US or abroad, or be successfully developed, manufactured and marketed. Such risk factors are disclosed more fully in the Nabi Biopharmaceuticals most recent for 10-K filed with the Securities and Exchange Commission, and any subsequence SEC filings.

Information discussed in today?s call and Webcast is time sensitive, and is accurate only as of today, July 24, 2002. Any redistribution, retransmission or rebroadcast of this call or Webcast in any form without the expressed written consent of Nabi Biopharmaceuticals is prohibited. I will now turn the conference over to David J. Gury, Chairman, President and CEO of Nabi Pharmaceuticals. Please go ahead.

Thank you very much, and thank you all. I appreciate your patience, we?re a little bit late starting this afternoon, but thank you for joining us for our second-quarter results. Joining me at this end is Tom McLean, our Executive Vice President and Chief Operating Office, Mark Smith, our Senior Vice President of Finance and Chief Financial Officer.

I?d like to begin with an overview of key business developments, after that I?ll ask Tom to update our progress on operations, and Mark to discuss the financial position of the company. We will then open the lines for questions.

Our strategic and operational objectives are straightforward and remain unchanged. Our cash flow will generate from operations; we are investing in innovative vaccines, antibody products, with the potential to revolutionize the way doctors treat significant unmet medical needs. Our focus is in the area of bacterial and viral infections, and addictive diseases. We are pleased to report this quarter results, which keep us on track with cash flows to advance the development of our products.

As noted in our April conference call, the value of our Gram-positive infections program was affirmed by the publications of the results of the initial phase III trial for StaphVAX in the New England Journal of Medicine in February. We are now focused on the preparations required to initiate the confirmatory phase III trial for StaphVAX, which is expected to begin in 2003. We continue to focus our efforts on reducing regulatory risks, by using vaccine manufactured at the commercial facility site through the design of the trial. We?ve made progress in transferring the manufacturing for StaphVAX to the contract manufacturer, and we remain on track to have the vaccine available to initiate the confirmatory phase III trial of StaphVAX next year.

Through communications with the FDA we have developed our understanding of the trial design. The trial will include approximately 3,000 end-stage renal disease patients undergoing hemodialysis, which is the same patient population we used in the initial phase III trial. This will be a double-blinded placebo-controlled trial; we would anticipate conducting the trial at approximately 170 dialysis centers. The trial is expected to have, as its primary endpoint, significant reduction of Staph aureus bacteremia for eight months following the initial injection of the drug. As you will recall the first trial showed protection up to 10 months. After eight months trial participants are expected to receive a booster vaccination and will be monitored for an additional six months.

The study blind is expected to be maintained throughout the entire study period, and the endpoint of the study is expected to be the prevention of blood-borne infection or bacteremia at the eight-month period, and the booster data collected in the trial will be helpful in providing guidance on how the product can be used in chronic, at-risk patients.

Based on our expectation of the positive result from the trial, we continue to anticipate filing a BLA for this product, with the FDA in 2005. Within the timeline established in our February conference call, we reported on the results of our booster clinical trial for StaphVAX in May. Importantly this trial demonstrated that a booster dose of StaphVAX given to previously vaccinated hemodialysis patients, increases the concentration of vaccine-specific serum antibodies against Staph aureus to what we believe to be protective levels. This is a very significant result for this chronic-risk patient population. We expect to present the detailed results of this booster trial at an appropriate medical conference later this year.

Our progress with the other products in our development pipeline has rapidly accelerated in 2002. As expected we have introduced products NicVAX and Civacir into their first human clinical trials this quarter. We continue to anticipate the initiation of additional clinical studies for Altastaph, our Staphylococcus aureus immune globulin human product in adults with Staph infections and in all birth-weight neonates later this year. We now have five products in clinical phase development.

The Civacir clinical trial is sponsored by the National Institute of Allergy and Infectious Diseases, or NIAID, a part of National Institutes of Health, and has been conducted at five study sites in the United States. This product is important for several reasons. Civacir has the potential to address a significant unmet medical need for liver transplant patients suffering from hepatitis C, or HCV. Re-infection with HCV is almost universal in liver transplant patients suffering from Chronic HCV, despite the use of available antivirals.

The manufacture of Civacir will take place in our manufacturing facility in Boca Rotan, and the HCV enriched plasma raw material used in this manufacturing will be collected within our network of FDA approved antibody collection centers, placing us in control of both the quality and quantity of the product.

Also significantly, doctors who would prescribe Civacir in transplant centers are already well appointed with Nabi Biopharmaceuticals in our Nabi-HB product. We?ve been pleased with the progress of this trial, in terms of subject enrolment, and look forward to reporting in on the results of this trial in 2003.

We also announced in June that we had initiated phase I testing of NicVAX in humans. This clinical trial will examine NicVAX safety and ability to stimulate the immune system in non-smokers. Twenty trial subjects have been randomly assigned to receive either the drug or placebo injection. Following the completion of this first trial we plan to conduct additional phase II clinical trials to investigate NicVAX safety and ability to stimulate immunity in smokers, and ex-smokers. The first phase II trial was anticipated to commence in 2002; if the NicVAX vaccine performs well in these phase I and II trials, definitive phase III trials to evaluate NicVAX efficacy to treat nicotine addiction and to prevent nicotine addiction in people who have not yet started smoking, will be required.

Before concluding I?d like to also discuss a significant organizational development that took place this quarter. Mark Soufleris has filled the newly created position of Vice President of Investor and Public Relations. Mark has served Nabi Biopharmaceuticals as Vice President of Marketing since 1997, and brings extensive knowledge of our strategy and our products to his new position. Mark?s appointment represents a key element of our commitment to maintain and develop our relationships with our investors, as we embark on this next phase of our corporate development. A key element of Mark?s charge is to provide a comprehensive program to build investor and public awareness about Nabi Biopharmaceuticals. I know Mark is committed to this program and looks forward to building these key relationships with the investors, and to getting to know all of you.

I can now ask Tom McLean to briefly update you on operations in the second quarter. In introducing Tom I?d like to take the opportunity to recognize a significant achievement of Tom?s during the second quarter, for which we?re all extremely proud. In June Tom was named as the 2002 Business Person of the Year by the Professional a Business Forum at their Seventh Annual EV Awards. This award is especially significant because honors excellence, values, integrity and ethics in the professions and business of South Florida. These are all qualities that are and will be vital at Nabi Biopharmaceuticals - congratulations again, Tom.

Thank you very much, David. In the second quarter we met our operational objective of generating cash flow to support our significant research and development programs which Dave?s just highlighted. I?d like to talk about the factors that contributed to achieving that operational objective, including continued strong sales of all four biopharmaceutical products, improved product supply for Autoplex and Aloprim, manufacturing capacity utilization through Nabi-HB production and contract manufacturing in our Boca Raton manufacturing facility, and improved process management at our plasma production facilities.

First, and most significantly, our four biopharmaceutical products generated strong sales in the second quarter. As background, we sell our products to wholesalers and distributors who in turn sell them to end users, the hospitals and clinics that use them to treat their patients. Sales of our products to wholesalers and distributors grew 31 percent over the comparable quarter in 2001. And based on reviews of patient user sell-through data, long-terms sales trends for our two leading biopharmaceutical products, Nabi-HB and WinRho SDF, continued to demonstrate increases in patient use. As inventory levels of wholesalers and distributors come down, we expect to see continued growth in reported net sales as we move through the rest of this year.

Strong sales for Nabi-HB in the second quarter of 2002 reflect our success in reducing inventory levels in our distribution network in the second half of last year, and the initial buy-in of our Boca manufactured product. Factory sales of Nabi-HB are 14 percent higher in the second quarter of 2002, compared to the same period in 2001. At the same time, increases in hepatitis B liver transplants drove a 7 percent gain in Nabi-HB patient use, compared to the second quarter of 2001. In fact patient use in June was at the highest level we have achieved in the last two years, and we?ve achieved that result despite some reduction in the amount of hepatitis B immune globulin being used in combination with antiviral therapies like Lamivudine, post liver transplant.

Now turning to WinRho SDF, in 2001 we refocused our hospital-based sales and marketing efforts on WinRho, that has helped to drive record patient use of this product in the second quarter of 2002, up over 20 percent from 2001 levels. Patient use in May and June was at the highest level in the product?s history.

Turning now to our other biopharmaceutical products. We have continued to focus on improving product supply from the manufacturers of Autoplex and Aloprim, that is the critical issue for sales of these products. The supplier of Autoplex has been unable to provide us with reliable supply for several quarters now. Although there was some improvement in the second quarter, we expect limited supply to again be an issue in the third quarter of this year. Consistent with recent reporting periods we benefited from a contractual penalty from the manufacturer based on their failure to deliver a minimum supply of product in the second quarter.

Sales of Aloprim have also been affected in recent quarters by limited product supply from the manufacturer of this product, although to a lesser extent than Autoplex. During the second quarter of 2002 we received two back-ordered lots of this product, which significantly increased our sales to wholesalers and distributors in the period. We also noted a continuation of a positive trend in patient use, which was up more than 15 percent from 2001 levels based on the success of our marketing programs. The combination of filling the wholesaler/distributor pipeline and increased patient use, drove an almost 4-fold increase in sales from Q2 2001.

Bringing the Boca Plant on line is another major area of focus for our operations in 2002. During the second quarter we had our first FDA inspection at the plant after being licensed to manufacture Nabi-HB in October of 2001. [P-Biologics] conducted the inspection, and it was successful and resulted in a limited number of observations. We responded promptly to these citations and were notified last month by the FDA that our corrective responses were filed and appear satisfactory. This is now the second successful FDA inspection of the plant, and this confirms we are operating the plant in an excellent state of compliance.

As we have discussed previously, Nabi Biopharmaceuticals will not fully utilize the available manufacturing capacity of our Boca Raton Plant until products from our development pipeline are launched. This gives rise to an excess manufacturing capacity expense, and the amount of expense will be dependent on scheduled contract manufacturing production runs. We continue to seek these opportunities for manufacturing on behalf of other companies. As previously reported, we have two signed contract manufacturing agreements, and have already initiated manufacturing under one of those agreements. However, due to project delays we will not initiate manufacturing under the second agreement until some time in 2003. We remain very optimistic about signing additional contract manufacturing agreements this year, based on the shortage of available manufacturing capacity of this type, and the number of products under development.

Another important area of focus of our operations is antibody production. We operate nine collection centers to produce the specialty plasma raw material that is required for the manufacture of our current and pipeline antibody-based therapies. Through increased focus on plasma operations and processes, plasma production through the first six months of this year is running at 33 percent above 2001 levels. This production level contributes to the cost-effective operation of these centers, and enhances our ability to generate incremental cash flow in the near term. In the longer term, our strength in plasma operations means we will realize significant value from this captive source of raw material for our pipeline products like Civacir and Altastaph.

Our goals for leveraging the cash return from our current operations also include product acquisition and in-licensing opportunities. We plan to add one or more products to our portfolio between now and the launch of StaphVAX. Quite simply, this will further increase the return from our proven and capable sales and marketing infrastructure. Our focus is on products targeted to the physicians we call on today, oncologists, hematologists, and transplant physicians, as well as the physicians who will be important to the success of our Gram-positive program. An antibody-based product would also have the benefit of leveraging our manufacturing infrastructure.

We also remain committed to finding the right development partner for the Gram-positive program. We have continued to devote considerable effort to this since our April conference call. While we will not set an expectation about when we would complete a partnering agreement, I can assure you this is a top priority for Nabi Biopharmaceuticals. The ideal partner continues to be a company that will contribute expertise and resources to accelerate the time-to-market for these products; a company with access to the financial resources to share in the development and commercialization expenses of the program and a company that can work to address the regulatory and commercialization requirements in markets outside the United States, markets where Nabi Biopharmaceuticals has not yet established a presence.

In summary, our operating performance is strong in the second quarter, and we expect to see continued year over year gains in sales for our four biopharmaceutical products in the second half of this year.

Now, I would like to introduce Mark Smith who will review out financial performance in the quarter. Mark?

Thank you, Tom. Positive earnings in the second quarter contributed to the positive cash flow from operations of $2 million. We ended the quarter with approximately $47 million of cash on hand, and after redeeming our 6.5 percent convertible debt on 8 April, we are debt-free as of 29 June 2002. This places us in a strong financial position at quarter-end. In addition to the cash on hand, Nabi Biopharmaceuticals had access to over $22 million of unused borrowing capacity under our existing bank loan our existing bank loan of credit at quarter-end.

Consistent with published expectations, we generated net income in the second quarter of $820,000 or 2 cents per share. The strong financial performance of the second quarter has more than offset the loss we recorded in the first quarter, with net income of $160,000 [technical difficulty] ended 29 June 2002. Overall we generated a positive EBITDA of $3.5 million in the second quarter, including funding a $1 million or 25 percent increase in research and development expenses. On a year-to-date basis we have generated an EBITDA of $6.3 million. This includes funding a year-to-date increase in research and development spending of $2.5 million.

We believe this demonstrates the success of our strategy to build a base business capable of supporting our investment in developing a very strong and promising product pipeline as well as funding our capital spending needs.

Let?s now walk through the key line items of our second-quarter income statement to understand Nabi Biopharmaceuticals? performance. Overall sales for the second quarter of 2002 were $50.8 million compared to $65.3 million in the second quarter of 2001. We expected this decrease because sales for the second quarter of 2001 include sales from the 47 antibody collection centers we sold in September 2001. Our pharmaceutical sales were $24.8 million in the second quarter of 2002, compared to $18.9 million in the second quarter of 2001, an increase of 31 percent over 2001 levels.

As Tom discussed, biopharmaceutical sales benefited from increased sales of all of our products, Nabi-HB, WinRho, Autoplex-T, and Aloprim. Significantly, sales of Nabi-HB increased 14 percent over second-quarter 2001 levels. On a year-to-date basis sales of Nabi-HB have increased 22 percent over 2001 levels. This is very significant because Nabi-HB is our highest margin product, and the product we manufacture at our Boca Raton facility. Sales of WinRho increased over 20 percent in the quarter compared to 2001 levels. Again as Tom spoke to, this increase in factory sales was in line with the increased patient use for this product also reported in the quarter. As a result of increased end-user demand for Aloprim, combined with the delivery of two back-ordered lots in the second quarter, factory sales of Aloprim increased 4-fold in the second quarter of 2002 from second-quarter 2001 levels.

Antibody sales were $26 million in the second quarter of 2002, compared to $46.4 million in the second quarter of 2001. Long-term focus of our antibody business has shifted to providing specialty antibody products for use as raw material in the manufacture of our own current and pipeline antibody-based therapies. In the short term, we managed the antibody business opportunistically to generate incremental operating margin and cash flow, to fund the development of our research and development product pipeline.

After accounting for royalty expense, our gross margin was $16.5 million in the second quarter of 2002, compared to $17.4 million in the second quarter of 2001. This represents an increase in gross margin as a percentage of total sales of 6 percent from 2001 levels, to 33 percent. Increased gross margin percentage reflects the increased proportion of higher margin biopharmaceutical product sales to total sales. In dollar terms, gross margin decreased due to the impact of excess manufacturing capacity in the quarter.

As discussed in previous quarters, when the manufacturer of Autoplex has been unable to meet contracted manufacturing minimums, they must pay us a penalty for lost margin. During the second quarter of 2002 we benefited from this penalty in the amount of $516,000.

Consistent with our guidance for the year, we significantly increased our investment in research and development activities. Research and development spending increased by 25 percent, from $3.9 million in the second quarter of 2001, to $4.9 million in the second quarter of 2002. This change reflects increased spending on Civacir, primarily for manufacture of material for use in clinical trials. In addition, research and development expense included costs associated with the continued development of StaphVAX, including transfer of manufacturing to the contract manufacturer?s facility, NicVAX clinical trial costs, and costs associated with Altastaph clinical trials scheduled for later this year.

Selling, general and administrative expenses were $10.2 million in the second quarter of 2002, compared to $11.1 million in the comparable quarter of 2001. These expenses include the impact of a bad debt write-off associated with the antibody business of $375,000, or 1 cent per share, as well as increased costs for insurance and consulting. Note that selling and marketing expenses were not impacted by the sale of the majority of the antibody business in September 2001.

On 8 April 2002 we redeemed our 6.5 percent convertible debt. By taking this action, Nabi Biopharmaceuticals avoided $1.3 million of interest expense in the second quarter of 2002. This increased the cash from operations available to invest in research and development programs this year.

Now moving to our expectations for the remainder of 2002. We continue to believe that biopharmaceutical sales will increase more than 10 percent in the full-year 2002, from 2001 levels, or to over $80 million. We also continue to project antibody sales in the full-year 2002 to be approximately 60 percent of the full-year 2001 levels, or approximately $100 million. As noted in our year-end earnings call, initial operation of the plant will be dilutive to earnings due to excess manufacturing capacity. Based on current, plant operating expense levels and depreciation, we expect excess capacity expenses to be $4 million in 2002. This expectation was an increase of $500,000 from previous guidance, and is dependent on achieving plant contract manufacturing runs.

We continue to seek opportunities to optimize use of our manufacturing capacity by expanding the market for Nabi-HB through international distribution agreements, and obtaining additional contract manufacturing agreements. Based on our sales projections, and including our projected excess manufacturing expense, we expect to generate an aggregate gross margin after royalty expense of approximately $60 million, driven primarily by our biopharmaceutical business.

We continue to support the operating expense guidance provided for selling and administer expenses being more than 10 percent below 2001 levels for the full-year 2002. Based on current projections, research and development spending in 2002 is expected to increase over 25 percent from 2001 levels. We also continue to support that we will generate net income for the full-year 2002. To reiterate, the focus of our current operating plan is to generate the cash necessary to advance our extensive research and development pipeline, and fund the capital investment requirements.

Now let me turn things back to Dave Gury.

Thanks, Tom and Mark, for the update on the quarter, and some color on the results that were reported this afternoon. At this time [Kristy] I?d like to ask you to open up the lines for questions.

Thank you gentlemen, the question and answer session will begin at this time. If you are using a speaker-phone, please pick up the handset before pressing any numbers. Should you have a question, please press ?star 1? on your pushbutton telephone at this time. Should you wish to withdraw your question please press ?star 3?. Once again should you have a question, please press ?star 1? at this time. Questions will be taken in the order they are received, gentlemen, please stand by for the first question.

Our first question comes from Fariba Ghodsian, of Roth Capital, please state your question.

You gave very good detailed briefing of the whole quarter, so I think the only question I have left is that regarding your guidelines for the remainder of the year, you mentioned that you would be profitable for the year as a whole, are you giving any specific guidelines for the following two quarters, whether both of them would be profitable or not? And the other question I have is, you mentioned both initiation of the phase III trials for StaphVAX, and a potential partnership possibly in 2003, can you give any more specific guidelines in terms of whether it?s the first half of the second half for the phase III trials?

Let me start by talking about the timing of the phase III trial in 2003. At this point we?re only giving guidance of 2003, hope to be able to update this as we go through the balance of the year, so that as we get closer to the year we will have a better sense of when that will come during the year. But this is the most guidance that we can give.

And I think just to say that that timing is dependent on when the material of the vaccine manufactured at [Dow] will be available, and in the second half of the year, that?s when we start to get into the purification and conjugation steps of vaccine production. So as we better see how that going we will be able to estimate better when that trial will begin.

And as to your question on the guidance, we?ve not been giving quarterly guidance and we?re really sticking to the guidance we gave that we will be profitable for the full year, and that maybe period-to-period or quarter-to-quarter fluctuations based on sales variations, while as we acknowledge we are increasing our investment in research and development spending, and that type of increases tend to be fixed and more straight line.

Our next question comes from Tony Campbell of Knot Partners, please state your question, sir.

I actually have about 3 or 4 -- 3 questions then maybe a comment. First of all, why can you not pro forma -- give us the pro forma numbers excluding the sale of the plasma business?

We?re really focused on the business that we have going forward, and the trends that we?re focused on are the trends in what we said are the driver of that business, and they are the biopharmaceutical business. So we gave --

Well that?s a better reason for [axing] it out, in other words you?re comparing apples to apples.

The antibody business was not a discontinued operation, we continue to maintain a presence in the antibody business which we reported as a segment. So the best guidance I can give you on that type of pro forma is the 8-K we filed when we initially announced the transaction for the antibody business sale back in June and September of 2001.

Which give it, on the full year - and I realize, Tony, it would be nice if we had it more precisely defined - but at this point we --

Full year-end [indiscernible]

Financial reporting standards would preclude us from treating that as a discontinued operations because we did maintain some of the business. So we would be violating reporting and accounting standards if we did try to report that on a pro forma basis.

Second question if I may. Could you talk about what in effect the total R&D costs are going to be for the next three years, through the ?05 period with StaphVAX?

The guidance I think that we can give you, Tony, is that as we look at StaphVAX in the next trial - and frankly until we have final contracts and agreements on what the cost is going to be, we can?t be really specific - but the first trial we completed was somewhere around $12 million in outside costs. This trial, because of the larger number, will be higher, but it?s a shorter follow-up period, so you can?t just double it. So it?s something more than 12 million, it spreads out over two years, and in terms of that trial, that?s I think the guidance we have given.

And if we really go to phase 3 on the other two would they be on the same order of magnitude?

No, my guess is they would be significantly lower, but here until we really get through phase I, phase II, we don?t really know in any good way to give you a good guidance on what the phase III trial will be. So we really need to get some sense of what the number is going to be and what the length of time will be before we can do that.

And then on the plant that you?ve got excess capacity, so my question is, at what capacity is the plant operating at today, and at what capacity do we need to get to, to break even?

Today the plant is operating anywhere - depending on the timing of when the contract manufacturing is occurring - anywhere between 35 and 50 percent of capacity as it?s designed today. And what we believe, what we set as a goal for ourselves is through additional contract manufacturing to try to get that to a breakeven level in 2003.

What level would that be?

It depends on the contract itself, Tony, because there are certain parts of the processes that some companies use, and other companies use the plant fully. So I can?t quite you a [leader] number because it?s not just a one-size-fits-all facility. And I think that?s all I can say right now.

And I guess finally, I?m kind of concerned, at the end of last your you guys basically promised us a joint venture partner on the StaphVAX, and here we sit fully almost eight months later, there?s no joint venture partner, which calls into real question whether anybody on the outside thinks that this is a valid opportunity. And I think it?s in part one of the -- I will give you the market has been pretty difficult, but it?s in part where your stock has really taken much more of a hit than others. And I, as you know, to be fair and even on this, I [lauded] you guys on the fact that you were able to get more from the sale of your business than most people thought. So I think you owe your shareholders a full explanation here as you were, as I recall on the last couple of conference calls, you were pretty - particularly as we approached year-end last year - pretty optimistic that you would get a joint venture partner.

Well, Tony, I think the only thing I can go back to is the comment that as we went through last year, before the sale of the antibody business, we had a real need to have the partner before we could advance the next trial. We have, with that partner, felt that we can move it forward without having the partner done, and so we chose not to complete a deal that we didn?t think was good for the shareholders. We are very much focused on having a deal done, but it will be done with the right partner at the right time, and it?s I think something that - I know - that is getting top priority in the company, and we are moving as quickly as we can.

Ladies and gentlemen, as a reminder, should you have a question please press ?star 1? at this time. Our next question comes from Jason Aryee of Jalaa Equities, please state your question.

You guys seem to be on a run-rate of close to a 100 million based on this quarter, than the 80 million that you have guided to previously for the year in pharmaceutical sales. Do you want to revise that guidance, especially since I think, Tom, you mentioned that the back-half of the year, should you expect to see increases over this quarter?

We expect to see increases over our prior year levels, Jason, and at this point we?re going to stick to the guidance that we?ve made.

Can you break out, Mark, the gross margins from the pharma business for us?

Well the guidance we?ve given to that is that in general the gross margins we expect for the full year will be around $60 million, but that would be split $50 million coming from the biopharmaceutical business, and $10 million coming from the antibody business.

And I assume that despite the fact that you?re using a lot of the antibodies, the gross margin there is still pretty good because it?s all the higher end specialty plasma, is that correct?

Well the extent we use our own plasma that margin of course is in the biopharmaceutical side.

Just a point there, we run the plasma business opportunistically, so where there?s opportunities to sell higher margin speciality plasmas at a better margin than you might get off the normal source plasma, we execute those opportunities, which will give you some period-to-period fluctuation.

Regarding Altastaph, when do you expect -- you?re just guiding some time this year, Tom, as far as initiation, not giving a Q3 or Q4?

That?s correct, at this point, Jason, we?re just saying that we expect to start the trials this year.

And can you give us any update on Civacir or NicVAX, how the enrolment is going there?

We?re very pleased with the enrolment in both programs, and we hope to have results from the NicVAX study that would allow us to go forward with the second phase I, II trials still this year, and we would expect to have the Civacir results available in 2003.

Do you want to give us any timeframe in ?03?

No.

and Altastaph, any timeframe in when we might complete the trial, how long would the trial be?

You know that?s something that I don?t think we can speculate on right now, Jason, either, but certainly we?ll be updated on that before our call in October.

I would say it would be within 2003 that we would have Altastaph results.

And regarding StaphVAX, it was unclear, Tom, whether you expect to -- whether the trial gets un-blinded after the eight-month primary endpoint, or after the additional six months of boosting?

We expect to maintain the blind through the boosting period, with the primarily endpoint we believe being at the eight-month timeframe, and then having the boosting data available to give us some indication of how you deal with the chronic risk that ESRD patients face.

And lastly, and just to kind of take off a little bit on Tony?s last question; it seems if you break down the assets and the liabilities of the company, which there really aren?t much liabilities, it seems like you come up with a figure of around $4 a share in assets, and as I said, you?re on a run-rate to do probably certainly of 80, maybe close a 100 million revenues on the pharma side, which it seems you?re getting absolutely no value for. And you?re getting absolutely no value for a pipeline that you?re going to have four mid to late-stage clinical trails going on. What?s the disconnect here; what are you guys -- I mean you had a great quarter with the exception of the slip on the partnership, you seem to be executing very well, what?s not translating here, what are we not getting as to why the stock seems to be trading basically at just pure break-up asset value, and no credit to anything else?

I don?t think we want to be in a position of speculating on what -- how you guys are reacting. I think we can give you our best sense of where we are and what our guidance is, and leave it up to you. I think you?ve assessed it well though, Jason, in terms of there are huge opportunities.

And let me put it in simple terms, we?re not focused on driving share price, our focus is on what?s needed on an operations side to produce the cash flow to invest in our pipeline. And we?re focused on advancing a pipeline of products that we believe have tremendous value, and will meet medical needs that are very significant and have no other alternatives.

Are you continuing your share buy-back after what, the 3-day period after earnings?

What we need to look at is share repurchase versus investing in that pipeline, which we think is the real driver of value in the company, but it?s something that we continually re-evaluate as we go forward.

As in the program that we have established.

And that continues, that program then?

Yes it does.

The final question comes from Marvin Kunter, Investor, please state your question.

I just have a couple of very general questions, and I hope that I?m maybe not unsophisticated, but I would be very much relieved to hear you say specifically that in August there will be no issues of accounting and questions of signing off on anything relating to accounting?

We are not one of the companies that is required to certify the financial statement. We certainly will file our 10-Q, by August, and that will state that management believe that all the adjustments required to make the statements conform with GAAP, have been made.

So then you?re basically saying there should be no accounting issues that could come up whatsoever, in this day and age?

We?re not aware of any issues.

The other question I have is - well two questions - but the first one is that your -- I should say our business is very important to have good quality employees and staff that are reliable and long-standing. Is there any reason whatsoever why you?re not going to be able to maintain the staff and the quality of staff that I you?re, I assume, utilizing?

I think we have an excellent staff, good quality, and I don?t anticipate any issues in maintaining them on our programs.

And the final question that I have is, I know in prior quarters one of the issues was the fact there was write-offs relating to the new facilities which appeared to be one of the issues that affected the stock. Is that basically under control, or handled or done with, and is there anything new in terms of the facility or future facilities that would come into play?

Well the expenses that we incurred related to the plant were not write-offs of the plant per se, but they were expensing of excess capacity costs, which is generated from routine operations when we are unable to fully utilize the operating capacity of the plant.

And a chief component of that is the depreciation or amortization of the capitalized basis in the plant, and that?s just happening according to the accounting method that we?ve selected.

And as we?ve said, we would expect that number to be $4 million for the full-year 2002, and that number is included in all the expectation guidance we gave, including that we expect to be profitable for the full-year 2002.

So there?s nothing that would effectively be an additional write-off kind of a thing that would reduce any of the profit factors that you?ve discussed during this phone call to this point?

Based on what we know today, we are unaware of issues beyond what we?ve spoken to in this call, and have disclosed previously in our SEC filings.

I think Marks and I both try to be clear that the cost of the plant is dependent on our ability to achieve our projected levels of contract manufacturing. And we will continue to update you on our progress with regard to that utilization of the plant at we go through Q3 and Q4.

Thank you very much.

Thank you, and thank you all for joining us this afternoon, and sticking around through this time, very busy, difficult day. I?d like to point out that a telephone replay of today?s conference call for US callers will be available through 5 pm Eastern Time, 31 July this year, can be accessed by dialing, 1 800 428 6051, replay 250292. For international callers, the conference call can be replayed through 5 pm Easter Time, 31 July ?02, by dialing 1 973 709 2089, password 250292. Additional audio replay of today?s call will be available on the internet and can be accessed from Nabi Biopharmaceuticals Website, www.nabi.com, or at www.companyboardroom.com, through 5 pm Eastern Time on 31 July ?02.

Again thank you all very much for your interest in Nabi Biopharmaceuticals, we look forward to continuing to update you with our call on the next quarter. Thank you very much.

Ladies and gentlemen, thank you all for participating, all parties may now disconnect.