Vaxart Inc (VXRT) 2003 Q2 法說會逐字稿

Good afternoon. My name is Heather and I will be the conference facilitator today. I'd like to welcome everybody to the NABI biotechnology conference call. All lines are placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during this time, press * and the number one on your telephone keypad. Should anyone require assistance at any time during the conference, press * and zero and an operator will assist you. As a reminder, Ladies and Gentlemen, this conference is being recorded on Wednesday, July 23, 2003. I would now like to introduce Mr. Mark Soufleris, VP of Investor and Public Relations. You may begin.

Good afternoon. Welcome to the Nabi pharmaceuticals conference call and Web cast to review the 2003 second quarter results. Before we begin, I would like to remind you that remarks made in this conference call and Web cast may contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Please be cautioned that any such forward-looking statements are not guarantees of future performance and involve 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 upon third parties to manufacture the products, the impact of current industry supply and demand factors on the company and its products, the ability of the company or third parties to meet contractual obligations, and the future sales growth prospects for the companies biopharmaceutical products and the likelihood that any product in the company's research pipeline can receive regulatory approval in the United States or abroad, or be successfully developed, manufactured, and marketed. Such risk factors are more fully disclosed in Nabi Biopharmaceutical's most recent Form 10K filed with the SEC and any subsequent SEC. Filings.

Information discussed in today's call and Web cast is time sensitive and is accurate only as of today, July 23, 2003. Any redistribution, retransmission or rebroadcast of this call or the Web cast in any form without the express, written consent of Nabi Biopharmaceuticals is prohibited.

I will now turn the conference call over to Thomas H. McLain CEO and President of Nabi Biopharmaceuticals.

Thank you, Mark. In directing and measuring our progress this year, we have set five clear and important business objectives. First, building value in our operating business. Second, our development priority for 2003 is completing the steps that are needed for approval of Staphvac in the U.S., both in terms of commercial manufacturing and initiating the confirmatory phase three trial. Third, advancing the other clinical programs, Ultrastaph, Sevacir and KnickVax. Let me re-emphasize our primary development objective is the advancement of Staphvac. Fourth, executing business development opportunities that can provide us with incremental cash returns and additional capabilities to advance our product pipeline and Fifth, building the strong leadership needed for the immediate and long term success focused this year in the areas of vaccine manufacturing, clinical, and regulatory.

During the second quarter, we accomplished several strategic business objectives. We will have a chance to review their significance briefly this afternoon. They include initiating the Staphvacs immunogenicity study, the key step prior to beginning the confirming phase three trial later this year. Second, out licensing a veterinary application of the Staphvac technology to pharmacy and animal health, now a part of Pfizer. Acquiring a new product, FASLO, securing new funding from debt and equity sources. Completing a successful leadership transition, and building cash flow from operations.

Achieving our first objective for our business this year, building value, building the cash return from operations is core to the success of our business strategy, and it differentiates us from other biopharmaceutical companies at a similar stage of development. We do not have a cash burn rate. Cash flow from operations provides the financial support for advancing our product pipeline. Today we are well positioned to fund ourselves to achieve the 2003 and 2004 business objectives. That result is particularly meaningful at the end of the second quarter because we were able to achieve this critical objective despite some operational challenges. Results from the second quarter are proving that our efforts to build value from important near-term business opportunities are assuring that we have the financial resources and the flexibility to achieve our goals. The challenges in the second quarter came from two areas. Lower numbers of Hepatitis B liver transplants in the first half of 2003, and reduced plasma margins. But the important outcome is that although -- that through successful management of business opportunities, our earnings results for the quarter are in line with expectations, and our operating cash flow remains strong.

Biopharmaceutical sales in the second quarter were led by the continued strong performance of Winro, achieving a 20% increase over the same period last year. And momentum is building in 2003, with a 13% increase in Winro sales from the first quarter of this year. We are driving continued growth in end user sales for patient demand for this product. We expect Winro sales to continue to be strong this year as we capture incremental market share from traditional IBIG therapy and as we grow the market overall, both by delayed and spleenectomy and favorable outcomes under a new higher dosage protocol for Winro patients.

In contrast, growth in Nabi HB revenues has been limited by a decline in Hepatitis B liver transplants in 2003. Just published data from UNO indicates that these transplants have decreased almost 30% through May in comparison to the prior year. Because there are fewer than 300 hepatitis B liver transplants each year, any shift in timing can have an impact on the quarterly results. Our market research indicates that there is no decline in the numbers of hepatitis B liver transplant candidates. Based on that research, we believe that this decrease in transplants is a temporary phenomenon and expect an increase during the second half of the year. Particularly, in view of many of the innovative techniques that surgeons are using to increase the pool of livers that are available for critically ill patients.

As a result of this trend in the first half of 2003, sales of NABI this quarter declined about 18% from the same period last year. But when we look at sales on a year to date basis, and we look at patient use of our product, they are even with 2002 levels. We have been able to achieve this result by building our market share in the important maintenance segment of the market. We will take additional steps to further build our market share in the U.S. during the remainder of 2003.

With that success, we are well positioned to fully leverage the benefit of any increases in hepatitis B liver transplant. We also expect to benefit from growth in the overall market when NABI HB intravenous is licensed for use in liver transplant patients. Under our license submission filed with the FDA last year, NABI HB intravenous will be the only product indicated for protecting the liver at and following transplant.

During the second quarter, we received a complete response letter from the FDA on our BLA. Following our review of the FDA's response and a meeting with them last week, we plan to submit our response to their comments by early September. This will include available data from longer term follow-up on the patients in our clinical studies, and additional pharmaco (ph) kinetic analysis. Finally, in addressing the important patient need and the market opportunity for NABI HB outside the U.S., we have advanced towards registering NABI HB intravenous in Europe.

Based on our progress with the FDA in the U.S., and our package of clinical data, we prepared a briefing document for European regulators. We have already met with the Paul Erlich Institute in Germany and based on their positive feedback, we are preparing a license application for Europe to be submitted in the first quarter of 2004.

Turning to another area of emphasis to improve cash flow from operations this year, we will benefit from increase in the utilization of our biopharmaceutical manufacturing plant. During the first quarter call, we described plans for a maintenance shutdown of the facility. I'm pleased to report that the plant was online and fully operational before the end of the second quarter.

Another key factor on our overall cash flow performance is our plasma collection operation. We believe we are in a good position to respond to recent market changes. With nine collection centers, the size of our business is manageable, and our objectives for 2003 are simple and straightforward. First, entering into a long-term commitment for normal source plasma production with a reliable customer. In that way, we can lock in a sustainable cash return. And increasing the production margins and, therefore, the cash return on specialty plasma sales.

Turning now to our second and third objectives for 2003. Our development focus this year continues to be on advancing our products to prevent hospital acquired Staphoreous bacterial infection. Staph vacs and Ultrastaph are being developed to address this serious, unmet medical need. Based on the importance of these programs, we have made key leadership additions in vaccine manufacturing clinical and regulatory since the beginning of this year. These changes have added value experience and new insights advancing these products towards licensure in the United States and Europe.

In June, we announced the start of a staph vacs immunogenicity trial. This study will compare antibody levels raised by vaccine made at the intended commercial contract manufacturer to the vaccine used in the first phase three study. This is the important last step before we begin the significant investment of time and money in our confirmatory phase three trials.

The last subjects in the immunogenicity study received their staph vacs injection during the first week in July. We will follow all of the subjects for four weeks. We are also negotiating final agreements with three major dialysis providers for study sites for the phase three confirmatory trial. With good results from the inmunogenicity trial and the completion of these agreements we plan to begin the confirmatory phase three trial of staph vacs early in the fourth quarter of this year.

Even as we continue to make significant progress towards staph vacs licensure in the U.S. we are also defining the steps to license the product in other markets. During the second quarter, we conducted several meetings with European regulatory authorities using a briefing package drawn from the data from our first staph vacs phase three clinical trial. We have been very pleased with the response that we have received to date. We have additional meetings scheduled during the third quarter, and we will use all of the information gathered to define the next steps toward E.U. registration.

Based on the outcome of these meetings, we will develop a manufacturing strategy that addresses the timing and requirements for European licensure of this product as well. We also continue to advance the other products in our development pipeline during the second quarter. The N.I.H.-sponsored CIVASIR trial in liver transplant patients has been completed. We are anxiously awaiting the analysis of clinical data from the N.I.H.. We expect to report on these finds during the third quarter. We will also initiate a phase two study of ALTA staph in neonates this summer. Results from the trial are expected to be available next year and will help to define the design of a phase three clinical trial.

Finally, our second NIC-VAC clinical trial being conducted in smokers and non-smokers in the Netherlands is making great progress. We plan to report results of the trial in the first quarter of next year. We also plan to initiate a NIV-VAC phase two trial in smokers in the U.S. this summer. This trial will be funded in part by our grant from NIDA, the National Institute on Drug Abuse.

Turning to our fourth objective for 2003, executing business development opportunities, it continues to be very important to our long term success. We out licensed a significant veterinary application of the Staph vaccine technology to Pharmacia animal health, now part of Pfizer, during the second quarter. This clearly affirms the strength of our grand positive infections program and the intellectual property in this area. This arrangement allows NABI to continue to focus on our Staph vacs clinical program while Pharmacia animal health completes the development of a whole cell vaccine for mass titus(ph) in cattle. Pharmacia animal health will commercialize the vaccine. While NABI will benefit from some payments during the development of the product, a significant financial benefit will come from a royalty on product sales.

In June, we signed a contract to acquire a product, FASLO from Braintree laboratories. We believe that FASLO is the best product for controlling serum phosphate levels in patients with kidney failure, a significant factor in death and illness for these patients. We are making this significant investment because we believe it provides an outstanding opportunity to immediately build a significant operating cash flow return. Leveraging our sales and marketing experience and infrastructure. But this is also a very important opportunity for Nabi biopharmaceuticals strategically. FASLO begins to build a presence for us in nephrology. Nephrologists are prescribers for ESRD patients. The study population for our phase three staph vacs trial. FASLO will also benefit from synergies with the 200 dialysis centers that will be clinical trial sites for staph vacs providing valuable product sales opportunities in 2003 and 2004. We expect the acquisition to close on August 4.

Partnering with our marketed and development stage products, also continues to be an important focus of our business development activities. We remain committed to finding the right partners for our programs.

Our fifth and final objective for 2003 is to continue to strengthen our management and leadership to assure our strategic success. We are building a leadership team not only with the technical skills, but also a commitment to our corporate culture based on quality, values, integrity and ethics. This year, we have concentrated on building our management team in the vaccine manufacturing and the clinical and regulatory areas to ensure that we achieve optimal success with staph vacs. As I indicated earlier, that is allowing us the opportunity to define important next steps to achieve the earliest possible success with this important program.

During the second quarter, we also completed a successful leadership transition. Dave Gurry retired as our CEO. Dave led the company through its transformation from being a plasma supplier to becoming a fully integrated biopharmaceutical company. He led the company forward to the final phase of its transformation initiating the final clinical trials for staph vacs. After his retirement from Nabi on June 20, Dave is continuing as Non-executive Chairman of the board. We certainly wish him much success and happiness.

Before concluding, I would like to add a few words about the recently completed private equity placement announced on July 14. It was very gratifying to see the high level of interest among current and new investors. We have used this level and mix of participation as both a strong belief in what Nabi Biopharmaceuticals is doing today and importantly, what our investors believe we can do in the future. We are committed to building value for all of our investors. Value in our marketed products, and in our pipeline products. Now, I would like to introduce Mark Smith, who will review our financial performance for the second quarter and discuss our updated 2003 expectations. Mark.

Thank you, Tom. As Tom has outlined, including the business development activities and financing activities, we have reported over the last two weeks, we continue to maintain an ongoing focus to drive our operations, to provide the funding to unlock the value in our research and development pipeline. In line with published expectations, and our previous communications, on the impact of our earnings from a charge of $3.3 million for the retirement of the former CEO, Dave Gurry, we reported a net loss of $3 million this quarter. Keeping with our ongoing operations focus, this quarter we generated $3 million of cash from operations, increased our cash balances over $1 million, before including additional funds received under a new debt agreement. Loss before interest, taxes, depreciation and amortization as $1.6 million for the quarter, including the retirement charge. Notwithstanding the cash payments related to this item will be deferred to future periods commencing in January, 2004. Total sales comprised of biopharmaceutical product sales and antibody product sales, $35 million in the second quarter of 2003, compared to $51 million for the comparable quarter of 2002.

As we have reported in each of our last several reporting periods, this reduction was expected due to our fulfilling the contracted volume requirements of a contract to deliver non-specific antibodies with single customer this April. As we have described, we supplied non-specific antibodies to the customer, but we acquired from the purchaser of the majority of the antibody collection business at the selling price in the contract, therefore, generating no margin from these sales. We reported these sales as revenue because we retained the risk of credit loss from the customer. As a result of completing our commitments under this agreement the second quarter of 2003, we reported sales of $200,000 under the agreement to $13.4 million in the second quarter of 2002.

Year to date, total sales were $86 million in 2003 compared to $92 million for the year to date period in 2002. Non-specific antibody sales included $18.6 million in the year to date period of 2003 that were reported under the arrangement with the single customer compared to $27.6 million for the 2002 period.

Sales of biopharmaceutical products for $22 million for the second quarter of 2003 compared to $25 million for the second quarter of 2002. For the six month ended June 28, 2003, biopharmaceutical sales were $45 million, compared to $40 million for the first six months of 2002, and 11% increase. These biopharmaceutical sales trends are consistent with the full year biopharmaceutical sales guidance we have previously provided and reflect our management of the trend to more level sales per quarter for the biopharmaceutical products to each of the quarters of the year.

Sales of Winro increased 20% to $12.8 million in the second quarter of 2003, compared to $10.7 million for the comparable quarter of 2002. As Tom has noted, sales increase is supported by record levels of patient demand for this product in 2003, which have driven sales including sales to distributors and wholesalers who have increased their inventories of Winro in response to increased patient demand. For the first six months of 2003 sales of Winro have increased, 65% compared to the first six months of 2002, or in dollars, $24.1 million compared to $14.6 million. Sales of NABI-HB were $7.1 million in the second quarter of 2003, compared to $8.7 million in the second quarter of -- 2002. As described earlier, the sales level was achieved despite a 30% decrease in liver transplant activity year to date, as recorded by (inaudible) compared to 2002 levels and reflects our success in gaining market share in 2003.

For the six months ended June 28, 2003 and June 29, 2002, sales of NABI-HB were essentially leveled at $17.4 million and $17.7 million. Sales of our other biopharmaceutical products formally Autoplex-T and Aloprim increased to $2.1 million compared to $5.5 million reported in the second quarter of 2002. This quarterly trend was consistent for the first six months of 2003 with sales of the other biopharmaceutical products being reported at $3.1 million in 2003, compared to $7 million in 2002. In 2003, sales of our other biopharmaceutical products have been limited by product supply shortfalls from the manufacturers of these products. Product supply shortfalls for Autoplex have been a longstanding issue and are expected to continue throughout 2003.

Products supply of Aloprim resumed from the manufacturer in April, however, sales of Aloprim in the second quarter were limited due to providers using an alternative product, a new market entrant in the period of limited supply. With the resumption of supply from the manufacturer and our expectation of consistent product supply from that manufacturer moving toward, we anticipate sales to regain 2002 patient utilization levels at later periods of 2003. Sales in the second quarter of 2002 also benefited from the delivery of three backordered lots which were substantially sold into the distribution channel in that period. Antibody sales were $12.7 million in the second quarter of 2003, compared to $26 million in 2002. Including the effect of completing the no-margin supply contract that I described earlier intercepting overall sales.

I will focus the remainder of my remarks on antibody sales to the business that we will operate going forward. On specific antibody sales from our own plasma collection centers total $5.5 million in the second quarter, compared to $4.4 million in the second quarter of 2002. Primarily reflecting increased production at our centers. Year to date sales of non-specific antibodies from our own centers is $10 million in 2003, compared to $8.6 million in 2002, reflecting year to date increases of antibody production. Sales of specialty antibodies this quarter were $6.4 million, compared to $8.2 million in the as a result of 2002. This decrease was primarily due to lower sales of anti-rain business and anti-D, antibodies.

We have a contractual commitment to supply substantial quantities of antibody is to the purchaser of the majority of the antibody collection bid as a low margin through 2004, which will limit higher margin sales of this specialty antibody product for the balance of 2003. Sales of specialty antibodies for the six month ended June 30, were $12.5 million in 2003 compared to $15.3 million in 2004, reflecting the trends noted for the second quarter as well as lower sales of anti-HDS plasma. We have retained the greater volumes of this anti-HBS material in 2003 to support increased manufacture of NABI HB. Antibodies were the primary raw material for NABI HB. The gross margin was $14.5 million in the second quarter of 2003, compared to $16.5 million in 2002.

Decreased dollar gross margin primarily reflects the lower sales of NABI HB in the quarter. A year to date basis gross margin increased to $30.1 million to $30.6, reflecting the bio product sales offset by the reduced margins from the antibody operations. Gross margin in the second quarter of 2003 was impacted by an excess plant capacity cost of $1.8 million. We had informed investors of this item in our first quarter reporting, as it relates to a scheduled routine plant maintenance shutdown this past quarter. Excess plant capacity expense was $1.6 million in the second quarter of 2002.

The third quarter of commercial manufacturing operations at our Boca Raton facility. year to date, excess plant capacity expense was $1.8 million in 2003, versus $2.1 million in 2002. Fully absorbed plant operating costs in the first quarter of 2003. Gross margin this year quarter and year to date benefited from gross non-performance penalties of $2.1 million and $4.3 million from manufacturing of Autoplex D. This compares with $500,000 for the second quarter of 2002, to $1.7 million for the six-month period ended June 29, 2002.

As we described before, when the manufacture of Autoplex D fails to provide us contracted product minimum of course they must pay us a penalty for lost margin. Operating results in the second quarter included research and development expense of $5.9 million, increase of $1 million from comparable quarter of 2002. Research and development costs were driven by our continued investment in NABI biopharmaceuticals for positive and NIC-VAC program and the HB and NABI. The research and development expense for the was $11.7 million compared to $9.3 million for the comparable period of 2002. Reflecting increased support for these programs throughout the Year-to-date. Selling general and administration expenses were $12.7 million in the quarter, including the impact of the charge of $3.3 million under the retirement agreement with the former C.E.O. Dave Gourry. Selling general and administrative expenses was $10.2 million for the second quarter of 2002. For the six-month ended June, 2003, these expenses were $22.8 million compared to $19.4 million for the comparable period of 2002. Nabi Biopharmaceuticals income tax benefit reflects an effective tax rate of 28%. This rate differs from statutory rates due to the expected future benefits from tax credits, primarily research and development tax.

Now, turning to our overall financial position. In communicating our operating strategy to you over the past several quarters, we have emphasized that we would generate the cash flow from operations to fund research and development and capital spending. At June 28, 2003, we had approximately $59 million of cash on hand. This quarter, we strengthened our financial position by entering into a credit facility agreement with Wells Fargo foothill. The facility provides for up to $35 million in borrowing, comprising a term loan of $10 million funded on June 20, and a revolving line of credit of up to $25 million. The term loan is repaid over the three-year term of the facility with the balloon payment due on June 2004 and bears interest of 4.5%. Following revolving line of credit are limited by the eligible accounts receivable and inventory. The facility does requires that we maintain compliance with the financial covenants and is typical of borrowing arrangements is secured by the assets of the company. As June 28, we had no borrowings under the revolving line of credit and excess availability of approximately $16 million.

Subsequent to year-end, this continued to strengthen our financial position by completing a private placement of common stock, the number of institutional investors. We are issuing 5.6 million shares of stock, raising gross proceeds of $34 million. Looking ahead for the remainder of 2003, we continue to expect a full year increase in biopharmaceutical sales from our four current products of approximately 5% above 2002 levels with the addition of FASLO to the product portfolio from August 4, we would expect full year biopharmaceutical sales to increase from between 15% to 18% above 2002 levels. In year to forecast antibody sales for the full year 2003 to be approximately 70% of 2002 levels, driven by continued greater utilization of the Boca Raton plant manufacturing NABI HB, excess plant capacity costs for the full year 2003 are expected to be limited to approximately $2.5 million. Due to the scheduled maintenance shutdown being completed in the past second quarter, $1.8 million excess capacity was incurred this quarter. Research and development spending is still expected to increase over 30% in 2003 over 2002 levels driven by costs for our confirmatory phase three clinical trial of (inaudible) which is expected to commence later this year. Other significant efforts will include commencing the phase two trial for alpha stat in low and birth weight newborns in the third quarter, and clinical trial activity for NIC-vac here and in Europe. The effective tax rate will be approximately 30% in 2003 if we continue to benefit from research and development tax credits. Due to the impact of the charge for the retirement of the former CEO reported this quarter, we now anticipate reporting a loss for the full year 2003. And we continue to expect to incur significant additional expenditures, acquisition of vaccine manufacturing capability. Now, let me turn things back to Tom McLain.

Thanks, Mark. In closing, the significant business developments of the second quarter have truly positioned Nabi as a biopharmaceutical company. We continue to be confident that our business strategy is the right strategy. It is clearly focused on tactics and priorities. We are strong financially. Now, we have a clearly defined company culture and we have a core leadership team that is both talented and capable. These elements will lead us to achieve new successes in 2003. That is how we will continue to build value for our investors. At this time, Mark and I would like to answer your questions. Heather

If you would like to ask a question at this time, you may press '*' and the number one on your telephone keypad. We will pause for a moment to compile the Q & A roster. Your first question comes from Martin Ofter with Wachovia.

Hi, guys. How are you doing?

Very well, Martin, how are you?

Well. I had a quick question about your HB franchise.

Sure.

As you know, one of your competitors recently decided to exit the business -- not a competitor, decided to exit the business of providing source plasma especially of anti-hep B antibodies. I wanted to know if you could comment on what you think their decision to exit the business says about your competition, and I guess if you could comment on the competitive landscape for your Nabi HB?

I can't speculate on what is happening with their decisions about what to sell or produce or not sell. What I can tell you is that we are self-sufficient for our hepatitis B materials, and we have significant share of the market here in the U.S., and that continues to be the way that we manage our business going forward.

Do you believe that your competition may be considering exiting the market?

Boy, I would not have an opportunity to speculate on that. We certainly, as we have said, we see additional opportunities to increase our market share as we go forward through the rest of the year.

Where do you feel your share currently stands in the domestic market?

I think it's somewhere in the 80%-plus range today. As we work to capture more of that maintenance segment of the market, we think we can improve on that.

Okay. Thank you very much.

Sure.

Your next question comes from Chris Lucent(ph) With UBS Financial Services.

Hi, Chris.

Actually, we didn't have any questions.

Okay. Thanks.

At this time, I would like to give everyone an additional moment to press and the number one for any questions. Your next question comes from Jason Diamond with Capstone Investments.

Hi guys. Tom, could you please discuss a little bit more about this demand size of the Nabi HB equation, if could you speculate as to why it might have fallen off in the first half of the year, and if -- I know that you said you expect it to resume back to normal levels. Is this going to be a growth --growth product -- is this going to be a growth segment? You know, if so, or if not, why?

Sure. Well, for the first half of the year when we look at our reported patient demand numbers, we're at a level that is even with what we were able to achieve in 2002. What -- with the information that came out from UNOS, looking at the first five months of the year, what we saw is that although total transplants had remained comparable to what they were in 2002, in the first few months of this year, hepatitis B transplants were lower. And there is nothing that we see in that data that would indicate that that is just more --anything more than a timing issue, and we would expect to see a return in the number of hepatitis B liver transplants in the second half of the year. The patient demand, the patient need is there. That's a constant. It just appears to be the way livers were allocated for transplant in the first part of the year. Because we're reporting by product sales, our -- reporting sales by product this year, and we wanted to be clear about what was going on with those numbers, why, we discussed that in the detail that we did today. So, we believe that not only will we gain share in the maintenance portion of the market as we go through the rest of the year, but with the return to more of what we would expect in numbers of hepatitis B liver transplants that we would see growth in sales of NABI HB in the future.

There's nothing, Tom, going on fundamentally on the treatment side of the disease. Clearly, the disease is unfortunately a growing epidemic but as far as the treatment side is there anything that is stifling the growth of transplants and stifling NABI HB's growth?

No. The number of transplants is remaining constant or growing. This was just a timing factor in terms of hepatitis B liver transplants in the first part of the year.

Thank you.

When we -- Jason, again, when we look through and look at chronically ill patients, hepatitis B transplant candidates, that they remain very strong.

Thank you.

At this time, I would like to give everyone one final opportunity to press '*' and the number one for any questions or comments. Your next question comes from Matt Duffy, with Black Diamond.

Thanks for taking my call. I wanted to ask you to discuss how you see the FASLO market situation, the competitive dynamics as well as the overall growth of that sector of the marketplace.

When we look at the market for phosphate finders in the U.S. today, that's really where FASLO is focused today. The market has three segments that are approximately equal in terms of patient size. That's patients who take Tums, calcium carbonates patients who take FASLO which is calcium acetates and patients who are taking RENA-gel. When we look at opportunities for FASLO and how it can perform in the US market going Forward look a the new KADOKE guidelines, which are expected later in the year in our marketing positioning with PHOSLO, that it is the best phosphate binder in terms of maintaining at or below the KADOKE guidelines for phosphate levels in the blood, as well as for the product of calcium and phosphates, and it is in accordance with the calcium guidelines under KADOKE. So, we see a real opportunity with the kind of consultative sales approach and promotion approach that has been our strength with our other products to not only see PHOSLO grow with the number of patients, but also to grow in terms of market share. So, it is a very exciting opportunity going forward.

How robust do you think that the patient growth can be, I mean in the overall phosphate market?

When we look at just in terms of patients on dialysis, the ESRD patients, a USRDS data projects that the number of patients today, which is around 275,000, will grow to 600000 by 2010, so that puts us with PHOSLO in a market that that is going to have strong growth in the next several years.

Great, thank you very much.

You are welcome.

For any final questions, you may press star then the number one on your telephone keypad. At this time, there are no questions. Do you have any closing remarks?

Thank you, Heather. I would like to thank you all for your interest in NABI Biopharmaceuticals. A replay of the call will be available through July 30, 2003, 5:00 p.m. eastern time, and the replay can be accessed in the U.S. by dialing (1800)-642-1687. Or internationally by dialing (1706)-645-9291, or through the web at www.nabi.com. The replay pass code for the call is 1355613. So to repeat the call in numbers in the U.S. are (1800)-642-1687. Internationally, (1706)- 645-9291, and through the web at www.nabi.com, and that replay pass code is 1355613, thank you very much.

Thank you for participating in the NABI Biopharmaceuticals second quarter earnings conference call. You may now disconnect.