Friday, April 05, 2013 12:07:31 PM
compliments of poster pm1469 a professional who does these
transcripts...entire CC below for those who haven't seen..
ACT Conference Call, 3/07/13
Gary: Before I talk about the exciting progress in our trials, I want to take this time to reflect on the last couple of years as Chairman and CEO of this company. I am well aware that many of our shareholders, me among them, hoped that our stock price would be much higher than it is today; but with all that we faced two years ago, I really cannot believe how far we have come. This is a company that had revolutionary and important scientific assets but was hampered by poor financing strategies, and a terrible reputation for meeting its financial obligations, to landlords and vendors, sloppy licensing and legal arrangements, misleading the 51 warrant holders that financed our capital needs, adverse and opaque relationships with our common stockholders. The company never even held an earnings call or had any open forum for investors. The company had never written an operating budget or any long-term strategic plan. In short, it wasn't a business in any sense of that word. As we stand here today, this is a COMPLETELY different Advanced Cell. We made decisions about our programs and opportunities with rigor and discipline. We don't give away critical company assets for nominal return. We have a world class Board of Directors and Ophthalmic Advisory Board that have relevant partnering, operating, entrepreneurial, financial and strategic expertise. It has obviously been painful to suffer the dilution we have had to incur to pay out hundreds of millions of shares to satisfy obligations that resulted from financings that occurred in 2005 to early 2010, but they were legitimate obligations of the company. It's disappointing to have to go to the SEC to settle something that occurred over four years ago, but we must do this to put our past behind us.
We have emerged from this a much stronger company, a company poised to advance its trials involving one of the largest unmet medical needs in the world. As we stand here today, we are planning for efficacy end points, labels, patient population, Medicare and commercial payor or HMO reimbursement strategy. We're planning for a potential success that seemed laughable to even dream of two years ago. As Kathy Singh told me yesterday, "I used to not answer my phone because it was always somebody we owed money to. Now I don't answer because it's always somebody who wants to invest in the company." And we recognize that this success is in large part due to the patience and perseverance of our shareholders. We at Advanced Cell are very proud of what we have done in two years. We know we have much more to do, but we are convinced that for the first time, we see a clear road to success, not one paved with extreme bumps and hazards. We have taken these necessary corporate actions so that the progress we make in the clinic can translate to increases in shareholder value. These settlements we made were necessary in order to remove substantial potential liabilities the company faced, which were likely to result in much greater cash and stock issuances, even larger legal fees, and continuing major distractions to the management team and board. Importantly, we are also advancing toward a resolution with the SEC. Once a small number of opened issues are resolved, we will again be in a position to carefully evaluate options to listing on a national exchange.
Turning to our operations, and as you may know, our trials have been going well. We recently reported that we are undertaking the second half of our trials treating Stargardt's macular dystrophy and dry age-related macular degeneration. We have had no reports of safety issues with our RPE cells in any of the 18 patients we have treated so far, which is very welcome news, and these trials are principally about safety in this early phase. At the same time, we continue to be encouraged with the functional data we have been able to gather on some of our patients. Our surgeons have reported back to us that they are seeing evidence of varying degrees of engraftment, changes in visual acuity, color perception and light sensitivity across the patients treated so far. At this point, you have to characterize our results as tantalizing, particularly because we are seeing some functional outcome in a group of patients who are all very late stage macular degenerative patients. However, we now have the opportunity to start treating patients who are at an earlier point in the progression of the disease.
As we announced earlier this year, the FDA approved a protocol change in our two US trials, which permits us to create new patient cohort IIa that will include patients with visual acuity as good as 20/100. Each trial will now include treatment of four 20/100 patients with 100,000 RPE cells, so that will be a total of 8 US patients total. We are only waiting for final DSMB clearance and for two of the four IRBs to approve at this point. We hope to hear from the DSMB as early as tomorrow, but if not, next week. We'll be able to treat all 8 of these patients in fairly rapid order without any breaks in the cohort. We are thrilled to begin treating these patients, as we hope to find in these patients areas of non-atrophic retina where there is the opportunity to observe rescue of photoreceptor function through the advanced retinal scanning techniques available to us. To put that patient group into perspective, many AMD patients with 20/80 vision are actually able to keep their driver's licenses, while 20/100 patients have advanced to a point where they are no longer permitted to drive. It is our expectation that these patients are more likely to have retained a greater number of dormant but rescuable photoreceptors and can be treated in areas of their eyes that will have a greater likelihood of impacting central and peripheral vision. Through treatment of this group of patients, we hope to see more consistent and pronounced improvements in visual acuity and other aspects of sight. This will give us an opportunity through the acquisition of data that normally does not become available until Phase II of a trial, to be able to better formulate a strategy for clinical end points and patient inclusion criteria in the next phases of these trials.
As many of you already know, not only do we have the top eye hospitals in the US, but also the top institutions in Europe taking part in our clinical trials. The input and advice from this group of surgeons is priceless. They represent the best of the knowledge and opinion leaders in this space. They have been involved in our efforts at the FDA, not only with respect to the ongoing trials, but it was through this group that ACT and Jules Stein Eye Institute at UCLA succeeded in expanding our RPE program with the additional approval from the FDA for Phase I/II study in patients suffering from myopic macular dystrophy. I want to note that this new IND application took only 30 days to be approved by the FDA. Myopic macular dystrophy is a severe form of macular degeneration that happens in people with severe myopia. You get significant elongation and distention of the eyeball that causes myopia, and also results in stress on the RPE layer, which can cause the death of the RPE cells and then in turn a loss of photoreceptor function. So it's a different mechanism of action that begins this disease, but progresses similar to that of dry AMD and Stargardt's disease. And this is a disease we believe our RPE cells can very positively impact. It is not lost on us how potentially large this patient population can be when worldwide markets are considered. In large cities in Asia, such as Shanghai for example, blindness due to myopic macular dystrophy affects more people than are affected by dry AMD, in part because this disease begins at a much earlier age. Every major pharmaceutical company with an ophthalmology program is watching these trials very carefully as we move forward.
While that is exciting to us, and we know to you as well, we need to keep eye on the types of things we can and should be doing before we engage in any serious consideration of partnering, collaborations or the like. The opportunity to treat these earlier stage patients to establish and get approval for a Phase II study, including its design and end points, and to expand into other indications, are all activities that help us tremendously, both in terms of credibility, and most importantly, valuation of the RPE program when the time comes to form a relationship with other companies. As we continue to move from discovery toward approval of commercialization, we are focusing more on the strategy around maximizing the value of these programs.
Now we have a number of other pre-clinical programs that have tremendous potential. One of the programs that I want to give you a quick update on is our platelet program. Platelets are key elements in maintaining blood vessel integrity, and so are essential in wound healing in the case of trauma to the body. But they are also able to speed up tissue regeneration and reduce scarring after injury or surgery. The source of platelets today is solely from donated blood, and platelets are far and away the most difficult of the blood products to maintain. They cannot be frozen or refrigerated. They must be stored at room temperature, and they have a shelf life of only 5 to 7 days. The consequence is that platelet supplies in most hospitals are minimal and they are used only sparingly in surgery in order to be maintained for use in the emergency room. After looking carefully at the demand for platelets and seeing this limitation on source, we have come to believe that the use of platelets would increase perhaps by millions or tens of millions of units per year if supply were available. This would include expand to use in surgical settings such as joint replacement, as well as potential demand for use in the cosmetic department. As we have discussed over the last few months, we have developed a manufacturing process for generating platelets using either embryonic or iPS cells as the starting materials. Our platelets look normal under the microscope and importantly, function like normal platelets, both in bench top experiments as well as in our animal models. Many of you have seen our mouse model. We are working on scaling up to bioreactor settings that we hope will eventually permit us to make vast quantities of platelets for commercial applications. We are now working towards filing an IND for what we expect will be the first in man trial using any kind of stem cell derived platelets, and perhaps even the first in the world for an iPS derived cell in any human trial. We actually have a pre-IND meeting with the FDA tomorrow and hope that their guidance will help us succeed in getting approval for these very important clinical trials.
On a frustrating note, we continue to struggle with a slow legal resolution concerning NIH registry of eligibility. I was just on a lengthy conference call discussing this matter with a new consultant we have retained to assist us, and we believe we have strategy to advance to approval. To us, it is insulting and almost laughable that the only embryonic stem cell lines that don't actually destroy embryos remain ineligible for Federal funding, not to mention the scientific advantages that our single blastomere-derived lines have over all of the inner cell mass-derived embryonic stem cells, and we have tested them against. We are certain that once our points are clearly understood by the right people, this roadblock will end.
In summary, we believe that 2013 will be a year of great value creation for shareholders. We expect to achieve significant milestones clinically, which would include meaningful signs of efficacy in our lead clinical programs. With most of the issues that created uncertainty for investors behind us, we feel that the market will begin to recognize the potential for our technology.
Now, I'd like to open the call for questions.
Question (internet): Regarding your upcoming conferences where ACT will be presenting, especially in Barcelona, Spain, where you will be appearing on a panel along side Mr. Steger, Head of Research and Technology Partnering for Roche. Is it fair to say Roche is a top contender to become our first JV partner?
Gary: Well, Shire is also on that panel as an aside, as is TiGenix, which is a very exciting opportunity for this company. Look, it is a big honor to be on a panel with Roche and Shire and TiGenix of course. I think it's an indication of how far along this company has come. I can tell you for certain that a year ago there was no chance that this company would have been on a panel like that one. I can also tell you that Roche and Shire are very up to date on these trials and know everything about them, but whether or not we're going to partner with Roche or Shire, or anybody else that we speak on the panel with, obviously I can't comment on. But I do think it is very important that the company has advanced to a stage of credibility where we're now invited to, and know on a first-name basis, the people that are Corp Dev heads at these big pharma companies, and I think it sort of speaks to what I was talking about earlier in my prepared remarks.
Question (internet): When do you anticipate starting Cohort 3 and Cohort 2A?
Gary: We have begun lining up patients for Cohort 2A. As I mentioned, only two of the four IRBs have approved the protocol change for 20/100. The other two really just applied in the last few days. So we're going to try to spread those patients out relatively equally among the four centers, but we have identified, in the two centers that have IRB approval already, some potential patients for the 20/100 and we're very excited about that. Cohort 3, which is the 150,000 cell patient cohort, as of right now, we're scheduled for treating two patients, let me just open my calendar, we're scheduled for treating two patients in the week of March 18th, one Stargardt's and one dry AMD. Obviously that is predicated though on us getting approval relatively quickly here from the DSMB, because we cannot start the patients on immune suppression until we've got DSMB approval. So hopefully if we get DSMB approval tomorrow, or Monday, the patients will begin their immune suppression within a couple days of that and then you know treatment one week later. So that's sort of where we are. It is most likely going to be end of March or early April before we can start treating the 20/100 patient cohort. I think it's important to understand that we've got no DSMB intermediate stopping points in those cohorts, so we ought to be able to treat those 8 patients with relative lack of time between them. In terms of our current corporate schedule for treating the balance of all these Phase I patients, the current schedule has us finishing all the patients in around October of this year, but obviously that is predicated on quick turnaround from DSMB, and also then having patients that are ready to go. So to some extent, those things are a little bit out of our control. Obviously we're working very hard with the institutions to have patients ready immediately after DSMB approval, because we now have so many centers on line.
Jim Coon: Good afternoon Gary. Gary, I've got a question, let me first start by saying I really like the strategy of not giving away the golden goose you said in one of your e-mail or PR updates, not giving away the golden goose of the RPE program too early, waiting until the value is there, so in my opinion that's all good. But in my opinion what is not so good is having to continue to finance the company for an extended period of time while share price is sitting at 7 cents. So my question comes back to some of the comments you were making on the platelet program, and some previous calls where you indicated the company had some interesting, or perhaps was considering maybe partnering platelets or one indication with the MSC program earlier, and I just wanted to see you know how would you guide shareholder expectations regarding a deal around platelets or MSC perhaps early on in RPEs?
Gary: Let me first say that I, like you, would love to have some non-dilutive financing come into the company. This year both the management team and myself have a significant component in our compensation related to getting some partnering deals done and some financing that will take some of the funding obligations off of our books, so we have, in addition obviously to our share ownership, we have ample incentive to try to make that happen. On the platelet side, rather than go for a corporate partnership, we have decided that we want to pursue, sort of pursue more governmental and quasi-governmental partnership funding focused on the potential battlefield and national needs components rather than any corporate partnership, so that's something we're pursuing on the platelet side.
On the MSC side, Matt in particular is charged with leading us down the road of pursuing potential partnerships in indications that appear attractive based on our preclinical or animal studies of a variety of autoimmune and inflammatory diseases, and we're also looking at potential partnering alternatives and opportunities on -- we've talked about these cells before, on these photoreceptor progenitor cells and perhaps sort of developing those and maybe some of the paracrine factors that we can identify so that it wouldn't necessarily be a cell therapy, but maybe some sort of injection or other kind of treatment. So those are the areas where we're actively pursuing partnerships for this year. Obviously as you get to the close of Phase I, you wind up your Stage II efficacy end points, we see what happens with these 20/100 visual acuity patients, we aren't foreclosing the possibility of any sort of partnership in the RPE program, but we really feel that we need to jealously guard the value of that program because it is scalable into Phase II/Phase III commercialization with very modest financial investments on behalf of the company as opposed to some of these more systemic trials and applications that I've just described. So I think that is where you're going to see us working towards partnerships. And look, it is not lost on us that for all of the big opportunities this company has, in our history we've never done any form of partnership or collaboration with any big pharma company, although we have of course collaborated with some of the most prestigious university research labs in the country and the world. So it's not lost on us, and we recognize that there is an element of credibility that will inure to us and the shareholder base and with institutional shareholders, if we can begin to create some partnerships, which will justify and really add credibility to our scientific and operating platforms.
Question (internet): When will we see published data on the first 18 patients?
Gary: We are considering a variety of publishing strategies. One thing that we are considering is an update publication on the first two patients that were described in the Lancet. Obviously we've got exciting and good things to talk about with those patients, so that's something we're considering. We're considering some kind of midterm publication on the first 18 patients, though truthfully, with the opportunity of the 20/100 visual acuity patients sort of going on at the same time, to us, really that's the more relevant patient set. So I think what our plan is in the interim, other than the potential for some sort of reviewed and written update related to the first two patients, is that we'll continue to feed you information about these patients periodically on earnings calls and through press releases. We actually have several of our doctors that are speaking at a variety of conferences, including the most prestigious of all the subretinal conferences, which is called the Vail Vitrectomy, so there we have three of our doctors presenting in about two weeks, so they will be talking about what they see in the patients and where they see this trial going. I mean I think it speaks volumes that you've got the world's premier vitreal retinal surgeons walking around, sort of promoting our cell therapy. So I mean in a way, that's the best endorsement you can have. And then I think you should expect to hear something from us once we've got some data around these 20/100 visual acuity patients as well. But I think the presentations that are going to be done at Vail Vitrectomy by Steve and Carl and Jim, I think is very exciting, it's good data, and I think it's a VERY strong endorsement of the potential of this therapy.
Len Yaffe: This is Len Yaffe at StocDoc partners. Thanks for outlining the excellent clinical pathway that you plan on taking over the near future. I was wondering if you could comment in regards to your capital structure, sort of a follow on to a prior question. If you had any plans once you achieve exchange listing for a reverse stock split that could make your stock more attractive and be eligible to be bought by institutional investors?
Gary: Certainly Len. Nice to hear from you. Certainly we want to add to the potential universe of potential investors in the company. Getting a stock that is listed on a national market that is marginable will bring in mutual fund buyers, hedge fund buyers. It will expand the potential investor universe by 150 billion dollars or more. So obviously that is a critical plan for us. At the same time, we obviously want to jealously protect any friction that would happen around a reverse stock split. So you know we would want to plan for having good news and the opportunity to share exciting results, whether it be in partnering or in factual efficacy results, and so forth, timed to coincide with that kind of reverse. So we're monitoring all this stuff very carefully. We're going to time this thing in such a way that it makes sense for us and for our shareholders. We have spent a lot of time talking to and meeting with potential investors, institutional investors in the company, and I would say that there is starting to be a ground swell of enthusiasm about the investability of this company now that we've put these sort of serial periods of massive dilution to the warrant holders behind us. So we're working with the Nasdaq. We've reopened discussions with them now that we have solved almost all of the items that were on the checklist for them in order to get listed. We're working closely with IR as well as investment banks who have been setting up non-yield road shows to introduce the company. We've been talking to equity research analysts that are well know and well respected and getting very good feedback. So we're formulating a strategy to get there and at the right time we'll do it because there's a lot of fear in the shareholder base about the reverse split, but it is really not, from our point of view and from the statistics, born out. We're a very investable institutionally eligible to be invested in company but for the fact that we're trading at 7 cents and we're on the OTC. So we're going to make these changes. It's kind of the last stage of the company growing up, and the great thing about the investors who buy early in mid stage biotech stocks is that they're very event driven, they're very patient, just like the shareholder base we have now. And we're eager to be able to get into that market you know. We want to do what's best for the shareholders, and what's best for the shareholders is increasing the potential pool of investors.
Len Yaffe: Great, thank you so much.
Question (internet): Where do you stand on your hunt for a CFO?
Gary: We actually have about four very good candidates, some of whom at this point have met with some of the members of our board, and we're advancing to hiring a CFO. Our requirements for that person are rigorous. We want them to be steeped in strong financial background in terms of financial accounting and being able to help augment our financial reporting, but also operating discipline, managing to a budget, experience in the industry, strategic experience in deal making in the industry for both partnering and M&A. So we've got very high expectations and we've found some great candidates, all of which I would be proud to announce as the CFO. In the past the company has made some senior management level hires that have not worked out culturally at the company, and making sure that they fit in and everybody is happy is really critical. So it's not just about satisfying Nasdaq, it's not just about satisfying me, it's not just about satisfying Bob. We have a culture at this company that is very valuable and collaborative and important, and we need to make sure we find the right person. So you know, my goal, my timeframe is to have that person hired and on by the end of April, but just because that's my timeframe, you know, if I don't get universal buy in from the board and from the management team, and if it takes longer, it's going to take longer. But you know right now, as we sit here today, I have four candidates that I think are compelling, that have great experience and I'd be proud to have any of them as a CFO to this company, and I know that the shareholders will be pleased with the backgrounds of these people.
Question (internet): Do you anticipate an increase in authorized shares this year, and will we be sending out proxy material for a reverse split and whatever?
Gary: Look, at some point the company is going to have to get more shares authorized. We'll make a decision based on where we stand in terms of partnering, where the stock price is, how much capital we feel we need in the intermediate term, where we stand with the Nasdaq and so forth. I'm not going to rush into anything, and you know we'll make a decision based on where we are at the time. The reason that we haven't filed the proxy materials concurrently with this is, I really do want to get the SEC matter put to bed and maybe the CFO position put to bed, so that that's all material that we can have as part of our proxy and part of our annual shareholder meeting. So that is sort of why we're holding off a little bit and I hope that that sends a signal to you guys that we're eager to try to get those two things to closure relatively soon.
Toby Broadwater: I see discussion on your reverse stock split. I understand that. Doesn't it seem compelling that if you kept it and did make some advances the stock would just go up in the event?
Gary: Undoubtedly we think the stock would go up in any event, but for us to become Nasdaq listed, we would have to get the stock, without a reverse, we'd have to get the stock to $4.00, which would be a market cap of 9 billion dollars basically, and that is unlikely to happen until we're close or into commercialization of the AMD market, and assuming we've got a very broad label. I mean, that's a big market cap. So this isn't something we're going to be able to do without a reverse. I will at some point in the future share with you guys, either through the web site or through a release or something like that, data about reverse splits that involve uplistings. There's really just not that much to be afraid of. I mean, there is friction that happens in the time of the announcement, and a lot of companies, you know they do lose shareholders in the friction, but I mean, you know we've gone from 25,000 to 42,000, to 48,000 shareholders, and it's the extraordinary patience of this shareholder base that gives me confidence that you know people aren't just going to walk away from this company. It doesn't change your economic upside as a shareholder, holding a 7 cent stock to a $7.00 stock. When you get to real market capitalizations, valuation is all that matters. And the valuation, whether it's at 7 cents or $7.00 is irrelevant. The difference is at $7.00 you can have Fidelity and all the biggest hedge funds in the world investing in your stock and at 7 cents you can't. So your marginal buyers are that much bigger.
Toby Broadwater: Okay. Second question, you've got enough capital to go how far out in the future without new revenue?
Gary: Right now with Lincoln Park deal in place, and assuming that we don't change anything, we don't radically accelerate our plans or anything like that, or all of a sudden if the results were so good in the 20/100 patients that we want to go right to a pivotal trial in the Stargardt's or something like that, I mean obviously that could cost more, although obviously if that happens, we're not going to be sitting at 7 cents (laughing). So you know, we're funded right now into about the second quarter of 2015. So a lot's going to happen between then and now. We'll be well into if not through with Phase II, assuming we don't skip Phase II in Stargardt's. We'll know a lot more about where we stand with platelets, so our annual burn rate for 2013 will be in the 16'ish million dollar range, and just a little bit higher in 2014. So maybe 19 million, so we're pretty comfortable with where we are right now. Obviously as we discussed earlier in this call, we would love to get some non-dilutive capital in the form of some kind of partnership or another and we are working on it and like I said, we are highly incentivized to get there.
Toby Broadwater: Is any non-profit interested in donating money so to speak, cuz it is such an important issue?
Gary: You know, we've looked at some of those structures. They're very hard to do. We're more focused on the governmental, quasi-governmental and the big corporate partnerships. That is really the area that is much more attractive to us.
Toby Broadwater: Thank you. I appreciate your time.
Question (internet): Elaborating on the office expansion in Marborough.
Gary: Any of you that have been to Marlborough and walked through the offices would know that not only were we extraordinarily tight on office space, but we were basically sleeping on top of each other in the manufacturing and in the lab. We're at a point now where we need to actually be manufacturing two different products right? We need to be manufacturing platelets for human trial use, and manufacturing RPE cells for human trial use. So those two things require a lot of manufacturing space, so obviously we need to create a manufacturing suite that can satisfy that. Then in terms of lab and research space, we were very tight. A lot of our equipment is very old. So you know, we did this at really very marginal incremental costs to the company. I mean it increases the new space when you factor in giving back our old space, or 60% of our old space anyway, it only increases our annual burn rate by about $200,000. And it gives the FDA much more comfort in our manufacturing, gives us redundancy, gives us more room to expand our core research programs, so it really does a lot for us. You know, in a perfect world would we have gone from the number of feet we have to the number of feet we're going to. Maybe it's a little more space, but honestly the space was so inexpensive compared to any alternatives, and a couple of years ago when the company moved from Worcester to Marborough, we lost almost a month of work because we had to shut down, freeze. Here we're literally going to be walking things right across the hall. So it makes a big difference in terms of the cost of moving and so forth. I mean we'll save probably in moving costs what we'll spend in the first year on incremental rent. So we think this was a really a no brainer.
Kathy: It's also important to note that that this laboratory space that we're moving into, which is really difficult to come by in Massachusetts, so it's got chemical hoods and it's got bench space, and it's got the appropriate HVAC system for labs, so we were actually quite lucky to have found that.
Question (internet): Is ACT completely finished with all lawsuits and the issue with the SEC?
Gary: The answer to that question is, we are completely finished with the 51 warrant holders, which was by far the most difficult thing to finish. What we have left that's outstanding is the SEC matter. I want to make it clear that in the SEC matter, they are seeking no censure, no fines, and no penalties. What they are asking us for is essentially disgorgement of the cash that the company got through an exemption in the Securities Act, so they are asking for 3.5 million dollars, and they are asking for a cease and desist that we'd never do that again. Well obviously I would never do that again. It was done before me. I had no involvement in the management or the decision making at the time it was done, so we would never do that again. So the cease and desist is a give away. And from our perspective, we are trying to come to a resolution that requires us to pay less than the 3.5 million dollars to settle this matter. There are a variety of legal grounds that we are taking to try to pursue that, but of course the risk is if we can't settle with them and ultimately go to court, they could decide to seek you know penalties and censure and so forth. So it is incumbent on us to settle this. I'm not going to, I have no intent of letting years slip by and not have this resolved, because it's an overhang on this company, it's something, you know it's a black hole from the past, so we're going to put it to bed and I’m trying to do it in the most cost effective way possible. One thing you have to consider of course is that we have to continue to pay legal fees to the extent that this stays open, so we're eager to set this aside.
The other open matter, the suits from Aronson/Gorton, who had invested in the company back in 2004 timeframe, those are open matters. We've gotten a lot of their claims dismissed. We are hoping to get the balance of their claims dismissed and/or come to a settlement with them. It has been hanging over the company for years and years and it's something we're eager to get resolution to. Those are the two things left in the litigation section and when you go back and you look at what that litigation section looked like a year ago, I mean it's incredible how much we've accomplished. So I'm thrilled to say that we really do see the light at the end of the tunnel on that.
Francis Gavo: Hi Gary. Thanks for taking the call. My question is with regards to clinical trials for MMD. I was wondering when that was going to start, when the first injections are gonna happen, and if we're going to have a cohort with the 20/100 patients?
Gary: Excellent question. The point for treating MMD patients, our deal with Jules Stein is that they are working to try to find separate private financing for that trial. So we have told them that if they can't, we'll be there to try to support it. For a variety of reasons they want to try to get some separate financing, so the team there is working on that. We have not yet set a time table for the beginning of first injections in that trial. I will tell you that it will be a very inexpensive trial to run because it's running on almost the same protocols, same testing, same data aggregation as the AMD and SMD trials. So the cost of the trial is going to be under 2 million dollars to whoever puts the money up. And that includes screening and a year of back-in follow up, so it's not like you'd be writing a check for 2 million dollars this year. In terms of a 20/100 cohort, they want to see the results of the first few patients before we go ask for a protocol amendment. As you're probably aware, we applied for the protocol amendment for our US trials and the IND for the MMD at virtually the same time in December. So we couldn't really go in for 20/100 patients in the MMD trial because we didn't know if they were even going to approve it in the AMD trial. So we were a little subject to the timing there, but in any case, we want to treat some earlier stage myopia patients before we go into the earlier stage cohort. But given the way that that disease works, we think we're going to learn a lot from the 20/100 patients we treat in Stargardt's and AMD.
Francis Gavo: My second question is in regards to the platelets partnering that you mentioned. You mentioned that you were looking at government organizations and similar organizations. Would the NIH approval of our NED lines be an obstacle to that?
Gary: Well one thing you have to remember is that in that trial we're doing iPS cells and separately ES derived cells, so we don't need NIH approval for the iPS cells. So the two trials would be filed separately. We would plan to run them concurrently, but in order for the ES cell trial to be funded federally, we would need the lines on the NIH registry.
Francis Gavo: Okay. So what specifically, what kind of organizations are we looking for to partner with?
Gary: I think I've said all I really care to say at this time on that. It's governmental and quasi-governmental organizations that have the cash to be able to pay for a big opportunity like this. So I don't think I'm going to comment on that.
Francis Gavo: The reason I mention this is because there is some thought on iCell about maybe getting some kind of cooperation with the Blood Bank and the Red Cross, and maybe some kind of funding from them.
Gary: I don't think I want to say anymore at this time. We're in sort of a sensitive period of trying to resolve that.
Francis Gavo: Thank you for your answers Gary.
Gary: We're coming up on the hour mark now, so I'm going to close this down now. I really appreciate everybody taking their time and asking these questions. I continue to be amazed and astonished by how many people dial in, both on the web and on the phone, to these calls. It's really a great testament to the opportunities that this company has, and I really do hope that we're going to be able to meet the expectations of the board, the management and the shareholder base. So with that, I want to thank everybody for their time today and their continued support. We'll be speaking with you again when we report our first quarter results in May, and of course I'm sure you'll be following the conferences and so forth that we've got in the interim. Thanks very much. Have a good day.
transcripts...entire CC below for those who haven't seen..
ACT Conference Call, 3/07/13
Gary: Before I talk about the exciting progress in our trials, I want to take this time to reflect on the last couple of years as Chairman and CEO of this company. I am well aware that many of our shareholders, me among them, hoped that our stock price would be much higher than it is today; but with all that we faced two years ago, I really cannot believe how far we have come. This is a company that had revolutionary and important scientific assets but was hampered by poor financing strategies, and a terrible reputation for meeting its financial obligations, to landlords and vendors, sloppy licensing and legal arrangements, misleading the 51 warrant holders that financed our capital needs, adverse and opaque relationships with our common stockholders. The company never even held an earnings call or had any open forum for investors. The company had never written an operating budget or any long-term strategic plan. In short, it wasn't a business in any sense of that word. As we stand here today, this is a COMPLETELY different Advanced Cell. We made decisions about our programs and opportunities with rigor and discipline. We don't give away critical company assets for nominal return. We have a world class Board of Directors and Ophthalmic Advisory Board that have relevant partnering, operating, entrepreneurial, financial and strategic expertise. It has obviously been painful to suffer the dilution we have had to incur to pay out hundreds of millions of shares to satisfy obligations that resulted from financings that occurred in 2005 to early 2010, but they were legitimate obligations of the company. It's disappointing to have to go to the SEC to settle something that occurred over four years ago, but we must do this to put our past behind us.
We have emerged from this a much stronger company, a company poised to advance its trials involving one of the largest unmet medical needs in the world. As we stand here today, we are planning for efficacy end points, labels, patient population, Medicare and commercial payor or HMO reimbursement strategy. We're planning for a potential success that seemed laughable to even dream of two years ago. As Kathy Singh told me yesterday, "I used to not answer my phone because it was always somebody we owed money to. Now I don't answer because it's always somebody who wants to invest in the company." And we recognize that this success is in large part due to the patience and perseverance of our shareholders. We at Advanced Cell are very proud of what we have done in two years. We know we have much more to do, but we are convinced that for the first time, we see a clear road to success, not one paved with extreme bumps and hazards. We have taken these necessary corporate actions so that the progress we make in the clinic can translate to increases in shareholder value. These settlements we made were necessary in order to remove substantial potential liabilities the company faced, which were likely to result in much greater cash and stock issuances, even larger legal fees, and continuing major distractions to the management team and board. Importantly, we are also advancing toward a resolution with the SEC. Once a small number of opened issues are resolved, we will again be in a position to carefully evaluate options to listing on a national exchange.
Turning to our operations, and as you may know, our trials have been going well. We recently reported that we are undertaking the second half of our trials treating Stargardt's macular dystrophy and dry age-related macular degeneration. We have had no reports of safety issues with our RPE cells in any of the 18 patients we have treated so far, which is very welcome news, and these trials are principally about safety in this early phase. At the same time, we continue to be encouraged with the functional data we have been able to gather on some of our patients. Our surgeons have reported back to us that they are seeing evidence of varying degrees of engraftment, changes in visual acuity, color perception and light sensitivity across the patients treated so far. At this point, you have to characterize our results as tantalizing, particularly because we are seeing some functional outcome in a group of patients who are all very late stage macular degenerative patients. However, we now have the opportunity to start treating patients who are at an earlier point in the progression of the disease.
As we announced earlier this year, the FDA approved a protocol change in our two US trials, which permits us to create new patient cohort IIa that will include patients with visual acuity as good as 20/100. Each trial will now include treatment of four 20/100 patients with 100,000 RPE cells, so that will be a total of 8 US patients total. We are only waiting for final DSMB clearance and for two of the four IRBs to approve at this point. We hope to hear from the DSMB as early as tomorrow, but if not, next week. We'll be able to treat all 8 of these patients in fairly rapid order without any breaks in the cohort. We are thrilled to begin treating these patients, as we hope to find in these patients areas of non-atrophic retina where there is the opportunity to observe rescue of photoreceptor function through the advanced retinal scanning techniques available to us. To put that patient group into perspective, many AMD patients with 20/80 vision are actually able to keep their driver's licenses, while 20/100 patients have advanced to a point where they are no longer permitted to drive. It is our expectation that these patients are more likely to have retained a greater number of dormant but rescuable photoreceptors and can be treated in areas of their eyes that will have a greater likelihood of impacting central and peripheral vision. Through treatment of this group of patients, we hope to see more consistent and pronounced improvements in visual acuity and other aspects of sight. This will give us an opportunity through the acquisition of data that normally does not become available until Phase II of a trial, to be able to better formulate a strategy for clinical end points and patient inclusion criteria in the next phases of these trials.
As many of you already know, not only do we have the top eye hospitals in the US, but also the top institutions in Europe taking part in our clinical trials. The input and advice from this group of surgeons is priceless. They represent the best of the knowledge and opinion leaders in this space. They have been involved in our efforts at the FDA, not only with respect to the ongoing trials, but it was through this group that ACT and Jules Stein Eye Institute at UCLA succeeded in expanding our RPE program with the additional approval from the FDA for Phase I/II study in patients suffering from myopic macular dystrophy. I want to note that this new IND application took only 30 days to be approved by the FDA. Myopic macular dystrophy is a severe form of macular degeneration that happens in people with severe myopia. You get significant elongation and distention of the eyeball that causes myopia, and also results in stress on the RPE layer, which can cause the death of the RPE cells and then in turn a loss of photoreceptor function. So it's a different mechanism of action that begins this disease, but progresses similar to that of dry AMD and Stargardt's disease. And this is a disease we believe our RPE cells can very positively impact. It is not lost on us how potentially large this patient population can be when worldwide markets are considered. In large cities in Asia, such as Shanghai for example, blindness due to myopic macular dystrophy affects more people than are affected by dry AMD, in part because this disease begins at a much earlier age. Every major pharmaceutical company with an ophthalmology program is watching these trials very carefully as we move forward.
While that is exciting to us, and we know to you as well, we need to keep eye on the types of things we can and should be doing before we engage in any serious consideration of partnering, collaborations or the like. The opportunity to treat these earlier stage patients to establish and get approval for a Phase II study, including its design and end points, and to expand into other indications, are all activities that help us tremendously, both in terms of credibility, and most importantly, valuation of the RPE program when the time comes to form a relationship with other companies. As we continue to move from discovery toward approval of commercialization, we are focusing more on the strategy around maximizing the value of these programs.
Now we have a number of other pre-clinical programs that have tremendous potential. One of the programs that I want to give you a quick update on is our platelet program. Platelets are key elements in maintaining blood vessel integrity, and so are essential in wound healing in the case of trauma to the body. But they are also able to speed up tissue regeneration and reduce scarring after injury or surgery. The source of platelets today is solely from donated blood, and platelets are far and away the most difficult of the blood products to maintain. They cannot be frozen or refrigerated. They must be stored at room temperature, and they have a shelf life of only 5 to 7 days. The consequence is that platelet supplies in most hospitals are minimal and they are used only sparingly in surgery in order to be maintained for use in the emergency room. After looking carefully at the demand for platelets and seeing this limitation on source, we have come to believe that the use of platelets would increase perhaps by millions or tens of millions of units per year if supply were available. This would include expand to use in surgical settings such as joint replacement, as well as potential demand for use in the cosmetic department. As we have discussed over the last few months, we have developed a manufacturing process for generating platelets using either embryonic or iPS cells as the starting materials. Our platelets look normal under the microscope and importantly, function like normal platelets, both in bench top experiments as well as in our animal models. Many of you have seen our mouse model. We are working on scaling up to bioreactor settings that we hope will eventually permit us to make vast quantities of platelets for commercial applications. We are now working towards filing an IND for what we expect will be the first in man trial using any kind of stem cell derived platelets, and perhaps even the first in the world for an iPS derived cell in any human trial. We actually have a pre-IND meeting with the FDA tomorrow and hope that their guidance will help us succeed in getting approval for these very important clinical trials.
On a frustrating note, we continue to struggle with a slow legal resolution concerning NIH registry of eligibility. I was just on a lengthy conference call discussing this matter with a new consultant we have retained to assist us, and we believe we have strategy to advance to approval. To us, it is insulting and almost laughable that the only embryonic stem cell lines that don't actually destroy embryos remain ineligible for Federal funding, not to mention the scientific advantages that our single blastomere-derived lines have over all of the inner cell mass-derived embryonic stem cells, and we have tested them against. We are certain that once our points are clearly understood by the right people, this roadblock will end.
In summary, we believe that 2013 will be a year of great value creation for shareholders. We expect to achieve significant milestones clinically, which would include meaningful signs of efficacy in our lead clinical programs. With most of the issues that created uncertainty for investors behind us, we feel that the market will begin to recognize the potential for our technology.
Now, I'd like to open the call for questions.
Question (internet): Regarding your upcoming conferences where ACT will be presenting, especially in Barcelona, Spain, where you will be appearing on a panel along side Mr. Steger, Head of Research and Technology Partnering for Roche. Is it fair to say Roche is a top contender to become our first JV partner?
Gary: Well, Shire is also on that panel as an aside, as is TiGenix, which is a very exciting opportunity for this company. Look, it is a big honor to be on a panel with Roche and Shire and TiGenix of course. I think it's an indication of how far along this company has come. I can tell you for certain that a year ago there was no chance that this company would have been on a panel like that one. I can also tell you that Roche and Shire are very up to date on these trials and know everything about them, but whether or not we're going to partner with Roche or Shire, or anybody else that we speak on the panel with, obviously I can't comment on. But I do think it is very important that the company has advanced to a stage of credibility where we're now invited to, and know on a first-name basis, the people that are Corp Dev heads at these big pharma companies, and I think it sort of speaks to what I was talking about earlier in my prepared remarks.
Question (internet): When do you anticipate starting Cohort 3 and Cohort 2A?
Gary: We have begun lining up patients for Cohort 2A. As I mentioned, only two of the four IRBs have approved the protocol change for 20/100. The other two really just applied in the last few days. So we're going to try to spread those patients out relatively equally among the four centers, but we have identified, in the two centers that have IRB approval already, some potential patients for the 20/100 and we're very excited about that. Cohort 3, which is the 150,000 cell patient cohort, as of right now, we're scheduled for treating two patients, let me just open my calendar, we're scheduled for treating two patients in the week of March 18th, one Stargardt's and one dry AMD. Obviously that is predicated though on us getting approval relatively quickly here from the DSMB, because we cannot start the patients on immune suppression until we've got DSMB approval. So hopefully if we get DSMB approval tomorrow, or Monday, the patients will begin their immune suppression within a couple days of that and then you know treatment one week later. So that's sort of where we are. It is most likely going to be end of March or early April before we can start treating the 20/100 patient cohort. I think it's important to understand that we've got no DSMB intermediate stopping points in those cohorts, so we ought to be able to treat those 8 patients with relative lack of time between them. In terms of our current corporate schedule for treating the balance of all these Phase I patients, the current schedule has us finishing all the patients in around October of this year, but obviously that is predicated on quick turnaround from DSMB, and also then having patients that are ready to go. So to some extent, those things are a little bit out of our control. Obviously we're working very hard with the institutions to have patients ready immediately after DSMB approval, because we now have so many centers on line.
Jim Coon: Good afternoon Gary. Gary, I've got a question, let me first start by saying I really like the strategy of not giving away the golden goose you said in one of your e-mail or PR updates, not giving away the golden goose of the RPE program too early, waiting until the value is there, so in my opinion that's all good. But in my opinion what is not so good is having to continue to finance the company for an extended period of time while share price is sitting at 7 cents. So my question comes back to some of the comments you were making on the platelet program, and some previous calls where you indicated the company had some interesting, or perhaps was considering maybe partnering platelets or one indication with the MSC program earlier, and I just wanted to see you know how would you guide shareholder expectations regarding a deal around platelets or MSC perhaps early on in RPEs?
Gary: Let me first say that I, like you, would love to have some non-dilutive financing come into the company. This year both the management team and myself have a significant component in our compensation related to getting some partnering deals done and some financing that will take some of the funding obligations off of our books, so we have, in addition obviously to our share ownership, we have ample incentive to try to make that happen. On the platelet side, rather than go for a corporate partnership, we have decided that we want to pursue, sort of pursue more governmental and quasi-governmental partnership funding focused on the potential battlefield and national needs components rather than any corporate partnership, so that's something we're pursuing on the platelet side.
On the MSC side, Matt in particular is charged with leading us down the road of pursuing potential partnerships in indications that appear attractive based on our preclinical or animal studies of a variety of autoimmune and inflammatory diseases, and we're also looking at potential partnering alternatives and opportunities on -- we've talked about these cells before, on these photoreceptor progenitor cells and perhaps sort of developing those and maybe some of the paracrine factors that we can identify so that it wouldn't necessarily be a cell therapy, but maybe some sort of injection or other kind of treatment. So those are the areas where we're actively pursuing partnerships for this year. Obviously as you get to the close of Phase I, you wind up your Stage II efficacy end points, we see what happens with these 20/100 visual acuity patients, we aren't foreclosing the possibility of any sort of partnership in the RPE program, but we really feel that we need to jealously guard the value of that program because it is scalable into Phase II/Phase III commercialization with very modest financial investments on behalf of the company as opposed to some of these more systemic trials and applications that I've just described. So I think that is where you're going to see us working towards partnerships. And look, it is not lost on us that for all of the big opportunities this company has, in our history we've never done any form of partnership or collaboration with any big pharma company, although we have of course collaborated with some of the most prestigious university research labs in the country and the world. So it's not lost on us, and we recognize that there is an element of credibility that will inure to us and the shareholder base and with institutional shareholders, if we can begin to create some partnerships, which will justify and really add credibility to our scientific and operating platforms.
Question (internet): When will we see published data on the first 18 patients?
Gary: We are considering a variety of publishing strategies. One thing that we are considering is an update publication on the first two patients that were described in the Lancet. Obviously we've got exciting and good things to talk about with those patients, so that's something we're considering. We're considering some kind of midterm publication on the first 18 patients, though truthfully, with the opportunity of the 20/100 visual acuity patients sort of going on at the same time, to us, really that's the more relevant patient set. So I think what our plan is in the interim, other than the potential for some sort of reviewed and written update related to the first two patients, is that we'll continue to feed you information about these patients periodically on earnings calls and through press releases. We actually have several of our doctors that are speaking at a variety of conferences, including the most prestigious of all the subretinal conferences, which is called the Vail Vitrectomy, so there we have three of our doctors presenting in about two weeks, so they will be talking about what they see in the patients and where they see this trial going. I mean I think it speaks volumes that you've got the world's premier vitreal retinal surgeons walking around, sort of promoting our cell therapy. So I mean in a way, that's the best endorsement you can have. And then I think you should expect to hear something from us once we've got some data around these 20/100 visual acuity patients as well. But I think the presentations that are going to be done at Vail Vitrectomy by Steve and Carl and Jim, I think is very exciting, it's good data, and I think it's a VERY strong endorsement of the potential of this therapy.
Len Yaffe: This is Len Yaffe at StocDoc partners. Thanks for outlining the excellent clinical pathway that you plan on taking over the near future. I was wondering if you could comment in regards to your capital structure, sort of a follow on to a prior question. If you had any plans once you achieve exchange listing for a reverse stock split that could make your stock more attractive and be eligible to be bought by institutional investors?
Gary: Certainly Len. Nice to hear from you. Certainly we want to add to the potential universe of potential investors in the company. Getting a stock that is listed on a national market that is marginable will bring in mutual fund buyers, hedge fund buyers. It will expand the potential investor universe by 150 billion dollars or more. So obviously that is a critical plan for us. At the same time, we obviously want to jealously protect any friction that would happen around a reverse stock split. So you know we would want to plan for having good news and the opportunity to share exciting results, whether it be in partnering or in factual efficacy results, and so forth, timed to coincide with that kind of reverse. So we're monitoring all this stuff very carefully. We're going to time this thing in such a way that it makes sense for us and for our shareholders. We have spent a lot of time talking to and meeting with potential investors, institutional investors in the company, and I would say that there is starting to be a ground swell of enthusiasm about the investability of this company now that we've put these sort of serial periods of massive dilution to the warrant holders behind us. So we're working with the Nasdaq. We've reopened discussions with them now that we have solved almost all of the items that were on the checklist for them in order to get listed. We're working closely with IR as well as investment banks who have been setting up non-yield road shows to introduce the company. We've been talking to equity research analysts that are well know and well respected and getting very good feedback. So we're formulating a strategy to get there and at the right time we'll do it because there's a lot of fear in the shareholder base about the reverse split, but it is really not, from our point of view and from the statistics, born out. We're a very investable institutionally eligible to be invested in company but for the fact that we're trading at 7 cents and we're on the OTC. So we're going to make these changes. It's kind of the last stage of the company growing up, and the great thing about the investors who buy early in mid stage biotech stocks is that they're very event driven, they're very patient, just like the shareholder base we have now. And we're eager to be able to get into that market you know. We want to do what's best for the shareholders, and what's best for the shareholders is increasing the potential pool of investors.
Len Yaffe: Great, thank you so much.
Question (internet): Where do you stand on your hunt for a CFO?
Gary: We actually have about four very good candidates, some of whom at this point have met with some of the members of our board, and we're advancing to hiring a CFO. Our requirements for that person are rigorous. We want them to be steeped in strong financial background in terms of financial accounting and being able to help augment our financial reporting, but also operating discipline, managing to a budget, experience in the industry, strategic experience in deal making in the industry for both partnering and M&A. So we've got very high expectations and we've found some great candidates, all of which I would be proud to announce as the CFO. In the past the company has made some senior management level hires that have not worked out culturally at the company, and making sure that they fit in and everybody is happy is really critical. So it's not just about satisfying Nasdaq, it's not just about satisfying me, it's not just about satisfying Bob. We have a culture at this company that is very valuable and collaborative and important, and we need to make sure we find the right person. So you know, my goal, my timeframe is to have that person hired and on by the end of April, but just because that's my timeframe, you know, if I don't get universal buy in from the board and from the management team, and if it takes longer, it's going to take longer. But you know right now, as we sit here today, I have four candidates that I think are compelling, that have great experience and I'd be proud to have any of them as a CFO to this company, and I know that the shareholders will be pleased with the backgrounds of these people.
Question (internet): Do you anticipate an increase in authorized shares this year, and will we be sending out proxy material for a reverse split and whatever?
Gary: Look, at some point the company is going to have to get more shares authorized. We'll make a decision based on where we stand in terms of partnering, where the stock price is, how much capital we feel we need in the intermediate term, where we stand with the Nasdaq and so forth. I'm not going to rush into anything, and you know we'll make a decision based on where we are at the time. The reason that we haven't filed the proxy materials concurrently with this is, I really do want to get the SEC matter put to bed and maybe the CFO position put to bed, so that that's all material that we can have as part of our proxy and part of our annual shareholder meeting. So that is sort of why we're holding off a little bit and I hope that that sends a signal to you guys that we're eager to try to get those two things to closure relatively soon.
Toby Broadwater: I see discussion on your reverse stock split. I understand that. Doesn't it seem compelling that if you kept it and did make some advances the stock would just go up in the event?
Gary: Undoubtedly we think the stock would go up in any event, but for us to become Nasdaq listed, we would have to get the stock, without a reverse, we'd have to get the stock to $4.00, which would be a market cap of 9 billion dollars basically, and that is unlikely to happen until we're close or into commercialization of the AMD market, and assuming we've got a very broad label. I mean, that's a big market cap. So this isn't something we're going to be able to do without a reverse. I will at some point in the future share with you guys, either through the web site or through a release or something like that, data about reverse splits that involve uplistings. There's really just not that much to be afraid of. I mean, there is friction that happens in the time of the announcement, and a lot of companies, you know they do lose shareholders in the friction, but I mean, you know we've gone from 25,000 to 42,000, to 48,000 shareholders, and it's the extraordinary patience of this shareholder base that gives me confidence that you know people aren't just going to walk away from this company. It doesn't change your economic upside as a shareholder, holding a 7 cent stock to a $7.00 stock. When you get to real market capitalizations, valuation is all that matters. And the valuation, whether it's at 7 cents or $7.00 is irrelevant. The difference is at $7.00 you can have Fidelity and all the biggest hedge funds in the world investing in your stock and at 7 cents you can't. So your marginal buyers are that much bigger.
Toby Broadwater: Okay. Second question, you've got enough capital to go how far out in the future without new revenue?
Gary: Right now with Lincoln Park deal in place, and assuming that we don't change anything, we don't radically accelerate our plans or anything like that, or all of a sudden if the results were so good in the 20/100 patients that we want to go right to a pivotal trial in the Stargardt's or something like that, I mean obviously that could cost more, although obviously if that happens, we're not going to be sitting at 7 cents (laughing). So you know, we're funded right now into about the second quarter of 2015. So a lot's going to happen between then and now. We'll be well into if not through with Phase II, assuming we don't skip Phase II in Stargardt's. We'll know a lot more about where we stand with platelets, so our annual burn rate for 2013 will be in the 16'ish million dollar range, and just a little bit higher in 2014. So maybe 19 million, so we're pretty comfortable with where we are right now. Obviously as we discussed earlier in this call, we would love to get some non-dilutive capital in the form of some kind of partnership or another and we are working on it and like I said, we are highly incentivized to get there.
Toby Broadwater: Is any non-profit interested in donating money so to speak, cuz it is such an important issue?
Gary: You know, we've looked at some of those structures. They're very hard to do. We're more focused on the governmental, quasi-governmental and the big corporate partnerships. That is really the area that is much more attractive to us.
Toby Broadwater: Thank you. I appreciate your time.
Question (internet): Elaborating on the office expansion in Marborough.
Gary: Any of you that have been to Marlborough and walked through the offices would know that not only were we extraordinarily tight on office space, but we were basically sleeping on top of each other in the manufacturing and in the lab. We're at a point now where we need to actually be manufacturing two different products right? We need to be manufacturing platelets for human trial use, and manufacturing RPE cells for human trial use. So those two things require a lot of manufacturing space, so obviously we need to create a manufacturing suite that can satisfy that. Then in terms of lab and research space, we were very tight. A lot of our equipment is very old. So you know, we did this at really very marginal incremental costs to the company. I mean it increases the new space when you factor in giving back our old space, or 60% of our old space anyway, it only increases our annual burn rate by about $200,000. And it gives the FDA much more comfort in our manufacturing, gives us redundancy, gives us more room to expand our core research programs, so it really does a lot for us. You know, in a perfect world would we have gone from the number of feet we have to the number of feet we're going to. Maybe it's a little more space, but honestly the space was so inexpensive compared to any alternatives, and a couple of years ago when the company moved from Worcester to Marborough, we lost almost a month of work because we had to shut down, freeze. Here we're literally going to be walking things right across the hall. So it makes a big difference in terms of the cost of moving and so forth. I mean we'll save probably in moving costs what we'll spend in the first year on incremental rent. So we think this was a really a no brainer.
Kathy: It's also important to note that that this laboratory space that we're moving into, which is really difficult to come by in Massachusetts, so it's got chemical hoods and it's got bench space, and it's got the appropriate HVAC system for labs, so we were actually quite lucky to have found that.
Question (internet): Is ACT completely finished with all lawsuits and the issue with the SEC?
Gary: The answer to that question is, we are completely finished with the 51 warrant holders, which was by far the most difficult thing to finish. What we have left that's outstanding is the SEC matter. I want to make it clear that in the SEC matter, they are seeking no censure, no fines, and no penalties. What they are asking us for is essentially disgorgement of the cash that the company got through an exemption in the Securities Act, so they are asking for 3.5 million dollars, and they are asking for a cease and desist that we'd never do that again. Well obviously I would never do that again. It was done before me. I had no involvement in the management or the decision making at the time it was done, so we would never do that again. So the cease and desist is a give away. And from our perspective, we are trying to come to a resolution that requires us to pay less than the 3.5 million dollars to settle this matter. There are a variety of legal grounds that we are taking to try to pursue that, but of course the risk is if we can't settle with them and ultimately go to court, they could decide to seek you know penalties and censure and so forth. So it is incumbent on us to settle this. I'm not going to, I have no intent of letting years slip by and not have this resolved, because it's an overhang on this company, it's something, you know it's a black hole from the past, so we're going to put it to bed and I’m trying to do it in the most cost effective way possible. One thing you have to consider of course is that we have to continue to pay legal fees to the extent that this stays open, so we're eager to set this aside.
The other open matter, the suits from Aronson/Gorton, who had invested in the company back in 2004 timeframe, those are open matters. We've gotten a lot of their claims dismissed. We are hoping to get the balance of their claims dismissed and/or come to a settlement with them. It has been hanging over the company for years and years and it's something we're eager to get resolution to. Those are the two things left in the litigation section and when you go back and you look at what that litigation section looked like a year ago, I mean it's incredible how much we've accomplished. So I'm thrilled to say that we really do see the light at the end of the tunnel on that.
Francis Gavo: Hi Gary. Thanks for taking the call. My question is with regards to clinical trials for MMD. I was wondering when that was going to start, when the first injections are gonna happen, and if we're going to have a cohort with the 20/100 patients?
Gary: Excellent question. The point for treating MMD patients, our deal with Jules Stein is that they are working to try to find separate private financing for that trial. So we have told them that if they can't, we'll be there to try to support it. For a variety of reasons they want to try to get some separate financing, so the team there is working on that. We have not yet set a time table for the beginning of first injections in that trial. I will tell you that it will be a very inexpensive trial to run because it's running on almost the same protocols, same testing, same data aggregation as the AMD and SMD trials. So the cost of the trial is going to be under 2 million dollars to whoever puts the money up. And that includes screening and a year of back-in follow up, so it's not like you'd be writing a check for 2 million dollars this year. In terms of a 20/100 cohort, they want to see the results of the first few patients before we go ask for a protocol amendment. As you're probably aware, we applied for the protocol amendment for our US trials and the IND for the MMD at virtually the same time in December. So we couldn't really go in for 20/100 patients in the MMD trial because we didn't know if they were even going to approve it in the AMD trial. So we were a little subject to the timing there, but in any case, we want to treat some earlier stage myopia patients before we go into the earlier stage cohort. But given the way that that disease works, we think we're going to learn a lot from the 20/100 patients we treat in Stargardt's and AMD.
Francis Gavo: My second question is in regards to the platelets partnering that you mentioned. You mentioned that you were looking at government organizations and similar organizations. Would the NIH approval of our NED lines be an obstacle to that?
Gary: Well one thing you have to remember is that in that trial we're doing iPS cells and separately ES derived cells, so we don't need NIH approval for the iPS cells. So the two trials would be filed separately. We would plan to run them concurrently, but in order for the ES cell trial to be funded federally, we would need the lines on the NIH registry.
Francis Gavo: Okay. So what specifically, what kind of organizations are we looking for to partner with?
Gary: I think I've said all I really care to say at this time on that. It's governmental and quasi-governmental organizations that have the cash to be able to pay for a big opportunity like this. So I don't think I'm going to comment on that.
Francis Gavo: The reason I mention this is because there is some thought on iCell about maybe getting some kind of cooperation with the Blood Bank and the Red Cross, and maybe some kind of funding from them.
Gary: I don't think I want to say anymore at this time. We're in sort of a sensitive period of trying to resolve that.
Francis Gavo: Thank you for your answers Gary.
Gary: We're coming up on the hour mark now, so I'm going to close this down now. I really appreciate everybody taking their time and asking these questions. I continue to be amazed and astonished by how many people dial in, both on the web and on the phone, to these calls. It's really a great testament to the opportunities that this company has, and I really do hope that we're going to be able to meet the expectations of the board, the management and the shareholder base. So with that, I want to thank everybody for their time today and their continued support. We'll be speaking with you again when we report our first quarter results in May, and of course I'm sure you'll be following the conferences and so forth that we've got in the interim. Thanks very much. Have a good day.
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