GTx, Inc. Q3 2008 Earnings Call Transcript

Nov.19.08 | About: GTx, Inc. (GTXI)

GTx, Inc. (NASDAQ:GTXI)

Q3 2008 Earnings Call Transcript

November 6, 2008, 9:00 am ET

Executives

McDavid Stilwell – Director, Corporate Communications & Financial Analysis

Mitchell Steiner – CEO and Vice Chairman

Marc Hanover – President and COO

Analysts

Joel Sendek – Lazard Capital Markets

Eric Schmidt – Cowen and Company

Howard Liang – Leerink Swann

Aaron Reames – Wachovia Capital Markets

Operator

Good day, ladies and gentlemen, and welcome to the third quarter 2008 GTx financial results conference call. My name is Sandy and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today’s conference. (Operator instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to your host for today’s conference Mr. McDavid Stilwell, Director of Corporate Communications. Please proceed.

McDavid Stilwell

Thank you, and good morning. On behalf of GTx, I would like to welcome you to our third quarter 2008 conference call.

We released our results earlier this morning through the newswires. If you do not have a copy of the release and want one, you will find it on our web site at gtxinc.com. We’ll have a replay of this call available on our web site until November 20, 2008.

With me today are Dr. Mitchell Steiner, Vice Chairman and Chief Executive Officer, Marc Hanover, President and Chief Operating Officer, and Mark Mosteller, Chief Financial Officer.

Following this introduction, Dr. Steiner will highlight third quarter 2008 clinical and corporate development. Next, Mr. Hanover will briefly discuss our financial performance. Dr. Steiner will then make closing remarks and open the call for questions.

Before we begin, I’ll remind you that information discussed on this call may include forward-looking statements, and such statements are subject to the risks and uncertainties we discuss in detail in our reports filed with the Securities and Exchange Commission, including in our most recent quarterly report on Form 10-Q filed August 5, 2008. We expressly disclaim any obligation to release publicly any updates to forward-looking statements made during this call.

Now, I’ll turn the call over to Dr. Steiner.

Mitchell Steiner

Thank you, McDavid. Good morning and thank you for joining us today.

We continue to make strong progress. Barring a recent planned pre-NDA meeting with the FDA, we are on track to submit this quarter the NDA for toremifene 80 milligram for the prevention of fractures and treatment of other estrogen deficiency side effects. In the first quarter of next year, we expect to hear from the FDA whether the NDA would be processed under priority or standard review. Our European partner Ipsen is planning to submit the MAA for toremifene 80 milligrams to the EMEA early next year. We are also in discussions with potential partners for toremifene in Asia, Japan and the rest of the world.

In September at the annual meeting of the American Society for Bone and Mineral Research, we presented additional efficacy and safety analysis from the Phase III ADT clinical trial. One safety measurement was serum PSA. PSA is a sensitive marker of prostate cancer progression in men with advanced prostate cancer, and is followed closely by physicians and patients to monitor the underlying prostate cancer. Among men in the modified intent to treat population with a detectable serum PSA at base line, which is a PSA greater than or equal to one nanograms per mil, there were 27% fewer men with PSA progression in the toremifene 80 milligram group compared to placebo. This reduction was statistically significant. Also there were no differences in PSA progression among men with an undetectable PSA at base line.

In October, at the Chicago Supportive Oncology Conference, we presented a similar analysis of PSA safety data from those study subjects who where treatment compliant at least 80% of the time. In this analysis, there were 31% fewer men with PSA progression in the toremifene 80 milligram group compared to placebo. We also presented at the same conference bone scan safety data and then a subset analysis of 201 men with a detectable PSA at baseline and no bone metastasis evidenced by bone scan. Initially toremifene 80 milligrams treatment did not affect the underlying prostate cancer. More specifically, this analysis showed by the end of the study 4.1% of men treated with toremifene 80 milligram had new bone met compared to 4.8% of men on placebo.

We believe these are important safety data for toremifene. The data from the ADT trial showed that toremifene 80 milligram treatment can prevent fractures and treat other estrogen deficiency side effects of ADT without negatively affecting the underlying prostate cancer. In fact, the PSA progression safety data suggests that toremifene may be suppressing prostate cancer progression and are consistent with the mechanism of action of toremifene.

In other pre-clinical and clinical studies, including a 514 patient Phase IIB clinical trial for the prevention of prostate cancer in men with high grade PIN, toremifene was shown to have prevented prostate cancer compared to placebo. These observations of the anti- prostatic effect of toremifene in men formed the basis of the ongoing Phase III clinical trial evaluating toremifene 20 milligrams for the prevention of prostate cancer in men with high grade PIN.

To update you on the progress of the PIN trial, in July of this year, an independent Data Safety Monitoring Board conducted a planned semi annual review of the unblinded safety data from the approximately 1,590 patients participating in the Phase III high grade PIN clinical trial and recommended the trial continue as planned. The DSMB to date has now reviewed safety data from the almost 3,000 patients enrolled in both the toremifene 80 milligram Phase III ADT clinical trial and the toremifene 20 milligram Phase III high grade PIN clinical trial with some of these patients taking drug for as long as three years.

As you recall, the end point of the Phase III high grade PIN clinical trial was based on prostate cancer events, and we believe the pre-speficied number of events to conduct the efficacy analysis will occur in the summer of 2009.

The Merck-GTx SARM clinical development programs are also making good progress. In October we announced the top line results from the Phase II clinical trial evaluating Ostarine, which Merck has now designated as MK-2866 in patients with cancer induced muscle loss also known as cancer cachexia. The clinical trial met its primary endpoint, a clinically significant absolute change in total lean body mass which is muscle compared to placebo and the secondary endpoint of muscle function which is performance.

The Phase II clinical trial enrolled 159 cancer patients with an average age of 66 years. The cancer types in this study were non-small cell lung cancer, colorectal cancer, non-Hodgkin lymphoma, chronic lymphocytic leukemia and breast cancer. There were 35 sites in the United States and Argentina and the participants were randomized to receive placebo, one milligram or three milligram oral capsule of Ostarine once daily for 16 weeks. Average reported weight loss prior to entry into the trial among all subjects was 8.8% and the subjects were allowed to have standard chemotherapy during the trial. The drop out rate during the trial was 33%, lower than the expected 50% rate, which has been observed in other cancer supported cancer clinical trials.

The primary endpoint of this study was absolute lean body mass measured by DEXA scan and the top line results showed that Ostarine treatment resulted in statistically significant and clinically meaningful increases in lean body mass compared to placebo and compared to base line in both the Ostarine one milligram and three milligrams treatment arms. The top line results also showed for the secondary endpoint of the study that Ostarine treatment improved muscle function performance in a 12-step stair climb test measuring speed and calculating power. No improvement in speed or power is observed for the placebo group.

The incidence of serious adverse events, deaths and tumor progression was similar in the placebo and treatment arms. The most common side effects reported among all subjects were fatigue, anemia, nausea and diarrhea, as you recall these patients were also on chemotherapy. Changes in ALT greater than twice the upper limit of normal were observed in two patients in each of the placebo, Ostarine one milligram and Ostarine three milligrams cohorts and no subject discontinued treatment because of ALT changes.

We are excited that Ostarine met the primary endpoint of the Phase II cancer cachexia clinical trial, even with the presence of confounding factors which included heterogeneous cancer population, cancer induced inflammation in the background and chemotherapy. The positive changes in lean body mass and stair climb performance compared to placebo was similar in magnitude to the changes that we observed in the Ostarine Phase II proof of concept sarcopenia clinical trial which we reported in December 2006. We plan to present the complete study results on the cancer cachexia trial at the upcoming scientific meetings in 2009.

Together with our collaboration partner Merck, we are evaluating Ostarine and other SARMs for sarcopenia in Phase I and Phase II clinical trials in both men and women. Sarcopenia is an exciting opportunity with a market potential we believe to be as large as osteoporosis. The purpose of these trials is to identify the best product candidates to take forward into Phase IIB and Phase III clinical testing for sarcopenia. We are looking forward to continuing our work with Merck on the future development of Ostarine and other SARMs and to updating you on the clinical development plans for sarcopenia, cancer cachexia and other muscular skeletal wasting conditions.

We are also excited about our pre-clinical pipeline. Building on our expertise of SERMs and SARMs, our robust discovery efforts have generated multiple selective nuclear hormone receptor modulator product candidates. We are currently focusing our efforts on completing the pre-clinical studies to begin a Phase I clinical trial of GTx-758 in the first quarter of 2009. GTx-758 is an oral LH inhibitor for advanced prostate cancer which has the potential to reduce testosterone to castrate levels, but without many of the estrogen deficiency side effects of current LHRH agonist therapies.

This drug candidate has the potential to be the first real advancement in the antigen depravation first line therapy since the introduction of LHRH agonists in the late 1980s. The clinical primary endpoint for ADT agents is testosterone levels, and accordingly the development pathway should be straightforward and expeditious. Given our expertise and our strong relationships with urologists, we believe this is an attractive product candidate.

Now I’d like to turn the call over to Marc Hanover.

Marc Hanover

Good morning.

The details of our financial results for the third quarter 2008 are included in this morning’s press release and are available on our web site. I’ll focus on the highlights. The net loss for the quarter was $11.9 million compared with a net loss of $10.2 million in the quarter a year ago. Revenue for the third quarter of 2008 was $3 million compared to $1.7 million for the same period last year. Revenue for 2008 included $315,000 of net sales of Fareston and $2.7 million of collaboration income from Ipsen and Merck.

Research and development expenses were $9.2 million and general administrative and administrative expenses were $6.1 million for the three months ended September 30, 2008, compared with $9.9 million and $3.2 million for the third quarter of 2007 respectively. At September 30, GTx had $105 million in cash. GTx has the potential to add to this cash balance and strengthen our balance sheet through the realization of near term collaboration milestones which the company may receive from our partners Ipsen and Merck. GTx has no debt and no warrants.

I will now turn the call back to Mitch.

Mitchell Steiner

Thank you, Marc.

GTx is unique. Not only are we one of a handful of companies who has a completed positive Phase III clinical trial with plans to submit a new drug application, but also we have the potential for a second new drug application next year for another program, the toremifene 20 milligram tablet for the prevention of prostate cancer in high risk men assuming positive results from the Phase III trial obtained next summer.

We also have the Merck-GTx SARM partnership which is working on Ostarine and other SARMs in multiple clinical programs and we expect to advance these drug candidates through late stage clinical trials for several indications. And capitalizing on our expertise in small molecule nuclear hormone receptors in urology, we are advancing another one of our compounds GTx-758 into a Phase I clinical trial next quarter, which has the potential to replace Lupron, Zoladex and other ADT therapies. Additionally GTx has a strong balance sheet with $105 million and no debt and no warrants. This does not even take into account the near term potential to receive multiple milestone payments from our partners Ipsen and Merck.

We are proud of what our 144 employees have accomplished. This year we delivered our first Phase III success. We’ve been purposefully building GTx as a company with the expertise to develop products in the bench through clinical trials and to commercialize them. We now have multiple near term revenue generating opportunities. At the same time, we are advancing our pipeline to deliver innovative product candidates year after year after year. 2008 has been a good year for GTx and we are even more excited about our future.

Operator, we are now ready to take questions.

Question-and-Answer Session

Operator

(Operator instructions) And your first question comes for the line of Joel Sendek of Lazard Capital Markets. Please proceed.

Joel Sendek – Lazard Capital Markets

Thanks. Good morning. My question has to do with your discussions with the FDA, we’ve heard someone on some other conference call this quarter that people are very skeptical about the FDA meeting their timelines and some are even thinking about not even asking for priority review. Did you get any sense that your pre-NDA filing or pre-NDA meeting that priority review might not be a valid strategy?

Mitchell Steiner

So the question is – thank you for the question Joel. This is Mitch. The question is the FDA has been missing a lot of its timelines and pushing them back and there may be sort of a sense that they may make a decision about priority review versus standard review based on what their work load looks like. And I think that from our standpoint we did not get any sense from the FDA one way or the other that their current workload was going to affect how they made a decision on whether we get priority review or not. What we did hear is that drugs that do not have anything – indications that do not have anything else indicated, in other words, there is no other drugs available for that indication, and that’s an unmet medical need, do quality for priority review, and they stuck to their guns on that. So I guess they are kind of being blind to the reality of whether they are going to meet that deadline versus whether or not we have the right to go down a certain regulatory pathway.

So the regulatory pathway is intact. In fact, I would argue, and this is Mitchell Steiner arguing now, that you have to think of our application more as a supplemental application in the sense that all – the NDA has been approved for Fareston 60 milligrams. And the sections that they would have to review are going to be peculiar to the clinical efficacy and the clinical safety and the CMC for this new line extension if you want to consider it that way. And so in some ways this may be – and this is Mitch talking now – this may be an easier evaluation for the FDA then starting from a new chemical entity.

Joel Sendek – Lazard Capital Markets

Okay. And along on those lines we can say since – may be the opposite side of the argument is if you look at the 20 milligrams on the ongoing study and all the safety data you have there, might they ask for that or is that totally irrelevant to this application?

Mitchell Steiner

It could be irrelevant because that’s 20 and the – in other words let’s say we would have had the reverse, you know – let me just say it this way. 80 milligrams is four times higher than 20, and so they would be less interested in what’s going on with the 20, because they already have this 60 milligram body of information out there for two decades. So they are going to be looking at the higher dose not the lower dose, and so it’s going to kind of be irrelevant in the sense that if they were no safety signals that would help you know, and we are not seeing safety signals in the 20 milligrams. If there were safety signals in the 20 milligrams, will that hurt you? Yes, but we are not seeing that. So really the 80 milligrams is what they are going to focus on because that’s a dose that’s not the approved 60 milligrams and the 60 milligrams is already three times higher than the 20.

Joel Sendek – Lazard Capital Markets

Great. That’s helpful. And then just my final question, a housekeeping one, when you – you said you are going to unblind or run the analysis on the PIN study in the summer, does that mean we will see the data in the summer or will that be simultaneous to when you make the disclosure?

Mitchell Steiner

I think we are trying to do – I think that really means the data in the summer.

Joel Sendek – Lazard Capital Markets

Okay, thanks.

Mitchell Steiner

Thank you, Joel.

Operator

And your next question comes from the line of Eric Schmidt of Cowen and Company. Please proceed.

Eric Schmidt – Cowen and Company

Good morning, guys. Mitch, as a follow up to Joel’s last question on the PIN data, we were thinking that with a three year timeline, in that a planned completion of the three year period in Q2, you just announced the data. I think you alluded to this now being an event driven analysis, could you clarify?

Mitchell Steiner

Yes. That’s been – we’ve said that every – in fact, I thank you for this question, Eric. The answer is yes, it’s always been event driven. The trial is a 36 month trial, just like cancer trials can be so many months, but it is event driven, and the interim analysis, as you know, was based on a certain number of events, and we hit those number of events, and then we pulled the trigger and we looked at the interim analysis and the same thing is going to be for the efficacy analysis that we are doing next year. So it is event driven. And now the next question would be, okay, if it is event driven, then do you have to wait the full 36 months before you go to file if it’s positive? And the answer is no. In fact, we are in better position to have three year data in a majority of our patients at the time that we would file for PIN. And so we are actually in better position because if we would have been successful this past year, then we would still submit the data that we have for the three year safety, but we would have to add additional data at the 120th day. You know you have 120 days after you file new NDAs to give them additional safety. In this situation, we are going to be locked and loaded with literally everything that we need if we are successful.

Eric Schmidt – Cowen and Company

Okay. Then could you help us on the number of events that are needed at the final analysis?

Mitchell Steiner

Yes, we had not disclosed those number of events, and as you know, we didn’t do the same thing for the last time because it just got people saying, what’s your event number now, what’s your event number now. And so what we’d rather say is that we believe – the company believes that we are going to hit that number of events in the timeframe that I just suggested. And could it change, could it be sooner? Yes, absolutely. Could it be later? We don’t think so. So we are trying to make sure that we give a realistic expectation of when you would expect to see the data.

Eric Schmidt – Cowen and Company

No, that’s fine. Thanks. A quick question for Marc on the financials, it looks like you are tracking toward the lower end of the net loss guidance for 2008, is the range of $52 million to $60 million still appropriate?

Marc Hanover

Yes, Eric, it is, primarily because we have – this quarter we are going to have some increased expense as it relates to our submission, and so our run rate will be a little bit higher but the answer is we will be on the lower end of our range.

Eric Schmidt – Cowen and Company

Okay, great. And last question from me, it just has to do with the SARM program with Merck. I know you are somewhat constrained by what you can say and also that you haven’t yet made a lot of decisions that are upcoming based on lack of data at this point. But help us out with the timeline, when do you think you will hear next about this program in terms of what compounds are going forward and what indications and when?

Mitchell Steiner

Yes. So let me again make it very clear there is a lot of activity going on between Merck and GTx, and there are compounds in multiple clinical programs. So it is lot of noise going – positive activity, I should say, not noise at all, it’s very focused positive activity going on between what Merck has done in the past and completing what GTx has done in the past and has completed, and what we are doing together. Even as early as eight months ago when we got together and did our partnerships, we had started some trials together. So there is a lot of activity.

The real question becomes, when will we be at a point where we can come back to the public and say, well, this is how we are going to go forward. We believe – and this is GTx talking now – we believe that after the cancer cachexia trial being positive, and interestingly, the cancer cachexia trial being positive for Ostarine and having another Phase II, that means now you have a 120 patients – 159 [ph] patients, both of them pretty much showing you that Ostarine is doing what Ostarine is supposed to do. Then that gives– that’s all human clinical data. It gives us a lot of ammunition to think about what the next later stage program is going to look like, and I think Merck and GTx trying to be very deliberate in how we approach that.

It’s a long way of saying that there’s a lot of good activity going on. To give you more specifically your answer, we hope that we will be able to give an outline and hopefully even get started on clinical development going forward, and we are going to be telling people the fist half of ’09. But believe me, Gtx and Merck are working very hard to make sure that we can identify what the next appropriate trial would be. And I will also tell you that Gtx and Merck are working very closely together so that GTx and Merck are sharing pre-clinical activities. In other words they are doing pre-clinical stuff, we are doing pre-clinical stuff; they are doing clinical stuff and we expect to continue to do clinical stuff. And so that’s really truly a joint partnership as opposed to having a relationship with a large pharmaceutical company where we are sort of the innocent bystander and get all the blame but no success. That’s not at all happening in this relationship.

Eric Schmidt – Cowen and Company

Thanks a lot.

Operator

(Operator instructions) And your next question comes from the line of Howard Liang of Leerink Swann. Please proceed.

Howard Liang – Leerink Swann

Thanks very much. Good morning. I’ve question regarding the FDA meeting. Can you tell us whether you were able to get anything out of the meeting, whether it is encouraging or non-encouraging from your perspective?

Mitchell Steiner

That’s a great question, Howard. Let me see if I can help give you the level of excitement that GTx has going forward. You know, we’ve been working on this NDA for the last 18 months. We made a decision that we weren’t just going to do a supplemental in the sense that you get to grandfather in with all these studies that may not have been required ten years ago when Fareston was approved. So we did a gap analysis, we did additional studies. We basically submitted a full meeting package to the FDA. As you know, we also have an SPA, and as you know we also make sure that we filed everything under the 1994 – I think it is 1994-95 draft guidance for osteoporosis drugs.

So GTx has done everything possible from a regulatory standpoint to make sure that we cover – we follow everything that is in the public domain plus having a special meeting, special protocol meeting with the FDA. In addition to that, we went ahead and submitted to the FDA full reports on additional studies that we’ve done, plus they saw the Phase III ADT clinical trial, both the efficacy and the safety, and based on that we then went and had a pre-NDA meeting with the FDA.

We are also working with an electronic vendor because the FDA requires that you file your NDAs now electronically. So we are literally at the brink of sending this stuff to get electronically formatted and you meet with the FDA because you don’t want to have everything electronically formatted before you have the meeting in case the FDA comes with additional studies and additional changes that require a delay. Well, the good news is there will be no delay. The FDA answered all our questions, there was nothing – no surprises. In fact, it was much more on the side of encouragement, and so GTx is very excited about moving ahead to file without delay our NDA and we‘re so happy we took the strategy to have everything ready to go, and that we do not expect to lose any time because of the recent pre-NDA meeting if that give you any sense of encouragement.

Howard Liang – Leerink Swann

Okay, great. And then a question for Marc regarding the near term milestones from either Ipsen or Merck, can you tell us what more you might expect in the near term?

Marc Hanover

Yes. Howard, I can’t disclose the specific timing for our agreements with both – prior agreements with both Ipsen and Merck. But obviously with Ipsen, we are coming up with some – there are some upcoming milestones based on submission. We are also coming up on milestone with approval hopefully. And with Merck, of course, we have a host of milestone opportunities based on our agreement, which again I can’t delineate. But suffice it to say that I wouldn’t mention in my comments today unless I felt like it was something that we could achieve in a near term range and that’s subject to the agreement.

Howard Liang – Leerink Swann

Okay, great. Then just last question for Mitch, regarding the finding of toremifene and the delayed PSA progression, Mitch, I know you know this already, can you sort of explain to us what will be the mechanism for a SERM to delay PSA progression?

Mitchell Steiner

Yes, so the mechanism would be that it works on the cancer itself. And if you look into the literature, it’s not peculiar to toremifene. All SERMs have the ability to be anti-prostatic. And toremifene has been used in advanced prostate cancer and hormone refractory. As you know we are going after the patients who are hormone sensitive. And literally, every study that’s ever been done pre-clinically and clinically and all the tox works, SERMs have always been anti prostatic.

So the mechanism is that it appears in order for prostate cancer to grow, you need to have a balance between testosterone and estrogen. And even though we focus on testosterone because that’s manly, it’s very clear that even in animal models, you can’t get prostate cancer unless you add estrogen. So estrogen is an important fact that we know now, and interestingly this science came about after we started our trials, early trials, not the latest trials, is that even the estrogen story is more complicated with estrogen receptor alpha and estrogen receptor beta being two receptor types that have sort of a yin-yang activity in the prostate where ERα accelerates prostate growth and ERβ actually slows it down.

So the role of estrogen is very important in the prostate and the mechanism of toremifene is that toremifene does block estrogen at the prostate level, and the whole beauty of it is at least bone alone [ph] as you see in our ADT trial and hot flashes and so on. So the anti prostatic mechanism has been well know for estrogen and the beauty of the ADT trial showing the PSA progression is reduced. And even if you look at the bone scan data where (inaudible) was 1% difference, even though not statistically significant because it’s a small number between bone scan progression in patients on toremifene versus patients on placebo, it mirrored what we saw in your PSA progression data.

So, it’s not only evidenced by a serum marker, but it’s also evidenced by bone scan. So not surprised, consistent with the mechanism of action shown from years of research, basic research in independent labs across the world, and now we are seeing it in our human clinical trial. So this is encouraging. Now remember now, the only test that we need to hit is that we have to make sure that toremifene in the ADT patients is not making the underlying cancer worse. And because that’s important when you are talking about cancer care products, one, you have to be efficacious, and two, you can’t compete with the, in this case, Lupron in its efficacy in keeping prostate cancer in remission, and in fact if anything it looks like it may augment and help.

Howard Liang – Leerink Swann

Great. Thanks very much.

Mitchell Steiner

Thank you

Operator

And your next question comes from the line of Aaron Reames of Wachovia Capital Markets. Please proceed.

Aaron Reames – Wachovia Capital Markets

Thanks for taking my question. I just had a follow up just on the Merck SARM relationship. Do you – and maybe this has already been addressed, so I apologize if it is a redundant, but do you have an idea of when Merck might be more willing to outline what their program, their internal program looks like, and when we might see data on any of those programs because there has been an update on how that may be conveyed to investors and GTx or if you can expand upon that, that would be helpful?

Mitchell Steiner

Yes. And the answer is Merck and GTx – let me say it in a different way. Merck understands that GTx has to let the public know what we are doing, the more for GTx than it is for Merck, because this is a program that’s one of our major programs. Merck has already disclosed in their annual report, and if you look at MK-2866 in their annual report this year, they’ve already disclosed that SARMs are a priority for them in sarcopenia. So that’s been publicly disclosed and prioritized by Merck.

Going forward, we are trying to work with Merck to lay out a program. It’s not because Merck doesn’t want to be transparent, it’s because we really have just gotten the clinical data, and they are just getting clinical data, and we want to make sure that before we tell the public what we are doing that we’ve done our research and that we’ve designed the trials and that we’ve met with the FDA when appropriate. And all of that kind of stuff is going on right now. And so what I can tell you is that as soon as we know what we are doing going forward, and we believe we will be able to share that with the public over the next half of the year, but it doesn’t mean to say we are not going to start to do something over the next half of the year.

It’s just saying that the clarity in the program and actually starting the programs is going to actually happen simultaneously. And we are just trying to work through that and give our partner an opportunity, because they just got this data for the first time, and we are using these data, plus the Phase II data that we reported in December 2006, plus their clinical data set, plus their pre-clinical information, our pre-clinical information, their regulatory discussions, our regulatory discussions, and their market research, our market research, to come up with the next best steps.

Aaron Reames – Wachovia Capital Markets

Okay, great. And then the last question I had, has there been any further I guess conclusion on whether sarcopenia would be defined as one or two standard deviations below normal in terms of how you would define that actual indication?

Mitchell Steiner

I think the question is a great question. I think it is a little bit more complex than that. And the reason for that is that in addition to talking about lean body mass, there may be some kind of performance measurements that will put a patient in the high risk group for frailty, and all of that’s being sorted out. It is not as clear, for example, as cancer wasting where you can obviously see that somebody is losing weight with cancer, you‘ve got a problem. In sarcopenia, the bar is a little higher in that it is going to – in addition to showing that you’ve increased lean body mass, i.e., muscle, you are going to have to show that that muscle translates into some kind of clinical benefit to the patient.

How to define that clinical benefit is where a lot of that discussion is being had, and you just have to stay tuned because the good news is that we are ahead of everybody else. More good news is that it’s unchartered territory, so that we are still going to, being ahead of everybody else, we are going to define what those definitions will be, and that we couldn’t have done it – we couldn’t be approaching that problem without being confident that GTx isn’t doing it alone. We are in fact doing it with Merck.

And as you know, Merck and other large pharmaceutical companies had to deal with the same issues when osteoporosis first came along, because as you know bone loss of aging is common. And when did bone loss of aging become a disease? And the answer is, when you are loosing enough bone that you are now more susceptible to fractures. And so we are kind of doing the same thing with sarcopenia. So we are being patient and we want to make sure that with an opportunity as large as sarcopenia that we do it right.

Aaron Reames – Wachovia Capital Markets

Okay, great. Thank you for taking my questions.

Operator

I am not showing any further audio questions at this time, so I would like to turn the call over to Dr. Steiner for closing remarks.

Mitchell Steiner

Thank you, operator. We’d like to thank you call for your interest in GTx. We look forward to updating you on our future progress and thank you again for joining us on today’s call.

Operator

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation, and you may now disconnect. Have a good day.

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