Cleveland BioLabs' CEO Discusses Q4 2012 Results - Earnings Call Transcript

Mar.14.13 | About: Cleveland BioLabs, (CBLI)

Cleveland BioLabs, Inc. (NASDAQ:CBLI)

Q4 2012 Earnings Conference Call

March 14, 2013 10:00 ET

Executives

Rachel Levine - Vice President, Investor Relations

Dr. Yakov Kogan - Chief Executive Officer

Dr. Andrei Gudkov - Chief Scientific Officer

Neil Lyons - Chief Financial Officer

Dr. Ann Hards - Executive Vice President, Regulatory Affairs and Quality Assurance

Dr. Ed Martin - Martin Blanck & Associates

Analysts

Matthew Kaplan - Ladenburg Thalmann

Mara Goldstein - Cantor Fitzgerald

Elemer Piros - Burrill Securities

Christian Glennie - Edison Investments

Robert Brous - Wunderlich Securities

Ken Boyd - The Way Investment Advisors

Operator

Greetings, and welcome to the Cleveland BioLabs’ Year End 2012 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Rachel Levine, Vice President of Investor Relations, Cleveland Labs. Thank you. Ms. Levine, you may begin.

Rachel Levine

Thank you, and good morning, everyone. Welcome to Cleveland BioLabs’ fiscal 2012 investor conference call. Joining us today are Dr. Yakov Kogan, Chief Executive Officer; Dr. Andrei Gudkov, Chief Scientific Officer; Neil Lyons, Chief Financial Officer; Dr. Ann Hards, Executive Vice President of Regulatory Affairs and Quality Assurance; and Retired Rear Admiral, Dr. Ed Martin of Martin Blanck & Associates.

Before we begin, I would like to remind all listeners that throughout this call, we may make statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of future performance or the successful execution of the company’s strategic plan and involve risks and uncertainties.

Additionally, I want to emphasize that some of the information discussed on the call, particularly our financial and cash outlook and forward-looking development plans based on information as of today March 14, 2012 and that actual results may differ materially from the expectations and assumptions discussed today as a result of various factors, including the risks outlined in our company’s filings with the Securities and Exchange Commission, including our most recently filed Forms 10-Q and 10-K. The information provided on this conference call should be considered in light of such risks. CBLI does not assume any obligation to update information contained in this conference call.

Dr. Kogan will open this morning’s call with a review of the year’s accomplishments and hand the call over to Mr. Lyons to discuss our financial outlook. Dr. Gudkov will provide a few more details on some of our development programs and hand the call back to Dr. Kogan for closing remarks and questions.

At this time, I’d like to turn the call over to Dr. Yakov Kogan, CEO. Please go ahead.

Dr. Yakov Kogan

Thank you, Rachel, and thank you to everyone for joining us for our 2012 investor conference call. I would like to start by reviewing our success in 2012. We have brought Entolimod into a pivotal stage of its development and moved several of our oncology programs forward in the clinic. One of our most significant achievement in 2012 was completion of a pivotal GLP’s non-human primate study. This study demonstrated with a high degree of statistical significance with a single dose of Entolimod given 25 hours after exposure to a 70% lethal dose of total body irradiation improved animal survival by nearly three times compared to the control group.

Over the course of 2012, we also secured several agreements on further guidance regarding the remaining development steps required to file a BLA for Entolimod as the radiation countermeasure with the FDA. Much of this progress is the result of seven meetings we had this Division of Medical Imaging Products since the transfer of our IND. Some of the key agreements on further guidance we have achieved includes: one, the scope and design of a proposed pivotal animal efficacy program, including the pivotal non-human primate study I just mentioned. Second, acknowledgement was the specific cytokines due to an important role in Entolimod’s mechanism of radioprotection. And as such it can be used as biomarkers for those conversion analyses and we advice on the structure of remaining clinical studies in healthy subjects.

The achievement of these qualifications regarding their requirements and study designs for remaining development tasks has yielded $2.3 million in additional and redirected awards from a Defense Threat Reduction Agency or DTRA and Chemical Biological Medical Systems, CBMS of Department of Defense and enable us to submit the developmental proposal to BARDA to fund remaining activities. Since then our team has been fully engaged in the execution of these funded studies including a GLP complaint PK/PD study in non- irradiated non-human primates. Simultaneously the team is working on preparation for the next round of studies required for BLA submission.

Our goal is to continue to work closely with FDA on the remaining aspects of our clinical protocol and position ourselves to file a BLA for Entolimod as a radiation countermeasure. While this considerable effort proceeds, we have been moving several programs forward for oncology and our applications. Enrollment in Entolimod advanced cancer trial at Roswell Park continues. And they are pleased to share what no serious adverse events have been reported to-date. Our next task is to move forward these additional efficacy clinical trials for Entolimod. These trials will be based on our growing body of knowledge regarding tumor types expressing the targets for Entolimod. Andrei will share more details of this later in the call.

CBLB612 is progressing through formal pre-clinical and GMP manufacturing in order to file an IND later this year. Our plan is to conduct a trial in healthy subjects to evaluate safety and potential efficacy of 612 as a stimulator of hematopoietic stem cell proliferation and mobilization. 612’s potency has been documented in multiple preclinical studies in mice and non-human primates. And our goal is to establish its potential as a complement to a current standard of care.

In July, this program received every year approximately $4.6 million developmental contract from the Ministry of Industry and Trade of Russian Federation. Incuron has completed dosing of two cohorts in a Phase 1 study of oral formulation of CBL137. This study has been run with patients with advanced solid tumors which are resistant of refractory to standard cancer I am sorry I apologize which are resistant or refractory to standard of care treatment. An IND for intravenous formulation of 137 is on track for submission to FDA this quarter. We believe that 137 is a primary target of interest for potential partners and investigating ways to expedite generation of value-driven clinical data.

We have accumulated very promising clinical data on various combination therapies and optimizing a trial strategy in order to maximize its efficacy. This strategy will be driven in part by data provided by a novel diagnostic assay we have developed, which Andrei will describe shortly. Dosing has been completed in the sixth cohort of a dose escalation arm of Incuron’s ongoing clinical trial of 102. This trial is for refractory advanced cancer patients with liver metastases given the lack of dose limiting toxicity absorbed progression in additional higher dose cohort will take place before initiating the efficacy arm. This is of course a positive news regarding the potential Phase 2 withdrawal, what also means was the trial is not likely to report until early next year.

In October, CBL102 was granted Orphan Drug status by the FDA for treatment of hepatocellular carcinoma, and a similar filing is being prepared for European Union. They are pleased to share for an investigator-initiated trial with 102 is currently being prepared at the Case Comprehensive Cancer Center at the Cleveland Clinic. Their protocol is for Phase 1, Phase 2 study of Tarceva in combination with (indiscernible) in patients with advanced non-small cell lung cancer. The prospects for this trial are quite exciting as 102 is our precursor Curaxin compound and shares the same molecular target as 137. Since this is investigator-initiated trial, Incuron will be only supply and drug product and will not bear our costs.

Panacela Labs continued the clinical work for its five pipeline candidates with a view towards potential IND filings. Xenomycins, a family of compounds in development as anti-infective agents was awarded a three-year approximately $4.8 million development contract from a Ministry of Industry and Trade of the Russian Federation. Our achievement in 2012 clearly demonstrated our ability to work with the FDA and push multiple programs along strategical path. Now, our job is to complete the Entolimod’s development as the radiation countermeasure and bring our oncology assets to the next level.

At this time, I will turn the call over to Neil to review our financial outlook. I will return a bit later to share our goals for 2013.

Neil Lyons

Thank you, Yakov. Our audited financial statements for 2012 will be filed with the SEC on Monday, and I address your attention to our earnings release issued this morning. First, let’s start with our equity raise. In Q4 2012, we raised over $17 million gross with net proceeds approximating $15.8 million to provide the financial resources to continue our clinical programs and keep our Entolimod defense team intact. As Yakov mentioned, the team is currently executing pivotal activities recently funded by DTRA and CBMS and is also working on critical ancillary activities for the next step in Entolimod’s development. This equity raise is one of the notable financial events easily discernible from our earnings release.

Another notable item is our position in cash and short-term investments, which was $28.3 million consolidated and $18 million for CBLI standalone at December 31, 2012. You may recall that we had published a CBLI standalone pro forma cash balance at September 30 of $20 million, including the net proceeds from our equity raise in Q4.

On our Q3 call, we confirmed net monthly cash burn guidance for CBLI standalone of $1.1 million to $1.2 million per month. Consequently, you might have expected the December 31, 2012 cash balance to be $17 million or less. The stronger cash position relates in part to receipt of some R&D tax credit refunds from the State of New York that were originally planned for Q1 2013 and other miscellaneous items.

Since the tax credit refunds were recognized earlier than planned in Q4, the resulting favorable variance as compared to our guidance will be offset by an unfavorable variance as compared to our guidance in Q1. On balance, the March 31 cash position should align with our prior guidance. These items and a deferred revenue item I will discuss later cover the more interesting aspects of our Q4 financial results. The other financial results are more or less as expected. So, I will spare you the standard rundown of the numbers. If you have specific questions, I’ll be pleased to answer those in Q&A.

Now, for the 2013 guidance, we continue our prior guidance namely that our net monthly burn is in the $1.1 million to $1.2 million range until we have an active contract with BARDA if that is forthcoming. It is our expectation that either the award or the failure to award the BARDA contract will significantly change our financial forecast for the year. And since we cannot predict exactly when or if a BARDA contract will be awarded. And since the BARDA contract is highly material to our financial projections, we will be providing only limited guidance for 2013 at this time. Once we have clarity on a BARDA contract we will refresh our financial guidance accordingly. We can’t however provide some more details regarding our active contracts.

First, I would like to draw your attention to a new table we have included in the MD&A section of our 10-K. This table addresses all active contracts, it does not address contracts that have been completed, it identifies award amounts, funded values, revenue recognized to-date and most importantly funded revenue yet to recognize.

As Yakov mentioned earlier, we have been spending the DoD development funding we got from CBMS and DTRA. In the fall, minor revenue was recognized in the fourth quarter. And we expect the remaining $2 million to be spent fairly consistently over the first three quarters of 2013. Moving on to our Russian grants note they are denominated in rubles and given exchange rate fluctuations the contract values in U.S. dollars are subject to change as such award amounts announced in our press releases are based on exchange rates at the time of the press release. Award amounts evidenced in the table on our 10-K are based on our award amounts in effect at year end. Total award values differ, revenue is accordingly – revenues are recorded in U.S. dollars based on average exchange rate in effect during the period. If you are not familiar with the accounting for subsidiaries of foreign functional currencies you might find it bit confusing. Nevertheless, we received the grant for CBLB612 last July. We have recognized approximately $9 million in the fourth quarter and expect $2 million of funded value to come in fairly evenly over 2013 and ‘14.

Panacela received a grant for Xenomycins in November. We have recognized approximately $900 million in the fourth quarter on that contract also and expect $2.6 million to come in fairly evenly over 2013 and ‘14. Incuron received a grant for Curaxin development in 2011. This contract has been fully paid at the end of last year. Today, we have recognized $1.6 million as revenue and expect the remaining $3.3 million to come in fairly evenly during 2013. However, given that this contract has been fully paid, the $3.3. million of revenues still to be recognized is shown as deferred revenue on the company’s balance sheet that is revenue next year will be recognized but no more cash to come next year on this contract.

Incuron has received $11 million of funding out of a $17 million commitment from Bioprocess Capital Partners and expect to receive the remaining $6 million in its final investment tranche from Bioprocess in 2013. Panacela has received $9 million funding out of an approximately $26 million commitment from Rusnano over a four-year period. We have submitted other proposals pending with the Russian Federation similar to the two grants awarded this year and the (indiscernible) grant awarded in 2011 for Curaxin. Our pending grant is approximately $10 million, of course there can be no assurance that these proceeds and grants will be awarded.

And one final comment on guidance, we have – until we have better clarity on BARDA we anticipate that both our consolidated R&D costs and G&A costs will trend in line with 2012 and total amount with the main variance being a switch from R&D spending on Entolimod as a radiation countermeasure given that the 179 animal GLP NHP study conducted in – concluded in mid-year 2012 that spending will be replaced by an increase in expending – expenditures for our Curaxin research, to our Incuron subsidiary which Andrei will highlight next. Andrei?

Dr. Andrei Gudkov

Thank you, Neil. As Yakov mentioned we have made substantial progress with our oncology programs. Not only Entolimod and two correction drugs currently in clinical trials, but we have compiled a significant body of data regarding the expression of the molecular targets for these drugs. Our companion diagnostic for Entolimod has enabled us to measure toll-like receptor 5 activity in 135 tumor samples we received from Roswell Park surgeons. Among the tumor samples we have tested several have demonstrated a fairly high proportion of TLR5 expression such as bladder, breast, lung melanoma, prostate and colorectal. This information combined with our knowledge regarding particular tissue types expressing TLR5 is guiding our Phase 2 trial strategy.

Our intention is to proceed into a Phase 2 trial without waiting for the current trial to finish and we are working with clinicians at Roswell Park to design one or two multi-center protocols, which could be submitted to the FDA in the coming months. We are performing similar tests for the molecular target of Curaxin 137, which is a chromatin remodeling protein complex named FACT. To-date, we have analyzed levels of FACT expression more than 850 tumor samples from patients at Roswell Park.

Our research has concluded that FACT is not expressed in the majority of normal tissues, but is over expressed in several types of cancers, and that this FACT expression is an indicator of poor prognosis similar to HER2/neu in breast cancer. Pancreatic, colorectal and lung are the three examples of the tumor types with high proportion of FACT positive ones, potentially making them a good target for the trial. We are also using FACT monitoring assay in Incuron’s ongoing clinical trial with oral formulation of 137 to measure reduction of FACT levels in patients. Our hope is that we might provide our potential partners with a pharmacodynamic indicator of 137’s activity as this trial progresses and the new trial was opened with a IV formulation here in the U.S. All-in-all, we are very excited by the insights these diagnostic assays are providing and believe that will add significant value as we move forward.

With that, I will pass the call back to Yakov for concluding remarks. Yakov?

Dr. Yakov Kogan

Thank you, Andre. We are incredibly focused on increasing shareholder value through two primary objectives: one, securing the BARDA development contract for Entolimod as the radiation countermeasure and performing all final program requirements for a BLA filing, and second, achieving value-driven efficacy data for oncology pipeline. In our view, the Entolimod radiation countermeasure program represents our nearest term opportunity to achieve revenues. We have made enormous headways used for FDA and they are doing our best to translate this success into a government fund and support the need to get through a BLA and ultimately procurement.

Received last night signature of the Pandemic and All-Hazards Preparedness Reauthorization Act into law by President Obama as the strong signal what the government continues to believe in the importance of these countermeasures for our nation security. I would like to reiterate what we are not just sitting around and waiting for BARDA’s response to our most recent proposal. So, we can execute the bulk of the remaining activities for BLA. The team has been actively executing the work plan under our DTRA and CBMS contracts and doing whatever background preparation they can to move forward with our studies as soon as we have the funding to do so. At the same time, we are strategically advancing our oncology pipeline, which we think contains compelling sourcing processes and by evaluating every business development, an alternative funding opportunity along the way.

As always, thank you for your ongoing support. We will now open the call for questions. Operator, please begin the Q&A.

Question-and-Answer Session

Operator

Thank you. We will now be conducting a question-and-answer session. (Operator Instructions) Thank you. Our first question is from Mr. Matthew Kaplan with Ladenburg Thalmann. Please go ahead with your question.

Matthew Kaplan - Ladenburg Thalmann

Hi, good morning guys. Thank you for the additional detail. Could you give us a sense a little bit in terms of I know it’s hard to predict how do you control, but in terms of the BARDA contract, when do you expect in terms of timing to hear back and be able to say that you will be able to start recognizing, I guess, you are requesting $50 million, I guess if you are expecting perhaps in April, when do you think you will be able to have visibility?

Dr. Yakov Kogan

I will ask Neil Lyons and Ed Martin to answer this question.

Neil Lyons

Yeah, our policy on discussing further about the BARDA contract is pretty much they will comment the rules out there are fairly clear 180 days, BARDA publishes to review our proposals submitted and we are in that process. And we will comment if we get an unfavorable review as soon as we get an unfavorable review, but if the discussions continue we will not in contract negotiations we will not comment until we have a signed contract to announce.

Matthew Kaplan - Ladenburg Thalmann

Okay, fair enough. But is it reasonable to assume kind of first half of this year that you could have some resolution?

Neil Lyons

We are just not commenting.

Matthew Kaplan - Ladenburg Thalmann

Okay, fair enough. In terms of the Russian subsidiaries, Incuron and Panacela, can you give us a sense in terms of just full year 2013 revenues and expenses, gross revenues and expenses for those on a fully consolidated basis, how is that going to impact CBLI at Cleveland on a fully consolidated basis?

Dr. Yakov Kogan

Neil, could you please answer this question?

Neil Lyons

Yeah. Like I said in the opening remarks, the amount of G&A and R&D spending is in line with what we reported for 2012?

Matthew Kaplan - Ladenburg Thalmann

Okay.

Neil Lyons

The revenue rundown of the existing contracts I went through on how much revenue we can expect on 2013 and ‘14 from the existing contracts. The net consolidated burn is in the range of $2.3 million a month for the consolidated group. And then there is the potential we may get a $6 million equity infusion from Bioprocess Capital Partners, as I mentioned for Incuron.

Matthew Kaplan - Ladenburg Thalmann

Okay. So, kind of net, the way to think about as net $2.3 million per month earned in total?

Neil Lyons

Yeah.

Matthew Kaplan - Ladenburg Thalmann

Okay, great. Thank you very much and congrats on the progress.

Operator

Thank you. Our next question is from Ms. Mara Goldstein with Cantor Fitzgerald. Please proceed with your question.

Mara Goldstein - Cantor Fitzgerald

Thanks very much for taking the question. I just wanted to make sure I understood correctly, I thought I heard you say that Entolimod and oncology will proceed in Phase 2 while the Phase 1 is still ongoing. And so I am wondering if you then have achieved the maximum tolerated dose and what that would be? And if you can just discuss that a little further? Thanks.

Dr. Yakov Kogan

So, thank you for your question. This is Yakov.

Mara Goldstein - Cantor Fitzgerald

Hi, Yakov.

Dr. Yakov Kogan

So, today, the maximum tolerable dose in the oncology patients wasn’t established, we are continuing dose escalation in the ongoing trial. At the same time, we are designing the efficacy study, which would prove – hopefully prove for efficacy of 502, our Entolimod in cancers, which we believe in tissues which we expressed the all five targets. So, we are discussing multiple clinical designs with clinical thought-leaders, which would answer the efficacy question. So, we do not want to focus on Phase 2 study on this, but we are still working on the exact design.

Mara Goldstein - Cantor Fitzgerald

Okay, thanks for the clarification.

Operator

Thank you. The next question comes from Elemer Piros of Burrill Securities. Please go ahead with your question.

Elemer Piros - Burrill Securities

Yes, hi. Yakov, I may have not heard this correctly, but did you say that 612 might get into or you might file an IND this quarter or was I confusing it with some other program?

Dr. Yakov Kogan

Thank you, Elemer. To clarify my statement it was this year.

Elemer Piros - Burrill Securities

This year, okay, this year and what is the remaining work that you undertake with 612 before filing the IND?

Dr. Yakov Kogan

Completing the (psychology) studies and putting IND together.

Elemer Piros - Burrill Securities

Okay. And Neil how would you define an unfavorable review, what would that look like? They reject the whole thing or they have some problems that you have to – or issues that they would like you to readdress, what is unfavorable?

Neil Lyons

Well, being the finance guy unfavorable is no money. Now, there can be a variety of negotiations and questions of follow-up and we can’t predict that, we can’t predict the timing that will take to go through. But in the end, we of course want the funding to continue the development of Entolimod.

Elemer Piros - Burrill Securities

So, in response to your development plan that you submitted some five months ago, you expect them to say how much money would they award for finishing development of Entolimod?

Neil Lyons

Yeah, we expect them to respond to the proposal and we have said the proposals that are range of $50 million. There is a variety of options in that total package that they can select, they can select when they want to fund discrete workup versus other workup. And so it all depends on how BARDA concludes their procurement decisions and negotiations with the company. And of course BARDA can always say they are not interested, but it is just impossible to make any predictions at this point.

Elemer Piros - Burrill Securities

Sure. And have you bottomed down all the issues or the remaining questions with the FDA with regards to the remaining work for Entolimod?

Neil Lyons

I’ll ask Ann Hards, Dr. Ann Hards of Regulatory Affairs to answer your question.

Dr. Ann Hards

So we have tied down the preclinical program. The non-human primate preclinical program is completely agreed. FDA did agree with us on a proposal that we have for the mouse program last year. Although, we have decided that we would like to treat one of those studies, the design of it slightly, so we will be going back to them to make sure that they are in agreement with the tweak, the main point that still needs to be negotiated. FDA did agree last year or they provided us a review last year of a proposed clinical program design and among other things in their review was the comment that they would like to see the study that we had proposed broken into two parts, one being a PK/PD part and one being a safety part. I think we discussed that on the last call. And we are close, but have not yet gone down to discuss the design of that of the revisions that they requested in the clinical program. So, essentially there are three parts that remain for agreement, one is the tweak on the mouse study design and then we need to discuss the clinical program that has been split into two.

Elemer Piros - Burrill Securities

So, you mean the two and three is the PK/PD portion and then the third piece is the safety component. When do you hope to meet with the FDA or how long would you need to actually be able to set a meeting from your end?

Dr. Ann Hards

Well, I can easily tell you that a median requires 75 days to set it up, but we are still doing some additional data analysis before we finalize what we are proposing and I cannot comment yet on when we are actually going to request the meeting.

Elemer Piros - Burrill Securities

And do you think that BARDA might be would like to look at a full agreement with the FDA before committing funding?

Dr. Ann Hards

I can’t comment on that.

Elemer Piros - Burrill Securities

Okay.

Dr. Ed Martin

Let me – this is Dr. Martin essentially in the BARDA review process they have had and continue to have access to all the discussions and formal communications between Cleveland BioLabs and the FDA. And they clearly understand because they have got many other drugs in development across a spectrum of different biodefense hazards that FDA process is iterative and continues on. So, I don’t think they necessarily anticipate finality, indeed the proposals we have submitted to BARDA are to help develop and carry the process even further through with FDA.

Elemer Piros - Burrill Securities

Thank you, Dr. Martin for that. That was all from me. Thanks.

Operator

Thank you. Our next question is from Christian Glennie with Edison Investments. And once again kindly limit yourselves to two questions at a time. Please go ahead.

Christian Glennie - Edison Investments

Yeah, just quickly on just following up on the potential BLA filing you previously guided to Q4 2014, is that the real current estimate?

Dr. Yakov Kogan

So, our guidance is dependent on the timing of the BARDA award.

Christian Glennie - Edison Investments

Okay. So, but essentially there is nothing changed, I mean it would still be a Q4 ‘14 or a sort of study as it was marked put in place at the beginning?

Dr. Yakov Kogan

Our BARDA funding will take place in the second quarter this year our guidance would stay – our guidance is with spent.

Christian Glennie - Edison Investments

Okay, thanks. And then just following up on the proposed Phase 2 oncology’s Entolimod, can you give any more sort of insight into sort of potential quality and targets, is it likely to be one target or maybe a multiple and sort of rough timing of when that might get underway?

Dr. Yakov Kogan

I would like to ask our Chief Scientific Officer, Andrei Gudkov to answer this question.

Dr. Andrei Gudkov

Well, as I mentioned in my presentation, we are working closely with lead physicians of Roswell Park and several leading oncologists in the country to find the optimal way how to translate the current knowledge about 502 and the information we generated during the trial into most optimally designed Phase 2 trial. Most likely overall I cannot promise it’s 100% right now, but most likely we will start one or two trials in the near future each of which will be focused on a specific indication. And our consideration of choice of cancer will take into account several things, one of which is the expression of the target in the cancer itself and in the target organ. Second the availability of patients and our ability to reach quick end points, so that we can have some conclusive data within a short rather than long period of time. And three, how quickly we can do the trial provided the availability of patients of that particular diseases in the centers which we are planning to include. What are these cancers are going to be? I gave a list of those candidates we are considering among which are for example bladder cancer. However, they said the final determinations will be done shortly but we are not ready to say that for sure now.

Christian Glennie - Edison Investments

Okay, thank you. One quick follow-up on that if I may is that a – is it proposing that Cleveland undertakes these studies or is it substantial requirements coming in health?

Dr. Yakov Kogan

These studies were designed by Cleveland BioLabs.

Christian Glennie - Edison Investments

Okay, thank you.

Operator

(Operator Instructions) The next question comes from Robert Brous of Wunderlich Securities. Please go ahead.

Robert Brous - Wunderlich Securities

Thanks for taking my question. Actually Yakov, in follow up to your prepared remarks what formal plans does management and the board have in place to protect shareholder value in the event you received an unfavorable answer from BARDA?

Dr. Yakov Kogan

So, we have contingencies well in place, but at this time, I do not want to comment on this.

Robert Brous - Wunderlich Securities

And that plan could be enacted rather quickly or?

Dr. Yakov Kogan

Yes.

Robert Brous - Wunderlich Securities

Okay. And then just to follow up on Andrei, how many more samples, are you guys going to need to take to buildup that body of knowledge or to essay for TLR5 you mentioned bladder, are there going to be a lot of more samples that you are going to want to essay before you start to decide, which avenue go down or which studies?

Dr. Andrei Gudkov

Actually, at this point, we are not depending on the number of samples, because we have already substantial amount of evidence, which allow us to get all the necessary arguments based on the expression of the target. We are also waiting for the results or analyzing the data, which already finished experiments with some preclinical efficacy modeling of specific cancer types and the type of delivery of 502 for those particular cases. So, I don’t think there will be no delay based on the number of additional samples analyzed. Actually, there will be no delay at all. I would say that we are working so actively on designing this new trial that we have all the necessary information in place to make the decision. We just need to have to compare experts’ opinion and prioritize the protocols we have in mind.

Robert Brous - Wunderlich Securities

Thank you for taking my questions. I appreciate it.

Operator

The next question comes from Ken Boyd with The Way Investment Advisors. Please go ahead with your question.

Ken Boyd - The Way Investment Advisors

Thank you all for taking my call and congratulations on the progress so far. My question, I guess, will be related typically with Dr. Martin, if you could elaborate with the signing of PAHPA and the enactment yesterday. What was the anticipation of EUA and progress going towards an EUA look like going forward? What solicitations under BAAs for procurement might look like going forward and procurements from not only BARDA’s pre-disposed need of 2.7 million doses, what it may look like going forward optimistically, how is that?

Dr. Ed Martin

Well, I am never optimistic about the government, but essentially the critical importance of PAHPA being signed is that it’s a very significant reauthorization of the entire piece of legislation that runs this entire research effort across number of fields. And it was bipartisan, the House and the Senate came to agreement through negotiations, the President signed it. So, in Washington today that’s huge. Now, what it did is allow very effectively not only a continuation of all the processes and procedures that are currently underway and have been underway. But it is significant, because Congress felt that it’s important enough to get this act to pass while they are obviously busy with a lot of other things.

Now, in regards to projecting I think there is not going to – the whole point of it is now we know the process is going to be the one that we anticipated EUAs are going to be, continued to develop the same way they have been just as a note and I’ll close with this, the e-ways are developed by the government either the Center for Disease Control or BARDA and then work through an intergovernmental system ending up with the FDA, and ultimately with the Secretary of Health and Human Services. So, the good news is neither the issue around the continuing resolution or the sequester is affecting us at all, because the Special Reserve Fund is a key part of PAHPA and that’s where the largest or overwhelming amount of the money comes for all these kind of developmental programs.

Ken Boyd - The Way Investment Advisors

Thank you. Would you anticipate usually the government March and April is putting out the solicitations if you get under the fiscal budget, you are obviously ending in September, is it possible to reflect on what we anticipate possible solicitations made enough for procurement?

Dr. Ed Martin

Well, the way this list it’s true that actually it’s more like April through about June and this year that may even be delayed for what they call RFQs or they call RFPs. Those are very specific requirements. Essentially, BARDA operates under a BAA, which they publish every couple of years and it is a very wide open broad ranging mechanism by which interested parties can apply. So, we don’t need to have RFPs come out for our activities with BARDA.

Ken Boyd - The Way Investment Advisors

Thank you.

Operator

(Operator Instructions) Mr. Kogan, there are no further questions at this time. I would like to turn the floor back over to you for closing comments.

Dr. Yakov Kogan

I just want to thank everyone for joining us today.

Operator

This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!