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Executives

Joseph Chiarelli – Chief Executive Officer

Barry Jenkins – Chief Financial Officer

Peter Stegagno – Vice President-Operations

Iulian Cioanta – Vice President-Research and Development

Dan Jorgensen – Chief Medical Officer

Analysts

Brian W. Marckx – Zacks Investment Research, Inc.

SANUWAVE Health, Inc. (OTCQB:SNWV) Q2 2013 Earnings Conference Call August 15, 2013 10:00 AM ET

Operator

Greetings, and welcome to the SANUWAVE Health Inc. Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instruction) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Barry Jenkins, Chief Financial Officer of SANUWAVE. Thank you, Mr. Jenkins, you may begin.

Barry Jenkins

Good morning and thank you for participating in today’s call. Yesterday, after the market close SANUWAVE announced our Q2 2013 financial results. If you have not received the new release or would like to be added to the company’s distribution list, please call SANUWAVE at 678-578-0103 or go to the Investor Relations section of our website at www.sanuwave.com.

Now before we begin, I would like to caution that comments made during this conference call by management will contain forward-looking statements that involve risk and uncertainties regarding the operations and future results of SANUWAVE. I encourage you to review the company’s filings with the Securities and Exchange Commission, including without limitation our Forms 10-K and 10-Q, which identifies specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements.

Furthermore, the content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, August 15, 2013. SANUWAVE undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.

With that said, I’d like to turn the call over to our Chief Executive Officer, Joseph Chiarelli. Joe?

Joseph Chiarelli

Thanks, Barry, and good morning, and we appreciate you joining us on this call. Now, as most of you know at SANUWAVE, we’re focused on regenerating bones, muscles, tendons and skin, with our high energy focused shock wave technology. Now, I noted some people believe this shock wave space is highly competitive. However, we believe we have unique benefits over the competition including.

We are the only company developing focused shock wave technology with no direct competition to us in our applied fields. Now, there are other companies using other pressure wave methods such as focused or diffused shock waves, radial shock waves, lasers, ultrasound and radio frequency. However, we have a distinct advantage over these other technologies including; one, we don’t create heat, which is important, because heat close tissue or coagulates blood. Two, they can penetrate any tissue depth, so that we can treat issues that are on the surface or below the skin. And three, and probably the most important, we create angiogenesis, new blood vessels, which prevents the recurrence of chronic conditions. Now, our immediate focus with this technology is the advanced wound care space. However, given the unique characteristics of our technology, we believe that it can be developed beyond the medical space and potentially be used in non-medical applications.

So we’re currently using the technology in two devices; the dermaPACE and the orthoPACE; and both are approved and being used in Europe, Canada, and Asia with over a 150 devices in hospitals and doctors offices outside the U.S. In the first half of 2013, we serviced the devices applicators that provided over 5,000 treatments in Italy, Belgium, the Netherlands and Hong Kong alone. Now, I believe these numbers are impressive, and along with my team, we are actively working with on new distributor in Australia and New Zealand, and our distributors in Korea and Europe, to increase turnover and device use. We’re going to have more about this as the year progresses.

We also wanted to emphasize this morning that our priority or immediate focus is the Phase III U.S. Clinical Trial Supplement with our lead device, the dermaPACE. Now, we started this trial in the second quarter of 2013 in patients with diabetic foot ulcers. It’s a supplemental trial, meaning the FDA allowed us to use the data from our first Phase III trial to formulate the statistical plan for this trial. In essence, we are layering this trial onto the first trial. Now that’s a benefit to us for three reasons: first, the first trial showed that the dermaPACE device was safe and achieved efficacy, albeit later when the FDA required primary endpoint; second, we’re able to use additional device applications for each patient in this trial; and third, we will need fewer patients to demonstrate statistical significance from the Sham arm, and what that means is a shorter timeline to complete the trial.

Now, as we reported last evening, enrollment in this Phase III trial, which began in June, has now reached 30 patients. That’s about a third the minimum required and we are exceptionally pleased with the enthusiasm, effort and attention, the investigators are giving to or have been giving to our trial. I do want to caution though that while we continue to see interest in patient screening, there’s no guarantee that enrollment will continue at this pace.

In fact, it’s possible with variables such as vacation and weather, remember we’re coming into the hurricane season or the prime portion of the hurricane season, and those elements could cause a slowdown in enrollment. So with that caveat, I believe that we’re on track to meet our goal of full enrollment in the first quarter 2014, and Dan Jorgensen, our Chief Medical Officer, will review the trial in more depth later in our presentation.

I also want to point out that an important aspect of the current dermaPACE trial is the use of Bayesian statistics. Now, a frequent question that’s asked to us is how Bayesian statistic methodology changes the calculation of statistical significance as compared with frequentist statistics, and Pete Stegagno will explain this later in the call. He is kind of stuck in with this. I’ll just say that under the Bayesian method, we required as few as 90 patients to achieve our primary endpoint, although, we may enroll additional patients to protect the trial against dropouts.

Now, as focused shock wave technology differs from other pressure wave technologies, the dermaPACE device does have many unique characteristics that separate it from any device in development or approved to treat diabetic foot ulcers or DFUs. The key properties of the dermaPACE in that regard are angiogenesis, anti-inflammatory characteristics and antibacterial capability.

I want to point out that the anti-inflammatory properties were recently presented at the World Congress of Microsurgery by Dr. Maria Siemionow, a microsurgeon at the Cleveland Clinic, who is also the surgeon who completed the first successful face transplant. She is also a member of our Science Board, and Dr. Siemionow presented preclinical data that demonstrated the anti-inflammatory effect of our dermaPACE in trauma situations, and Dan will also expand on this a little bit in a few moments.

Last point before I turn it back over to Barry and the rest of the team, a few weeks ago, we completed a small round of funding, $1.6 million. Now, we chose to be selective with this round, as our existing shareholders have recommitted themselves to providing the necessary funds to see us through the dermaPACE trial. And in this regard, they converted their $2 million of senior notes into equity at the end of July to further strengthen our equity base. There have been investor questions about the $0.20 conversion price, and I want to point out that the conversion price was set at the closing market price when the subscription agreement was signed in November of 2012, and since then, the stock price has risen about fourfold.

So to summarize, we believe that we made significant progress against the corporate goals that we identified for you both at the beginning of 2013 and in our first quarter conference call. And I will now turn the call back to Barry, so he can quickly review the highlights of the financial results for the second quarter.

Barry Jenkins

Hey. Thank you, Joe. So for the quarter, we remained focused on keeping our cash expenses low while we prepare for the start with a very important enrollment phase of the dermaPACE clinical study. Revenue for the second quarter of 2013 was $161,000, a decrease of 24% from last year’s second quarter. However, our gross profit as a percentage of revenue was 85%. That was up 24 basis points from last year and 13 basis points from the first quarter.

The decrease in revenue was due to the continued impact of the European economic slowdown on our largest distributors who are in Europe, which reduced the sales of devices in the quarter. The improvement in our operating margin was due to the increased sales of our higher margin device applicators as more devices are in use in 2013 as compared with the prior year.

Total operating expenses and this includes clinical related expenses for the dermaPACE clinical trial, increased by 27% or $397,000 to $1.9 million for Q2 2013. The increase in operating expenses for 2013 was primarily the cost associated with the start of the dermaPACE clinical trial in the second quarter, which totaled $379,000. And these expenses included a clinical research organization cost, the investigator meeting that we held in May, the cost of non-capital software and equipment that is used by the 20 clinical sites and, of course, the patient enrollment expenses during the quarter.

Below the line, in other income, we had net other income of $908,000, which is a result of the non-cash accounting expenses related to the common stock conversion feature included in the $1 million senior secured notes that we issued during the first quarter of 2013. The change in our stock price during the quarter resulted in the accounting fair value for the conversion feature to decrease by $2.3 million, which was a gain for the quarter. And this gain though was offset by $1.2 million for the quarter for the accrual of a non-cash interest expense, included in the amortization of the debt discount on the senior secured notes.

These notes were converted equity in July, which I’ll discuss in a few minutes. The net loss in the second quarter of 2013, decreased by $606,000 to $818,000 from $1.4 million loss last year, the net loss for Q2 2013 was $0.04 per share as compared to a net loss of $0.07 per share last year.

Now looking at cash flow, for the first half of 2013, so for the first six months, net cash used by operating activities was $2 million, which was $521,000 or 21% less than the prior year’s use of $2.5 million. This decrease in the use of cash for operating activities is due to the reductions in headcount and overhead related operating expenses during late 2012, which impacted us into 2013, offset by the increased dermaPACE clinical trial expenses I discussed earlier.

We’ve reduced our monthly cash burn rate from operations, which was $417,000 per month for the first half of 2012; we’ve reduced that down to $331,000 per month for the first half of 2013. However, we do project that our cash burn rate from operations will increase, because of the enrollment phase of this dermaPACE clinical trial, which is really starting to ramp up here in the third quarter of 2013, will increase approximately $575,000 to $625,000 per month, and that’s the same, as we’ve projected since the first quarter.

In July, 2013, we strengthened our balance sheet by completing a public offering for $1.65 million and converting a $2.2 million in senior secured notes to equity. The public offering we issued an aggregate 3 million units, which were sold at $0.55 per unit, with each unit consisting of a share of common stock and a warrant to purchase one half share of common stock, and the five-year warrants have an exercise price of $0.80 per share. The senior secured note holders voluntarily converted all of the outstanding notes into 10.9 million shares of restricted common stock at the conversion price per the note agreements of $0.20 per share, and as Joe said earlier, that’s the market price at the time the subscription agreement was put in place in November of 2012. The note holders also received warrants to purchase an aggregate total of 2 million shares of common stock. Those five-year warrants have an exercise price of $0.80 per share. We anticipate completing additional capital raises in 2013 to fund our ongoing dermaPACE clinical work and to provide working capital.

With that financial update, let me now turn it back over to Joe for business update.

Joseph Chiarelli

Thanks, Barry. Now, my preference is that each of the senior members of the management team discuss their respective areas. So on the dermaPACE study, we’ll have Dan Jorgensen, who is an MD and our Chief Medical Officer; walk you through the importance and the status of the current dermaPACE trial. Dan?

Dan Jorgensen

Thank you, Joe. Globally, there are over 360 million people living with diabetes, 27 million of whom live in the United States and this number could increase by 50% over the next 10 to 15 years as the population ages. In the U.S., there are 1.5 million diabetic foot ulcers diagnosed each year, leading to over 80,000 amputations at an annual cost of $3.6 billion. Obviously, this is an area of significant unmet medical need. We feel that dermaPACE can help address this need. This is the reason for the current clinical trial.

As mentioned during the last call, this trial is carefully designed. It is a prospective randomized sham-controlled double blinded clinical study incorporating data from the previous trail using a Bayesian design based on important guidance from the FDA. Only the highest quality sites representing all regions of the United States were included. Patient screening began shortly after the investigator meeting in mid-May and the first patient was enrolled in June. We are pleased to report that 30 subjects have been randomized thus far, approximately one-third of our minimum required enrollment. With the activation of our final sites in the coming weeks, we will be at full course. Therefore, we are on track to meet our goal of completing enrollment by first quarter 2014.

In my opinion, based on decades of clinical trial experience, the success of our study is directly related to relationships forged between the sponsor and the investigators, and in this study, I’m happy to say these relationships are quite strong. The SANUWAVE clinical team has been communicating with its sites and with the CRO on a daily basis. Over recent weeks, I have personally visited over half the sites, with plan to visit the remaining sites in the near future.

During these visits, I’ve met with the investigators and their site personnel, discussed patient recruitment and retention strategies, answered questions regarding the protocol and in some cases observed patient visits. Investigators have expressed their enthusiasm over the design of the trial, the support received from SANUWAVE, and the ease of using the dermaPACE device. As a result, we are confident that everything possible is being done to make this trial a success, and that the dermaPACE device after approval, could be easily adopted by clinicians for use in patients with diabetic foot ulcers.

These investigators already envision other applications of PACE technology in ways that could benefit their patients and have made suggestions about the design and conduct of future studies in areas well beyond the treatment of diabetic foot ulcers. One example is the area of microsurgery. This is based on the work of Dr. Maria Siemionow of the Cleveland Clinic, whom Joe mentioned earlier. She has shown that PACE therapy can prevent damage and accelerate recovery of tissue deprived of adequate blood flow, which occurs in prolonged surgical procedures. The underlying mechanism appears to be the strong anti-inflammatory effect triggered by the focused shock wave. In summary, we are pleased by the progress in our current clinical trial in patients with diabetic foot ulcers and believe that PACE therapy has potential benefits in other conditions. And we look forward to studying these other conditions in the near future.

Joseph Chiarelli

Thanks, Dan. We believe that we’re really off to a good start with the dermaPACE Trial Supplement and we truly appreciate the effort being made by the sites conducting the trial. Okay, now, because this is a supplement to the original trial and we are using Bayesian statistics, we’ve been asked a lot of questions about how the Bayesian methodology affects the calculation of statistical significance. So I am forcing Pete Stegagno, our VP of Operations and Regulatory Affairs to provide a summary explanation. So in addition, he’ll also give a quick summary of our status for initiating the orthoPACE trial, which is our other CE Mark device in the United States. Here’s Pete.

Peter Stegagno

Thank you, Joe, and good morning, everyone out there. As all of you know, trials are usually conducted using frequentist statistics, which requires having a sufficient population size, which is the power, and achieving a significant difference between the active arm and the Sham arm of placebo. Beginning in 2007, the origin of dermaPACE trial enrolled 206 patients and followed this method. In this trial, statistical significance was achieved at 20 and 24 weeks. However, the primary endpoint was at 12 weeks. At 12 weeks though the dermaPACE active arm showed statistical significance for wound area reduction greater than or equal to 90%. So in essence, the dermaPACE works, it just didn’t work quickly enough with the number of treatments prescribed in the trial design.

The scientific study that came out after the initiation of the first trial in 2007, indicated that if additional dermaPACE treatments are made, complete closure can be achieved by 12 weeks at rates that are substantially higher than that achieved by standard of care treatment alone, which is the Sham. SANUWAVE proposed and FDA agreed to this a supplemental trial that incorporated this increased dosage and also the structure the data analysis under Bayesian statistical principles, and this means that the supplemental trial we’re currently running is designed to verify that if additional treatments were incorporated in the first trial, we really believe the primary endpoint would have been achieved and we saw this in the rates of wound area reduction up to 12 weeks.

The incorporation of this prior data, meaning the information from the first study is the main reason for not leaving a large patient population in this supplemental trial. If the FDA had not agreed to the use of Bayesian statistics, our trial would be over 300 patients. In addition, the use of Bayesian statistics enables modeling by using conditional probability versus static probability. This is entirely different from the use of static modeling for tax law changes versus dynamic modeling of the effect of the tax law change.

With conditional probability, calculations are made that include the results of the original trial, which is the prior knowledge and results in the supplemental trial itself. Joe as he alluded to earlier, likes to call this layering. Now each patient in the supplemental trial effectively updates the accumulated probability that occurred before the patients’ data is averaged to totals. Simply, Bayesian statistics takes into account what happened previously to identify, if the next set of data indicates a significant difference exists from sham arm. So in simplified terms, success will be achieved if two key criteria are met. First, the rate of closure in the dermaPACE arm is greater than the rate of closure in the Sham-control arm. And secondly there is at least a 12% difference between the closures in the two arms. The Bayesian impact is most pronounced on the difference required and the frequency of this trial, the difference required between the two arms would be higher than the 12% and require more patients.

Now, what does this all mean again in numbers, we will have our first look at success after 90 patients have completed the first 12 weeks of the protocol, and the possibilities for success are in a range, in developing the operating characteristics for the study, a number of different success numbers were used. And one possible scenario just to give you in simple terms what success we’ll achieve is, looking at 90 patients and assuming an equal randomization, meaning 45 patients on each arm, dermaPACE and sham. Success can be achieved if 14 dermaPACE patients achieve complete closure by 12 weeks versus eight Sham-control patients. In essence again, hitting that rate of closure with dermaPACE greater than sham and a 12% difference between the arms, we should and expect to achieve a significance and then success.

I’d also like to briefly summarize where we are with plans for our orthoPACE device and its placement in the U.S. market. We intend to leverage our experience with the legacy OssaTron device and the move forward in selective orthopedic indications. We’ve already had discussions with FDA and they have been beneficial in helping to determine the proper development of clinical and regulatory pathway for this device. We’re still evaluating our options in regard to selecting indications and expecting a more clarity in the fall.

Joseph Chiarelli

Okay, thanks, Pete. I just want to indicate that we’re very sensitive about discussing the orthoPACE trial or any other trials that we’re considering that lever current approved indications, and we prefer not to discuss any of this until we have closure with the FDA on trial protocols, and also have the funding in place required to move forward in a controlled and logical manner. So we will not be providing additional information, until those discussions are complete whoever will require to do so by other events.

Now just to wrap up our formal presentation here, we wanted to cover two other areas today, our patent portfolio and how we can utilize it, and then and we’re having Iulian Cioanta who is our Head of R&D to walk you through the portfolio and the potential use of focused shock wave technology outside of healthcare, and actually, specifically, the cleaning of the effluent of frac oil wells. Iulian?

Iulian Cioanta

Thank you, Joe, and good morning to everybody on the call. SANUWAVE has a total of 33 patents or patents pending in its portfolio, covering a range of focused short wave applications and medical applications, energy production, water and food cleaning and blood sterilization. Of our patents, 24 are domestic and nine are outside the U.S. The average life of our patent is above 9.5 years with a range up to 18 years.

To touch on that, we have taken significant steps since the beginning of 2013 to reinforce our patent portfolio. On January 1, 2013, a blood sterilization patent was issued to SANUWAVE, which covered the use of shock waves to sterilize blood collected for medical purposes, and on a net need of modern society.

Immediately after the issuance of the blood sterilization patent, mentioned above, a division of patent from the same application was filed to cover non-medical applications for cleaning industrial waters and liquid foods.

Finally, we filed an additional new patent application to cover the use of shock waves in the oil industry for fracking enhanced oil recovery, separation of oil from water, cleaning oil, process water and (inaudible) the applicable sites.

In addition to strengthening further, our patent portfolio in non-medical applications, we have constructed and continued to improve our first proof-of-concept working model for expediting the cleaning of dirty waters generated during oil exploitation.

We believe that the use of our technology can have significant positive and financial impact and provide in the same time, an environmental advantage versus other systems. Based on the encouraging results from this model, the proof-of-concept model, we are ready to produce a mobile small scale model that can be legally transported and made operational in any third-party testing facility or directly into the field where the water cleaning process takes place.

Joseph Chiarelli

Thanks, Iulian. I got to say this is, it’s really interesting and we do have some videos, which demonstrate this and it’s amazing what we can do with our technology in this area. And I do want to emphasize that all of this work has been done in-house and it’s leveraged our existing knowledge, particularly Iulian’s knowledge and patents. And he and his team have really done an excellent job of developing this working model for such an environmentally important area. And they’ve done so well staying within a very, very tight budget.

Now, just to conclude and to refresh you on what we are striving to accomplish in 2013. Our objectives are to complete patient enrollment of the supplemental trial to obtain FDA approval for the use of the dermaPACE device, to treat diabetic foot ulcers; secondly, to expand our distribution network in Europe, Canada, Asia and the Pacific for the two currently approved devices in those areas with dermaPACE and the orthoPACE; third, to identify opportunities for the use of our patented shock wave technology in other areas of regenerative medicine, in other areas of healthcare, and in our industries outside of healthcare. And finally, to initiate discussions with companies and individuals to develop the appropriate channels and business models, so that we can initiate our technology in those areas, while providing a satisfactory return to our shareholders based upon the risks taken.

We’ll stop here and the team is more than happy to answer any questions that you may have. So I will now turn it over to Kevin to open it up for questions. Kevin?

Question-and-Answer Session

Operator

Thank you, sir. We’ll now be conducting a question-and-answer session. (Operator Instruction) Our first question today is coming from Brian Marckx from Zacks Investment Research. Please proceed with your question.

Joseph Chiarelli

Hey, Brian. How are you today?

Brian W. Marckx – Zacks Investment Research, Inc.

Good, how are you guys?

Joseph Chiarelli

Good, thank you.

Brian W. Marckx – Zacks Investment Research, Inc.

The frac water cleaning model sounds interesting, can you guys provide a little bit more kind of insight into timelines on when you think you might have the small-scale model complete?

Joseph Chiarelli

Yes, we have been working with a company that actually, currently services the experiment in the oil wells, they have actually provided us with the characteristics and the flow rates that we need to meet. And as we meet or exceed that, with our core proof-of-concept model. In September, we intend to start building the scale model and hope to have it done either in September or in October. So we are on a fairly fast track to get this done and to demonstrate it out in the field.

Brian W. Marckx – Zacks Investment Research, Inc.

Okay. Relative to the trial, I know you said, you can only potentially provide limited information. The IRB approvals at the intended sites, do you have all of those now?

Joseph Chiarelli

Dan why don’t you answer? I guess we…

Dan Jorgensen

Yes.

Joseph Chiarelli

A big yes.

Dan Jorgensen

I was on mute, I apologize. the answer is yes.

Brian W. Marckx – Zacks Investment Research, Inc.

Okay. And have all the trial sites enrolled at least one patient now and how many of the patients have actually started treatment.

Dan Jorgensen

There’s a 12 or 14 inactive sites at the moment, so the answer is no, everyone hasn’t enrolled the patient. And the 30 patients we mentioned are enrolled patients. So they’ve actually started in the process that is not the screened number or the prescreened number. I have to say it’s not, they’re actually enrolled and being treated.

Brian W. Marckx – Zacks Investment Research, Inc.

Okay, okay. That’s perfect.

Brian W. Marckx – Zacks Investment Research, Inc.

And the last one, on the potential application in microsurgery, that also sounds very promising, any insight into kind of what the game plan forward is there?

Dan Jorgensen

We held an internal strategy session last week to prioritize how we will move forward with the different capabilities of the technology, as you can tell with the number of patients we have, and with the potential users. What we need to do is to, one, remain focused, not only on would care, but then on using our resources in the most efficient way. We will in the fall, once we have completed this process talk, basically lay out a better plan, because there are a number of trials and that would need to be conducted in different areas.

So with this point, we’re reluctant to say too much other than to say we have identified some areas that are called our next steps either in wound care in the rejuvenative area or in other areas in healthcare, but want to make sure that we understand the timelines, the costs and our ability to get market penetration before we lay this out to investors.

Brian W. Marckx – Zacks Investment Research, Inc.

Okay. All right, thanks a lot guys. That’s all I had.

Joseph Chiarelli

Thank you.

Barry Jenkins

Right.

Operator

Thank you. (Operator Instructions) Our next question is coming from (inaudible). Please proceed with your question.

Unidentified Analyst

Joe, can you talk a little bit more about the additional financing you might have to do in 2013?

Joseph Chiarelli

Sure, short version, we need from the start of the trial to FDA approval total with that $10 million. This round was $1.6 million. We are currently working on some other efforts, so we basically have to get the difference between $1.6 million and $10 million, and if my math is correct, that’s about $8.4 million. We expect to do that in a number of ways. It can be broken down between the data collection and then from data collection to FDA approval. I want to emphasize that we chose not to take the [rate] of doing it all upfront in order to protect existing shareholder value. We will continue to take that approach to ensure that those investors who take the risk, and work with us, and trust us, all right, will be rewarded to the extent we possibly can do that. Did that answer your question?

Unidentified Analyst

Yes. Thank you, Joe.

Operator

Thank you. Our next question is coming from [Scott Cooper] from Harrington Management. Please proceed with your question.

Unidentified Analyst

Hi, two questions. First of all, I want to learn more detail about the wound care overall market and the type of evaluations these companies are getting pre-enforced FDA approval?

Joseph Chiarelli

It is all over the lot, right. And as you know, osteolysis just basically doubled their share price as they announced in a Phase II that they had success in closing wounds, diabetic foot ulcer wounds, and that’s they’re doing 12 in 12 like we are. We find it interesting, because we tried to find out looking at their information as to whether they have any reopenings on their wounds and they have not reported that. So you have exceptional valuation there, Derma Sciences is the same way, Cytomedix and Magmedix, all of whom, I’d like to call them wound stuffers, have a something that fills the wound to promote cellular growth into the space. But the valuations were all over the lab, and it does, there seems to be great anticipation for the wound care area that this is a place now where there is potential. The size of the market globally is about $22 billion, and I think that’s fairly conservative, that is defined as our code in advanced wound care market, which takes into account, not only DFUs, but other types of wounds.

We do now have some another trials that are being done. but so far, no one has demonstrated to the FDA that they can achieve a 100% closure at 12 weeks. I believe based upon everything we’ve seen so far that we come to closest with the original trial was greater than 90%. And I know, I didn’t answer your questions specifically. but on the valuations, it’s really tough thing to do. You said you had a second question.

Unidentified Analyst

No, you know what, you’ve answered it. I appreciate it, and keep up the good work. You guys are doing a great job.

Joseph Chiarelli

Thank you.

Operator

Thank you. (Operator Instruction) As there are no further questions at this time, I would like to turn the floor back over to management for any further or closing comment.

Joseph Chiarelli

Thank you, Kevin. And we want to thank all of you for joining us this morning. If you have any questions, please don’t hesitate to give us a call. We’ll do the best we can to answer the question, within the domain of what is public information at the moment. We do look forward to providing you with more information and detail as we progress through the rest of 2013. We’re excited and I don’t say that rightly, because we’ve made great progress in the (inaudible) since I joined the company and that’s because of the team that we have and the support we have from our Chairman as well as from our investors. So we thank all of you and look forward to our next call in November.

Operator

Thank you. That does conclude today’s teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.

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