Cleveland BioLabs' CEO Discusses Q4 2013 Results - Earnings Call Transcript

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 |  About: Cleveland BioLabs, Inc. (CBLI)
by: SA Transcripts

Cleveland BioLabs, Inc. (NASDAQ:CBLI)

Q4 2013 Earnings Call

March 11, 2014 10:00 AM ET

Executives

Rachel Levine – VP, IR

Yakov Kogan – CEO

Andrei Gudkov – Chief Scientific Officer

Neil Lyons – CFO

Analysts

Mara Goldstein – Cantor Fitzgerald

Operator

Greetings, and welcome to the Cleveland BioLabs Fourth Quarter 2013 Investor Update Call. At this time all the participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder this conference is being recorded.

I would now like to turn the conference over to Ms. Rachel Levine, Vice President of Investor Relations. Thank you, Ms. Levine. You may begin.

Rachel Levine

Thank you, and good morning, everyone. Welcome to Cleveland BioLabs’ fourth quarter and fiscal 2013 investor update call.

Joining us today are Dr. Yakov Kogan, Chief Executive Officer; Dr. Andrei Gudkov, Chief Scientific Officer; Mr. Neil Lyons, Chief Financial Officer; and Dr. [Langdon Miller], Senior Medical Advisor and Consultant.

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 plans and involve risks and uncertainties.

Additionally I want to emphasize that some of the information discussed on this call particularly our financial and cash outlook and our forward-looking development plans is based on information as of today March 11, 2014 and that actual results may differ materially from the expectations and assumptions discussed today as a result of various factors. Such risks, uncertainties and factors include the risks outlined in our company’s filings with the Securities and Exchange Commission including our most recently filed Form 10-Q and 10-K. The information provided on this conference call should be considered in light of such risks. CBLI does now assume any obligation to update information contained in this call.

Dr. Kogan will open this morning’s call by sharing CBLI’s priorities for the year and update on the Entolimod radiation program. He will then introduce Dr. Langdon’s Miller’s role as a part of the Executive Team. Dr. Miller will discuss his views on the Entolimod radiation program and progress with CBL0137 clinical development.

Dr. Gudkov will then provide updates on the Entolimod Cancer Immunotherapy Program and pass the call to Neil Lyons who will recap results for the period and discus financial outlook. Dr. Kogan will then return for closing remarks and open the call to questions. At this time I would like to turn the call over to Yakov. Please go head.

Yakov Kogan

Thank you, Rachel and thank you to everyone for joining us this morning. For many years we have been known for our most advanced drug candidate Entolimod and the radiation countermeasure. Over the past couple of years we have significantly progressed development of this program. We have delivered statistically significant efficacy data, had mature discussions and agreements with the FDA regarding its development path through the Animal rule.

Now we are poised to review our recommendation of a human dose based on the dose conversion rate with the FDA this summer and evaluate our ability to submit a pre-emergency use authorization or pre-EUA submission. In the past we have enjoyed financial support from both the Department of Defense and BARDA.

Recently however we were informed that our latest proposal to BARDA would not be negotiated due to lack of availability of funds. Similarly they are not happy with this outcome. This being said this is not all what we assume to be the CBLI story. We are an oncology company with a unique set of drug candidate what we believe is as promising as or better than [inaudible]. This compound has been moved forward into the clinic.

We believe the market’s ability to value our oncology drug candidate has been difficult due to the early stage of development and overwhelming relatively near term magnitude of our radiation countermeasure program. This is our challenge to execute some inexpensive near-term objectives what is positive could make our radiation countermeasure program even more valuable and to mature the market’s understanding of our oncology drug candidate and for commercial potential.

How are we going to do this? Our immediate plans include pursuit of emergency use authorization submission for Entolimod as a radiation countermeasure and establishing clinical proof of pharmaco-dynamic activity of CBL137 and Entolimod as cancer therapeutics.

We believe we have identified a strategy to maximize the potential value for our radiation countermeasure program through pursuit of pre-EUA status. As what was less than we are receiving, this is a decision through which the U.S. government is able to administer unlicensed rescue therapeutics in emergency situations. If the FDA grant pre-EUA status purchases of Entolimod could be made for stockpiling in the event of a disaster.

Actual use of stockpiled drug occur only in declared emergency. I need to add what over 70% of dollar spent to-date on countermeasures in the U.S. strategic national stockpile have been for unlicensed drugs. We believe achieving pre-EUA status could also drive foreign government support for this program. Unlike a delayed or NDA submission which includes all data requirement for full licensure a pre-EUA submission is based only on data accumulated up to a time and that are relevant for a proposed emergency use.

During our FDA meeting in July of 2013 it was confirmed but the selection of a human dose based on the animal data basis would be the major remaining program goal as a prelude to the submission of the pre-EUA application. Over the past few months, the team has been working on completion of data analysis and selection of an appropriate human dose. Now that this work is completed we have requested a meeting with the FDA to discuss our findings. Our hope is to present information was also sought as an integral part of the pre-EUA submission.

Given the estimated time in previous phases please keep in mind that even if the meeting is successful we may or may not be able to immediately proceed to preparation of the pre-EUA submission.

As we work towards with and our oncology goal we recognize the critical importance of adding senior medical and drug development expertise to our management team. With this in mind a little over a month ago we started working closely with Dr. Langdon in the U.S. to help guide and execute our clinical strategy. Langdon is an appropriate drug developer with more than 20 years of experience in the design, conduct of successful translational clinical drug development program in oncology.

He has worked in all phases of drug development from first in human studies to pivotal registration directed trial and has contributed to a submission of milestone INDs and NDAs during his tenure at the National Cancer Institute and several large and small based pharmaceutical companies. These include pharmacy’s operations, [PDC] therapeutics and install the pharmaceutical and science. Langdon has played major roles in successful developments of drugs both, hematological and solid tumors including several marketed brands such as Neupogen, [Ucaine], Camptosar, Aromasin, SUTENT, and most recently [inaudible] which is pending licensure insurer.

Langdon has been integrated in our radiation countermeasures and is working closely with Dr. Ann Hards, our Executive Vice President of Reg Affairs on our communications with the FDA and preparation for the upcoming meeting. Langdon has also joined the CBL137 team and is providing guidance on our ongoing clinical trials evaluating data and mapping out an approach to Phase II study. We are very excited to have Langdon on board and he has already made significant contribution.

I will hand the call over to him now to take you through his impression of the radiation countermeasure program and the trial phases and in term of 137. Andrei will follow Langdon with updates regarding the Entolimod immunotherapy application.

Unidentified Corporate Participant

Thank you, Yakov. I am happy to be here and pleased to share some of my initial thoughts on the Entolimod radiation countermeasures program and discuss CBL0137 development. Yakov covered recent progress on the radiation countermeasures program but I would like to add my own perspective which has been significant part of my motivation to work with Cleveland BioLabs.

I feel that the Entolimod radiation program has significant positives including a well characterized mechanism of action, pharmaco-dynamic markers that logically tie the drugs mechanism to its clinical effect. It’s a very highly significant and dose dependent efficacy data in irradiated animal primates and a defined safety profile in healthy humans. We are going to be doing our very best to present a compelling case to the FDA to support the submission of a pre-EUA application as Yakov mentioned.

Now let’s turn to CBL0137 which has emerged as a leader in Cleveland BioLabs Oncology pipeline. This drug candidate has several strengths including its novel targeted and well defined mechanism of action, progressed IP position and demonstration of preclinical efficacy as a single agent or in combination with standards of care in a broad spectrum of cancers. CBL0137 binds in the minor group of DNA and that binding results in the sequestration effect which is short for facilities [comitant] transcription in the DNA Access been characterized in the neighborhood of oncogenic transcription for multiple oncogenes and the over expression of that in tumor samples has been found to correlate with the expression of markers associated with poor prognosis, higher change of metastatic disease and lower overall survival.

In fact that activity is quite attractive as a therapeutic mechanism since it was upstream of other of transcription oncogenes such as [heat shock] factor protein one which have long been cited as individual drug targets. When CBL0137 is administered that becomes trapped in DNA for netting the transcription of certain oncogenes and leading to activation P53 and inhibition of [inaudible]. These actions can disrupt tumor growth in in-vitro and in in-vivo is demonstrated in preclinical models in a broad spectrum of cancer types.

Given these observations Cleveland BioLabs has developed clinical pharmaco-dynamic marker assays to attract the activities of CBL0137 in circulating peripheral blood amount and increase in cells in plasma and is integrating these assays into two ongoing Phase I clinical trials evaluating both oral and intravenous administration in patients with advanced cancer.

The study of oral CBL0137 is currently evaluating the fixed dose escalation cohort without reaching a maximum tolerated dose. The study assessing the intravenous form of CBL0137 has completed the evaluation of patients in the second cohort without evidence of toxicity. Consistent with the mechanism of actions representative samples of circulating cells from patients anticipating in this study of oral CBL0137 have shown increased sequestration effect in DNA, increased cellular expression of T53, and reduction in plasma concentrations of [CO-10] which is a downstream marker and activity.

Once the Phase I pharmaco-dynamic, pharmacokinetic and safety profiles provides the basis for selecting recommended starting doses for CBL0137 we intend to pursue phase II evaluation of the drug in selected tumor types. Selection of indications will take into account the roll the effect in the carbo-genesis of those cancers as well as evolving preclinical and Phase I clinical data with CBL0137 reach indication we will consider regulatory and clinical potential with the goal of seeking a path to rapid regulatory approvals for CBL0137 or maximizing the commercial prospects for the drug across multiple cancers.

Cleveland BioLabs hopes to work closely with collaborative groups like NCI-funded children’s oncology group or COG to seek roles for the drug in areas of high unmet medical needs, preclinical experiments with CBL0137 performed part of the NCI’s preclinical pediatric tumor testing program have shown activity of the drug alone and in combination and several highly aggressive models of pediatric tumors.

Based on these results the COG is helping to perform phase I study in children that might lead to development of CBL0137 as a therapy for Neuroblastoma, Neuroblastoma and other life threatening pediatric cancers. The start of that Phase I study in children will be continued upon establishing the maximum tolerated dose for CBL0137 in the ongoing phase I trials in adults.

At this time I will turn the call over to Andrei to share some updates on the Entolimod immunotherapy program.

Andrei Gudkov

Thank you Langdon. Now let’s turn to Entolimod application as immunotherapy. In this case we are following two directions, systemic and local administration. For systemic administration our focus is to demonstrate proof of Entolimod pharmacological actively in humans so that we might position it as mobilizer of innate immune-activity against the tumor and open the door for future combinations with emerging class of inhibitors.

As you know last August we amended the dosing regimen in our Phase I ongoing program in patients with breast cancer to assess their ability and determine immuno-regulatory effect of Entolimod in patients with advanced cancer to assess tolerability and determine immune-stimulatory effect of Entolimod.

The second group under this new schedule is being dosed as we speak and we’re using pharmaco-dynamic assets to measure specific immune cell activation. In addition we are planning to initiate a Phase 1 study in healthy subjects in Russia in the second half of 2014 to achieve additional statistics regarding the response of specific immune cells without any interference from prior treatment.

In the healthy subject study this Phase 1 is relatively fixed to recruit and it is already funded by a grant from Russian Ministry of Trade. We also believe that this trial can help support our distinctive database for the radiation program. For local administration we are looking at organs that express TLR5 Entolimod’s target like the bladder. Our research has also shown that many human bladder tumors express TLR5 which might facilitate anti-tumor targeting or anticipate an innate immune response.

Specifically we are looking at non-invasive bladder cancer as most know there is a significant unmet need for new therapeutic treatments in these fields. The NDA held a panel last May to address this need and encouraged new entrants in to the field. During this panel we have been suggested effective therapies for BCG refractory disease might be candidates for accelerated approval base of single arm study. In our case TLR5 expressions of the bladder and the potential for ultimately quick initial readout by regular spectroscopy could make this opportunity attractive.

This local therapy approach will also enable us to use and Entolimod repeatedly which is important for systemic applications due to development of neutralizing antibodies. We are consulting the neurological experts regarding the possibility of performing a potential trial in patients with BCG refractory recurrent non-muscle invasive bladder cancer and will move forward in this trial if feasibility and financing permits.

At this point I’ll turn the call over to Neil for a review of the financials.

Neil Lyons

Thanks Andrei. First a few comments about our financial results. For the year ended December 31, 2013 our revenues increased by $4.9 million or a 138% compared to 2012 and are recorded at $8.5 million. This increase is attributable to increased development funding we received from both the Russian Federation and the U.S. Department of Defense.

R&D expenses for 2013, decreased by $3 million or 13% overall compared to 2012 and are reported as $19.5 million. There were three drivers for this overall decrease. First, spending is down marginally due to the winding down of the irradiated pivotal study in 179 non-human primates that was underway in 2012. Second, the development of the Panacela compound which mirrored and focused primarily on those compounds receiving development support from the Russian Federation.

Finally offsetting these decrease is an increase in our oncology development activities including continued enrollment in Russia for the oral formulation of CBL137 which had already done in Q4 2012, the initiation of our U.S. IV clinical study for CBL137 in the third quarter of 2013 and preparation and filing of CBL612 IND with the Russian regulatory authorities also funded by Russian development contract.

For 2013, G&A was up $900,000 or 8% and is reported at $12 million. This net change relates to increased G&A cost for Russian based subsidiaries including by BioLab’s 612 which was not operational or which was only operational for part of 2012 and corporate legal and intellectual properties offset in part by various cost reductions. In our view, our existing liquidity and capital resources, in addition to our cash receivables we also excess capital through development contracts and from our financial partners and our subsidiaries Incuron and Panacela.

On a consolidated basis, we reported $10.4 million of cash in short term investments at December 31, 2013 with $8 million available for general use and $2.4 million restricted for the use of our subsidiary, offset by $100,000 in receivables. A further note, we received an equity investment netting us approximately $6.4 million in January 2014.

At December 31, 2013 we had been awarded $22.8 million in currently active contract from the Russian federation, $17.8 million of which has been funded and the remaining $5 million is to be funded in the future. Of the $17.8 million that was funded we received and recognized as revenue on a contract to-date basis spanning 2013 and prior $9.6 million leaving $8.2 million to be recognized as revenue in the future. Of the $8.2 million, $1.1 million has been received and is reflected as deferred revenue on our balance sheet.

In addition, Incuron’s financial partner, Bioprocess Capital Partners should contribute their final equity tranche of 180 million Russian rubles set forth in their original investment agreement of approximately $5 million based on recent exchange rates during the first half of this year, Panacela’s financial partner Rusnano originally committed to 26 million in funding of which 15.5 million remains available for investments at their options.

And moving on to historical cash burn and cash items. For the fourth quarter CBLI’s standalone monthly cash burn without Incuron and Panacela was 1$ million compared to our guidance of $1.2 million on average. The favorable variances due to receipts from Russian federation’s contract fund which we had anticipated would not be received before January. CBLI’s consolidated monthly cash burn was $1.1 million compared to our guidance of $2 million per month on average. The favorable variance is due to the anticipated cash received from the Russian federation just mentioned and reduced expenditures by our Panacela subsidiary.

Effectively we expect CBLI’s standalone cash burn to approximate $1.1 million to $1.2 million per month on average for calendar 2014 and we expect consolidated cash burn to approximate $1.7 million to $1.8 million per month on average for calendar 2014. The assumptions behind this guidance include on the expenditure side execution of the meeting with the FDA regarding pre-EUA request, conclusion of the Phase 1 trials of Entolimod [inaudible] in the U.S., continuation of the Phase 1 trials both in the Russia and the U.S. of CBL137, initiation of the Phase 1 trial of Entolimod in healthy volunteers in Russian Federation, initiation of the Phase 1 trial of CBL612 in the Russian Federation, filing of an IND for MOBILAN in the Russian federation.

On the receipt side received a contract fund for all the development contracts already in place with the Russian Federation. And received in the last tranche of investments by Bioprocess Capital Partners. With that we expect our cash resources including the money raised through the sale of equity in January 2014 to last CBLI standalone, that is without Panacela and Incuron into the first quarter of 2015. We also believe that there are sufficient financial resources in place to execute the planned development efforts for Incuron of Panacela during 2014.

Although our subsidiaries are currently evaluating the possibility of new investors and financing requirements for follow-on development needs. We will update you on those plans during future calls when more information will become available. We expect significant changes in the 2014 operating results as compared to 2013 results assuming a consistent level of expense for non-cash [aggregate] compensation namely our revenue forecast is based on contracts currently in place, meaning there is no revenue from the U.S. government projected in this calendar year and the remaining revenue from Incuron both contract is expected to be fully recognized in the first half of 2014.

R&D and G&A are both expected to decrease in part due to the restructuring and cost cutting efforts we have reviewed on our prior calls, most notably the transfer of 26 research colleagues to an affiliated entity, Buffalo BioLabs due to the declining needs our product pipeline has for the service. R&D is of course the more volatile of the two cost categories as the majority of the cost incurred are variable and fluctuate with the planned development activities. In 2013 we incurred over $9 million in costs related to our radiation countermeasure program which included a non-irradiated preclinical study needed to provide data for our recommended human dose.

For 2014 we expect spending on this drug candidate to approximately 20% to 25% of 2013 spending. The development of the rest of our drug candidates in total is currently forecasted to be about 10% higher than it was in 2013.

As for G&A we expect about a 10% reduction overall. And a further note interest expense will increase due to the full year of outstanding debt to both Hercules and Rusnano. The continued financing of our operations remain a top priority. As we’ve indicated before we continually evaluate all reasonable forms of financing, we believe that our clinical oncology progress including follow-on study designs will be of interest to fundamental biotech investors and commercialization partners. We intend to aggressively communicate these plans and clinical data as it becomes available throughout the coming months.

As part of this plan we will consider monetizing drug candidates that we do not prioritize for internal development, out licensing prioritized drug candidates to commercialization partners, other strategic corporate actions and raising capital through the issuance of the securities. We cannot comment on the timing of any specific action or a combination of actions but we want to be clear that we are considering all of these actions and intensifying operations in the most recommendable fashion.

Lastly we’ve received noticed regarding a deficiency in continued listing requirements for the national capital market – for the NASDAQ capital market. This requires listed securities to maintain a minimum bid price of $1 per share. We have a period of 180 calendar days in which to regain compliance. In the event if we have not regained compliance during this prime period we may be eligible for an extension up to an additional 180 days to gain compliance. We will be keeping our investors informed regarding our progress on this matter.

That concludes my comments Yakov please continue.

Yakov Kogan

Thank you, Neil. As I mentioned earlier we are focusing our strategy and the resources on three value drivers, activate submission for Entolimod as a radiation countermeasure; and development of 137 and Entolimod as cancer therapies. We are pleased to have random results, as we progress through the quarter and are actively looking to extend these capabilities with additional expertise to help optimize the data we are generating over Entolimod immunotherapy program.

Before we open the call to questions I’d like to thank what we believe there is a lot of value in CBLI, what has not yet been realized. We believe our pipeline is highly innovative and sets ourselves sales against many other successful biotech companies in the market. Our scientific activity has generated novel drug candidates and targets with well characterized mechanism of actions. We have demonstrated substantial clinical efficiency in areas of unmet medical needs such as lung and pediatric cancers as-well-as acute radiation positioning. And they are latest clinical Phase 2 data and proper pharmaco-dynamic activities through our Phase 1 program. As always we thank you for your support.

We will now open the call to questions. Operator please begin the Q&A.

Question-and-Answer Session

Operator

Thank you. Ladies and gentlemen at this time we will be now be conducting the question-and-answer session. (Operator Instructions) Our first question comes from the line of [Christian Glenny] with Edison Investment Research. Go ahead with your question, please.

Unidentified Analyst

Hi, good morning. Just wondering whether that you had any feedback in the interim since BARDA gave the feedback to you on the basis of the funds available at the time in January whether there’s been any interaction with BARDA and particularly around whether there is any sort of knowledge gained or gleaned from that process that could then helped to inform you leading to the FDA in the pre EUA submission?

Yakov Kogan

Thank you for the question. I’ll answer all the questions. So in regards to the knowledge we gain from BARDA offer, so all the discussions we had with BARDA indicate what the negotiation was terminated due to lack of our availability of funds. This is the persistent message we got from BARDA they remain interested in our compound.

In regards to all discussions with FDA which is led by [inaudible] we believe we have a clear plan going forward and there is no relationship between our discussions with BARDA and FDA.

Unidentified Analyst

Okay. Thank you. And then just going forward a bit in terms of hopefully the pre-EUA goes through and gets approval. What is the current situation in terms of available product of the actual product in terms of what you have available and to potentially start providing contributing to the stockpile?

Yakov Kogan

As of today the company has more than 1.5 million of projected human doses which we have manufactured under EG&P conditions. These doses kind of more activity than would be available for procurement if government decides for it.

Unidentified Analyst

Okay. Thank you.

Operator

Our next question comes from the line of Richard [Leader] a private investor. Go ahead with your question, sir.

Unidentified Analyst

Yes. My question has to do with if Entolimod is not – basically doesn’t go forward and you switch to an oncology company approach. You indicated you have funding through the first quarter of 2015 and it would seem to me that the time frame we are talking about would extend well beyond that. And I am wondering how you think you might be able to drive capital – at least in the capital markets based on what’s happened to the last two private investors in January, that did not fair particularly well?

Yakov Kogan

Thank you. I’ll ask Chief Financial Officer Neil Lyons to answer your questions.

Neil Lyons

Yes, thanks for the questions. We as I mentioned on in my comments we are looking at a variety of options to raise capital. We will consider licensing of products, we will be working with our financial partners in Russia, we will consider equity raise transactions. And we believe that the oncology – the strength of the oncology story, the maturing of these products in the clinical will be attractive and the company’s current valuations will be attractive to current fundamental investors to typically invest in early-stage oncology products.

Unidentified Analyst

Hey, thank you.

Yakov Kogan

Yes.

Operator

(Operator Instructions). Our next question comes from the line of Mara Goldstein with Cantor Fitzgerald. Go ahead with your question please.

Mara Goldstein – Cantor Fitzgerald

Thanks a lot, can you hear me oaky?

Yakov Kogan

Yes.

Mara Goldstein – Cantor Fitzgerald

Great I just was hoping maybe if you could just review for me around the sequencing of events with FDA and the types I guess sort of timelines and types of meetings that you are requesting so we would have an idea of what that could have those milestones might look like to you from a regulatory perspective?

Yakov Kogan

I’ll turn to Dr. Miller to answer the question.

Unidentified Corporate Participant

Yes at this juncture we have requested a meeting with the FDA. We are targeting that for July of this year. The primary issues for discussion will be the data to be submitted in a pre-EUA, focusing on the efficacy in non-primate, the safety data in healthy volunteers and the dose selection translation from the non-human primates to human that would be the basis for radiation protection and indication.

We anticipate that it will take sort of months to put together pre-EUA package once we have sense of the FDA’s commentary on our meeting materials.

Mara Goldstein – Cantor Fitzgerald

But is FDA required to respond to you in any particular timeframe?

Unidentified Corporate Participant

There isn’t established PDUFA timeframe for pre-EUA submission no.

Mara Goldstein – Cantor Fitzgerald

Okay do you have any sort of historical contact of what the timing of something like this look like?

Unidentified Corporate Participant

Well we would hope that it would be done with some alacrity consistent with the serious nature of the indication and the FDA’s interest in seeing these types of programs moving forward.

Mara Goldstein – Cantor Fitzgerald

Okay, thanks appreciated.

Unidentified Corporate Participant

Yeah.

Operator

Our next question comes from the line of [Gary West] with Cleveland BioLabs. Go ahead with your question please.

Unidentified Analyst

Yes, thank you. I didn’t hear you mentioned the head and neck trial, maybe I missed but I thought that initially was a very promising pathway for clinical usage of products. The second question is does BARDA have a priority with us that established what they are currently funding and they just haven’t and we just didn’t make the cut to that issue. Thank you.

Yakov Kogan

I will ask Andrei Gudkov to answer your first question about head and neck cancer and then I’ll answer your second question about BARDA.

Andrei Gudkov

Thank you for your question. Indeed we have been considering a number of options we’re making nice trials which would allow us to fill several barrels with one shot and including pursuing some oncology trial goals with expectations to fulfill the needs of defense program. And head and neck trial was one and remains the one under our consideration.

We have a number of other options which are emerging which satisfy the same need. We are analyzing them in pre-clinical studies and we have come back to our investors at the time when we will be close to make the decision about the optimal solution. However in principal the idea of having trial which would allow us to reach this dual end point is viable and we keep pursuing that at the level of analysis and planning.

Yakov Kogan

Thank you Andrei in response to your second question about BARDA priorities and finding we’ve made. So BARDA is government organization so that needs to fund this program in radiation arena as well as outside radiation funded by BARDA all needs to just type I believe [inaudible], so you can see it on the website for yourself and do analysis.

I couldn’t have comment on kind of plan BARDA has in mind and why it’s funding certain developments. But what I know for sure about BARDA is that Congress have continued to express the concern over the lack of countermeasures which address the potential radiation on nuclear emergency. We in Cleveland BioLabs are fortunate on moving forward is a EUA submission as quickly as possible we believe this demonstrates that we have done development stages and separate stage for the future procurement.

Unidentified Analyst

Can I have a follow up?

Yakov Kogan

Absolutely.

Unidentified Analyst

Going back to the head and neck when I was just here a couple of years ago attending a radio-oncology meet I thought the head and neck trial had actually started at the Rochestor, is it that not started at – at your cancer center here, you are now thinking of the…

Yakov Kogan

We work very closely with clinicians as well cancer institutes' to develop a protocol and protocol was submitted to IRB for approval and was based on clinicaltrial.gov site. We decided to closely pursue this opportunities along the lines which Andrei – Andrei is going to report to his question. So we’re focusing on our priorities and clinical development in our areas which we believe are more prominent in terms of generating value for our investors.

Unidentified Analyst

Okay. And one more question – the previous study on that price of the pivotal study was really quite impressive the effective mitigation effect that the drug has. And on the pivotal study which was just completed I think were they relatively held similar I have not seen the publication of that data have you published that?

Yakov Kogan

Absolutely so I assume what you are talking about that is Entolimod as the radiation countermeasure, in non-human primates.

Unidentified Analyst

Right.

Yakov Kogan

If we completed few of those studies where first one was the efficacy study in 179 radiated non-human and we published the top line results and presented them in multiple conferencing. The second study was done in non-radiated studies between the non-radiated primates so the animal just received a different dose of Entolimod on the dose escalation manner. And the biomarkers data pharmacokinetic data counter measure it was also done in about 180 animals very large study.

So this study – the primary goal of this study was to generate biomarker statement to contribute to our dose conversion methodology. But this is not a survival study so and it’s very technical in nature. We submitted the reports to FDA and as of today we are not planning to publish the release of data. It’s very hard to explain to general public all the biomarkers data.

While we believe they are very precise in nature and we would like to remain them as a trademark safety – as a kind of priority to the data on their label – environment.

Unidentified Analyst

Okay one more?

Yakov Kogan

Sure.

Unidentified Analyst

You completed a human study I thought a safety study in Florida I believe it was, is that data still being used or you’re going to have to do that again at human safety study?

Yakov Kogan

I would like to confirm we completed two studies in 150 healthy volunteers in several sites and one of them was in Florida. And I would ask Dr. Langdon Miller to comment on our plans of using this data for those conversions.

Unidentified Corporate Participant

Yes so those human indeed are of course are critical to establishing two things, one is the safety of the Entolimod for this application across the range of doses and then also to use the pharmaco-dynamic data derived from that study for those conversion and basically equating an effect seen in humans with the effects seen in the non-human primate in order to establish a dose. So having a dose range both in human and non-human primates we’re able to establish dose correlations and selective dose based on the dose response curve in the non-human primate. So that worked we are proposing to use the existing body of data which is quite substantial in humans as the basis for the pre-EUA application.

Unidentified Analyst

Okay thank you very much.

Operator

Our next question comes from the line of [Ken Boyd with DeVane Investment Advisors Group]. Go ahead sir with your question.

Unidentified Analyst

Thanks for taking for call and congratulate and thank you for the note, thank you for the participation today. My question is that can you correct me by saying you had 1.5 million doses in inventory that was correct, what was the cost running that and why do we have so many current historically if we’ve been in the 300,000 doses or less?

Yakov Kogan

Excellent thank you Ken for the question, so let me start on your last one, why so many. We were in development mainly respective manufacturing courses, with single runs generating hundreds of thousands of projected human doses. We as of today completed four food scale – but three of which were funded by the previous BARDA council, and they required a validation of the process, needed to move forward performance of the studies in pivotal studies. So, a course of these events were funded by partners. The second was done to initiate that humans to open the IND and initiate the human study.

Unidentified Analyst

What is the current shelf like on average of these of those four different runs?

Yakov Kogan

So all these runs was sorted as storage conditions were more – right now.

Unidentified Analyst

And we should be getting approximately 300,000 doses per yield on each of those manufacturing runs and when was the last one actually done?

Yakov Kogan

I believe it was in 2011 but I need to double check with our people.

Unidentified Analyst

Okay and also correct me and I have some difficulty trying to get you I apologize, I was under the impression we’re have package submitted by the first quarter completion in the first quarter for the FDA and that we’re looking for April-May type of timeline, and now I see you have not completed the – although we do have those conversion portion done, what was the cause of that delay and is July an optimistic timeline or is that being referenced as the practice some of the FDA personnel that come back to you this July I mean help me understand a little more clearly.

Yakov Kogan

I think I will start answer your question and I’ll ask Langdon to add some additional details. So first of all let me state it very clearly, it was no delay from a timeline has been stated to our investments in the past. To answer to your question in the first quarter of 2014 which was done and their report was submitted. We submitted this request only after those conversions or when the conversion was done and we are confident what we will be able to put in the package needed for our pre-EUA application.

The additional communications was we would be looking for a meeting with FDA in the late second quarter, in the email communications FDA specifically addressed the participation of certain FDA personnel to attend this meeting and due to inability on our side on part of development we request the meeting to take place in July this was a major issue behind this decision so I do not see any major delay this meeting. So Langdon then would you like to add anything.

Unidentified Corporate Participant

Yes, I think that as Yakov explained part of the issue is that we would like certain people of the FDA to be present and for all of them to be assembled at the July conference as it may be a better prospect. The other issue is that we really would in essence try to put together certain portion of the pre-EUA package basically as the basis for the meeting and so increase the efficiency of whole process and that takes a little more time upfront but we hope it will save time at the back end of where the FDA review.

Unidentified Analyst

Thank you. Last question if I may, are there any potential solicitations that are open now with the DOD which we anticipate with or are we anticipating anything that’s going to be open that we respond to through this calendar year?

Yakov Kogan

I would like to confirm that with perpetual solicitations from BARDA which are on an annual basis, we would be responding to such solicitation only have very clear guidance from FDA on the pre-EUA submission.

Unidentified Analyst

Okay thank you. Thanks for taking question, again thank you.

Operator

Just a reminder before we take our next question there is two questions limit please.

Unidentified Analyst

What’s preventing the Iranian Revolutionary Guard from coping up their own batch of 502 considering the recipe which published in Times Magazine with ten, 12, 15 years ago.

Yakov Kogan

So the manufacturing courses, design and the entire sequence of 502 hasn’t been published. This remains to be a trade secret of Cleveland BioLabs, we have patented the manufacturing process and it remains a trade secret.

Unidentified Analyst

So it’s very unlikely that they would be able to replicate that or come close to it maybe get some doses that are meant for providing from medical research compare to it and seeing the highest dose on the human studies didn’t affect anybody adversely it seems they can make a pretty big mistake on the outside and self-protect themselves inside.

Yakov Kogan

I can see the [inaudible] they were never able to repeat what we did here.

Unidentified Analyst

Okay, well that’s real strange. What’s preventing Israel from buying say 5 million or 6 million doses clearly give them a cut rate pricing or haven’t finalized the optimum dosage. [Inaudible] on the doc today talking about suitcase bombs and so forth anything we think, I just want to understand CLG ordered this in September 2010 and you had evidently sailors exposed on the U.S. – over 30 times the radiation dose in that primary losses doesn’t something like rate model affect the navy [inaudible] found the table and set the FDA to movable quicker on this?

Yakov Kogan

Thanks for your question. I can’t control what we hadn’t.

Unidentified Analyst

I’m sorry it’s more of a statement.

Yakov Kogan

No it’s very interesting. I couldn’t comment on some questions you have but I can confirm we had a number of discussions with foreign government what I like – and as in any business development and activities we do not provide any comments on this whole how intense and when we are negotiating so before we have this consummated and published we are not going to provide any update.

Unidentified Analyst

All right, given the funding problems CBL has in all the great drugs you were not able to receive through lack funding the original DOD contract at September 2010 called for some 40,000 doses at $800 a dose. I just can’t comprehend the cost maybe a $5 a dose or $10 a dose, the package why you can’t come to some kind of agreement with DOD where you can sell $5 million at $50 a dose and get some money into the company and worry about the final dosage and that’s the highest dose that in the two human trials didn’t adversely affect anybody for any point of time in 2014 and going around.

Yakov Kogan

Just thanks, I would like to confirm what the DOD point of each what time and package and in futures purchases of the 502 as a point of adoption specifically stipulates what the drug [inaudible]. We believe that we have a clear path forward that create submission for people we may provide that each of our future.

Unidentified Analyst

Okay, I confronted my senator in the Senate at White House at a meeting last year and handed information on CBL502. And he was completely unaware and then I confronted the Secretary of the Armed Services Committee who is also my Senator and he just didn’t seem to be aware of that and also management armed service committee seemed to be unaware of the fact. I think we need to go in a different direction like somebody goes at the Capitol Hill and rams the papers and shows that the proof that this works and it’s safe and why four years after or three and half years DOD and we have already have incident on the Reagan where people been exposed to massive dose of radiation, to request that this is the FDA meeting..

Operator

In the interest of time, I am sorry sir, you can follow up. We can take one more question today from the line of Charles [Hillcombe], private investor. Go ahead with your question sir.

Unidentified Analyst

The first question I had involves the employees that are leaving CBLI and joining Buffalo BioLabs. My question is any of the value of the developmental work that CBLI has done and funded up to this being migrated to Buffalo BioLabs with those employees and/ or have those individuals signed a non-compete agreement?

Andrei Gudkov

Right. So yes the transition of personnel to Buffalo BioLabs was done in such a manner was no harm, or no any kind of effect was done to developmental program. All policy in place have signed the release and non-compete agreements we do employ Buffalo BioLabs time to time to perform the clinical studies needed to our dental programs to support our clinical applications based on our competitive basis as a fee for service contract.

Unidentified Analyst

Okay. Thank you. I do have another question and thank you for your response to that. I am a little bit lost with regards to what actually happened with BARDA I am trying to follow it and I frankly I don’t understand – I mean I maybe wrong in what I am going to say but I believe that a governmental agency such as BARDA is awarded a pool of funds by Congress to carry out its activities for the year and then that pool of fund is distributed to various contractors that BARDA has dealt with. I mean the explanation for at this point is that the funding was not available but there is – it’s a question of how it is distributed. Why did [inaudible] received our portion of fund because of a quality of our product or was something that submitted on time or incomplete or hedged I don’t know what happened I am not sure it’s an open ended portion.

Yakov Kogan

So I would try to answer that to my ability, so back in October 2012, the company submitted their full proposal in response to project announcement. In late July 2013 last year we received a category one letter from BARDA, category one is the highest range for the products one can achieve in such proposal and hence at our point of negotiation.

The point of negotiation was terminated in mid-January due to lack of availability of funds and it was only cited reason for termination of negotiation. In the official letter we did receive based on the of course and [give] reason the company has. So BARDA usually enter in a multi-year agreement with contractors and is funded on the multi-year basis. So I couldn’t comment on behalf agencies what kind of commitments were answered but has we received in mid-January the budget allocation from the Congress for FY14, they probably realized there are no funds to fund Cleveland BioLabs proposal and terminated negotiation.

Unidentified Analyst

Okay. So we are unaware of any deficiency in product or our approach to the submission process then, it’s strictly funding?

Yakov Kogan

The whole communication we received from BARDA stated they terminated negotiation due to a lack of availability of funds.

Unidentified Analyst

Okay. Just a final question is probably for Neil and my question is our funds are projected to last through the first quarter of ‘ 15. My question is that projection based on a worst case scenario?

Neil Lyons

Yeah this is Neil thanks for asking the question. I believe I said in my comments that cash at hand I didn’t say through Q1 next year. Worst case there is always a worse case than what you plan for we try to plan for very conservative pace or track record and past year I believe it’s been pretty comforting to the investors that the guidance we have given of spending levels has been actually less than guidance or at guidance. We factor into our guidance cushions of course as we prudently should and then I gave guidance even little north of that meaning a little more conservative than that.

So can something else happened, clearly in research developments there is always new discoveries that generate new questions that would suggest we need to do extensions and activities that are not originally planned and so therefore that’s always in flux but we have given guidance as best we can.

Unidentified Analyst

Okay. All right. Thank you.

Neil Lyons

Yeah.

Operator

Thank you. This will conclude our teleconference today. A replay of this call will be available later today by dialing 877-660-6853. The conference ID number to input is 13576596. This replay will be available until March 28. We thank you for participating. You may disconnect your lines at this time. Have a great day.

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