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Executives

Kathy Waller - Financial Relations Board

Nassib Chamoun - President and CEO

Andrew Leuchter - Professor of Psychiatry, Semel Institute for Neuroscience and Human Behavior, UCLA.

Paul Manberg - VP of Clinical, Regulatory and Quality Assurance

Mike Falvey - CFO

Analysts

Tao Levy - Deutsche Bank Securities

Isaac Ro - Leerink Swann

Jonathan Block - SunTrust Robinson Humphrey

Joshua Zable - Natexis Bleichroeder

Aspect Medical Systems, Inc. (ASPM) Business Update Call December 11, 2007 9:00 AM ET

Operator

Welcome to the Aspect Medical Systems BRITE trial's results conference call. (Operator Instructions).

I would like to turn the conference over to Kathy Waller of the Financial Relations Board. Please go ahead.

Kathy Waller

Thank you, Steve. Good morning. I would like to thank everyone for joining us today for our conference call. Earlier this morning we sent out a press release outlining the results from the BRITE trial. If anyone has not received the release, please feel free to call the Financial Relations Board and [Karen Daubert] can send you another copy, our number is 312-266-7800.

In addition, supplemental material has been posted on Aspect's website that you may find helpful while listening to today's call.

Before we begin the call, we would like to remind participants that certain statements in this conference call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements include statements concerning the potential impact of our ATR device on managing major depressant and in predicting antidepressant effects of neurostimulation; our plans to initiate pivotal trials of our ATR device in Q2 of 2008; and, if successful, to seek FDA clearance in 2009. Our commercialization plans for the ATR device assuming it achieve necessary FDA clearance and the use of our platform biomarker technology in neurostimulation treatment for neuropsychiatric conditions.

The statements involve risk and uncertainty among the factors that could cause actual events to differ materially from these forward-looking statements in this conference call. They are those that are set forth under the heading "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2006 and our quarterly report on the Form 10-Q for the fiscal quarter ended September 29, 2007. Each was filed with the SEC.

In addition, any forward-looking statements represent our views only as of today, and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our views change. Therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today.

With that said, I would like to introduce Aspect's President and Chief Executive Officer, Mr. Nassib Chamoun. Nassib will begin the call by presenting an overview of the BRITE trial, and the call will later be open to your questions.

Nassib, you may go head.

Nassib Chamoun

Thank you, good morning, and welcome. Joining me this morning for the call will be Andrew Leuchter, M.D. Professor of Psychiatry at the Semel Institute for Neuroscience and Human Behavior at UCLA, Principal Investigator for the BRITE trial and share of Aspect's Neuroscience Advisory Board. From the Aspect Management team we are joined by Paul Manberg, PhD, Vice President of Clinical and Regulatory and Quality Assurance, and Mike Falvey, our Chief Financial Officer. Dr. Leuchter is joining us from a close scientific meeting of leading academic psychiatrists today where the final results of the BRITE trial are being presented in a poster session. Some of the key findings from the poster are summarized in a presentation that can also be accessed on our website at www.aspectmedical.com.

I will begin the call with some brief comments about the challenges in the management of major depression that our technology seeks to address and the evolution of Aspect's research efforts in this area leading up to the BRITE study results. Dr. Leuchter will then review the study, the design of the BRITE study, review the findings from the final BRITE data, and discuss the potential impact on clinical care.

To conclude, I will provide some comments on the planned path forward for Aspect's depression program, and highlight our progress in a new field of investigation, namely neurostimulation. We will then open the call for your questions.

The BRITE trial which stands for Biomarkers for Rapid Identification of Treatment Efficacy in Major Depression is an effort to evaluate Aspect's neurophysiologic biomarker of Antidepressant Treatment Response or ATR by Aspect and our collaborating investigators at ten different sites across the U.S.. For many of our study sites, the BRITE trial was their first major clinical research undertaking with a medical device, which we believe is an indication of the uniqueness of our technology in aiding the pharmacologic treatment of depression.

With that context, I would like to thank our investigators for their successful efforts to enroll 375 subjects into the BRITE study which was completed at the end of Q1 2007, and to follow these subjects to their last visits in Q3 2007. We understand from our investigators that our EEG recording procedure was easily learned by their research staff and well-accepted by patients.

Aspect undertook the BRITE trial with a clear vision that a clinical need in depression care today is the individualization of treatment that is based on objective and early signals of response or non-response. While there are many effective anti-depressives available today, it is impossible to predict which treatment approach will work for a given patient, so identifying an effective regimen is still largely a trial and error process, which can take weeks or months.

Unfortunately, many patients simply give up before receiving adequate treatment, particularly in the first several weeks, when side-effects may become more perceptible than symptoms relief.

With a high prevalence, 15 million people in the U.S alone will experience a major depressive episode this year, and with the challenges of treating the disease, depression is viewed as a major health problem by health insurance, governments and businesses, which according to the National Business Group on Health, lose an estimated $44 billion per year related to depression.

One: Our successful pilot studies at Mass General and Cedars-Sinai gave us the confidence to move forward with the larger more complex BRITE trial, with the primary goal of prospectively validating ATR as a one week biomarker for treatment response to a commonly prescribed SSRI antidepressant, in this case, escitalopram also known under the brand name Lexapro.

Two: Developing evidence of the potential clinical impact of ATR and exploring alternative treatment pass for patients who are predicted not to respond to escitalopram. And three: Greatly expanding our EEG database to enable further refinements to our algorithm prior to a pivotal trial for FDA clearance, which we expect to initiate in Q2 2008.

We are very excited to report positive results for the BRITE trial, which are being presented this week at a closed scientific meeting. Further analysis of the BRITE data continues and additional findings will be submitted for presentation, a key clinical conferences in Q2 2008.

At this time, I will ask Dr. Andrew Leuchter to briefly review the design of the BRITE trial, discuss the results from the BRITE data and describe the potential clinical impact of ATR on the management of major depression, Andy?

Andrew Leuchter

Thank you, Nassib. Let me begin by quickly going over the design of the BRITE trial to put the results into context. All BRITE subjects who identify the suffering from nature depression in the screening process had a baseline EEG recorded. Then they were given escitalopram, the brand name Lexapro, for one week at the recommended starting dose of 10 milligram per day. At day seven, subjects received another EEG recording from which their ATR values were calculated. However, both the subjects and the investigators were blinded to the ATR results.

Also at day seven, subjects were randomized to one of the three study arms. In the first study arms, the subject continued on escitalopram at 10 milligrams per day and it was continued through week seven of the study. In the second arm, subjects were randomly switched to the antidepressant bupropion XL, also known as Wellbutrin XL, and maintained on 300 milligrams of bupropion XL through week seven. Subjects in the third arm received a combination of escitalopram and bupropion through week seven. All of these assignments were random and were not done on the basis of an EEG recording.

There were no statistically significant differences in the baseline characteristics of the three study arms. After the week seven endpoints, investigators could then increase the dose for the subject who had not yet remedied, meaning they had not fully recovered from their depression for the rest of the 13 week study.

282 subjects completed the BRITE study prior to the week's primary seven week endpoint, of which 220 were valuable, after excluding 33 subjects who deviated from the study protocol and 29 with excess noise in their EEG recordings. Although 10% of the subjects, particularly that nine of 10 research sites, had no experience with the EEG previously.

Completion rates were within the expected range, and we are pleased to see that given the number of visits and the EEG recordings, seven in all per subject were built into the study. This is consistent with the positive feedback we received about the ease-of-use and the patient's acceptance of the EEG recording technology and protocol.

The number of valuable subjects in each study arm was roughly equal with 73 in the escitalopram, 73 in the bupropion switch arm and 74 in the escitalopram/bupropion combination arm.

The protective accuracy of the ATR was tested in the primary escitalopram, because this with the subjects, did not have any changes to their treatment regimen before the seven-week primary endpoint when changes in subjects Hamilton Depression Rating Scale, or HAM-D scores, were compared with their one-week ATR prediction.

Subjects were considered responders to treatment if they experienced a 50% reduction, or significant improvement on the HAM-D scale. And they were considered remitters if they achieved a HAM-D score less than or equal to seven of the seven-week primary endpoint. This generally would mean that they had recovered from their depressive episodes, and these are very common definitions of response and remission for depression treatment trials.

In the final BRITE analysis, 52% of the subjects for the escitalopram and 47% across all study arms met the definition for response at week seven. Remission rates at week seven were 37% for the escitalopram and 32% across all study arms. These remission and response rates are in line with the rates seen in other antidepressant medication studies and were not statistically different among the study arms or study sites.

An improved ATR, what we call version 4.1, developed prior to the final BRITE analysis, and was 74% accurate in predicting the seven-week response and remission on the escitalopram subjects in the final BRITE data set. This was significant with the p<0.001 on the end of the 73 subjects.

In the fully prospective test, under post-interim analysis subjects, ATR 4.1 actually achieved 76% accuracy in predicting responses. This was statistically significant at the .002 level on 38 subjects and 79% accurate in predicting remission, significant at the .005 level. These results on the second half of the BRITE data are an important validation of the predictive accuracy of ATR 4.1, because this algorithm was developed prior to cracking the code on the final BRITE data set.

The version of ATR reported on at the interim BRITE analysis that the earlier version ATR 4.0 was also shown to be a significant predictor of the seven-week response and remission on the final BRITE data set. It had an accuracy of 60% in predicting response significant to the p .048 level, and 68% for predicting remission significant to the .012 level.

We were very pleased to see ATR also emerging as a predictor of remission, which is extremely important from the clinical standpoint, because the goal of treatment is to achieve remission. A remission is a much less frequent occurrence than response in antidepressant treatment, and it can take a very long time to achieve, so to be able to predict this outcome would be particularly valuable to our position. I should add that as I presented this data here at this meeting, people were really very excited at the prospect of being able to predict antidepressant treatment remission.

Perhaps the most clinically compelling analysis from BRITE is the retrospective analysis of the potential impact on outcomes of the ATR-guided treatment. We designed a BRITE, which predicted escitalopram responders and non-responders and will randomize to all study arms. This allowed us to retrospectively examine differences and outcome among subjects treated in accordance with their ATR status, and those maintained on a single agent SSRI, common in the management depending depression patients. What we first observed was that ATR-predicted responders to escitalopram had response rates of 67% if left on escitalopram for seven weeks. Similarly treated predicted non-responders had a response rate of only 28%.

This difference between the 28% and 67% response rates is highly statistically significant as a p<0.001 level. The same held true for remissions. BRITE subjects, predicted to achieve remission with escitalopram treatment, were significantly more likely to remit if randomized to stay on escitalopram for seven weeks. 50% of those subjects reached remission, as compared to subjects predicted not to remit on escitalopram, who had a remission rate of only 21% if left on escitalopram. The difference between 50% and 21% is a statistically significant p-0.01 level.

Practically speaking, the ATR could potentially provide the greatest clinical benefits for those patients who might be kept on a medication that is unlikely to help them. Research has shown that depression patients who are not getting better with the first treatment attempt, not only do they experience prolonged suffering, but they are more likely to abandon treatment altogether. This is because of the lack of efficacy, and they may become more resistant to treatment over time.

In the BRITE study, subjects who were ATR predicted non-responders to escitalopram had notably better outcomes if they were randomized to switch to bupropion, an antidepressant with a different mechanism of action than escitalopram. Specifically BRITE study results showed that we could theoretically achieve a 61% response rate if patients were treated according to ATR status; in other words, leaving ATR positive subjects on escitalopram and switching ATR negative subjects to bupropion. This would represent a 10% absolute increase when compared with the 51% response rate for subjects treated with escitalopram alone. It also reaches the number needed to treat, a threshold of 10. This means that at least 10% of depressed patients would theoretically have a much better clinical outcome if ATR was routinely used to guide treatment.

A threshold at the United Kingdom’s National Institute on Clinical Excellence has stated [without] public health significance, that we believe that the public health significance maybe even greater in actual medical practice, when factors such as medication adherence are considered. And we will examine this possibility in the future studies.

Another objective of BRITE was to test the technology’s ability to predict the emergence of adverse events during medication treatment, the most serious of which is suicidal ideation. Fortunately for the patients in BRITE and the implied safety of the protocol, the incidence of treatment-emergent suicidal ideation was lower than we had anticipated.

Initial analysis of BRITE results regarding EEG-based predictors of worsening suicidal ideation, are trending in the expected direction. But the study was not powered adequately to fully evaluate this hypothesis and further studies will be required to test this point.

We will continue to bind the BRITE data to identify EEG features associated with treatment-emergent adverse events.

And with that let me turn things back over to Nassib.

Nassib Chamoun

Thank you, Andy. Let me wrap-up with a few key points here. We are very excited about the positive results from the BRITE trial. These results from BRITE give us the confidence to move our ATR program forward to the next pivotal trial, which we are currently designing with feedback from the FDA and our advisors, and plan to initiate in Q2. We expect that this trial will be roughly half the size of the BRITE trial and we'll focus on prediction accuracy as the primary endpoint. We believe if this next trial is successful, it will lead to a filing seeking FDA clearance in 2009.

Assuming positive outcomes from our pivotal trial and subsequent FDA approval, we plan to launch our first product with a small direct sales force focused on a targeted subset of psychiatrists, who are opinion influencers in the field of depression and high prescribers of antidepressants.

This customer segment consist of approximately 8000 psychiatrists, of which about half are concentrated in metropolitan areas, and many of those in group practices. These clinicians are also the most experienced and knowledgeable about their needs and the challenges of treating the depression patient population, and they will provide Aspect with valuable input with which to refine the technology. This Phase I launch would be expected to last 18 to 24 months post-FDA clearness, and with the aim to gain a market foothold among self-pay patients who are well-represented in the types of psychiatrists' practices, while building the clinical evidences for reimbursement and further developing the technology.

As the planned product and application evolves, and reimbursement becomes established, we expect that the market opportunity could grow substantially to include a much broader group of practitioners who will constitute the prescribers of antidepressants today. At that point, we would likely see a commercialization partner with scale in the office based position marketplace.

We believe the development of our technology well times to take maximum advantage of the trend towards personalized medicine, and has the potential to be extremely attractive to patients, clinicians and payers alike, particularly in the [group of] Psychiatry where the trial and error medication selection approach still predominates.

There is a growing recognition that improvements in care will be realized, not just through the development of new therapeutics, but by the individualization of treatment through the use of biomarkers of response.

On this same theme, the need for biomarkers is even more acute when more costly and invasive treatments for depression are contemplated, such as neurostimulation approaches. For that reason, we have decided to allocate additional resources to the development of biomarkers for use in conjunction with neurostimulation treatment. There is a critical need for methods to determine which patients might benefit from neurostimulation prior to implantation of devices and to improve treatment outcomes by optimizing stimulation parameters.

This week, we are presenting a poster at the Annual Meeting of the International Neuromodulation Society meeting in Acapulco, Mexico, entitled "EEG ATR May Predict Clinical Response to Cortical Stimulation Therapy: Initial Findings from the PROSPECT Study". The poster outlines preliminary findings from the research collaboration with Northstar Neuroscience, to evaluate EEG-based markers of response, and Northstar's pilot study of cortical stimulation for treatment of depression.

These preliminary findings suggest that our ATR treatment response biomarker may also be a predictor of an antidepressant effect with cortical stimulation. Neurostimulation is a very interesting field, and we believe our platform biomarker technology may prove to be valuable in the optimization of neurostimulation treatment for neuropsychiatric conditions.

With that, I would like to open the call to your questions. Thank you.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) And we'll go to Tao Levy with Deutsche Bank.

Tao Levy - Deutsche Bank Securities

Hey, good morning.

Nassib Chamoun

Good morning, Tao.

Tao Levy - Deutsche Bank Securities

I'm having a few questions here. First, just maybe one a little bit quickly, I just want to make sure I got the points here. The start of the patient enrollment in the next trial will be second quarter of '08?

Nassib Chamoun

That's correct.

Tao Levy - Deutsche Bank Securities

And you said the trial will be half the size of the BRITE trial. So how long do you expect it to take to enroll, seems like it will be pretty short, right?

Nassib Chamoun

I will let Paul Manberg to answer that. He is putting all those pieces together.

Paul Manberg

Yeah. The current study, it took about 18 months from beginning to completion of the trial. So we expect this to be shorter than that, because we will probably be looking at an eight-week endpoint for this study. So it won't be as long of a tail. And since the number of patients will be about half, we are expecting about a year for this study to be completed. And that, based on our successful completion of the BRITE study on schedule, I think we are confident that we can accomplish that.

Tao Levy - Deutsche Bank Securities

And you are early to add, I assume you've had early discussions with the FDA, what type of regulatory process is this going to involve, they can require panel. Is it quicker than the standard 9 to 12 months regulatory review?

Paul Manberg

Right, we've held two meetings with the FDA about this and there was obviously a question as to which reviewing branch would get it. That's been worked out. This is being viewed as similar to a diagnostic type device where we are predicting response. So we are now expecting that we will probably go through 510K process or the de novo processes, that still under a discussion. And there is no requirement under those processes that it goes before a panel, I think it's still possible that the FDA would decide to do that.

Tao Levy - Deutsche Bank Securities

Okay.

Andrew Leuchter

So, we are hoping that the review process might be shorter than a year, but as you know with the FDA that it really depends on the strength of the evidence that you submit.

Tao Levy - Deutsche Bank Securities

Great. And then for the clinician, maybe if I could have a couple of quick questions. First, do you have any data on patients who completed the entire trial, who went the 90 days?

Andrew Leuchter

We certainly do have those data in terms of the final endpoint for the study. We are still looking at those data right now in terms of what happened in the dose escalation phase of the study, because after the primary endpoint then subject could receive an increase dose of medication. So, we are looking to see how sensitive the predictor is to medication dose changes and we will be looking at those data over the next few weeks.

Tao Levy - Deutsche Bank Securities

Okay. So, that hasn't been collected, the analysis of that data has not been completed yet?

Andrew Leuchter

That's correct, yes.

Tao Levy - Deutsche Bank Securities

When they looked at the data or when they changed the dose potentially after day 49, did the clinicians then have access to the EEG data?

Andrew Leuchter

No, the clinicians remained blinded to the EEG results, really until the data analysis. So, it was all based on how subjects were doing clinically in terms of dose changes.

Tao Levy - Deutsche Bank Securities

So, then do you change the dose and then you do I guess another EEG at day 56 and then other one at 91?

Andrew Leuchter

Yes, whenever there was a dose change, we've got essentially another ATR, we would have one EEG immediately before the dose change and then one week after, so we could see how the EEG biomarker was affected by any changes in those end clinical status.

Tao Levy - Deutsche Bank Securities

So, is there a potential that, when after you go through the analysis of the final three months data, that you lose some of the predictability that you may have assumed earlier on as the patients get better or get worse or again, I'm just trying to, understand what new data could come out once you go beyond three months?

Andrew Leuchter

Right, it's a very good question and of course, until we literally look at all the data, we won't know. I would expect that right now, we have an underestimate of our response in remission rates. I can remember our primary end points here was at 49 days, which all of the studies show, is a time when most of the patients would have responded or remitted, but we still would expect a substantial number to show improvement after that point. So, we may find that we actually do somewhat better at predicting response or remission after our primary end point looking at the rest of the study. But, of course, it’s going to be a complicated analysis, because subjects do sometimes drop out of the study after a time or they may require different kinds of changes in their treatment, which might make them not eligible to continue in the study. So, we'll have to look at that as we go.

Tao Levy - Deutsche Bank Securities

Perfect. And then, my final question, the ATR guided data looks, part of one of the more intriguing parts of the presentation. Are there any efforts to do a trial looking at that area so that, because I feel like that part reflects real world a little bit more when this product gets onto the marketplace?

Andrew Leuchter

Right. I'll comment just briefly on the potential for that and then I'll ask Paul to comment on what we are going to be looking at. When I presented these data yesterday to a number of psychiatrist and clinicians working in this area, they too found that to be one of the most exciting prospects that rather than leading people on antidepressant treatment that would ultimately prove not to be beneficial to be able to make a change of one week is going to lead to earlier and substantial improvement I think people find very exciting especially, because it looks like we can predict permission. So I think that’s something that is from the feedback I've gotten so far likely to be embraced by the field. In terms of plans to look at actual switching, Paul, perhaps you'd like to comment on that.

Paul Manberg

Yeah, I think the strategy, as we look forward, is the priority has to be to get the second confirmatory study to prove the efficacy of the ATR, certainly from a regulatory standpoint. So as requirement that you want to have two studies confirming the efficacy and so that would be our priority to do a very tightly focus study to obtain that information. I think as we look at the various strategies to switch patients to other treatments that will be really part of the work that we do in the marketplace especially to seek reimbursement, because in that clinical daily use, the type of situation that's the kind of information that the payers are looking more for.

Tao Levy - Deutsche Bank Securities

Great, thank you very much and just one last thing. What's the name of the conference where this data was presented?

Nassib Chamoun

It's a large gathering of Neurocycle pharmacologist and that's about all we can say are allowed by the conference organizers to say, because they don't authorize anybody to use their name or disseminate the name of the conference. So, that's all we can share with you at this point.

Tao Levy - Deutsche Bank Securities

Okay. Thanks a lot.

Operator

We go next to Isaac Ro with Leerink Swann.

Isaac Ro - Leerink Swann

Thanks for taking the question.

Nassib Chamoun

Hi, Isaac.

Isaac Ro - Leerink Swann

Hi. So, just first off, escitalopram arm 28% non-responders. I am wondering how that compares with the traditional [VIEW] results you get under current practices without any kind of EEG guidance. What I am trying to get out here is, how much better do you think the ATR needs to be compelling for clinicians, especially since there won't be reimbursement at the time of launch?

Andrew Leuchter

Well, from the feedback that I've gotten from my colleagues in this meeting and just in general, if we have something greater than 70% accuracy in predicting not just responds, but also remission that's something that right there people would find to be very, very useful. Of course, they also don't want to be switching people off of medications so much they can be fairly confident that somebody is going to be a non-responder to that medication. So, if we are talking about only in the range of 20 plus percent, likelihood of response based on ATR, a negative ATR that's something also the people would find clinically useful.

I don't think that anybody would be following ATR blindly, this is the kind of thing that people would say, okay, I have a biomarker here that is telling me, what the likelihood of the patient responding or remitting with this medication. And then I am going to use all the information I have including how the patient is telling me their feeling etcetera. Put all those things together and make a treatment decision. But I think that this biomarker is something people would find to be a very valuable adjunct to all the other information they have.

Isaac Ro - Leerink Swann

Okay. And then just looking at the pivotal trial design, I am just wondering [at last], is this a sort of thing where you need to control for maybe time of day when you are taking the EEG or administering drug, as I understand, if there is a little bit of fluctuation in terms of how people often feel depending on the time of day, things like that?

Paul Manberg

I would say for, in the present study, we did not control for that on purpose because it's so difficult to arrange for the patients who always come on the same day. So from a patient convenience standpoint, we didn't think that it would be reflective of clinical practice if we mandate it to be used at the same time. There has to be a little bit of that variability to reflect what is clinical practice. So, we would not control for exactly the time of day.

Nassib Chamoun

And that's actually better because that's the way of life and that's how the devices likely to be used.

Andrew Leuchter

Right. And just to add to that, in doing regular EEG and practice, I mean people do sometimes try to control for time of last meal, time of day, things like that. But if this is going to be a practical clinical management tool, it has to be robust enough that it is not sensitive to those kinds of things that are common in clinical practice.

Isaac Ro - Leerink Swann

Got it, okay. And then just last question regarding sales force, it sounds like you guys rebuilding one out as they go prior to getting reimbursement and prior to announcing a partner, is that the right way to look at it?

Paul Manberg

Well, I think, this is really a high level overview of how we are thinking about the market. I want to be very clear that initially we are going to be highly targeted with a very small organization, now whether that's an extension of our own internal organization, or it's in collaboration with somebody. A lot can happen between now and the launch.

But if we decide to pursue it on our own, I want to be very clear that this is not going to be a 300 sales rep, $50 million effort and let's go after it across all front. But more of a sequence than plans launch that allows us to get the benefit, what is working, what is not, allows us to understand the real utility of the product.

I think the value to the FDA cycle or process, we just described is it's fairly straightforward, that's what they need, that's what we'll deliver to get the clearance. And then you have an approved product that clinicians can integrate into their clinical practice and define all kinds of utility for it, that will hopefully be able to a better build upon in a broader launch and optimize the product for broader launch, while also collecting the data necessary to secure reimbursement.

So I know sometimes there are anxieties that once this product is launched, we are going to be spending tens of millions of dollar on a launch. And we think there is a better way to achieve this goal and succeed with this product in the marketplace.

Isaac Ro - Leerink Swann

Great, thanks. Last question, just regarding path to approval, would you expect to give us little bit of clarity regarding timing, and what do you think the FDA will want to see around the time, by the time you get to the start of the pivotal or something like that?

Paul Manberg

Yes. We would, once we have the launch of the study, once it's approved, then we are certainly going to be starting, and I'd expect that we would put an announcement about that. Okay, as we did at the start of this study.

Isaac Ro - Leerink Swann

Thank you.

Operator

We will go next to Jonathan Block with SunTrust Robinson Humphrey.

Jonathan Block - SunTrust Robinson Humphrey

Hey guys. Good morning.

Nassib Chamoun

Hi, John.

Jonathan Block - SunTrust Robinson Humphrey

This is sort of a little bit of a follow-up to Isaac's question. I guess just on the sales force. I realized what you are laying out there, but just when I look at it, I would think that to pioneer this market ex-reimbursement, with so many different touch points that a partnership would probably make a little more sense out of the gate. So, maybe if you can just give us some details, these discussions take place, you didn’t find the financials that attract, there was or is something that again you feel differently and you think you are better off just attacking from a specialized point of view initially, getting the traction and then leaning on the marketing dollars of the pharma company?

Nassib Chamoun

There are a lot of discussions that are on going, it’s a matter of identifying the right partner, under the right terms that we believe are going to give us the best combination of resources and touch points. So, I am not precluding that, I'm just saying that, regardless of who launches it. The right approach here is to target a small subset of highly concentrated high prescribers they are mega practitioners, they are likely to have access to a greater percentage of self paid patients. And to learn from their experience to optimize the positioning of this product for reimbursement purposes and for a broader launch, whether we are using our own organization or somebody else's, and I must tell you that based on our experience with BIS, we work with several hundred OEM reps around the world, but the people who are able to convey and deliver the message appropriately are people that Aspect controls and trains, and are experienced enough to communicate and educate on the topic. Obviously, the larger footprint of a bigger company opens the door and gives you the access. So, it’s going to be a combination. And we're right now just beginning to think about that. I think, there's a lot of work to be done, to give you a clear commercialization tab that we just wanted to give you the highlight of how we are thinking about it, regardless of whether it’s purely our own people or our people with the collaboration of a partner, which we have several ongoing discussions and Andy can comment a little bit about the most frequent visitors to his poster yesterday so Andy?

Andrew Leuchter

Yes, we had quite a bit of interest from not only academic psychiatrists who would like to try out this technology in their own research, but also from a number of pharmaceutical companies who came by, who expressed interest in seeing what ATR would show looking at already approved antidepressants, but also looking at the compounds in the pipeline. I think, increasingly, people would like to see medication selection for individual patients directed by what might work for that particular patient. It's kind of the right-drug-right-patient, as early as possible model. So, I think, there are several companies that may want to help develop the technology.

Jonathan Block - SunTrust Robinson Humphrey

Okay, great I mean just two other quick ones, if I may or may if you can speak a little bit to some of the design changes that were made, I think that you referenced that the some of the results got a little bit better, I'm assuming the latest and greatest will be used for the pivotal and then just the feedback that you are getting surrounding the changes that has been made and how that increases what you think will be the final outcome from the pivotal?

Nassib Chamoun

Sure, I think that as we said earlier and what we've experienced with this and the anesthesia space. Our algorithm has been improving for 20 years, obviously the more time and the more patients you have under your belt, the less significant those improvements become. And we've identified and other feature that we felt added value to the index we integrated that into ATR 4.1 and clearly that has made a significant impact on the performance of the index, both for remission and for response. And I suspect that now we'll be doing a little more tweaking with the rest of the BRITE data, also looking at the data going out three months, because this is a very rich data set will have close to 2000 visits in EEG recordings, which is enormously valuable and it's part of what has constituted our most significant barrier to entry historically aspect of these trials and the ability of these trials to provide data to constantly optimize these algorithms, which are empirical in nature. So we think that the full BRITE data set will help us to treat the index further as we go into the pivotal trial in Q2.

Jonathan Block - SunTrust Robinson Humphrey

Right. Just too perhaps, I think, as Nassib said that, when one has more data one tweaks algorithms. I think the important feedback that I got yesterday was, number one, people were pleased that we were prospectively testing the improved ATR algorithm on new subjects. So it wasn't just a retrospective what was actually a prospectively look people that encourage and please by. And secondly just underline that people were very excited about ability to predict clinician, which is something that people were not convinced, we are going to be able to do the data certainly but very encouraging in that regard?

Nassib Chamoun

One more component along those lines is, also not just the algorithm, but the architect rejection and the processing of the EEG, as we said, we lost about 10% of the cases, because of the noisy signal, but we've learned from that and we'll probably incorporate some automated processing that would help guide the clinician and achieve a higher -- a hit rate on high quality EEGs when they apply the system. Again, these are artifact rejection and algorithm improvements are the two of the biggest comparative barriers entry that we have on our bispectral index and that's really based on a massive amount of clinical experience and clinical trials with data to optimize to.

Operator

(Operator Instruction) We'll go next to Joshua Zable with Natexis Bleichroeder.

Joshua Zable - Natexis Bleichroeder

Hey, guys, thanks for taking my question and congratulations.

Nassib Chamoun

Hi, Josh. Thank you.

Joshua Zable - Natexis Bleichroeder

A couple of quick questions here. Nassib, I just understand the timeline properly, it seems like you start the trial in Q2 '08 and then you would hopefully finish the trial with approval some time in '09. I am guessing, if the trial takes a year, that gets us to Q2 '09. So I guess may be you can just walk me trough the thought process of the approval in '09?

And then once you would launch after that, you said there will be a limited launch of 18 to 24 months, so when would sort of be the full blown commercial, maybe can just kind of walk through that timeline a little bit clear for?

Nassib Chamoun

Well, let me start by saying our goal is to submit an application or file in '09.

Joshua Zable - Natexis Bleichroeder

Okay.

Nassib Chamoun

Whether the approval is in '09 or not, it's tough for me to tell the FDA will do what they need to do.

Joshua Zable - Natexis Bleichroeder

Okay.

Nassib Chamoun

And it could be faster, it could be slower, and that's why we refer to a launch post-FDA clearance, which could be late '09, it could be middle of '10. I would be hard pressed to predict that right now. I would also say that the initial launch, not necessarily it's limited, but it's targeted, it's focused.

You are going to kind of your highest likely early adopters and the most experienced likely users with the largest mix of patient populations. Because I think that's going to be very beneficial for us to full scale commercialize this product, and it's going to be very beneficial for us from a reimbursement standpoint, and we expect that cycle to be 18 to 24 months again from approval.

Now when is approval, I can't tell you that until we start the trial, we figure out what the FDA wants to see and we see the results at the end and it's all packaged and submitted. So, there are couple more milestones before we can give you better visibility on that. But those are good rough estimates that you should consider.

Joshua Zable - Natexis Bleichroeder

That's fair. That's helpful. And then is there anyway you can give us any idea of price of the device and may be the disposables associated with it, do you have any idea?

Nassib Chamoun

It's too early to decide how we are going to price it. Clearly, this is not going to be a $15, $16 disposable as it is in the anesthesia space. It will be several times that and it will be potentially a $100 to $300 range, depending on the number of visits, number of assessments that a patient is likely to go through and how we are likely to place the equipment, which right now consists of our BISx technology connected to a specialized laptop of some sort. So the cost of the hardware is minimal.

The business model of how we integrate the hardware and the disposable still needs to be worked out, but we are waiting to get the BRITE data. So we can, based on that, do some market research and talk to potential customers and evaluate the value proposition with something tangible in hand.

Joshua Zable - Natexis Bleichroeder

Great. And then I know some other people asked about spending on the sales force, which I think you are pretty clear on answering that. Obviously, that would be ways away after approval. So up until then, is there any reason to believe that you guys would up your R&D, I know you are having a pretty healthy clip in general. But would we spend more sort of into it on the trial, on whether be, I know you've talked a little about neurostem, just obviously during the trial cost money get in to the FDA. Any color there?

Michael Falvey

Yes sure, this is Mike. Currently as we look in to next year, the neuro program as described by Paul, as he laid out that trial. We think we could spend probably in the range of $4.5 million to $5.5 million, which is little bit less than we've spent this year and last year. The biggest difference been driven by the size and the length of this new trial versus the BRITE trial. So, we don't think you are going to see any substantial increase to support further development of the ATR. And we have spoken about it, there maybe potentials in coupling this with neurostem, but we got nothing on the horizon just yet.

Joshua Zable - Natexis Bleichroeder

Great. Well, congrats, guys. Thanks for all the questions.

Nassib Chamoun

No problem.

Operator

We have a follow-up question Jonathan Block, SunTrust Robinson Humphrey.

Maggie

Hi guys it's Maggie in for John. Real quick, when you retrospectively looked at the data you said theoretically the ATR non-responders would have done better if they switch to Wellbutrin. Retrospectively speaking, would they have theoretically done better if they had switched to the Wellbutrin/Lexapro arm.

Nassib Chamoun

Andy?

Andrew Leuchter

The results are clearest, before they switched to Wellbutrin alone. It's a pure case of one drug or the other. The results from the Wellbutrin/Lexapro arm didn’t really show that it shows a clear predictor of response to the combination treatment. So, we are really focusing primarily on the single drug treatment arms.

Again, when we designed the study, we were not certain whether a negative ATR would mean that one should either switch to a totally different medication or whether one should do combined treatment with another medication and those were the two major options and it looks like that the negative ATR the best step is to switch to a different medication. I think that's the best way to interpret our results so far.

Nassib Chamoun

The one thing I would add is that the combinations therapy gave us results that were intermediate, as you would expect so, they didn't do as poorly as if they just said on escitalopram, but they didn't do as well as they would have or they did do, if you switch completely to a different drug.

Maggie

Thanks

Operator

Having no further questions, I would like to turn the conference over to Nassib Chamoun for any additional closing comments.

Nassib Chamoun

Thank you all for participating in our call this morning. I will close by simply reiterating our enthusiasm for the results we have seen to-date from our neuroscience effort and our confidence in the steps we are taking to capitalize on this opportunity. We believe that the results from BRITE suggest that our technology may become an important tool to assist clinicians and the management of anti-depression therapy.

Our experience in this area may also position us to play a similar role in the neurostimulation market. Paul, Mike and I will be in the office for the rest of the morning, if you have any other questions. Thank you all for your time this morning. Have a good day.

Operator

That does conclude today's conference. Thank you for your participation. You may now disconnect.

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