Penwest Pharmaceuticals Co. Q4 2007 Earnings Call Transcript

Penwest Pharmaceuticals Co. (PPCO)

Q4 2007 Earnings Call

March 12, 2008 11:00 am ET

Executives

Jennifer L. Good - President and Chief Executive Officer

Benjamin L. Palleiko - Senior Vice President of Corporate Development and Chief Financial Officer

Analysts

Jeff Goater – Cowen & Company

Lawrence H. Neibor – Robert W. Baird & Co.

Robert Hazlett – BMO Capital Markets

Angela Larson – Susquehanna International Group

Ken Trbovich – RBC Capital Markets

Arthur Freedman – Freedman Assets

Presentation

Operator

I would like to welcome everyone to the fourth quarter 2007 year end financial results conference call. (Operator Instructions).

The matters discussed herein contain forward-looking statements that involve risks and uncertainties, which may cause the actual results in the future periods to be materially different from any future performance suggested herein. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words believes, anticipates, plans, expects, intends, potential and similar expressions are intended to identify forward-looking statements.

Important factors that could cause results to differ materially include risks relating to the commercial success of Opana ER, including our reliance on Endo for the commercial success of Opana ER and risks of generic competition. The need for capital, regulatory risks relating to drugs in development, including the timing and outcome of regulatory submissions and regulatory actions, uncertainty of success of collaborations, the time of clinical trials whether the results of clinical trials will warrant further clinical trials, warrant submission of an application for regulatory approval of, or warrant the regulatory approval of, the product that is the subject of the trial; whether the patents and patent applications owned by us will protect the Company’s products and technology and prevent others from infringing it. Actual and potential competition and other risks as set forth under the caption Risk Factors in Penwest’s quarterly report on Form 10-Q filed with the Securities and Exchange Commission on November 8, 2007, which risk factors are incorporated herein by reference.

The forward-looking statements contained in this press release speak only as of the date of the statement made. Penwest disclaims any intention or obligation to update any forward-looking statements.

TIMERx is a registered trademark of Penwest. All other trademarks referenced herein are the property of the respective owners, thank you. Ms. Good, you may begin your conference.

Jennifer L. Good

Thank you. Good morning everyone, welcome to our review and discussion of Penwest’s results for the fourth quarter and year ended December 31, 2007. Joining me on the call today is Ben Palleiko, Penwest’s Senior Vice President of Corporate Development and Chief Financial Officer. I will begin by discussing our progress and the challenges we faced in 2007 as well there are plans for 2008. Ben will then review the financial results for 2007 and the outlook for cash.

After our prepared remarks we will open up the call to answer any questions that you may have. 2007 was a difficult year to be a Penwest shareholder. We had a series of events largely external to our operations, which negatively impacted our share price. There was also an overhang on the stock during much of the year as a result of concerns around potential financing. This combination of factors resulted in a very poor performance of our company stock for the year. I know that as a result of our stock performance you have questions and concerns. I want to address those and in order to do so I hope to accomplish three things on this call.

First; I want to convey the progress we made internally in 2007 despite the overall pressures in our business. Second; I want to assure that the Board of Penwest and I are clear about the realities of our current business and are adopting the way we manage the company accordingly. Third and finally; I will discuss the outlook and our plans for 2008 in light of those realities. Internally, we made important progress in 2007 and several areas I believe were important to our company’s long-term growth and diversification.

Let me begin with Opana ER. Net sales for the Opana franchise in 2007 were $107 million and IMS reported that Opana ER represented about 78% of that number. On Endo’s earnings call a couple of weeks ago they stated that they are pleased by the performance of the Opana franchise and expect steady growth in 2008 as a result of the continued benefits of their marketing initiative, sales force expansion and managed care programs. Based on Endo’s guidance for 2008, we expect to begin receiving royalties on Opana ER during this year.

On the IP front, we listed three additional formulation patents in the Orange Book covering Opana ER, after the back and forth with the Impax Laboratories on their rescinded ANDA, on December 14, Endo and Penwest received a Paragraph IV certification notice from Impax notifying us that the FDA had accepted it’s ANDA as of November 23, 2007.

On January 25, we filed a law suit against Impax for patent infringement. We believe that based on the stated date of FDA of the acceptance of the Impax’s ANDA that we are entitled to Hatch-Waxman 30-month stay on Opana ER beginning on December 14, 2007.

On February 14, 2008, Penwest and Endo received a Paragraph IV certification notice from Actavis against our patents listed for Opana ER. We and Endo are currently evaluating the information we’ve received from Actavis, we have 45 days from the date we’ve received this certification to file a law suit in order for us to be entitled to a 30-month stay in connection with the Actavis ANDA.

We cannot provide you with further detail on this today but I can assure you that the legal teams for both companies are working collaboratively and aggressively to pursue all appropriate avenues to defend this important asset for both companies. We will provide you with updates as appropriate as we move forward on this matter.

As a reminder both Penwest and Endo are continuing to prosecute multiple additional patent applications to cover Opana ER. Endo is also busy implementing a lifecycle management strategy, the first stage of which was announced last week with the launch of three new strings of Opana ER.

Finally, as we have discussed before, Endo has underway an ongoing licensing effort to secure European partner for Opana. All of these initiatives are being aggressively pursued to maximize the value of Opana for both Endo and Penwest.

We also made progress in 2007 advancing a pipeline of product candidates that we believe is both commercially and scientifically promising. In February 2008, we announced the results of the Phase IIa trial we completed for Nalbuphine ER, a drug we are developing for moderate chronic pain. We reviewed the results of the trail at that time so I won’t go over them again here. But, we believe the results of the trial support the trends of efficacy of Nalbuphine ER across multiple endpoints and patient populations and that the drug appears to be safe. The adverse event for this drug appeared to be first week effects and not chronic adverse events that continued throughout the study.

We are in the process of completing the data analysis of this study and are working on a Phase IIb study design. Our intent is to design a study that will be powered for statistical significance on the primary endpoint and will utilize the study design which optimizes the titration rates. We anticipate being prepared to dose this study in the second half of this year. Concurrently, we are out talking to potential partners in Europe who may be interested in European rights for this drug.

In July 2007, we announced the in-licensing of two compounds for medicine pharmaceuticals. The first compound A0001 is a small molecule that can be delivered orally and we believe could treat defects in the mitochondrial respiratory chain pathway. These defects are strongly associated with several orphan progressive neurodegenerative disorders that are both chronic and serious in nature. There are currently no approved therapies for most of these disorders.

The drug has received orphan drug designation from the FDA for the treatment of inherited mitochondrial respiratory chain diseases. The IND enabling toxicology studies for A0001 were recently completed and we believe the results enable us to begin our Phase I safety program. We plan to meet with the FDA in the next couple of months to confirm our proposed talks and Phase I development programs for this molecule.

Assuming we can commence the Phase I program as early as this summer, we expect results close to year end. We also are completing the planning of the clinical strategy around this molecule and will share the details as we get further along. We expect to select a second NCE for medicine late in the year. We also have formulation work ongoing for both the Parkinson’s compound as well as epilepsy compound, we anticipate dosing the Parkinson’s formulation in a Phase I PK study in the second quarter of this year with results expected in the third quarter. The epilepsy compound will follow shortly behind.

Well, we are excited about the product candidates in our pipeline as well as our organization’s ability to develop these drugs; we do recognize the financial realities within which we must operate the company. We just closed the financing this week, which was clearly dilutive to our shareholders. The cost of capital emphasizes the importance of discipline financial management, which includes both cost controls as well as bringing additional non-dilutive financing into the company, primarily to partnership money on our neurology assets. Then we’ll speak more about our thoughts on this front, but the goal of these efforts will be to operate this business without accessing the capital markets as far into the second half of 2009 as practicable.

This financial management program is already underway at Penwest, one component of which was a 14% reduction in headcount that was implemented this week. We are also cost -- we are also cutting all non central spending within the company, we are in the process of completing a bottom’s up budgeting effort which minimizes the overhead of the company and paces the spending on the development programs in our product portfolio.

I clearly understand the need to reduce the burn of the company and we are in the process of making these tough decisions internally as well as working hard on the deal front. As we get more clarity on the numbers we will be in a better position to share the details of the projected burn with you.

So, as we look further into 2008, I am confident that the business strategy the Board and Senior Management Team have agreed to its focused achievable and if executed well can drive long-term shareholder value. I also believe that the company has solid assets in place it can leverage to grow, these asset include the company’s significant financial interest in Opana ER both in the US and worldwide. Our existing pipeline targeted at disorders of the nervous system and the underlying extended release technology base, which is very flexible and recognized in the industry.

Finally, I believe we have assembled our drug develop capability within Penwest that can execute on our plans. I also believe that with the recent financing, we are solid financially and with the disciplined management of the company’s resources as well as some level of success in out-licensing our non-neurology assets, we can fund the company’s operation into at least the second half of 2009.

I’ll now turn it over to Ben to discuss the financial results for the quarter and year and provide his comments around cash.

Benjamin L. Palleiko

Thank you, Jennifer. The net loss for the fourth quarter of 2007 was $9.3 million or $0.40 per share compared with the net loss of $8.9 million or $0.38 per share in the fourth quarter of 2006. The increase in the loss primarily reflects reduced interest income due to our lower average cash balances and interest expense relating to our $12 million term loan partially offset by lower SG&A spending.

For the year ended December 31, 2007, our net loss was $34.5 million or $1.38 per share compared to $31.3 million or $1.38 per share for the full year of 2006. This increase loss is largely due to spending associated with our collaboration and license agreement with Edison Pharmaceuticals and other R&D spending, lower interest income, interest expense in our term loan and lower revenues. These changes versus the prior year were partially offset by lower spending on Torsemide ER, which we just continued in the third quarter, lower stock based compensation costs and lower market research costs compared to 2006.

Total revenues for the fourth quarter were $872,000 compared with $739,000 in the fourth quarter of 2006. Our revenues in both periods were derived primarily from our continuing royalties on sales by Mylan Pharmaceuticals of Pfizer’s 30mg generic version of Procardia XL.

In the fourth quarter we also recognized $177,000 in TIMERx product sales primarily to Endo Pharmaceuticals for Opana ER compared to $150,000 in the 2006 period.

For the full year 2007, our total revenues were $3.3 million compared to $3.5 million for 2006. This decrease is due to a continuing decline in royalties from Mylan partially offset by increased product sales to Endo and reimbursements for R&D work conducted as part of one of our technology license agreements.

Selling, general and administrative expenses in the fourth quarter were $3.4 million compared to $3.6 million in the 2006 period. This decrease is primarily as a result of lower incentive bonus compensation costs and lower market research costs partially offset by increased legal costs. SG&A expenses for the full year 2007 were $14.3 million, an increase of $185,000 from $14.1 million in 2006. This increase primarily reflex increased facility related costs and legal costs partially offset by lower market research costs.

Research and development spending for the fourth quarter was $6.5 million compared to $6.4 million in the fourth quarter of 2006. This increase is primarily due to payments made to Edison Pharmaceuticals under the terms of our agreement as well as expenses we incurred on A0001, the lead candidate licensed under that agreement. These costs were largely offset by lower spending on other early stage programs including Torsemide ER.

For the full year 2007, our R&D expense was $23.6 million an increase of $704,000 from $22.9 million in 2006. This increased results primarily related to payments to Edison and pre-clinical work on A0001 as well as increased spending on Nalbuphine ER. These increases were partially offset by lower stock base compensation expense and lower spending on Torsemide ER and other early stage programs in our pipeline.

Our cash burn excluding financing activities for the full year 2007 was $30.9 million. As of December 31, 2007, we had cash in investments of $23 million compared to $40.6 million at December 31, 2006. In addition, as you know, we recently closed on $25.91 million equity offering that will yield approximately $23.2 million after deducting expenses and fees.

As Jennifer said, our recent financing has reinforced to us the current state of the capital markets, as well as the obligation we have to continually ensure that the expenses we incur have the clear expectation of increase from shareholder value. We believe we have always operated in this fashion but it is important to reiterate that controlling spending and extending our cash runway as long as possible will be essential focus of our efforts throughout 2008.

We are currently engaged in a review of all our spending across the Board and have already implemented significant cost reductions including the headcount reduction that Jennifer mentioned. This review will include both our overhead expenses as well as our development plans for clinical candidates.

In conjunction with these efforts we are aggressively working to increase the amount of non-dilutive financing we bring into the company through multiple sources. As Jennifer mentioned, we are seeking an European partner for both Opana ER in conjunction with Endo and Nalbuphine ER.

We also continue to pursue technology licensing arrangements with parties that value our drug delivery technologies and we are increasing our efforts to seek foundation funding for at least to part of our expenses related A0001. We expect that these and other potential sources of revenue will be key components of funding our program spending over the next several years.

The ultimate goal behind all these activities is to fund the company’s operations as far into the second half of 2009 as practicable. Given the current state of our spending review we will not be providing expense guidance for 2008 at this time. However, we will return to you after the end of this quarter with an update on our progress and more specifics on our plans for achieving this goal.

Jennifer and I would now like to open up the call for any questions that you may have. David.

Question-and-Answer Session

Operator

(Operator Instructions). And your first question comes from the line of Jeff Goater with Cowen & Company.

Jeff Goater – Cowen & Company

Hi, good morning, thanks for taking my question. Ben, I know, you’re not providing financial guidance but can you give us a sense of where the cuts were made?

Benjamin L. Palleiko

So far, we beside the headcount reductions we have made some cuts in our capital expenditures and a fair bit of the market research efforts we have done in conjunction with clinical candidates clearly since we did the budget some of the timelines and projects have shifted a little bit. So, some of the expenses come from there, we have also done an initial scrub on program spending and eliminated any type of activities that weren’t going to effect the timelines on moving those projects forward. And then, as a whole bunch more general G&A overhead reductions you can make, travel expenses and such. So, they add up to a reasonably good amount of money here on the first pass and we’re going back again now to dig in some more.

Jeff Goater – Cowen & Company

And I was just wondering is there any update on the declaratory judgment motion that was filed in the Impax case and if not, do you have sense of timing here?

Benjamin L. Palleiko

So, we actually dismissed those claims when Impax came back with the second filing.

Jeff Goater – Cowen & Company

Okay.

Benjamin L. Palleiko

And there was a sort of convoluted legal rationale to that. But essentially it was overtaken by events when they came back and certified again.

Jeff Goater – Cowen & Company

Okay.

Benjamin L. Palleiko

And so the first lawsuit sits out there as purely a patent infringement suit at this point, and then the second lawsuit has been filed as well and looks very similar now to first.

Jeff Goater – Cowen & Company

Okay. And then, finally I guess from our contractual standpoint how does that all, would a change of control at Endo effect your Opana ER agreement?

Jennifer L. Good

There is no contractual change at all.

Jeff Goater – Cowen & Company

Okay, thanks.

Operator

And your next question comes from the line of Larry Neibor, Robert W. Baird

Lawrence H. Neibor – Robert W. Baird & Co.

Good morning.

Jennifer L. Good

Good morning, Larry.

Lawrence H. Neibor – Robert W. Baird & Co.

Can you give us an update on IP estate for Opana ER, I think about this time you were expecting some feedback from the patent office?

Jennifer L. Good

We had from additional patent activity, which we received basically an approvable notice, there is some additional information we had to submit the generic filings, these are our formulation patents and so we are waiting an action from the patent office and there is really no timeline on that to finally get the patent allowed. With regards to Endo-192 patent, which has led, most people will ask about as well, that’s Endo’s patent to be cleared so there really, the better people to be commenting on it but they did receive a non-final rejection somewhere in the last month, I don’t have the date right in front of me, they are preparing a response to that and will submit that in due course here. So that’s really the update and we do expect additional patents to issue in 2008. We got them from alcohol patents that we think we may get some office action on by the end of the year, as well as getting these patents issued in the Orange Book that I just referred to you.

Lawrence H. Neibor – Robert W. Baird & Co.

Okay, the second question I think there has been an abuse resistant extended release opioid filed recently and Pain Therapeutics talks about filing Remoxy soon. What impact do you think these new entrants into the chronic opioid space might have on Opana ER?

Jennifer L. Good

Yeah, that’s a good question and again probably a better question for Endo from a marketing perspective. I will give you my personal views, I think Remoxy is the only drug that I am aware of that is basically close to being filed. My belief is that they are going to have some patent issues with that. But assuming they are able to actually get through that and get the drug issued. I think largely what you’re going to see is Remoxy take share away from OxyContin because I think if your physician you are going to write an OxyContin script and you make your own decisions about whether you want that to be abuse resistance or not. They got the whole play of oxymorphone is a different molecule, and people use that for reasons separate from writing an OxyContin script. So, I think it will have more of an impact on OxyContin that it will on oxymorphone overall.

Lawrence H. Neibor – Robert W. Baird & Co.

Great, thank you very much.

Jennifer L. Good

You bet, Larry.

Operator

Your next question comes from the line of Robert Hazlett with BMO Capital Markets.

Robert Hazlett – BMO Capital Markets

Thanks. Couple of them have been answered. My question is have you had any contact and I know its early days with the new management team over at Endo, have you had any discussions even briefly with regards to the new CEO over there and if you have, how would you characterize that?

Jennifer L. Good

Robert, we have a lot of ongoing discussions with Endo, so I have obviously had a lot of chances to interact with Nancy Wysenski. We know the rest of their management team as well. Obviously the new CEO was just announced today so to be honest with you, we have not met him, have not had any conversations so I do not have any comment on that front, but you know, obviously we know the rest of the management team well.

Robert Hazlett – BMO Capital Markets

Okay.

Jennifer L. Good

So, I hope he does great for Endo.

Robert Hazlett – BMO Capital Markets

We do too. Thanks.

Jennifer L. Good

Yeah.

Operator

Your next question comes from the line of Angela Larson with SIG.

Angela Larson – Susquehanna International Group

Good morning and thanks for taking the questions. A couple of questions. Do you still have credit of line open with Merrill Lynch and how much is left on that?

Benjamin L. Palleiko

So, the total terms of agreement were for $24 million, $12 million were due in March of last year, as you know; the other $12 million does remain accessible to us through roughly mid September of this year contingent on two conditions. The first is an Orange Book listed patent for Opana, which as you know we have, the second is the market capital $250 million at the time of draw, which as you know we don’t currently have. And also I should point out Merrill Lynch capital was recently acquired by GE Capital so technically this is held by GE now.

Angela Larson – Susquehanna International Group

Okay. Great, thank you. And also on the R&D reimbursements, you said something that we should look to continue going forward?

Benjamin L. Palleiko

Yes, I mean we signed a technology licensing agreement last year and so that work is ongoing through at least the first couple of quarters of ’08 and so that will be those numbers are still show up going ahead for the current deal and then obviously as we sign new arrangements, those will flow in the same fashion.

Angela Larson – Susquehanna International Group

Okay. And then my last question is on is on Torsemide ER. Is this an asset that you could possibly sell or you know gain a partnership or is it completely dead?

Jennifer L. Good

Angela, to be honest with you it’s out there, it’s available someone was interested we’d obviously sell it, but it is not a big effort we are putting to behind and I think it’s the time I tell you we had a hard time establishing well we thought was PK PD correlation with consequently makes us conclude we are not sure there is an actual formulation there without going into the body. So, someone was interested in all that work we’d certainly sell it but, we are not putting a lot of effort into licensing it.

Angela Larson – Susquehanna International Group

Great, thank you.

Jennifer L. Good

Yeah.

Operator

Your next question comes from the line of Ken Trbovich with RBC Capital Markets.

Ken Trbovich – RBC Capital Markets

Thanks for taking the questions. I guess I wanted to circle back to the discussion around the reduction and the anticipated benefit that you get in terms of extending the burn? Is there a charge that we should anticipate related to this in the first quarter and what would that look like?

Jennifer L. Good

Yeah, Ken that’s a good question. So, that was executed this week, the severance charges are small, so you won’t even really going to see it crop up quite frankly, the overall sort of annualized reductions of these savings is roughly $1 million sort of all in with benefits. The severance charge is probably in the 100,000 range so, I don’t know from an SG&A perspective you really see much there.

Ken Trbovich – RBC Capital Markets

Okay. And then just as it relates to the general outlook for the business, I know obviously you are addressing the expense side in terms of these reductions, could you give us a sense as to what you anticipate on the royalty side, I mean, when we run a numbers it looks as though you should still receive royalties starting this year. Is that what you see in your model?

Benjamin L. Palleiko

Endo has probably said that we -- that they expect to start paying us royalties in 2008 and I think we are very comfortable that we will start seeing royalties in 2008 as well.

Ken Trbovich – RBC Capital Markets

Okay. And does that factor into your discussion about how far this cash get you, I mean, in some ways the ramp of Opana, one would argue might get you further is as long as you can get to the point at which those royalties kick in?

Benjamin L. Palleiko

Yeah, I mean clearly can -- I mean that’s the point we are working towards, we do believe that the royalties will grow substantially or have the potential to grow substantially over the course of next 18 months and we would very much liked, that extent that is possible to get to that point with the funding mechanisms we talked about in our scripted remarks.

Ken Trbovich – RBC Capital Markets

Okay, so, on the scripted side, could you repeat again how far you get this, get you to on the sort of existing cash balance and then remind us as to whether or not that assumes any increases in Opana, from where they are right now?

Benjamin L. Palleiko

So, I mean, its right, what we said in the comments is that the goal, the goal we are putting in place for the company is with the resource we have on hand the royalty payments we expect the other revenue sources, the cost reductions we’re implementing in the other ones we expect to implement. And then these other non-dilutive sources, the goal is of all that together is to get us far into 2009 as possible, certainly as part of the second half of 2009, as possible. And with our accessing the capital markets to which to me at least means equity debt you know any sort of financing external financing mechanisms.

Ken Trbovich – RBC Capital Markets

Okay, and is that still includes funding the next Phase of studies for Nalbuphine?

Jennifer L. Good

Although it’s a good question Ken, and to be honest with you I mentioned we are trying to find a European partner, you know, so I would say despite in the disclosure we’ve made publicly sort of as it hears about financing, is that the cash on hand not anticipating any partnership revenues, not anticipating under royalties etcetera gets us at least through Q1 of ’09, I am clearly been told you we are going to figure out how to extend that runaway significantly. That member the Q1 ’09, does assume we fire off on Nalbuphine trial, at some point this year. I think from a practical perspective though, that’s an obvious trigger we have to serve extend that runaway, I think we can do that through one of two ways. We get partnership money in to help fund that trail or we think about the timing of when that gets started. So, all that’s currently on the table for discussion right now.

Ken Trbovich – RBC Capital Markets

Okay, thanks. And my last question is just with regard to anything at all on the proxy side, if there has been any additional news or if that gone away?

Jennifer L. Good

I have no additional news, we received the notice from (indiscernible) Capital, we are reviewing it, and we are not commenting on it at this time.

Ken Trbovich – RBC Capital Markets

Okay, thank you.

Operator

(Operator Instructions). And your next question comes from the line of Arthur Freedman with Freedman Assets.

Arthur Freedman – Freedman Assets

Yeah, hi, good morning and thanks for taking my question. I was just -- wanted to sort of summarize, and focus in on some of the previous questions. When I looked at Exhibit A at all the purchasers in the private placement it’s not like one or two companies, you have quite a number of companies who have clearly are confident about the success of the about long-term out, or they wouldn’t have put out this much money in the private placement. So could you help us give a little more color or looking ahead what can you think or the big ticket items you are thinking that will break the company out in terms of getting the stock price up and just really gaining some momentum? What should we be looking for specifically? Which areas?

Jennifer L. Good

Yes. No. Arthur, it is a good question. I think I would echo your sentiment on the investors. I think we got some very good fundamental healthcare investors who have known the company’s clearly know that space. I think it’s essentially you know, the Opana asset clearly I think is been over sold hard in 2007, around a lot of the patent and generic news then I must say it’s not warranted in the market like this but I think clearly that’s been hit hard in the stock price. You know, in my personal opinion, and granted I am paid to make this happen, so I am biased, but I think they are can potentially be a lot of run room past this 30-month stay on Opana ER through additional patents that get prosecuted, and lifecycle management etcetera, etcetera. And when you run those numbers on Opana clearly every year you extend this asset is very significant to Penwest, so I think people look at sort of where the stock is in and the stock really being sold down to assume you have a generic launch in June of 2010.

So, I think that’s important I think at this point time there is very minimal value given to the pipeline overall I look forward to sort of helping the street understand over the next year what I think the value is in that pipeline. I think getting some of these partnerships done, I think that sends two messages, one is certainly helps on this cash goal, and Ben and I are serious about not having to go back to the capital markets again. We would like to be able to run this company through when we can breakeven from a cash flow perspective. I think securing partnership money will give people comfort around that I think importantly on Nalbuphine, it gives the validation of a partner too about what we see in that program overall. I think on our Phase I Parkinson’s drug we are going to have data on that in the third quarter that is a very interesting program, that at the point in time if we have success we will disclose the molecule, and also talk about plans around that. So I don’t know if I can give you any single thing, I think it is the combination of several assets here most of which are being given no value in the current stock price, and I think the one that is has been sold hard I think in the last several months, so that’s my view of it at least.

Arthur Freedman – Freedman Assets

Thank you very much. That’s exactly what I was looking for. I am trying to focus the story, you know, for investors. That is what I was after.

Jennifer L. Good

Okay.

Arthur Freedman – Freedman Assets

Thank you.

Operator

And there are no further questions in queue at this time.

Jennifer L. Good

We appreciate you joining at this morning to discuss our results for the fourth quarter and year ended 2007. Ben and I will be at the Cowan Healthcare Investor conference next week in Boston and hope to see some of you there. Thank you.

Operator

This concludes today’s conference call. You may now disconnect.

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

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

If you have any additional questions about our online transcripts, please contact us at: [e-mail]. Thank you!