Hythiam Incorporated Q2 2008 Earnings Call Transcript

Hythiam Incorporated (HYTM)

Q2 2008 Earnings Call Transcript

August 11, 2008 4:30 pm ET

Executives

Lisa Wilson – IR, In-Site Communications

Terren Peizer – Chairman and CEO

Chuck Timpe – CFO

Rick Anderson – COO

Gary Ingenito – SVP of Scientific Affairs

Chris Hassan – Chief Strategic Officer

Ian Worden – SVP of Disease Management Operations

Analysts

Kevin Ellich – RBC Capital Markets

Lynn [ph] – Brean Murray, and Carret

Ram Selvaraju – Rodman & Renshaw

Robert Cohen – Western International

Presentation

Operator

Greetings, ladies and gentlemen, and welcome to Hythiam Incorporated second quarter 2008 earnings conference call. At this time, all 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. It is now my pleasure to introduce your host, Ms. Lisa Wilson with In-Site Communications. Thank you. Ms. Wilson, you may begin.

Lisa Wilson

Good afternoon, everyone. My name is Lisa Wilson, Investor Relations for Hythiam. Thank you for participating in the Q2 earnings conference call. In a moment I will turn the call over to Hythiam's CEO, Terren Peizer, who will introduce the other participants.

Before that, I would like to call your attention to the following Safe Harbor statement. The statements which will be made during the course of this call that are not historical in fact are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations, forecasts, and assumptions that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth or implied by the forward-looking statements.

Similarly statements herein that describe the company's business strategy, prospects, opportunities, outlook, objective, plans, intentions, or goals are also forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors that are detailed in the company's SEC filings. In addition, the statements in this call are made as of August 11, 2008. The company expects that subsequent events or developments will cause these views to change. The company undertakes no obligation to update any of the forward-looking statements made herein, whether as a result of new information, future events, changes in expectations, or otherwise. These forward-looking statements should not be relied upon as representative of the company's views as of any date subsequent to August 11, 2008.

With that, I would turn the call over to Hythiam's CEO, Terren Peizer. Terren?

Terren Peizer

Thank you Lisa. Welcome, everyone, and thank you for joining Hythiam's 2008 second quarter conference call.

Presenting with me on the call today is Chuck Timpe, our Chief Financial Officer; Rick Anderson, our President and COO; Gary Ingenito, our Senior Vice President of Scientific Affairs. Also on the call for management are Chris Hassan, Chief Strategy Officer; and Ian Worden, Senior Vice President of Operations.

After I turn the call over the Chuck to provide the brief overview of the financials, Rick will provide details about our managed care offering Catasys. He will also provide a clear overview of our opportunity, our objectives, and the progress we are making. Then Gary will address our ongoing research efforts and I will conclude with closing remarks and then, of course, open the call for questions and answers.

I will now turn the call over to Chuck to provide a quick overview of the financials. Chuck?

Chuck Timpe

Thanks, Terren.

For the second quarter, we reported consolidated revenues of $11.6 million, which included $2 million in revenues from our healthcare services business and $9.6 million in revenues from CompCare's operations, compared to consolidated revenues of $11.3 million in the second quarter of 2007, which included $2.2 million in healthcare services revenues and $9.1 million from CompCare's operations.

The net loss in the second quarter of 2008 was $14.1 million or $0.26 per share, compared to a net loss of $12.3 million or $0.28 per share in the same period last year. Included in the 2008 second quarter net loss was a $3.9 million net loss from CompCare's operations and related purchase accounting adjustments compared to $1.3 million for CompCare in the same period in 2007.

The consolidated net loss for the 2008 second quarter included non-cash charges for depreciation, amortization, and stock-based compensation expense of $2.8 million compared to $1.8 million for similar expenses in the year earlier period. The consolidated net loss for the 2008 second quarter also included a non-cash charge of $1.3 million from the change in fair value of our warrant liability. Included in the consolidated loss for the 2008 second quarter were one time charges of $1.2 million in expenses relating to severance payments and other costs, including $542,000 in stock-based compensation, incurred relating to actions taken in January and April to streamline the company's healthcare service operations, and $625,000 of one time expenses recorded by CompCare.

As of June 30, 2008, the company had consolidated cash, cash equivalents, and marketable securities of approximately $26.6 million, including $1.3 million held by CompCare. In January 2008, we streamlined our healthcare services operations to focus on managed care opportunities, reducing cash operating expenses by 25% to 30% for the remainder of the year. In April, we took further action to streamline our operations by reducing cost additional 20% to 25%.

We achieved our goal and reduced our cash expenditures to approximately $7.7 million in the second quarter of 2008. We currently expect to spend cash of $6.6 million and $5.6 million respectively in the third and fourth quarters of 2008, compared to an average of $11.5 million per quarter in 2007 in our healthcare services operations. Projected cash operating expenses at the end of 2008 will be at a level sustainable into 2009.

For each of the first two quarters in 2008, we achieved revenues of $2 million. This revenue was entirely private pay, which comprises less than 8% of the industry opportunity and even less of our business plan. Although we reduced our field resources supporting our private pay revenue base by 73% in late January, we achieved $2 million in revenues in the first quarter, largely due to the carryover effect of the 60 Minutes program covering PROMETA back in December 2007, and due to marketing initiatives that although discontinued in the first quarter of 2008, continued to have a favorable impact on our revenues into the second quarter.

We have curtailed certain marketing initiatives that although revenue generating provided negative cash flow. On a go forward basis and as our legacy marketing initiatives and the 60 Minutes impact fully taper, our revenue may be impacted by market conditions due to the uncertain economy and also as we maintain our commitment to reduce our net cash burn by lowering expenses in segments of private pay that are revenue generating by providing negative cash flow.

Although a re-allocation of these expenses may reduce revenues in the near term, we anticipate that over subsequent quarters, our enhanced ability to make claims will provide significant benefit as we invest in various marketing initiatives on which we anticipate positive cash flow and a significant return on investment. Including only our private pay business and without considering any additional revenues from managed care opportunities, we project to reduce our net cash burn to $3.5 million in the fourth quarter of fiscal year 2008 with operating expenses at a level sustainable into 2009.

We are focused on managing our cash operating expenses to allow us time to achieve our objectives into 2009, as managed care revenues begin and we move towards profitability. The resulting enhanced cash position may be augmented by additional non-dilutive capital formation. For the quarter ended June 30, 2008, there were 31 licensed locations in the US that contributed to revenues at some level, compared to 42 locations in the second quarter of 2007. As of June 30, 2008, we had 97 sites under licensing agreements with physicians and healthcare providers. For the quarter, our average revenue per PROMETA patient treated was $6,675 compared to $6,382 per patient in the second quarter of fiscal 2007.

I will now turn the call over Rick for more details about Catasys and our managed care opportunity.

Rick Anderson

Thanks, Chuck.

Over the past year, everyone at Hythiam has been working diligently to develop and enable the company to offer the Catasys program to health plans, employers, and unions throughout the United States. We are now beginning to see the culmination of these efforts as we achieve clear program definition and are gaining traction with payers interested in engaging our services.

But before providing overview of our managed care market opportunity and our progress with Catasys in the marketplace, I will clearly define our Catasys offering. Catasys is a substance dependence solution that integrates medical and psychosocial treatments into proprietary treatment algorithms, including the proprietary PROMETA treatment program. It is designed to provide innovative and integrated solutions comprised of medical intervention, psychosocial treatment, and care coaching via specially trained network. It focuses on identifying, educating and enrolling substance-dependent members into a treatment program. It provides substance dependent health plan members with a discreet, convenient treatment at no significant out of pocket cost. It is designed to work with other providers and programs due to the high co-morbidity of this population, and it is designed as an integrated treatment solution similar to other chronic disease programs, thereby further destigmatizing substance dependence treatment.

Although many people are involved in the process of reaching out and engaging health plan members, perhaps the most critical person in the Catasys offering is the care coach – a trained clinician who stands by and guides the member from the first phone call to the completion of their treatment. Utilizing the dynamic IT platform and through telephonic outreach, the care coach will assist the member in developing a care plan, monitor the member's progress, and consistently follow up to help increase the member's engagement in the treatment program.

Most payors currently do not cope with substance dependent members through integrated solutions. They either engage behavioral health companies or develop similar cost management programs internally to address those members. Behavioral health companies are focused on providing existing treatments and managing their own cost. If treatments are ineffective, the payer ends up paying not only the behavioral aspect, but also incurs medical cost from ER visits or increased expense from acute care visits at high cost facilities from undertreated or untreated addiction.

In addition, substance dependence complicates the treatment of other chronic coexisting conditions medical and behavioral conditions, making these already expensive conditions even more costly due to noncompliance. Even if a payer decides to address substance dependence internally, such programs are similarly focused on managing cost and the medical and behavioral component are typically not tightly integrated. Currently there are no comprehensive integrated treatment solutions we are aware of for substance dependence that contain both medical and behavioral aspects. No one in the industry is offering a complete solution. Catasys, however, provides that solution.

Recently completed studies and the accumulation of scientific data are demonstrating that the PROMETA treatment program underlying Catasys works. We also know that effective substance dependence treatment will benefit both health plan and behavioral health organizations, and we recently reviewed data from a pilot program that showed Catasys was effective at reducing behavioral health cost such as acute inpatient and residential bed days. Lastly, we know that bundling other treatments into our Catasys program, such as Suboxone for opiate dependence, with a focus on offering care coaching and the integrated treatment, can provide significant value to a plan and will help us succeed.

During the second quarter of 2008, we continued to focus on managed care opportunities by offering payers our Catasys program and a simple value proposition – let us deliver Catasys to improve patient quality of care, produce better clinical outcomes and reduce both medical and behavioral cost in the form of fewer ER visits, reduce inpatient utilization and hospital re-admission rates, and better compliance with treatment for any coexisting disorders. Our Catasys programs are also designed to help the plan’s customers, the employers and organized labor improve presenteeism and reduce medical cost and job related injuries in the workplace, thereby improving productivity.

Due to the lack of competition and our compelling value proposition to third party payers focused on reducing healthcare cost, we expect significant penetration throughout the managed care industry. We are encouraged that we are continuously and continuing discussing Catasys with a significant number of payers throughout the US and we are in various stages of development with those opportunities. This progress is very exciting to us, given that we have only so far reached a small portion of the overall healthcare marketplace, and in upcoming months we plan on attending large industry conferences to further increase awareness of the benefits of Catasys among payers, employers, unions, and benefit consultants.

We are also in discussion with potential strategic alliance partners to increase distribution and penetration. Our primary corporate goal is to engage through Catasys third party payers covering 3 million covered lives by the end of 2009, which when ramped into 2010 should bring the company to profitability. Our management team is now enthusiastically aligned towards achieving the 3 million covered lives as soon as possible. In light of the fact that many plans are in various stages of evaluating or discussing the adoption of our program, including CIGNA who has approximately 10 million covered lives, our opportunity represents many multiples of this amount, and we believe there is significant upside potential to our 3 million life objective.

Our progress to date is especially encouraging, considering that Catasys has only recently been completed, and discussions with payers are largely outside the normal benefit cycle. To help payers understand the cost and the overall impact of members with substance dependence diagnosis and to further define our opportunity, we have developed an economic model to clarify the cost, calculate an ROI or cost savings for the payer, and project the overall market opportunity. Most of our assumptions in developing the model are based on an analysis of an actuarial database of 20 million commercial plan lives throughout the US.

We estimate that for any given commercial population, 9.8% are substance dependent. However, the total population, only approximately 1.9% of the members will have a substance dependence diagnosis in a given year. Of those members, it is estimated that 26% will likely be high utilizers of health plan services, those who incur $7,500 or more in claims cost in a given year, although this group averages $25,500 in annual claims. The remaining diagnosed substance dependent members with less than $7,500 in claims are classified as at risk.

In working with the payer, we project we will enroll 30% of high utilizers to deliver an ROI to the plan of between 2 to 1 and 3 to 1 on a three year contract, depending on the plan demographic. For the at-risk group, Catasys includes components for ongoing monitoring and possible enrollment into a high utilizing treatment program at a later date. For the approximate 185 million managed care lives in the US, and if we project charging $10,000 case rate for high utilizing program, and a $25 per at-risk member per month rate for the at-risk program, our market opportunity is approximately $3.5 billion.

While the cost savings benefit of addressing high utilizers is significant to the payer, the data collection, screening, and monitoring of the at-risk population is useful to the plan as well, especially with respect to cost avoidance by identifying and coaching the at-risk group before they begin incurring significant claims and become high utilizers. Given the strong value proposition we offer, and because Catasys offers significant benefit to health plans, the plan’s customers, including employers and unions and ultimately the patient, we believe there are compelling reasons for payers to adopt Catasys. This is further underscored by the fact that health plans are continually searching for new ways to reduce healthcare costs.

In May, we announced that the company entered into an agreement with CIGNA to be reimbursed for providing our treatment program in Dallas, Texas. We are pleased to announce that we have completed training and began operationalizing our program on schedule. Training was well received and CIGNA is in the process of identifying patients appropriate to refer to our program. As the opportunity develops, we will consider approaches to partner with CIGNA on the most effective ways to identify and expand the number and speed of enrolling patients in the program. We anticipate the volume will build over time, and that positive results early in the program will provide the basis for expansion of the program geographically.

I will now turn the call over to Gary for an update of our clinical studies. Gary?

Gary Ingenito

Thanks, Rick.

The results of completed and ongoing clinical studies and pilot programs continue to be an important part of achieving our objectives, and will not only aid in our marketing efforts, but will provide substantial scientific validation to the PROMETA treatment program that underlies our Catasys offering.

We strongly believe the financial community is greatly undervaluing the data presented thus far on the PROMETA treatment program. Substance dependence and its impact on healthcare cost is a significant market. It is estimated that approximately $50 billion is spent annually in direct medical expenses associated with substance dependence and that 56% of those costs are attributable to alcoholism. Our studies are designed to exhibit results and data that strengthens the validity of PROMETA and distinguishes the treatment from peers.

In fact, very few pharmacologic therapies achieve statistical significance in clinically meaningful endpoints. Based on the data we have seen to support PROMETA, this differential and perception of our treatment versus peers doesn't typically occur in any other disease state. We feel that this represents a tremendous opportunity in our shares today, and we'll reward the shareholders over time as this inefficiency normalizes.

We are eagerly anticipating Dr. Walter Ling's double blind placebo controlled study out of UCLA on methamphetamine dependent individuals and expect the results soon. Dr. Urschel's double blind placebo controlled study has been submitted for publication in a peer review journal. The study showed that the pharmacological component of PROMETA treatment program versus placebo had a statistically significant reduction of craving for methamphetamine, which further substantiated that our program reduces cravings and improves retention. Further, he has presented at a scientific conference that the reduction in cravings was complemented by reductions of use on several measures.

In July, Dr. Raymond Anton presented top line results from his double blind placebo control study out of the Medical University of South Carolina on alcohol dependent individuals. The 14 week study was designed to evaluate the impact of PROMETA on percent days abstinence, other use measures, and cravings. The available data from the first six weeks of the study showed that the PROMETA Treatment Program demonstrated a statistically significant improvement in patients with greater symptoms of alcohol withdrawal. As Dr. Anton discussed with us just last week, this is an important finding for the field of science and our company.

Also, if we consider that the majority of the medical expenses incurred from substance dependence are derived from those who exhibit symptoms of alcohol withdrawal, the results are very valuable data for PROMETA and our Catasys offering. The other component of Dr. Anton's study addressed subjects with lesser symptom of withdrawal, and as the results are currently unexplained, Dr. Anton is conducting further analysis of additional data and hopes to be able to provide insights in his eventual publication of this study.

Ongoing research includes two additional double blind placebo controlled trials that will also provide clarity on the impact of treating subjects in various states of alcohol withdrawal. The first is being conducted by Dr. Joseph Volpicelli, MD, PhD, on alcohol dependent subjects with low symptoms of alcohol withdrawal. And the second is from Jeffrey Wilkens, M.D. at Cedars-Sinai Medical Center and is focusing on alcohol dependent subjects with higher symptoms of alcohol withdrawal. Dr. Volpicelli's study will include 120 subjects, three times the size of the lesser symptom group in the Anton study.

Volpicelli's study subjects are receiving three infusions per treatment as our current treatment protocol dictates, versus the two infusions provided in the Anton study. The data is currently being analyzed. The study results will either confirm the Anton data and suggest that withdrawal symptoms are an important marker in identifying alcoholic patients most appropriate for the PROMETA treatment program, or the results will fail to confirm Anton's data and demonstrate that PROMETA has a positive treatment impact regardless of the level of alcohol withdrawal symptoms.

I will now turn the call over to Terren for closing remarks.

Terren Peizer

Thanks, Gary.

As you have just heard about our studies from Gary, we believe that the release of data from these studies will continue to drive increased adoption by commercial managed care entities, have a positive impact on our private pay business line, and ultimately provide opportunities to penetrate the Medicaid and justice system population.

We will continue to carefully monitor our operating expenses while making progress with our Catasys offering, and are aligning our organization to achieve our primary objective of 3 million covered lives by the end of fiscal year 2008. We offer payers a simple message in presenting Catasys. They have the challenge in addressing substance dependence and it costs far more than they may realize. We have the solution. We offer a unique program, an appealing value proposition, and are excited about the progress we are making towards securing opportunities with payers and potential alliance companies. We look forward to sharing more success with you in the future.

At this point, the management team and I will be happy to take any questions that you may have.

Question-and-Answer Session

Operator

Thank you. (Operator instructions) Our first question is coming from Kevin Ellich with RBC Capital. Please state your question.

Kevin Ellich – RBC Capital Markets

Hello. Good afternoon. Thank you for taking my question. First question has to do with Catasys. I was wondering – Rick mentioned the care coach position. I was wondering how many care coaches you guys have or are being enrolled in the program.

Rick Anderson

From a care coach perspective, we currently have two care coaches that are operating, and we expand that as we need to cover the members that they are coaching.

Kevin Ellich – RBC Capital Markets

And how many members can each coach kind of efficiently cover?

Rick Anderson

What we are looking at right now is that each one can at any given time – and obviously, it will depend on – as the volume flows through that they can cover 80 people each. Each of those people are available for calls that are incoming as well as outgoing calls as part of the coaching process, which is part of the developed programs, and each of the coaches is trained on the relapse prevention program that provides part of the psychosocial as well. So that is part of what integrates all the pieces together.

Kevin Ellich – RBC Capital Markets

So they are basically like, it’s kind of like a buddy system or kind of like a – just like a support group basically?

Rick Anderson

We tend to refer to it sometimes as a virtual sponsor, which – that kind of concept, yes.

Kevin Ellich – RBC Capital Markets

I understand. Excellent. Then going back to the financials, maybe Chuck can handle this. With the operating expense reductions going down to $6.6 million and $5.6 million in Q3 and Q4, where are those savings coming from? Is it just overhead and personnel?

Chuck Timpe

It's a number of fronts. First of all, we would no longer have the non-recurring cost that we experienced in the first and second quarter. And then going into the fourth quarter from third and fourth quarter, our clinical research expenses will be declining. But we are continuing to make reducing operating expenses in various areas as we are concentrating on our managed care opportunities.

Terren Peizer

And keep in mind while we are reducing expenses across the board, and a large part is also reallocation of expenses, so while we might be reducing as we mentioned earlier, that we reduced our private pay resources by 73%, we are also reallocating some of those resources to Catasys, which is obviously our emphasis. So that's why we've been actually impressed that we've able to maintain this revenue by reducing our cost 73% in private pay, but again we've been allocating it over to Catasys.

Kevin Ellich – RBC Capital Markets

Okay. Excellent. That's helpful. And then with the cash, how much of that is in auction rate?

Terren Peizer

Well, as you've been reading, the hard answer is of the reported number, the gross number is – the net number of the market adjustment is $25.3 million at the Hythiam level. Now that includes a mark-to-market which they are securities, which base amounts about $11.5 million, mark somewhere in the $0.94 to $0.95, but given what has occurred in the past week, what we've seen, and we were also working with other lenders. But for example, our securities are at UBS, they are now offering a program where we qualify for $0.75 on the face amount. That's where we've marked it down.

So when you net it all out, Kevin, it's something in the neighborhood of maybe a $2.8 million difference between the 75% of the $11.5 million, and we'll have actually access on a known interest charge to cash. So net-net, a long winded way of saying when you cut through all the math, you take the amount of $25.3 million, add back say the differential that gets you to $11.5 million base, and then subtract out $2.875 million. So we only won't have access to $2.875 million in the short run. I would expect also a secondary market to develop that will further cut that number down.

Kevin Ellich – RBC Capital Markets

Right. So just to get a better handle on that, I guess thanks for the detailed explanation, so if the auction fail, the total exposure would actually be $11.5 million, though? Is that right?

Terren Peizer

Auctions fail, the face amount is $11.5 million. We record the actual cash on our books at the face amount less the discount that they are being marked-to-market, right? But again we have access to 75% of the face amount or it would be $8.625 million of the $11.5 million we have access to today if we want it.

Kevin Ellich – RBC Capital Markets

Okay, I understand now. Then last question, just wondering how the CIGNA adoption is going? Have they enrolled any patients yet or how many patients do they have?

Terren Peizer

Well, with respect to CIGNA, first of all, in the future, we are not going to certainly make a habit of discussing a single client, but in this case we feel it's appropriate since we just recently announced it. I'm going to turn it over to Rick to talk about the progress with that. But keep in mind, as discussed in the past, CIGNA will be different than the other plans that you will see us announcing relationships with and agreements with in that CIGNA occurred – a dialogue with CIGNA occurred post the Urschel top line data, but pre-completion of the Catasys product offering. So CIGNA started off as looking more like a reimbursement program that will morph into the Catasys offering as we expand it. But the other agreements and relationships that we'll hopefully see in the future will be the pure Catasys offering. With that, I'll turn it over to Rick to give an update of what we've done and where we are in the process.

Rick Anderson

This program was intentionally brought to operational status, which included making sure all the pieces on our side were in place and fully functioning. Everybody was trained as well as training the various people at CIGNA, which happened over a several day period where we trained people both in the local markets as well as in the international offices. But it was intentionally done during a historically slow summer to ensure the successful implementation, that all the pieces were in place in anticipation that the treatment season starts again as you come into the fall.

And while the first referral has happened, we don't expect that there's going to be much activity until September, when CIGNA has informed us that the number of people seeking care seasonally increases, which is entirely consistent with general mental health and substance abuse treatment seeking trends. We see that in other parts of our business and all mental health related entities tend to see that seasonal cycle. We also anticipate of course that as it starts up, it will gain momentum, especially as people get treated and go forward, and we've seen that over and over.

And as previously discussed with CIGNA, when we were coming into this relationship from the beginning of the program, we were relying on referrals from them. They're warm transferring referrals that come in to our care coaches to explain what the program is and then set them up for an appointment with a provider to do the screening, et cetera. And we had discussed upfront that if that process does not yield sufficiently fast enrollment for everybody to be happy in terms of their ability to evaluate the program, that we left open the possibility of doing outreach – which is part of the normal Catasys program that Terren made reference a minute ago where we are making outreach to people who already presented for chemical dependency or substance abuse treatment and/or have the claims, and that's a more aggressive and really our preferred approach there.

The approach that they've taken at this point is fairly consistent with past approaches they've taken with other programs, and we have the ability like I said to go back and talk to them, which we anticipate we will do as we go forward in the year. Because our target is really to bring as many people as quickly as possible into the program, so that they can have a sufficient number of people to evaluate that and to demonstrate the success of the program and expand it from there.

Kevin Ellich – RBC Capital Markets

So how many patients?

Terren Peizer

We are not breaking out the number of patients, but I guess the – what differentiates with CIGNA, as Richard said – the difference between them referring a new patient, and in Catasys what happens is that we've already targeted the patient because they've already presented a claim of chemical dependency. So you actually already know who the patient is and you are marketing to that patient that, hey, you can do this treatment. It's discreet. It's simple. It's convenient. And you are not going to have cravings, anxiety, et cetera, and your insurance company CIGNA will pay for it and you'll feel better.

Versus now what happens now is that a patient calls whoever at CIGNA or to clear it, says, I want to get treated for substance dependence. Well, that might not be the patients we already identified when we go through the math of 1.93% being high utilizers. This might be the part of the 9.8%. So one's the targeted approach, and CIGNA said to us from the get-go, in the beginning, let's try the referral process while we are getting used to it, getting up to speed, everyone is trained and we do some dry runs. And then after a couple of months, we'll revert to marketing towards the targeted and already labeled population. As already said in the past, we expect a very slow ramp in the beginning, but then we anticipate to start seeing accelerated beginning in the September month.

Kevin Ellich – RBC Capital Markets

Okay. Thanks, guys.

Operator

Our next question is coming from Jonathan Aschoff with Brean Murray, and Carret. Please state your question.

Lynn – Brean Murray, and Carret

Hi. This is actually Lynn [ph] on behalf of Jonathan. A couple of questions. Given your research, you know, CIGNA deal and the data from Dr. Urschel and Dr. Anton, I was wondering how that has impacted your negotiations with other healthcare plans?

Terren Peizer

That's a very good question, and obviously very germane, and obviously the trifecta [ph] to our company these days. First, I would say in the last few months the activity that we've seen at the healthcare level has grown exponentially and that is the result in part of the completion of Catasys. It's only recently in the last two to three months that we've had all the actuarial data available to actually show the health plan how much substance dependence was costing the plan, which is a big driver to them getting and having adoption, and then being able to present the value proposition.

So the combination of completing the Catasys product offering and the actuarial data showing the savings, and plus as you point out the scientific validation from the Urschel study and the Anton study and soon we hope to see other data, and then the CIGNA agreement because someone wants to see someone else – in particular, a CIGNA statute, since they are an innovator and a leader. I believe to put it to quantify that exponential growth, I would say approximately we are in talks and in discussions and follow up with approximately 25 health plans now, which has grown dramatically in the last two to three months.

That said, if you look at those 25 plans or so, it encompasses approximately greater than 80 million lives. In the short run, we expect two or so Blue Cross/Blue Shields to proceed to contract and in the contracting phase. And we are excited about this, because it will offer significant start of penetration in Blue Cross/Blue Shield, and we all know that one or two Blue Cross/Blue Shield signing will lead to others to sign, so we are excited about that.

But also I think, as Rick pointed out, we are excited about the strategic alliances that we can form to accelerate along those 80 million lives. And again we believe that we are being extremely conservative when saying that 3 million lives is our target by the end of '09 and how that leads to profitability. And then – so any further progress above and beyond those 3 million lives or those 80 million lives accelerated by the strategic alliances, we believe will contribute to significant profitability, dramatic profitability in fact.

Lynn – Brean Murray, and Carret

Okay, that's great. So regarding Dr. Ling's data, first, when do we expect to see that data? How do you see that data impact the company going forward?

Terren Peizer

That's a very good question. And I think it's been topical on a lot of people – certainly a lot of people in Wall Street's minds. First of all when will we see it? We don't control it. It's not our study. It's not our study design. It's not our data. Gary is shaking his head, yes. It's not our data, so it's really up to Dr. Ling when to release it. We do know that the blind has not been broken yet. I believe that there's a strong likelihood we can see the data sometime over the next 30-ish days if Dr. Ling decides to release it at that point.

Lynn – Brean Murray, and Carret

Okay.

Terren Peizer

And I think relative – more importantly, what does it mean for us? I think what's interesting is I think there's a disconnect relative to our company, relative to the importance of PROMETA and Catasys and even how we are perceived in the stock market. Alcohol as we said is 56% of the direct medical expenses of substance dependence of $50 billion. Alcohol is the number one application of PROMETA and of Catasys.

CIGNA didn't just sign up for methamphetamine. They signed up for alcohol, cocaine, methamphetamine and we are going to add more applications to that. More importantly, it should be noted when you look at even our private pay revenue today, it is 60% of our revenue today, alcohol. So there is this little disconnect, but I think over time as we point out, this will be mitigated.

Each study in terms of its importance is part of a totality of evidence. Each study seems to show a different angle, has something positive to contribute to the scientific validation and efficacy of PROMETA, and the payers are interested in Catasys. Any scientific studies are the scientific validations of the pharmacologic portion of PROMETA and even by extrapolation of the bigger pie, of Catasys. So the payers are really focused on, can we improve outcome, not necessarily whether it's statistically significant versus placebo. That's when they are trying not to pick up coverage of a treatment. When they want to pick up coverage of a treatment like Catasys, because it saves them money, benefits patients, and satisfies their customers, the corporations and the unions, they look to pick it up and they are focused on the totality of the picture. That said, we are looking forward to the UCLA data.

Lynn – Brean Murray, and Carret

Okay. And thanks for the detailed explanation. And lastly, can you comment more specifically on how you plan to use non-diluted cash, how are you progressing on those plans?

Terren Peizer

Well, yes. As I mentioned in the past call, and mentioned briefly today as well, we have a variety of ways of raising capital. Now, of course, we are thrilled that we are seeing the relief on the auction rate front that is in the near future, and so at the time – and at the time of realizing value and taking value, raising capital on a non-dilutive basis, and re-allocating that capital to our managed care and to Catasys and even to some extent our private pay, marketing activities when we are able to make claims, we will look to do so.

We are not going to specifically articulate today, but what I've said in the past and I've said in conferences is that we have a lot of value in this company. We have value as it relates to our intellectual property, as it relates to our substance dependence intellectual property, and certainly as it relates to broader applications of our intellectual property, as well as other business model, re-allocations of capital and realization of capital that I think shareholders will be very pleased with. And I think again more of our value will be recognized in the marketplace as we progress. And hopefully we'll be reporting on some of that activity in the very near future.

Lynn – Brean Murray, and Carret

Great. Thank you very much for taking my questions.

Terren Peizer

My pleasure.

Operator

Our next question is coming from Ram Selvaraju with Rodman & Renshaw. Please state your question.

Ram Selvaraju – Rodman & Renshaw

Hi, thanks very much for taking my question. First of all, and this question is probably for Gary. Given what we saw in the lower CIWA score group in the Anton study, where there was a suggestion that there might be a situation where those on placebo fared better than on the PROMETA program, if such a result were to be borne out by the upcoming data from the Volpicelli study which is focusing on lower CIWA scores, what impact could this potentially have for the utility of PROMETA in alcoholism as a whole?

Gary Ingenito

Your assumptions there one are that after the data analysis is completed by Dr. Anton and after everything has been looked at including functional MRIs in the remaining eight weeks that the result would still hold up without the finding of any compounding factors and that the Volpicelli data will confirm it. Correct?

Ram Selvaraju – Rodman & Renshaw

That would be one potential scenario obviously.

Gary Ingenito

So I think –

Terren Peizer

That would be the worst case scenario, that’s reducing us to the worst case.

Gary Ingenito

I think in that, it would help us to be able to predict and identify patient populations that would benefit more from PROMETA in the particular alcohol group that we are looking at. Now, is that an absolute? No. I think that as one knows, CIWA scores in withdrawals are a continuous variable and exactly where the proper cutoff would be for a patient to benefit, we would have to continue to explore.

Dr. Anton picked one number, but is it 6? Is it 7? So we would need to evaluate that further. But it actually provides clinicians possibly in your scenario with a direction in order to help the more serious worse patient who is a higher utilizer and who is the problematic one for clinical therapy, which as Dr. Anton pointed out in his conclusions, is an important group in alcoholics seeking treatment.

Terren Peizer

I would just keep on reiterating. We believe – in that study there was a high correlation with severity of alcoholism or the quantity of use of alcohol and the high CIWA score of patients. I can't be clear enough. The high CIWA score patient is the patient responsible for 80% to 90% of that 56% of that $50 billion number. It's the one that everyone is focused on. There has been no solution.

For example, if you relate it to Catasys – now mind you, I'll throw the caveat that Dr. Anton is very clear. He doesn't understand that low CIWA outcome. One of the other outcomes that could occur is that there's no difference between placebo and PROMETA in the lower group, which would clear up that issue, and we might see that there's actually – with the three infusions might be a meaningful difference in favor of PROMETA in the low CIWA group.

That said, in the Catasys context, we are not even sure that that low group would be appropriate for PROMETA. We would put them in the at-risk category, and where they would be in that $25 per member per at-risk for the risk group. Again, that is only $300 per patient a year. We would have them in some care coaching and psychosocial not appropriate for PROMETA.

What we are hoping to see is really how expansive can PROMETA be applied – but in reality as it relates to PROMETA and Catasys and Hythiam, what we are really focused on is that CIWA high group. Because that's where the expense – medical expense, the savings to the health plans. And truly when you look at the breakdown of those that present for treatment in the country today, it is your more severe alcoholics and your higher CIWA score patients.

Ram Selvaraju – Rodman & Renshaw

Okay. So essentially even with the worst case scenario, which obviously does not necessarily have to be the case, we would still be able to expect utility of PROMETA in those patients who we would normally think would be the highest utilizers. Correct?

Terren Peizer

Yes. That's exactly correct. But in fact Anton says it does. This is and I will point it out – I mean he wouldn't come out and say this, but it's obvious, I think. You look at every other pharmacologic, whether it be Vivitrol (inaudible) naltrexone – none of them have achieved meaningful statistical significance in an alcoholic population on abstinence. This is the first time – and Anton pointed it out in a conference call just last week, where he was talking about some of the additional findings. He is learning more and more about the high CIWA grouping and the low CIWA grouping.

For example, the low CIWA grouping has, 25% of those patients have significant amount of blood alcohol levels. But he said actually those patients exhibited characteristics of the high CIWA group. This is not a surprise to us and this is why we added the three days – a third day of infusion several years ago because there could be alcohol on board, because the patient was going in withdrawal before the treatment and started drinking in the parking lot or what have you. But as far as going forward, I would say that we – this is actually so significant to us and Anton saying it's probably the most significant – if it progresses, he was talking about how it's effective with not only alcohol but seems to be effective with other applications. This is a major step for science. And that’s what’s really – I mean this is a major – we're on the verge of a major breakthrough with the scientific validation of PROMETA.

Ram Selvaraju – Rodman & Renshaw

Okay. Just with respect to timing, you mentioned that we could potentially see data from Dr. Ling's study within the next 30 days if he elected to release the data at that point. To what extent would we be able to expect the Volpicelli data to precede Dr. Ling's data?

Terren Peizer

I think we’re – and Gary actually – you know actually more recent update than I, because you just spoke with him. When – you may want to comment on when we might see the Volpicelli data?

Gary Ingenito

So, again, we are in the same process as we are with Dr. Ling in terms of cleaning that data, ensuring that it is ready, have the blind broken first, the statistical analysis plan is completely defined, et cetera. I would put a similar timeframe within the next 30 to 45 days around the Volpicelli data.

Ram Selvaraju – Rodman & Renshaw

At this point we really have no idea which could come first?

Terren Peizer

No. I don’t think – let me tell you – let me explain why the complication on the Ling data and that's why it's a little variable. The Ling data – the reason the blind hasn't been broken are twofold at this point. Number one, the very last patient in the study will receive their very last day of the gabapentin this week. Once all the patients have received all the – and in the UCLA study the gabapentin was taken out 40 days out from the beginning of treatment. In the – he is waiting till after the last patient has had the last medication and then the data – which is I believe in the process of being cleaned by his data center right now on all the patient data and it will then be – once the last patient has taken their medication, the data will be segregated into say group A and group B and then he will run the statistical analysis before breaking the blind.

But the complication – not the complication – what we don't know and it's up to Dr. Ling to decide is he might have data – 90% something of all the patients going out 106 days, but there still might be a few patients that remain going out as much of the 160 days. Of course, we know retention in methamphetamine studies is not always very high, although we would expect it to be higher in the PROMETA study. So I think it's his belief that he will release preliminary data on the bulk of the patients in the study and recognizing that the last stragglers in the study won't significantly impact the outcome. That is entirely up to him and if that's the case, if he does do interim data, we expect it in the next 30 days. If he decides to wait till the very last patient has come in the last day, it can be sometime in September-ish, towards the end of September actually.

Gary Ingenito

As Terren said, both researchers have conducted the study to the highest standards of good clinical practice and will not compromise in any way the data.

Terren Peizer

Right, I mean you could say – that's what I wanted to explain – you can see that they are not – I mean they – every which way – I mean these are two – Volpicelli's one of the tops in the field of alcoholism and certainly Ling we believe to be on peer in the similar field [ph] and UCLA to be on peer in the similar field. So, their study design, their data, how they report it, when they report it, it's in their control. But that's the indication that they are giving us right now.

Ram Selvaraju – Rodman & Renshaw

Okay. So basically the best case scenario would be we would expect to see it within the next 30 days, worst case scenario would be sometime around the end of the September, the Ling study?

Terren Peizer

I would say that’s –

Gary Ingenito

Yes, I would agree at worst case, yes.

Terren Peizer

Worst case, yes.

Ram Selvaraju – Rodman & Renshaw

Okay. Also could you just comment briefly on the number of centers that are actually up and running in Dallas that can administer the PROMETA protocol and what their threshold would be for processing patients out there in conjunction with the CIGNA evaluation?

Terren Peizer

That is a great question. Rick?

Rick Anderson

I can certainly answer the beginning of it. The CIGNA program currently is being done entirely through the managed center that we have in Dallas, the company managed center, the PROMETA centers is actually in Dallas. And Chris, do you want to comment on the capacity?

Chris Hassan

Murray Hill is a fully integrated addiction center who has no issue with adding resource to apply to that. Currently they have a number of patients who are in all phases of what would be utilizing Catasys from the IOP to the medical management to individual therapy. So there's no constraint right now as far as – they literally do on average 30 patients a day. We are adding another healthcare provider right now, so they are doubling that exposure right there and run the meetings in the evenings as well.

Rick Anderson

Right. And I would say with the current configuration, they could handle in excess of 2,000 patients. And what you are saying is that could be handled easily, modularly [ph]. And they – we really kind of anticipate that we need about, on a full blown Catasys program, that you need about two, three with redundancy providers per 100,000 to 150,000 members that are being provided. And we currently have a number of providers in Dallas outside of that as well that we could expand that to.

Ram Selvaraju – Rodman & Renshaw

Okay. So just to recap here. You say that the current capacity in Dallas would be for the ability to process approximately 60 patients per day?

Rick Anderson

About 2,000 per year, and then all we have to do in order to increase that is they just have to increase their staffing.

Ram Selvaraju – Rodman & Renshaw

Okay. Which is relatively easy to do?

Rick Anderson

Correct.

Ram Selvaraju – Rodman & Renshaw

Okay. Has there been any indication from CIGNA that they would be interested in looking at the PROMETA protocol in other geographic regions as part of the evaluation process or are they satisfied with keeping the evaluation based in Dallas?

Rick Anderson

As part of the original discussions when we came to agreement, we discussed other geographic areas as well and we would anticipate this being – an ongoing relationship whereby we would discuss the evaluation expanding as well as other ways to increase the number of people during the evaluation process. And then as the program plays itself out, that's really the point at which we would be able to demonstrate success and roll it out much more broadly.

Ram Selvaraju – Rodman & Renshaw

Okay. Then I just have a couple of quick questions for Chuck if he's still there.

Chuck Timpe

Yes.

Ram Selvaraju – Rodman & Renshaw

Chuck, you mentioned that the net cash burn for the third quarter and the fourth quarter you gave precise numbers. What were those numbers again?

Chuck Timpe

Our cash expenditures are projected at $6.6 million in the third quarter and $5.6 million in the fourth quarter.

Terren Peizer

And so the cash burn, you’d add back the revenue. So what we are saying is to date we've been struggling along the $2 million a quarter without really marketing and making claims and taking 73% of our resources out. And then – so if in the third and fourth quarter, if we saw those numbers taper down on a revenue basis, we would reduce our expenses commensurately, and we have a plan in place in the third and fourth quarter to do so. So we maintain the net burn of somewhere in the neighborhood of I'd say $4.6 million to $4.7 million in the third quarter and $3.5 million in the fourth quarter. So what we are really targeting here, as we said in the prior call, is our net cash burn to extend the runway to allow the Catasys revenues to kick in, and obviously not having to go to the equity market for capital.

Ram Selvaraju – Rodman & Renshaw

Okay. Just a couple of other things. Previously you had stated that one possibility would be to spin off the CompCare division. Any idea as to when that may happen?

Terren Peizer

Well, we haven’t – I don't know that we've commented on that to be frank. I think there's always – if you go back to CompCare, when we entered into the CompCare transaction, it was with the expressed purpose of completing the Catasys offering where we would gain their user accreditation and their infrastructure as our back office. We didn't purchase all of CompCare. We purchased 50% of CompCare. So we are just an equity investor. We haven't put any money into CompCare. We haven't taken any money out of CompCare. So, it's really just been an equity interest.

We then after acquiring the 50% interest and the reason we did so obviously is so we can sit down and work out an administrative services agreement where we could use their back office and we subsequently did do that. So we have that agreement in place, and we again remain an equity investor in CompCare. I don't believe we have said publicly or any way which way about anything about spinning off CompCare. That's always a, I guess, one of the possibilities we could always be focused on is monetizing any asset we have at any point in time.

Ram Selvaraju – Rodman & Renshaw

Okay. So, just from a housekeeping perspective, for the foreseeable future, the financial statements will continue to be consolidated, correct?

Terren Peizer

As of today, yes.

Ram Selvaraju – Rodman & Renshaw

Okay. Thank you. Those were all my questions. Thank you.

Operator

Our last caller is Robert Cohen with Western International. Please state your question.

Robert Cohen – Western International

Yes. Most of my questions have actually been answered, but a couple of questions I have. Number one, how many people did you guys actually train at CIGNA for the Dallas project?

Terren Peizer

I'll let – Ian Worden is our Senior Vice President of Operations. He's intimately involved with the rollout of the CIGNA program as well he’ll be involved in all the rollouts of all of our programs that we have in the hopper. Ian?

Ian Worden

Sure. I don't have the exact number, pardon me, but I would say it was in excess of 50 different care managers, member advocates, and EAP professionals associated with CIGNA, both locally in the Dallas market and well as the national office in Minnesota.

Robert Cohen – Western International

Okay. And just a couple of other questions. You guys talked a lot about percentages, how these insurance companies save money. If you have a 10 million patient plan, can you give us a scenario of why an insurance company finds your protocol a compelling proposition and use dollars based off 10 million if you could, if you can give us in dollars versus percentages?

Terren Peizer

Well, that's the number we typically have used and that we used it in the past calls. If you go to our website, it's also in a recent PowerPoint that we presented last week at the BMO Healthcare Conference. On 10 million lives – well, your question is twofold. On 10 million lives, we on the high utilizers generate $140 million in high margin revenue, and on the low utilizers or the at-risk utilizers, it would be approximately $51 million. So a total of $191 million a year in savings for a plan of 10 million lives, so CIGNA's say 10.4 million lives, or some combination of many plans adding up to 10 million lives. Of course, we are talking of plans that are bigger than 10 million lives. So $191 million in savings a year.

Now, that's part of the value driver. The other part are the fact that is A, their patient outcomes are improving and something that would be harder to track is their – as Rick mentioned, their compliance to other treatment programs for other diseases, whether they be physiological diseases or behavioral health diseases. That might be a difficult number to track down. As well as from a marketing standpoint the plan, the end-user – the corporation and the union – have not only the low healthcare cost and the lower behavioral healthcare cost, lower medical and behavioral healthcare cost, but get the added benefit of the productivity gains in the form of absenteeism and presenteeism, as well as the workman's comp claims going down.

So, this is really an unusual circumstance where you get so much benefit out there that just walked in the door in the form of Hythiam and Catasys that they – obviously in this era of reducing healthcare cost, anywhere they can pick up savings is a powerful motivation to sit down and talk to us. When we actually show them how much that is, they are very surprised. And then when they run their data against our data that we are showing them, which is our a 20 million composite plan, they are seeing that their expenses are at least what we are telling them they are, and in many cases depending on where they are located in the country, can be much greater than what we are telling them they are.

So there's a tremendous driver which is – that’s why we are hard pressed to find why people – or why any health plan wouldn't adopt us when it's a win-win-win for everyone, and frankly it's really why I believe that they will look to adopt sooner rather than they normally would another medical program. As well as the fact that I think when we look at it, 25 plans that we are talking to right now, we don't see plans dropping off and that's surprising to us. We don't see plans saying, you know, just not enough information, not enough data, not enough peer review publications. There are some plans that believe me, they are going to wait for peer review publications because they have internal procedures. But by and large, we are seeing continued acceleration of our relationships with health plans throughout the country.

Robert Cohen – Western International

You had a gentleman on there, I believe from Rodman Renshaw, I don't remember his name, you were trying to explain that in Anton's study, that he had a very good outcome from the high CIWA group. Correct?

Terren Peizer

Yes.

Robert Cohen – Western International

Okay. And from what you just said, most of the money that you guys are looking at comes from this high CIWA group. So my question is – why is Dr. Ling's data, for some reason to Wall Street why does that seem to be a much more focus than what Anton just proved out on the high CIWA group? The low CIWA group, I mean there is nothing been effective anyways, so I'm trying to understand why people didn't put a lot more weight into what just happened on the Anton study based off what you have said on this call.

Terren Peizer

Right. Well, I don't know that I can answer that conclusively, but I'll give you some theory. One is the development of the company, whether you look at it through the legacy of the justice system program, the big driver in the justice system is methamphetamine. And there was a problem, if you go back over the years where there was – there still is a methamphetamine epidemic, and methamphetamine was driving a lot of headlines and attention.

We had the original Urschel data, the first study data we had was the open label Urschel data. That was methamphetamine. Then he did a double blind placebo controlled study. That was the first double blind data really. That was methamphetamine. Then people said well, cravings, 30 days, but you have this other study here by Dr. – the Dr. Ling and the UCLA, and that needs to validate all the other meth data and everyone has always as a result has been focused on methamphetamine I would say more significantly than the alcohol.

I also believe most people on Wall Street did not believe since no one else was able to achieve statistical significance on an abstinence measurement in alcohol, and it is very difficult to achieve because – and it's one of the reasons why we believe in PROMETA being an integrative approach of medicine, pharmacologic and behavioral, and Catasys even being a level above and beyond. What's really – when you look at it – when you look at it – someone just interrupted me, so I apologize. When you look at it, the alcohol – since none of the other pharmacologics achieved statistical significance on abstinence levels, I believe people didn't really believe we were going to achieve it and the reason is because placebos isn't just a sugar pill or saline solution.

In these substance dependence studies which make it very difficult to achieve statistical significance, you also have the standard of care, psychosocial behavioral therapy programs alongside. So patients are motivated to be in a study, and on both sides, PROMETA and placebo, and they are getting the standard of care psychosocial treatment, it might be hard to see statistical significance. It's only because in these small studies, relatively small studies that we are able to see statistical significance is by the significant treatment effect that PROMETA has in treating a patient. But the reason we are about integrating behavioral with the medical and Catasys integrating behavioral, the medical and care coaching and IT platforms is because we don't believe it's about a scientific – one medical application. We believe it's about the integration and about the disease management of it.

Robert Cohen – Western International

Thank you.

Operator

Our final question is coming from Kevin Ellich with RBC Capital Markets. Please state your question.

Kevin Ellich – RBC Capital Markets

Hi, Terren. I just had one quick follow up. Based off of last quarter's call, you had mentioned you guys are evaluating a number of strategic initiatives that can capitalize your asset base and your value and capital. I was just wondering if you can you talk about, if you guys are you still pursuing those, or what is that all about basically?

Terren Peizer

I think it came up in a couple of questions before, but maybe you weren't on the line. But I could – let me just leave it at this. We are not going to itemize all the specific ways that we can realize value other than the general statement that I've made before and I'll make again – that we have a lot of intellectual property here. We believe it's not being valued properly. We believe that intellectual property is tied directly to substance dependence treatment and certainly value above and beyond the substance dependence applications that will we believe expand to other behavioral health type psychosocial type disease indication.

I believe the substance dependence data that has come out to date will further validate other applications and that is probably a longer term asset value realization and capital formation process that I think will play out sometime over the coming – we'll say six months to a year. And then there are more immediate ways of realizing value in capital that are more in terms of the reallocation and showing the value of our business model. So one I would say is our intellectual property base. I will say one is our business model base, and that could take the form of variety of ways of realizing asset value, as well as most importantly when we undertook this endeavor, capital without the issuance of shares.

Kevin Ellich – RBC Capital Markets

Okay. Thanks.

Terren Peizer

Okay. I think we'll conclude here, but I'd like to take this moment to thank Chuck Timpe with complete gratitude for his outstanding contribution. Since the day the company was launched, Chuck has been here approximately five years. He will be turning 63, and will be retiring sometime before year end. Chuck is really excited obviously about our future, and I believe every year Chuck purchases stock in the open market, and he of course will be available to us in perpetuity. But we wish him many, many, many vibrant years in retirement, and we will certainly miss you. But we wanted to express our gratitude to Chuck, and again, thank you for your tremendous contribution.

I want to thank everyone again for joining us today. As usual, we appreciate your support and we look forward to discussing our company with you at the next quarterly call. Thank you.

Operator

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time, and we thank you for your participation.

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Comments

[PacificGate...:]

Evidence, and history, suggests that "balance" is the better part of valor in all our endeavors. Extremes tend to enjoy only fleeting moments of glory.

While we cannot rid the world of “lust, greed, envy, sloth, and their pals” there are some basic common sense elements that must be re-injected into our capitalist system we all know and love.

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Due diligence and oversight long ago slid out the window. No one was watching.

Time to do something about it.

"WE THE SHAREHOLDERS OF YOUR COMPANIES......

pacificgatepost.blogsp...

2008 Sep 14 02:04 PM