Emisphere Technologies, Inc. Q2 2008 Earnings Call Transcript

| About: Emisphere Technologies, (EMIS)

Emisphere Technologies, Inc. (OTCPK:EMIS) Q2 2008 Earnings Call August 11, 2008 10:00 AM ET

Executives

Michael V. Novinski - President, Chief Executive Officer, Director

Michael R. Garone - Chief Financial Officer, Vice President

Bob Madison - Senior Director of Corporate Communications

Analysts

Steve Brozak - WBB Securities

Jay Saunders - Deutsche Bank

[Abe Schloss - Maxim Group]

[Rick Elkin - Oppenheimer]

[Bill Stein]

Operator

Good morning and thank you for joining us today for the Emisphere Technologies 2008 second quarter financial results conference call. (Operator Instructions) At this time I would like to turn the call over to Mr. Bob Madison, Investor Relations company.

Bob Madison

Welcome to Emisphere’s second quarter earnings conference call. Today’s presentation is posted on our website. Please log on to www.emisphere.com to follow along. As a reminder, this call will be webcast live via the Internet. To access the webcast of this conference in listen-only mode, please go to the Investor Relations portion of Emisphere’s website. An audio replay of this conference will also be posted to Emisphere’s website two hours after the completion of this call where it will be archived for one week.

On the call this morning are Michael V. Novinski, President and Chief Executive Officer of Emisphere Technologies, and Michael Garone, Vice President and Chief Financial Officer.

Before we begin, please note that the forthcoming discussion may contain forward-looking statements. These particular forward-looking statements and all statements made on this call that are not historical facts are subject to a number of risks and uncertainties and actual results may differ materially. Please refer to Emisphere’s most recent filings with the SEC for more information on the risk factors that cause actual results to differ.

I will now turn the call over to Michael Novinski.

Michael V. Novinski

First and foremost let me thank everybody for taking the time this morning to attend this conference call and surely it is our intention and hope that everybody gains something from this conference call regarding Emisphere and more particularly the new and emerging Emisphere that is now taking place.

I’d like to turn your attention to Slide #3 and chat a little bit about this morning’s agenda. What I would like to go over is, I have a few remarks that I would like to make in the opening. I will then turn the microphone over to Mike Garone, our Chief Financial Officer. Mike is going to review the financials for the second quarter of 2008. He will then give it back to me and I will talk a little bit about our organizational highlights for the quarter, a little bit about our pipeline, our partnership update, and then I will be concluding with some remarks and then opening up the forum to questions and answers.

As far as introductory remarks, Ladies and Gentlemen, there are just a few things I would like to say. And that is, over the past quarter we’ve had a number of communications that we have gotten out. And really what we plan to do today is we’re not going to necessarily revisit all of these communications in detail but more importantly we’re going to summarize exactly what has gone on and hopefully try to highlight some of the things perhaps that have not been mentioned. Our policies continue that we really want to highlight frequent and transparent communication to all of you and our honest hope is that you’re gaining much benefit as well and more importantly clarity from these types of communications.

Finally, one of the things I’d like to mention is that we’ve set timelines and objectives for ourselves and some of the things have not necessarily hit the timeline right on the mark but for the most part we believe that we have actually hit the timeline on everything that we have talked about. And if anything, I personally believe that when you look at the overall progress of this organization not only are we going to achieve the goals and objectives that we have set out for ourselves in the short and long term, but overall I actually think that we’re ahead of schedule for many of the projects.

With those remarks, what I would like to do is turn the podium over to Mike Garone, our Chief Financial Officer, and ask Mike to review the quarterly financials for you.

Michael R. Garone

Thank you everyone for joining us on the call this morning. I am going to start my summarizing our financial results for the second quarter. Emisphere reported a net loss of $7.6 million or $0.25 per basic and diluted share for the three months ended June 30, 2008 compared to a net loss of $12.1 million or $0.43 per basic and diluted share for the three months ended June 30, 2007. Second quarter operating loss was $5.9 million compared to an operating loss of $9.5 million for the same period last year.

Total operating expenses were $5.9 million for the second quarter, a decrease of $4 million or 41% compared to the same period last year and a decrease of 11% compared to the first quarter 2008. Total operating expenses for the second quarter include research and development costs of $3.3 million which decreased $2.7 million or 45% compared to the same period last year and decreased $0.5 million or 13% compared to the first quarter 2008; general and administrative costs of $2.4 million which decreased $1.3 million or 35% compared to the same period last year and decreased $300,000 or 12% compared to the first quarter 2008; other expense for the second quarter 2008 was $1.7 million compared to $2.6 million for the second quarter 2007 primarily due to the change in fair value of derivative instruments.

Cash, cash equivalents and investments as of June 30, 2008 were $15.4 million an increase of 11% compared to $13.9 million as of December 31, 2007 and includes the receipt of a $10 million nonrefundable license fee in connection with our license and development agreement with Novo Nordisk. We anticipate that existing capital resources without implementing further cost reductions or raising additional capital or obtaining cash from potential partners will enable us to continue operations through approximately March 2009.

The company registered 7 million shares on a shelf registration during September 2007 which is consistent with test fund raising practices and is currently evaluating various financing options to address its future cash needs with the objective of minimizing dilution and disruption. Additionally, the company is actively engaged in discussions with several potential development partners and anticipates that it will be able to announce several new partnerships that will enable operations to continue for some time.

That concludes the summary of financial results for the second quarter. With that I will turn the call back over to Michael Novinski.

Michael V. Novinski

Ladies and Gentlemen if we could move to Slide 5, there are a few things I’d like to say about the organization before getting into the highlights of the quarter. First and foremost is that the goal that we have established for Emisphere since the new management team came on board is to drive value and that is what we intend on doing and that is our goal. In order to drive value we established the goals of commercializing this technology and also to bring in high value partnerships as the most immediate way that we are able to drive value.

If you could turn to Slide #6, the reason we have done this is because commercialization of this technology, why is it so important? Well as I’ve said in the past, first and foremost commercializing this technology will establish a totally new perspective, and that’s important. It’s also just as important that commercializing it will place this technology in another class. It will bring it out of the clinical stage and experimental stage into the commercial stage and that will allow us to initiate a revenue stream for this organization as we continue our march on towards profitability.

On the partnerships, if you look at Slide #7, the partnerships allow us to do a few things. One is they allow us most importantly to build our pipeline. Secondly what it allows us to do is it allows us to take other organizations’ patented molecules and combine them with our proprietary eligen technology. Also just as important, it brings substantial financial investments to the technology and it allows us to not only gain more knowledge but expand the use of the technology. And when I say bring substantial financial investment I not only mean monies that are involved with up front and milestones but more importantly the financial investment that is highlighted by a commitment to the technology when one combines a proprietary molecule, an exciting proprietary molecule, with an exciting technology. Finally, these partnerships help increase the demand for our technology and our goal is to demonstrate that eligen is in fact the number one solution for molecules that are difficult to absorb through normal oral routes.

If you’ll look at Slide #8, I’d like to talk a little bit about some of the organizational highlights that have taken place in the second quarter of this year.

First and foremost I think you see an organization that has improved focus and you now see improved productivity. From the headcount standpoint we have reduced the headcount by over 40%. From the operational expense standpoint and burn rate we have reduced our burn rate by 41% when you look at it compared to the same quarter of last year, and when you look at it from the prior quarter of this year we’ve continued to reduce our burn rate by 11%.

We’re an organization with clear objectives. We’re also an organization now with clear goals. We have a strengthened management team. Although you haven’t seen the announcement yet, we have added a VP of Strategy and Development and that addition is Nicholas Hart. And you will be seeing an announcement on that in the very near future. And finally, I believe that Emisphere may be a team in transition but it is a team with a strong leadership team.

If you’ll look at Slide #9, I would like to talk a little bit now about our pipeline. Overall, the pipeline remains unchanged and let me assure you that all projects continue to progress forward. So if there’s a project I’m not highlighting, there has been no change. But there are a few that I would like to highlight for you as I mentioned at the beginning that we may have brought up in recent communications.

If you’ll look at Slide #10, the highlights of the product pipeline are then in Phase III with our partner Novartis.

The program for osteoporosis is proceeding extremely well. We have just completed the recruitment. We put out that announcement on osteoporosis where there are now over 4,500 patients and recruitment has been completed on this three-year trial. So that’s going very, very well.

The Phase III program on osteoarthritis is also going extremely well. We hope in the very near future to be able to announce that the recruitment is finalized for study one. We are waiting on that. That recruitment is about 1,000 or 1,100 patients and it is a two-year study. And finalizing that recruitment is critical because that study will allow us to file for the osteoarthritis claim in Europe.

We also hope to see the initiation of the second study very, very shortly and that is the study that is required for the filing in the US along with study one. Both of them are two-year studies and we would expect that the recruitment for study two would take somewhere around nine months.

In the Phase I area we put out an announcement that the PTH study with Novartis was initiated. This is a very important study and we expect those results to be completed somewhere around this year so we can then move forward with this project. On the GLP-1 and PYY we announced the GLP-1 portion of that study. The results were completed. Very good results. Very encouraging results. And the second arm of that study which is now GLP-1 and PYY should start in the next month or so.

The oral gallium project results were presented by our partner Genta and again very, very good results were presented in June. That project is moving forward nicely.

And finally, the GLP-1 analog program that we recently established with our partnership with Novartis will eventually be moving into a Phase I. The exact timing of when it becomes a Phase I program will be dependent on some preclinical work that is in the process of being finalized for carrier selection and other issues. But that’s moving along very nicely. And I’ll just mention something about that in the next few slides.

If you’ll look at Slide 11, as far as the preclinical portion and development area we have three goals and our goals are that we want to do as we’re doing with the Novo project and others and that is move projects from the preclinical into the clinical stage and we believe we’re going to be able to do that. We are having extensive discussions with a number of organizations where we feel we will be able to expand our collaborations in the preclinical stage. And we’re also initiating projects in this area that are very comparable to the B12 area. So a lot of things are going on in the preclinical area but again the goals are to move the projects from existing projects into the clinical area, we’re looking to expand our collaborations and become even more active, and initiate projects that are comparable to the B12 and we’re doing that.

Finally, on the product pipeline if you can turn to Slide 12, I’d like to talk a little bit about what we recently had a discussion about and that is eligen B12. We had a conference call on this where we went into depth about the recent scientific findings, and I would just like to remind everybody here about the conclusions of what we found and what our next steps are. Those conclusions are that eligen significantly enhances B12 delivery in humans. We’ve also found that eligen utilizes a new mechanism of B12 delivery. Our reasoning for that is when you look at the [T-Max] that was reduced by over 90% and the [T-Max] of the peak absorption was increased by over ten-fold. And finally, it’s extremely encouraging to see that the B12 animal studies prove to be highly predictive of what we now have seen in humans.

Slide 13 will highlight what our next steps are, and those are that we’re going to continue with our current regulatory strategy which includes pursuit of the NDI, new dietary ingredients, application and [inaudible] status.

We are going to continue with our clinical investigation of eligen from a B12 pharmacokinetics standpoint but we’re now going to look at lower doses in the target population and we look to initiate that in this quarter. We are going to now look to clinically investigate eligen B12 for its therapeutic efficacy as well in the target populations and that is scheduled to all get initiated in the next few months or in the fourth quarter of 2008. So things are really on target for that and progressing extremely well.

We’re also going to step up our efforts now to establish a very sound commercialization strategy, a sound commercialization strategy that is really going to maximize the potential valuation of this opportunity.

The next slides talk a little bit about the partnerships. Slide 14, the renewable Nordisk partnership is in place and things are going very, very well there. We are initiating a number of different action steps with Novo. And Mike talked about this, we do expect to bring in an additional two partnerships in 2008. We have absolutely no reason to think that we will not be doing this.

On Slide 15 if I may and if you’d allow me, the concluding remarks for this quarter are that I believe you see Emisphere is an organization with the following. One is we’ve highlighted today that we have vastly improving financials which helps the strength of this organization. We have a strong and improved organization that is clearly focused on generating value, and this is only going to improve as time proceeds. We have a company that has a clear pathway to commercializing the technology, and we’re going to do so in a shortened period of time and look to establish eligen as the number one solution to problems with the absorption of selective molecules.

We have an exciting Phase III program with over 5,500 patients now being treated for osteoporosis and osteoarthritis. We’ve seen encouraging results with our early clinical stage programs including the GLP-1 data. We have a productive and improving preclinical program. And we have a new leadership position together with Novo Nordisk that now establishes eligen and the GLP-1 proprietary analog as probably the most exciting future treatment for Type 2 diabetes.

And finally Ladies and Gentlemen, I think we have now a company with an improving valuation.

I’d like to thank you for your attention. And if I may I would like to open the forum up now to questions and answers.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from Steve Brozak - WBB Securities.

Steve Brozak - WBB Securities

I’d like a little bit of comparison with for instance the B12 program as how you see it and how you see the process being much closer to market than what you would normally expect when you see a biotech or specialty pharmaceutical company going through the process.

Michael V. Novinski

I think it’s safe to say that our goals are that there is the potential to bring this technology to a commercial level somewhere toward the second half of next year if everything will go as planned. Now we do have a number of things that have to be done. There are some studies that have to be in place as we talked about in the one slide. We have to look at the lower doses because we looked at relatively high doses but we do have to look at lower doses from a pharmacokinetics standpoint. These studies are not that long but they do have to be thought through and they are being done with the sound expert advice of scientific experts as well as the sound discussions with our Board, and then we want to look at efficacy studies in the fourth quarter. But we do believe that as opposed to a drug pathway that we would have the potential opportunity of trying to bring this to market somewhere toward the latter half of next year. And I think that’s the point that you’re trying to get me to bring out. Is that not correct?

Steve Brozak - WBB Securities

Great. One follow up. It looks like you’ve got events that are staggered that will continue and that can just be added on once you do get this commercial proof of concept. What kind of new interest are you seeing in terms of potential partnership by comparison to when you started up initially?

Michael V. Novinski

I think that one thing I would like to say in answering this question is that I think the understanding of the technology has vastly improved over the last 12 months and this has generated much more interest in positioning the eligen technology in which our goal is as the number one solution when it comes to the absorption of selected molecules. It’s a process where we’ve seen an increased interest. We are having a number of discussions from a preclinical to a clinical and I think this process is just going to continue as we move forward with the goals that we have set in mind. And that is to increase the demand for this technology.

But in order to increase the demand for this technology we needed to establish a clear understanding of how the technology can benefit a number of different organizations. And I think that is happening. I do not think that it’s at the level that I’m satisfied at the moment but it’s at a much greater level than it was when I started or when the new team came on board. And I think this is only going to improve as time proceeds. I’m very excited about it. When I’m talking with companies about the eligen technology, there are a lot of things that I could point to on the progress that we have made. I am just very excited and I know our team is very excited about the reactions we’re getting. And I think this is only the beginning.

Operator

Our next question comes from Jay Saunders - Deutsche Bank.

Jay Saunders - Deutsche Bank

This is Dr. Saunders. I have several questions. Number one, is there any risk by competition from a company like Merck which makes Byetta which is GLP-1 in developing technologies like the eligen technology? And is there any communication with research organizations, for instance Harvard Medical School is doing a lot of research on this particular problem GLP-1 delivery? That’s two questions. Number three is, why was market capitalization increased and what effect will it have on share prices? How long would you anticipate before the eligen GLP-1 technology actually gets to market? Finally, what’s the timeline for increasing income flow from new partnerships so that Emisphere will be actually making money instead of losing money?

Michael V. Novinski

Those are a lot of questions so let me start from the last and go forward and try to address them. I may have to come back to you because actually I’m kind of working remotely on this call and trying to keep tab on when you get a question like that.

Anyway, as far as the partnerships that’s a process. We’re continuing to have discussions with companies all the time. And as I said our goal is to continue to bring in high value partnerships. We believe we’re going to bring in additional partnerships this year and our goal is to have an organization that we will continue to do this, to bring in partnerships where we are going to continue to increase the investment in the eligen technology as a solution to the absorption of selected difficult molecules that actually fit the criteria. I think this is only a process that you’re going to see is just going to increase over time. I think Novo was the first example.

I think there will be more additional examples and as I said, I think that in terms of the benefits that partnerships bring, they bring a number of benefits. Not only do they bring milestone payments and they help offset some of the operating expenses but my honest belief is that the real benefit of these partnerships is that they demonstrate that companies are going to take their proprietary molecules like Novo and their GLP-1 proprietary analog and they’re going to be investing tens and hundreds of millions of dollars into a clinical program that hopefully will eventually result in commercial products that are going to bring a benefit when we’re talking about improving health care.

And I think that’s the most important thing about these partnerships and I do believe these partnerships will increase over time as we establish the eligen technology as a solution and as the number one solution. So I can’t give you a time periodon that but I can tell you that it’s a process and it’s a process that is going to continue and I think it’s going to continue in a very, very positive way.

As far as timing of when you will see a commercialization of GLP-1 and the eligen technology, I cannot provide a timeline on that. We’re just beginning with the partnerships. We’re just getting into the carrier selection. And I would say as time proceeds as with any drug development program, timelines will be established where both companies are comfortable with. But upon signing a partnership and a commitment to technology and setting up a true clinical development program, I think it’s a bit early to be establishing timelines and I certainly wouldn’t do that without the input from our partner because depending on which carrier is selected and which is best, will no doubt affect the timeline.

Now you had two more questions and I have to apologize. Either number one or number two, if you can repeat them for me, I’d be happy to try to answer them.

Jay Saunders - Deutsche Bank

Why was the market capitalization increased and what affect will that have on price per share?

Michael V. Novinski

On that one, basically we all know that Emisphere was extremely undervalued and I think Emisphere and the technology was extremely misunderstood. I’m very excited to see that the market capitalization is increasing and I think that people are beginning to understand that it is our goal to drive the value of this organization and our message is beginning to be heard. I still believe that this organization is tremendously undervalued but I think hopefully this market capitalization will continue to increase. So my answer is that I think the technology and the organization has been somewhat misunderstood and as we begin to gain clarity on that, we will continue to see an increase in market capitalization.

And what was the first question?

Jay Saunders - Deutsche Bank

Do you see any risk to Emisphere’s future by competition from other companies like Merck that make Byetta which is the GLP-1 medication that they have on the market now because I’m sure other people are doing that?

Michael V. Novinski

Let me try to address that. I think actually Byetta is a [Amilin Lily (3) 02:54.2] venture to be honest with you. But there are always risks. People are always driving to be competitive when it comes to drug development. However, I like our position in terms of where we stand with the eligen technology and with the drug delivery.

Let me give you a clear example why rather than sitting here and saying I’m speculating and I’m biased. When companies like Novo go through the selection of who they want to put their proprietary and valuable assets and analogs with, they go through an extensive search of what technologies are available and who they could potentially partner with. And Emisphere of course is not the only company that is striving to do this in this particular field. However, as people continue to pick Emisphere as Novo did, I think that should clearly elucidate where companies believe our technology stands and how forward it is in terms of its progression as a technology.

Sure, there’s always competition in the field but the fact of the matter is that the more people that pick Emisphere, there’s a demonstration - and these companies do their homework - that the eligen technology is one that I believe and we believe is far out in front of the competition. And people are always striving to bring improvements forward in drug development. But I think that this is just a demonstration that “Hey look. I think we’re pretty far ahead of the game. We have a very exciting technology.” Is it going to be picked by every single company? Of course not, but the more companies that pick the eligen technology is going to underscore the position that we believe it’s the number one solution and the best solution out there so far.

Operator

Our next question comes from [Abe Schloss - Maxim Group].

[Abe Schloss - Maxim Group]

I have two questions here. Number one, you mentioned that we have a shelf registration and you also mentioned that we’re looking to finalize two more partnerships in 2008. Do you see any financing before those partnerships are completed? And my second question is, has Novartis announced any results yet of their Phase II study of the osteoporosis or osteoarthritis studies that they’ve had?

Michael V. Novinski

Regarding the second question first, we are expecting publications any day now and basically they have been accepted for publication. We are at the mercy of the [Journal. We’ve seen draft manuscripts of these and we’re just waiting for these to be published. Could they come out tomorrow or this month? The answer is yes. So they should be coming out shortly. That’s the best I can say and I think that’s the best that if you posed it directly to Novartis that they would say.

The second question regarding the financing, right now the company is in a stronger cash position than it was not too long ago. The goal is that we are always evaluating the options with the Board. I cannot put any timelines on this. The shelf registration as you know is not necessarily an indication of financing. It is consistent with past practices that this be available to the organization but we will have this discussion with the Board. Our goal is to improve the financials of the organization. We’re doing that. We’ve done that with the Novo situation. We will continue to do that with the partnerships that we are striving to complete this year and with further collaborations. And then we will together with the Board of Directors of Emisphere who are actively engaged in all aspects of the business have a discussion of whether this is in the best interests of the shareholders to do a financing or not. But I couldn’t give you a timeline on that.

Operator

Our next question comes from [Rick Elkin - Oppenheimer].

[Rick Elkin - Oppenheimer]

I have a few questions here. First, if you look at the market for injective vitamin B12, the market for vitamin B12 in health food stores and the market for vitamin B12 as a food fortification agent; if you look at those as three distinct markets or market segments requiring three different sales and marketing strategies, I have two questions about this. First, is there one of these segments that you plan to attack first? And second, how would you sell into this segment that you plan to attack first? And on the other two segments, if you do them all at the same time or if you get to them later, how would you sell into those segments? So that’s kind of my first question.

Michael V. Novinski

There are three segments and when you start putting things together, there could be more than three segments. I think that’s probably the most exciting thing about this is that there are so many different ways that you could potentially commercialize B12. However, at this stage I think I mentioned that we’re going to be stepping up our efforts now to establish a very sound commercial strategy. And that commercial strategy will involve which segments are we most apt to look at first and how we are going to do that. At this point in time I think it would be prudent to say let us look more closely at all of these. They’re wonderful opportunities. There are a number of different opportunities. It’s a great problem to have. We are looking at it very closely. And I think in a short period of time I will be able to provide more clarity on how we are going to try to maximize the valuation of these various segments. Whether you do it through alternative A or B or C, there are a number of different ways to attack it.

We’re having discussions right now. We’re having active discussion with the Board about this. I think it would be wise that if you give me a month or so, then we can discuss it in more detail with a little bit more clarity.

[Rick Elkin - Oppenheimer]

Regarding oral PYY and oral acyclovir, can you give us an update? Are there additional clinical trials being planned either by Emisphere or whoever your collaborating with or are there any clinical trials underway now for either oral acyclovir or oral PYY?

Michael V. Novinski

On the oral acyclovir, we got the results in and the results were very good in terms of the bioavailability. We’re now in discussions with the company that we carried on this collaboration with on what are the best next steps. Like I said, we’re in discussions with what steps do we want to take next. By far it’s not a dormant project. It’s an active project. I didn’t highlight it but as I think I mentioned at the outset, it’s progressing forward and we have a number of things that have been taking place this past quarter and we have had some discussions. I will be very honest with you and I will tell you that with my hip being replaced two weeks ago, I’ve probably been trying to prioritize things a little bit and perhaps this one took a little bit of a back seat as compared to B12 and the other things that are going on regarding the oral acyclovir. But we are having those discussions and they will continue. But I can’t provide any more clarity on what the exact next steps are going to be.

On the PYY I mentioned that we have a GLP-1/PYY that’s being conducted with Professor Beglinger. You saw the results of the GLP-1 portion of that study. The second arm of that is in fact where we add GLP-1 and PYY together, and that will be starting in September. So that’s an active project and that’ll be being initiated in September. I can’t give you a timeline on the results because we haven’t discussed the exact timeline with Professor Beglinger to the point where I would like to commit to them. It’s not a very long timeline but nevertheless that is being oddly if I’m not mistaken will be initiated at the end of this quarter or the beginning of the fourth quarter.

[Rick Elkin - Oppenheimer]

One last quick thing. On the two deals that you’re expecting some time this year, would each one have approximately the same amount of upfront money as the Novo deal? I mean Novo deal had $10 million upfront.

Michael V. Novinski

I can’t comment on what amounts would be upfront or not. As I think I mentioned, every partnership that Emisphere does is going to be unique. Each one is going to have their own parameters. Each one is going to have specific values. There’s a reason why we do each partnership. I don’t think you’re going to see any partnerships that are all identical.

As I said at the outset, the important thing about these partnerships is that you get exciting proprietary molecules that you put together with the eligen technology and that you look to the partnership as a potential way of generating revenues but also eventually generating a commercial product and doing so in such a way that’s exciting for the organization. I think you have to look at each partnership separately and each one is going to have specific benefits attached to that. In some cases it will be a certain amount of upfront, certain milestones. In certain cases it’ll be exclusivity. In other cases it may be a semi-exclusivity. Each one is different and each one brings in a certain amount of value to Emisphere in a different way.

Operator

Our next question comes from [Bill Stein].

[Bill Stein]

One of the things that I find the most exciting thing about Emisphere, about the technology, is extending patents for different companies, finding new products and generating new revenues for the big pharma. But I just wanted to ask you, would you say that big pharma has been more or less receptive to using your technology recently due to the slowdown in the world economy in any way?

Michael V. Novinski

To answer your question, as I think I mentioned to one of the other callers that this is a process and I do believe very strongly that the technology and Emisphere was somewhat misunderstood. I do believe that that misunderstanding is being cleared up in a very rapid fashion. And the reason I say that is because we are having an increasing number of calls with a different number of companies regarding potential problems and hurdles that they face. And I, like you, do find one of the more exciting things about this technology is that it does bring a solution to a lot of the problems that the pharmaceutical industry faces when it comes to the absorption of different molecules that they have problems with.

I do believe that we are making a tremendous amount of progress. It will take time. I’m not going to over promise. But I believe that we’ve made good progress in clarifying the misunderstandings that may have existed and I think we’re going to continue to make progress. This will take time. We are a small organization but I think there’s a lot of excitement that is beginning to build and I underscore beginning to build about how this technology can help people solve problems. Like you, I have to underscore what you stated and that’s what makes me so excited about this technology.

Operator

I am showing that there are no further questions at this time so I’d like to turn the call back over to Mr. Bob Madison.

Bob Madison

Again, thank you everyone for joining us on the call this morning. We will continue to keep you updated on our progress. This concludes our call. Have a good day.

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