Aethlon Medical's (AEMD) CEO Jim Joyce on Q2 2018 Results - Earnings Call Transcript

Aethlon Medical, Inc. (NASDAQ:AEMD) Q2 2018 Earnings Conference Call November 2, 2017 4:30 PM ET

Executives

Scott Gordon – Investor Relations-CoreIR

Jim Joyce – Chairman, Chief Executive Officer and Secretary

Jim Frakes – Chief Financial Officer and Senior Vice President-Finance

Analysts

Brian Marckx – Zacks Investment Research

Marc Robins – Catalyst Research

Operator

Good afternoon and welcome to the Aethlon Medical Earnings Conference Call for the Second Quarter Fiscal 2018. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Participants of this call are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes. A replay of the call will be available approximately one hour after the end of the call through November 09, 2017.

I would now like to turn the conference over to Scott Gordon, President of Core IR, the company's Investor Relations firm. Please go ahead, sir.

Scott Gordon

Thank you, Rachel, and thank you for joining today's conference call to discuss Aethlon Medical's corporate developments and financial results for the second quarter fiscal 2018 ended September 30, 2017. With us today are Jim Joyce, the company's CEO; and Jim Frakes, CFO. At 4:15 p.m. Eastern time today, Aethlon Medical released financial results for the second quarter fiscal 2018 ended September 30, 2017. If you have not received Aethlon Medical's earnings release, please visit the investor's page at www.aethlonmedical.com.

During the course of this conference call, the company will be making forward-looking statements within the meaning of Section 27-A of the Securities Act of 1933 and Section 21-E of the Securities Exchange Act of 1934 that involve risks and uncertainties. The company cautions you that any statement that is not a statement of historical fact is a forward-looking statement. These statements are based on expectations and assumptions as of the date of this conference call.

Such forward-looking statements are subject to significant risks and uncertainties and actual results may differ materially from the results anticipated in the forward-looking statements. Factors that could cause results to differ materially from those anticipated in forward-looking statements can be found under the caption Risk Factors in the company's Annual Report on Form 10-K for the year ended March 31, 2017 and in the company's other filings with the Securities and Exchange Commission. Except as may by required by law, the company does not intend nor does it undertake any duty to update this information to reflect future events or circumstances.

It’s now my pleasure to turn the call over to Jim Joyce, Aethlon Medical's CEO. Jim?

Jim Joyce

Thank you, Scott, and good afternoon everyone. We've been quite busy since our last quarterly call. On August 11, we delivered an expedited access pathway submission to the FDA as the means to acceleration the potential commercialization of our Hemopurifier to treat infectious viral pathogens. On September 12, we disclosed that the FDA awarded our Hemopurifier with an Expedited Access Pathway designation, which also allows for the broad spectrum indication of use against life threatening viruses. I'm pleased to report that this past week, the FDA published guidance that our Hemopurifier and other Expedited Access Pathway devices will now be advanced under a new breakthrough device designation, which is being established as a result of the 21st Century Cures Act that was signed in the long last December.

On September 14, we disclosed that we were awarded a National Cancer Institute contract and on October 2 we announced the completion of the $6 million financing. During the quarter, we also utilized our aftermarket facility to bring in an additional $1.6 million as a result of these financing activities. We eliminated the balance sheet risk optics that overhung our company and became compliant with NASDAQ shareholder equity listing requirements, which we disclosed on October 10th.

And our most recent disclosure we announced the large scale manufacturing collaboration with iBio on October 16. This is related to scaling up the production of the lectin-affinity agent that resides within our Hemopurifier and capture infectious viral pathogens. During the quarter, we also disclosed that the institutional review board at the Translational Genomics Research Institute had approved the clinical study protocol to support our next CTE and Tauopathy biomarker study in former NFL players. We are now planning the formal kickoff of this study, which is being advanced by our Exosome Sciences diagnostic subsidiary.

Now before I turn the call over to Jim Frakes, our CFO, I want to provide some further details regarding our breakthrough device designation. Beyond accelerating our potential pathway to market, the FDA agreed to the following indication of use for our technology. The Hemopurifier is a single-use device indicated for the treatment of life-threatening highly glycosylated viruses that are not addressed with an approved treatment. So instead of an indication of use against a specific virus, the FDA allowed us an indication of use that is based on a surface structure, in this case by cost related and is common to a broad spectrum of infectious viruses.

To support this statement that I want to share that in coordination with the centers for disease control and infection, the National Institute of Allergy and Infectious Diseases classified 42 viruses, could be life threatening category A, B or C pathogen threats in the United States. Of these 42, 40 are highly glycosylated viruses and of those 40 only two are addressed with an approved post exposure therapy. This statistics is not inclusive of newly emerging viral threats. It is not inclusive of mutant strains of treatable viruses that evolved to become life threatening nor does it include viruses that maybe genetically engineered to be agents of bioterror. As Bill Gates has been quoted this form of viral threat could kill more than ten million people in a single incident.

In reality, the treatment of life threatening viruses represents one of the most significant unmet needs in global health and biodefense. At present there are life threatening outbreaks occurring around the world. There are real world concerns that circulating strains of influenza virus to trigger global pandemic. China has reported that 39% – 39% of the 1500 plus individuals that had been impacted with the H7N9 strain of influenza have died and at the same time neglect the strain of H3M2 influenza has caused the worst outbreak in 50 years in Australia, New Zealand. There is a plague outbreak in Madagascar and Marburg virus infections are being reported in Africa.

Last week, the World Bank reported that it conducted a pandemic’s simulation with a dozen countries that reinforce the urgent need for therapies to combat pandemic viruses and Harvard University Belfer Center for Science and International Affairs with a recent report that claim North Korea has an advanced biological weapons program that may include thirteen different pathogen threats including smallpox and deadly hemorrhagic viruses. Again, the treatment of life threatening viruses represents one of the most significant unmet needs and global health and biodefense.

Since receiving an Expedited Access Pathway designation, which will be known as the breakthrough device designation going forward, we have conducted a telephonic meeting with our FDA review team and we have agreed to schedule a follow on meeting at FDA headquarters to determine the clinical pathway to support commercialization of our life threatening virus indication of use. As soon as we have further clarity from FDA, we will provide immediate guidance. In the meantime, we are exploring other life threatening glycosylated disease targets that are not addressable to proved therapies.

This includes tumor-derived exosomes, which are focus of the National Cancer Institute contract that we disclosed in September. We have already achieved our first milestone under this contract program. And finally, in parallel to our FDA endeavors, we have assembled a small capable and experienced team to navigate opportunities within the U.S. government to financially support the implementation of our technology as a broad spectrum treatment countermeasure against bioterror and pandemic threats.

We believe our Hemopurifier – device or Hemopurifier aligns to full fill several of the primarily objectives of the Department of Health and Human Services, Public Health Emergency Medical Countermeasure Enterprise otherwise known as PHEMCE. PHEMCE’s objective includes the support and potential procurement of medical countermeasures into the Strategic National Stockpile.

In recent years, the PHEMCE initiative has shifted from attempts to align a V specific countermeasure with each pathogen threat through a transition towards broad spectrum countermeasures with activity against high priority threats including both known and unknown threats pandemic strains of influenza, an emerging threats including Zika, Ebola and MERS-coronavirus for which we have data against all three as well as numerous other high priority threats.

With that said, I will now turn the mic over to Jim Frakes, who will discuss our financial results.

Jim Frakes

Thanks, Jim, and good afternoon everyone. Our net loss for the September 2017 quarter was $1.3 million, or $0.14 per share, compared to a net loss for the September 2016 quarter of $2.3 million, or $0.29 per share.

Our consolidated operating expenses were $1.24 million in the September 2017 quarter compared to $2.61 million in the September 2016 quarter that was a decrease of approximately $1.37 million or 52% reduction. This decrease was due to a reduction in payroll and related expenses of approximately $1.19 million, a decrease in professional fees of approximately $128,000 and a reduction in our general and administrative expenses of approximately $55,000.

The $1.19 million decrease in payroll and related expenses was primarily due to a $1.24 million reduction in stock based compensation that decrease in stock based compensation was due to the upfront vesting percentage of the RSU grants to our officers and directors last August 2016. Our cash-based payroll and related expenses increased by approximately $45,000 due to headcount additions in our scientific staff.

We had other expense of approximately $72,000 in the September 2017 quarter compared to approximately $37,000 in the September 2016 quarter or an increase of approximately $35,000. At September 30, 2017, we had a cash balance of approximately $920,000, and on October 4th, we completed a public offering that raised net proceeds of approximately $5.3 million.

Also in October, we made – as Tim Joyce noted, we made the first billing under our contract with the National Cancer Institute. That billing was for approximately $75,000 and it represents the first milestone under that contract. The overall revenue opportunity under that nine month contract was approximately $300,000 and we successfully meet the milestones in that contract and we may have an opportunity to win a related Phase II contract, which would be a two year contract with $1.5 million revenue opportunity.

We put out these earnings and related commentary in the press release earlier this afternoon. That release included the balance sheet for September 30, 2017, in the statements of operations for the three and six month periods ended September 30, 2017 and 2016. We will file our Form 10-Q quarterly report following this call.

And now, Jim Joyce and I will be happy to take any questions that you may have. Rachel, please open the call for questions.

Question-and-Answer Session

Operator

At this time, we have allotted 30 minutes to address questions from participants. [Operator Instructions] The first question comes from Brian Marckx with Zacks Investment Research. Please go ahead.

Brian Marckx

Hi, guys. Jim, in terms of the expected upcoming sit down with FDA, do you have any idea in terms of the timing when that may happen? And then sort of content for the meeting and outcomes of the meeting in terms of, I guess, going forward and anything relative to clinical design that you expect from the meeting? And I guess in particular when it comes to clinical design, do you have any idea what FDA is going to want in terms of kind of it was just – do you expect sort of an outcomes type, clinical outcomes type based end point or is it – do you think even something like viral capture could be sufficient in terms of an end point?

Jim Joyce

Yeah, Brian, first off, it's nice to have you on the call. As part of your last – the last point you make the viral capture, we think that’s a very critical component of quantifying the capability of our device to perform to meet label indication. We have an affinity capture infectious viruses and ability to quantify what's in the cartridge no longer circulating in the patient after treatment. We think it's probably the most beneficial or most valuable data point that takes us away from relying on observational data or short-term reductions or changes in viral load based on PCR measurements.

So that's one part of it, but I think in the bigger picture, the opportunity we have here is part of this breakthrough device program is to work directly with FDA to establish the clinical design protocol to advance or commercialize our product for the life threatening virus indication of use. FDA has under these programs provides – it's different for each case, but seems to provide a certain level of flexibility.

I know on our case, we have the opportunity to make a decision if we wanted to choose a single viral pathogen versus the actual loud indication of use, which is very broad spectrum. Obviously, we chose the broad spectrum indication of use. And what we hope comes out of this program is perhaps some type of hybrid – hybrid orphan type of designation that would allow us to collect data, but to start treating a wide range of life threatening viruses, but until we have that sit down, you know, we can’t. We can only speculate. Though what we have been told is that we will leave that meeting with clarity in terms of the clinical plan moving forward to support the potential commercialization of our technology against viruses that meet the label indication.

Brian Marckx

In terms of the – you’ve reference 42 highly glycosylated viruses, two of which implied or today treated with – effectively treated with an approved therapy. So I’m wondering if it's particularly as it relates to those two that are treated today, is it possible that it's feasible to run kind of a standard randomized clinical study with those two – one of those two viruses with a control based on the fact that – whatever those two viruses are, are treated today.

Jim Joyce

Yeah it’s probably – we probably don't have that capability due to the fact that these viruses that are high threat category A, B or C that are treatable, they're not very prevalent, as an example one of them is treatable with the post-exposure therapy in rabies virus, but the incidence in rabies virus in the U.S. is somewhat low. So we are hoping to have a pathway where we could collect data against a wide range of viruses that meet that label indication of glycosylated viruses not addressed within an approved therapy, which what we’re trying to point out with that statistic is that a majority of the virus is that the U.S. government feels a greatest threat against its citizens.

Brian Marckx

Yeah, clearly, clearly FDA recognizes that this is kind of a conundrum not just obviously with your situation, but with drugs and biologics that they need to find something that will effectively treat certain things that you can’t run typical RCTs with. So I'm sure you're familiar with the animal rule with drugs and biologic. So is there – with your discussions to date with FDA, have you – has there been feedback from them relative to whether there is sort of a pathway that is kind of similar to the animal rule would be with drugs on the device side?

Jim Joyce

Yeah, no, the one thing I'm pleased to report is that for an extended period of time now, FDA has agreed that based on our mechanism of action we don't fall under that animal rule, which has really been a gating factor for [indiscernible] traditional disease specific drugs and vaccines against each threats. What we do know based on our dialogue is not just a lot of interest in finding a pathway to advance our technology against known high threat viruses, but also to newly emerging unknown threats and there has been I think one of the things that’s important about our technology being structure based.

There is a lot of concern about how we're going to advance countermeasures into the Strategic National Stockpile that have had the potential to be safe and address not just newly emerging pathogens where it’s not possible to advance new drugs or vaccines, but against genetically engineered pathogens, which is a very – become a very big point inside of a number of agencies including FDA. So the structure that we capture viruses by, it’s a structure called the glycan shield that helps viruses to evade surveillance of the immune system.

In many cases, it's also an impediment to vaccine – the development and vaccine therapies. We believe if there's a newly emerging threat or genetically engineered pathogen that same glycan structure is going to be in place that will allow us to capture it. And we think our novel strategy actually provides a reasonable phase mechanism that in the absence of other therapies can be deployed against these threats.

Brian Marckx

Okay, Jim, when – do you have any idea in terms of the sit down with FDA when that might happen?

Jim Joyce

We're hoping towards year-end or right after the New Year.

Brian Marckx

Okay, all right. Great, thanks a lot.

Jim Joyce

The one thing I can just add on Brian is that the FDA is very responsive whether it’s telephonic, the companies that are participating in this program. So the pathway – the level of collaboration is quite significant. In addition to our long-term review team that's been working with us in our first telephone call. We were also introduced to six new members of our team that participate to collaborate with us as a result of this expediting access program that will be now known as the breakthrough device program going forward.

Brian Marckx

Yes that – that’s I'm curious. It brings up another question. Is your feeling that the more I guess responsive communication with FDA has to do with DAAAP in a breakthrough and does it – do you think it will all has to do with the new administration and the new FDA commissioner?

Jim Joyce

I am – all I can say is I'm very impressed with the pace at which the new commissioners moving forward or anybody that follows clinical stage therapeutic devices. There is a period of time. There were not much for a number of years not much was moving forward under FDA. You get the sense with the new commissioner that he is proactively advancing strategies to address life threatening disease conditions to implement the use of therapies whether it's our therapy or other therapies that offer a hope to treat certain disease conditions.

And I think what the new breakthrough device designation, people have to understand that was – that was part of the 21st Century Cures Act that was signed into law on December 13 of last year. And the thing that they would now provide a guidance that will implement this program within a year of it being referenced in this law, I think that’s pretty aggressive.

Brian Marckx

Yeah, it’s encouraging for sure. Thanks, Jim. I appreciate it.

Jim Joyce

Okay, thank you, Brain.

Jim Frakes

Thanks, Brain.

Operator

The next question comes from Yi Chen with H. C. Wainwright. Please go ahead.

Unidentified Analyst

Hi, I am sitting in for Yi. I am James. As we know the FDA’s new breakthrough device program has replaced the EAP program. Do you feel that a single pivotal trial would be sufficient for the Hemopurifier?

Jim Joyce

James, first off, good to have you on the call and hopefully everything is okay with Yi. I know he is a busy guy. In terms of the pivotal study, again, I don't want to try to predict much in the same manner. I wouldn't want to project potential commercialization and for a clinical stage therapeutic company that’s going through the regulatory process with FDA, but we would like to think based on the intent, the expedited access program breakthrough technology program that the FDA would want to put us in a position actually start treating individuals that are infected with life threatening viral pathogens.

And perhaps it's our hope that we’ll have that opportunity, but it will be an opportunity that allows us to collect data to support the label indication, but not against the single – single viral pathogen, but against the breath of different pathogens. But the upside of the program if we get to define our clinical plan in collaboration with FDA versus submitting a proposal for a clinical plan. So it’s – the goal is to get our therapy under these programs in the treating patients that don't have other treatment options and the most viruses that are – really are limited treatment options.

Unidentified Analyst

Okay, so the breakthrough device program issued draft guidance and there is going to be a balance on pre and post market data collection. Do you feel that perhaps a hybrid trial one in which you would enroll patients based on the EAP structure specific indication and also include patients for a specific disease as sort of an authentication. Do you think a hybrid trial would be something that you’re interested [ph] in speaking with the FDA about?

Jim Joyce

Perhaps, but I believe at this point in time under this breakthrough device designation, the focus is very much on broad spectrum against life threatening viruses that are addressed with an approved therapy. So for many of these severe ones, when they become life threatening makes it very challenging to conduct a larger pivotal study to collect data. It could be that once we have clarity on the pathway to commercialize what clinical data is going to be required to commercialize our technology related to the specific indication allowed under the breakthrough technology. It could be at some point in time down the road.

We determine a viral pathogen where it does become feasible to conduct controlled human studies, but each virus is different in that. That area where it becomes feasible to run controlled human studies typically is related to acute – I mean I'm sorry chronic viral pathogens where we’d be acting as an adjunct potentially. So, right now, we're very fixated on navigating as indication of use that’s been allowed. It's an indication that I think for many years as we've been saying we're advancing the technology as a broad spectrum countermeasure. I'm not sure very many people actually thought the FDA would allow a broad spectrum indication of use really based on a structure versus first having to get across the goal with one specific species and family of virus.

Unidentified Analyst

Okay, thank you. And are you in talks with potential partners and markets outside of the United States especially in territories that have had a presence lethal viral infection outbreaks.

Jim Joyce

Well, I think the one thing we've been cautious about as we started navigating with FDA, we never – we never knew if or when FDA would approve studies to advance our technology here in the U.S. We previously prior to FDA approving a study here in the U.S., we previously conducted four different human studies with good success overseas. Once we got approval to initiate studies in the U.S., we became focused on U.S. clinical progression knowing that the FDA remarks perspective and from the perspective of most people is the regulatory gold standard globally. And for many regions in the world where there is high prevalence of some of these viruses, they don't have the luxury of having a medical device regulatory agency, so they rely on approvals such as FDA approval as a means to open up those market opportunities.

So the one thing we do understand is that if you can be one of the few companies that can successfully navigate through FDA, is not just the U.S. opportunity, that successful navigation opens up global markets, as well. So we’re really focused in the U.S. We certainly – there are certainly groups outside of the U.S. that we've had discussion with over the years, but right now we're locked in on clinical advancement focusing on the label indication that’s been allowed here by FDA.

Unidentified Analyst

Alright. And transitioning to the Hemopurifier in cancer indications, do you expect to begin any human clinical trials in 2018?

Jim Joyce

I don't expect that we initiate human trials in 2018 unless it was some type of compassionate use type of therapy. Again we want to leverage what we're seeing with the label indication against infectious viruses and start thinking about tumor-derived exosomes as another type of glycosylated disease target, it's not a threat in approved therapy. And we think long term our opportunity in cancer could be a significant value driver. For somebody that's been following our company they know we did a lot of pioneering work related to tumor-derived exosomes and believe based on this glycosylated structure on their surface, we believe that a time when the medical community’s consensus was that these particles were just set of the debris and had no biological function. We believe they played a role in cancer progression, related to immune suppression.

Today these particles are associated with immune suppression cancer patients, but more importantly have been discovered to be the seat that allow for the spread and creation of metastasis in cancer patients, which is attributed to be about 90% of cancer deaths. So we think this is a very big area, but we also look at our technology in this case unlike an acute neuro [ph] and viral pathogen where we’re trying to tip the balance in favor of the immune system, which we demonstrate with the Ebola patient in Germany that we could effectively do.

In cancer, we're looking to be an adjunct and we have the advantage of being an adjunct that can combine with other therapies, without adding additional drug toxicity. But the thing to really be cognizant of and the backdrop here is emergence of immuno oncology drugs therapy that are being approved such as CAR T therapies. And you have to believe that a device that can eliminate or reduce the presence of tumor-derived exosomes that could combine with those therapies could bring the therapy in full circle, while one side of the equation is stimulating the immune system, the other side is eliminating the immune suppression.

So that market is unfolding today and that continues to unfold. I think it will better define our opportunities as an adjunct in cancer care.

Unidentified Analyst

Alright, thank you. My final question, could you provide a number – of the number of retired football players, professional in the CTE study, have you to began the enrollment? And if so how many retired professionals are going to be in that study?

Jim Frakes

Yes, so this is an extension of our first study with Boston University, which was the first NIH-funded study at CTE. The outcomes were very promising in terms of a biomarker we discovered, that’s an exosomal biomarker that we believe moves across the blood-brain-barrier, it’s a biomarker that expresses tau protein which the abnormal accumulation of tau protein in the brain is the hallmark of CTE, alzheimer's and 20 other tauopathies, that involve abnormal accumulation of tau protein in the brain.

In the previous study we saw that the levels of tau zones, what we call were nine times higher in the NFL group, as compared to same age group controls and very similar in levels as compared to Alzheimers patients. So in this study – last study we did 78 NFL players, in this study we’re looking to enroll up to 200 individuals at multiple site locations. The Translational Genomics Research Institute is based in Phoenix where there is a high concentration of former FL players. Once this study is up and going it's likely that we'll make a second site, maybe a third site to accrue. The number of subjects we'd like to accrue. But at this point in time I guess the guidance I could give you is that the IRB has approved the study.

Our team along with the TGEN team in Phoenix are working on logistics locating our office study and I would expect that additional news related to disclosure be forthcoming soon.

Unidentified Analyst

Alright, thank you so much.

Jim Frakes

Thank you. I appreciate it.

Operator

The next question comes from Marc Robins with Catalyst Research. Please go ahead.

Marc Robins

Hey thank you. What an incredible quarter, locked up accomplished.

Jim Frakes

Thanks Marc.

Marc Robins

Just want to ask one question Jim.

Jim Frakes

Yes.

Marc Robins

You're welcome. One simple question and I don't think it's so simple, but it's straightforward. We've discussed in the past how seemingly the Hemopurifier wasn't directly designed to battle bacteria, but we've discussed you and I, about how bacterial cells seem to bleb off exosomes that have back lagged, I think, have that glycosylated shield, shielding cover. And because of that this possibly could be part of the reason why some of the bacteria that are more prevalent and seemingly more terminal and dangerous, could be dual growing, so becoming so.

Has there been any research that you've noted that talks about that that may be might support our wild-ass theory?

Jim Joyce

Well we did have some insights as part of the Department of Defense DARPA contract, it was dissipating in related to sepsis. We did have some confirmatory work, again this is in vitro, preclinical foundation work against certain bacterial toxins. And I think it's very – first I have to – I have to applaud you for this very intuitive comment or question, because if you think about for the first time an actual indication based on the structure related to viruses, you’d have to ask the question how else could we utilize if we’re advancing in biodefense with different government agencies obviously now that they are focused on broad spectrum countermeasures.

And I believe based on our collection of data against viral pathogens, we would be a leading broad spectrum countermeasure based on pre-clinical and clinical data. But you still have to think about well what else could our technology do without additional modifications. And we think about well where else could this glycosylated structure? We kind of look at this in a simple manner that we said initially this glycosylated structure helps viruses surveillance of the immune system, that’s a common theme and that would cause us to look at tumor-derived exosomes, because we believe that perhaps the structure is not just viral specific, it may be a commonality amongst a wide range of diseases to allow them to proliferate below the surveillance of the immune system, so that causes the first look at tumor-derived exosomes.

But you have to believe with bacteria we have very limited data that came out of the new DARPA program. But you’d have to believe that this is something we should be taking a close look at, as it relates to high threat bacterial agents such as botulinum toxin, anthrax toxin, tularemia and other threats that are very significant interest to our government. And certainly if we have the capability to demonstrate that we have to eliminate check toxins from those threats, that would certainly add to the potential rationale of why our products should be supported by the U.S. Government or potentially meet the goal of defense initiative, where the product moves towards the strategic national stockpile.

So everyone I think were very – yes.

Marc Robins

It seems like you have a really great opportunity though Jim. And that is and I don't want to spend more R&D money until we start getting revenue in significant amounts. But if viral cells produce exosomes or have those glycosylated shield and tumor cells can threw off exosomes with a glycosylated shield, and we have whatever it is throwing off tau zones, which I guess have a glycosylated shield which you are attracting, why not bacteria. And if you've got a bad bacteria such as the black death, why not in Madagascar threatening the eastern half of Africa seems to me like you got a good opportunity for a laboratory in, in vivo expedition if you will. And that was just my comment.

Jim Joyce

No, no I appreciate your comment. I think in the backdrop of that comment, I think, it's you've been following us long enough to recognize a time when the programs to advance countermeasures against bioterror and pandemic threats which were launched by Project BioShield, you recognize that for many years the focus of those programs was to align a disease-specific drug or vaccine with each and every threat.

Any programs by definition in terms of definition of countermeasures they precluded a medical device of participation which at one point provided me the opportunities to testify before Congress to argue three real points. And that was a device should be part of the definition of countermeasure against these threats, you can address the breadth of – threats that are disease-specific countermeasures you need to have a broad spectrum therapy. And the third point was is that if you have a broad spectrum therapy, each therapy should have other commercial applications which should allow your stockpile to be useful versus having to be replenished each year against viral pathogens or whatever the disease targets are that may or may not infect somebody in the U.S. And at that time countermeasures that have commercial applications were also precluded.

So the thing that, I think, one would be very happy about if they really follow the evolution is that today the focus has shifted towards broad spectrum. If you have a commercial application beyond bioterror and pandemic threats, that is an added gold star to your equation. And most important for us medical devices are part of the definition of treatment countermeasure. In some cases throughout defensive documentation it literally points out to not just medical devices, but also medical devices and other non-pharmaceutical medical countermeasures. There’s a chance to think that we're in much better position today to execute based on legislation than we've ever been.

Marc Robins

I'll get back in queue. Thanks so much.

Jim Joyce

Thank you.

Jim Frakes

Thank you Mark.

Operator

We have now reached our allotted time for questions. This concludes our question-and-answer session. I will like to turn the conference back over to Jim Joyce for crossing remarks.

Jim Joyce

Thank you. I appreciate everyone's participation today. I look forward to your participation in the next quarterly call. And hope you continue to follow our company closely in the months to come. Thank you again.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.