Cytocom, Inc.
Q3 2013 Earnings Call Transcript

Published: 7 Nov 2013

[Operator:]

Greetings and welcome to the Third Quarter 2013 Investor Update Call. At this time, all participants are in a listen-only mode. A brief 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. Rachel Levine, VP of Investor Relations. Thank you, Ms. Levine. You may begin.

[Rachel Levine:]

Thank you and good morning everyone. Welcome to Cleveland BioLabs’ third quarter 2013 investor conference call. Joining us today are Dr. Yakov Kogan, Chief Executive Officer; Dr. Jean Viallet, Chief Development Officer; and Mr. Neil Lyons, Chief Financial Officer. Dr. Andrei Gudkov, our Chief Scientific Officer, who normally joins is traveling out of the country and unable to join us today. Before we begin, I would like to remind all listeners that throughout this call, we may make statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of future performance or the successful execution of the company’s strategic plans and involve risks and uncertainties. Additionally, I want to emphasize that some of the information discussed on this call, particularly our financial and cash outlook and our forward-looking development plans, is based on information as of today, November 6, 2013 and that actual results may differ materially from the expectations and assumptions discussed today as a result of various factors. Such risks, uncertainties and factors include the risks outlined in our company’s filings with the Securities and Exchange Commission, including our most recently filed Forms 10-Q and 10-K. The information provided on this call should be considered in light of such risks. CBLI does not assume any obligation to update information contained in this particular conference call. Dr. Kogan will open this morning’s call by sharing some thoughts on CBLI’s strategic direction and focus. Dr. Viallet will then discussion clinical oncology plans for Entolimod and address ongoing work for the radiation countermeasure indication and CBL0137. Mr. Lyons will follow with a review of the company’s financial outlook and some recent transactions. Dr. Kogan will then return for closing remarks and open the call to questions. At this time, I’d like to turn the call over to Dr. Yakov Kogan, CEO. Please go ahead.

[Dr. Yakov Kogan:]

Thank you, Rachel and thank you to everyone for joining us this morning. 2013 has been a dynamic year for CBLI. We have significantly transformed our organization to reflect the advancement and maturation of our pipeline as we progress oncology trials and registration enabling studies for the Entolimod radiation countermeasure program. We believe these efforts have sharpened our focus and enhanced our ability to create value. Over the past nine months, we have appointed several successful leaders in the biopharmaceutical and financial sectors to our board and broadened our regulatory affairs and clinical oncology and development expertise with key hires. The influence of these initiatives has already made an impact through initiation of U.S. clinical study with the intravenous formulation of 0137, modification of our ongoing Entolimod oncology strategy, and of course, our progress with the FDA on the Entolimod radiation program. More recently, we transferred a significant number of laboratory and preclinical service personnel to Buffalo BioLabs, an independent entity owned by of one of our founders and directors, Dr. Andrei Gudkov. We have also executed a service agreement with that company so as not to lose any continuity in our ongoing work with the FDA and other government agencies and other tasks supporting our clinical programs. As Neil mentioned on our second quarter conference call, our need to maintain this talent in-house and carry the associated overhead is decreasing over time as we move further into the clinic. This model enables priority access to these research capabilities on as-needed basis while saving costs and preserving management attention. Neil will walk you through some of operational and financial details of this transaction later in the call. In the meanwhile, I would like to highlight some of the events of the quarter. One of our most significant achievements from a developmental perspective was the initiation of dosing in the United States intravenous trial with 0137. On the Entolimod front, Jean is leading the charge in our discussions with the FDA regarding the radiation indication and the dose conversion work necessary to bring us to a human dose. This is a milestone what will move us towards meeting BLA requirements, as well as open an opportunity to file a pre-EUA submission. While we are on this topic, I will remind everyone what we are still engaged in an active negotiation process with BARDA. There was a temporary pause during the government shutdown, but now we are back to work. Again, we are prohibited by BARDA from commenting any further on this topic and will provide updates when the process is concluded. I am also happy to report what the modified Entolimod oncology trial has resumed recruitment to a (indiscernible). While this trial will take some time to complete, Jean and his team have mapped out a clinical strategy what can move the program forward and hopefully deliver value-added human efficacy data. Jean will describe this strategy in more detail shortly including an opportunity to start a new study before completion of our ongoing Phase 1 trial. And finally, we filed an IND for 612, a drug in development for induction and mobilization of hematopoietic stem cells with the regulatory authorities in the Russian Federation. I will now turn to some achievements on the financial front. I am very pleased to highlight our loan agreement with Hercules Technology Growth Capital. Many of you may have heard of them as they have a strong reputation in the life sciences and technology arenas and perform significant diligence on potential investments. We added $6 million to our balance sheet at the end of the quarter and have access to additional $4 million upon achievement of certain milestones. Beyond this transaction, we have also announced two contracts totaling over $9 million with the Russian Ministry of Industry and Trade for Entolimod and Mobilan, a drug being developed by our Panacela subsidiary. These contracts will support ongoing drug development work in the United States and Russia and required little additional investment on our side due to value of intellectual property and other work being contributed. We are making a strong effort to be more strategic in our approach to financing the company and continue to pursue alternative opportunities. Neil will cover the details and financial impact of these events during his remarks and address any necessary updates to cash guidance. At this time, I will turn the call over to Jean to add his perspective on some of the recent development progress and share the clinical oncology plan for Entolimod. I will return a bit later for closing remarks.

[Dr. Jean Viallet:]

Thank you, Yakov. Before we review the clinical oncology strategy for Entolimod, I will recap some of the work we are doing for the radiation countermeasure program. As I discussed on our second quarter call, the next major step in our process with the FDA is to finalize the algorithm for animal to human dose conversation and conduct an initial estimate of the final human dose. This includes finalizing data analysis of a non-irradiated, non-human primate study completed over the summer and producing a formal study report, which is expected to be completed by the end of this year. We can then incorporate this data into our larger comprehensive analysis and approach the human dose calculation. From there, we will need to schedule a meeting with the FDA and come to some agreement on the dose and our approach. It is our understanding from our last meeting with the FDA that the positive outcome of this discussion would qualify us to submit a pre-EUA application as well as facilitate the finalization of remaining requirements for a BLA. We also continued to work with the FDA on validation and review of the data package we submitted over the summer. As we discussed on our second quarter call, we presented the FDA with a comprehensive and integrated analysis of all of the secondary pharmacological and biomarker data from our last pivotal non-human primate survival study with all of our analysis of biomarkers and clinical observations from previous human and animal studies. Our objective is to provide the FDA with a comprehensive view of human safety and pharmacology, and hopefully reduce any need to repeat dose ranging in healthy subjects. Now, let’s discuss our strategy for the Entolimod oncology program. As we mentioned on our last call, the dosing regimen in the ongoing advanced cancer trial was modified to further optimize Entolimod’s immunostimulatory effects. This is a slight change from our previous focus on cytotoxic effects of Entolimod on Toll-like receptor 5 expressing tumors. While direct cytotoxic effects of Entolimod remain a meaningful potential development path, we believe the more optimal opportunity for value deriving data rests within its use as an immunotherapy. Coincidentally, immunotherapy is also one of the most exciting areas of oncology research at the moment. What are our next steps? While the current study continues to recruit and explore dose ranges for systemic tolerability and effect, we are preparing to pursue a mid-term data readout through a more focused and localized administration of Entolimod as an immunotherapy mainly within the urinary bladder. According to published data, bladder cancer is the fourth most common cancer in the world with an estimated global prevalence of 2.7 million cases. In the United States, 2013 incidence of bladder cancer was approximately 73,000 cases with a prevalence of over 500,000. Approximately $4 billion is spent on treatment of this disease every year, with more spent to treat per patient than any other cancer. Most of this money is spent on non-muscle invasive bladder cancers, which have the highest local recurrence rate of any solid malignancy. Approximately 75% of patients have recurrence within five years, and a majority of these patients see recurrence within two years. This high recurrence rate necessitates lifetime monitoring by cystoscopies and treatment of these multiple recurrences by transurethral resection followed by intravesical chemotherapy or immunotherapy. The most successful therapy for decreasing the risk of recurrence and progression in these cases is intravesical immunotherapy with BCG, an attenuated form of live tuberculosis bacteria, which presents the risk of exposure to tuberculosis to treating physicians and patients. Intravesical installations of BCG cause extensive inflammation in the bladder wall which helps to eliminate tumor cells. Toll-like receptors are expressed in urothelial cells and are thought to have a role in the response to uropathogens and to immunotherapy with BCG. In the case of BCG, it acts through the Toll-like receptor 4, which can have several undesirable side effects. In the case of Entolimod, however, we are working through Toll-like receptor 5, which is known to be prominently expressed in bladder and which is thought to induce a much less toxic response based on previous systemic administration. We have performed exploratory preclinical experiments using Entolimod in the bladder and have seen sufficient evidence of activity in models with primary tumors to believe this is a ripe opportunity. Our thinking is that it will take a modest amount of additional work to move forward with the study of intravesical administration of Entolimod to prevent recurrence of secondary bladder cancers in patient’s refractory to BCG. This study could be started while the ongoing Phase 1 continues and because of regular monitoring through cystoscopies, we could potentially know within a two year timeframe of starting this study if Entolimod was successfully preventing recurrence in these patients. The area of bladder cancer does have significant competition. However, it remains a major unmet medical need, and we believe any therapies that can offer risk benefit over current standard care would be welcomed by treating physicians, as too many patients still end up losing their bladders. Another long-term, but exciting potential opportunity for Entolimod immunotherapy is in hepatotropic tumors, ones that have a high propensity to metastasize to the liver. This follows along some of the original thinking behind the Entolimod program. As you may be aware, liver metastases are often the most common direct cause of fatalities in cancer rather than primary tumors. And there is often very limited approaches to tackle this problem. In our particular case, we would need to let our current Phase 1 study conclude before proceeding into another trial. That being said, there is a very unique orphan opportunity in this area that could lead to a registration effort within a five year timeframe following a relatively small Phase 2 study. I’m talking about uveal melanoma. Uveal melanoma is a cancer of the eye. It’s completely unrelated to skin melanoma and presents a totally different picture. It is a rare affliction with only about 2,500 new cases in the U.S. every year. But, one of its unique features is a 90% rate of liver metastases in a certain subset of patients. These patients can be identified with a commercially available gene signature, which can predict with a very high degree of accuracy which ones will fall into a high risk category at the time of diagnosis, representing approximately 40% of the total patients, or 800 to 1,000 new cases per year in the United States. Treatment of the primary tumor is relatively straightforward. However, there is no effective treatment for those that develop liver metastases and once this occurs, survival is very brief. Patients are concentrated in specialized referral centers, roughly 70 across the country. And we have been collaborating with one of them. Dr. Hans Grossniklaus of Emory Hospital, one of the clinical thought leaders in this area, who has explored the use of Entolimod in his specialized models of uveal melanoma liver metastases in the mouse. Given the concentrated patient population and extreme orphan nature of the disease, we believe that this would be a great opportunity. Once proof of concept is established in this pathway, the door could also be open for partnerships in larger, more common hepatotropic cancers which would require extensive Phase 3 patient populations, such as colon cancer. We intend to use data generated under the recently awarded contract with the Russian Ministry of Industry and Trade for study of Entolimod in colorectal cancer to guide our long-term plans to develop a pivotal Phase 3 trial of Entolimod in combination with chemotherapy for stage C resected colon cancer. Now, let’s spend a few minutes reviewing progress with CBL0137. We are proceeding on track with our U.S. intravenous trial, and are completing enrollment to the first cohort. As I have previously mentioned, this trial will help us focus our ongoing development strategy for this program. We are very excited about our collaboration with the Children’s Oncology Group at the National Cancer Institute, which is centered on the potential to study CBL0137 in highly aggressive pediatric cancers. We are tracking our adult IV trial closely, waiting for the achievement of the maximum tolerated dose so that they may then complete the design and execute a trial in pediatric patients. And we believe this is an incredible opportunity for us and very pleased with this collaboration. The Russian trial with oral administration of 0137 is also proceeding and is actively enrolling its fifth cohort. To-date, no drug related serious adverse events have been reported in either trial although we have yet to reach dose levels where toxicity or measurable signs of activity might be expected. Our recent understanding related to the role of FACT, the molecular target of 0137, as an important cofactor for oncogenic transcription for multiple oncogenes known to be associated with aggressive cancers has been the subject of both publications and presentations at several scientific conferences over the past few months. We are having many discussions with clinical thought leaders and potential partners about the implications of this discovery. This is of course our focus for future clinical studies as well. We are integrating diagnostic assays measuring FACT expression in serum and in tumors into our trials. At this point, I will turn the call over to Neil for the financial review.

[Neil Lyons:]

Thank you, Jean. First, a few comments about our financial results, for the first nine months of 2013, our revenues increased by over 200% compared to the first nine months of last year and are reported at $4.6 million, which is attributable to the increased development funding we have received from both the Department of Defense and the Russian Federation. R&D expenses for the first nine months of 2013 decreased 12% overall compared to the same period last year and are reported at $14.9 million. There were three drivers for this net overall decrease. First, bio-defense spending is down largely due to the winding down of the irradiated pivotal study in 179 non-human primates that was underway in 2012. Second, development of the Panacela compounds was narrowed and focused primarily on to those compounds receiving development support from the Russian Federation. Finally and offsetting those decreases is an increase in our oncology development activities, including continued enrollment in Russia for the oral formulation of CBL0137, which had only begun in the fourth quarter of 2012, the recent initiation of our U.S. IV clinical study for CBL0137 and preparation of CBLB612 IND for filing with the Russian regulatory authority. More detailed fluctuation data for both our revenues and R&D expenses can be obtained from the MD&A section of our Form 10-Q to be filed shortly. For the first nine months, G&A is up $800,000 or 9% and is reported at $9.8 million. This net change relates to increased G&A cost for our Russian-based subsidiaries, including BioLabs 612 which was not operational in 2012 and corporate, legal and intellectual property fees offset by various cost reductions mostly related to business development. Now, moving on to new business, and we do have several items of financially significant new business to review. First, let’s review our new loan from Hercules Technology Growth Capital. The loan commitment is for $10 million with $6 million funded at closing, which was September 30 and $4 million fundable upon award of a BARDA development contract or other funding suitably scoped to cover remaining development costs for Entolimod as a radiation countermeasure. Debt service only requires payment of a monthly interest charge for the first 12 months. Commencing on November 1, 2014, we are required to begin making 26 monthly principal interest payments based on a stated interest rate of approximately 10.5% and a 30-month amortization period with the balance of the loan due on January 1, 2017. And if you work the math, it means the remaining four months of unpaid principal at the end of 2016 is due on January 1, 2017, in essence, a balloon payment. In addition, the $550,000 termination fee will also be due on January 1, 2017. Additional information regarding this loan can be found in our Form 8-K filed on October 4. Second, we restructured our laboratory and preclinical services group as Yakov mentioned. These professionals will provide services to CBLI, Incuron, Panacela and other parties. We view Buffalo BioLabs, or BBL as a CRO; that is a group of professionals who offer scientific services to drug development companies like CBLI. Similar to the treatment of IP developed by other CROs on behalf of their clients, the IP developed by Buffalo BioLabs when performing services for Cleveland BioLabs will be owned by Cleveland BioLabs. This group of 25 professionals transferred to BBL represented a gross annual expenditure of $1.8 million for salaries and benefits and now reduces our CBLI U.S. headcount to 27 people. Had we retained this group within CBLI, our management would have become increasingly distracted to source a backlog of work for this team as our consolidated pipeline is maturing and requiring less and less of these services. Often emerging biotech companies in this situation need to reduce force; that is change the skillsets needed to meet the changing needs of the maturing pipeline. We were fortunate to be able to transition this team without significant cost while still maintaining access to their research services on an as needed basis. This transition is expected to yield cost savings of about $130,000 on average per month through the first half of 2014. Also related to the BBL transition, we announced that Dmitry Tyomkin would leave Panacela Labs and join BBL as their CEO. Michael Fonstein will replace Mr. Tyomkin as the CEO of Panacela Labs, which brings me to our third financially significant topic and that is the continued success of our Russian operations team in winning development contracts from the Russian Ministry of Industry and Trade. As Yakov mentioned, we recently announced the awards of two development contracts. The first was awarded to our wholly-owned Russian subsidiary, BioLabs 612 for Entolimod to be studied as an adjuvant therapy in colorectal cancer patients. The second award was made to Panacela for the development of Mobilan. Those are three-year contracts and were for 149 million rubles each or approximately $4.6 million each and require matching funds. In the case of the Entolimod grant, we estimate that about $3 million of the matching fund requirement will be satisfied by the historical value of our IP investment in Entolimodwith the remainder being spent in the 2016 timeframe for colorectal-related activities. In the case of Panacela’s contract, most of the matching requirement will be satisfied by historical and ongoing IP investments and other planned technological developments. Let us now review our existing liquidity and capital resources. On a consolidated basis, as of September 30, we reported $14.6 million of cash and short-term investments. We also had $600,000 in receivables. Prospectively, our funded contract backlog was $12.2 million as of September 30 and adjusted on a pro forma basis for the two October dated awards from the Russian Ministry I just mentioned. Of the $12.2 million, $2 million had been received as of September 30 and was included in deferred revenue, leaving $10.2 million of funding to be received as the contracted services are rendered. These contract funds come from both U.S. government and the Russian Federation to support our development efforts for Entolimod for ARS, Entolimod for colorectal cancer, Curaxin, xenomycins, CBLB612 and Mobilan. In addition, Incuron’s financial partner, Bioprocess Capital Partners, financial partner in Incuron is on schedule to contribute another equity tranche of $5.6 million by the end of 2013. Panacela’s financial partner, RUSNANO, originally committed $26 million in funding, of which $15.5 million remains potentially available. Therefore, in total, we expect to have $50.5 million in funding available through cash in the bank of $14.6 million, receivables of $600,000, funded contract backlog to be received as services are rendered of $10.2 million, negotiated equity funding from our subsidiary partners of $21.1 million in total and a second $4 million tranche available from Hercules upon a sufficiently scoped development contract from BARDA or other similar funding arrangements. Now, moving on to cash guidance, for the third quarter, CBLI standalone cash burn was $1.3 million compared to our guidance of $1.4 million on average. When we announced the additional financing we have received from Hercules, we indicated that our cash resources should last us into Q2 2014, and we continued to support that guidance. Of note, this guidance does not assume a BARDA contract award and it does not assume any proceeds from the second tranche of $4 million from the Hercules loan, a conservative approach to providing guidance. This guidance does assume we will conclude the current ARS work we have conducted with the DoD, which we believe will be completed in Q4, but no ARS work beyond that. It does assume that we will continue development of Entolimod for oncology as Jean has described. With those assumptions, we expect CBLI’s standalone cash burn to approximate $1.2 million per month on average from October 1 through mid-2014. CBLI’s consolidated burn was $1.6 million and $2.2 million per month for the third quarter and for the first nine months of 2013 respectively. This compares to our guidance of $2.3 million on average per month previously provided. And using the assumptions outlined above, we expect consolidated cash burn to approximate $2 million per month on average from October 1 through mid-2014. With that, I’ll turn the call back over to Yakov.

[Dr. Yakov Kogan:]

Thank you, Neil. In closing, I would like to focus on what we believe to be the key value driving milestones for the coming months. First, securing new government funding to support the Entolimod radiation program, we have already said we are in an active negotiation process with BARDA. Second, continuing our data analysis and dose conversion work with the FDA, which will ultimately enable us to finalize remaining studies and submit a pre-EUA application. Third, continuing execution on our ongoing Phase 1 studies. We anticipate four clinical read-outs in the next 12 to 18 months, starting with 0102 study results later this quarter. And fourth, executing our refocused clinical oncology strategy, which is intended to generate value-adding human efficacy data in as short a timeframe as possible. As Jean mentioned, this clinical plan has been designed to leverage our newly expanded knowledge regarding immunostimulatory capabilities of Entolimod and the role of FACT as an essential enabler of tumor transformation and survival for several aggressive oncogenes. These two areas are of extreme interest and promise in the oncology community today. We are focused on achieving these goals and creating value for our stakeholders. As always, we thank you for your support. We will now open the call to questions. Operator, please begin the Q&A.

[Operator:]

Thank you. We will now be conducting our question-and-answer session. (Operator Instructions) Our first question is coming from the line of Mara Goldstein with Cantor Fitzgerald. Your line is now open, you may proceed with your question.

[Mara Goldstein:]

Thanks very much. I’m wondering if you could maybe talk a little bit more about the Entolimod and the new administration for bladder cancer and how that currently compares with how patients are treated with BCG?

[Dr. Yakov Kogan:]

I will ask Jean to answer this question.

[Dr. Jean Viallet:]

Thank you, Mara. Well, the standard of care of course after a patient is diagnosed with non-muscle invasive bladder carcinoma is a transurethral resection of the tumor, but that alone leaves with unacceptably high rate of further recurrence of the tumor. And intravesical administrations of BCG are then administered as the first line standard of care. Typically, six doses in six consecutive weeks and then every three months thereafter. This is associated with a fairly significant burden of local toxicity, because of the robust inflammation that is induced. And although it’s the standard of care and helps in decreasing recurrences, it’s by no ways the perfect. A lot of patients will recur later, requiring either further resections and administration of BCG, or a switch to intravesical administrations of these different chemotherapies. But, none of these approaches will protect every patient, and too many patients still end up losing their bladders, which is obviously a very devastating event for both medical complications and personal quality of life. So having a background if you will of proof of biological principle that activating immunostimulatory Toll-like receptors functions in this particular setting, having the preclinical observation that stimulating the Toll-like receptor 5 with Entolimod is active in a relevant preclinical model. We have every reason to expect that we can have success with Entolimod in this setting. In addition, there is a fraction of bladder tumors that express the Toll-like receptor 5. And even though it’s not the focus of the overall development, there is then the opportunity of these Toll-like receptor 5 expressing bladder cancers to have a direct cytotoxic response to Entolimod, further potentializing the potential for successful outcomes for these patients.

[Mara Goldstein:]

And then (indiscernible) how would you expect the administration to follow the same in terms of dosing and frequency, or would your anticipation be something different?

[Dr. Jean Viallet:]

So the current vision for an initial clinical experience would be to mimic the BCG schedule of administration. Weekly for six doses and every three months and focus initially on patients that are refractory to BCG; that is, who have relapsed within a relatively short timeframe after their last BCG treatment so that we will have an opportunity to evaluate whether Entolimod affords them better control than their prior BCG treatment.

[Mara Goldstein:]

Okay and if I could ask a different question, an unrelated question that has to do with the pending BARDA potential funding, is there an expiration date on that request? Do you get to a certain point on which it has to be resubmitted or renewed, or does it stay open indefinitely?

[Dr. Yakov Kogan:]

While the company is still in negotiation, this process could go and no need for additional resubmission of the proposal is needed.

[Mara Goldstein:]

Okay, thanks.

[Operator:]

Thank you. (Operator Instructions) Our next question is coming from the line of Mr. Christian Glennie of Edison Investment Research. Your line is now open you may proceed with your question.

[Christian Glennie:]

Yes, good morning. Just on the potential timing of interactions with the FDA you talk about completing the current sort of dose conversion analysis by the end of year, setting up a meeting with the FDA presumably early next year, leading to a pre-EUA filing. What should we be thinking about in terms of the potential timing of that pre-EUA?

[Dr. Jean Viallet:]

What we had in mind was being ready for submission in the third quarter of 2014 following a definitive meeting with the FDA in the first quarter. In the interim, we are in frequent communications with the FDA to discuss and resolve any questions arising from our July meeting with them.

[Christian Glennie:]

Okay, thank you. And then just to be clear on the planned – the potential Phase 1 in bladder cancer that will go they might start ahead of the outcome of the current study, what’s the timing for that. And also does that study start – is that dependent on some sort of fresh financing or other activities, or is that in your budget at the moment to get that study started?

[Dr. Yakov Kogan:]

Christian I will ask Neil Lyons to respond to the second part of the question.

[Neil Lyons:]

As I had mentioned, the planned activities to go forward with Jean’s bladder cancer trial are in our budget. Our cash forecast is through the middle of next year. This trial would initiate likely in the second half of next year. So, additional funding is needed past the middle of next year anyway.

[Christian Glennie:]

Okay, thank you.

[Operator:]

Thank you. Our next question is coming from the line of Mr. Richard Luder, a Private Investor. Your line is now open, you may proceed with your question.

[Richard Luder:]

Hello thanks for taking my call. Now, oddly enough, I do have bladder cancer and it’s taken care of by a procedure. I think you guys mentioned cystoscopy and what happens is after it was diagnosed, I go in once a quarter for the examination and then if the new growth is found, it’s surgically removed also by, I guess, a not dissimilar operation. But I am wondering I also have a friend who also has bladder cancer and these six sessions, he goes through. So is that determined by the nature of where the growths are, or what’s – I am curious about the distinction there?

[Dr. Jean Viallet:]

Right, so at the time of the initial diagnosis of bladder cancer, and typically people notice that they have blood in their urine and they go see a doctor as a consequence of that. There is different presentations of that tumor in terms of is it growing on a stalk if you will, floating within the bladder, or is it flatter-based. And when the surgeon removes it, it’s sent to the pathology laboratory to be examined under a microscope. And the question is the degree of differentiation, how aggressive does it look under the microscope and most importantly, how deep it penetrates within the bladder wall. And all of this is taken into account by the urologist to decide what are the most appropriate next steps for the individual patients.

[Richard Luder:]

Okay so yes okay that explains it. Thank you. And now just a second question I have; this has to do with a news release from January of ’13 with regard to a presentation at a BARDA symposium that was cosponsored by another agency where CBLI was selected as a product developer to give a presentation. Now, the question I have as an investor is that was ten months ago almost. And I am wondering what I should think. I was very excited at the time, but there has been a great passage of time since. I know you can’t talk too much about BARDA, but could you comment on that observation?

[Dr. Yakov Kogan:]

Absolutely, so first of all, you are absolutely right. It was Cleveland BioLabs was invited to give a presentation at the January meeting, cosponsored by NIH and BARDA. The process which we are currently going through, and which was well described in a previous call, this is the formal process of submitting a proposal to seek funding to complete development of a drug and launching a drug on the market. And it’s a very formal process guided under broad agency announcement, which outlines the process and responses. And we are currently in active discussions post completion of the review.

[Richard Luder:]

Just one final question, were there other companies also selected to present. I mean how many companies were in the position of CBLI at that symposium?

[Dr. Yakov Kogan:]

It was several companies which are currently funded by BARDA who are also presented during this symposium.

[Richard Luder:]

Okay, good. Thank you very much. I appreciate it.

[Operator:]

Thank you. Our next question is a follow-up coming from the line of Mr. Christian Glennie with Edison Investment Research. Your line is now open. You may proceed with your question.

[Christian Glennie:]

Hi again. Thank you. Just on the Russian deals on Entolimod and Mobilan, what’s the likely kind of, you said they are both three-year contracts, but what’s the likely kind of tranching of the payments that might – the contract revenues that might be received? Is it fairly consistent through the three years or is it a bit lumpy?

[Dr. Yakov Kogan:]

I will ask Neil Lyons to answer the question.

[Neil Lyons:]

Generally, it’s fairly consistent over the three-year period. It is not funded upfront. Certainly, it’s funded in tranches, I believe, one or two tranches per year fairly consistently over that time period.

[Christian Glennie:]

Okay, great. Thank you.

[Operator:]

Thank you. (Operator Instructions) There are no further questions at this time. I would like to turn the floor back over to management for any closing comments.

[Dr. Yakov Kogan:]

We would like to use this opportunity to thank everyone, all our stakeholders, for your support. Thank you.

[Operator:]

Thank you. Ladies and gentlemen, this concludes today’s teleconference. You may disconnect your lines at this time. A replay of this conference will be available via telephone by dialing 877-660-6853 and using access ID 100723 followed by the pound key. Thank you for your participation.