IVERIC bio, Inc.
Q3 2014 Earnings Call Transcript

Published: 11 Nov 2014

[Operator:]

Please standby, we are about to begin. Good day. And welcome to the Ophthotech Corporation Third Quarter 2014 Earnings Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Kathy Galante. Please go ahead, ma'am.

[Kathy Galante:]

Good morning. And welcome to our third quarter 2014 earnings call. Joining me today, I have Dr. David Guyer, Chief Executive Officer and Chairman of Ophthotech; Dr. Samir Patel, President and Vice Chairman; and Mr. Michael Atieh, Executive Vice President and Chief Financial and Business Officer; and Mr. Todd Smith, Senior Vice President and Chief Commercial Officer. Before we begin, I would like to remind you that today we will be making forward-looking statements relating to the company's future expectations regarding its financial results, potential receipt of milestone payments, clinical and regulatory developments, and commercialization plans. These statements constitute forward-looking statements for purposes of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995. These statements cover many events and matters that are subject to various risks that could cause actual results to differ materially from those expressed in any forward-looking statements. I refer you to our SEC filings and in particular the Risk Factor section in our quarterly report on Form 10-Q filed on August 6, 2014 for a detailed description of the risk factors affecting our business. In addition, any forward-looking statements represent our view only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we disclaim any obligation to do so, even if our views change. I would now like to turn the call over to David.

[Dr. David Guyer:]

Thanks, Kathy, and thank you to everyone for joining us on the call this morning. As we continue to strengthen our management team, I would like to introduce two of our newest members of the senior executive team. Michael Atieh has joined us as our Executive Vice President, Chief Financial and Business Officer and Treasurer. During his career, Mike has led multiple senior level finance and business teams. At Merck he held various executive positions, including Senior Vice President at Merck Medco, Treasurer and Vice President, Public Affairs. At OSI Pharmaceuticals, Mike was the Executive Vice President and Chief Financial Officer. He also has significant commercial, financing and business experience in ophthalmology, having led Eyetech Inc. as the Executive Chairman when it became a private company. Todd Smith joined us as Senior Vice President and Chief Commercial Officer. Todd will be responsible for developing and implementing the company's commercial strategy and related high-quality infrastructure. As we continue to advance our pipeline and prepare for the potential launch of Fovista, Todd will lead the marketing, market access and sales teams. In addition to leading successful product launches, Todd's breadth of experience encompasses global marketing, as well as strategy and business development. Most recently, Todd served as Executive Vice President and Chief Commercial Officer at Horizon Pharma, where he launched the company's pain portfolio. In addition, he led the sales and marketing activities at Abbott for the virology franchise. Todd has gained experience in a broad spectrum of biotech and pharmaceutical companies, which include Bayer, Agouron and Fenwell Inc. in addition to Horizon and Abbott. We are excited to have Mike and Todd joined our senior management team and we are confident they will great values, we continue with our mission to address multiple areas of unmet need in the age-related macular degeneration market. As announced in our press release this morning, we are pleased to have achieved the final enrollment-based milestone related to the Phase 3 program of our anti-PDGF agent Fovista under the terms of company’s $125 million royalty financing agreement with Novo A/S, which was entered into in May 2013. This milestone triggers a third and final payment to us of $41.7 million. The funding of this final tranche results an additional royalty interest to Novo based on Fovista sales. We continue to stay on track with respect to the execution of our pivotal Fovista Phase 3 program, evaluating the safety and efficacy of Fovista administered in combination with anti-VEGF drugs for the treatment of wet AMD. We expect to have initial topline data from the Phase 3 program available in 2016. As we prepare for the potential launch of Fovista, we believe that there is a significant worldwide commercial opportunity to address major unmet needs in wet AMD. Accordingly, we had begun to build and invest in our commercial organization and to continue to work closely with Novartis, our ex-U.S. partner. In September, we achieved the $50 million enrollment milestone payment from Novartis as part of our ex-U.S. licensing and commercialization agreement, which we entered into in May 2014. This payment was triggered as a result of Ophthotech reaching the initial enrollment goal in the Phase 3 clinical program for Fovista and is the first of a total of $130 million in potential enrollment-based milestones under the agreement. Ophthotech continues to lead the global Fovista Phase 3 clinical program and has the sole responsibility for the registration of Fovista in United States, while collaborating with Novartis to seek regulatory approvals outside the U.S. As an important reminder, our Fovista development strategy remains agnostic with respect to the choice of anti-VEGF agent administered in combination with Fovista. I will now turn to our Fovista expansion program. In August, we initiated the first of several planned Fovista expansion studies. The expansion studies are designed to further investigate the potential role of Fovista combination therapy in reducing treatment burden, reducing sub-retinal fibrosis and addressing treatment resistance related to anti-VEGF monotherapy in wet AMD patients. Therefore our Phase 3 pivotal trials and Fovista expansion studies allow us to leverage the underlying strength of the science related to Fovista to potentially modify the disease and become the foundation therapy for wet AMD. In addition to expanding our Fovista and Zimura franchises, we are committed to exploring opportunities to address the unmet needs in AMD. Our strategy is to be scientifically driven, evaluate multiple options with a limited upfront investment and obtain early proof-of-concept validation prior to a larger commitment of our capital. Today's announcement of an option agreement with AVEO Pharmaceuticals is an example of this strategy. Samir will discuss shortly currently a significant unmet need exist in treating wet AMD during the long-term or maintenance phase of anti-VEGF monotherapy that current anti-VEGF therapies do not address. To potentially address this unmet need, we’ve entered into a research and option agreement with AVEO. We plan to explore and investigate the role of this VEGF receptor tyrosine kinase inhibitor in a sustained-release formulation administered in combination with Fovista for non-oncological ocular indications. Under the agreement, Ophthotech is solely responsible for the formulation development of the compound for non-oncologic ocular indications. The agreement is structured to provide significant optionality with Ophthotech only making payments after reaching certain key milestones, while retaining total control over the decision to continue any further development. Under the terms of agreement, we obtained upfront fee of $500,000 for exclusive rights to investigate this anti-VEGF compound. Upon the completion of our initial analysis, if we elect to continue the development of an ocular formulation of this anti-VEGF compound, we will pay an additional fee of $2 million upon our submission of an initial new drug application and $6 million upon demonstration of proof-of-concept in humans. We also have an exclusive option exercisable at our sole discretion, to obtain further development and commercialization rights for non-oncological eye indications outside of Asia. If we elect to exercise our option and choose to further advance the development of this compound, we’ll obtain option exercise fee of $2 million. In addition, potential milestone payments may include future clinical and regulatory-based milestones of up to $50 million of which approximately 80% are due upon regulatory approvals, commercial sales-based milestone payments of up to $45 million and royalties on potential product sales. This deal is structured so that in effect as each trigger point is achieved. We will gain more information and knowledge regarding this agent for ocular use in combination with Fovista, therefore allowing us to make an informed decision regarding the benefit relative to the risk profile. We believe the strategy and deal structure will lead to a higher probability of value creation for our shareholders. With that, I'd like to turn the call over to Samir.

[Dr. Samir Patel:]

Thank you, David. Good morning and thank you for joining us today. As David mentioned, we are excited to enter into this research and option agreement, which allows us to exclusive investigate tivozanib, a VEGF receptor tyrosine kinase inhibitor for potential treatment of non-oncologic ocular diseases. The management of wet age-related macular degeneration today typically requires the administration of monotherapy anti-VEGF regimen for multiple years. All current standard-of-care anti-VEGF agents are roughly equivalent with respect to their benefit relative to safety. In addition, multiple studies confirm that on average over the longer term anti-VEGF monotherapy for wet AMD does not result in improvement of visual outcome with many patients continuing to experience further visual loss in the real world. We believe that a comprehensive solution to meet the current unmet need for wet AMD includes enhancing visual outcome during the acute phase of therapy and also reducing treatment burden and visual loss during the maintenance phase. Ophthotech Phase 3 program is designed to investigate the potential of Fovista in combination with anti-VEGF, in combination with current standard of care anti-VEGF agents to demonstrate improvement in visual outcome relative to monotherapy anti-VEGF administration. If successful, this Phase 3 trial should address the unmet need of enhanced visual outcome during the acute phase of wet AMD therapy. The Fovista expansion studies will investigate the potential of Fovista combination therapy to address the additional unmet need of treatment burden and longer-term visual loss during the maintenance phase of treatment. The rationale of Fovista expansion trial is based on the retrospective subgroup data analysis from our 449 patient randomized, controlled Phase 2b Fovista combination therapy trial. Retrospective subgroup analysis from this trial suggest that compared to anti-VEGF monotherapy, Fovista combination therapy may result in reducing neovascular size and sub-retinal fibrosis. We believe that reduction in neovascular size via Fovista combination therapy may reduce treatment burden, and inhibition of sub-retinal fibrosis may translate into reduction of longer-term visual loss during the maintenance therapy. We consider Fovista to be anti-VEGF agnostic, but it can be paired with each of the anti-VEGF agents currently used to treat wet AMD, as reflected in the design of our Phase 3 program. However, none of the currently utilized anti-VEGF agents are able to successfully reduce treatment burden through a frequency of administration of every three months or greater without adversely affecting visual outcome. Therefore, pairing Fovista during the maintenance phase of wet AMD therapy with a sustained release anti-VEGF agent may potentially expand the dosing regimen through a quarterly treatment regimen or beyond. This will add another potential therapeutic regimen to address the treatment burden via Fovista combination therapy. Tivozanib is a vascular endothelial growth factor tyrosine kinase inhibitor designed to potentially block VEG-F signaling pathway. In addition to its small molecule properties, we believe its high potency, selectivity and relatively long half life for a molecule within this class are important properties for the development of a sustained release formulation for maintenance therapy. This agreement continues our quest to develop multiple and flexible therapeutic options. In addition, this agreement may provide the opportunity to expand into other non-oncology ocular indications such as diabetic retinopathy. We continue to evaluate optimal anti-VEGF strategies, technologies and targets that are complementary to Fovista. We look forward to keeping you informed as this program moves forward. Looking forward to 2015, we are also excited about our planned Phase 2, 3 trial of Zimura to treat geographic atrophy, a dry form of age-related macular degeneration. GA is a very pronounced unmet medical need in the AMD space, as there is currently no FDA approved treatment for dry AMD. Zimura inhibits the complement protein C5, a central component of the complement cascade. I will now turn the call over to Mike.

[Mike Atieh:]

Thank you, Samir. Let me start by saying, it has been a pleasure working with the Ophthotech team since I joined on September 30th. I also look forward to meeting many of our shareholders and research analysts over the coming months. Here is a brief update on our results of operations for the third quarter and our cash position. Revenue was $39.6 million for the three and nine months ended 2014 related to the $50 million enrollment milestone -- enrollment-based milestone that was achieved in September 2014. The balance of the milestone payment was recorded as deferred revenue. As a reminder, the company did not have revenue during the comparable periods in 2013. Research and development expenses were $17.1 million for the three months ended September 30, 2014, compared to $11.1 million for the same period in 2013. R&D expenses were $66.2 million for the nine months ended September 30, 2014, compared to $17.8 million for the same period in 2013. The increased research and development expense in each of the three and nine months ended September 30, 2014 relates primarily to our Fovista Phase 3 clinical program, including clinical trial costs and the cost of manufactured Fovista for the trial, and increased compensation expenses associated with additional research and development staffing. Also contributing to the increased during the nine months ended September 30, 2014, was a milestone payment of $19.8 million that we made to a third-party licensor in June 2014 in connection with entering into the Novartis agreement. General and administrative expenses were $8.8 million for the three months ended September 30, 2014, compared to $4.2 million for the same period in 2013. G&A expenses were $22.7 million for the nine months ended September 30, 2014, compared to $9.1 million for the same period in 2013. The increased general and administrative expense in each of the three and nine months ended September 30, 2014 relates primarily to an increasing cost to support our public company infrastructure, including additional management, corporate staffing, professional services and consulting fees, increased share-based compensation and costs related to an executive retirement and other one-time post-employment costs. The company reported net income for the three months ended September 30, 2014 of $10.9 million, or $0.31 per diluted share, compared to a net loss of $18.4 million or $10.26 per diluted share for the same period in 2013. The company reported a net loss for the nine months ended September 30, 2014 of $62.3 million, or $1.88 per diluted share, compared to a net loss of $36.6 million or $23.21 per diluted share for the same period in 2013. Now turning to the balance sheet, cash, cash equivalents and marketable securities totaled $409 million at September 30, 2014, compared to $211 million at December 31, 2013. And now, I'll turn the call over to David.

[Dr. David Guyer:]

Thank you, Mike. Before turning the call back over to the operator for questions, I would like to acknowledge the completion of our first full year as a public company. In September 2013, we closed our initial public offering and began trading on the NASDAQ market. Today, we continue to advance the company with our Phase 3 Fovista program, the initiation of our Fovista expansion programs and continuing development of Zimura, our complement program. In addition, we achieved another major milestone this year by entering into an ex-U.S. licensing and commercialization agreement with Novartis, the leader in ophthalmic pharmaceuticals worldwide. As part of our business development strategy, today’s exclusive research and option agreement provides an opportunity to expand our research efforts in AMD and other ocular diseases. Furthermore, we continue to strengthen our team with experienced senior management executives that have successful track records in the development and commercialization of ophthalmology products. We are well-positioned to bring our clinical programs forward. We have a strong capital base which we intend to effectively manage by investing in our promising product profile -- product portfolio. We look forward to providing you with updates as our programs progress. Thank you for your time this morning and for your continued support. I will now turn the call over to the operator to open the lines for any questions.

[Operator:]

(Operator Instructions) We will take our first question from Yigal Nochomovitz with Oppenheimer.

[Yigal Nochomovitz:]

Hi, good morning. Thanks for taking the question. David, just one clarifying one first on the enrollment milestones, just the 41.7 from Novo, is that tied to the same enrollment trends as that you received for the Novartis milestone last quarter, or is it different?

[Michael Atieh:]

History, Yigal, it’s Mike Atieh. This is different. This is the final enrollment milestone really to Novo agreement and the Novartis obviously milestone is something completely different under the Novartis agreement.

[Yigal Nochomovitz:]

Okay. And then on the AVEO agreement, I guess I am just trying to get a better understanding of the strategic thinking there. It seems like a bit of a departure from where you’re going with Fovista and being VEGF agnostic. So I am just curious, is there something specific about tivo as a small molecule versus an antibody, maybe the name like tivo more amenable to possible co-formulation approaches? Thanks.

[Dr. Samir Patel:]

Good morning, Yigal. This is Samir. So we are very much anti-VEGF agnostic and I think it’s very much consistent also with how we thought about this space. So all of the current anti-VEGF agents do a terrific job in reducing permeability alternations and are ideally suited to be paired with Fovista during the acute phase or induction phase if you will to achieve enhanced visual outcome. And that component has not changed and is being studied in our Phase 3 trials. But as we look in an anti-VEGF agnostic fashion how to address a disease that we all know requires multiple years of therapy, we certainly see that patients on average lose vision. And so again, if we think about that in anti-VEGF agnostic fashion and ask ourselves the question, what’s behind the reduction of visual loss with its current anti-VEGF agents and reduction treatment burden? And I think most individuals will agree that the reduction in vision loss is because of some combination of atrophy fibrosis and growth of lesion and treatment burden. It’s been elusive for all the anti-VEGF agents currently to go past or increase the frequency past quarterly regimen. So why is that? One of the reasons we believe that is potentially that the biologic agents tend to have marked sensitivity or conformational sensitivity and also tend to be larger. So the ideal molecules for anti-VEGF would be amenable to a sustained delivery and we just think that small molecules that one can conjugate with either polymers or use additional technologies, they are much more flexible and we’ve the opportunity of investigating a very potent one at that with a longer half life. So if we were able to combine Fovista with an anti-VEGF agent that allows sustained delivery just like all the current anti-VEGF agents are being looked at I believe for sustained delivery. So the concept is very much consistent with being anti-VEGF agnostic to go ahead and address the unmet need in the maintenance space. Does that clarify your question?

[Yigal Nochomovitz:]

Yes, great. And do you know did avail every look at anything in the ophthalmology -- I mean did they ever do any preliminary preclinical work even just to see if there is a potency against retinal diseases?

[Dr. Samir Patel:]

I am not quite sure if those avail, but I can’t tell you that there is -- there has been a poster at RVO where tivozanib was looked at in choroidal neovascularization and it totally inhibited not only choroidal neovascularization but cause regression of neovascularization.

[Yigal Nochomovitz:]

Okay. Great. And then just one final question on the Phase 3 for Fovista. Given that you’re moving ahead with the enrollment, I just wondering if you could potentially at this point narrow down the topline data time, even something like one-half versus two-half ’16 as we get closer to 2015? Thanks.

[Dr. David Guyer:]

No. We’ve said we are on track and as before there will get in 2016 but we have not narrowed at this point.

[Yigal Nochomovitz:]

Okay. Thanks, David.

[Operator:]

And we’ll take our next question from Joseph Schwartz with Leerink Partners.

[Joseph Schwartz:]

Great. Thanks very much. Congratulation on the start of your first expansion studies. I wanted to ask, since clinicaltrials.gov just lists safety as the primary outcome, but I know, you’ll be looking at things like sub-retinal fibrosis? What kinds of technology you’ll be using to measure and quantify that? And then also the arms on the clinicaltrials.gov list a pretreatment as well as a simultaneous treatment regimen. So I was wondering if you could talk a little bit about that?

[Dr. Samir Patel:]

Sure. This is Samir. Good morning. So in connection to fibrosis and how it’s evaluated and graded recently at the American Academy of Ophthalmology, a subgroup analysis of fibrosis. In a grading teams where the severity of fibrosis was graded on fundus photograph by mass independent reader graded it from great zero to great four progressive fibrosis and that’s one way to do it. What I think it’s important to realize, the outset is, it's fairly easy to note fibrosis on a fundus photograph and I don't think most physicians would disagree with that. However, there hadn’t been an established format or standardization for fibrosis grading in a quantitative fashion. That being said, I think most would agree that it's very easy to look at severe fibrosis, moderate fibrosis and minimal fibrosis, and that’s been quantified in the reader who presented our data. So for this particular study and question you’re talking about. We will continue to use that grading system. But we also looking yet some new modalities that are out with the OCT that also looks that reflectivity of this fibrous component and we're working with the reading centers to set up an algorithm that would capture this, but it's not been validated to-date. In closing, fibrosis the presence or absence is relatively easy and most physicians would not debate with any ambiguity whether it’s present or not.

[Joseph Schwartz:]

Okay. Great. And then, thanks for that. And then the two treatment strategies, either pretreatment or simultaneously administered, what is that represent?

[Dr. Samir Patel:]

Okay. Sure. So, and I’m sorry, you did that backed up. So if you look at the CAT paper that came out showed that patients were treated with anti-VEGF therapy, developed fibrosis roughly at about rate of 33%, 32% or 33% at first year, roughly about 40% in the second year. And if you look at the odds ratio on patients, all the risk factors that led to development of that fibrosis. And interestingly, the presence of neovascularization and its component on OCT known as subretinal hyperreflective material were strongly associated with emergency fibrosis. So in our trial, we're looking at the regimen as in the Phase 3 of simultaneous administration of anti-VEGF, anti-PDGF to go ahead and confirm our findings in the Phase 2 trial that the combination had reduction of subretinal fibrosis. In addition, we’re looking at pretreatment, whether that can enhance the anti-fibrotic effect and that is based on the concept that if you were to strip pericytes via pre-treatment, anti-VEGF administration itself has been now shown convincingly to increase and up regulate PDGF. So if you are pre-treating and preventing that up-regulation then that might lead to enhance neovascular regression, further reduction in subretinal hyperreflective material and may translate into an enhanced anti-fibrotic effect. So we are just trying to optimize the regimens in a more controlled file downstream and understand if that results in enhanced anti-fibrosis. Hope that’s clear, but I am happy to answer follow-on questions.

[Joseph Schwartz:]

Very helpful, thanks.

[Operator:]

(Operator Instructions) we will go next to Terence Flynn with Goldman Sachs.

[Irene Lau:]

Hi this is Irene in for Terence. Thanks for taking the question. Can you give us any more insight on the potential royalty that you might avail?

[Michael Atieh:]

Yes it’s Mike Atieh. The royalty rates vary. They are tiered and they essentially start in the low double digits and end in the mid teens.

[Irene Lau:]

Thank you. And may be just can you update out your thoughts on bringing forward the co-formulation of Fovista with an anti-VEGF?

[Dr. Samir Patel:]

Actually, we missed the end of the question, it broke up a little bit. Can you repeat that?

[Irene Lau:]

Sure. Just your thoughts on bringing forward the co-formulation of Fovista with an anti-VEGF?

[Dr. Samir Patel:]

Irene, are you referring to co-formulation as in the context of current anti-VEGFs or in a context of the tivozanib.

[Irene Lau:]

Really, both.

[Dr. Samir Patel:]

Okay. So our position on that has not changed. At the end, it is about nothing but meeting the unmet need in the acute and maintenance phase of therapy and what exact combination and what exact regimen ideally results in improvement of enhanced vision and reduction treatment burden and visual loss. And that means that administration of the anti-VEGF agent regimen and anti-PDGF need to be decoupled as we are studying in our Fovista expansion study than co-formulation doesn’t make much sense. Secondly, in a setting, where chronic suppression and sustained suppression of anti-VEGF leads to maximal improvement, then in that setting you’d administer anti-PDGF, Fovista and you’d have a sustained release in the maintenance phase. In the setting where the anti-fibrosis is demonstrated later on to be independent of the anti-VEGF effect and given the new data that’s been coming out from both IVAN and from CATT and recently company HARBOR as well suggesting that increased exposure to anti-VEGF leads to more atrophy of the macular and reduction of visual outcome is associated with atrophy. It wouldn’t make much sense to have a co-formulated setting in that situation when there are NO permeability alterations. And then the other end of the spectrum, if you have permeability alteration that is leakage and as the patients continue to require the anti-VEGF component and every time you inject anti-VEGF, PDGF upregulate, they are a combination in simultaneous administration would make sense and a co-formulation would certainly make sense. So as far as our development strategy is concerned, we are looking at co-formulation with all anti-VEGF agents as we looked at in the past. And we continued to evaluate it now for its merit moving forward. But I think in summary what we’ve tried to say from inception is identifying the ideal regimen to reduce the treatment burden, reduce long-term vision loss and enhance visual outcome is going to be the most important. And that’s what will drive the question of co-formulation and not the simplicity of whether to have a co-formulation or not.

[Irene Lau:]

Great. Thank you.

[Operator:]

We’ll go next to Stephen Willey with Stifel. Please check your mute button, or pick up your handset.

[Stephen Willey:]

Yeah. Sorry about that. Thanks for taking the question. Samir, with respect to -- I know or I think it’s been speculated at VEGFR-1, maybe plays a little bit of a different role than R-2. And I think there has been some speculation that R-1 may be a negative regulator of retinal angiogenesis. Just wondering, if you can provide any color on that at all?

[Dr. Samir Patel:]

So, just as a little bit of background, thank you, Stephen, this is Samir. So it is a little bit of background, I mean, not only it is to resonate a very potent anti-VEGF agents that inhibits all three receptors of our VEGF. But it also has very long half life relatively speaking compared to the other tyrosine kinase inhibitors. And a lot of these drugs, as you know, drug in general also are able to bind to the melanin in the eye. So really taking together that microenvironment is ideal suited for a sustained release formulation with a small molecule. And specific to your question on the VEGF receptors, I think the answer is we don’t exactly know and cannot make statements of what role each receptor makes in the eye with respect to angiogenesis. I can tell you that there are papers out there that PLGF plays a role in angiogenesis. We also have some studies that I have looked at that show that blocking that the first, the VEGFR-1 can be complementary as well. But I think at the end, it’s all about the specific angiogen -- the heterogeneity of vessels that are there, the stage specific evolution of the neovascularsation. We simply don’t know and we obviously have to do the studies in a broad group of patients to understand that.

[Stephen Willey:]

Okay. And then I know tivo bones -- binds the receptors pretty tightly, but do you know what the potency of the full selectivity looks like in terms of the next most potent kinase? So I was trying to get a sense as to kind of how clean it is outside of the VEGFs?

[Dr. Samir Patel:]

Right. That’s a great question. I mean, as you know, the tyrosine kinase inhibitors as a general class, they tend to have multi-target effects. And within that spectrum that’s the really very attractive feature of tivozanib is it happens to be a very selective one at very low doses. It’s able to preferentially inhibit the VEGF component of the receptors. And as I stated the combination of selectivity, the long half life and the potency is very important. As far as potency relative to other tyrosine kinase inhibitors, I think I'll refrain from giving actual numbers, but I think it’s reasonable to state compared to the general categories of other tyrosine kinase inhibitors, its potency is several folds higher. And so we believe that when you put all that together, we will be looking at studying this and rapidly bringing it to proof-of-concept. As David stated, there is a little upfront spend and hopefully in a structured transaction, we will try to go ahead and do this the asset with producing data that are complementary to Fovista.

[Stephen Willey:]

Okay. And then just a quick one for Mike. I had to hop on a little bit late. The $39 million you recognize in revenue, that’s presumably the Novartis enrollment milestone. And then do you recognize the balance of that in 4Q, or is there some kind of schedule to that?

[Michael Atieh:]

Exactly. There is a schedule to that and it’s based on how that payment is broken up based on a collaborative arrangement accounting. So you’ll see it roll out as revenue over the course of probably two to five years or so, but it’ obviously not a lot of revenue, the cash payment in October which will be important part of that.

[Stephen Willey:]

Okay. Thanks.

[Operator:]

And that concludes the question-and-answer session. I would now like to turn the conference back over to management for any additional or closing remarks.

[Dr. David Guyer:]

I would like to thank everyone for their support and interest, and we will end the call now. Thank you.

[Operator:]

And that concludes today’s conference. We thank you for your participation.