MacroGenics, Inc.
Q4 2015 Earnings Call Transcript

Published: 1 Mar 2016

[Operator:]

Good afternoon. We will begin the MacroGenics' 2015 Fourth Quarter and Full Year Conference Call in just a moment. All participants are in a listen-only mode at the moment and we will conduct a question-and-answer session at the conclusion of the call. At this point, I will turn the call over to Jim Karrels, Senior Vice President and Chief Financial Officer of MacroGenics.

[Jim Karrels:]

Thank you, operator. Good afternoon and welcome to MacroGenics' conference call to discuss our 2015 financial and operational results. For anyone who has not had the chance to review our results, we issued a press release this afternoon outlining today's announcement, which is available under the Investors tab on our website at www.macrogenics.com. You can also listen to this conference call via webcast on our website; it will be archived there beginning approximately two hours after the call is completed. I'd like to remind listeners that we will make forward-looking statements on today's call and therefore I would like to also remind you that today's discussion will include statements about the company's future expectations, plans and prospects that constitute forward-looking statements for purposes of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our annual, quarterly and current reports filed with the SEC. In addition, any forward-looking statements represent our views 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 specifically disclaim any obligation to do so even if our views change. Now, I would like to turn the call over to Dr. Scott Koenig, MacroGenics' President and Chief Executive Officer.

[Scott Koenig:]

Thank you, Jim. I'd like to welcome everyone participating via conference call and webcast today. Thank you for joining us. I'll take the time during our call as we customarily do to review the progress that MacroGenics has made and then describe for you our key upcoming objectives. Before handing the floor to Jim who will take us through our 2015 full year financial results, let me briefly provide a quick summary of our overall performance. 2015 was a great year for MacroGenics. We hit key development milestones and significantly bolstered our financial position through [pioneering] [ph] activity and a successful equity offering. Our long standing focus and discipline on maximizing the productivity of MacroGenics antibody engineering platform has paid off with a deep and diverse pipeline that we have today. There are now six DART molecules that are at clinical stage. Four of these are being driven forward by us and two are being driven by our collaboration partners, Janssen and Pfizer. We have the leading franchise for targeting B7-H3 including enoblituzumab which is being evaluated clinically, both as monotherapy and in combination with checkpoint inhibitor, and MGD009, our DART molecule. And of course, we have margetuximab, our Fc-optimized HER2 antibody in both the pivotal Phase 3 SOPHIA trial for metastatic breast cancer, as well as the recently initiated Phase 1b/2 combination study with pembrolizumab for advanced gastric cancer. All of these development programs incorporate our internal R&D platforms and expertise. In the future we expect to continue to generate new programs using our proprietary platforms for further clinical testing. I'll talk about each of these programs in more detail but first Jim will give an overview of our financial results.

[Jim Karrels:]

Thank you, Scott. This afternoon we reported financial results in line with our expectations. As we described in our release today, MacroGenics had research and development expenses of $98.3 million for the year-ended December 31, 2015, compared to $70.2 million for the year-ended December 31, 2014. This increase was primarily due to the initiation of two margetuximab trials, both the SOPHIA Phase 3 study, and the Phase 1b/2 gastric cancer study, increased activity in our preclinical immune checkpoint program including MGD013 and the initiation of a Phase 1a study of MGD010. We had general and administrative expenses of $22.8 million for the year-ended December 31, 2015 compared to $15.9 million for the year-ended December 31, 2014. This increase was primarily due to an increase in labor related expenses, including stock-based compensation as well as IT related expenses. We recorded total revenues consisting primarily of revenue from collaborative research of $109.9 million for the year-ended December 31, 2015, compared to $47.8 million for the year-ended December 31, 2014. This increase was primarily due to the $72.3 million in revenue recognized under the agreements with Janssen and JJDC partially offset by decreases in revenue recognition related to other agreements. Collaborative research revenue includes the recognition of deferred revenue from payments received in previous periods, as well as payments received during the year. For the year-ended December 31, 2015, we had a net loss of $20.1 million compared to a net loss of $38.3 million for the year-ended December 31, 2014. Our cash, cash equivalents and investments as of December 31, 2015 was $339 million compared to $157.6 million as of December 31, 2014. You will recall that in July 2015 we successfully raised $141 million net proceeds from the sale of our stock to the public. In addition, we received $125 million from Janssen and related entities, including a $50 million upfront payment as well as a $75 million equity investment as part of our MGD011 collaboration with them. Based on the company's cash and investment balance and current operating plan, MacroGenics expects that its current cash, cash equivalents and investments combined with anticipated non-equity funding under our various strategic collaborations should fund the company's operations into 2018. And with that, let me now hand the call back to Scott.

[Scott Koenig:]

Thank you, Jim. One of our corporate goals in 2015 was to have six candidates from our oncology portfolio in clinical trials by year end. I'm proud that we have achieved that goal. I'll use our time today to review those molecules and their progress. I'd like to point out that each of the candidates in MacroGenics' pipeline is derived from what we believe are the industry's leading antibody engineering technologies. As many of you know, our antibody technologies consisted of our Fc-optimization platform which enhances an antibody’s ability to interact with immune effector cells and our Dual-Affinity Re-Targeting, or DART platform which enables the targeting of two antibody specificity through a single recombinant molecule. At our R&D Day in the fall we announced that we can now incorporate three antibody specificities in a single recombinant molecule via our Trident platform. Finally, we use our cancer stem-like cell platform as an internal antibody discovery and target identification tool. Our most advanced program today is margetuximab which is in a pivotal Phase 3 SOPHIA study for patients with metastatic HER2-positive breast cancer. In SOPHIA, we are evaluating the efficacy of margetuximab plus chemotherapy as compared to trastuzumab plus chemotherapy following progression after at least two lines of previous therapy. This study is designed to enroll approximately 530 patients and we are targeting completion of this study in 2018. In addition, MacroGenics recently dosed the first patient in the Phase 1b/2 clinical trial of margetuximab in combination with the anti-PD-1 therapy, pembrolizumab, or KEYTRUDA, in patients with advanced HER2-positive gastric cancer. Treatment options for these patients are limited and our proposed combination regiments would avoid chemotherapy while exploiting the expected enhanced immune-mediated killing properties of both margetuximab and pembrolizumab. We recently elected to expand the scope of this trial to include centers in both Asia and North America. The study is being conducted in collaboration with Merck. Moving on now to our B7-H3 Franchise, I would like to reiterate a point that we made during our R&D day last fall. We are developing what we believe is the leading franchise of product candidates that target this member of the B7 family of immune regulatory molecules. We have multiple programs that target B7-H3 through complementary mechanisms of actions and take advantage of this target’s broad expression across multiple solid tumor types. All these programs are 100% owned by MacroGenics. The most advanced B7-H3 targeted candidate that we have in development is enoblituzumab or MGA271 which is an FC-optimized monoclonal antibody. In November one of our investigators presented a late breaker at the Society for Immunotherapy of Cancer or SITC Annual Meeting, describing encouraging initial single agent anti-tumor activity and heavily pre-treated patients including those with prostate and bladder cancer, as well as melanoma. The drug was generally well tolerated in patients. We expect to present data from additional patient in the expansion cohorts of this monotherapy study of enoblituzumab later this year. We also continue to enroll patients in the combination study of the enoblituzumab with either pembrolizumab or ipilimumab. As I mentioned, we're approaching B7-H3 through a variety of complimentary mechanism. Our second clinical candidate in this portfolio is MGD009, a DART molecule. MGD009 directly targets the tumor expressing B7-H3 and also CD3 on T-cell to provide redirected T-cell killing of the tumor cell. MGD009 is being evaluated as a Phase 1 study in patients across multiple solid tumor types. We are scheduled to present MGD009 pre-clinical data at the upcoming Antibodies as Drugs Keystone Conference, the week of March 7, and we'll make the data available on our website after it's been presented. Shifting away from B7-H3 to our broader portfolio of DART product candidates, there are now five additional DART molecules at clinical stage besides MGD009. As with MGD009, many of our DART molecules are designed to target specificity for a known cancer antigen working in tandem with a CD3 redirected T-cell killing mechanism to leverage the power of the bi-specific approach. The first of these is MGD006, a CD123 x CD3 DART molecule is being studied in a Phase 1 trial and is designed to treat patients with AML or MDS through redirected T-cell killing of cells expressing CD123 which is the IL-3 receptor alpha chain shown to be present in a variety of hematological malignancies. We anticipate providing clinical data on this trial later this year. The MGD007, a gpA33 x CD3 DART, in a Phase 1 study. MGD007 like MGD006 is designed to redirect the immune system to kill tumor cells that express glycoprotein A33 which is found on a majority of primary and metastatic colorectal cancers. We expect to provide a clinical update on MGD007 as an appropriate venue later this year or early next year. I'll note that MacroGenics retains full MGD006 development and commercialization rights for North America, Japan, Korea and India while Servier has rights in all other territories. With regards to MGD007, if Servier exercised its license option at the conclusion of the Phase 1 study, the same would be true for that molecule. MGD011 being developed under our collaboration with the Janssen is a DART molecule designed to treat T-cell malignancies via targeting of CD19 and CD3. We believe that this bi-specific approach over its potential advantages in treating a wide range of T-cell malignancies versus other CD19 targeting approaches including various cell-based therapy. Finally, I am very pleased to announce that one of our collaboration partners, Pfizer, recently advanced PF-06671008, a DART molecule that targets P-cadherin and CD3 by submitting an IND application that has cleared the FDA 30-day clock. This is the first partner-developed DART molecule that will enter clinical development, and we are delighted that Pfizer has advanced this candidate. The last of our oncology-based DART molecules I'll tell you about today is MGD013, an Fc-bearing DART molecule that is designed to simultaneously block two important and highly researched immune checkpoint molecules, PD-1 and LAG-3. We are pleased with the pre-clinical rationale for this combined targeting approach and are optimistic regarding the potential for multi-specific molecules to provide an enhanced immune regulatory activity against a broad range of cancer cell types. We anticipate submitting a R&D application for MGD013 in 2017. We plan to highlight MGD013 pre-clinical data in a poster at AACR in April. Shifting gears a bit, let me quickly discuss opportunities for DART molecules and therapeutic areas beyond oncology including auto-immune disease and infectious disease. MGD010 is a CD32B x CD79B DART molecule being developed for T-cell mediated auto-immune diseases under collaboration with Takeda. This molecule is being evaluated in the Phase 1a study in normal healthy volunteers, and we expect to report clinical data later this year. In the infectious disease area, we are developing MGD014 to eliminate latent HIV infection under a significant NIAID contract. During the second half of 2015, the results of pre-clinical studies were published demonstrating that DART molecules targeting the HIV envelope protein and T-cells via their CD3 component are able to redirect immune system's T-cells to kill HIV infected cells. DART molecules of this design could be used independently or become a key part of a shocking kill strategy in conjunction with HIV latency reversing agent. This is a great opportunity to contribute to the treatment of a serious infectious disease and we're glad to be working on this with NIAIDs support. Finally, we plan to share pre-clinical data on five programs at AACR in April. Stay tuned for press release with the details in a few weeks once the abstracts are published. To summarize our pipeline activity, we continue to advance innovative molecules from our research effort as the clinical development with a goal of addressing areas of high unmet medical need for patients. Within our clinical pipeline we have a very diverse and balanced portfolio of molecules spanning all stages of development. In oncology, we are developing programs to treat both, liquid and solid tumors and are pursuing both validated and novel targets. Within our B7-H3 franchise, we have a very comprehensive effort underway to unlock the promise of this important immune regulatory target. We are also deliberately branching into additional therapeutic areas beyond oncology that can be assessed through our DART and Trident technology. Finally, I'd like to point out that we have a robust mix of programs that are being developed through collaborative externally funded efforts. This gives us the ability to take advantage of the productivity and versatility of our platform while accessing non-diluted funding from our partners. As it relates to our pipeline, I want to reiterate that throughout the year, we expect several important milestone including data from multiple DART program and IND filing for a new program and updates from additional enoblituzumab mild therapy cohort. Looking further forward, commercialization is on the horizon and we have taken steps in that direction. We recently hired Tom Farrell as our Vice President, Market Development and Strategy. Tom was most recently at Genentech, a member of the Roche Group, where he was Global Pricing and Market Access Head for Oncology and Hemophilia, and responsible for leading the development and implementation of global pricing and payer strategies for all oncology, including Perjeta and Kadcyla, and hemophilia molecules from early through late-stage development. As we stand today, I believe that we have the platform, pipeline and people in place along with a sound strategy and financial resources to continue making significant progress in 2016. This concludes my prepared comments, and we'd now be glad to discuss questions that callers may have. Operator?

[Operator:]

Thank you. [Operator Instructions] And our first question comes from Michael Schmidt of Leerink Partners. Your line is open.

[Jonathan Chang:]

Hi, this is Jonathan Chang stepping in for Michael. Thanks for taking my question. So I have three questions; the first question, can you talk about how you're thinking about potential partnerships for assets in your B7-H3 franchise?

[Scott Koenig:]

Yes, Jonathan. Thanks for the question. As I pointed out before, we own all our assets currently. And as you can imagine after the presentation of our clinical data, both at our Research Day and at the SITC meeting, there was a lot of interest about these programs. And so we actually have engaged in discussions with a number of potential partners, we're assessing what the value of maintaining these programs ourselves, continuing them forward versus the opportunities that a partnership would afford us. Given that there is such broad expression of this B7-H3 antigen, most solid tumors, and the cost for developing this will be quite large we are looking at the opportunity how to best move the enoblituzumab as well as the MGD009 forward to get the largest most comprehensive data sets forward, and stay tuned we'll see where this goes after we complete our assessments and these potential partners can complete their assessments as well.

[Jonathan Chang:]

Great, thank you. And the second question, can you provide some color on the progress of 006? You've mentioned adding additional six sites in Europe in the first half of the year previously. Can you talk about how enrolment is going in the Phase 1 study?

[Scott Koenig:]

So, as I previously pointed out, we were recruiting patients initially at five sites in the U.S. Patients were being recruited initially at individual single doses, we're currently at the phase of treating patients with an intra-dose escalation. And as I said before, we anticipate adding six sites in Europe the first half of this year. We anticipate by the end of the year a good part or all of the study should be completed enrolment. And as we've indicated towards the end of the year we will provide updates on the clinical study.

[Jonathan Chang:]

Great, thank you. And last question, can you provide any additional color on the progress of 007 as you continue to fine tune the dose in that study?

[Scott Koenig:]

Yes, thanks for that question. As you know this is a very interesting target, GPA33. Again, recruiting CD3 positive T-cells, targeting colorectal cancer patients with metastatic colorectal cancer who have been refractory to previous treatments. And as we’ve pointed out previously in addition to the expression of this antigen on tumor cells, there is expression of the targets on normal GI tissues which includes colon, small intestine and in some areas of the stomach. And so as we've indicated previously, we're trying to fine tune the dose and provide pre-treatment regiments for the patients that would limit or mitigate any side effect profiles of the molecule targeting normal tissues, and we anticipate enrolling additional patients over the course of this year, and hopefully we'll complete that assessment by the end of the year, and as we've indicated we will update everyone about where we stand on that program either late this year or early beginning next year.

[Jonathan Chang:]

Great. Thank you very much.

[Operator:]

[Operator Instructions] And our next question comes from Yigal Nochomovitz of Citigroup. Your line is now open.

[Yigal Nochomovitz:]

Yes. Hi Scott and Jim. How are you? I just have a sort of a big picture question in terms of the DART portfolio. I know you mentioned some updates at AACR poster on pre-clinical, but could you just give us sort of the broader picture on what the data [pass] [ph] looks like across the DART portfolio in terms of getting to some understanding of the clinical profile and the sort of how much will we know as we exit year end '16 as far as the clinical potential of each of these assets? Thank you.

[Scott Koenig:]

Thanks, Yigal. As I mentioned by Jonathan's question previously, we will provide updates, again, towards the end of the year on 006 which is the CD123 x CD3; on 007, GPA33 x CD3 late this year or early beginning next year. The first asset of the DART platform that we will present publicly will be MGD010 which is our CD32 x CD79B bi-specific that we are exploring in a normal volunteer single dose escalation study. That will be presented at a scientific conference mid-year and so you get the first insights on activity in this normal volunteer study with that asset. With regard to additional clinical data this year, we have nothing specifically planned as you know Janssen has been developing MGD011, our CD19 x CD3 molecule. They're in dose escalation phase in all B-cell malignancies there, and they have the right to present data as they wish although they have indicated to us that they will be fairly disclosive about the progress of that study. No other clinical studies are at this point anticipated to be presented this year. As you noted before, and as we mentioned in the earlier part of this call, we will have pre-clinical data that will be presented at five AACR posters which will include the MGD011 PD-1 x LAG-3 pre-clinical data, and additional studies on three DART molecules which incorporate CD3 specificity which we have not previously discussed, as well as some pre-clinical data on a B7-H3 targeted ADC antibody.

[Yigal Nochomovitz:]

Okay, great. And then just one question if I could on the competitive front, obviously you have a novel technology with the Fc-optimized antibody for B7-H3. I was wondering if you could comment briefly on a competitive molecule from Daiichi, they apparently also have a B7-H3 however, a slightly different approach with [indiscernible] of the Fc-domain. Any thoughts there on how you may be differentiated relative to that one? Thanks.

[Scott Koenig:]

So, thank you very much. The molecule from Daiichi, we are aware of recently of an pre-consulator [ph] molecule whether that is the one that bears the antibody drug conjugates, the ADC. I'm not clear on whether it's just a wild type Fc. So we have no -- I have not reviewed any of the data from that group as of yet. With regard to our molecule, as you are well aware we have incorporated quite unique specificities of our Fc region in which we've selected amino acids that have been substituted in the CH2 and CH3 region of the molecule so that the Fc domain increases mining dramatically to activating Fc receptors and reduces bonding to the inhibitory Fc receptor CD32B and what we have found that that combination gives maximum ADCC activity as well as shows the ability to destroy tumors with lower density of antigens on its surface. As we updated folks in terms of the biological activity of this molecule at our Research Day, as well as the SITC meeting, we described a very exciting finding that this Fc enhanced molecule targeting B7-H3 leads to changes in the repertoire of T-cell clones, and patients that have been treated with nobody choosing that and whether this is due to the Fc-modifications or specific targeting B7-H3 through its immune checkpoint activity, we don't know as of yet but the fact that a Fc enhanced antibody that will engage macro phases. I think K cells and will lead to increase in energy and presentation that can translate in expansion of specific T-cell clones. I believe is a very important finding and we are continuing to follow that data if there is predictability in terms of reduction of these T-cell clones and with clinical responses. As noted earlier, I do not know what sort of activity the Daiichi molecule has with their modifications.

[Yigal Nochomovitz:]

Great. And then just one quick more, you said you're going to present the initial data of the scientific conference in the middle of the year. At that point, are you going to be able to say where you are going in terms of which auto immune indications?

[Scott Koenig:]

So at the time of the presentation, we will have additional clinical data still coming into the study so we will not have fully complete study even at the time of mid-year but we have a significant amount of the clinical data to present at that time. So the arrangement for this molecule, if you recall, we have an option based deal with Takeda and Takeda does not have to take a decision until we provide them with a complete data set of clinical data. They have a certain period of time they have to make that decision. Ultimately, if they decide to opt-in, we have discussed with them the strategy going forward with regard to the breadth of auto-immune diseases. If they decide not to move forward with that, we will make a decision ourselves either as to pursue it by ourselves for specific auto-immune indications which we are not ready to discuss at this time or possibly look for other opportunities for partnering the molecule.

[Operator:]

Thank you. And our next question comes from Matthew Harrison of Morgan Stanley. Your line is now open.

[Dave Lee:]

Hello, this is Dave Lee sitting in for Matt. I had a quick question on margetuximab. I know it's early in the trial run but how's the enrollment going thus far?

[Scott Koenig:]

Thanks, Dave. We started the SOPHIA study in the latter part of 2015. Currently, we are enrolling patients both in the U.S. and in Europe. We anticipate continued site initiation visits of new sites both, in U.S. and Europe and hope to have almost all of them completed by mid-year. We are also anticipating adding some additional sites in Asia. So, we're still early in the recruitment process, things are going well in terms of patients that enrolling but we still don't have a good feel for the trajectory yet. And I think we we'll have a better sense once we have completed the full group of sites initiation in the middle of the year.

[Dave Wilson:]

Excellent, thanks for that. If we just jump over quickly to Trident, I know it's relatively early in that part of the platform and if you could just give us a view on what areas you looking at and what are some attractive potential indications for Trident that would be great?

[Scott Koenig:]

Thank you. We appreciate that question. Just to refresh folks, the Trident platform enables us to incorporate three different specificities in single antibody like molecule. We had presented on our Research Day two examples of mechanisms in which we exploit this technology. In one case we demonstrated that we can incorporate two different tumor-specific antigens along with a target directed to an immune cell. What this allows us to do is to actually join the specificities for too distinct tumor antigens that normally might be expressed on non-tumor cells but by having this engagement of two tumor antigens, we heighten the specificity of the tumor cells versus the normal tissues and allows the engagement of immune cells to destroy those tumor cells. We're now looking at various combinations of antigens that we are putting together but we it's still too early to discuss the specific targets, we are exploiting there. On the other side, we also have demonstrated that as compared to the DART molecule we are using CD3 as a mechanism to engage T-cells or amino-factor cells because CD3 is expressed both on CD4 and CDH cells. You end up recruiting both populations in the DART molecule to the tumor-specific antigen. What we demonstrated is that by designing a molecule that incorporates CDH specificity, in addition to CD3, we can achieve the maximum killing effect of the Trident molecule as compared to say the DART molecule that only has CD3 but avoids many of the cytokine release that's associated with CD4. And so as a result, we are also exploring how this could be utilized for particular tumor and infectious disease targets but again, still too early to discuss the details of that.

[Operator:]

Thank you. And our next question comes from Stephen Willey of Stifel, your line is now open.

[Philomena Kamya:]

Hi, this is Philomena for Stephen Willey. I have just a couple of questions surrounding the biological activity of B7-H3. So on your R&D Day you showed some great glove pods demonstrating the co-expression of B7-H3 on this CD4 positive CD25 positive regulatory T-cell population, and we were just sort of wondering whether there is any evidence that B7-H3 expression T-follicular helper cells as well?

[Scott Koenig:]

On T-follicular helper cells as well, Philomena, I actually don't know the answer to that question. I will have to ask my other colleagues whether they have looked at the follicular helper population. This would -- we examined the circulating pool of CD4 positive cells, and as we showed the resting CD4 positive Fox T3 positive, the cells were positive but whether the follicular compartment of the T helper is also expresses in this, I don't know at this point.

[Philomena Kamya:]

Okay, perfect. And so my second question is around the 014 molecule. We're just kind of wondering whether the M-arm of the antibodies is capable of the cross-grade activity for the shock and kill aspect of it.

[Scott Koenig:]

Great question. So as you know, though the 014 molecule we've selected as the first entry is an antibody that was described a while ago called A32. This is an antibody with a very broad cross binding specificities, in fact in a collaboration that we did on this molecule, this DART molecule with a group at Duke University, they had demonstrated virtually every HIV isolate that they had looked at which was if I believe close to 70 different versions would bind with the A32 specificity. And so, we are very excited about the prospects of having very broad coverage. I'm still understanding that there will be some of the rarer clays, this will not bind to actually everything. We are exploring other envelope specificities including ones to other 120 domains, as well as 41 domains as the second entry points in our strategy.

[Philomena Kamya:]

Thank you very much for taking my questions.

[Operator:]

Thank you. And our next question comes from Chris Marai of Oppenheimer. Your line is now open.

[Michelle Gilson:]

Hi guys, this is Michelle on for Chris. We are just wondering if you can share with us a little bit of what you plan to present at AACR, what kind of data?

[Scott Koenig:]

As I mentioned earlier Michelle, we will have five posters that we will present and I guess last week, AACR listed the names of the posters, so the abstracts haven't come out and they will be out in a few weeks but just to highlight, we will present the pre-clinical data on MGD013 which is our PD-1 by LAG-3 DART molecule pre-clinical data on B7-H3 ADC antibody. See anybody and then we have three new DART molecules and FA-2 by CD. Our world won by CD3 and then IO-13 RA-2 target by CD3.

[Michelle Gilson:]

That's great. And then for your CD3 by specific. What are you holding to share with us this year and as far as what would make it ready for Phase 2?

[Scott Koenig:]

As I mentioned earlier Michelle on the call, we are anticipating that the majority of the patients in our dose escalation Phase 1 study should be enrolled by the end of this year, and so anticipate sharing data at that time. And clearly, these patients will be continued to be followed into the following year in 2017 but we hope to be able to make a decision regarding our plans for Phase 2 development around that time.

[Michelle Gilson:]

Okay, great. Thank you guys.

[Operator:]

Thank you. And I'm showing no further questions. At this time, I'd like to turn the conference back over to Dr. Koenig for closing remarks.

[Scott Koenig:]

Thank you, operator. I'd just like to thank everyone again for joining us and I'll let you know that we look forward to updating you on each of the program that we discussed today as we continue to make progress throughout the year. Have a good day.

[Operator:]

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude your program. And you may all disconnect. Have a great day everyone.