ThermoGenesis Holdings, Inc.
Q2 2015 Earnings Call Transcript

Published: 13 Feb 2015

[Operator:]

Good afternoon and welcome to the Cesca Therapeutics Second Quarter Fiscal Year 2015 Financial Results Conference Call. All sides are currently in a listen-only mode. But please note there will be a question-and-answer session later on in the call. Also note today’s conference will be recorded and will be accessible both by phone and internet. [Operator Instructions] Please refer to the press release about this conference call on the company’s website, cescathearapeutics.com for further detail. The company has asked that I read the following statement. Management will make comments today that contain forward-looking statements. Forward-looking statements are any statements that are made that are not historical facts. These forward-looking statements are based on current expectations of the management team and there could be no assurance that such expectations will come to fruition. Because forward-looking statements involve risks and uncertainties Cesca’s actual results could differ materially from management’s current expectations. Please refer to the press release, the company’s Forms 10-K, 10-Q and other periodic SEC filings for information about factors that could cause different outcomes. Including risks associated with timing and commencement of clinical trials, design and requirements of clinical trials and required submissions, which maybe affected by changing FDA requirements and policy based on developments and the regenerative medicine industry as well as operating expenses and revenues that are impacted by such changing requirements. The information presented today is time sensitive and is current at this time. If any portion of this call is rebroadcast, retransmitted or redistributed at a later date Cesca will not be reviewing nor updating this material. I would now like to turn the conference over to Mr. Robin Stracey, Chief Executive Officer of Cesca Therapeutics. Please go ahead, sir.

[Robin Stracey:]

Thank you, operator and a very warm welcome to everyone on the call. I’m joined today by our President, Ken Harris, who as you know oversees all of Cesca’s clinical programs and our Chief Financial Officer, Dan Bessey. I plan to make a few introductory remarks touching on our vision for the company and the key elements of our strategy, then highlight some of the key events and accomplishments since the last time we talked. Ken will then take you through a deeper dive into progress with our clinical programs, before Dan discusses our financial results for the quarter. I’ll back for a few wrap up comments after Dan and then we’ll open the call up for questions. Our vision, our intent is that Cesca becomes a leading global supplier of autologous cellular therapies and automated delivery systems, and advance the practice of regenerative medicine. Marketed therapies will include treatments for vascular indications such as critical limb ischemia, acute myocardial infarction, ischemic stroke and non-healing ulcers, treatments for orthopedic indications such as spinal fusion, osteoarthritis, non-union fracture and avascular necrosis and treatments for hematology and oncology indications, including hematopoietic stem cell therapy. These collectively add up to over $16 billion of addressable market opportunity worldwide. Our initial targets and the focus of the lion share of our current efforts our critical limb ischemia and acute myocardial infarction, indications which our propitiatory point of care platform SurgWerks is particularly well suited. I mentioned in our last call that SurgWerks is built on three scientific and clinical fundamentals that we believe are critical for the successful commercialization of cell therapies. First, the safety, we use a patient’s own stem cells we therefore consider our therapies to be naturally safe and importantly believe that due to be shared by regulators such as the FDA. Second is process control. Stem cells are fragile and must be handled with considerable care for maximum curative potential. Our protocol tightly controls handling steps and environmental exposure during cell harvesting, processing and readmission back into the patient. And third there’s practicality for adoption. Our protocol is typically conducted in a 90-minute procedure with a single use disposable kit inside the operating room and the direct and continuous supervision of the treating physician. These three fundamental characteristics put us on a pathway to commercialization of a product offering that we expect to be highly compelling. It also puts us on a regulatory pathway that we expect to be much shorter than most other cell therapies under development elsewhere. In the last couple of months, a substantial proportion of my time has been invested in building tighter alignment across our organization regarding Cesca’s strategic direction in an effort to further accelerate our transformation into a fully integrated regenerative medicine company. This is a work in progress, but fundamentally achieving our vision bows [ph] down to successful implementation of what we have identified as full key imperatives. They are first, clinical excellence in stem cell applications, this is a bold statement, that should be self-evidence is a priority. And in case you aren’t aware Clinical Excellence in Stem Cell Applications or Cesca is the tag line from which the Company’s name itself is derived. Second is optimal leverage of our base business. We are somewhat unusual among our peer group of companies in that we have a $16 million revenue base business that generates approximately $6 million in gross profit. That gross profit contributes nicely to the fixed cost associated with the infrastructure we need, to support our ambitious clinical program. It provides the technology and intellectual property from which the VXP and associated bagset, integral components of Surgeworks are derived. It also supports our product development and supply chain infrastructure. Our quality management system, sales, marketing and technical support capability and some of the G&A functions associated with our continuing operations as a public company. Third, is world-class business processes. There are many of course, but among those standout for us are the ability to design and run highly effective clinical trials, including those that involve international sites and the ability to develop and commercialize clinically demanding and highly regulated therapeutic offerings. And fourth is high performance team capability. Beyond the obvious requirement for talented employees fundamental to our transformation into a world-class, fully integrated and commercially oriented regenerative medicine company is clarity of purpose, a well defined vision, a robust team plan and rigorous performance management. We have organizational initiatives underway in all these areas. Now, turning to recent events and highlights for the quarter. In our last call, on November 13, 2014, I mentioned that our IDE submission to the FDA for approval of our pivotal Phase III clinical trial and the treatment of no-option patients this critical limb ischemia was eminent. While we submitted it a week later on November the 20, it was a huge undertaking 4,000 or so pages and an effect for which Ken and the clinical team deserve a great deal of credit. We subsequently received feedback from the FDA and Ken will discuss the comments and our plans to address them in just a minute. Sufficed to say at this point that we feel good about how iterative and ongoing dialogue with agency and remain optimistic that we will be able to stop the trial during the second calendar quarter of this year. As for our base business, we had a good quarter, with results pretty much inline with our expectations. The cord blood business is somewhat limited in terms of growth potential, but there are pockets of opportunity and we continue to seek to exploit those in order to maintain our solid position. Also during the quarter, we strengthened our board with the addition of Michael Rhein. Michael has over 30 years of corporate banking and securities experience at Deutsche Bank and currently has an investment management company based in Germany. He was a director of TotipotentRX Corporation until the merge with ThermoGenesis, that resulted in the formation of Cesca Therapeutics. In addition to being a director of the company, Michael also serves on our audit committee. At this point, I’d like to turn the call over to Ken for a more detailed update on progress against our highest priority clinical milestones. Ken?

[Ken Harris:]

Thank you, Robin. I’m pleased to provide an update today on the progress we’ve made on the clinical programs since the previous earnings call. I shall be updating you on three key initiatives, the progress with the FDA submission for the pivotal CLI clinical trial, the update on the India dCDI submission for the Phase II feasibility AMI clinical trial and the update on our progress with the bone marrow transplant initiatives. Our main technology platforms are the SurgWerks-CLI and VXP System for the aspiration, processing, testing and delivery of autologous bone marrow cells in the operating room and a procedure lasting approximately 90 minutes. And our cell works platforms for the intra-laboratory processing or bio processing of blood or bone marrow cells for clinical use. Although we have nine target indications in our pipeline, we are actively pursuing clinical development with the SurgWerks-CLI kit, and VXP System for the intramuscular delivery of autologous bone marrow cell concentrate into the afflicted late of no-option critical limb ischemia patients, the SurgWerks-AMI kit and VXP System for the intracoronary delivery of autologous bone marrow cell concentrate into the heart of patients suffering from a recent ST-elevated myocardial infarction otherwise known as STEMI and finally advancing our CellWerks platform for use in the preparation of improved bone marrow transplant in hematological oncology and hematological genetic disorder patients. Now, turning to the updates on each of these initiatives, in late December we announced receiving the response of the U.S. FDA to the CLI IDE application for CLIRST III pivotal trial. The FDA did not approve to the company to begin the trial for few key reasons, the most significant in our opinion being their need to see additional cell characterization data of our SurgWerks-CLI kit, and VXP System after each cell handling step. Additionally, they’re evolving their thinking in how point of care procedure should be implemented and desire that we establish intraoperative rapid diagnostic testing around certain safety and dose parameters prior to the injection to the patient. We have spoken in the past about our opinion that intraoperative quality control is important and if the company has been working for over two years on methods and systems to achieve this. Since the December response letter, we’ve been working diligently together the request data in actual human donors. The first step in this process requires the need to establish procedures and reviews for gathering donor bone marrow representative of at sample size and the evaluation being conducted in the clinical setting. The process includes harvesting a donor’s bone marrow, testing it for various characteristics at each handling step, including after aspiration, cell concentration and then in the stimulated injection. We continue to believe that one of our unique SurgWerks components is our ability to do intraoperative diagnostics on the patient cell and subsequent cell therapy injecting. In addition to the process, which we are happy now appears critical to the FDA’s thinking, the agency is also directly requesting that the company should have a message for determining rapid assessment of sterility prior to injection. This sounds easier than it actually is, but we are currently evaluating an approach in the donor samples under preparation now to satisfy this requirement. We’ve been in consultation with the FDA since the November letter for agreement on the method and are now utilizing the steps to make it practical in the operating room. In the December press release, the company did highlight that the overall trial design appeared satisfactory to the FDA with the study design of a randomized, double-blinded, placebo-controlled trial of 224 subjects at 60 clinical trial sites using an adjudicated blinded, independent central review committee to determine the primary end point of amputation free survival at 12 months. The 224 subjects has been determine based on the assumption of a 20% different in response between the treated and placebo arms at an 80% power. The proposed study has an interim analysis for both utility and re-powering as required when 50% of the subjects have completed the 12-month follow-up exam. All in all, we remained optimistic borrowing any additional unplanned issues to submit the IDE amendment, addressing each open issue by the end of March. We continue to identify, qualify and prepare the first 20 plus three clinical trial sites starting as soon as possible after the FDA approval is received. Turning to the AMI program, we are approximately 60 days behind our earlier guidance on the Phase II feasibility submission to the Indian Drug Controller General, primarily driven by the availability of the central IRB hearing dates. The current date for the first IRB scheduled hearing for our application on the SurgWerks, AMI and VXP System is March 3. We assume that will take the IRB approximate 30 days to give a final clearance assuming there are no major concern and the DCGI application will follow immediately thereafter. We anticipate DCGI to take approximate six months to review and approve the trial. So our first human treated target is late Q3 2015. The AMIRST trial design is a randomized, double-blinded placebo-controlled trial, with the two to one randomization. The study is focused on safety and may give some insight into preliminary efficacy for STEMI patients who have a poor responding left ventricular ejection fraction 72 hours after reperfusion. The primary endpoint for safety is MACE or major adverse cardiovascular events and the efficacy in point is LVEF, left ventricular ejection fraction change. We have changed the randomization from one-to-one to two-to-one at the request of our advisory panel and this will have a slight impact on the number of subjects. We anticipate this to move a bit higher from 30 to a range of 35 patients to 45 patients. But as the trials in India, the overall patient cost of additional subjects is not a significant driver to the overall trial cost. The largest cost components for this trial are the blinded U.S. based core lab assessment of the cardiac MR or magnetic resonance imaging, and the electronic capture in management of the clinical data. Lastly, specific to our bone marrow transplant program we are pleased to announce that we did receive approval by the Indian Drug Controller General or DCGI for the import in commercialization of our MarrowXpress, MXP System. The approval of our bone marrow cell processing device is important to us, because it’s the foundation for CellWerks platform and the cornerstone of our partnership with Fortis Healthcare to advance our bone marrow transplant initiative in India, where we are seeking first move our status to enable a growing number of bone marrow transplants in the region. In traditional bone marrow transplant, the better the match, the better the outcome. The cell type match has historically being critical for two reasons. Fostering [indiscernible] time and thus minimizing the risks of infectious diseases mortality and second the reduction of graft-vs-host disease otherwise known as GVHD. Unless the donor and the patient are a perfect match in both red blood cell type called ABO match and white blood cell type called HLA matching, additional laboratory and pharmaceutical adjunct steps are required. Each of these manipulations and therapies comes with their own risks. In normal routine lab and chemical processing practice today, as one depletes the unwanted red blood cells and plasma they also inadvertently deplete significant numbers of the desired stem cells. The lower the stem cells count becomes, the longer the patient takes to reestablish, a newly engrafted blood and immune system resulting in increased risk of elements and potential death. Our CellWerks product using the MarrowXpress system can effectively address the inadvertent stem cell loss in traditional bone marrow transplants and more efficiently prepare transplant unit. Specifically our stem cell yields are between 30% to 40% higher in current laboratory methods leading to an anticipated better engraftment rate. Typical engraftment rates in mismatched units can be as low as 70%, which is a very troubling failure rate. With respect to India, the success rate of the yield even lower, driven by the unavailability of unrelated donors and their requirement to use the less than ideal six of six matched units. And first, we will be seeking to advance our haploidentical transplant program in partnership with Fortis Healthcare. Haploidentical hematopoietic stem cell transplantation, otherwise known as HSCT, provides in opportunity for nearly all patients to benefit from stem cell transplant, when in HLA genotypically matched sibling is not available. Initial results with the use of mismatched allografts, led to limited enthusiasm due to GVHD and infectious complications resulting in unacceptable treatment-related morbidity and mortality. Recent advances with effective T-cell depletion and we believe in combination with MarrowXpress to support the use of mega doses of stem cells. Better antimicrobial therapy and reduced intensity, conditioning and significantly decreased the early transplant related mortality and GVHD. This type of treatment is critical to cure hematological genetic disorders. The company plans to utilize in partnership with Fortis is unique GMP laboratory in Gurgaon, India to enable this advance treatment. The Indian market itself, which is evolving can be broken down into the adult hematological malignancy market or B cell malignancies have roughly 50,000 new diagnosis per year in the Indian urban areas and the combined pediatric hematological genetic disorders including sickle-cell disease, beta-thalassemia and severe combined immunodeficiency or SCID account for an additional 12,000 new cases per annum. So in this relatively large market translate into commercial value, we believe so in India in the near-term. The target market can be calculated as follows. The focuses on families living in urban centers with sufficient education and wealth to support a private payer program and rolling all the numbers together, we estimate that approximately 6,000 such transplants could be requested across the country. The addressable market is approximately $150 million. The company currently has the capacity to do approximately 700 high dose standard prosthesis and 365 haploidentical cases per annum. In the meantime, the company will use the current regulatory clearance to provide standard laboratory bone marrow transplant services for Fortis’s applications. In closing, I would like to say that at Cesca, we believe that our cell therapies can make a life-changing difference in patients with diseases such as severe vascular and hematological and oncological indications. Believing that our approach to stem cell therapies is unique and highly effective, providing measurable cost benefit for insurance providers and easy for physician adoption, we are confident that Cesca SurgWerks and CellWerks platforms will play a leading role in successfully transforming the emerging field of regenerative medicine. I would now like to turn the call over to Dan for a review of the quarter’s financial performance.

[Dan Bessey:]

Thank you, Ken, and good afternoon, everyone. Our financial results for the quarter were largely driven by two core strategic objectives. The first objective is to drive the advancement of our cell therapy clinical programs with a particular focus on obtaining FDA approval to commence our pivotal Phase III trial treating critical limb ischemia. While this represents our primary near term focus, we also continue to make important clinical progress on our AMI and BMC programs. As Ken mentioned earlier, we are preparing to seek approval from the DCGI to conduct a feasibility study in India treating patients who have suffered a stemming heart attack. You will note that the financial impact of these initiatives primarily reflect themselves in the research and development and general and administrative financial line items. Secondly, we sell automated and manual cell processing and steward systems the cord blood banks and hospitals throughout the world. The gross profit generated by there cord blood product lines is used to partially fund our clinical trial programs and corporate infrastructure. Moving now to our financial results for the second quarter of our fiscal year, net revenues for the quarter into December 31, 2014 were $4.6 million, compared to $4.5 million for the same period in the prior year. The modest increase in revenues was due to sales from cord blood products and services generated from the company’s new Indian business that are the result of the merger with TotipotentRX. Recall that that merger with TotipotentRX occurred in February of 2014. So there were no revenues relating to our cord blood business in India in the second fiscal quarter of last year. Gross profit for the quarter ended December 31, 2014 was $1.5 million, compared to $1.8 million for the same period in the prior year. The decrease in gross profit of approximately $300,000 was primarily due to additional manufacturing costs that were expensed during the quarter. Operating expenses for the quarter ended December 31, 2014 were $5.9 million, compared to $3.4 million for the same period in the prior year, representing a year-over-year increase of $2.5 million. The increase in cost was primarily attribute to the development of our cell therapy clinical programs, including cost associated with the preparing our IDE application for pivotal Phase III trial treating critical limb ischemia. Also contributing to the increase in operating expenses were legal cost associated with defending certain clients against our Res-Q product line and cost associated with employees severance. These cost increases were partially offset by the absence of legal and advisory fees associated with consummating a merger with TotipotentRX in February of 2014. Adjusted EBITDA loss was $3.6 million for the quarter ended December 31, 2014 compared to $1.3 million for the same period in the prior year. Net loss for the quarter ended December 31, 2014 was $4.4 million compared with $1.6 million for the same prior year period. The increase in the adjusted EBITDA loss of $2.3 million and the increase in the net loss of $2.8 million were due to our investments and the development and advancement of our clinical programs and legal cost associated with the patent litigation. We ended the second quarter with $8.4 million in cash compared with $14.8 million at the end of fiscal 2014. Regarding our cost structure, our net cash outflows will increase over historical levels as we advanced our CLI, AMI and BMT programs into their next respective trial phases during the coming year. Regarding future funding plans, we remain active in monitoring capital markets and expect to strengthen our balance sheet as a precursor to launching our pivotal trial treating critical limb ischemia. As we approach the commencement of these trials, we will provide further updates on our expectations of our cash expenditure level and associated funding plans. I’ll now turn the call back to Robin for his closing remarks.

[Robin Stracey:]

Thank you, Dan. So in summary, before turning the call over for questions, 2014 was year enormous sculptural and organizational change for us. Having completed the merger of ThermoGenesis and Totipotent to create Cesca Therapeutics and having set the company on a exciting new growth trajectory, our focus now is on fully harnessing, the collective capabilities of each of our parent organizations, to drive effective execution of our ambitious growth strategy. Importantly, our base business in cord blood continues to perform inline with expectations as we direct more and more of our effort towards scaling up our activities in the therapeutic arena. And following dialogue with the FDA that has been both constructive and helpful, we hope soon to be able to begin enrolling patients in our first major U.S. clinical trial, the pivotal Phase III trial for critical limb ischemia. With that, I would like to thank you all for your attention and turn the call over to the operator, who will open it up for questions.

[Operator:]

We will now begin the question-and-answer session. [Operator Instructions] First question comes from Jason Kolbert from Maxim. Please, go ahead.

[Jason Kolbert:]

Ken, Robin, Dan, thank you so much for the conference overview. I just want to dial in a little bit more on exactly what you’re going to in terms of the FDA response particularly when we talk about point of care in the OR. And specifically, I know that there were questions about sterility testing and product characterization, so as much detail as you can give me in terms of where you are in that process is going to really help me understand kind of the timing of the turnaround and the initiation of the CLI trial which is where I think I and most investors are focused, thanks.

[Ken Harris:]

Alright, thanks, Jason. I’ll start at the FDA’s request really was broken down into two needs one was full characterization after each of the devices in our SurgWerks kit. And we believe their need for that information was to ensure that each device that we’re using on or by the patient has minimal effect on cell quality. So we had supplied data in our IDE application around final cell quality, host the inject date needle, they’ve asked us to go back now and look and compare and contrast cellularity after aspiration after processing and after injection, its very straightforward analysis that we can do in a laboratory. And what we needed to do was develop a statistically valid study plan around getting patient donors who could provide bone marrow at the same quantity or near the same quantity that we will use in the CLI treatment and do all of the testing at inner point of care environment. So that took us sometime to get approval to do that and find a source on to do the process. That is behind us now and we are more than 50% of the way through that donor population. Each donor is put through a battery of testing that lasts about three weeks and those testing include things like full psychometry analysis of different cell markers, cell potency for three different cell potency assays, bioactivity assays which we had already submitted to the FDA, but now will conduct after each of these interim device steps. And then moving on to the second major comment that I had was, once they see consistency in the device output, they then want to move on to the biological variability of a donor or patient in the operating room, and A) ensure that the donor has enough stem cells to reach a therapeutic dose, so they asked us to provide the minimum therapeutic dose that we would use in the trial, and B) to provide a means with which we could test that in the operating room, that work is already been done and that was provide in the IDE application, which is basically a rapid diagnostic where we will look at certain surgical [ph] markers from the cell concentrate and see that it meets our minimum dose and therefore would be a green light to the physician to inject. The sterility request was from left field chronically [ph] was never anticipated to be a what we thought a reasonable plan for us to undertake early on, because sterility today is a 14-day test there is no method and many companies including myself spent over a decade trying to develop these methods, and they are very complicated. So we have settled with the FDA to do a rapid Gram staining in the operating room on the final injected product prior to injection into the patient. And the rubber hits the road really around timing, these patients are under general anesthesia and so we are going through different simulations and process optimization steps now jointly with the FDA to see how we can get that into an acceptable number of number of minutes, but sufficed to say it’s adding about 15 minutes to the procedure in total.

[Jason Kolbert:]

Got it. Got it, Ken, thank you and that’s really, really drawn [ph], I have to tell you its granular and it’s very helpful. Two other questions, you talked a little bit about the cardiac trial and I don’t think I quite understood what you were saying so if you could take a minute and just kind of go back what is the objective of the cardiac trial and I believe you were saying that, that trial is going occur in India on the Totipotent centers. And then my last question is, what do you think the market opportunity is in India and what I really mean by that is what does it take to get adoption of the products, so what is the initial opportunity take? We know it’s a big market opportunity but we know that culturally its not BMTs are just not widely done in India, so help me understand how much resources you’re willing to dedicate in order to kind of drive the volume of processing and kind of change the medical paradigm in Asia and particularly in India. So two different questions, thanks.

[Robin Stracey:]

Okay, I’ll start with the AMI question at the top. The goal of study is to focus on a patient population that have had an ST-elevated MI and acute MI and have gotten to the hospital within 24 hours of an onset of symptoms and then received reperfusion therapy. And the reperfusion therapy could be stenting, angioplasty, or thrombolysis. Once we receive that therapy, normally a patient’s ejection fraction will start to pop backup to a near normal level within 24 hours or so after reperfusion. However, in above 20% of the cases, the patients for various reasons their ejection fraction remains very low and add a low level that they are on the past to chronic heart failure. And statistic show that is 72 hours post-reperfusion, if the ejection fraction is not about 40% the patient has 80% chance of mortality at the one year endpoint. So that is our patient population it’s this 20% of non-responders. And our goal is to do the intervention within seven days after that assessment. So total time from onset of the heart attack to our intervention is a maximum 10 days, and it’s basically no-option patients. Our goal is to, A) stop remodeling of the heart and remodeling is what drives chronic heart failure through the inflammatory response. And we major that through heart volume metrics and that includes ejection fraction or the strength that heart can pump, heart wall motion, so how floppy or rigid is the heart wall to be capable of squeezing the blood in an out. And second of all of that hemodynamics between the different chambers of the heart. And those are as a composite are different end points. However, in this study, which is the Phase II study we’re focusing only one safety with some efficacy evaluation. And there we’ll be looking at major cardio vascular adverse events which will be things like another heart attack re-hospitalization, stroke, anything in the cardiovascular world and we would anticipate to see statistically significant lower mace in the treated arm and in the placebo arm. And I think, sorry.

[Jason Kolbert:]

And in fact strikingly for to the dynamics of the near stem trial but help me understand the basis for India versus the portability of this data to the U.S. which is where it would be a great market opportunity.

[Robin Stracey:]

Right, so portability of data I think on we’ve now proven in our CLI admission that the FDA accepts data from India and how we design trials. So I’m very comfortable that report, that over here for pivotal trial and we also remain very confident that the Indian market alone which is the largest cardiovascular market in the world in and of itself would provide a very sufficient market for us to have justify of ROI on our investment. Our goal would be to bring it once we’ve completed the safety aid [ph] study and remember the Cook Medical is our partner in the intracoronary catheter. So we’re sort of going to battle with a well respected, experienced cardiovascular house. Once we’ve shown the safety in the Phase II then we would expect to look at the global markets and determine where we would go from marketing license for the Phase III.

[Jason Kolbert:]

Fantastic thank you, I got it, I don’t want to take the too much time on the call. If you could just close with me on what you think to build out is going to look like in India in BMT that would be very helpful for my metrics.

[Robin Stracey:]

Okay, so I think as I mentioned we have a capacity limitation. So there are - we think when you look at affordability, education, many other parameters that gets the right patient to tertiary care hospital of which there are handful in New Delhi, handful Mumbai, basically handful in each of the major cities in India. And you sort of call that all the way down you end up with about 6,000 or so patients that would fit all the criteria for being - for meeting that the treatment and being able to pay for it and getting to a centre that can do it. So we have planned to start a in our own center where we can do over 1,000 of these a year in our own capacity and start with education programs combined with Fortis. And we now have the largest and best primary or tertiary care BMT private center in India and presently the organization is doing roughly 15 bone marrow transplants a month and we feel we can get back up to 30 to 50 a month pretty quickly through more education, conferences and outreach to primary physicians. So I think, it would be a stair stepped approach, it’s going to take marketing, it’s not going to happen overnight, but the infrastructure is there the dCDI approval is there and we now have, we have a world-class BMT team trained in Australia and Canada now that have almost three years under their belt in the Fortis center and then we are combining that with our own advisory panel that we’ve built here in the U.S. that’s going to start leading an exchange program what we’re going to send follows and we’ve had positive responses from Emory and Stanford, as well as UCLA to send fellows overhead to our program for six months to one in India market beneficial demand that would be provide the academic support for us to train may more Indian physicians at a much quicker phase.

[Jason Kolbert:]

Well, that’s really exciting guys. Great run down, really appreciate all the progress are very excited to see the start of the CLI trial and the execution of all of these programs and development. Great job, thank you.

[Robin Stracey:]

Thanks.

[Operator:]

The next question comes from Reni Benjamin of H.C. Wainwright. Please go ahead.

[Reni Benjamin:]

Hi, good afternoon guys and thanks for taking the questions. I guess just maybe building on Jason’s characterization question. You talked about the sterility assay and it looks like after everything is sort of settling down the characterizations sort of throughout the process one at that much more time. But the sterility assay looks to be like an open ended this question almost I heard you wrong. Can you talk a little bit about how you’re going to work with the FDA, I guess on this, I thought you had mentioned on call that it typically takes about seven days, what kind of assays are there that could cut this down significantly, because I assume, you’d have to do that with each patient, with each procedure. And or there any other assays there that look at things more than just gram staining would you have to worry about that?

[Robin Stracey:]

Yes, it’s a good question. So the current USP method that is excepted by FDA for a pharmaceutical sterility is a 14 day culture test and that is already in our protocol. And so the FDA wants us to continue doing that, it’s a much more sensitive assay. But for some reason and I can’t put my finger on the renewed sensitivity they have around sterility, they comeback now and said we’d like some leading indicator in the operating room before the injection is done. We’ve had dialogue with FDA that, A) there aren’t methods to do that and B) we are dealing with - if there was a contamination level, because we are only a 90 minutes, the contamination level would be so low that in order to get an acceptable sensitivity, you would need something like PCR and that’s to acceptable, right. And we all agreed with that, the FDA agreed with that. So their position was do a Gram stain, let’s see what the results look like. Do ten patients or so and then comeback to us and we’ll make a decision whether we want you or need you to continue doing that through the whole trial. Now keep in mind, that we’ve done over 650 patients with point-of-care treatments and we’ve done sterility assessment on all of them, we’ve never had a single sterility issue. So we’re very comfortable as there are strong data to make the FDA, often they come off with this, but I don’t know if something has happened in another study or what has led them to just want some additional box check, but they are pushing for it. Our Gram stain is going to take anywhere from 15 minutes to 30 minutes and we are trying to optimize the methods we can to get it done in under 15, because we do have the patients under general anesthesia and we worry about some risk of that.

[Reni Benjamin:]

All right.

[Robin Stracey:]

But…

[Reni Benjamin:]

So let me just follow-up with if the trial shows, you already submitted the data for 650 patients, there’s never been a sterility issue, if the trial now shows, let’s say and replicates the data, could it possible that in the final approved process that you don’t to do a sterility assay to begin with, or are you establishing sort of a new protocol and setting a new trend whereby a sterility assay would have to be done once its on the market.

[Robin Stracey:]

Yes, it’s a good question, I mean, I’ll tell my feeling from FDA is I’d like to see it. However, they are cognizant of the fact that it takes time, and I think they’re in a risk benefit analysis system shelved [ph] on it, which is why they said do the ten patient check point and let’s recalibrate. I think if there are no issues with doing it in the operating room and they remain more comfortable having it, I think, it will probably scale up with the procedure. But if anything goes wrong or they don’t like it, then I think its probably going to not be required after that that tenth patient.

[Reni Benjamin:]

Got it. Just based on your discussions you guys have any new thoughts regarding a discussion about in SPA prior to starting the pivotal study.

[Robin Stracey:]

I don’t really see the need for an SPA at this point because we have, our protocol is been wedded [ph], it’s going through already full regulatory review. We have their feedback on what they want changed which was what I’ll call four major deficiencies of which two of them are really simple to address on these two around cellularity. And all the rest were just little nit-picking things like change this line, say that in your form consent, change this little piece of the protocol. So I think we really are close to having full agreement on the protocol.

[Reni Benjamin:]

Got it. Do you think that this is something specific to you guys are this or your product specifically or do you think this is kind of a changing of the playing fields and maybe a new standard is being set in terms of the autologous therapy, autologous regenerative medicine market.

[Robin Stracey:]

Yes, I don’t want to speak for the FDA, I’ll just tell you what they told us. I don’t know what they are thinking. However, they did say to us in our discussions that they understand that were an IDE, they are considering that at step, however, for IDE point of care SIBR reviewed products they are going to require these intraoperative cell analysis steps. And they didn’t leave a lot of room its up for discussion.

[Reni Benjamin:]

Got it, got it. Just switching gears, I have just two more questions. One having to do with the bone marrow study, just sort of where are we, I thought the last update we had five out of the ten patients, we’re indicated to maybe I’m often like can you just give us a what exactly is going on there, when we can expect some data? And I thought I had a milestone about submitting a 510(k) bone marrow transplant 510(k) application to the FDA. Was I wrong on that one or is there been a change and thinking about that?

[Robin Stracey:]

No, you are wrong. There has been a slight change and thinking because we slowed down to go ahead and get the MXP approved as a platform rather than waiting for the clinical trial data and in so doing, we stopped, we put a hold on the trials in India for that approval, now that it’s on my update this morning is that we have three pediatric patients in the pipeline to go back in the trial now. So we’re ready to turn those back on, we also have interest for one to two wanted major national cancer centers here in the U.S. few also contribute to those study. So I think we’ll be broadening the clinical trial sites to be both U.S. and India. And that will strength in our U.S. application.

[Reni Benjamin:]

So can you just give me sort of like, how many patients total is going to be involved in this package and when you think you might submit the application.

[Ken Harris:]

Yes, so it’s 10 patients for ABO and is 10 patents for Haplo. And we’re at five for ABO, four for Haplo and - are main for us because that’s were the money it is in the Haplo side. And that’s where we have the BMT specialty team now in place in the collaborations developing here in California and in memory [ph] to speed them up. But enrollment is one of the issues in this whole process and that’s what’s let us to realize that we need a much more proactive marketing program as well to grow the business.

[Reni Benjamin:]

Do you think you so might see data this year?

[Ken Harris:]

Yes, that’s the goal.

[Reni Benjamin:]

Okay. And just one final question for no one we have Robin out of this, how’s the CEO hunt doing - going or is he starting to like that chair.

[Robin Stracey:]

Well, certainly is a lot of fun being in the Cesca these days with Dan and Ken and everything was going on in the company. So we’re still in the early stages, I’ve been involved now since the very end of October, we kind of slow things down a little bit with the Thanksgiving, Christmas, New Year. So within the early stages we’re obviously more focused on the caliber of the individual and expediency run and I maybe created a board that I more than happy to pinch it as long as necessary to make sure we get the right person in. So it’s ongoing but it’s still early, is the answer.

[Reni Benjamin:]

Got it. Thanks very much and good luck.

[Robin Stracey:]

Thank you.

[Ken Harris:]

Thanks Benjamin.

[Operator:]

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Stracey for any closing remarks.

[Robin Stracey:]

Well, thank you all, once again for joining us today for the great questions and for your continued interest and support of the company. We look forward to talking with you further and keeping you posted on our progress. So thank you all and have a very good evening.

[Operator:]

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