XOMA Corporation
Q3 2009 Earnings Call Transcript

Published: 9 Nov 2009

[Operator:]

Welcome to XOMA third quarter 2009 earnings conference call. For opening remarks and introductions I’d like to turn the conference over to Carol DeGuzman.

[Carol DeGuzman:]

Good morning and welcome to XOMA’s third quarter conference call. This morning XOMA issued a news release which included our financial results for the third quarter and nine months ended September 30, 2009 and a general business update. Our quarterly report on Form 10-Q will be filed later today. Each document will be available on the XOMA website www.xoma.com. Today’s webcast can be accessed via our website and will be available for replay until the close of business on January 8, 2010. The telephone replay will be available beginning later this morning until the close of business on November 18. Access numbers for the replay are listed in this morning’s news release. On the call today will be Steve Engle, Chairman and Chief Executive Officer, and Fred Kurland, Chief Financial Officer. Also joining us today is Dr. Allen Solinger, our Vice President of Critical Immunology. We wish to remind all listeners that certain statements made on this call will be forward-looking. Statements concerning anticipated levels of cash, results of clinical trials and trends with the 052 development partnership or that otherwise relate to future periods are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on assumptions that may not prove accurate. Actual results could differ materially from those anticipated due to certain risks inherent in the biotechnology industry and for companies engaged in the development of new products in a regulated market. Among other things, the anticipated levels of cash may be other than expected due to unanticipated changes in XOMA’s research and development programs, unavailability of additional arrangements or higher than anticipated transaction costs. Results of clinical trials may be delayed or never occur and XOMA’s two outside partnerships may not be entered into in the time frames indicated or at all. These and other risks including those related to XOMA’s ability to comply with NASDAQ’s continued listing requirements, the declining and generally unstable nature of current economic conditions, the results of discovery in pre-clinical testing, changes in the status of existing collaborative relationships, the ability of collaborators and other partners to meet with obligations, XOMA’s ability to meet the demands of the U.S. Government, competition, market demand for products, availability of additional licensing or collaboration opportunities, share price volatility, and XOMA’s financing needs and opportunities are described in more detail in XOMA’s most recent filing on Form 10-K and in other SEC filings. Consider such risks carefully when considering XOMA’s press release. I’ll now turn the call over to Steven Engle, XOMA’s Chairman and Chief Executive Officer.

[Steven Engle:]

Good morning everyone and thank you for joining our call today. XOMA has made significant progress in 2009 toward our objective of becoming a company focused on proprietary product development. We’ve done so while generating revenues from technology licensing collaborations, royalties and bio-defense businesses and through difficult circumstances that included the removal of royalty generating RAPTIVA from the market as well as a particularly challenging economic environment. The following are XOMA’s key accomplishments to date in 2009. We have advanced XOMA 052, our anti-inflammatory antibody to Interlucen 1 data or IL1 data through the completion of successful Phase 1 trials and into Phase 2, development in type two diabetes and cardio metabolic diseases. We reported new pre-clinical results showing the benefit of XOMA 052 in reducing the build up of plaque which can lead to hardening of the arteries and heart attack. Pre-clinical results with another IL1 targeting agent have shown beneficial effects in cardiac remodeling which may reduce the risk of congestive heart failure following heart attack. These results provide direct evidence of the potential for IL1 in addition to beneficially impact major cardiovascular diseases. Based on these developments and its Phase 1 results XOMA has expanded its XOMA 052 development strategy to cardiovascular diseases. XOMA has also advanced its XOMA 3AB and a botulism antibody for bio defense into pre-IND studies and continues to develop its pre-clinical pipeline in inflammatory, cardio metabolic, infectious and oncologic diseases. We are also pleased to have exceeded expectations for generating revenues. For the nine months ended September 30, 2009 XOMA recorded revenues of $76.8 million compared with $31.1 million for the same period of 2008. Collaboration, licensing and bio defense revenues totaled $48 million in the first nine months of 2009. With the signing of new agreements with Kaketsuken and the Celphon subsidiary Arana Therapeutics, actual and anticipated non royalty revenues now total $62 million for the year thus far. In addition, royalties for Lucentis CIMZIA and RAPITVA including a one time pre-payment of $25 million for future Lucentis royalties, generated revenues of $28.9 million through September 30, 2009. Based on our cash reserves, anticipated revenues from collaborations including a XOMA 052 partnership, licensing transactions and bio-defense contracts, we believe XOMA has sufficient cash resources needed for anticipated net cash needs into 2011. We are excited about the new cardiovascular results from pre-clinical and clinical studies with XOMA 052 and other IL1 targeting agents and our expanded strategy for XOMA 052 in cardiovascular diseases which have substantial value. We continue to make progress in our discussion for potential partners. Importantly, new cardiovascular results combined with previous data greatly increase the value of XOMA 052. As a result, partners need additional time to view the new data. As might be expected, with our financial flexibility and depending on ongoing discussions, we may complete a partnership within the original timeframe, or it may take some additional time for partners to fully value XOMA’s 052’s potential beyond diabetes. With this brief summary, I will now turn the call over to Fred to review our financials.

[Fred Kurland:]

Good morning everybody. Welcome to our conference call. Thanks for attending. Total revenues in the 2009 third quarter were $27.4 million compared to $7.9 million in the 2008 third quarter. The company had net income of $1.5 million or $0.01 per share in the 2009 third quarter compared with a net loss of $20.4 million or $0.15 per share for the third quarter of 2008. The improvement was primarily due to increased revenues as a result of the sales of the LUCENTIS royalty interest and decreased operating expenses. Total operating expenses were $20.6 million in the 2009 third quarter compared with $26.4 million for the third quarter of 2008. This decrease was primarily due to reduced expenses arising from the work force reduction in January 2009, particularly in manufacturing and related areas and associated selling, general and administrative support, as well as multiple cost control initiatives. At September 30, 2009 XOMA has unrestricted cash, cash equivalents and short term investments of $27.7 million compared with $10.8 million at the December 31, 2008. As Steve mentioned a moment ago, in September we fully repaid principal and accrued interest totaling $44.4 million on our loan with Goldman Sachs specialty lending holdings. XOMA’s total revenue in the third quarter of 2009 included $22.3 million in royalty income, $3.7 million in contract and other revenue and $1.4 million in license and collaborative fees. In the 2008 third quarter revenues were $4.6 million for royalties, $2 million in contract and other revenue and $1.3 million in license and collaborative fees. The increase in royalty revenue was primarily due to the sale to Genentech of XOMA’s royalty interest in LUCENTIS. XOMA receives royalties based on U.S. sales of CIMZIA which is marketed by UCB for the treatment of moderate to severe rheumatoid arthritis an estimated $10 billion overall market and for Crone’s disease. Royalties on CIMZIA in the third quarter of 2009 were $200,000 and they’re expected to increase as UCB continues the CIMZIA launch in the U.S. rheumatoid arthritis market. XOMA’s R&D expense for the third quarter 2009 was $13.4 million compared with $19.7 million for the same period a year ago. This decrease was due to decreased personnel costs as a result of the January 2009 work force reduction and reduced spending resulting from multiple additional cost initiatives. Selling, general and administrative expenses for the third quarter of 2009 were $7.2 million compared with $6.7 million for the same period last year. Interest expense for the third quarter of 2009 was $1.3 million compared to $2 million for the same period last year. This decrease was primarily due to the repayment in full of the Goldman Sachs loan in September 2009 and a decrease in the outstanding principal balance of and interest rate on the Novartis note. Loss on debt extinguishment for the third quarter of 2009 was $3.6 million related to the repayment of the Goldman Sachs loan. This loss includes a prepayment premium of $2.5 million as well as the recognition of unamortized debt issuance costs of $1.1 million. With the repayment of the Goldman Sachs loan, XOMA’s sole debt obligation at the end of the third quarter was $13.1 million in long term notes due to Novartis. This note was established under a loan facility to facilitate XOMA’s participation in its collaboration with Novartis including the development of HCD122 which is in Phase 1 clinical testing for lymphoma. The Novartis note is secured by XOMA’s interest in the collaboration as a low interest rate and is due in 2015. Cash, cash equivalents and short term investments at September 30, 2009 were $27.7 million compared with $10.8 million at December 31, 2008. In September 2009 in addition to the repayment of the Goldman Sachs loan, the company completed two common share financings under its committed equity line of credit facility with Azimuth Opportunity Limited that provided approximately $26.4 million in gross proceeds to the company. About $12.3 million of these proceeds were used together with other funds to repay the Goldman Sachs loan. Cash provided by operating activities during the first nine months of 2009 was $11.5 million compared with cash used in operating activities of $35.8 million during the first nine months of 2008. This change is primarily due to license and collaborative fees as well as the sale of the LUCENTIS royalty interest. In the third quarter of 2009 XOMA entered into an at market issuance sales agreement with William Smith and Company under which we may issue up to 25 million of our common shares from time to time through William Smith as agent by means of one or more at the market offerings, or with XOMA’s approval in negotiated transactions. The company’s equity line of credit with Azimuth is no longer in effect and no additional shares can be issued under it. A more detailed tabulation of XOMA’s financial results appears below in the press release and a more complete discussion is included in the company’s quarterly report on Form 10-Q for the quarter ended September 30, 2009. As has been our practice throughout the year, we will not be providing guidance on revenues or cash receipts for 2009 so as to best manage our ongoing negotiation for XOMA 052 and technology licensing an in light of general economic and market conditions. I will however, update our guidance on anticipated cash used in operating activities for 2009. We currently estimate that cash used may range from $5 million to cash positive in comparison to our previous estimate of a range that was a cash use of $15 million to cash positive. Now I’ll turn the call back to Steve for some closing comments.

[Steven Engle:]

With multiple revenue streams, a world-class antibody discovery platform, and a growing pipeline featuring our anti IL1 antibody with multiple indications in anti-inflammatory potential including the major indication of multiple cardiovascular diseases, XOMA is well positioned for additional progress for the remainder of 2009 and beyond. This concludes our prepared remarks. Please open the call for questions.

[Operator:]

(Operator Instructions) Your first question comes from Matthew Kaplan – Ladenburg Thalmann & Co.

[Matthew Kaplan:]

Could you first start off talking about the Phase 2 diabetes program that you’re planning and then also the cardiovascular or cardio metabolic you’re planning in terms of the time line and points involved in both those studies and when we should expect to see data with those?

[Steven Engle:]

Let me begin by making sure that I introduce Dr. Alan Solinger, our Vice President of Immunology at the company and Alan will speak to the programs.

[Dr. Alan Solinger:]

We’re very pleased that our Phase 1 studies were very successful and gave us much more information than we had originally anticipated. We are in the process of initiating our early Phase 2 program in diabetes as well as evaluating additional input from our potential partners and from our key opinion leaders, especially having met many of them up at the most recent diabetes meetings. So there will be future announcements as to the exact details of these trials as they are initiated later this year. As far as the cardiovascular diseases, this has been a very fruitful area of research from our pre-clinical group and when this is added to the available data that’s in the literature based on IL1 blockade in animal models as well as potential data coming from two ongoing human studies, we feel this is a very lively area for further clinical development and as we go further, we should be announcing more details on these studies, probably later this year or the early part of 2010.

[Matthew Kaplan:]

So in terms of data from either of these studies, it’s really kind of later in 2010 or second half?

[Dr. Alan Solinger:]

Right. What we’ve said is based on the time frames we’re looking at, we think we’ll have interim data in the third quarter of next year, that is 2010 that would be available from the first study.

[Matthew Kaplan:]

In the diabetes study?

[Dr. Alan Solinger:]

Yes.

[Matthew Kaplan:]

And then in terms of cardiovascular, you haven’t given any guidance with that yet?

[Dr. Alan Solinger:]

Not yet. Again, as this very exciting data has come out and since we spoke to you last, we’ve not only been to Montreal for the IDF Conference, but at that conference we held a thought leader meeting. That is, we brought in some very world class expert physicians to talk to about which studies should now run based on the new data. As you probably know, the APOE data that we just announced at the conference is very complimentary to the DIO pre-clinical data that was announced earlier and the reason is that the DIO points with the reduction or cholesterol reduction and it provides in the APOE, new data. We’re showing that we can reduce plaque in the animal models and this is the standard model that almost everybody uses for evaluating many cardiovascular drugs to determine whether they can reduce hardening of the arteries. In fact, the statements have been evaluated in this particular model. So we see the DIO information as being complemented by the new APOE and so this just opens up a whole new area. So at this conference with the experts, we were walking through with them what were the possible shorter term trials that we might run and which ones would they like to be involved with and so forth. So this has been a nice step up in the amount of information. In addition to that of course, the pre-clinical data showing a reduction of heart muscle damage arising from the re-modeling of the heart post a heart attack was put out in circulation magazine in 2008, and now there are announced clinical trials started looking at this very same kind of approach. As you may know, the number of patients that have congestive heart failure is rising, and part of that the physicians believe, is related to the fact that we’re now preventing people from dying from the heart attacks, but the damage to the heart muscle itself now becomes the long term problem. So adding that all up, we think the data we’ve gotten is very important. It either complements or opens up new areas, unlike the CRP data we had originally in our Type 2 diabetes Phase 1 studies which is a major biomarker as you know for cardiovascular risk. This new information is very specific to different indications and so in some cases this is information that had been asked by our partners and so we’re very pleased to be sharing that both with the public and with the partners and we continue to do studies to illuminate what the drug can be used in. So that’s by way of saying that we’re working through that information both with the medical experts around the world and thinking through what trials make sense in the short term. As you know, eventually, cardiovascular trials become rather large and so what we’re looking for is what’s the right set of Phase 2 type studies. Smaller studies can be done in a relatively short period of time that would give us the information back to help us then plan the Phase 3 studies. As we look at that of course, we’d expect Phase 3 studies to be done with a major partner who can help us worldwide to run the trials and to get the information out. In the meantime, what we’re doing is trying to come up with these studies that would make sense. So we’re going through that process right now to determine those studies. As soon as we can get that information together, we’ll come back with comments about doing studies in this area.

[Matthew Kaplan:]

If you look at the aggregate of data that you have in cardiovascular shutting down as you kind of alluded to, what data do you think is necessary to be able to harvest the total value of XOMA 052 in the cardiovascular setting that you don’t have yet and as you started to allude to in the answer to the first question, to get a partner comfortable to award you the full value for 052 in cardiovascular?

[Steven Engle:]

It’s always hard to know what the next thing is that you might discover with a drug that’s a general anti-inflammatory. It’s kind of like asking about corticoid steroids where we use this stuff. But what we believe is that now that we’re talking about the cardiovascular market, this is a very, very large additional opportunity. You may remember that when we started the work two years ago with the Phase 1 study that Dr. Solinger initiated, that we were very careful to focus on diabetes and the auto-immune diseases rather than speak to the potential opportunity in cardiovascular. And so in bringing this out to the public and investors, what we’ve been doing is, we wanted to bring this up now because we think we have the data to really support the development of the drug in these different areas. So I think from our point of view in terms of generating global value for the drug, or total value for the drug, we think that now having come in with data to better illuminate the cardiovascular potential, really does do a lot of what we wanted to do as far as moving in this area, and it simply comes down to the fact that the cardiovascular market is the largest market of all the markets for pharmaceutical drugs. So we think we’ve done what we wanted to do here. And of course, diabetes is not a small market either. So between the two, we think we are approximating the full value of the drug because of the size of those markets.

[Matthew Kaplan:]

You answer is that you think you have enough data now currently beyond the need for additional studies to actually be awarded some …

[Steven Engle:]

We do.

[Matthew Kaplan:]

Can you give us some guidance in terms of R&D and SG&A expenses going forward?

[Fred Kurland:]

As you know it’s been our practice to not provide guidance going forward for things like that. What we have done is provided guidance on cash use and operations. I expect that will continue but not on the expenses per se.

[Operator:]

Your next question comes from Jason Kantor – RBC Capital Markets.

[Jason Kantor:]

I’m still a little confused to the answers to lots of questions. You said that you thought you had enough information for the partners to make a decision but you’ve also said that you’re designing these trials based on comments from your potential partners. So what happens two months from now when the partners realize, well if they just wait a little bit longer, they can see the data that they in fact asked for. Why shouldn’t we expect that a partnership should come following some of this data?

[Steven Engle:]

I think from our point of view, we think it’s good news to go ahead and get the cardiovascular outcome better defined and clearer in terms of the opportunities because it expands what a partner would consider needs to be done with the drug and therefore which markets that we could end up going after in the long term. So we think it helps in the sense of defining that value, but we think what’s on the table is already pretty clear, that there is an opportunity. Just to be sure, when you’re talking about the results from the reduction in plaque and the APOE model and the lipid reduction the DIO model, what you’re talking about is stat market. You’re talking about something as you probably know is that 50% of the patients in the stat market still have an elevated risk of having the next event. So you’re talking about one of the largest opportunities in the world. So we think definitely points at what needs to be done with the drug which is you need to evaluate the drug over time for that kind of opportunity because it is a very large opportunity. So I guess where I’m thinking right now at least, and I can’t speak for the partners, is that this provides clear evidence of the cardiovascular opportunity and that it would not be good to not go and try the drug in that direction. So now it’s a question of how do you come up with studies or which studies do you do in the Phase 2 type program to help you elucidate the use of the drug in that area. And so that’s the kind of thing that we’re thinking about with the thought leaders, but in terms of the value itself, we do think these studies point at the opportunity. They definitely show you that there is multiple ways to confirm the importance of Trial 1 data in the cardiovascular market and so we feel pretty comfortable with that. That is clear now and it’s clear in that we’ve used our own drug to do it. It’s not just somebody else’s drug.

[Jason Kantor:]

Again you don’t think that the partners are going to want to see the data from the ongoing or planned studies before making an investment?

[Steven Engle:]

We can’t call exactly what they’re doing. These are large scale conversations that we’re having with multiple players, so first of all, some companies one way, some companies the other way in their thinking but our feeling is that there certainly is interest in moving forward with this thing, with the programs, and not waiting. But one can never tell until the deal is actually done. That’s part of the problem here in trying to answer your question, is we don’t know until we actually get the deal done how to answer your question. We just know that right now, we think that this has been a good step forward and that there are plenty of people out there who recognize what this means. And the change in the conversations with partners has been that they’re now looking at okay, what do we do in Phase 2 to lead to Phase 3 as a way to go. But as far as waiting, waiting comes back to the issue of the situation which is we do have several people we’re talking to and there is a competitive situation here where how long you want to wait could be a very risky situation for you. And if I were them, I’d be considering that because obviously we are making progress in the clinic, but in the meantime we’re making progress with partnering conversations and so then it comes down to them calculating the risk they want to take of continuing not to be a part of this and the chance that they may lose the opportunity to be involved in what could be one of the most exciting drugs in the last five years. So I think everybody is pretty excited about this and the question is how long do they want to wait. And I think that is a pressure against what you’re talking about which is the tendency of everybody to say I need more data. And I think that is a very strong pressure against that situation.

[Jason Kantor:]

How much are you planning to or willing to expand on the program ahead of getting a partnership?

[Steven Engle:]

As Fred said, we’re really not commenting on numbers and so forth, and predicting that is part of why we wrote in the press release that there’s a possibility depending upon how the current conversations come out that we could move sooner versus later. So all of that is calculation related to the partners. As you know what we said when we started the Phase 2 was that we saw it as two parts of the program. One was the 2A and one was 2B. The 2A’s are the studies we’ve talked about moving forward, but 2B would be the things like the six month diabetes study that is kind of becoming a standard study. And as we said before, we had elected to wait on those studies until we had additional resources to be able to fund those either through a partner or otherwise, and of course we’re thinking the partner is the way to go here. The partner not only provides revenue but also provides us with their insights into these trials and these kinds of opportunities. So we see that as an important step in the process here.

[Operator:]

Your next question comes from Aaron Lindburg – WM Smith Securities.

[Aaron Lindburg:]

A follow up on Matt’s question with the cardiovascular data, with the two ongoing human studies, can you give us a little bit more color on what’s going on there, how many people are enrolled, what’s the specific end points you’re looking for?

[Steven Engle:]

First of all, these are not studies that are being done by XOMA. These are studies being done one by an independent investigator with commercially available drug and his information is posted on clinicaltrials.gov. So we’re only aware of the general details of what he’s planning on this study. The other is a study that’s been announced that’s being performed in the United Kingdom, also looking at cardiovascular events and the sequel of those cardiovascular events using commercially available product from one of the IL1 modulators. So at this point, we don’t have the data. We’re not privy to that and we as everyone else are awaiting these results. But when you put that on top of what we’ve seen already in our pre-clinical models, we’re very hopeful that these studies are supportive of what we plan for the future.

[Aaron Lindburg:]

How much revenue from the sale of the future LUCENTIS royalties was included in Q3?

[Fred Kurland:]

The number is $22.3 million. As you recall, the entire deal was $25 million, but a relatively small part, about $2.7 million had already been booked in the second quarter.

[Aaron Lindburg:]

Of the partners or potential partners you’re negotiating with related to 052 have discontinued negotiations over the last few months?

[Steven Engle:]

We do not give that kind of detail as we go through these conversations, so I’m sorry I can’t really talk to that issue. And just to be sure, we’d love to talk about it in detail. The problem is, you can bet all the partners are listening to the telephone call that we’re having right now and there’s no point in giving away information in the partnering process. And I think all the investors can understand why the company would choose not to provide that kind of detail.

[Aaron Lindburg:]

Can you give us an update on the ongoing Phase 2 trial for 052 and RA?

[Dr. Alan Solinger:]

At the present time this is a very limited trial, a very small trial. Enrollment is still open and we await the data as it matures. But at this time, we don’t have a full set of data. It has not been unblended as of this time.

[Aaron Lindburg:]

How many people are enrolled at this point?

[Dr. Alan Solinger:]

Again, we haven’t announced that. We’ll announce when the trial is completed.

[Aaron Lindburg:]

One of the things you talked about on the last call was IV versus subQ and the dosing range. Can you give us any indication of where you’re at there?

[Steven Engle:]

For all of our subsequent trials we will be using the subQ formulation and the subQ scheduling. I think we’re pretty well set on the dose range that we mentioned previously and that we are in the less than one milligram per kilogram dosing range. We still believe we have the same scheduling of doses roughly once a month or longer between doses. So there have been no changes from our prior comments.

[Aaron Lindburg:]

Once you establish a partnership for 052 and bag the cardiovascular maybe all indications, what are your top priorities beyond that?

[Steven Engle:]

First of all we plan for this to be a c0-development project and we plan to continue to get information now from the running of those studies. That’s why we talked about an interim result coming out from the study we already have ongoing in the diabetes study in Phase 2A. In the other parts of the company though we continue to move forward as we indicated in our press release with both the bio-defense and the pre-clinical program and so we see that as another area and I think we tried to walk through some of the different indication areas that we talking about. And of course, it’s quite broad in the sense that it’s multiple areas there. So as we get towards the end of next year, we think we’ll speak more about what we’re doing pre-clinically right now because for competitive reasons, we’re not talking in detail about these programs, but rest assured that they’re all targeting very large market opportunities and that we believe well positions any company to compete in this area. As you probably know, we have a broad capability that’s been greatly increased because of our corporate partnerships that we’ve had over the last four or five years and as a result, we understand quite a bit about doing these. It’s not as though we’re just a biotech company with three or four things we’re working on. We in fact are working on multiple projects because of the partnerships. So all of that expertise and knowledge and know how and patents all applies to these new projects. So we’re excited about it, but at this point for competitive reasons, we’re not saying much about it. But I think everybody will be quite pleased as we get there.

[Aaron Lindburg:]

How does XOMA attempt to realize the full value for 052 beyond diabetes and cardiovascular? You talked a little bit to those two major indications, but over the course of the last couple of years you’ve talked about applicability and dozens of other indications. What’s the strategy for trying to extrapolate some value there without data being available?

[Steven Engle:]

These are all in our discussions with corporate partners. I think everybody recognizes that diabetes and cardiovascular are the big, big opportunities. There are other issues that we as a company want to deal with in terms of having back up opportunities and also faster to market opportunities. Now in talking about those with the partners, we haven’t finished the discussions so all of this is provisional until we do that. But the concepts or issues there as we think about them are, we’ve got opportunities to develop the drug faster in some orphan indications. Now if we succeed in the cardiovascular and diabetes area, the pricing of the drug for those kinds of indications may be relatively lower to what it might be in a more of an orphan indication, as a result of which, we have a trade off to make between these things which we’re in discussion on. At any rate, we do think there are a number of other opportunities. You can see that by the work going on right now with some of the other companies in the IL1 development area including the gout studies and RA studies and some of the other things with systemic juvenile idiopathic arthritis where people have chosen to go into those areas as their next step. So we see those as also potentials for the XOMA 052 drug. The issue though as we go through it will be something that we’ll discuss in detail with the partners and come back. Obviously the one other issue is the difference in delivery between what we would use, say the subQ that Alan was referring to dosing that we would use in cardiovascular and in the diabetes area versus what we might be able to do by way of a different dosage form in some of the other orphans. So those are all things that we’re looking at and as we get that cleared up in our minds and in discussions with partners, then we’ll come back and talk to you more about it. As you might guess, for competitive reasons, the company is not disclosing everything that its thinking about and so as time goes on we’ll try to do what we can about this, but I think that everybody understands that it is a competitive area and we want to be careful what we say.

[Aaron Lindburg:]

With the Type 1 diabetes study that’s being funded by an outside party, when is that to begin?

[Steven Engle:]

That trial is all set to begin. We’re just waiting on the final Swiss Health Authority approval and then we should be able to open the trial immediately. This is an investigator study that was supported by the Juvenile Diabetes Research Foundation , a grant to Dr. Mark [Donaf] at the University of Zurich.

[Operator:]

Your next question comes from [Rich Juvaral – Cannacord Adams]

[[Rich Juvaral:]

I had a follow up question on the Type 1 study. What doses and dose regimens will you be investigating in that particular trial and another follow up to the cardiovascular program, the [anicenra] post trial that’s listed on currenttrials.gov that you site in the release, looks to be a pretty short 10 patient trial. Based on the design or what’s public on the design of that trial do you think that a trial of that size and duration could give you the proof of concept for 052 in such an indication or would you need to something more robust?

[Dr. Alan Solinger:]

Let me answer your first question. We haven’t personally announced the details of the Swiss trials as far as dosage and dosing schedule because technically this is not a XOMA trial. This is a trial being performed by Dr. [Donaf] with support from the Juvenile Diabetes Foundation. At the present time we are supplying drug and so I guess you could call it technical advice on the performance of the trial. So really it’s up to Dr. [Donaf] to announce the dosing ranges and the dosing schedules. As to the [anicinra] cardiac study you are very correct. This is a very small trial and without knowing the results or the purposes that were originally designed into this trial by the investigator all I can say is that there certainly is the possibility if the pre-clinical data portents well to what we would see in humans, then we might certainly get a signal out of this study that would help support our ongoing hypothesis. However, this is awaiting the results being made public. Dr. [Bodge] has not released those results yet, and so as soon as he releases those results then we should be able to. On the other hand, there is Dr. Crossman’s study that’s being done in the United Kingdom that is much larger. That data should be out in the foreseeable future. I’m not sure of all the details, but I think in combination the trials will give us a very good reading on the size and the scope of future trials in the post MI indications. But I think as Steve has alluded the cardiovascular area and the impact of IL1 therapies is not just in the post MI area related to the damage that occurs with the MI but also the chronic and sub acute area in the development of congestive heart failure which really in the long term serves to be the biggest worry among the cardiologists of these patient groups. So I think we will see some very interesting proof of concept data in the near future and I think we are very pleased that these studies are ongoing and we’re anticipating starting our program shortly.

[Operator:]

We have no further questions as this time. I’d like to turn the conference back over to Carol DeGuzman for any closing remarks.

[Carol DeGuzman:]

We’d like to thank all of you again for joining us today. We look forward to seeing many of you next week in New York at the Lazard Health Care Conference and at other events.