Veru Inc. (VERU) Q3 2017 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen, and welcome to Veru Inc.'s investor conference call. [Operator Instructions] Please note, this event is being recorded. Statements made on this conference call that are not historical in nature are forward-looking statements. Such forward-looking statements reflect the company's current assessment of the risks and uncertainties related to our businesses. Our actual results and future developments could differ materially from the results and/or developments in such forward-looking statements. Factors that may cause actual results or developments to differ materially include such things as risks related to the company -- development of the company's product portfolio; risks related to the ability of the company to maintain sufficient financing on acceptable terms when needed to fund development and company operations; risks related to competition; government contracting risks; and other risks detailed in the company's press releases, shareholder communications and Securities and Exchange Commission filings. For additional information regarding such risks, the company urges you to review its 10-Q and 10-K SEC filings. I'd now like to turn the conference over to Dr. Mitchell Steiner, Veru Inc.'s CEO and President. Please go ahead.

Thank you, operator, and good morning. This is Dr. Mitchell Steiner, President and CEO of Veru Inc., and joining me today are Daniel Haines, CFO; and Kevin Gilbert, Senior Vice President, Corporate Development and Legal. I'm very proud of our team and our accomplishments to date as we transition to a biopharmaceutical company focusing on urology and oncology. Today, we will provide an update on the progress we're making with commercialization of our products and clinical development of our drug pipeline as well as provide financial highlights for the third fiscal quarter. You may have noticed from the operator's introduction the change in our corporate name to Veru Inc. This name change was just one of several proposals supported by stockholders at our recently completed special meetings -- meeting, and we thank the shareholders for their continued and significant support. We're no longer reliant on a single product, the FC2 Female Condom, and we're no longer reliant on a single market, the global public sector. We have our key team and organizational structure now in place. We now have a diversified revenue stream, with both FC2 via prescription in the U.S. and PREBOOST sales. We're advancing our deep pipeline of multiple 505(b)(2) and new drug products, including Tamsulosin DRS, Delayed Release Sachet, to which we should see additional revenue in the near term. For our results so far in 2017, the major highlights and milestones achieved are as follows. As of April, we now have the infrastructure in place and market access to make FC2 available by prescription in the United States since it's fully reimbursable by Medicaid and private insurers. By adding new national distribution contracts, FC2 is now available in 97% of the U.S. retail pharmacies. We have 12 salespeople marketing and selling in the U.S. We launched PREBOOST, our 4% benzocaine topical wipe to prevent premature ejaculation. Positive clinical study results were presented in the American Urological Association in May, and the AUA chose the study to be included in their press conference program on May 30. We're currently in partnership discussions. In May, we had positive clinical data in Stage 1 of the bioequivalence study for our first pharmaceutical drug, Tamsulosin DRS, the company's novel proprietary slow-release granular formulation of tamsulosin designed for the treatment of BPH, which is benign prostatic hyperplasia, or an enlarged prostate. Subsequently in July, we announced the initiation of the subject screening process with Stage 2 of the study, and we started manufacturing the NDA-required registration badge, which will be used for FDA submission. We're on track to file the NDA in early 2018 and launch the product in late 2018. In May, following a pre-investigational new drug application meeting with FDA, we announced that we plan to advance our proprietary drug candidate, VERU-944, which is zuclomiphene, for the treatment of hot flashes in men receiving hormone therapy for prostate cancer into a Phase II clinical trial, utilizing the 505(b)(2) FDA NDA pathway. Let's start with an update on the FC2 global public sector. Our financial results for the FC2 business has had 5 straight quarters of lower than expected and declining sales. With our new team in place, under the leadership of Denise van Dijk, we are beginning to see the positive results of our new global public health strategy. For fiscal third quarter 2017, we are seeing better sales for the global public sector than during the first half of the year. We also have the potential to obtain future business with new large tenders announced in Brazil, up to 50 million units over the next year; and South Africa, up to 120 million units over the next 3 years. We believe that we are the only manufacturer that can meet these volume demands. Furthermore, Brazil continues to pay us for its due invoices, which has significantly reduced the Brazil account receivables. We have also signed new partnership agreements for distribution into 8 South American countries and Pakistan. We will continue to do what is necessary to maintain our status as a market global leader for female condoms. Our diversification strategy has also been making good progress. First, we have positioned FC2 Female Condom from an over-the-counter product to a prescription product in U.S. Second, we have advanced the clinical development of lower risk, lower cost and potentially large market drugs using the expedited 505(b)(2) regulatory pathway. And third, we have initiated the manufacturing of VERU-111, an oral anti-tubulin, a new chemical entity for oncology, which have premium market opportunity. Next, I would like to comment on our 3 new and near-term revenue programs: FC2 by prescription in the U.S.; PREBOOST; and Tamsulosin DRS. In the United States, we are seeing the realization of new revenues for more prescription commercialization for FC2. We have completed the removal of FC2 from the over-the-counter product channels. One of the reasons for this change in commercial strategy was because 10 years of investment resulted in minimal OTC sales generated by FC2. The company, in fact, lost money in this channel. In contrast, with less than 6 months of investment in the prescription channel, the FC2 prescription business is already proving to be a way to generate new high margin revenue. Our commercial team has built the U.S. infrastructure and its creative market access for FC2 via prescription. Strategically, we're connecting the women's desire for sexual protection with both access to the product through retail pharmacies and payer reimbursement. FC2 is covered with no out-of-pocket cost by most insurance plans when dispensed by prescription. Insurance coverage of female contraception, which includes the female condom, is mandated in all 50 states by the Affordable Care Act, which was enacted in 2010. Well, things were a little uncertain for a while there. We are delighted that the Affordable Care Act has been not been repealed, and women will continue to have access to contraception. We have confirmed that both private and public insurers are indeed reimbursing for the FC2 product dispensed by prescription. Here are some of the accomplishments of the U.S. FC2 program. One, we have signed several national distribution agreements that make FC2 available in over 97% of retail pharmacies. We have implemented a marketing program with approximately 12 key account managers in very select territories to build awareness among physicians to help generate and support sales of FC2. We have signed a 340B national contract to provide FC2 to HIV and sexually transmitted disease clinics nationwide. There are approximately 56,000 340B entities. We have implemented a university and college FC2 awareness program so that FC2 will be available to young women from these campus-based clinics and pharmacies. We have initiated a patient assistance program for those women who have no insurance. Through a link in our website, we offer FC2 at a discounted price, and the product will be shipped directly to their home. We are working with a number of telemedicine companies and will shortly be posting a link on our website to provide telemedicine options to allow women to obtain a prescription from a physician online, which would then be sent to their pharmacy of choice or a mail order pharmacy, a specialty pharmacy. We've launched a social media campaign, including Ask Amanda, an FC2 viral video, which is already generating significant awareness. Another quarter of launch activities -- after another quarter of launch activities, we now have proof of concept that the FC2 prescription business is a viable and potentially profitable business. We have -- we believe the timing of the launch could not have come at a better time. I want to thank the commercial team for successfully and quickly implementing this plan. It's now clear that FC2 prescription business is promotionally sensitive, and as such, we plan to seek marketing partners in addition to our internal team to help grow sales. We plan to provide more information on revenues and prescriptions by next earnings call. Our second revenue program is PREBOOST, 4% benzocaine topical wipes, which is approved in the United States for the prevention of premature ejaculation. Unlike other currently available OTC products, PREBOOST has results from a recently completed human clinical trial. An independent Phase IV clinical study was conducted by Jed Kaminetsky. Results from this PREBOOST clinical study were presented at the Annual Meeting of the American Urological Association in Boston on May 16 by Dr. Ridwan Shabsigh, Professor of Urology at Weill Cornell Medical College and President of the International Society of Men's Health. The study was also included as part of the press conference program at the AUA meeting. The Phase IV double-blind randomized placebo-controlled clinical study met its primary endpoint of change in average intravaginal ejaculatory latency time at 2 months as well as secondary outcomes of change in questionnaire assessments, including global rating of the stress, medication assessment and index of premature ejaculation. After treatment with PREBOOST, 82% of men were no longer considered to have PE while being treated and reported a statistically significant better sense of ejaculatory control, confidence, satisfaction, sexual pleasure, increased length of intercourse and reduced frustration. The treatment was well tolerated, and no transfer into the product was reported. We're using digital and social media to market and sell product into the U.S. In addition, we are in discussions pursuing possible over-the-counter distribution and partnership opportunities both in and outside the U.S. While these near-term products will continue to provide important revenues, we believe that the future growth of Veru will come primarily from its pipeline of near-term and long-term pharmaceutical product candidates. I'm happy to report that we're advancing at all fronts, and that our pharmaceutical products under development are progressing well. This includes Tamsulosin DRS for BPH; VERU-944 for hot flashes in men with advanced prostate cancer on hormone therapy; VERU-722 for male infertility; and VERU-111 for metastatic prostate, ovarian, breast and other cancers. Tamsulosin DRS for BPH, our 505(b)(2) drug product, is our first near term opportunity. Tamsulosin DRS is a new slow-release oral granular formulation that addresses the large patient population of men with BPH who have difficulty swallowing pills. We've recently announced a successful completion of a Stage 1 of the bioequivalence clinical study. Stage 1 was designed to select the optimal formulation of our proprietary Tamsulosin DRS. With Stage 1 successfully completed, we have advanced the selected Tamsulosin DRS formulation to the second and final stage of the BE clinical study. The results from Stage 1 of the BE trial demonstrated that Tamsulosin DRS may have advantages over FLOMAX. Unlike FLOMAX, Tamsulosin DRS is composed of slow-release granular formulation that does not have a food effect and may be taken on an empty stomach, which may aid in avoiding the potential for dizziness and hypotension. The ability to take this product on an empty stomach is an important differentiation, what seems like a very minor change in our label could be a major change in the value of the product. We announced in July that the company has initiated the screening process for Stage 2 of its bioequivalence study in Tamsulosin DRS. The Stage 2 bioequivalence study is a 21-day single dose comparison of Tamsulosin DRS slow-release granules with FLOMAX capsules in 36 patients, who have either fasted or eaten prior to dosing. We also announced that we have started contract manufacturing the NDA-required registration badge, which will be used for the FDA submission. Having met these milestones, we're on track for potential approval and launch of Tamsulosin DRS in 2018. We will also meet with the European Medicines Agency and file in Europe next year. We believe this product addresses substantial market need and is a near-term revenue opportunity. Our initial commercial plan is to launch Tamsulosin DRS into long-term care facilities. Tamsulosin DRS is needed for the treatment of BPH for the 60% of men, who are currently in long-term care facilities who have difficulty swallowing pills. Tamsulosin DRS would be the only slow-release granular formulation for any alpha blocker class of BPH drugs. Based on IMS data, over 3.6 million prescriptions for tamsulosin and other alpha blocker capsules were written for men in long-term care facilities. There were also about 3.6 million men who cannot swallow pills, and there are no alternative formulations. Many of these men cannot swallow this capsule whether because of stroke, Parkinson's disease or other limitations, and now they're being subjected to surgery, they have to wear diapers or having them dwell in urinary catheter. Urinary catheters are particularly worrisome as they are a common cause of urinary infections, urosepsis and death. Given this unmet market need, we can expect that Tamsulosin DRS is the only slow granular formulation of the alpha blocker BPH drug would be placed in all of the long-term care pharmacy formularies. Current or branded and generic alpha blocker U.S. market opportunity, in total, is approximately $4 billion annually, and $400 million is in the long-term care market. Let me emphasize that Tamsulosin DRS is not a generic. It's a 505(b)(2) product and will be priced as a brand new drug. Our next 505(b)(2) drug product is VERU-944, which is being developed to treat hot flashes associated with prostate cancer hormone therapy, also called androgen deprivation therapy in men with advanced prostate cancer. Drugs in this class include Lupron, Elegard, Zoladex and Firmagon. Androgen deprivation therapy works by lowering testosterone to castrate levels. As estrogen in men is derived from testosterone, low testosterone means low estrogen, too. Low estrogen levels lead to hot flashes. Up to 80% of men on androgen deprivation therapy suffer from hot flashes, and up to 40% of hot flashes being moderate to severe. Hot flashes is a major reason for drug noncompliance. Unlike post-menopausal hot flashes, hot flashes associated with androgen deprivation therapy do not abate with time, with up to 40% of men still suffering from hot flashes 8 years later. There are no drugs currently approved for this indication in the United States. Approximately 700,000 men in the United States on androgen deprivation therapy for prostate cancer. In May, following a positive pre-investigation on new drug application meeting with FDA, we announced we plan to advance into Phase II clinical trial VERU-944 for the treatment of hot flashes in men receiving hormone therapy for prostate cancer. VERU-944 is a nonsteroidal oral estrogen called Zuclomiphene, which is derived from Clomiphine. Utilizing the 505(b)(2) FDA regulatory pathway, we plan to file the IND by January of 2018 and start to Phase II in the first quarter of 2018. The study has a 12-week treatment period, and we estimate we will enroll around 120 men. We expect Phase II clinical data in 2018. And during our meeting with FDA, FDA expressed enthusiasm for this indication as no FDA approved drug for this condition exists today. With regard to the progress of our other clinical programs. VERU-722 for male infertility, the FDA invited us to present at a public FDA advisory committee in December 2016. As part of this meeting, they validated our development program and gave us the green light on the clinical trial design. VERU-722 has the potential to be the first oral drug for male infertility. VERU-111, our novel oral alpha and beta tubulin inhibitor, think of it as an orally-administered chemotherapy. We started the manufacturing process for drug active pharmaceutical ingredients that we need to complete to pre-clinical studies. We plan to file the IND in early 2018 and then start the open label Phase I clinical trial shortly thereafter. We plan to work with the Johns Hopkins Cancer Center and will include metastatic prostate cancer as well as broadly other types of taxane-resistant cancers, including lung, ovarian, breast, colon, pancreatic and head and neck. I will now turn the call over to Dan Haines, CFO, to discuss the financial highlights. Dan?

Thank you, Dr. Steiner. As Dr. Steiner indicated, we were encouraged to see the sales in the public sector recover slightly in fiscal Q3 to volumes closer to historical average, and we intend to aggressively compete for the coming substantial tenders in South Africa and Brazil. Speaking of Brazil, on our last call, we discussed our visit to Brazil on how positive we felt about the direction of the country. A week or so after that call, allegations of corruption against President Temer were announced, causing further uncertainty and possible delays in the payment schedule we have previously agreed to. As you might recall, Brazil owed a total of $13.1 million as of March 31, 2017. And through our distributor, we agreed to delay payment on $7.8 million of receivables in exchange for prompt payment on the remaining $5.3 million. As Dr. Steiner mentioned, we received several payments from Brazil this fiscal quarter, totaling $2.2 million, leaving an unpaid balance of $10.9 million as of June 30, 2017. In addition, we received another $2 million in the past couple of weeks. So although payments did not come as fast as we'd hoped, we only have the remaining $1.1 million to collect on near-term receivables as of today. Fortunately, the Brazilian Congress voted last week against prosecution of President Temer, not on the premise of his innocence but on the prospect of economic stability, which is certainly an encouraging sentiment and an indication of how Brazil is serious about putting its economic recovery ahead of politics. Speaking to our fiscal Q3 results. Unit sales totaled 8.5 million, which is 21% lower than the 10.7 million from Q3 2016. Net revenues for the quarter totaled $4.3 million, a decrease of 22% from the prior year quarter. Gross profit decreased 29% to $2.3 million for a margin of 53% compared with $3.2 million for a margin of 58% in the prior year quarter. Operating expenses increased by 49% from $2.4 million for the prior year quarter to $3.6 million. The increase in operating expenses was primarily due to an increase in research and development expenses for our clinical development programs, which were not present in the prior year, and additional headcount associated with the FC2 prescription launch. The bottom line result was a net loss for the quarter of approximately $800,000 or $0.03 per diluted common share compared to a gain of $570,000 or $0.02 per diluted common share in fiscal Q3 2016. For the year-to-date fiscal Q3 results, unit sales totaled 19.4 million, which is down 45% from prior year of 35.3 million units. Excluding Brazil sales of 11.5 million units, which are included in the prior year total, unit sales were down 18%. Net revenues for the quarter totaled $10 million, a decrease of 46% from the prior year. And gross profit decreased 54% to $5.2 million for a margin of 52% compared with $11.5 million for a margin of 62% in the comparable prior year period. Operating expenses increased 34% from $8.2 million for the prior year to $10.9 million, again, driven primarily by R&D expenses and increased headcount. The bottom line result was a net loss for the quarter of $3.9 million or $0.13 per diluted common share compared to net income of $2.1 million or $0.07 per diluted common share in the prior year. Also to note regarding our P&L for the 3 and 9 months ended June 30, 2017, we recorded tax benefits of $500,000 and $1.9 million, respectively. Now turning to our balance sheet. As of June 30, 2017, our cash balance was $2.7 million, short-term accounts receivable was $5.8 million, and long-term accounts receivable was $7.8 million, for a total combined cash and accounts receivable of $16.3 million. We continue to expect the $7.8 million of long-term receivables, which are all attributable to Brazil to be collected sometime in 2018. Our net working capital was $7.2 million as of June 30, 2017, compared to $8.3 million as of the end of last quarter. During the 9 months ended June 30, 2017, we produced $400,000 of cash from operating activities, which is compared with using $900,000 of cash in the comparable prior 9 month period. Our plans have been and continue to be to advance our clinical programs using cash available from our commercial operations. We have made progress on our Brazil collections. We are optimistic about the near-term prospects of meaningful FC2 profit via prescription in the U.S., and we expect the global public sector to return closer to historical volumes and operating profit. As Dr. Steiner also mentioned, a special meeting of shareholders took place a couple of weeks ago. One of the successful proposals was an increase in authorized common stock from 38.5 million to 77 million. The outstanding Series 4 Preferred Stock was converted to common, yielding approximately 53.2 million common shares outstanding as of today. While we currently do not have plans to issue equity or secure debt financing, the increase in authorized stock is a significant step in strengthening our balance sheet, simplifying our capital structure and providing access to various financing arrangements under much more favorable terms should we have the need. Now I'd like to turn it back to Dr. Steiner.

Thanks, Dan. We continue to make substantial progress transforming The Female Health Company from a single global public healthcare product company into Veru Inc., a global biopharmaceutical company with a highly diversified drug product portfolio focusing on oncology and urology. It is the potential of our drug pipeline that should provide the most shareholder value. The 505(b)(2) pathway provides significant upside as it brings approved drugs with new indications or new formulations for the same indications to the market significantly and more rapidly, providing much shorter time to revenue. We've already advanced our current 505(b)(2) pharmaceutical products, notably Tamsulosin DRS, which has the potential to generate revenues in the near future. We believe this is an important step in delivering significant value to our stockholders. I am more excited than ever about our company's future, and I'm proud of our team for the great progress we have made to date. Finally, at the beginning of the call, I referenced our special meeting of stockholders with regard to the change of our corporate name from The Female Health Company to Veru Inc. All 5 of the proposals submitted to a vote at the special meeting exceeded their minimum required vote thresholds to be passed. We believe that these results better position the company for future growth and the potential creation of significant shareholder value. The increase in authorized shares provides financing flexibility regarding future opportunities, and the automatic conversion of the preferred shares simplifies our capital structure. The adoption of an equity incentive plan allows the company to retain, incentivize and attract a high-caliber team to deliver on the promise of the drug products in our pipeline while aligning our team's objectives with stockholder return. With that, I'll now open the call to questions. Operator?

[Operator Instructions] And the first question comes from Yi Chen with HC Wainwright.

The first question is, can you give us some additional color regarding the revenue recognized in this third quarter, besides the $2.2 million received from Brazil?

Revenue from did you say the prescription business?

Yes, if there's any.

Right. So the $2.2 million was cash received from Brazil. So that was -- that's considered our public sector. But I think Mitch can address questions on the prescription revenue.

I think he was asking in general to give color on other -- you want to know specific revenue streams?

I want to know what is inside the $4.3 million top line revenue in the third quarter.

The vast majority of it is global public sector revenue. The prescription revenue, which would be the incremental FC2 sales, is not material enough for us to talk about right now, and we intend to give a lot more detail on that on our next earnings call.

So the global sector -- the global public sector revenue in the third quarter, other than the $2.2 million received from Brazil is about $2.2 million or $2.3 million, right?

No. The revenue recorded in the period has no Brazil revenue in it. The $2.2 million we were discussing was aged receivables that were recognized as revenue years ago, in 2015 actually.

Okay. So the total global public sector revenue of FC2 in the third quarter is about $4.3 million, $4.2 million?

Correct, which exclude any revenue from Brazil.

Understand, understood. So is that -- is this the kind of level of global public sector you expect going forward? Or should we expect some fluctuations?

I think in the past, the company, you can -- we do a good job breaking out unit sales in the Q filing, which we should be making here in the next couple of days. But you can see the company has historically trended between probably 35 million up to 60 million units in the public sector. That's the historical averages. We had 2 down quarters. I would say this fiscal Q1 and fiscal Q2 were abnormally low. The total for this period of 8.5 million units approaches the historical averages, and we're hoping to see that trend continue upward and revisit those historical averages soon.

Right, let me also comment. It's a great question. But as I said in my comments that the future needs for the FC2 condom has also been clarified. So usually, what happens to these large customers is they publish or they announce the tender of how many units they're going to be looking for, for that period of time. And so last year was quiet. There was nothing. It was quiet. And so this year, we've already heard that Brazil, now that they're kind of getting through all of this craziness, is going to put in a whopping order of 50 million units. And in the past, I mean, that's probably one of the biggest annual orders that they planned to put in. And as you know, our company is the only one that has the capacity that can generate 100 -- can produce 100 million units a year. And so most -- the other competition globally are well below that. And so we think we're in good position, and our strategy is to get as much of that 50 million unit order. With that also said, South Africa also announced that they have a need for 120 million units over the next 3 years, so roughly 40 million units a year. So all of our emphasis in the public sector right now is to grab those 2 buckets, South Africa and Brazil, because -- again, let me just dream for a moment, if we're able to get all of the 40 million a year from South Africa and the 50 million in Brazil, we could have a 90-million-unit year next year. So again, I'm just dreaming. But it could be significantly close to that. So this market does fluctuate, and you have good years and you have bad years, and it looks like some of the strategies that we have employed globally and internally here in the U.S., aligning FC2 as a prescription business also means that we can sell less units into the U.S. and see the same kind of revenue we see outside the U.S. So it makes sense to do that. And again, diversifying our product portfolio so that as you look at our growth, you don't see the fluctuations from quarter-to-quarter, instead, you see growth. And in the background of that growth, we will always have the public sector that we're going to be aggressive about.

And could you provide some additional comments on what the prescription FC2 sales ramp up could look like going forward? And whether if -- if there's any change in the Affordable Care Act in the future, could that affect the prescription business in the U.S.?

Yes, so what we've spent since April -- and again, April is not that long ago -- is I gave you about 9 or 10 bullets of really major infrastructure changes that have to be put in place. And it took a lot of the team's effort. We have now a full complement of 12 sales people that are selling. We know it's promotionally sensitive because the numbers each week are looking better and better and growing as you would expect. But we're going to give ourselves 1 more quarter before we announce anything publicly in terms of number of prescription and sales. But as I mentioned in my comments, it's promotionally sensitive, and what that means is now that we're in 97% of the retail pharmacies and our national distributors also -- one of our national distributor is also a 3 PL, we can actually track it very carefully. And it clearly is related to the territories that are being serviced. With that said, one of our strategies is to go out there and get a co-promote or a marketing partner that has more sales people that we can "throw at it" because it's promotionally sensitive. And so I think you'll see that this strategy will play out very nicely. As it relates to ACA, the Affordable Care Act, just by way of history, prior to 2010, 28 of states, almost all of them are blue states, already had some sort of plan in place to cover female contraception; if not 100%, pretty darn close to 100%. And it was the idea of the blue states when they went from female contraception covered by blue states to female contraception covered by the nation, all 50 states, that's no surprise that they took that same model and applied it to all 50 states. So if there's some of the -- off likelihood that ACA should be repealed, then they'll go back to the original 28 states that have coverage for female contraception. And it's no surprise that the blue states also tend to be the most populous states, including New York, where Governor Cuomo has already made an important statement. In fact, very, very soon after Trump was elected, he made the point that -- to women, don't worry, you're going to be covered here, and in particular, he was referring to female contraception. So I think we have a good fallback position. We've got 28 states that will continue to cover it in some fashion or form. But at this point now, we don't see any major changes happening in ACA. And even more reason that if anything should happen at ACA and go to 28 states, that will probably happen around the same time, if at all, when we get ready to launch Tamsulosin DRS. And so within the window that things could change, we have a high margin product, a pharmaceutical product that could -- that can take advantage of the infrastructure that we've built for the FC2 prescription business.

Got it. Final question. Regarding Tamsulosin DRS, should we expect a data readout from the Stage 2 by the end of 2017?

Yes.

And regulatory submission in first half 2018?

Yes. Yes and a yes.

Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back to Dr. Mitchell Steiner for any closing remarks.

Thank you, operator. I appreciate everybody joining us on today's call, and I look forward to updating everybody on our progress at our next investors call. Thank you very much for joining us.

Thank you. The digital replay of this conference will be available beginning approximately noon Eastern Time today, August 8, by dialing 1 (877) 344-7529 in the U.S. and 1 (412) 317-0088 internationally. You will be prompted to enter a replay access code, which will be 10110602. Please record your name and company when joining. The conference has now concluded. Thank you for attending today's discussion.