VivoSim Labs, Inc. (VIVS) Q3 2018 Earnings Report, Transcript and Summary

Good afternoon, and welcome to the Organovo Fiscal Third Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this conference is being recorded. I would now like to turn the conference over to Steve Kunszabo, Head of Investor Relations. Please go ahead.

Good afternoon, and thanks for joining us. I'd like to welcome you to our fiscal third quarter 2018 earnings call. Joining me on the call this afternoon are CEO, Taylor Crouch; our CFO, Craig Kussman; and our General Manager, Paul Gallant. Today's call will begin with the discussion of the 2018 fiscal third quarter results, followed by Q&A. Before I turn things over to Taylor, I'd like to caution all participants that our call this afternoon may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical fact, and include statements about our future expectations, plans, and prospects. Such forward-looking statements are based upon our current beliefs and expectations, and are subject to risks, which could cause actual results to differ from these forward-looking statements. Such risks are more fully discussed in our filings with the Securities and Exchange Commission. Our remarks today should be considered in light of such risks. Any forward-looking statements represent our views only as of today, and while we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our expectations or views change. During the call, we'll also be referring to certain non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles. Please refer to today's earnings release for a definition of these non-GAAP financial measures. With that, let me turn things over to Taylor.

Thanks, Steve, and good afternoon, everyone. I'll get us started by jumping right into the excellent progress we made advancing our liver therapy and tissue program. We believe our liver NovoTissues has the potential to become a revolutionary therapeutic application in treating many forms of dysfunction and impairment. In particular we're studying a range of clinical indications involving inborn errors of metabolism that can become life threatening and often result in the need for a liver transplant. Patients need is great in treating these abilitating pediatric liver diseases where annual cost of care are quite significant and current cell and gene therapy treatment regimen has had limited success. Our liver tissue aims to change all of this. In late December, we reached our first regulatory milestone with the FDA granting orphan for our NovoTissues treatment of Alpha-1 antitrypsin deficiency or A1AT. Patient populations suffering from this rare disease are in desperate need of new treatment options. The FDAs quick action recognizes the importance novo tissue engineering bases to purchase for these vulnerable patients. The FDAs orphan drug designation program also provides important developmental and economic expenses to sponsor so that we can expect to have more frequent interactions with the FDA including protocol assistance as we design and execute our study. We also qualified for tax credits for clinical research cost and weaver a certain registration fees. Finally, orphan designation also comes with a seven year term of market exclusivity upon FDA approval of the orphan drug. Taken together, these benefits can provide a more extreme lines and cost effective path to commercialization, while also being substantial drivers of our capital plan and partnering opportunities. As for our ground picking science we're creating a liver tissue patch that will approximately the size of a dollar bill when you plant into human. Simply put, our immediate target would be to supplement the function of a deteriorating organ with healthy tissue. Ultimately, we could delay the need for a transplant, reduce annual cost of care for patients and perhaps even potentially cure some of these diseases. We've also begun new animal model studies in a second therapeutic indication within the area of inborn errors of metabolism. The second disease known FAH deficiency frequently causes severe liver damage and commonly requires a patient to receive a new liver at an early age. We look forward to reporting proof-of-principle data in the coming months on this second important indication. I like to emphasize that unlike traditional drug development, where a different drug candidate progress for each indication, we're embarking on a strategy where the same healthy tissue patch could potentially be used across multiple disease areas. This approach could offer important synergies in terms of manufacturing, R&D and de-risking the development process. Overall, we're pleased with the progress we've made toward developing multiple IND-track therapeutics programs. We continue to target distribution of our first investigational new drug application to the FDA by the end of calendar year 2020. Until then, we'll continue to conduct safety and dosing investigations in small animals of these models as we move to defining and scoping IND enabling studies. Let me move now to an update on our commercial operations. As we announced last quarter, we continue to shift our R&D and business development efforts to high value disease modeling capabilities. In addition, we're seeing great commercial traction from our Samsara subsidiary, which more than doubled its contribution to our business versus the year ago quarter. Samsara's procurement and delivery of high quality human cells provides key building blocks for our own R&D mission and the same cells are also increasingly in demand for our client's research programs. We expect that our disease modeling and Samsara revenues combined will be the corner stones of our revenue growth as we look ahead to fiscal 2019. These core sources of revenue should also be bolstered by a range of deeper service and collaborative agreements, NIH grant payments and proceeds from technology licensing agreements. As a remainder, the objective of our platform technology is to produce living tissues that mimic key aspects of human biology and disease. Our ability to manipulate our bioprinted tissues to crossover from a healthy to a disease state in liver and kidney systems can facilitate breakthrough translational research from target discovery through to high content drug profiling. Importantly, by anchoring our work in liver disease, we're addressing growing markets that align with major therapeutics research areas in the biopharmaceutical industry. Case for our focus on tackling the spectrum of non-alcoholic fatty liver disease is quite compelling. Let's briefly review the key factors. As a starting point one third of first flow population suffer from deteriorating liver function. Liver disease is a growing public health crisis throughout the United States, Europe and Asia. As a leader in liver research, it's important for us to be a partner in treating liver disease as well as understanding how new and existing drugs perform in our dynamic tissue model as a potential for [indiscernible] given these funds. Furthermore, according to a recent journal publication, approximately two thirds of patients over the age of 50 with either diabetes or obesity are thought to have NASH with advanced fibrosis. This truly isn't epidemic. Not surprisingly the global pharmaceutical industry has launched over 250 clinical therapeutic programs to pursue treatments across the liver disease spectrum including NASH and fibrosis. Many global pharmas have major research programs aimed at liver disease and several of these companies are among our early adaptors. Lastly, liver disease is complex and requires a multi-planned approach to treatment. Our leading clients are already working with us to validate multiple platforms that evaluate different conditions of disease induction, progression of the various liver disease states and multiple classes of drugs. In short, our biopharma clients want more human relevant data in their drug discovery workflow to support decision making around which programs to move forward and we believe this demand will lead to growing and sustainable engagement with our platform. I'd also like to share a few leading indicating indicators demonstrating our momentum as we shift to disease modeling collaborations where our goal continues to be moving our clients from single project studies to larger longer term relationships. I'm pleased to note that we've added 11 customer accounts and completed over 40 orders in the first three quarters of fiscal 2018, which puts us ahead of the pace we were on in fiscal 2017. In the fiscal third quarter, substantially all of our service revenue related to developing custom disease model with some of our repeat clients now moving forward to begin testing their proprietary compounds on our platform. This is good news because our competitive differentiation lies in our ability to emulate human disease on our tissue platform and predict our drug form in human. We regularly hear from clients that existing animal models and simple screening platforms do not answer key questions of functionality required to improve drug development success rates. Overall, our sincere disease modeling services recognizes the important role that liver disease plays in pharmaceutical R&D, while also representing the highest value opportunity for our commercial business. We're seeing deeper engagement from our clients in this space and look ahead with excitement to forging lasting relationships. In closing, if you break our business down into two key components, we're developing our own therapeutic solutions to treat disease, while also providing assets to our dynamic tissue platform that allows our clients to do the same. This foundation supports multiple path to monetizing value for our stakeholders including the curation and delivery of high quality cells, the partnering of our platform to develop custom models for high content drug profiling and being successful in our own research mission to deliver revolutionary therapeutic solutions for treating disease. These are harmonious and complimentary paths for creating value with meaningful commercial, operational and R&D synergies. Importantly, we plan to execute against these opportunities while also being mindful towards our cash burn rate. We look forward to an exciting fiscal 2019 and to updating you again in the months ahead. With that I'll turn it over to Craig for a more complete financial review.

Thanks, Taylor and good afternoon everyone. I'll start by reviewing our key financial metrics for the fiscal third quarter and then recap the narrowed fiscal 2018 guidance range we updated today. I'll conclude my remarks by briefly summarizing our balance sheet and liquidity profile. Organovo generated fiscal third quarter total revenue of $1.2 million, which was unchanged from the prior year period and down 15% sequentially. On a year-over-year basis, total revenue results were driven by higher grant payments and growing contribution from our Samsara subsidiary, which offset lower collaborations revenue as key collaboration agreements were completed in the prior fiscal year. Product and service revenue was $0.8 million, up 19% from the prior year period. We continue to see growing demand from customers for our ability to provision primary human cells through scientific applications which also supports our commercial and research mission to build dynamic custom tissue models. As we've assessed the best path forward to monetize the value of our platform technology, penetration of the biopharma space with liver disease modeling services along with Samsara's procurement and delivery of cell based products to the commercial customers will be the key drivers of revenue growth over the next 12 months. As Taylor noted, the case for moving into high content drug profiling is quite attractive. Our success in this area will hinge on engaging with our clients to validate multiple disease interrogation platforms and from there to forge sustained relationships that allow us to become integrated components of their R&D workflow. I'll focus next on operating expenses. We reported $0.2 million in cost of revenues for the fiscal third quarter, a 9% decline from the prior year period. The dropping cost of revenues was largely due to a greater contribution from higher margin, primary human cell and tissue products. Research and development expenses were $4 million, a 20% year-over-year decline primarily resulting from lower employee and lab supply cost related to our organizational restructuring and the prioritization of our R&D project. We recorded $4.9 million in selling, general and administrative expenses during the fiscal third quarter, a 12% year-over-year decrease largely due to lower employee and non-cash stock based compensation expenses. SG&A also included approximately $0.3 million of one-time CEO transition cost and $0.8 million nonrecurring charge related to our organizational restructuring. Finally, a brief review of the full year fiscal 2018 outlook we updated today and a few quick notes on our balance sheet and liquidity profile. We now forecast total revenue between $4.5 million and $5.2 million for fiscal year 2018, with the primary contributions as we wrap up the year coming from a few key components. Continued uptick of our liver disease modeling services, accelerating growth from our primary human cell and tissue products, as Samsara has become an increasingly bigger piece of our revenue mix, this had great commercial success in the last nine months owing to the high quality and differentiated cell provisioning product it offers to biopharma companies and ongoing progress on our NIH grant, for which we've already recorded $0.4 million year-to-date and expect to book approximately $0.2 million in the fiscal fourth quarter. On the same basis, for the full year fiscal 2018, we now expect negative adjusted EBITDA between $25 million and $26 million. We've continued to improve our cash burn throughout fiscal 2018, which is primarily driven by the reduced operating cost we're benefiting from as a result of our organizational restructuring and a streamlined focus on our existing commercial opportunities and therapeutic tissue programs. By comparison, we recorded $29.8 million of negative adjusted EBITDA for fiscal 2017. It's worth highlighting that at the midpoint of our new guidance range, our operating burn rate as measured by this metric has improved by $4.3 million versus our last fiscal year. Now for our balance sheet, at the end of the fiscal third quarter a cash and cash equivalent balance of $47.3 million, which includes net proceeds of $3.1 million from the issuance of nearly 2.3 million shares of common stock in at the market or ATM offerings. With approximately 14.6 million of funds still remaining under our ATM facility, we have access to nearly 62 million in available liquidity to carry out our business plan and invest in our key growth initiatives. As circumstances and market dynamics permit, we'll continue to use our ATM facility opportunistically to extend the cash run rate for the business as we've continued to do in early 2018. The ATM facility is a flexible tool that lets us strengthen our balance sheet in a disciplined way while moving us forward to key value inflexion points as we consider our long term capital plan. The S-3 filing we made today, which replaces the remaining amount of our aspiring shelf registration supports our ongoing ATM activity. If we're able to continue successfully executing against our planned ATM strategy, our cash position and overall liquidity will be sufficient to last us through the remainder of calendar 2018. I'll wrap up by noting that like Taylor, I envision two things to be [ph] fundamental elements of our business. In the long term, we're developing our own nova therapeutics to treat liver disease. In the short term, we're helping our advance their own programs by providing vital data to support their decision making. We look forward to updating you on our progress again very soon. With that I'll turn things back over to the operator for the Q&A portion of this afternoon's call.

[Operator Instructions] The first question comes from Reni Benjamin of Raymond James. Please go ahead.

Hey, good morning guys. Thanks for taking the - or good afternoon thanks for taking the questions. I guess maybe starting off, can you talk a little bit more about the current collaboration - I think Craig mentioned that some of the revenues were lower this quarter primarily because the collaboration is not completed. Is there a transfer rate, I don't want to say renewal rate, but is there - do those collaborations then potentially morph into more of the disease specific type of collaborations or do they end and can you give us some color on that?

Yeah, these collaborations were basically around the development of specific tissues and they are pretty much - you can think of them, at least the historical ones that we've done, have really been kind of one off and are not necessarily intended to lead to what I would call routine type of screening our disease modeling.

Okay, so then as we try to envision how the disease model collaborations will grow, can you maybe provide some additional color in terms of the engagement you're expecting from not only your current clients, but moving forward how you plan on obtaining additional clients?

Sure. Hey, Reni, this is Taylor. We continue to enjoy a steady stream of new clients entering what I've described in the past as our adoption curve queue with starter projects and we also continue to enjoy a steady stream of those clients converting to repeat clients as they work with us in a series of supportive projects towards developing custom disease models specific to their research classes of drugs. And this sort of predictable build has happened for the area of NASH, for liver fibrosis and we're starting to see that in other therapeutic areas as well, including our important progress in the kidney fibrosis space. So our business model is kind of a layer cake approach, where we see each of these custom models layering in sometimes two, three or more at a given client and each of them being interrogated by multiple classes of drugs by our clients. So it's kind of a predictable and growing adoption rate and that's really how we see our business growing across liver, moving on to other organs as opportunities arise.

Okay and just maybe to dig in a little bit here, can you give us a sense as to right now of all the clients that you have, how many are starter plans versus repeat clients in the - of those that are evaluating specific disease tissue types?

So in general and this is held pretty constant for the last quarter or two, it's about 60% returning clients, 40% new clients, which kind of makes sense because I think we've got a broad and aggressive business development outreach out there. So you obviously always want new clients entering the fold and I think as I mentioned this, there is quite a large number of major pharma and biotech companies just targeting the NASH space alone and we're doing I think a great job of canvassing that broad opportunity. But clearly what we want is clients moving forward to complete custom models and then ultimately moving forward to more steady states for recurring and long term predictable use of our platform.

And when you talk about the canvassed sort of opportunity that you have, right, of those that are focused on NASH, how many - I guess you must have a certain percentage that you've already tapped and then probably goals for call a discount a year. How - I assume it should be going, but can you give us a sense as to how many of those you could penetrate and if there have been any pushback at those point in your search?

Sure. Let's say our target and you could look at major liver meeting exhibitors or attendees to see that target universe serving over a hundred potential clients. We feel we're doing a pretty good job of getting our message out to clients either through direct business development outreach or through our regular presence at leading conferences as presenters. We've mentioned in the past that we have dozens of clients, we've not quantified further than that. I mentioned that I think in this call 40 total discreet projects just in the first three quarters of this year. So that gives you a sense that we're well on our way to penetrating that market, but certainly there is plenty of account work to go. And I think the other part of your question was, does it always work? I have to say, I'm pretty surprised at our conversion rate, positively surprised at how high our success rate is from a - from let's call it a cold call to the opportunity to submit a bid to our ability to close those first bids and it's certainly well over 50%. Clients that don't move forward as initially, typically is for two reasons. One, they would prefer for us to finish all of our custom work and move more towards highly validated reproducible conditions for a platform. By the way they tend to be talks clients versus those that are comfortable working with us side by side on the cutting edge as we tease out all the capabilities that our living tissues can produce in this dynamic disease modeling environment. So I see late adaptors as one reason and then there are clients that are trying other complex modeling approaches or just generally sitting on the sidelines and either vary of new technologies in general or they're more specialty pharma companies that don't have much of a discovery effort primarily focused in the clinic. But I should say even in the - we have a number of clients even that just have products in the clinic that are working with us to profile drugs that are already in human testing, so generally just a very nice adaption rate.

Got it and just one final for me and I'll jump back in the queue. In the liver therapeutic franchise, you mentioned that we'll be seeing principle data in the coming months, can you kind of talk to us a little bit about what that proof of principle data looks like and are still on track for a first IND in the calendar year of 2020?

Yes, we're starting to end our target for a first IND submission at the end of 2020 and we're really hardened by Scott Gottlieb and others at the FDA, putting out as encouraging a set of announcement is possible for companies in our space working with advanced regenerative medicine solutions particularly in diseases - areas of diseases with unmet needs and even more particularly in pediatric and orphan diseases. And at Organovo we've checked everything of one of those boxes quite dramatically. With regard to how we choose to present in the price investors of progress in our preclinical proof of concept work, I think you'll see us continue to present abstracts and papers at leading conferences throughout the year and we certainly have a scheduled queue of those and that's where we'll typically demonstrate how our tissues reform in animals, how we maybe effecting the disease conditions and ultimately what we like to see and as clearly as possible, is it changed the vital rate in animals treated with our patch versus control. So these are the kinds of things we'll be talking about over the coming year.

Perfect. Congratulations and good luck going forward.

Thank you.

The next question comes from Brandon Couillard of Jefferies. Please go ahead.

This is Matt on for Brandon, thanks for taking the question. I know it's over really, but I think you're willing to share in terms of how do you expect the revenue trajectory develop into fiscal '19 and how it will be implied 4Q product revenues, it appears to point towards around $4 million to $5 million annualized rate?

Well, I like the way that you used the word trajectory. We certainly see momentum in our business. We see uptick repeat business and engagement. All are key indicators of growth. So I would hope that we would be providing guidance along those lines going forward. The thing I'll continue to point out is that because we're working custom disease platforms and collaborations, the projects and month-to-month revenue certainly that we see here internally can be bumpy, but overall we see a nice uptick and growth. And underlying that is also a pretty strong and straight forward trajectory in our Samsara cell business, which we mentioned has already doubled in a year-over-year comparison and we see that business continuing to take off. So really our decision to supply the raw materials that we're using to other sophisticated clients has turned into quite a successful business and it also is a great door opener, synergistic with our clients and we actually are beginning to sort of think of terms like Samsara insight to demonstrate higher quality platform obviously including ours, so certainly a nice drivers of growth going forward.

Thanks and now that you've filed the orphan status with FDA, what are the next milestones for the therapeutic tissue, are there going to be more data releases planned near term and what are the next milestones you expect to demonstrate with the tissue?

Well, the classic regulatory milestones probably next we would announce would be a result or acceptance of the pre-IND meeting, but that certainly would be outside of the coming fiscal year to sometime between now and I think closer to 2020. Outside of that, we as I mentioned earlier, we plan to be regular presenters of our data because we believe it's important not only demonstrate how the tissues could work in the clinic, but also it so nicely underscores our fundamental message that we could create a living dynamic model highly relevant of human condition against which one can test drug. And so all of our short term commercial clients are fascinated and closely following our successes on the therapeutic side and many of those clients who have regenerative medicine strategies or have an interest for therapeutic programs in some of these orphan disease areas clearly are watching us carefully as we work with them on their more traditional drug approaches.

Appreciate it, thank you.

The next question comes from Ed Arce of H.C. Wainwright & Company. Please go ahead.

Hi, Taylor and Craig, nice to talk to you and congrats on the progress on your newer programs going forward.

Thank you.

I have a few questions, first on your liver therapeutic tissue program, you've got now two identified indications that you're proceeding forward with. I guess the first is, are both of these using the NovaTissues and then around that, these two indications A1AT and FAH, if you could just give us a little more detail around why you selected these two particular as your first couple of therapeutic approaches and is there any thought for consideration around seeing clear competitively of your own customers targets? And then I have a few follow ups. Thanks.

Sure. So let me start at the end of your questions. I think our clients are really routing for us to succeed and creating systems that support profiling their drugs and that's indicated by the fact that they're collaborating with us often real time. Long before we completely validated or teased out the final capabilities of our platform. Typically that's a sign of partnering versus sort of hands off transaction. I think with regard to our therapeutic strategy, our approach is to put patches comprised of primary human cells providing normal function into humans with impaired organs. Most regenerative medicine strategies, so those of large pharma and biotech companies are aimed at reengineering cells using stem cell therapies, using DNA transcription strategies et cetera and so basically putting something very different into humans and what we're doing which is healthy functioning tissue. So if anything, our strategy is compatible with those strategies and it's not unreasonable to imagine we may also partner some days to help clients with those more engineered solutions, imbed those technologies into our tissues as we learn more about how our tissues are accepted and functioned in humans. Finally, one of the reasons we chose the liver as our primary target, it's the homogenous regenerative organ and often the first that you learn of the fact that you've got an impaired or seriously dangerous alarming of liver function is when you're down 10% or 15% remaining functional capacity of your liver and then you're on a pretty short list often for transplant or serious intervention. Conversely, therefore our theory is that perhaps small doses or patches providing incremental benefit around that time frame may help walk patients back from that transplant event and that's pretty much at the core of our strategy. Ideally our patches might be able to maintain liver function definitely, so lots of potential there. I remember the first part of your question, sorry. We're using the same composition and design for our patches across multiple indication areas and I think that's quite a nice synergistic and de-risking approach and we believe the FDA is quite intrigued by that process because in a sense they only need to learn and work with us to characterize one approach and then try that in any condition where the liver is otherwise healthily functioning with the exception of one deficiency or one missing enzyme.

Okay, that's great. Thank you for that. And then just one big picture question around your liver disease modeling studies, you've mentioned in some of your prepared remarks earlier about the existing animal models that often don't answer some key questions around liver function and I was hoping that you could hallucinate exactly what kinds of those questions were you referring to?

Well, it's interesting. Yesterday we had one of our clients address our employees. A Vice President, 30 year veteran of the pharmaceutical industry with several drugs on the market under his belt and this client is working with us with our NASH model. And we asked him, why work with Organovo, you're already in the clinic, what differentiates us either classic 2D screening models or animal models? And he looked at us and said, because you're allowing us to work in dynamic human tissues, it's just simple as that. Animals are not good predictors of humans as we know. Even if they give you some ideas of where the drug may perform, they can be way off in terms of what dose works, how doses combine, how they metabolize et cetera and these are all the kinds of things that we're looking to try and prove upon with our tissue platform.

Okay, great. I did have one other question just at my side. I was wondering if the FDA technical guidance that was released back in December on 3D printing technology to start, does that type of guidance apply to you and if so were there any surprises on material changes to what you would have been expecting?

The answer is yes. The guidance is something - by the way we liked the theory, we played a role in providing advice and feedback into that process and we're delighted with the FDAs recognition of the importance of not only 3D printing, but complex tissue and tissue engineering solutions as extremely promising. Particularly, for a number of unmet disease areas and so as I mention in parallel with that guidance, right around the same time that they surprisingly quickly gave us our orphan drug designation. I'd mention, probably a couple of months faster than we were expecting to hear from them, but perhaps because they wanted to end the year with a lot of messaging around the same topic, that's when the FDA also said, we're looking for a whole range of ways to encourage clients to progress these technologies focusing unmet theories of these areas and as I mentioned also as an added bonus they have a particular benefit in pediatric orphan disease areas even better. And that's where we're starting with our approval.

Okay, alright. One last one and then I'll jump back into the queue. This is for Craig. I just wanted to make sure I heard this correctly, the cash burn rate through the end of calendar year 2018?

Yes, that assumes that we are able to continue to avail ourselves of the modest continued ATM activity combined with the burn rate trajectory that our operating cash flows are already on, that we effectively would not be in a position to have to do any type of larger financing during calendar 2018.

Okay, great. Thanks very much to both of you.

Yeah and just to add, the implication there is also that we would end 2018 with an adequate cash reserve for our forward mission.

Got it. Thanks again.

[Operator Instructions] The next question comes from Matthew Cross of Jones Trading. Please go ahead.

Hey, guys. Thanks for taking my questions. Great to see the shift towards disease modeling being reflected in your revenue mix so quickly. That said, you've - taking the revenue estimates for fiscal 2018 towards lower ends compared to last quarter, I'm curious about reflective of an expected change in grant revenue or if the disease modeling projects with your - as you said, now making up the majority of service revenues or longer term projects or was it the toxicology and sort of the bulk of those revenues is just being realized?

I think part of our tightened revenue guidance is just practically speaking, we had $2 million spread in the range and with one quarter left, clearly we have a much clear idea of what that range will fall into. So we just wanted tighten the guidance. I think as I mentioned on the last call, a lot of our projects are binary in terms of which quarter they fall into and so our ability to predict at the tightest level often comes down to sometimes one, two or three projects, finishing early or finishing a month later than expected. There is a fair amount of experimental wrestling that we do here and well, we have a pretty good idea of timing and outcome, still there is timeline variability and so I think the breadth of our revenue range and the ability to predict even into the near term is affected by those binary outcomes, but we don't see that as a result of lack of client interest or lack of traction in the business model.

Sure, okay, got it. I appreciate the clarity. And then second question I had was I was hoping to kind of building off of Reni's question. As far as the FAH program and data that maybe coming later this year, given that you guys originally received the order designation for the Alpha-1 antitrypsin program, I was wondering if you could just talk why couldn't be so much be done for the FAH program to potentially get designation for that one as well. Thanks.

That's a great question. I probably think it's premature to give any guidance on that, but just to speculate because we're using similar materials and approaches and - so you could imagine that the safety side of our database is complimentary to what we've already created and our plan with the FDA is already filed. There should be a pretty straight forward path for us repeating the process we did with Alpha-1 antitrypsin. So depending on how the animal model base comes out, it's certainly reasonable to expect that we would be looking at teeing up this second indication for an IND check program.

Great, okay and I'll look forward to any update I guess following pre-IND meeting and when data is available. Thanks, guys.

Sure and as I mentioned, FAH is also a pediatric orphan disease, so as far as I can imagine it would follow on the same criteria the FDA used to approve the Alpha-1 antitrypsin orphan designation.

This concludes our question-and-answer session as well as today's conference. We thank you for attending today's presentation. You may now disconnect.