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Edited Transcript of BTX earnings conference call or presentation 14-Mar-19 8:30pm GMT

Q4 2018 BioTime Inc Earnings Call

ALAMEDA Mar 20, 2019 (Thomson StreetEvents) -- Edited Transcript of BioTime Inc earnings conference call or presentation Thursday, March 14, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Brandi L. Roberts

BioTime, Inc. - CFO & Senior VP of Finance

* Brian M. Culley

BioTime, Inc. - CEO, President & Director

* Edward D. Wirth

Asterias Biotherapeutics, Inc. - Chief Medical Officer

* Gary S. Hogge

BioTime, Inc. - SVP of Clinical & Medical Affairs

* Ioana C. Hone

BioTime, Inc. - Director of IR

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Conference Call Participants

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* Joseph Pantginis

H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst

* Keay Thomas Nakae

Chardan Capital Markets, LLC, Research Division - Senior Research Analyst of Therapeutics, Devices and Diagnostics

* Naureen Quibria

* Reni John Benjamin

Raymond James & Associates, Inc., Research Division - Senior Biotechnology Analyst

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Presentation

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Operator [1]

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Welcome to the BioTime, Inc. Fourth Quarter and Full Year 2018 Conference Call. (Operator Instructions) This call is subject to copyright property of BioTime, Inc. and recording, reproduction or transmission of this call without the expressed written consent of BioTime is strictly prohibited.

As a reminder, today's call is being recorded. I would now like to introduce your host for today's conference, Ioana Hone, Director of Investor Relations at BioTime. Ms. Hone, please go ahead.

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Ioana C. Hone, BioTime, Inc. - Director of IR [2]

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Thank you, Jonathan. Good afternoon, and thank you for joining us. A press release reporting our fourth quarter and full year 2018 financial results was issued earlier today, March 14, 2019, and can be found on the Investors section of our website.

Please note that today's conference call and webcast will contain forward-looking statements within the meaning of federal securities laws, including statements regarding our strategy, goals, product candidates and clinical trials, expected synergies and benefits of the Asterias acquisition and financing matters. Such statements are subject to significant risks and uncertainties, including those described in our press release issued on March 14, 2019, and our recent SEC filings on Form 8-K, Form 10-K and Form 10-Q. Actual results or performance may differ materially from the expectations indicated by our forward-looking statements due to these risks and uncertainties. We caution you not to place undue reliance on any of the forward-looking statements, which speak only as of today.

Joining us today are our Chief Executive Officer, Brian Culley; our Chief Financial Officer, Brandi Roberts; our Chief Medical Officer, Ed Wirth; and our Senior Vice President of Clinical and Medical Affairs, Gary Hogge. The executives will provide prepared remarks, then take questions from analysts and institutional holders.

With that, I'd like to turn the call over to Brian Culley, our CEO.

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Brian M. Culley, BioTime, Inc. - CEO, President & Director [3]

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Thank you, Ioana, and good afternoon, everyone. We have been extremely busy since my first earnings call just 5 months ago, with significant advancements made on the corporate development, clinical and operational fronts. BioTime is a very different company than when I joined as CEO in September of last year, and we will continue to pave the way toward our objective of becoming the leading cell therapy company.

On our last call, we outlined our plans to simplify BioTime's corporate structure and focus on our most compelling clinical opportunities. We intended to accomplish this, in part, through targeted transactions with our affiliated companies. We have executed on these near-term promises, and I'd like to highlight those recent accomplishments briefly before going into greater detail on each one. First, at the beginning of this week, we announced that we completed our acquisition of Asterias Biotherapeutics, broadening our pipeline with the addition of 2 synergistic and compelling clinical-stage cell therapy assets. In January, we entered into an exclusive agreement with Orbit Biomedical and will collaborate with Orbit on the use of their proprietary injection technology to deliver OpRegen for the treatment of dry age-related macular degeneration in our ongoing clinical study.

We also made some recent changes to our executive team. In January, we announced the appointment of Brandi Roberts as our Chief Financial Officer and Senior Vice President of Finance, and more recently, as a result of the acquisition of Asterias, we also added Dr. Ed Wirth as our Chief Medical Officer. Ed will oversee the clinical development of the OPC1 and VAC2 programs.

As a reminder, BioTime owns a large portfolio of cell therapy technologies and patents. The actual and potential product candidates contained within this platform exceed our ability to fully develop them. As a result, from time to time, we look to strategically convert some of these earlier-stage or noncore research programs into new businesses, from which cash or equity can be utilized to support our more clinically advanced than the internally held programs. For evidence of this effective strategy, I can point to the fact that we now have successfully launched 2 public companies, OncoCyte Corporation and AgeX Therapeutics, each valued today at more than $150 million and each one launched with assets that originated from within BioTime.

In the first example, OncoCyte recently reported positive results from an R&D validation study of DetermaVu in noninvasive liquid biopsy test intended to facilitate clinical decision-making in lung cancer diagnosis. BioTime owns approximately 28% of OncoCyte's common stock. And as of yesterday, OncoCyte was trading at $3.81 per share. So the value of BioTime's equity position in OncoCyte was approximately $55.9 million.

In the second example, last year, we sold a portion of our ownership of AgeX Therapeutics to a private company called Juvenescence for a total of $43.2 million. We also distributed approximately 12.7 million shares of AgeX common stock to BioTime shareholders and launched AgeX as a newly listed public company. AgeX has performed well as a public company and as of yesterday, was trading at $4.19 per share. The value of BioTime's nearly 5% equity position in AgeX, as of yesterday, was approximately $7.2 million, and we are still owed $21.6 million from Juvenescence, which is due to us no later than August 2020, which represents yet another source of opportunistic capital for us.

We're pleased with the performance of our subsidiaries and affiliates and believe further value may be extracted from their success. In addition to the $23.6 million in cash we had at year-end and the Juvenescence note with a face amount of $21.6 million, we hold approximately 14.7 million shares of common stock in OncoCyte and 1.7 million shares of common stock in AgeX. Although no assurances can be given as to the value of the Juvenescence note or of those shares I described, if and when we were to dispose of them, but those assets together with our cash represent more than $100 million of assets that could be used to help fund our operations.

Looking forward, 2019 will be an important year with significant planning and execution required on clinical and operational fronts. Our first order of business will be fully integrating the Asterias assets into our pipeline and doing this quickly and successfully so that the financial synergies we anticipated, primarily related to personnel, can be realized. To that end, we plan to deploy our OpRegen process development and scaleup teams onto the Asterias programs so that they can contribute learnings and success they've had with OpRegen manufacturing to our 2 new cell therapy assets.

With that brief introduction complete, I next will review each of our programs and plans for the year in a bit more detail as this will be the first time we are discussing the plans for the newly combined company. I'll begin with our lead program, OpRegen.

OpRegen is an allogeneic or off-the-shelf cell therapy treatment in development for dry-AMD, the leading cause of adult blindness in the developed world. There currently are no FDA-approved treatments for dry-AMD. Our planned approach with OpRegen is to manufacture and deliver healthy RPE cells to the back of the eye to replace dead, dying or dysfunctional RPE cells. We believe this approach can slow the loss of vision and possibly improve vision in affected patients. OpRegen has been granted Fast Track designation by the FDA and currently is a subject of a Phase I/IIa multicenter clinical study. The study is designed to evaluate the safety and tolerability of different doses of OpRegen, but we also are collecting markers of efficacy, which will help inform our decisions and strategy for the next trial. The current study is expected to enroll a total of 24 subjects, divided into 4 cohorts according to disease stage and visual acuity.

Of the 24 subjects, 12 legally blind subjects with best corrected visual acuity of no better than 20/200 have been enrolled, and we now are enrolling patients with best corrected visual acuity as good as 20/64. We have dosed 3 of these better vision patients so far, with 9 better vision patients remaining to be enrolled and dosed, which we expect to be completed this year.

Data reported to date from the study indicate that treatment with OpRegen is well tolerated, with signs of structural improvement in the retina and reductions in drusen density observed in some patients. In particular, early data collected from better vision patients appears encouraging. We can identify evidence of the continued presence of transplanted cells, signs of structural improvement within the retina, and although the data are preliminary and the number of treated patients is small with limited follow-up, there are early suggestions of improvements in visual acuity. Additional treatments and longer follow-ups will be important to us because better vision patients with earlier-stage AMD more closely represent the patient population we ultimately hope to treat.

I next want to explain the significance of the exclusive partnership we announced in January with Orbit Biomedical, in which we will assess their recently approved subretinal delivery system, which is a vitrectomy-free delivery device for targeted administration of whole cells to the eye.

Delivery of cells to the subretinal space is a well-known challenge for ophthalmology companies. Traditionally, the subretinal space is accessed first via vitrectomy or removal of the gel-like substance that fills the eye, followed by an injection through the front of the eye and all the way back into and under the retina itself, puncturing the retina as necessary as a part of the process. As you can imagine, this procedure involves some risk to the patient, and furthermore, removal of the needle is associated with efflux of cells away from the injection site, leading to dose variability as well as the potential for delayed complications.

Orbit's subretinal delivery system, which recently received 510(k) clearance from the FDA, is designed to precisely and consistently deliver therapeutics to the subretinal space via a suprachoroidal route, avoiding the need for both the vitrectomy and perforation of the retina from the vitreal space. We are excited to deploy the Orbit device into our ongoing trial as soon as possible because we believe that if successful, the use of this device could not only decrease the number of adverse events we might otherwise observe, but also may provide superior dose control of our cells in our clinical trials, which may lead to smaller and more well-controlled data collection. We believe this alternate anatomical route of delivery could become a new standard of care in ophthalmology, which is why we have obtained the exclusive right to negotiate commercial supply terms with Orbit for the delivery of cells in the field of dry-AMD.

Looking ahead on the data front, we expect to present updated results from the ongoing OpRegen clinical study, including additional data on the better vision patients, at the ARVO Annual Meeting on May 2 of this year. Moreover, we are working toward initiating dosing of the first patient with both the Orbit device and a new thaw and inject formulation of OpRegen in the second quarter of 2019. We anticipate completion of patient enrollment in the study will occur by the end of the year.

Moving now to Asterias. Just a few days ago, we announced the closing of the acquisition of Asterias, with that company now becoming a wholly owned subsidiary of BioTime. Notably, 98% of BioTime votes cast and 96% of Asterias votes cast were in favor of this merger, which we believe reflects strong support from stockholders for the advancement of the combined company and the product candidate pipeline. We expect this acquisition to be synergistic in a number of ways. First, we believe Asterias' cell therapy product candidates fit naturally and operationally within BioTime's existing business and serve our objective of creating a dominant cell therapy company. Moreover, we expect to benefit from substantial financial synergies and enjoy other advantages from our critical mass, which collectively supported our decision to acquire Asterias. We also will look to strengthen and broaden the existing collaborations with Asterias' notable and relevant partners, including the California Institute for Regenerative Medicine, or CIRM, and Cancer Research UK.

From a general management perspective, 2 members of the former Asterias Board of Directors will serve on the BioTime board and we anticipate a smooth transition and integration process. Importantly, we believe BioTime's shareholders will benefit from the current and future value of a broader and more innovative pipeline as well as the opportunity to address disease areas that are in need of groundbreaking approaches and which seem like suitable, if not superior, targets for whole cell approaches compared to small molecule or antibody-based techniques.

I now would like to spend a moment to introduce you to OPC1, one of the 2 clinical programs we acquired from Asterias. OPC1 is similar to OpRegen insofar as the basic approaches to manufacture and deliver to the body a very specific kind of cell. In the case of OPC1, the approach is to manufacture and deliver an oligodendrocyte progenitor cell, which is a type of glial cell found in the central nervous system. Oligodendrocyte progenitor cells are naturally occurring precursors to the cells which provide electrical insulation for nerve axons. Their application to spinal cord injury, or SCI, is because severe, functional impairment, including limb paralysis, aberrant pain signaling and loss of bladder control and other body functions can occur when spinal cord cells are subjected to and damaged by a crush or contusion injury. Based on the reparative properties associated with oligodendrocytes, we believe the delivery of healthy new spinal cord cells is ideally suited to treating neurological conditions such as SCI and potentially, other disorders of demyelination.

The OPC1 cells also have been shown to have additional functions such as the secretion of neurotrophic factors and stimulation of new blood vessel formation, which we believe provide further support to the process of tissue repair in the injured spinal cord.

The OPC1 program currently is in a Phase I/IIa multicenter clinical trial named SCiStar for treating acute spinal cord injuries and which recently completed enrollment. Clinical development of OPC1 has been partially funded by a $14.3 million grant from CIRM, and we intend to seek additional nondilutive funding from CIRM later this year. OPC1 has received Regenerative Medicine Advanced Therapy, or RMAT, designation for the treatment of acute SCI and has been granted Orphan Drug Designation by the FDA.

In January of this year, top line data was announced from the OPC1 trial. The primary goal of the study was to observe the safety of OPC1 in cervical spinal cord injury patients and to accumulate data on dosing, timing and engraftment to aid the design of later-stage trials. The key findings from the study include a positive safety profile. Specifically, MRI scans at 12 months post-injection showed no evidence of adverse changes in any of the 25 subjects treated with OPC1, and to date, there have been no unexpected serious adverse events related to the OPC1 cells.

All 3 subjects in the Cohort 1 and 95% of subjects in cohorts 2 through 5 have MRI scans at 12 months, consistent with the formation of a tissue matrix at the injury site, which is encouraging evidence that OPC1 cells have engrafted and helped to prevent cavitation, a destructive process that occurs following injury and which typically results in permanent loss of motor and sensory function, and which can lead to serious additional complications.

From an efficacy perspective, at 12 months, 95% of subjects recovered at least one motor level on at least one side and 32% of these subjects recovered 2 or more motor levels on at least one side according to the NC scale, the International Standards for Neurological Classification of Spinal Cord Injury, the exam that's used to determine motor score. Notably, no subjects experienced decreased motor function following administration of OPC1, and subjects consistently retained the motor function recovery seen through 6 months or saw further motor function recovery from 6 to 12 months. We now are in the process of analyzing the full data set from the SCiSTAR trial to inform how best to proceed with this promising program. We expect to propose a clinical plan to the FDA later this year and to share the outcome of those discussions when they are available. In the meantime, we will be leveraging our manufacturing capabilities and process development expertise from the OpRegen program to try and accelerate OPC1 product development. We also plan to submit for further grant support from CIRM around the middle of this year.

The second clinical program we acquired from Asterias is VAC2. VAC2 is an allogeneic or off-the-shelf cancer immunotherapy consisting of antigen-presenting dendritic cells and is currently in a Phase I clinical trial in subjects with non-small cell lung cancer. VAC2 is designed to stimulate a patient's immune responses to a tumor antigen commonly expressed in cancerous cells but rarely found in normal adult cells. Similar to OpRegen and OPC1, VAC2 is produced from pluripotent cell technology but uses a different lineage differentiation protocol to generate a population of mature dendritic cells. We use dendritic cells because they are potent antigen-presenting cells, which instruct the body's immune system to attack and eliminate harmful pathogens and unwanted cells.

To target cancerous cells, VAC2 is engineered to express a tumor-selected antigen found in over 85% of all cancers. Because the tumor antigen is loaded exogenously into the dendritic cells before treatment, VAC is actually a platform technology that can be modified to carry essentially any antigen, including patient-specific tumor neo-antigens. VAC2 represents just one promising foray from this platform.

In the VAC2 program, 4 patients had been enrolled to date in the Phase I clinical trial, and enrollment will continue throughout 2019. We're fortunate that the VAC2 trial is being fully funded and conducted by Cancer Research UK, the world's largest independent cancer research charity. Upon completion of the Phase I trial, BioTime has an exclusive option to acquire the data generated in the trial from Cancer Research UK for approximately $1.6 million. So though we don't currently have operational control over the VAC2 clinical trial, we provide input to Cancer Research UK and the arrangement offers us tremendous optionality at an attractive price.

Turning next to Renevia, our medical aesthetics program targeting an HIV lipoatrophy indication, we submitted our CE Mark application for Renevia in 2018 to BSI, the independent accredited body in the U.K. responsible for reviewing such applications, and their review is ongoing. It is important to note that this regulatory review process does not come with a statutory clock, meaning BSI can take as long as it deems necessary to review our application. Our best estimate at this time for a response is sometime in the second half of this year. If our application is approved, we intend to identify an external partner for commercialization of Renevia in Europe. And as shared previously, the U.S. market is no longer part of our commercial plan because the FDA indicated it would designate Renevia as a drug-device combination, so the shorter regulatory path afforded to devices is not available for Renevia in the U.S.

Lastly, I want to bring attention to one of our core competencies, whole cell manufacturing, which is a foundation of cell therapy. I believe manufacturing is an underappreciated competitive advantage for BioTime based on our commercially viable GMP manufacturing facility, and experienced staff of more than 30 professionals located in Jerusalem, Israel, have done an exceptional job with our OpRegen clinical program. Driving the lineage of whole cells and controlling their manufacture up to a commercially viable scale is a difficult task, but our team has made significant improvements to the process development and commercial viability of our OpRegen product candidate. Our facility manages storage, clinical supply manufacturing, scale of production and stem cell banking and handling, and we now have successfully produced enough OpRegen clinical trial material to conduct our next study. And we will focus our efforts on optimizing process development and scale up activities for the assets we have acquired from Asterias.

I'll now take a break and turn the call over to Ed Wirth to introduce himself. He then can pass the call over to Brandi to introduce herself and provide the financial overview.

Ed?

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Edward D. Wirth, Asterias Biotherapeutics, Inc. - Chief Medical Officer [4]

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Thanks, Brian. I'm very pleased to transition from the role of Chief Medical Officer of Asterias directly into the role of CMO of BioTime. Nearly my entire career over the past 25-plus years in academia and industry has focused on the translational and clinical development of cell-based therapies for neurological indications and more recently, cancer. As a faculty member at the University of Florida, I planned and conducted the first Phase I clinical study in the U.S.A. of neuro-tissue transplantation into human subjects with spinal cord injuries.

In 2004, I transitioned from academia to industry and served as the Medical Director for regenerative medicine at Geron Corporation, where I planned and led the world's first clinical trial of human embryonic stem cell-derived product, GRM OPC1, now known as AST-OPC1, in patients with acute SCI. Since joining Asterias Biotherapeutics at its inception in 2013, I have led the continued clinical development of AST-OPC1 via the SciSTAR trial and worked closely with my former Asterias colleagues on the VAC2 program. I look forward to working with the BioTime team to continue advancing the OPC1, VAC2 and OpRegen programs into later-stage clinical trials.

Brandi?

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Brandi L. Roberts, BioTime, Inc. - CFO & Senior VP of Finance [5]

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Thank you, Ed. I'd like to start off by saying that I'm really happy that I joined the BioTime team. I believe that my strong leadership skills in finance and operational areas, such as clinical development and manufacturing, will be helpful as we continue on our mission to becoming a leading cell therapy company. I bring over 20 years of experience to my position. I am a CPA and started off my career at PricewaterhouseCoopers, so I have a strong foundation of accounting and financial knowledge. I worked at Pfizer for 7 years, so I also have a strong foundation in pharmaceutical research and development. When I was a CFO at Mast, I helped run the largest sickle cell clinical trial ever completed. It encompassed 388 patients at 75 sites in 12 countries. I provided operational oversight, including significant project management, as we worked to complete data lock in a timely manner and finish our study within budget. I understand the needs of clinical-stage companies, and I look forward to working with the team here to create shareholder value as we work to deliver clinical data on our 3 cell therapy programs.

I'll start off the financial discussion with some balance sheet highlights. At December 31, 2018, BioTime's cash and cash equivalents totaled $23.6 million. Our marketable securities, which includes our investment in AgeX, totaled $7.2 million. Our investment in OncoCyte was valued at $20.3 million as of December 31, 2018. But as Brian mentioned previously, OncoCyte released positive data recently and has seen a significant increase in its stock price. Accordingly, our investment in OncoCyte was worth $55.9 million as of yesterday.

Our promissory note from Juvenescence was valued at $22.1 million as of December 31, 2018. If Juvenescence completes an IPO prior to note maturity, then the note will convert into Juvenescence stock. The conversion is subject to an upward adjustment if the 20-day VWAP of AgeX stock is above $3. Based on yesterday's closing price, the 20-day VWAP of AgeX is $4.43. If the conversion were to take place now, the number of shares to be issued would be adjusted upward by roughly 1.5x and the shares will potentially be worth more than $30 million.

If the promissory note is converted, our Juvenescence stock will be a marketable security that we may use to supplement our liquidity needs. If the promissory note is not converted, it is payable in cash, plus accrued interest at 7% per year, which is roughly $1.5 million per year at maturity in August 2020.

In looking at our statement of operations, it's important to remember that we deconsolidated AgeX as of August 30, 2018. So when looking at the entire year, AgeX revenue and expenses were only included for 8 months. To make this easier to understand, we have included a non-GAAP table in our earnings release as well as our GAAP financial statement. The non-GAAP table breaks out BioTime versus AgeX operating expenses as well as noncash and nonrecurring charges. Please keep in mind, when reviewing this table, it does not represent a cash flow by entity because grants and other revenues are not included in the totals.

Revenues for 2018 were $5 million, an increase of $1.5 million compared to the prior year. The increase was primarily related to an increase of $1.9 million in grant revenues, offset by a reduction of $400,000 in subscription and research-related revenues due to the deconsolidation of AgeX. Our grant revenues for 2018 were from the Israeli Innovation Authority and the NIH.

Operating expenses are comprised of R&D expenses and G&A expenses. Total operating expenses for 2018 were $46.5 million as reported, which is comprised of $38.8 million for BioTime and $7.7 million for AgeX. Total operating expenses for 2018 were $37 million as adjusted, which is comprised of $31 million for BioTime and $6 million for AgeX.

R&D expenses for 2018 were $21.8 million, a decrease of $2.2 million compared to prior year. The decrease was mainly attributable to reductions in AgeX-related programs, LifeMap Solutions expenses, Renevia program expenses and the absence of OncoCyte R&D expenses in 2018 that were incurred in 2017. The decreases were partially offset by an $800,000 write-off of certain acquired IP R&D assets by AgeX in March 2018.

G&A expenses for 2018 were $24.7 million, an increase of $4.8 million compared to prior year. So the increase was primarily attributable to increases in management transition and compensation costs, legal audit and compliance costs related to the AgeX distribution and share-based compensation expense due to new equity award grants. The increases were offset by reduced G&A expenses for OncoCyte, LifeMap Solutions and AgeX.

As we turn to 2019, one of our major goals will be to realize synergies from the Asterias acquisition. At this point in time, we are working on the transition of manufacturing activities from Fremont to Jerusalem and evaluating our plans for the next clinical trial of OPC1. We are still working out the final details of our 2019 budget, but we do anticipate our 2019 cash spend will be significantly less than the prior year. Even with taking into consideration onetime expenses related to the Asterias acquisition and the evaluation of the Orbit device in 2019, we still intend to spend less than the combined company in the prior year.

In connection with the Asterias acquisition, we expect to make extensive reductions in headcount and nonclinical-related spend. We will also continue to evaluate our existing operations for additional cost efficiencies as we progress our clinical programs in the best way possible. We plan to provide more detail on financial guidance at our first quarter earnings call that is anticipated to take place in May.

And with that, I will turn the call back to Brian.

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Brian M. Culley, BioTime, Inc. - CEO, President & Director [6]

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Thanks, Brandi. As you can tell, we've been rapidly transforming BioTime into a leading cell therapy company through strategic transactions on the corporate development, clinical and operational fronts, and we have no plans to slow our pace of progress. We will remain focused on advancing our clinical programs of thoughtful and cost-effective manner throughout 2019, and we'll update investors frequently on our time lines, achievements and regulatory plans.

Some things to look forward to this year include a new corporate brand focused on clinical-stage cell therapy programs, which we expect to be launched in the second quarter; updated results from our Phase I/II clinical study of OpRegen for the treatment of dry-AMD at the 2019 ARVO Annual Meeting in May; initiation of dosing with the Orbit device and a new thaw and inject formulation in our ongoing clinical study of OpRegen anticipated in the second quarter; advancing the OPC1 program, including manufacturing improvements and plans to meet with the FDA to discuss next steps in the clinical development of the program; strengthened partnerships with CIRM and Cancer Research UK for the ongoing support of the OPC1 and VAC2 programs; completion of patient enrollment in our Phase I/II clinical study of OpRegen anticipated by the end of this year; evaluating the development of OPC1 as a candidate for multiple sclerosis and ischemic stroke through ongoing research collaborations we have with major universities; an increased presence in the patient, physician and advocacy communities; and lastly, a decision on BioTime's CE Mark application for Renevia, which is expected in the second half of 2019.

I believe in the past 6 months following my hire, we have delivered on promises to take BioTime in an exciting new direction, and we will continue to increase visibility of the company in our attempt to build institutional and retail support through continuous communication and engagement. Our goal is to build awareness and support for a reinvigorated and repositioned BioTime. That will be this management team's priority and focus in 2019 and beyond.

And with that, operator, we are ready for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Jason McCarthy from Maxim Group.

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Naureen Quibria, [2]

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This is actually Naureen calling on behalf of Jason. We were just wondering, one question really, with regards to the spinal cord asset that you acquired through the Asterias acquisition. You mentioned that you have a meeting coming up with the regulatory authorities later on in the year. What do you think the path forward is with regards to this asset and advancing it in the setting of spinal cord injury?

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Brian M. Culley, BioTime, Inc. - CEO, President & Director [3]

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Hey, Naureen, thanks for joining. So because it's a new asset to BioTime, we're just going to be evaluating the existing path. At present, we don't have any reason to think that the path that Asterias had discussed with the FDA has any flaws or deficiencies or problems. It's just a matter of we want to go through and make sure that we're comfortable with it as well. If there are any changes, whether those are to regulatory strategy or on the CMC side or anything like that, that is something that we would update accordingly. But at that time, we know that Asterias have done a lot of work and had very promising interactions with the agency on a proposed next study. And so until and unless something changes, it's status quo with that program.

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Naureen Quibria, [4]

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And just a quick question on what you'll be presenting at ARVO with regards to OpRegen, can you talk about how many patients have been enrolled and what we'll be seeing there in Cohort 1?

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Brian M. Culley, BioTime, Inc. - CEO, President & Director [5]

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Yes, I'll hand that question to Gary Hogge, who can provide you with some more information.

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Gary S. Hogge, BioTime, Inc. - SVP of Clinical & Medical Affairs [6]

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Yes, thanks for the question, Naureen. So as Brian said, there are 12 patients that were involved in cohorts 1, 2, 3, the additional 3 patients in the better vision in Cohort 4, and those data will be updated and presented in ARVO. So a total of 15 patients will be presented.

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Operator [7]

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Our next question comes from the line of Joe Pantginis from H.C. Wainwright.

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Joseph Pantginis, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [8]

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And congratulations on getting Asterias done. Also starting with OPC1. Just curious, you did mention, Brian, that you will obviously be doing some internal analyses of the data. So I was curious about what your public disclosure plan might be, especially with regard to granularity on the patient populations in the study to date and differences between, say, the AIS-A and AIS-B populations as an example?

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Brian M. Culley, BioTime, Inc. - CEO, President & Director [9]

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Yes, and that's something that I think that -- I mean, I will have Ed join in just a second. I think Asterias didn't provide, let's say, patient-level data, yet. And so Ed can provide a quick review of what's currently known. And then one of the things that we will be doing as we continue to analyze this data is provide greater granularity because that will help inform our strategy such as our inclusion/exclusion criteria in the next study.

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Edward D. Wirth, Asterias Biotherapeutics, Inc. - Chief Medical Officer [10]

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Yes, thanks, Brian. So yes, you may recall them, Asterias did provide, as Brian mentioned, top line data earlier this year for the 12-month primary readout in the study. And the plan, as Brian mentioned, is underway right now to deeply analyze this data. Once we believe that the data we have thus far are very informative as it relates to later-stage trials with respect to a patient's inclusion, dosing, dose level, dose planning and so forth, so again, we're evaluating all of those variables right now and those will factor into our plans going forward in our upcoming meetings -- our meetings with the FDA.

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Joseph Pantginis, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [11]

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But with regard to, say, public disclosure of any of these analyses?

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Brian M. Culley, BioTime, Inc. - CEO, President & Director [12]

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Well, Joe, there's nothing on the calendar right now. But as we have summaries available, whether those are in the form of peer review publications or abstracts or presentations, I imagine that would be something that we would be sharing this year.

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Joseph Pantginis, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [13]

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No. That's helpful. And then just one quick question hopefully. So as you're looking to get patients on the OpRegen study going under the Orbit delivery system, just curious what the outstanding punch lists might look like with regard to getting a patient to that stage?

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Brian M. Culley, BioTime, Inc. - CEO, President & Director [14]

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Look, you're probably familiar, just that there's a 30-day waiting period for any protocol amendment that goes in. And then prior to that, there is a little bit of qualification of the Orbit device that gets done. So those 2 things together, we anticipate that our first Orbit patient will occur in the second quarter.

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Operator [15]

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Our next question comes from the line of Reni Benjamin from Raymond James.

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Reni John Benjamin, Raymond James & Associates, Inc., Research Division - Senior Biotechnology Analyst [16]

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Can you talk a little bit about enrollment in the OpRegen program right now? Are you finding any sort of difficulty in obtaining these patients and identifying the patients? I guess what I'm going with this is I would have expected the next 6 patients in that study to be enrolled a lot quicker than kind of by the end of the year.

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Brian M. Culley, BioTime, Inc. - CEO, President & Director [17]

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Gary, please?

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Gary S. Hogge, BioTime, Inc. - SVP of Clinical & Medical Affairs [18]

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Yes, hey, Reni. So as we've gone through the better vision cohort, the data safety monitoring group as well as the FDA put in mandatory stagger periods, where they wanted to evaluate the safety in those individual patients. Also, as those evaluations were ongoing, we began the discussions with Orbit. And as Brian alluded to earlier, we certainly believed that Orbit may represent a superior way of administering OpRegen. And so in a way, we're holding out for the OpRegen amendment to be received by the agency.

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Reni John Benjamin, Raymond James & Associates, Inc., Research Division - Senior Biotechnology Analyst [19]

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Got it. And just to clarify, the 9 remaining patients to be dosed in Cohort 4, they are not going to be with the Orbit injection technology, they will be dosed the classic way, and then you'll have an additional x number of patients with the Orbit technology?

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Gary S. Hogge, BioTime, Inc. - SVP of Clinical & Medical Affairs [20]

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No. Our goal will be to treat the next 6 patients using the Orbit device, at least the next 6 patients.

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Reni John Benjamin, Raymond James & Associates, Inc., Research Division - Senior Biotechnology Analyst [21]

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Got it. Okay. Great. And then I know that you guys mentioned on the call and on the press release about looking at these cell therapies as a potential treatment in multiple sclerosis and ischemic stroke. I think it was the OPC1 candidate. Can you talk a little bit about what's driving your thought process there? Have you done work with OPC1 in these indications? Or is it more from work that's been done externally that makes you think that this might be a great area to go into?

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Brian M. Culley, BioTime, Inc. - CEO, President & Director [22]

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Yes. I mean, naturally, we're always looking for ways that existing programs may have broader applications. So rather than thinking of OPC1 as limited only to spinal cord injury, maybe it is appropriate to look at it in terms of conditions of demyelination. So Ed, if you could comment about some of the work that Asterias has done with some of the academics, looking at other areas that OPC1 could potentially go into in the future?

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Edward D. Wirth, Asterias Biotherapeutics, Inc. - Chief Medical Officer [23]

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Sure. Yes, thanks, Brian. Yes, so on the MS front, we have had prior collaborations with the academic institutions and also, we have an ongoing collaboration with the -- investigated out in UC Irvine actually, that's developed a unique animal model of MS, where the immune attack is directly against the myelin-forming cells, but it wouldn't necessarily reject our cells. So we're looking at that model to potentially help us to evaluate the ability of OPC1 to remyelinate axons in a very good MS animal model. With regard to stroke, stroke, actually, about 1/3 of all strokes are predominantly in the white matter, which is the area we'll be targeting with OPC1. But even major strokes have a significant white matter component to them. And so we have a collaboration in progress as we speak right now, a preclinical efficacy study in the leading animal model of stroke, which is the middle cerebral artery inclusion model with an investigator at the University of South Florida, that's done quite a few of these studies. And there the in-line phase of that particular collaboration should be completed in the second quarter. And then once the data are analyzed and so forth, I would imagine, slightly later in the year, we would have -- be able to provide an update from that work.

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Reni John Benjamin, Raymond James & Associates, Inc., Research Division - Senior Biotechnology Analyst [24]

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Great. Then just switching gears to Renevia real quick. Has there been any sort of back and forth with the European agency, Brian? I mean, typically, during the phase, there's both a question-and-answer period, sometimes the clock stops. Can you just give us a little bit more color there? And you mentioned a distribution agreement. What would the ideal sort of distribution agreement look like?

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Brian M. Culley, BioTime, Inc. - CEO, President & Director [25]

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So I'll do the second part of it before the first part. So we don't currently have the infrastructure to establish a European commercial business. So I think what would be ideal for us would be to find an entity that has those capabilities and structure something where we can enjoy the potential upside to essentially shift the risk, shift the commercial risk onto somebody else. With respect to the process, Gary, you can provide -- I mean, we have been going back and forth. There's different divisions within that group that we interact with.

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Gary S. Hogge, BioTime, Inc. - SVP of Clinical & Medical Affairs [26]

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Yes. So we've interacted with a number of other groups, from the CMC side, from the animal component aspect, and we're still awaiting clinical questions. So we know that they're actively reviewing it. But at this time, we have no deadline. And to your question as to a stop clock, that technically, there is no clock and no stop clock. So it's entirely -- we respond when we receive questions, but thus far, has been positive interactions.

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Reni John Benjamin, Raymond James & Associates, Inc., Research Division - Senior Biotechnology Analyst [27]

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Got it. And one final one, if you'll let me. Regarding manufacturing, you spent some -- a little bit of time talking about it on the call. What are your thoughts in terms of keeping it in-house versus working with the CMO at later stages of development?

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Brian M. Culley, BioTime, Inc. - CEO, President & Director [28]

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Cell therapy is not like making aspirin as everyone knows. And I feel strongly that owning manufacturing, controlling manufacturing has tremendous value. These cells can diverge through the process, and I think throwing it over the wall to a CRO, especially one that hasn't been doing it for years and years, is a big gamble. There, in some cases, may be some cost savings, although, frankly, I think what we -- what our expense structure looks like, it is really attractive. So you never know what may happen in the future. If a partner wants to come in and buy commercial rights, some or all the commercial rights, and then demand to absorb manufacturing, obviously, we're open to having that conversation. But we're pretty happy with our very new facility there and the work that's been done. Working towards getting a closed system, growing these cells in bioreactors, these are things that I think are perhaps underappreciated and meaningful differentiating characteristics for that program vis-à-vis some of the other things that are happening out there in the space.

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Operator [29]

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The next question comes from the line of Keay Nakae from Chardan.

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Keay Thomas Nakae, Chardan Capital Markets, LLC, Research Division - Senior Research Analyst of Therapeutics, Devices and Diagnostics [30]

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A couple of questions about the collaboration with Orbit. First of all, trying to understand how quickly a practitioner becomes facile in using this device. So maybe to start, what kind of clinical data did Orbit have in getting their 510(k)?

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Brian M. Culley, BioTime, Inc. - CEO, President & Director [31]

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Yes, hi, Keay. That's a good question for Gary.

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Gary S. Hogge, BioTime, Inc. - SVP of Clinical & Medical Affairs [32]

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Yes. So again, they have a 510(k) clearance that was granted at the end of November. They had extensive processes of human developments. There was a paper published by Allen Ho out of the Philadelphia area looking at some patients using the Jansen cell line. Jansen decided not to pursue that, and then Orbit was an offshoot of that. They conducted a device improvement and undergone an extensive human and animal testing as part of that filing with the agency. And so based on those data and the FDA clearance, we feel comfortable beginning patients with -- OpRegen patients with Orbit.

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Keay Thomas Nakae, Chardan Capital Markets, LLC, Research Division - Senior Research Analyst of Therapeutics, Devices and Diagnostics [33]

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So is it relatively straightforward for the surgeon to utilize the device? Or what kind of training or even in some sort of nonhuman model do they need to undergo before they feel comfortable putting it into a human eye, especially in somebody with less severe vision impairment?

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Gary S. Hogge, BioTime, Inc. - SVP of Clinical & Medical Affairs [34]

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Right. So there is a training process, a surgical training process. It is a suprachoroidal route so that it's not something that the typical retinal surgical specialist undergoes training in. And so they have an extensive training program involving online aspects, didactic lectures and a wet lab experience in preparation for that. And our investigators will undergo those before they begin treating any subjects.

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Keay Thomas Nakae, Chardan Capital Markets, LLC, Research Division - Senior Research Analyst of Therapeutics, Devices and Diagnostics [35]

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Okay. And in terms of the exclusivity of the collaboration, is this exclusive only to cells administered to the eye for dry-AMD, or does it include potentially other therapies?

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Brian M. Culley, BioTime, Inc. - CEO, President & Director [36]

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No. Orbit's business model, if I could speak for them, would be to partner with various companies in different parts of the eye and different approaches. We feel extremely satisfied that we have whole cell delivery to the back of the eye for the field of dry-AMD. It's not limited in some way. But we would imagine that, that company is going to also approach some of the gene therapy companies or others that work in the eye that may have other diseases or indications. As long as we have the right to lock up the space that we're working in, that's what's a primary interest to us.

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Keay Thomas Nakae, Chardan Capital Markets, LLC, Research Division - Senior Research Analyst of Therapeutics, Devices and Diagnostics [37]

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Okay. 2 more questions. One, have you explored the potential to get RMAT designation for the dry-AMD indication?

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Gary S. Hogge, BioTime, Inc. - SVP of Clinical & Medical Affairs [38]

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This is something we'll definitely engage with the agency when we interact with them, presenting some of our Phase I/IIa data.

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Keay Thomas Nakae, Chardan Capital Markets, LLC, Research Division - Senior Research Analyst of Therapeutics, Devices and Diagnostics [39]

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Okay. And just a final question on the manufacturing and moving to Israel, if you could just maybe quickly describe what it is that they're able to do much better than what you've been able to do in Fremont.

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Brian M. Culley, BioTime, Inc. - CEO, President & Director [40]

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I wish I could. Certainly, components of this are proprietary or let's say, they're part of competitive intelligence. I did allude to some of them in a general way, working towards having a closed system, growing cells in a bioreactor. So you think about more 3-dimensional cell growth and production rather than 2-dimensional, the COGS improvements that you have there, the scale improvements that you have there and the control improvements you have there, without going any further, those are sort of the categories of advantages that we think are relevant to that program. Okay, Keay. I look forward to seeing you at -- next week at the cell therapy conference.

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Operator [41]

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This does -- this concludes the question-and-answer session. I'd like to hand the program back to Brian Culley for any further remarks.

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Brian M. Culley, BioTime, Inc. - CEO, President & Director [42]

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All right. I appreciate everyone joining us this afternoon. I'm obviously excited about our plans. I thank you for your interest in our business, and I hope we will be able to keep this positive momentum going for a long time. Thank you very much.

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Operator [43]

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Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.