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Edited Transcript of OPHT earnings conference call or presentation 1-Aug-18 12:00pm GMT

Q2 2018 Ophthotech Corp Earnings Call

Princeton Aug 17, 2018 (Thomson StreetEvents) -- Edited Transcript of Ophthotech Corp earnings conference call or presentation Wednesday, August 1, 2018 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* David F. Carroll

Ophthotech Corporation - Senior VP, CFO & Treasurer

* Glenn P. Sblendorio

Ophthotech Corporation - CEO, President & Director

* Kathy Galante

Ophthotech Corporation - VP of IR & Corporate Communications

* Kourous A. Rezaei

Ophthotech Corporation - Senior VP & Chief Medical Officer

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Conference Call Participants

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* Anupam Rama

JP Morgan Chase & Co, Research Division - VP and Analyst

* Yigal Dov Nochomovitz

Citigroup Inc, Research Division - Director

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Presentation

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Operator [1]

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Good day, and welcome to the Ophthotech Corporation Second Quarter 2018 Earnings Call. Today's call is being recorded.

At this time, I would like to turn the call over to Kathy Galante. Please go ahead, ma'am.

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Kathy Galante, Ophthotech Corporation - VP of IR & Corporate Communications [2]

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Good morning, and welcome to our second quarter 2018 earnings call. Representing Ophthotech today is Mr. Glenn Sblendorio, Chief Executive Officer and President; Dr. David Guyer, Executive Chairman; Dr. Kourous Rezaei, Chief Medical Officer; David Carroll, Chief Financial Officer; and Mr. Keith Westby, Chief Operating Officer.

I would like to remind you that today, we will be making statements relating to Ophthotech's future expectations regarding operational, financial and research and development matters, including statements regarding the implementation of our strategic plan; our projected use of cash and cash balances; the timing, progress and results of clinical trials and other research and development activities; the potential utility of our product candidates; and the potential for our business development strategy, including our collaborative gene therapy research programs and any potential in-license or acquisition opportunities. These statements constitute forward-looking statements for the purpose of the safe harbor provision under the Private Securities Litigation Reform Act of 1995.

These statements cover many events and matters that are subject to various risks that could cause actual results to differ materially from those expressed in any forward-looking statement, including risks relating to the initiation and the conduct and design of research programs and clinical trials; availability of data from these programs; expectation for regulatory matters; need for additional financing and negotiation; and consummation of in-license and/or acquisition transactions. I refer you to our SEC filings and in particular to the Risk Factors section in our quarterly report on Form 10-Q filed on May 9, 2018, for a detailed description of these risk factors affecting our business.

In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we disclaim any obligation to do so even if our views do change.

I would now like to turn the call over to Glenn.

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Glenn P. Sblendorio, Ophthotech Corporation - CEO, President & Director [3]

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Thank you, Kathy. Good morning, everybody. We appreciate you joining our call this morning. During the first half of 2018, we continued implementing our strategy to broaden and advance our portfolio in retinal diseases as well as enter the emerging field of gene therapy by securing collaborations with 3 leading academic institutions: the University of Florida Research Foundation; the University of Pennsylvania; and the University of Massachusetts Medical School and its Horae Gene Therapy Center. Further, we continue to advance our therapeutic programs with our complement factor C5 inhibitor, Zimura, in ongoing clinical trials in multiple retinal diseases.

In 2018, our team made significant progress, and we are on track with our Zimura program to provide top line data from our various trials, starting in 2018 followed by 2019 and 2020. We're excited today to report that we expect initial top line data by the end of 2018 from our dose-ranging, open-label, uncontrolled, multicenter Phase IIa clinical trial of Zimura in combination with the antivascular endothelial growth factor agent LUCENTIS in patients with wet age-related macular degeneration, or AMD, who have not been previously treated with anti-VEGF therapy. We completed patient enrollment for this trial in April of this year.

We are currently on track for patient recruitment in our ongoing randomized, double-masked, sham-controlled Phase IIb clinical trial assessing the safety and efficacy of Zimura monotherapy in patients with geographic atrophy secondary to dry AMD, and expect initial top line data in the second half of 2019. Initial top line data for our Phase IIb randomized, double-masked, sham-controlled clinical trial assessing the safety and efficacy of Zimura monotherapy in patients with autosomal recessive Stargardt disease -- this is expected to be available in 2020. This clinical trial began recruiting patients earlier in the year.

Then moving on to gene therapy. Over 2 decades in the making, gene therapy has begun to emerge as a promising new class of therapies to treat a number of diseases. We believe that to combat vision loss for both orphan and large-market retinal diseases, gene therapy presents an intriguing scientific rationale. Gene therapy as a treatment approach for retinal diseases is attractive to both patients and physicians since it has the potential to provide a durable, prolonged therapeutic effect and possibly a cure in a single administration.

In June 2018, we entered into an exclusive global license agreement with the University of Florida and the University of Pennsylvania for rights to develop and commercialize a novel adeno-associated virus, AAV, gene therapy product candidate for the treatment of rhodopsin-mediated autosomal-dominant retinitis pigmentosa, or adRP, an orphan monogenic-inherited retinal disease that is characterized by progressive and severe loss of vision leading to blindness. Kourous will provide more detailed information regarding this potential treatment option.

We also entered into a sponsored research agreement with the University of Pennsylvania, which is facilitated by the Penn Center for Innovation, pursuant to which we together plan to conduct preclinical studies with the product candidate as well as natural history studies in rhodopsin-mediated adRP. As I mentioned before, earlier in the year we initiated a series of sponsored research agreements with UMass Medical School to utilize their minigene therapy approach and other novel gene delivery methods to target retinal diseases. As a condition of each research agreement, UMass Medical School has granted us an option to obtain an exclusive license to any patents or patent applications that result from the sponsored research.

We believe that our strategy of applying the latest scientific knowledge and know-how to develop a diverse portfolio of product candidates for the treatment of retinal diseases, integrating both gene therapy and therapeutics for orphan and large-market indications, reinforces our commitment to create value for our shareholders. As we continue to move the company forward, our business development outreach will continue to be aggressive but selective as we seek new opportunities that are in sync with our science-driven, retina-focused strategy.

We will continue to build on this strategy to uncover novel and differentiating technologies and product candidates through collaborations with leading academic institutions and companies. We believe that our expertise in drug development for retinal diseases and our clinical experience and execution are key to delivering on this strategy and to create tangible opportunities for the company and value for our shareholders.

As we look ahead to the remainder of 2018, we expect to report top line data for our Phase IIa clinical trial for Zimura combination therapy in wet AMD. Second, we expect to complete the recruitment of our Phase IIb clinical trial for Zimura monotherapy in geographic atrophy secondary to dry AMD. And finally, potentially enter into new opportunities to further expand both our therapeutic and gene therapy portfolio in retinal diseases.

I'd like to now turn the call over to Kourous.

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Kourous A. Rezaei, Ophthotech Corporation - Senior VP & Chief Medical Officer [4]

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Thank you, Glenn. And good morning, everyone. As Glenn mentioned, we expect initial top line data from our dose-ranging, open-label, uncontrolled, multicenter Phase IIa clinical trial of Zimura in combination with the anti-VEGF agent LUCENTIS in treatment-naïve patients with wet AMD by the end of this year.

We recruited a total of 64 patients in this clinical trial. This trial is designed to assess the safety of different doses of Zimura in combination with LUCENTIS 0.5 milligrams and to detect a potential efficacy signal at month 6. Following the completion of this trial, clinical data will be analyzed; and we will determine whether to proceed to a randomized, sham-controlled clinical trial of Zimura combination therapy with anti-VEGF in wet AMD.

As of you may recall in our previously completed Zimura wet AMD Phase I/IIa study, among treatment-naïve patients that received 6-month intravitreal injections of Zimura in combination with LUCENTIS 0.5 milligrams in the high-dose group, 60% of the patients gained greater than or equal to 3 lines of vision, which is generally accepted as meaningful visual gain with a mean visual gain of 15.3 letters from baseline, both of which are higher than what is generally seen in clinical trials for anti-VEGF monotherapy.

All doses were well tolerated, and no safety concerns were identified. Our trial had a small sample size consistent with a Phase I/IIa study with no control group. Although potentially an efficacy signal was present, we wanted to further validate these findings before entering into a large-scale, randomized, controlled trial. We look forward to the upcoming Zimura data in wet AMD later this year.

The recruitment of patients in our ongoing Zimura Phase IIb clinical trial in geographic atrophy secondary to dry AMD is currently on track. And we expect to complete enrollment in the third quarter of this year. Approximately 275 patients are expected to be enrolled into this clinical trial. This trial is designed to assess the safety and efficacy of Zimura monotherapy in geographic atrophy over 12 months. Patients will continue to be monitored until month 18.

We continue to enroll patients in our Zimura Phase IIb clinical trial in autosomal recessive Stargardt disease, which is an orphan-inherited retinal disease. We expect to enroll approximately 120 patients globally in this trial, making this one of the largest interventional clinical trials in Stargardt disease to date.

Moving on to our gene therapy programs. In June of 2018, we entered into an exclusive global license agreement with the University of Florida Research Foundation and University of Pennsylvania for rights to develop and commercialize a novel adeno-associated virus gene therapy product candidate for the treatment of rhodopsin-mediated autosomal-dominant retinitis pigmentosa.

Rhodopsin-mediated autosomal-dominant retinitis pigmentosa is a monogenic orphan disease, with more than 150 mutations identified in the rhodopsin gene. The construct for the rhodopsin-mediated autosomal-dominant retinitis pigmentosa product candidate combines a transgene expressing a highly efficient novel short hairpin RNA designed to target and knock down endogenous rhodopsin in a mutation-independent manner with a human rhodopsin replacement transgene made resistant to RNA interference in a single adeno-associated vector.

Ophthotech and Penn have also entered into a master sponsored research agreement, facilitated by the Penn Center for Innovation, pursuant to which Ophthotech and Penn plan to conduct natural history studies in rhodopsin-mediated autosomal-dominant retinitis pigmentosa patients and additional preclinical studies. In parallel with the sponsored research agreement, we plan to commence IND-enabling activities. Based on current timelines and regulatory review, we expect to initiate a Phase I/II clinical trial during 2020.

As part of our collaboration, we will work in partnership with internationally renowned scientists in gene therapy for orphan retinal diseases. We will collaborate with Professor Alfred Lewin and Professor William Hauswirth from the University of Florida; and Professor William Beltran, Professor Gustavo Aguirre and Professor Sam Jacobson and Professor Artur Cideciyan from the University of Pennsylvania.

As Glenn referenced earlier, our first step into gene therapy was our research collaboration with UMass Medical School that allows us to collaborate with high-caliber scientists such as Dr. Guangping Gao and Dr. Hemant Khanna. As you know, Dr. Gao is a pioneer in the development of the novel adeno-associated virus family for gene therapy. And Dr. Khanna's research focuses on using minigene technology to develop treatments for orphan retinal indications. We will evaluate the minigene therapy approach that is being developed at UMass Medical School to target orphan retinal indications.

AAV vectors are generally limited as a delivery vehicle by the size of their genetic cargo. The use of minigenes as a therapeutic strategy seeks to deliver a smaller but still functional form of the larger gene passage into the AAV delivery vector. The minigene strategy may offer a novel approach for diseases that would otherwise be difficult or impossible to address through conventional AAV gene replacement therapy, where the size of the gene of interest exceeds the transgene packaging capacity of AAV vectors. Further, our collaboration with UMass Medical School is focused on developing AAV vectors for delivering gene therapy to the back of the eye.

The scope of our agreement with UMass includes Leber Congenital Amaurosis type 10, or LCA10, which is the most common type of LCA and is caused by mutations in the CEP290 gene; and autosomal recessive Stargardt disease, which is caused by mutations in the ABCA4 gene. LCA10 and Stargardt disease are both orphan degenerative inherited retinal diseases that lead to vision loss, without any currently available FDA- or EMA-approved treatments.

Although very early stage in its development, we believe that minigene therapy for Stargardt disease is potentially a strategic life cycle improvement for our Zimura program in this disease. Our strategy is to build a diverse portfolio for the treatment of retinal diseases in both orphan and large-market indication using gene therapies and therapeutics. We believe that the field of gene therapy is here to stay. And our collaboration with eminent scientists at UPenn, University of Florida and UMass Medical School would allow us to be at the forefront of this cutting-edge technology for the treatment of retinal diseases. In the meantime, we look forward to upcoming data from our Zimura trials in wet AMD, geographic atrophy secondary to dry AMD and autosomal recessive Stargardt disease.

I will now turn the call over to Dave Carroll. Dave?

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David F. Carroll, Ophthotech Corporation - Senior VP, CFO & Treasurer [5]

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Thank you, Kourous. And good morning, everyone. I'd like to highlight a few items from our press release of this morning and also reaffirm our year-end cash guidance.

For the quarter, our net loss totaled $13.2 million or $0.37 per share compared to a net loss of $22.2 million or $0.62 per share for Q2 2017 as Q2 2017 reflected the impacts of the discontinuation of the Fovista Phase III clinical program and our organizational restructuring. Year-to-date, our net loss totaled $26.3 million or $0.73 per share compared to a net loss of $65.3 million or $1.82 per share for 2017, again due to the 2017 discontinuation of the Fovista Phase III clinical program and our organizational restructuring.

Turning to our expected year-end cash balance. Our cash balance at June 30 was $146 million, a $9 million decrease from March 31. We reaffirm our cash guidance and expect our year-end cash balance will range between $112 million and $117 million based on our current 2018 business plan, which includes continuation of our development programs for Zimura, our RHO-adRP gene therapy product candidate and our collaborative gene therapy research programs. Of course, these estimates do not reflect any additional expenditures resulting from the potential in-licensing or acquisition of additional product candidates, technologies or any associated development that the company may pursue.

I'll now turn the call back over to Glenn. Thank you for your time.

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Glenn P. Sblendorio, Ophthotech Corporation - CEO, President & Director [6]

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Thank you, Dave. We have a lot going on in the second half of 2018 and look forward to continuing to engage with investors and tell you our story. I'd now like to thank everybody for joining this morning, and open up the phone for questions, operator.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And we'll take our first question from Yigal Nochomovitz with Citi.

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Yigal Dov Nochomovitz, Citigroup Inc, Research Division - Director [2]

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So my question is on the gene therapy programs, unsurprisingly. So obviously, you're early in the game. But that may give you an advantage. And that's because of the recent draft guidance that I'm sure you're aware of regarding the gene therapy manufacturing that the FDA recently released. And so I'd be curious to hear your thoughts on how you're planning to integrate that guidance, assuming it's turned into a full guidance, with respect to the manufacturing scale-up that the FDA cites that they want to see the companies early in the development cycle initiate a long-term manufacturing scale-up plan before they start clinicals.

They also talked about (inaudible) assays, (inaudible) safety test development as well as nonclinical toxicology for developmental and reproductive tox. So I'd just be curious on your overall thoughts around how you're implementing that guidance and how you would make it consistent so you can coordinate across UPenn, UMass and UFlorida, which may have different approaches at least in the very early development stage.

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Glenn P. Sblendorio, Ophthotech Corporation - CEO, President & Director [3]

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Yes, thanks, Yigal. And that's a great question. And we're actually pleased the FDA is finally providing guidance on this. And the way that we're approaching, yes, we are early obviously with the clinical programs. And we do look at clinical programs in this area. Of course, manufacturing, CMC, consistency is always a major issue. So the way we've approached that since we are early is we've been building expertise internally through a network of consultants and experts on the regulatory side and the CMC side, the gene therapy side. And I think over the last year, we've learned a lot. I think we understand the guidance.

But more importantly, we've taken that expertise and we have interviewed a number of manufacturers, not only here in the U.S. but worldwide. And these are manufacturers well experienced in these methodologies and changing regulatory environment. So I think we're aware of it. I think we have the experts to support that. And we are working with, and haven't announced anything yet, leading manufacturers that can sure that as we scale up even in preclinical stage that would be in compliance with these new guidelines. I hope that answers your question.

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Yigal Dov Nochomovitz, Citigroup Inc, Research Division - Director [4]

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Yes. And what about the cadence of any new academic collaborations? I think I've asked this in the past, but I just thought I'd check. I mean, are there others that are on the -- in the wings that we could learn about? Are you sort of satisfied with the 3 that you have now?

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Glenn P. Sblendorio, Ophthotech Corporation - CEO, President & Director [5]

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Well, great institutions. We're really happy that we're able to work with the 3 institutions that we talk about all the time, UMass, UFlorida, UPenn, clearly leaders. I think as we indicated, we'd like to -- we've signaled that we continue to look. The criteria that we've applied to new programs would be that, one, there's great science; and two, that there's the potential for us to be first in that space. And I think if you looked at what we've selected thus far, there's good opportunity that if all works out we could have a leading gene therapy indication. So we continue to very aggressively talk to folks both on the academic side as well as the company or the commercial side. I think academics for us, being early to the game, has been a good experience by creating these relationships with the leading organizations.

So, answer: we continue to look. We continue to talk to folks. I think what is quite pleasing right now is that we're actually getting inbound calls as opposed to us being very active with outbound calls. So I think we're starting to create a little bit of a name for ourselves.

And Kourous, I don't know if you want to add anything. You're on the front line with a lot of the academic leaders here.

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Kourous A. Rezaei, Ophthotech Corporation - Senior VP & Chief Medical Officer [6]

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Well, Glenn, I agree with everything you said. We continue to look. And we also obviously follow the FDA guidance regarding the CMC. And we are at a good stage to be able to do that without needing to make any major changes.

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Yigal Dov Nochomovitz, Citigroup Inc, Research Division - Director [7]

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Maybe I could ask slightly different. I mean, what -- are there certain criteria that are must-haves for a new academic collaboration? I mean, what do you absolutely need to have in the profile of a new development program? And what are you trying to avoid?

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Glenn P. Sblendorio, Ophthotech Corporation - CEO, President & Director [8]

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It's a great question. Again, I'll go back -- an indication or a therapy that could be first to market; obviously, great science, first and foremost; and third, very important, a clear path to the clinic. And I think we demonstrated that with the UFlorida, UPenn. I think the third point is very important that we see -- the early research that we're doing with UMass is very important; great work may be to overcome a hurdle that's there today in delivering larger transgenes. But looking for programs with great science, great people and also clear path to the clinic.

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Operator [9]

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(Operator Instructions)

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Glenn P. Sblendorio, Ophthotech Corporation - CEO, President & Director [10]

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Okay, operator. Thank you. We appreciate everybody listening today and...

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Operator [11]

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We have a question come in. We'll take our question from Anupam Rama with JPMorgan.

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Anupam Rama, JP Morgan Chase & Co, Research Division - VP and Analyst [12]

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Just maybe a quick one on the cash position. I know the guidance is to end the year with $112 million to $117 million. But can you remind us how long this cash position is sufficient for as it currently stands?

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David F. Carroll, Ophthotech Corporation - Senior VP, CFO & Treasurer [13]

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So we can see -- based on everything that we have right now in terms of our assumptions, we can see ourselves clear to the end of 2019. As you know for just generally for GAAP, you have to look out the next 12 months. You'll see that in our 10-Q filing. But we can see ourselves clear through 2019 and into 2020.

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Glenn P. Sblendorio, Ophthotech Corporation - CEO, President & Director [14]

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Anupam, the other thing I'd add to Dave's comment, he's absolutely right, is that I think we have said pretty consistently that we have enough capital to bring all of the current programs to a [card turn]. So for example, we talked about data later in '18 for wet, data for dry in '19 -- for dry and then the Stargardt program. And also on Dave's guidance, as he said in both his commentary and what's in the Qs, this includes the gene therapy programs as well. And that's getting to again a milestone. So for example, in the adRP program, hopefully, to get it to the clinic. So I know it's not a specific guideline. But the capital is there to move these programs forward.

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Operator [15]

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And there are no further telephone questions. Glenn, I would like to turn the conference back over to you for additional or closing remarks.

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Glenn P. Sblendorio, Ophthotech Corporation - CEO, President & Director [16]

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Well, thank you, everybody, for listening today. We look forward to continuing to update you on our programs and BD activities, and appreciate it.

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Operator [17]

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This concludes today's conference. Thank you for your participation. You may now disconnect.