Pierre Laurin - President & CEO Greg Weaver - CFO

Alan Ridgeway - Scotiabank Neil Maruoka - Canaccord Genuity Doug Miehm - RBC Christopher Lam - Paradigm Capital Doug Cooper - Beacon Securities Lennox Gibbs - TD Securities Derren Nathan - Hybridan Roberts Nash - National Bank Financial

Good morning, my name is Luke [ph] and I will be your conference operator today. At this time, I would like to welcome everyone to the ProMetic Life Sciences Inc. 2016 Third Quarter Results Conference Call. All lines have been placed on mute to prevent to any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Pierre Laurin, President and CEO of ProMetic. You may begin your conference.

Well, thank you very much, and good morning everyone. Welcome to our webcast to review the highlights of the very exciting quarter, as so many critical milestones were achieved. But first, I'd like to remind you to review the Safe Harbor Statement on Slide 2 to the effect that this presentation contains forward-looking statements about ProMetic's objectives, strategies and business that involve risks and uncertainties. Let’s move on to Slide 3, you can see the agenda we proposed. So before Greg review the financials for Q3, I will go over some key points related to the financials and through the milestones achieved in the quarter. So, let's start with our cash position on Slide 4, we are in an excellent position right now with a pro-forma cash position just under 100 million, and this comprised cash on hand, Telesta cash and the proceeds from expected warrant exercise by year-end or just beginning of next year. I think this gives us a long run way covering 12 month of costs. During this period, we fully expect significant corporate development including commercial launch of plasminogen and of course partnering activities. The other point I want to make is on Slide 5, and is in relation to what is described as research and development expense line on our P&L. In Q3, we spent 23.5 million, but I want to make sure shareholders understand that about 40% of this cost is actually the cost of our GMP manufacturing activities for plasma therapeutics. And this includes for example Laval, Laval facility and the contract manufacturing cost in Winnipeg and this is very-very important to understand for many reasons First, from a corporate point of view, we have built a GMP manufacturing infrastructure that has the capacity to deliver revenue north of $500 million. This is not just insignificant R&D portion here the GMP manufacturing infrastructure, that once it's finished supplying clinical trial material is the same set up that launched and make commercial product, and the capacity is capable of delivering north of $500 million revenue. Second, this capacity is not only just for plasminogen, but also for IVIG, a modern plasma protein. So, it's quite significant infrastructure that we put in place. Thirdly, we have made investment both in terms of processing equipment and plasma inventory to prepare for the commercial launch of plasminogen. A significant portion of these costs are onetime cost and will be efficiently leveraged over the next, I don’t know 10 to 15 years of commercial production. So, it's very important to understand what is comprised in that P&L expense line. And finally from an accounting reporting point of view, when plasminogen is commercialized a good portion of these costs will migrate to the cost line, but I will let Greg to expand on this. This is more related to an accounting treatment of such expense. But to address the concerns of some shareholders, our R&D expenses are not growing exponentially in fact they are very low considering what is being achieved. If you look at Slide 6, for example, I am reminding our shareholders that about 80% of our R&D investment is for very low risk, very high reward drug assets. For instance plasminogen and IVIG, two drugs in Phase 3 clinical trial involving very little number of patients and for plasminogen would be at least filing process commencing in the coming days on unheard of. Investments for PBI-4050 covered for Phase 2 clinical trials. I am not sure you can find a company in the industry with equivalent low risk, late-stage drug candidate portfolio like ProMetic. It's actually amazing what is being achieved with the budget that we have. And what I would like to remind our shareholders is that for us even the product like IVIG, which is like a companion product to plasminogen or call it as a byproduct of our plasminogen process will generate on its own north of $200 million a year when it's approved. For most companies, this is a kind of revenue they hope to achieve with their star product. For us, IVIG is a very important financial contributor to our model, but it is only a companion product to plasminogen, and plasminogen which we view as a blockbuster drug. And speaking of plasminogen go to Slide 7 please, and how to do better than that in a trial, 100% success rate on meeting clinical trials primary end points and secondary end points. And this really impressed the FDA, we're moving forward with our a pre-agreed Accelerated Approval Regulatory Pathway, so we're commencing filing the BLA modules of the FDA, with the FDA as planned in the coming days as I said. And the BLA will still be based on the pharmacokinetic and clinical efficacy of first 10 patients. And very important that from the pre-BLA meeting that we had with the FDA, I mean the clinical efficacy is impressive enough, we don’t need to have additional clinical trial to further approve efficacy. This is very important that we filed for the Accelerated Approval Regulatory Pathway. We will continue monitoring the 15 patients currently enrolled for additional 36 weeks once they done the first 12 weeks of the trial. And that provides additional data for those 15 patients, they become a supplement to the BLA, but only once our plasminogen is approved mid-year next year. And this is great news as well as we speak to the performance of the product and the clinical trial. If you move to Slide 8, IVIG, well, I mean in the quarter we complete the enrollment of the adult patients to course. So, we expect to complete the trail from the same period next year and filed the BLA shortly thereafter. So that's our second plasma-derived product expected to be approved as to plasminogen. And as I said in opening statements, IVIG alone is expected to generate over $200 million a year. So, I think it's pretty exciting time guys, two frontrunner products really driving revenue and near-term catalyst for the Company. So moving onto PBI-4050, well, again this one doesn’t disappoint. The PBI-4050 met primary and secondary end points for most of use of -- not a surprised, but obviously good to have confirmed. Very important for us again, the study has helped us fine-tune our clinical program. You will hear more about it during the Analyst Day where we do a deep dive on both plasminogen and PBI-4050. But I mean it's clear that this trial served its purpose many time over. I mean we have demonstration of translation of pharmacologic activity from preclinical to humans, it is very reassuring that the performance on the preclinical model predicted perfectly, how it behaves in humans, the dose level was chosen, everything work. And we have many-many factors to look into and reassurance out that the drug is doing what we expected to do, both on the fat tissue, on the liver, on the pancreas, the drop of the biomarkers were associated with cardiovascular events and these are bonuses. I mean this is amazing. These biomarkers are really signaling that the patients have their kidney or heart stress, and those patients are at high risk, much higher risks than the general population to develop a myocardial infarction or kidney injury. And the fact that PBI-4050 reduced, those signals those stress signals is very-very significant. So look forward to further update at the Analyst Day. We were also reporting during the quarter, the Alstrӧm Syndrome, I mean very encouraging in the first five patients we saw a signal already in the liver. So, from metabolic syndrome or we see a signal in the pancreas, signal on the adipose tissue. Now with the Alstrӧm patient, we see a signal on the liver. So, it’s very, very, very promising and again more to come with that open label trial during the coming weeks and months. And finally, just yesterday at the American Heart Association Meeting in New Orleans, the Montreal Heart Institute, Dr. Dupuis, Jocelyn Dupuis made a presentation. And he will be a guest speaker for the Analyst Day where he will come and share with you additional results that we’ve generated at the institute both on the lung and on the heart very, very promising outcome. Because obviously as you could read on the press release yesterday, we’re talking now, this is not an orphan indication. This is where 5 million American suffering from heart failure and no drug, no treatment exists to treat the pulmonary hypertension and the right ventricular dysfunction that arise in the vast majority of those patients. And these are the two culprits that really lower or increase the mortality rates in those patients. So very, very promising, but again I will let Dr. Dupuis share his enthusiasm and more data on the Analyst Day on November 21st in New York. Finally, before I pass the baton to Greg, what’s next for PBI-4050? Well, I mean it will always be news coming from our ongoing clinical trials specially the open label one in the coming days expect interim readouts and patients with idiopathic pulmonary fibrosis or IPF multicenter trial. So, we are going live with this one very soon and of course more data from the Alstrӧm trial. What’s ongoing right now in terms of multicenter placebo control trial includes cystic fibrosis related diabetes. This is a pan-Canadian studies involving I think 9 or 10 centers. The chronic kidney type 2 diabetes is expected to be initiated in the US. And metabolic syndrome type 2 diabetes were expecting Health Canada very soon to give us green light to proceed this time. Same study you’ve seen at the University of Alberta, but this time a placebo control and two to three dose being tested against placebo. So, again further update at the Analyst Day in New York on November 21st. It will be webcast for those who can't attend personally. And we look forward to meet you there and share with you exciting information. So on that, Greg, we'd ask you want to cover Q3 financials.

Excellent, excellent. Thank you, Pierre. I’ll start with Slide 13, which is the mention of the source of financial information as filed last night and on SEDAR for your reference. And I’ll move right into Slide number 14 to review the Q3 results with you. I’ll start with revenues, the total Q3 revenues of 3.7 million compared to 5.7 million in Q3 of 2015, included the revenues from the sales of goods of 2.4 million as compared to 5.1 million in the third quarter of last year. And services revenue for the quarter was 1.4 million compared to 600,000 last year. 2016 year-to-date revenues were 12.3 million compared to 10.5 million in 2015. Year-to-date sale of goods 9.6 million compared to 9.2 in the first nine months of 2015. And service revenue 2.7 million compared to 1.3 million for the nine months prior year. And we see cost of goods sold that as expected fluctuating based upon product and services mix each quarter. Moving to research and development, as Pierre mentioned, the expenses include the manufacturing of all plasma-derived therapeutic used in clinical trials and for future commercial sale. With operations in Laval and at the Winnipeg CMO, which are significant categories of our R&D primarily representing about 40% of the total R&D year-to-date in 2016. So, the story there was establishing a necessary manufacturing infrastructure to enable the commercialization of several products, plasminogen expected to launch next year followed by IVIG and several other products currently under development. In the near future, some of these R&D expenses for example production cost associated with commercially destined plasminogen will migrate away from the R&D line and into the finished goods inventory on the balance sheet and to cost of goods sold upon product sale as you might expect. We booked $7 million of raw material in Q3 into inventory as we determined that likely that we will receive regulatory approval for commercial of plasminogen next year. The cost of manufacturing therapeutics to be used in clinical trials will continue to report as R&D expense. And as you saw in the MD&A and to the financial statements, the R&D expense was 23.6 million for the quarter as compared to 11.9 for the third quarter 2015 and 59 million year-to-date compared to 32 million year-to-date 2015. The increase year-over-year is driven by a 10.6 million increase in production expenses at Laval and Winnipeg facilities, necessary to generate the required data to file the regulatory BLA and to provide clinical trial materials. And we are also setting up the commercial infrastructure to drive the future significant top line pharmaceutical product revenues. This increase also aligns with our overall R&D activities as to our advancement of IVIG in Phase 3, plasminogen and the multiple Phase 2 trials of PBI-4050 that are ongoing. So, the third quarter included increases in R&D and fully cost, CRO cost, investigator expenses related to the clinical trials, and also some important in preclinical study costs as we continue working on evaluating possible expansion of fields for use for our therapeutic candidates. I'll move to administrative and marketing expenses which were 6.5 million for the quarter, compared to 4.1 million for the quarter ended last year, and 16.5 million year-to-date compared to 11.2 million for the first nine months of last year. The increase in admin cost lines up is indicative of the managed growth in our number of employees, our preparation for forthcoming launch of plasminogen, and also we included a nominal fee as related to the settlement of the GE litigation, which we comment on in the financial statements in the MG&A. And we currently have roughly 350 employees on board. Moving down, the loss on extinguishment for the debt was booked in the prior quarter as related to the issuance of shares through our lender Structured Alpha at the $3.10 per share bought deal valuation pricing. We fully explained that in the prior filing, so no need to get into details on that here. So the net loss of 28 million in Q3 compares to 10.6 million for the corresponding period and 70.6 million year-to-date 2016, compared to 44.5 million last year. Adjusted EBITDA reflects a loss of 63 million versus 32.8 million in 2015. I'll move to the next Slide 15, which briefly recaps in charts the revenues year-to-date September 30th, at a glance as I've mentioned in the previous slide. This is primarily the affinity resin product sales and services to pharma customers, year-to-date 12.3 million as compared to 10.5 million. And as we mentioned the variability quarter-to-quarter and year-to-year based on customer product delivery schedules, which we find fluctuate based on their individual requirements. We move to Slide 16 with you and talk for a minute about R&D expenses. As we mentioned, the first two bullets here are important of the 23 million in R&D roughly 40% of that is manufacturing of GMP plasma derived therapeutics and GMP manufacturing means more than just supplying drugs for clinical trials, but also the enabling of commercialization of products going forwards. So we're building that infrastructure. And in addition, the observation would be to roughly 80% of the cost is in relation to plasminogen, our IVIG program and other plasma-derived therapeutics that we are working on to follow IVIG into late stage trails and commercialization. So, a low risk high reward investment. Let me spend a minute on the chart below, just to point out that there is four categories that we breakdown the R&D spend into here. The manufacture of GMP plasma proteins which is that 40% of R&D or roughly 22 million year-to-date which ties into the plasma therapeutics availability to perform at quantities forecasted to me commercial scale requirements as well as clinical trial materials. The R&D therapeutics line of 23 million year-to-date will be captured although the smaller molecular R&D or the preclinical work is in here along with the PBT and across the R&D management team who's overseeing a clinical trial cost and other operations. The resin R&D line here which is roughly 7% of the total, which is capturing the UK resin R&D related activities and then the clinical trial cost roughly 16% of this year's R&D cost, again capturing the cost of the all the CRO work related to the Phase 2s with 4050 and the Phase 3s with plasminogen and IVIG. Pause there and put the Slide number 17, and look at our cash flows for the year-to-date where on the left column, we opened the year with 29.3 million in cash and of this used 63.5 in operations year-to-date of 26 million was in the third quarter and then 86 million of net inflow from financing activities was received year-to-date, again this as looking back at our financing activity of both equity and debt in the Q1 and Q2. 13 million used for capital assets and intangible assets, and these movements were uncombined with the opening balance of 20 million result in the closing cash position of 39 million, which makes a nice segway in the Slide number 18, where the balance sheet you see that 39 there and pointing out in the text box on the left where we strengthened that with the Telesta acquisition which had a 37.4 million of liquid cash assets to our treasury. The inventory bullet there where we booked 7 million in Q3 to support plasminogen product launch upcoming in 2017, following the IFRS rules that guide us to do that capitalization now based on the likelihood of expected regulatory approvals. The CapEx investment in manufacturing infrastructure of 11 million year-to-date is related to a combination of investments in Laval and Winnipeg at the CMO there and in our UK facilities, so the 11 million less some nominal depreciation for the year. Intangible assets haven’t changed a 148 million which we expect to 2014 in the NantPro transaction, but we mentioned it here because it’s a significant number. Accounts payable increased as it related to the beginning of the year, capturing account that has incurred in Q3 to be released in subsequent periods. And long-term debt, no change in Q3, long-term debt of 41.6 compared to last year and increased due to the debt financing in Q1, partially offset by the Thomvest structured out for participation in the private placement in Q2. And all this activity brings the total equity to 149 million and total assets to 241 million at the end of the quarter. With that, I will hand it back to Pierre for closing.

Well, thanks Greg. Before we open the lines for questions, I mean a reminder again on slide 19, Greg you highlighted, I’ve highlighted we have a very good cash runways frank with the pro forma cash resources providing operating runways for 12 months at least. And this gives us ample time to execute on commercial launch and close partnering deals, and we’re very busy on that front. Very important, I mean we can’t emphasize enough on this that there was some investment made on making sure Winnipeg was up to par of its capabilities and some CapEx and some processing equipment done there, which them impacts what we called the R&D line. But I think Greg you did a good job in explaining a 40% of that line is really manufacturing GMP that goes far beyond just R&D. But anyway, just for a short to understand that is there end at 80% of our R&D spend, actually it’s focused on lower risk extremely high reward drug candidates. We talked about IVIG, how itself can generate significant revenue and watch when you learn more about plasminogen as this is going to be quite an exciting day at the Analyst Day when we call it open to kimono and start talking about new exciting indications for plasminogen. Another point that Greg you mentioned is that the CapEx had I mean the manufacturing investments that we made is going to slow down because we’ve done everything we could to get Laval and Winnipeg ready, and the future investments could be related to the integration plasma supply, but that’s not to the same scope of things. So, on that note, perhaps operator we could open the line for questions.

Hi. Good morning guys. Thanks a lot for taking the questions. Pierre and Greg, I think I’m going to focus on Slide 16 on the R&D, because I think this is probably one of the most important things to come out this morning. Just to make sure that we're thinking about this correctly, if I look at the first line in the bar graph, the manufacture of GMP and plasma proteins. First of all Greg, is this nine months R&D or is this just in the quarter?

This is nine months, Alan. Looking year-over-year at 2015 to 2016 nine months are the two colors.

So, if I'm thinking year-to-date, we're sort of ballpark 60 million of R&D spend, about 37% I guess is the manufacturer. So it's around 22 million, you guys had a $7 million inventory build. I'm assuming that 7 million is baked into that line, which would mean that sort of the overhead of 15 million is sort of running the facilities. Is that a good way to think about sort of the overhead that will flow out of there into other line items next year when plasminogen becomes commercial?

Well, I mean you're right about the fact that the infrastructure that is there is what you need to have commercial activities, right. So that's, you can't manufacture clinical grade GMP material during pre-BLA phase with organization that is half the size that which you need to commercialize, right. So, people need to understand that, so your interpretation is correct, Alan.

And so then I guess the flip side of that is, if I look at the other $40 million which would be more of the R&D therapeutics to resin R&D in the clinical trial costs. That's probably where we should be thinking your actual sort of pure R&D for this year has been which would average out at about 13 million a quarter. Is that a good level to think about going forward just from the pure R&D perspective? Or I mean I know the clinical trial cost can swing there out a lot particularly next year when we look at some of the randomized larger randomized trials that are coming online, but if I'm thinking 13 million is kind of the base from which to build, is that a fair assumption?

It is and we've built inside in-house, I mean what's included in the R&D therapeutics, the second line on your Slide 16 does include a group that has grown considerably in-house for clean reg. Okay, we've one, two, three, four, five, six -- six physicians on board with various capabilities and expertise. Regulatory affair in the UK, in the U.S., in Canada, so there're many ways you could do it a trial. The clinical trial costs are external costs, but you have in-house capabilities to manage those costs. And we've been able to stay away from the use of very expensive CROs, not to say that we won't work with CROs, but it's been a balancing act where we are capable of managing infrastructure-wise some trials of decent size in-house. And we've done this because we're somewhat in a different position that sometimes one-off or one-play therapeutic companies which we rely remained very lean, virtual because they only have one product to look after. Here, the same group is looking after several products managing trial internationally now in U.S., in Canada and in the UK. So, it's I would say a good 25%, 30% of the R&D therapeutics actually devoted to manage the clinical trials. And you have a lot going in there, as you can see if I just go through the list plasminogen and itself, the cost of the trial is not expensive. But you remember, we are developing new formulation for the plasminogen intradermal for the diabetic foot ulcer, a new formulation for the tympanic repair. We are preparing and we will announce at the Analyst Day new indications for plasminogen, so there was a lot of work being involved in getting those ready to start. And then you have Alpha 1 antitrypsin and inter-Alpha 1 that we haven’t even talked about, that are all being ready for a clinical phase over the coming months. So, we will expand on this because we will have more quality time at the Analyst Day to do a deeper dive right on the activities. But hopefully that graphic helps Alan and you're about right 15 million to 16 million a quarter is about a descent run rate for next year.

I can add a footnote for you, Alan. You mentioned the future larger Phase 3 trials. I think the appetite there is demand in that with potential partner as we message in the past to the extent that there is more in the buffet than we can have.

Yes, and we are still in Phase 2 for 4050 next year, right. This is still Phase 2, the clinical trial that we are managing the multi-centric trials CFRD for example cystic fibrosis again managing the house. And to the Greg's point, we mentioned partnering activities there is no doubt and then when mind hopefully that we intend two partner, partner smartly. We don’t feel like it's time to give the sharper way the use at bring cash, but you took the gain away for shareholders. Our job is to actually do better than that and you will see what's coming and it's exciting time. Thanks for your question Alan.

Your next question comes from the line of Neil Maruoka with Canaccord Genuity. Your line is open.

My first question and perhaps I am jumping the gun here ahead of the Analyst Day, but the preclinical data that was presented on pulmonary hypertension. Is there any similarity there a read through to IPS as we are expecting that Phase 2 data sometime in the near term?

Neil, you are jumping the done. Now listen, I mean, the most interesting thing from the data obviously and it's purely coincidence all that it's coming out now because it's presented at the American Heart Association meeting. And the fact that we will have preliminary read outs with IPS, but obviously it is a norden model than the bleomycin model. The bleomycin preclinical model has been the main model where everybody relied onto to enable it rough to move into the clinic. And you saw the performance of PBI-4050 in that model, this is a chemical insult in the lung of mice and that PBI-4050 is a very well to reverse fibrosis. In the case of pulmonary hypertension, you have two phenomenon, concurrent phenomenon; you have the pulmonary fibrosis and you have pulmonary remodeling. And the fact that the drug works on both, both very well for very much any long indication including IPS, so stay tune, but we're very excited and we'll let doctor decree when adjusted for the data and more data that within that time to present at the American Heart Association because the timing of submitting the abstract was just off and the data came just afterward, but there is more at the Analyst day on that Neil. But it's is very exciting data.

I want some spot as a blot to surprise anymore. Question on the BLA filling, you have indicated that you are going to start that rolling, filing out rolling BLA this month. Can you provide us to a timeline where you see that how you see that? How you see that folding, when you expect to file the final module? And when you would expect to hear back from the FDA whether or not you are going to get a prior to review?

We're not sure how this priority review works I mean this is a very keen and very eager to get that drug out, this is not me to like IVIG or take the queue and will take 9 to 12 months. I mean in the case of plasminogen, we look at a difficult 4 to 6 months for approval. So as we start to filing modules in the coming days as I said, we need to do a lockdown on the first 10 patients to then prepare the module for the clinical efficacy and the pharmacokinetic. That should be done around January and the clock probably would start either as we file this months the latest would be January. But the advantage here is that during the pre-BLA meeting, we could share all of the clinical data in the long meeting with them, very impress and set the tone for the regulatory pathway we confirm. And no need for additional clinical trial, I don’t know that the audiences have understood this, but usually if you have an accelerated regulatory approval process, it is what the view that you will get approve, but you need to do additional clinical trial. We don’t have to that I mean this trial achieved more than what was asked, right. I mean I think that got lost in translation somehow and it's quite technical, but nothing significant.

Okay. And final question maybe just more of a modeling question for Greg on the revenue. You've seen a lot of there is lot of lumpiness and variability to the ordering patterns for your recent. Can we expect revenue to be kind of flat with where it was last year are you expecting another strong Q4 or toward looking in the past?

Good question. I think based on the visibility that we have it would be same to same. The Q4 could look more or less like Q3 as we worked at delivering what we have onboard and what's on the by year end.

And then I would add to just that what plays tricks also especially year end is very critical, you have some very specific criteria to have something recognized as revenue, it's no longer just having a confirmed shipping document that confirm the document as well. It may include also like having receives which may come weeks or later confirmation from the QC departments on the other company confirming that effects have met their QC, it's getting quite complicated in terms of revenue recognition. But year-to-year I think that we know that some declines that would have ordered were probably ordered in H1 intent and next year and therefore I view as almost a flat compared to last year. But it’s not that the business isn’t growing, it's a cycle. And in fact as you know, we’re well beyond that right now in terms of corporate growth. But still something that we our building of course when obviously facilities come online PPPS facilities revenues of resin will be far greater, but still a business that we view is growing steadily and that’s without lump here and there.

Your next question comes from the line of Doug Miehm with RBC. Your line is open.

Hi. Good morning. Pierre, just few questions around here, if we are six months to nine months away from the launch of plasminogen, can you tell me the status of the business internally from a launch perspective? Have you identified a number of plasminogen deficient patients and insurance ideas on distribution and those types of things? I just want to know how far down that checklist you are today, because it is growing to be lumpy long before that product is approved?

No, and we’ve been working on this for the past 18 months as you can imagine. What will become appearance, and if you may unless deferring the question, it’s a good one. But there is going to be several slide devoted to this specific question at the Analyst Day. I think it deserves to be in perspective of the congenital deficiency market launch, and how we intend to move the product in hospitals as well. And we’ve we’re going to cover all corners, but to reassure you on this very critical question, we have right now all the marketing folks on the board, we’ve been meeting with the payers, we have -- there is no existing patient we’re just we’ve been building this out from scratch. Unlike certain other patient association cystic fibrosis which are for a minimum patient association, there was no such thing for plasminogen, so we have to build a registry and we know in the U.S., how many patients there are where they’re located in general. So, and as you’ll see during the Analyst Day the number that we have found out to exist in the U.S. far exceed any analyst expectation. But, more so as we’ll explain there is a key needs for plasminogen in hospital as well, and therefore it’s a bit of hybrid launch Doug if I can say ahead of the Analyst Day, when that’s looks after making sure the product is available for critical and care use in hospitals as well as being delivered to specialty pharmacy for those who would sell in fuse at home. So, we have several slides going over this, well under control. And in terms of completing our investments to be able that we have the necessary work force, we’re looking to hire maybe four or five additional body counts to complete the group. Again as you can expect the handful of people that can control a small group of very influential teaching hospitals that deals with those clients and to those patients.

Okay. And then just housekeeping item with respect to that 7 million in inventory sort of A and B, A part would be is that expected to grow before the launch, I imagine it will? And the second part of that then is this inventory, the 7 million in inventory would equate to what level of net revenue sales for?

Well, I haven't done that math. I'll have to get back to you and perhaps a promise that we'll do that at the Analyst Day. What about that? I think that you're right come Q2, Q3. There'll be additional plasma that we collect from our own facility that we'll feed in the system. Now forget Winnipeg is able to supply well over that volume already. But this time around in the inventory there's also components, components that we know have some lead time that are important and we've for example filters from Sartorius, that inventory will last to 9 to 12 months. So there'll be some repurchasing, but I mean they will be cyclical and by the time we need to step up again inventory. we'll probably be well in H2 '17. So, we just wanted to make sure there was no surprise, no hiccups, no delivery. Nothing to point that could justify that we're not hitting our launch date, right, so, yes.

So, we'll learn more about what this could translate into at the Analyst Day?

Yes, I'll comment. Actually, we will have a nice slide just for you Doug on converting, just converting that. Obviously, we'll disclose during the Analyst Day the price range we're looking at right now, and so that people can start updating their model respectively.

It's an intuitive question because does it touches on top line pricing, gross to net adjustments, net revenues, gross margins etc., so lot's to follow upon there.

Your next question comes from the line of Christopher Lam with Paradigm Capital. Your line is open.

Maybe just jumping to IVIG, do you mind just reminding me the sales process for this product? You mentioned $200 million of sales of larger tender process and how quickly do you think sales ramp to that 200 million once approved?

Yes, IVIG is little more akin to a typical generic sale unlike plasminogen where you have a brand building process and have to adopt, part of the revenue growth would be from I call it concierge approach, lining up physicians and healthcare professionals, payers and so on. IVIG, there's demand for this every day. So, we'll be looking at both the Canadian market and the U.S. market. We're already well lined up with some GPOs and some distributors there that are always looking for good quality product, good supply. And you can expect that product will indeed be ramped up to a significant degree before approval. And therefore when we launch, you don't launch with a ramp up, you launch with a wall. It's a wall of revenue that hits upon receiving BLA just like Apotex and Leo pharma have been so good in performing, getting sales immediately the day after their approval. So, IVIG different sale patterns, much more aggressive in terms of impact on income and that's why we're very happy to have the infrastructure right now to deliver on this because both product together have created great P&L mix.

Is there a significant amount investment or CapEx for that will be require to I guess to improve your infrastructure for finish build type capacity for IVIG?

Well this as and before Telesta acquisition was to be done by CMOs for us right by contract manufacturing organization. We are going to take the next two to three quarters to really make sure that we can leverage and optimize the use of the Belleville facility. So, I think that if we do anything with that facility this will be late next year. And therefore sometime late '18, we would have in-house fill finish capability ready to support IVIG, but that fill finish can be done in various different places like it is right now. We are relying on the custom manufacturing firm for that fill finish activity.

A next question comes from the line of Doug Cooper with Beacon Securities. Your line is open.

I just wanted to jump back to the resin business, it sounds like there is a huge focus of the Company now, but can you talk to us how many clients would be in the revenue both for product sales and service?

There is a couple of companies in the service and three, four companies on the resin but as you know some of the clients they're kind of annualized and it’s a dangerous word because your pattern maybe ordering every 18 months, every 15 months, every 12 months. But on an annualized basis, we have client that will arrange between 4 million to 5 million orders that will exceed 12 million. So, we have a good basket of companies that together are anywhere between 5 million to 11 million, 12 million at least. So and of course we will come some quarters and years as we progress that they will order the same time and the quarters will look much bigger. But overall its growing, I mean it's not something that we are not taking care of. We are really looking forward to continue go in that business, but as you can appreciate most of the what you see in the R&D related resin is to support the development of affinity resin for our orphan drug, our orphan drug in our PPPS cascade. So I think, we generate more value by brining orphan drug from plasma in our platform then coming up with the new mile trap that maybe Glaxo can use. So, I think that’s an important point that a lot of the Cambridge works in the UK its focus on enabling more orphan products from our platform.

No doubt, sound obvious just, you just think this is something looking to offset some of the R&D spend from the cash flow from the sale of these products and this is nothing as probably a huge focus, but what are your thoughts sort of next year or two years or what this can generate in cash flow?

Well, no, I mean that business will grow. It will reach to 35 million to 40 million in the coming years. And then, we hopefully look at a 65 million, 70 million range when the PPPS plant of our licensees are operating, right because each facility is consumed a lot of that resin. That obviously the existing clients growing, there are some new ones that are very promising as well as that our coming on board, but have not made a huge impact yet, but they have great potential and the PPPS licensee facility, right. So we know our CNBG friends are being slow in starting but they will get there. And they will order resin and other facilities as you know could order significant resin. So, we see it as a growing element, but today I mean let's be honest I mean whenever we made five or three or six in the quarter, we make no difference to the whole place right. It is, I would have like to see six as opposed to three, but again its income sequential in the big scheme.

Just as you touched on a peer what the construction progress on the Russia and Taiwan plans?

Yes, Russia has completed the show. I think that right now the parties are in discussion to see how best to leverage that asset because I mean the Russian market is not exactly what you would call in tough shape. So there maybe opportunity to here to align capacity for what we need as you will see when we unfold the plan for plasminogen at the Analyst Day, you will see that as you can start selling everything we can make, we have a $1 billion drug in our hands here. And we can use all the initial capacity that we can find. The Chinese plant will now that we've advanced plasminogen IVIG, Alpha 1 antitrypsin will be -- the developments will be announced very soon. So, this gives a lot of momentum for our Chinese friend, we need three to four INDs to be filed at the same time. So that will revive something that everybody have stop asking question about and now that when we will bring it up when it's new, but it's going very well in China as well. So, very promising time Doug, and look more resin sales on the way.

Your next question comes from the line of Lennox Gibbs with TD Securities. Your line is open.

Can you please step us through the infrastructural build out in preparation for the plasminogen launch, so what exactly remains to be done and by when in order to be commercially ready for mid-2017?

We're pretty much done Lennox. I mean we have to bring processing equipments in the Winnipeg facility. As you know, we have a long-term lease in Winnipeg and its handling manufacturing at a scale that is three times to size of Laval. So we needed to bring the processing equipment that is the chromatography column, all the housing and the skits for the process for evolve actually plasminogen, IVIG and Alpha 1 antitrypsin, so several products so that we can manufacture in the two facilities at scale. Now Laval will be the anchor facility for the BLA for plasminogen, and it's ready to go. We've have pass successfully mockup inspection, QP inspections. And we needed to go through an inspection to be able to supply material in Europe for some of the patients being enrolled in our clinical trial. So, I would say Laval is ready, and Winnipeg has got now close to as ready as you can get. We've taken become the secondary site for plasminogen, it's the reverse for Winnipeg. The reverse for Winnipeg meaning that Winnipeg was a licensed facility like by the NDA and has been licensed to manufacture immunoglobulin, so it makes perfect sense even that fact plus it's bigger plan to make IVIG and to make rather Winnipeg as a reference site for the filing of the BLA. And then Laval becomes the secondary site. So, those two sites will be working in the sink, but each one taking the lead one for plasminogen and other one for IVIG. So, those two facilities are already for the commercial launch.

Okay. But if you move away from the facilities, what about sales and marketing medical information market access? What do you need to build out and when do you need to have them build out by?

Yes, we have already our marketing folks head of sales, we will have two to three medical zone and three to four sales rep, boots on the ground hitting around Q2, ahead of Q1, Q2 to hit the target list where we’re going to sell. So, we’re talking adding maybe seven or eight bodies there in their sales, sales and marketing on the ground in the US. In Canada, you may or may not know most of the sales for plasma-derived product goes to two organization, it goes to Héma-Québec for Québec and Canadian Med Service, so it's not much we can -- we have to do here to move units of IVIG. But for plasminogen, we’ll be focusing on the top tier hospitals and specialist that deal with hematology problems or thrombologic problem. We’ve already identified them and it really takes head full of folks to cover the universe as additional launch.

Your next question comes from the line of Derren Nathan with Hybridan. Your line is open.

Just regarding the closure for Telesta acquisition, now that is complete and the plasminogen approaching, do you know certainly where that’s going to fit in the production process in terms of the downstream process? And then would that be from day one?

Right. Well, the Bellville facility that we refer to should be large facility in Ontario has the capability to provide with minimal investments, the additional downstream process suites and fill finish in-house. So, that as we call as Phase 1 really would come to play when we have more than IVIG and plasminogen to manufacturing, that is we have also Alpha-1 antitrypsin and fibrinogen and other proteins. At that point, you have this additional downstream processing that enabled us to fully utilize the capacity of Winnipeg and Laval. So, we are going to be working on the master plan to look at the optimal design for Bellville to serve the purpose of adding downstream processing suites, and so finish this will not incur any expense until late next year, if we decide to go forward with that and would be in place second half of 2018. Now, there is a portion of that facility that is more or less call as a huge Costco-like warehouse, it’s being used right now. But we would strip it as we could consider expanding the plasma percentage capacity there to meet the expected demand for plasminogen. But that we have time to see it coming, as we launch a product as we explain we have currently between Winnipeg and Laval capacity to generate over $500 million revenue.

I think it gives you a lot of flexibility and the other gentlemen here was mentioning Russia and Asia, that going back to couple of years, that maybe seems to be the main focus on how you're going to fulfill on your capacity, but now you've seem to have taken it more into your hands?

Well, yes, I mean of course the Telesta acquisition was a great win-win for both the Telesta shareholders and for us. We can better utilize this asset than they could have and doing so it provides us with a lot of optionality, but we're going to make plans for it. So, it's very good that we have actually the luxury of been able to operate, generate massive revenue with our current infrastructure and actually look at how even better we can do by adding Telesta facility in due course. And Deren another point, this facility right now is cash neutral because there's the tenant using this other part of the plant that pays for the plant. So, this doesn't add cost to us until the time we decide what to do with it.

[Operator Instructions] Your next question comes from the line of Roberts Nash with National Bank Financial. Your line is open.

Pierre, as I met you in the early 90s been involved with buying in some Telesta, over the years we're thrilled to be part of your operation and congratulations, it looks very-very good --

[Operator Instructions] Roberts Nash, your line is open.

We lost Mr. Nash, we can't hear Mr. Nash.

Terrific, sorry about that everybody. Just very simple, MCNA almost got to through -- third phase results were good. They had the public forum, we're all disappointed November, but I think if it could have been done properly, we may have had a product a lot of urologists would like the product. Could you just make a comment on that because we're shareholders going to be shareholders of ProMetics?

Well I mean it's not a secret, I was involved with buying niche at the onset in '91 to '94; and I've seen -- it was called in those days, NCWE or Regression, it was called different thing. And I've seen it worked with my -- I've seen this product do marvel and I know how excited the urologist community was with this product. I see a lot of potential with the MCNA platform. I think that what we have to do is to take it on the side. We've a strong oncology core competency in the Company, if you recall we've hired a lot of the ex-BioChem Pharma when Shire acquired BioChem Pharma. All the medicine or chemist, the immunologists, oncologists group came on Board of ProMetic and of course when we look at SG&A, we really want to take our time to look at what went wrong, what is the strength of the platform and how can we repackage re-launch it, right. So, there is value there, but it will need serious things to think us to how best to leverage this.

There are no further questions at this time. I'll turn the call back over to the presenters.

Well, guys some of you will be in New York this Analyst Day as first for ProMetic, it's a big event for us. Three to four hours of presentations and discussions with those in the room, and it will be webcast. The presentations will become available on the website as they are being presented in the room. And we really look forward to do a deep dive on our exciting drug candidate PBI-4050 and explain little more in detail the amazing results we've generated with that growth, and plasminogen and what's coming with plasminogen because there is more and maybe I would just plasminogen launch. Exciting time, look forward to meeting some of you in person and thank you again for attending this webcast today. Thank you.

This concludes today’s conference call. You may now disconnect.