Good day, and welcome to the Precision Therapeutics Q3 2018 Business Update Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Elizabeth Barker, Investor Relations at KCSA Strategic Communications. Please go ahead..

Thank you all for participating in today's call to discuss Precision Therapeutics financial results for the third fiscal quarter of 2018. Joining me today are Dr.

Carl Schwartz, Chief Executive Officer of Precision Therapeutics; Bob Myers, Chief Financial Officer of Precision Therapeutics; and Jerry Vardzel, Chief Executive Officer of Helomics Corporation.

Before we begin, I would like to caution that comments made during this conference call by management will contain forward-looking statements regarding the operations and future results of Precision Therapeutics and Helomics Holding Corporation.

I encourage you to review the Company's filings with the Securities and Exchange Commission, including but without limitation, its Forms 10-K, which identifies specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements.

I would also like to refer to the Form S-4 Registration statement filed by Precision Therapeutics with the SEC in connection with the proposed merger traction with Helomics.

Security holders of Precision and Helomics are urged to read all relevant documents filed with the SEC including the proxy statement prospectus because they will contain important information about the proposed transaction as well the identity of people who, under SEC rule, may be considered participants in the solicitation in connection with the proposed merger, and a description of their interests.

With that said, I would like to turn the call over to Dr. Carl Schwartz.

Carl?.

Thank you, Elizabeth, and welcome to everyone who has joined us today for today's third quarter 2018 earnings call. It's great to see so many people dial in to hear our update as we progress through this critical period in the Company's evolution.

Also, be aware that AIPT is our new symbol, and it stands for Artificial Intelligence Applied to Precision Therapy. 18 months ago, we announced our intention to pivot into the Specialty Contract Research organization or CRO services sector.

And since then, we've been working on several initiatives to advance this strategy including the formation of our TumorGenesis subsidiary and our 25% investment in Helomics with whom we have also signed a definitive agreement to acquire. On today's call, I'm going to talk about our progress in these areas.

Later in the call, I'll also provide information about our Skyline Medical division before Bob Myers, our CFO, goes into our financial results in the quarter. CROs provide specialized services that are integral to the development of drugs, biologics and medical devices.

For the age of personalized medicine really finding cancer therapies, specialty CROs that rely on advanced technology are needed to optimize the drug development process. We believe this specialty CRO market especially as it relates to drug discovery, is at least $2 billion market and growing.

To position ourselves to leverage this exciting opportunity, we have formed our wholly owned subsidiary, TumorGenesis, in the first quarter of this year to pioneer a powerful new approach growing cancer tumors in the laboratory with an initial focus on ovarian cancer.

Currently, most exciting news for traditional patient-derived tumors in what are called PDX mouse model to understand cancer biology, a drug discovery and translate finding to our optimal treatment of a human disease. However, PDX mouse models are not able to represent the [technical difficulty] cancer type and sub type.

Questions have been raised about how well these models represent human cancers with a primary fear of being that cancers can undergo different genomic changes when translated to mice than they do when transplanted into human host. These changes could affect the ability to predict individual patient’s responses to drug, using PDX mouse model.

This can lead to costlier, less accurate and longer lasting clinical trials. To be short, this PDX mouse model market is low-hanging fruit for us. AT TumorGenesis, our aim is to produce a more accurate, predictive model of how treatments will perform before they enter expensive clinical trials by growing human tumors outside the body.

These patient-derived tumor models, which closely mimic the patient's internal environment and can be designed to fool the cancer cells into thinking they are inside a human body. This is expected to generate a more accurate response when testing drugs for personalized therapy and in the development of new drugs.

As mentioned, our initial focus will be on ovarian cancer. Fewer than 40% of women with ovarian cancer survive from today’s standard treatment. Our approach which targets cancer by the patient-specific mutation is designed to change this paradigm and significantly improve patient outcome.

Currently, there are 24 mutations of ovarian cancer in TumorGenesis is focused on completing tumor generation for each of these mutations with the aim of completing this process in the first half of 2019.

In recent weeks, we have made material progress towards this goal, including securing solid tumor samples for several ovarian cancer patients, and starting work towards validating growing already.

Already, TumorGenesis has developed a discovery kit which we are selling for $2,500 each, using this technology, for screening of these ovarian cancer cell types.

The development of this kit was the first major milestone in our quest to grow human tumors outside the body, and the kit is now being made available to clients with TumorGenesis for the whole cell screening and clinical research project.

The next three major milestones include one, identifying the peptides and structure needed to grow a tumor; two, selecting the one that works the best; and three, growing a tumor exogenously. We expect that these tumors will be in drug discovery projects with pharma at Helomics’ CLIA lab as part of our CRO services offering.

Upon completion of these next milestones, researchers will be able to fool ovarian cancer cells into growing as if they were still in the patient. This will help our pharmaceutical clients, research and develop new drugs or identify a combination therapy with previously approved drugs to improve patient outcomes.

The progress we have made at TumorGenesis in just a few months is encouraging and has firmly positioned us as the unique CRO. First, we are breaking new ground in our effort to grow tumors outside the body; another very significant differentiator, the application of artificial intelligence within our CRO platform.

I'm now going hand the call over to Jerry Vardzel, President and CEO of Helomics to discuss this further, and provide further update at Helomics, in which we have a 25% ownership stake Jerry?.

CRO services; the D-CHIP, which is our artificial intelligence platform for drug discovery, D-CHIP being our Digital Clinical Health Insights Platform; clinical testing for oncology centers, which is our Precision Oncology Insights pillar.

Let me begin by talking about our boutique CRO offering, which dovetails with what is happening at TumorGenesis and supports Precision Therapeutics’ position as a contract research organization.

Our CRO go-to-market strategy is driven by our artificial intelligence platform applied to our database, which has 150,000 tumors in it currently and is growing. Our goal is to leverage this platform into the drug discovery market with our pharmaceutical and diagnostic clients to usher in the next generation of precision cancer therapy.

We are positioning ourselves as a key partner for driving the discovery of new precision therapy from target biomarker discovery through drug screening and patient stratification and screening for clinical studies to companion diagnostics. In quarter three, we signed a major deal with a patient advocacy group, the National Alopecia Areata Foundation.

One of our key differentiators was our ability to offer a full service of specimen storage and processing. This means we will store, process and perform test to identify specific mutations on-demand for researchers that access this registry. This contract will generate both project fees and reoccurring revenue over many years.

We have also made progress with our biorepository services as part of our CRO services to address the needs for Specimen Lifecycle Management from transport, to storage, to processing and destruction. With over 20 years of experience in shipping live tumor tissue.

Helomics helps clients with all aspects of specimen logistic from study site collection to transport to the Helomics facilities and to other laboratory. The recent signing of the National Alopecia Areata Foundation contract includes our biorepository services with additional proposals in the pipeline.

Finally, the build out of our D-CHIP, our AI powered bioinformatics platform continues as we continue to add to our large repository of genomic and drug response profiles from the initial 150,000 anonymized clinical tests, performed on the patient’s own tumor.

The Helomics D-CHIP knowledge base is unlike other databases that just contain genomic information as it is unique in linking together genomic data and phenotype data, i.e. how the tumor response to drug.

We have also signed deals for D-CHIP, which will not only generate revenues from our informatics platform but will also generate revenues from additional NGS sequencing as we perform, as part of these contracts to generate additional data going forward.

One of the key objectives of our D-CHIP business was to partner with other key genomic data sources. And I am pleased to announce today that we recently signed a partnership agreement with Genome England’s 100,000 genomes project.

Through this partnership, we have the use of very expensive whole genome sequencer and we have access to the data they have generated on patient’s entire DNA which allows us to build out D-CHIP especially in the area of ovarian cancer.

Our artificial intelligence programs can now map whole DNA of the patient against individual tumor mutation to create therapy map. Finally, let me turn to our Precision Oncology Insights business. Our primary focus in this business is on ramping up specimen numbers and completing the necessary work to offer key tests that identify specific mutations.

The Precision Oncology Insights business captures up front revenues from the patient testing.

It involves comprehensive tumor profiling of the patient's own tumor together with the power of our artificial intelligence with D-CHIP, which is the Digital Clinical Health Insights Platform to generate a personalized oncology roadmap that provides the additional context that helps the patients’ oncologists to truly personalize treatment.

We continue to make progress with our outreach program to existing oncologists. We have over 1,400 in our network, which is currently generating growth in our specimen numbers, each month. Our initial effort of the outreach program has resulted in dialogue with over 150 plus previous vendors and 10 current vendors.

We look for this to continue to grow in quarter four and throughout 2019. We started this outreach program in quarter three, with the addition of three new registered nurse RN consultants. We did this to move away from the basic sales representative mentality approach and move towards the relationship building approach.

The utilization of registered nurses has enabled us to provide a more consultative approach that has been well-received as we've launched this going forward.

These specimens represent revenue from the clinical testing business through reimbursement, plus additional revenue for our other two integrated verticals in the form of data for the D-CHIP and two as is appropriately consented material for our drug discovery services.

We also are pleased to report that our next generation sequencing channel is up and running which impacts both, our Precision Oncology Insights business, as well as our contract research business and D-CHIP. For the clinical testing at the Precision Oncology insight business, we are offering 37 mutations over four key genes for cancer.

However, we measure many more genes together. These genes provide the data to power our AI-based D-CHIP platform going forward. This is truly an exciting time in Helomics. We continue to ramp up our CRO business with additional strategic collaboration with newly signed and executed contracts.

And we have a strong pipeline for the fourth quarter and beyond. With that, I'll turn it back over to Carl..

As you can see, there's a great deal to be excited about when considering the market opportunity ahead for us, and we are executing on all fronts to Precision Therapeutics as a unique player in the CRO market.

Through development of TumorGenesis and our investment in Helomics, we are positioning our company to take advantage of a multibillion dollar market opportunity. By creating a contract research organization poised to displace the existing PDX mouse models that are obviously flawed, yet so prevalent today, we are positioning ourselves to be pioneer.

Through the application of artificial intelligence, we believe that our work will bring about a better patient outcome, first in ovarian cancer and later in many other indications.

To provide additional support and guidance to the Company as we advance our growth strategy and the precision medicine market, we have launched the scientific and medical advisory board.

They comprise the world renowned scientific and medical experts who have worked closely with Precision Therapeutics’ senior management team throughout this crucial stage in our development. We have been able to attract eight world-class experts to the Board already, which I believe is a testament to the promise made. Number one, Dr.

Marc Malandro, Vice President of Operations for Science at the Chan Zuckerberg Initiative. Prior to his position, Dr. Malandro was the founding director of the Innovation Institute and Vice Chancellor for Technology Management and Commercialization at the University of Pittsburgh. Two Dr. Amelia Wall Warner, Founder and CEO of Clinical Trial Concepts.

She was previously the CEO and founder of the Successful Global Specimen Solutions Inc., which created a novel and analytic solutions for Global Specimen data tracking. Dr.

Robert Murphy, Professor, Ray and Stephanie Lane Professor of Computational Biology and Head of the Computational Biology Department in the School of Computer Science at Carnegie Mellon University. Dr.

Murphy is also a Professor of Biological Sciences, Biomedical Engineering, and Machine Learning, and was a founding director with Ivet Bahar of the Joint Carnegie Mellon University-University of Pittsburgh Ph.D. Program in Computational Biology.

Paul Sweetnam, founder of CellBridge, LLC; Tony Frudakis, previously Co-Founder & Chief Scientific Officer at DNAPrint Genomics; Ratmir Derda, Associate Professor at the University of Alberta. On the Medical Advisory Board we have Dr. Paul Kornblith, Founder and Former Chairman and CEO of Helomics Corporation.

Paul currently serves as a Medical Advisor to Helomics, the Pittsburgh Life Sciences Greenhouse, and the Innovation Institute; as Adjunct Professor in the School of Health and Rehabilitation at the University of Pittsburgh; and as the Western Pennsylvania Director for Life Sciences.

Also on the Medical Board, we have Hector Gomez, President & CEO, Co-Founder of GLG Pharma, LLC. Quite of an impressive group. Their combined skills and experience cover molecular biology, bioinformatics, forensic DNA and clinical drug development as well as establishing and growing new, highly successful businesses.

We consider these advisors important to the future of Precision Therapeutics, and I would encourage you to read more about each of them through their press releases that we have issued over the last few weeks, which includes detailed biographies for each of them.

With that, I'd like now to move into Skyline Medical Division where we have several very positive developments to discuss related to our sales strategy for the STREAMWAY System. During the third quarter we sold 10 units including 1 which took place outside North America.

This was the first time we have reported any sales outside of North America, which is a turning point for us as it represents the opening up of much a larger market. While we are pleased to be gaining considerable traction internationally, this coincides with the change in the direction of our U.S. operations that will impact sales.

We have been approached by a number of large hospitals and medical centers that expressed interest in purchasing the STREAMWAY, but provided feedback requesting certain modifications to address the needs of all facilities, especially those with poor vacuum. We have therefore made the decision to temper our U.S.

sales efforts, implement certain modifications, and then focus on ramping up domestic sales in 2019. To that end, we are releasing our Generation 3 STREAMWAY that uses the hospitals vacuum supply in quarter one 2019, followed by an enhanced version of the STREAMWAY, called STREAMWAY Plus, which has an on-board vacuum.

As a result of this decision, our STREAMWAY sales fell short of our predictions for the year. However, we believe this will be the best approach to maximize our total U.S. sales potential and we strongly believe we will recapture those missed opportunities and then some with improved strategy.

Compared to the STREAMWAY, the STREAMWAY Plus is 50% smaller than the previous model which frees up space in operating rooms and procedure rooms. It also is quieter and most importantly, has a powerful, efficient on-board vacuum pump to satisfy any fluid evacuation requirements.

This vacuum pump was something that medical centers have requested, and we believe will enable us generate significant sales next year. The new STREAMWAY Plus is nearly complete and we expect to receive 510(k) approval from the FDA in time for us to commence sales of it in the first half of 2019.

To support our revamped growth strategy, we are hiring several additional sales people that have decades of experience in the OR and medical device field. At the start of the year, we had only five sales reps which of course limited our capacity to form new relationships in the medical field.

These additional hires coupled with our latest-generation STREAMWAY technology are expected to springboard our growth in 2019 and we could not be more excited about this opportunity. In the meantime, as I alluded to earlier, our international sales efforts have already gained significant traction.

Earlier this year, we established our European arm, and over the past several months have developed a strong European sales presence consisting of both direct sales reps and a network of reputable independent distributors covering Portugal, Switzerland, Austria, and part of France.

These partners are constantly in discussions with potential new customers and we are pleased with the rapid progress they have made penetrating the European market.

The speed with which our first sale in Europe was secured, we believe, is indicative of how well-suited the STREAMWAY is to the European market and will pave the way for future sales in the region, as well as Asia, North Africa and the Pacific Rim.

Lastly, our European sales group has signed distributorship with several countries including Kuwait, India, EAU, Saudi Arabia and Pakistan who have contractually agreed to sell over 100 machines in 2019.

Anecdotally, at one of our booths at MEDICA one of the largest medical equipment shows in the world, the CEO of a Japanese company said, this is the most interesting product I have seen at MEDICA, quite a compliment considering there were over 5,100 companies at the show.

Furthermore, Skyline Medical is currently in negotiations with several other international distributors from around the world, as well as a number of hospital suppliers. We expect this global sales network to continue to grow, and with its expansion generate additional sales for the Company.

We’ll continue to issue regular updates on each of these initiatives as they materialize. I’ll now turn the call over to Bob Myers, CFO, to talk about our financial results for the third quarter. Bob, please go ahead..

Thank you, Carl. The financial results for the fiscal quarter ended September 30, 2018, were filed with the SEC this afternoon. Revenue for the quarter ended September 30, 2018 was $323,000 compared with $153,000 for the quarter ended September 30, 2017.

We sold 10 STREAMWAY Systems during the third fiscal quarter, compared with 2 STREAMWAY Systems in the third quarter of 2017. Our sales and marketing campaign has continued to generate solid results, having now sold 35 STREAMWAY Systems so far this year.

We expect this campaign for the STREAMWAY System will continue to accelerate in 2019 with the commercial launch of the Generation 3 STREAMWAY followed by the STREAMWAY Plus.

Further, our awareness campaign to improve the use of disposable filters and cleaning products has continued to produce recurring revenues from higher usage by existing customers, with sales from disposable products growing 55% in quarter three from quarter two in 2018.

Gross profit for the quarter ended September 30, 2018, increased to $245,000 compared with gross profit of $124,000 in 2017. Gross profit margin was 74.8% of revenue, a decrease of nearly six basis points, due to a higher cost compared with a gross profit margin of 81.2% of revenue for the same period in 2017.

As sales continue to increase, we expect that over time this will enable us to achieve volume purchasing discounts on both equipment components and our cleaning solution, which should bolster our margins.

Total operating expenses for the quarter ending September 30, 2018, were $2.1 million, an increase of approximately $992,000 compared with $1.1 million in the prior year period.

General and administrative expenses decreased by $0.1 million year-over-year, primarily from investors’ stock compensation that we recorded in 2017, due to our registered direct offering in November of 2016 with warrants that vested in 2017.

This was offset by higher operations expense, which increased by $531,000 due to $327,000 in consulting fees due to the TumorGenesis build-up; $68,000 in stock-based compensation for employee options; $93,000 in research and development; $7,000 toward testing for new STREAMWAY parts development; and higher payroll, taxes and benefits costs.

The net loss available to common shareholders for the quarter ended September 30, 2018 was $2.5 million compared with a net loss available to common shareholders for the quarter ended September 30, 2017 of $1 million. The Company also reported a $646,000 loss related to the Company's equity vested investment in Helomics, of which we own 25%.

Our comprehensive net loss for the quarter, which includes this loss and equity method investment was $2.5 million or $0.19 per share on 13.3 million weighted average shares outstanding, compared with $1 million or $0.16 per share on 6.2 million weighted average shares outstanding for the third quarter of 2017.

The Company had cash and cash equivalents of $0.2 million as of September 30, 2018, compared with $0.8 million as of December 31, 2017.

In the first week of October 2018, we received $1,815,000 in net proceeds from a private placement of secured convertible promissory notes, which show on our balance sheet and is represented by loan receivable on the balance sheet; half of that amount was advanced to Helomics. This concludes the financial portion of today’s earnings call.

Carl?.

Thank you, Bob. Operator, can you please open the call for question-and-answer..

Thank you. [Operator Instructions] We’ll go first to John Barker with BDT Traders [ph]..

Good afternoon.

So, the cost of the original STREAMWAY was $24,900, is that correct?.

Yes..

And how much will the 3.0 and a Plus cost?.

Do we have that number Bob?.

We are not prepared at this point in time to announce our sales numbers for that. I apologize..

Okay.

How many outstanding shares do you have, and what is your float right now?.

We have 14 million outstanding shares and our float is approximately the same as we have very little private ownership -- insider ownership..

14 million?.

Yes. 14 million..

Thank you very much..

You're welcome..

We'll go next to Dana Alan [ph] who is a Private Investor..

Hello. Extremely active company; and I appreciate the fact that you go into detail in your conference calls. On Helomics, you were -- particularly in the past that you thought it would be cash flow neutral or better in the third Q.

How did that go?.

We are moving towards that. Bob, I'll, let you give any financial. We are moving towards that with our pipeline. We are moving towards that. But in third quarter, we did sign contracts, and all three of the verticals, pillars are generating revenue..

We haven't reached a breakeven point on that as yet. I think the fourth quarter has real opportunity together with all the contracts that we have attained. Though I think we've seen some good progress in the third quarter, we're not there yet..

Okay.

And on the share count that you gave to the other caller, is that fully diluted at approximately 14 million?.

Yes, it is..

Okay.

And on the merger, do you have the votes lined up? There's quite common in mergers that the company sort of lines up the votes before they do the deal? Do you have that lined up at this point?.

Carl, may I answer or you wish to? We do have a proxy solicitor that we have hired that we've used in the past Reagan Associates that are working on our behalf to line up these votes..

Okay.

When would the vote be, has that been set yet on the date?.

No, it hasn't. We have filed our S-4, and we’ve received that communication from the SEC, which is going to include some comments. We’ll receive those comments sometime right after Thanksgiving. We will then immediately try to file a mandate S-4.

At that point, knowing where we stand with the comments to the SEC, we will be able to put a date for the votes..

Okay. And on this $2,500 kit for ovarian cancer, that’s something new that you announced today.

Is that correct?.

Yes, that's correct..

Okay. I hadn’t heard about that before.

And on that, who would be buying that? Who's the target?.

Are you on the phone? Richard?.

I think he is in [indiscernible].

Yes, I am. Hi, this is Richard Gabriel. I'm on the Board of Directors of Precision Therapeutics, but I'm also responsible for building the business. It would be our CRO customers. We actually would share customers with Helomics. So, it's -- a kit portion of it is separated from what they currently are doing. Okay? But, it's an add-on to it.

So, we actually become part of a CRO offering.

Does that answer your question?.

Maybe, it’s something new.

But, is it something you could sell today, is it available already?.

Yes. The kit’s made. Yes..

Okay.

Have you had any sales on it yet?.

Literally, the kit was made just last month. So, we haven't contacted clients, early adopters is what we're looking for..

Okay.

And for something like this, with a drug company, would they buy one of these kits or would they buy more than one? I'm trying to sort to get a gauge on it?.

Sure. Well, clinical trials generally, a Phase 1/2 clinical trial will be as low as 40, and as high as 100; Phase 2s are usually in the 300 to 500, maybe 600 range; Phase 3s are much larger. So, the number keeps going up..

So, if Pfizer, whatever wanted to use this kit, they’d probably end up by the time they get to the Phase 3 to buying well over 1,000 of these, if I remember your numbers correctly?.

Well, not necessarily that many, because the kit is a discovery kit. So, if they're screening the patients, new patients coming in and they find a new patient paradigm, they're going to want to know what that is. So, it may be a number between -- somewhere between over the course of a drug, probably 200 to 700 kits for the first kit.

The second kit would probably use all of them and then the third kit leads into the gene screening and compound dilution and compound screening that is available at Helomics..

Okay, good..

Dana, this is Bob Myers. I just want to make sure realize that this is -- these numbers that are coming from Richard are in his experience. He's had a great deal of them, but are not prognostications that we're making..

No, absolutely not. These are -- I've been in the drug business since 1984, so….

Good. And actually, I wanted to ask about shares, I missed one question, so just if I go back to Bob.

If the Helomics deal is finalized, then what would you expect the share count to be?.

I think, the share count would be just little -- at my head for a moment. Bear with me..

Which is fine, doesn't have to be pristine....

Probably in the neighborhood of 26 million to 27 million shares..

That was roughly my guess. Okay, good.

And do you expect the current loss, it was in the third quarter, do you expect that to continue about this rate, or were there some exceptions in the quarter?.

No, I don't expect it to continue at this rate. There is a lot of paper loss in the quarter, including the equity method loss that we have to take on Helomics, it was 1 -- total 646 and totaled 1.6 in total. So, that brings us up, and then there is various things that we have in terms of investor comp expense and option expense.

I think, that as our sales ramp up, specifically next year with such promise that we've now received from a MEDICA conference in Europe that I think that that will turn around..

Okay. And I'm wondering if I heard it correct on this deal that you just announced today with the 100,000 outfit in UK.

Did I hear right that this gives your Company the ability to do DNA sequencing with their equipment? Did I hear that right?.

It’s Jerry speaking. Thank you. It doesn't give us the access of doing the DNA sequencing. It gives us the access to over 500 ovarian cancer cases right now that are full sequence data with health care records. But, as we go forward in with them -- initially it's ovarian cancer.

But, as we go forward we will have additional collaborations with them as we use that biobank. But, the exciting part is, we have access to 500 additional ovarian cancer cases that are full sequence -- the full sequence data and have health care records. So you could -- that just fills in to what we already have. And we continue to build that.

And we’ll use that data to train the D-CHIP on a deeper set of genomic data, which will allow us to fill in the gaps where we don't have that specific data..

Now, being that you're in that business in a roundabout way, would you also -- do you think they'd be interested in your samples to add to their database?.

Not really. I think, at the end of the day it's filtering into our D-CHIP and the train our D-CHIP which is our machine learning program going forward. I mean, I’ll never say never, but really it's to fuel our engine as I like to say going forward..

Okay, good.

And with these changes in the STREAMWAY unit, does that mean for the Company -- it’s a question to someone else there that you're actually going to stop selling them until the 3.0 is available?.

No, we're not going to stop selling our generation to. What would Carl mentioned was that we did a turn in what we were doing in order to make sure that the market that we -- satisfy the market in the U.S. and ultimately in the world with this advanced machine.

But, we still have our Generation 2 model, it works extremely well and we are still selling it..

Okay. And then, I heard about that there were some contractual things done on the international side on the STREAMWAYS that if I heard right that you had like 100 guaranteed sales.

Can you expand on that a little bit? Is that pretty much guarantee that you'll get those 100 sales?.

I don't know that I would say that because sometimes distributors promise but don't deliver. But they -- we have a lot of enthusiasm. So, we're going to assume for the moment for conversation’s sake that yes these are going to be firm orders, a couple of them have guaranteed them. Most of them are -- a guesstimate at best.

But, they [indiscernible] that they're going to sell that many..

Okay. And Carl, it sounds like, those are spread over actually quite a few distributors.

Is that correct?.

Correct..

Good, good. Okay. Well, I appreciate all your answers to this. And I think the Company has great deal of potential. And thanks for all the work you guys are doing there..

We’ll now take your question from Steve [ph], private investor..

First question.

So, you just said 500 ovarian cancers profiles, is that correct?.

With the recent news of our collaboration with Genome England, we’ve got access to additional 500 ovarian cancer cases. And that’s to fill the gap of -- we have 150,000 plus tumors that we’ve over the years collected.

But, this allows us to specifically fill in some gaps on the D-CHIP with the 500 ovarian cancer cases from the UK Biobank, because they are full sequence data and they have healthcare records. So, this is just one step of us going forward. They have additional and other disease categories. But of course, our initial focus has been on the ovarian..

Right.

What makes up the rest of the 100,000? And is it spattering where we will not use a lot of those profiles? Does that make sense?.

This is not the Helomics [ph] part of the [indiscernible]. So, the 100,000 genomes projects in the UK for which we collaborated with, has about 20,000 at the moment, about 25,000 cancer cases spread across all kinds of different cancers we have, as Jerry said focusing on the 500 cancer, 500 ovarian cancer cases that are there.

There is also a large rare disease element, as well as chronic diseases such as cardiovascular -- diabetes, cardiovascular disease as well.

And so, this is a project -- this is the first phase of project at Genome England to basically sequence everyone in the UK and supply that data for use by pharma and diagnostic companies to somebody like us to drive new precision therapies, diagnostics and so on..

And it’s important to realize that we have our base of 150,000 plus tumors here that we build out….

Yes. 35,000 ovarian cancer tumors in our database..

So, this just is -- as Mark and I alluded to, it’s going to give us a deeper set of genomic data, we continue to fill the gaps. I mean, one of the things that we have approached on our three integrated business pillars is around Precision Oncology Insight business. And that brings in a new tumor every single day.

And that adds to our D-CHIP in our database going forward. So, these type of collaborations, especially this one has really ramped up what we have, and we’re extremely excited, as you can hear in our voices today..

No, I definitely think it was very good news to see this morning. It just kind of threw me for a loop when you said 500….

Yes. It’s a good -- it gives us -- as I said, it’s the quality of the samples that we’re getting in terms of the full sequence data and the healthcare records to go forward. So, it’s really the quality of that information that data that we’re getting to add into our ready D-CHIP that we’re building on..

How much more investment is required to be TumorGenesis fully functional?.

Well, we are -- Carl, my answer that one for you. Okay. This is Bob. We have an agreement with TumorGenesis that we are paying quarterly fees as part of. And that's actually those quarterly fees are done to cover some of their lab technicians that are really on the lower end of it.

They are -- the compensation for some of the higher level consultants comes in the form of milestones when these things are reached. So, we don't necessarily have to go into any further investment. The original investment that we made which was in stock has already been put into an escrow account.

And that gets released over a period of time as these milestones are reached..

Okay.

When will we be at full functionality?.

Richard, I don't know, if we can answer that, but I look forward to you..

We are acquiring additional samples on top of the samples that were acquired. So, we're -- we haven't quite close all of the contractual arrangements yet. But, they're in process between two locations, one in Florida, another one in Alberta, Canada. And we're working on a third one in Poland.

And these are actual clinical sites with pathologists and hospitals and oncology centers. So, that's in process. We hope to complete at least one of those before the end of the year.

And then, we're hoping to complete the acquisition of those ongoing samples first and second quarter and then move to the next kit and then finally have screening somewhere around midyear with -- in conjunction with Helomics. Those are….

Mid-year, that’s what’s it’s fully functional?.

It's too early to say we still have the early steps. The first kit has been made; we can say that for sure. I think, the next part of -- the next two steps are -- there's some -- the technology has been proven, we just need to put it into a clinical format, and that takes a little bit of effort.

And then, there's also patient acquisition, which takes time. There's a lot of bureaucracy, and the HIPAA rules on patient privacy are very stringent and it's very difficult to get a hospital sign off on it. So, we're working through all of that..

Okay.

Those one that we received here in Q3; so to receive the rest, the deal has to be completed by the end of the year, is that correct?.

Good milestone. So, one of the milestones. Then, it's a push -- it's a pushed [ph] out based on the various milestones..

And then, that money, how long will that -- what kind of runway will that give us as a company?.

Hopefully the money that's being put out, which frankly on a quarterly basis isn't very, very much, will carry them through till they are completed and we're hopefully going to have revenue along the way with the kits being sold to offset some of that expense that we have and that they can carry themselves in terms of revenue from the kits over the course of next few months..

Okay. And I wasn't talking TumorGenesis alone….

I'm sorry. That’s acute absurd.

So, could you repeat your question?.

So, we just got this loan or the bridge loan that we just received from the company, I don't remember the name. Sorry. So, how long will that carry AIPT forward before the cash on hand… [multiple speakers]..

That's fine. I expect it will be carry to at least until January when the merger hopefully will conclude..

Okay.

And then, what happens when the merger concludes? How do you have more cash?.

Well, there is a number of different things that we're looking into that I'm not necessarily at privilege to say. But I can't speculate -- not speculate. I can lead you towards the two biggest areas of partnerships with clients that we're working with in the Helomics field.

And we do have an ability to generate funding from an S-3, if that's what we needed to do..

S-3 that is dilution of shares?.

That would be some dilution of shares but move towards the process of getting us in a position to complete some acquisitions and things that will make a value of our shares that much more important..

Okay.

So, those acquisitions, that’s what the asked from 50 million to 100 million is?.

That's correct..

Okay. So, some of that would be private placement investors, some of that would be acquisition….

More towards acquisitions; I can't speak of private placements or anything of that nature because it’s speculative and it's not committed..

Please bear in mind we're also under 425 Rule..

We'll now go to the next question from Daniel Watkins, [ph] private investor..

Hi. I heard on the call that some hospital systems, large hospitals are interested.

Do those include large networks, such as Providence Health, et cetera?.

Yes. That's true..

And also, do they anticipate - are they going to buy a lot immediately? I should rephrase that question.

Are they going to buy many immediately or put it on a trial so once you reengineer the product with 3.0 or not that -- and roll out immediately?.

Well, it's all of that. But generally, hospital are conservative and so, they'll start off slowly and they'll ramp it up, once they're satisfied with it. And some buy a lot. We've had someone that bought four, five from the design….

Carl, if I may add, we do not have to moderate the rollout of the 3.0. We can -- we already have a number of hospitals that we are selling or attempting to sell for the Generation 2 model. And it's just a matter of taking up, and taking a machine that's going to have even better features to it to try to close sales..

Okay.

And what would you say is interest level -- with the large networks? Are they largely interested in replacing those large continuous surgery rooms on or more on a trial basis?.

Go ahead..

Well, I was just going to say that again, it’s all over the map. But they have a strong interest and we've always had a stronger interest in our machine, it’s just something like a long sales cycle to get where we want to go. Once they start going, they're very happy and they order more..

Okay. And I have a suggestion. You could -- you should -- you could, what’s the right word, have surgeries within the hospitals, talk about the product to higher up by posting in newsletters that surgeons lead, doctors lead, so then they could ask their bosses to look into the systems themselves..

Yes. That's maybe -- that's one option. We tend to go through effective control, which is where we really find our greatest acceptance when they see what our machine does in comparison with the hospital using now. But, once we get the surgeon -- we can get the surgeon on our side. But generally, it's infection control where we have a great efficacy..

We’ll now go to John Barker with BDT Traders. [Ph].

My question is for the entire group.

Have you guys read the comments on StockTwits?.

Well, on the -- this is Bob. On occasion, I have looked on some of the comments to try StockTwits, but naturally we can't respond to those..

And in the interest of time, it appears there are no further questions at this time, I'd like to turn the conference back to Dr. Carl Schwartz for any additional or closing remarks..

Okay. Thank you for joining us today. As you can see, it is very busy time here as Precision Therapeutics with many major initiatives in progress to drive growth in both, industry verticals, precision medicine and the medical device market. Skyline Medical has never been in a stronger position to secure sales.

We have established a strong and growing network of sales hubs that encompass North America, Europe, Australia and now South East Asia and the Pacific Rim. Already, we are generating revenues from this network which we believe will continue to ramp up as our sales teams advance their negotiations and we sign with additional independent distributors.

At TumorGenesis, we are undoubtedly entering an exciting market, where we are now successfully working toward what can only be called a groundbreaking solution that could create a paradigm shift in the way that pharmacological companies discover new drugs.

Our investee, Helomics, is making strides securing new client agreements and building revenue base. We are excited about our progress this quarter and we thank each of you for your support. With that, I’ll turn the call back to the operator to close the call..

This does conclude today's call. Thank you for your participation. You may now disconnect..