Acorda Therapeutics Inc (ACOR) 2008 Q1 法說會逐字稿

Thanks for holding and welcome to the Acorda Therapeutics first quarter 2008 financial results conference call. At this time, all participants are in a listen-only mode. There will be a question-and-answer session to follow. Please be advised this call is being taped at the Company's request.

Now I would like to introduce your host for today's call, Tierney Saccavino, Vice President-Corporate Communications at Acorda Therapeutics. Please go ahead.

Good morning, everyone, and welcome. With me today are Dr. Ron Cohen, our President and Chief Executive Officer, and Dave Lawrence, our Chief Financial Officer. Before we begin, let me remind you that this presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These statements are subject to risks and uncertainties that could cause actual results to differ materially, including the risk of unfavorable results from future studies of Fampridine-SR; delays in obtaining or failure to obtain FDA approval of Fampridine-SR; Acorda Therapeutics' ability to successfully market and sell Zanaflex capsules; competition, failure to protect intellectual property or to defend against the intellectual property claims of others; the ability to obtain additional financing to support Acorda Therapeutics' operations; and unfavorable results from its preclinical program.

These and other risks are described in greater detail in Acorda Therapeutics' filings with the Securities and Exchange Commission. Acorda Therapeutics may not actually achieve the goals or plans described in its forward looking statements, and investors should not place undue reliance on these statements. Acorda Therapeutics disclaims any intent or obligation to update any forward-looking statements as a result of developments occurring after the date of this presentation. I will now turn the call over to our CEO, Ron Cohen.

Thanks, Tierney. Good morning, everyone. This morning, we reported our first quarter 2008 financial results. During the quarter, we made solid progress on the key initiatives that will drive the quarter's growth. The agenda for the call is presented on this slide. I will provide an update on these initiatives, and then I'll turn the call over to Dave, who will provide you with the financial summary. We'll then open the call for your questions. In January, we were pleased to announce the successful results of our Thorough QT study. This is a human cardiac study required for all new chemical entities seeking approval from the FDA. Fampridine-SR at both the therapeutic and supertherapeutic doses was found to be no different from placebo. We are now awaiting data from our second Phase 3 trial of Fampridine-SR in MS, which we expect to be available in the second half of the current quarter, Q2 2008.

As we previously announced, we expect by the end of this year to determine Acorda's strategy regarding Fampridine-SR's commercial development in Europe. As part of this process, we have submitted materials requesting meetings with key EU member states to help inform how we will proceed in Europe. In the first quarter, we also acquired assets from Neurorecovery, Incorporated. This acquisition will enable us to explore additional therapeutic indications for Fampridine-SR in peripheral neuropathies, as well as provide access to pre-clinical compounds that may have utility in nervous system disorders. We also made good progress in preparing the modules that will be needed for our NDA filing, which we are targeting for the first quarter of 2009, pending the data from our second Phase 3 study. With respect to our pre-launch programs, one of our key pre-launch goals is to substantially raise awareness of and appreciation for the impact that walking disability has on the lives of people with MS among both health-care providers and consumers. In March, we published a Harris poll on mobility issues in MS. This was in collaboration with the National MS Society.

This poll highlighted the significant impact that mobility issues have on quality of life, safety and financial and emotional health among many people living with MS. A key finding in the poll was that 64% of the responders reported trouble walking, inability to walk or losing balance at least twice a week. This year, Acorda is a national sponsor of the National MS Society's Walk MS program. The program we've developed for these walks is called I Walk Because. This program gives a voice to the MS community, allowing them to articulate why and for whom they participate in these walks. As part of our sponsorship, Acorda has a booth presence at 10 of the largest walks around the country and allow walkers to record videos which are then posted on the Web site, www.Iwalkbecause.org. I was part of the team that staffed the booth at our opening walk in Dallas and I found it to be one of the most moving experiences I have had at Acorda. I encourage you to take a look at the testimonials recorded on Web site. I believe you will find that it provides a deeply personal sense of the impact that MS has on people's lives and of the commitment of the MS community to developing new therapies for this dreadful disease.

We also unveiled our MS Walking Awareness program for health-care providers at the American Academy of Neurology's annual meeting this year. This program allows MS professionals to experience a simulation of how walking disability affects real world situations, such as crossing a busy street at a traffic light. These efforts will continue at major medical meetings throughout the year. Moving to Zanaflex, our Zanaflex business continued to perform well this quarter, generating a combined $12.7 million in gross sales for the capsules and tablets. We expect to see continued sales growth in 2008, though at a more moderate pace as the franchise matures. We also expect our Zanaflex commercial operations to be net cash flow positive this year. We're extremely pleased with the value that Zanaflex business has brought to Acorda. It's allowed us to develop an outstanding sales and marketing operation, which in turn has positioned Acorda to Fampridine-SR in the U.S., if it is approved, as well as other products that may be approved in the future.

We also made great progress in advancing our pre-clinical pipeline toward our IND stage. Our two lead candidates, GGF-2 in the neuregulin program and rhIgM22 in our remyelinating antibodies program, are in the process of cGNP manufacturing scale up. We are targeting IND filings in late 2009 for both programs. In April, we hosted an analyst and investor briefing to provide updates on these two programs. Two key opinion-leading physician scientists were featured, Dr. Moses Rodriguez at the Mayo Clinic presented data on the remyelinating antibodies in pre-clinical MS models, and Douglas Vaughan, Chairman of Cardiology at Vanderbilt University presented data on the neuregulins in pre-clinical cardiac models. Dr. Rodriguez also was selected to present a plenary address on the antibodies at the Frontiers of Clinical Neuroscience Session at the Annual Meeting of the American Academy of Neurology. A Webcast of our briefing is available on our Web site, www.acorda.com. I encourage you to review it for a more detailed look at these very exciting programs which we are driving toward the clinic. I will now turn the call over to Dave, who will give you a financial summary for the quarter.

Thanks, Ron. In our press release this morning, we outlined our first quarter financial results for 2008. I will now review some of the financial information in more detail. The Company reported a net loss of 16.4 million for the quarter ended March 31st, 2008, or $0.54 per diluted common share, compared to a net loss of 7.5 million or $0.32 per diluted common share for the same quarter in 2007. After adjusting the financial statements for the non-cash impact of the NRI acquisition, the adjusted non-GAAP net loss is 13.7 million or $0.45 per diluted common share. Total operating expenses for the quarter ended March 31st, 2008, were 24.9 million, including a 2.7 million non-cash charge for the acquisition of certain assets from Neurorecovery. Research and development expenses were 9.6 million, which includes 2.7 million for NRI, clinical trial costs related to our Fampridine-SR trial, NDA preparation costs and development of two of our pre-clinical pipeline products.

Sales, general and administrative expenses for the quarter ended March 31st, 2008, were 15.3 million, and included expenses related to the Zanaflex promotional activities and Fampridine-SR prelaunch activities. As of March 31st, 2008, Acorda held cash, cash equivalents and short-term investments of 160.3 million. We expect this to be sufficient to fund the Company's operations into the third quarter of 2009 based on our current projected revenue and spending levels. Expenses are expected to increase and are weighted to the second half of 2008 and into 2009, pending the results of the second Fampridine-SR Phase 3 trial. I will now turn the call back to Ron.

Thanks, Dave. At this time, we'll open up the call for your questions. Operator?

(OPERATOR INSTRUCTIONS) Your first question comes from the line of Joel Sendek from Lazard Capital Markets. Please proceed.

Hi. Thanks. Two questions. The first is, I guess, on the run rate for the spend. It seems like you said in the press release, you have cash to last into the third quarter of 2009. That would contemplate almost a doubling of the current earn rate. I'm wondering if I was reading that right, or if you were just conservative with that projection.

Well, hi, Joel. It's Dave. It's our -- it's our projection based on our revenue and spending limits -- or revenue and spending levels that we have forecasted. Again, it includes the pre-launch activities for Fampridine doubling the sales force, pre-commercial manufacturing, NDA preparation costs, as well as our pre-clinical program advancement.

And to get a sense of the timing, when precisely would the sales force doubling occur?

We haven't determined that precisely, but we're going to work that so we get enough lead time to put them in the field, have them trained, have them already having staked out their territory, visited their target practices a number of times prior to an anticipated date for an NDA approval. Obviously, there's a fair amount of projection involved in that, but I would -- I would not expect it, at a minimum, before the end of this year, and possibly into next year.

Okay. And then just a quick question on what you said about the regulatory strategy for EU. Is partnering still an option you're considering -- ?

Yes, it is. We are considering partnering as a way to go in Europe. We have -- as I mentioned, we have now submitted request -- formal requests -- for meetings with various member state regulatory bodies in the EU. We hope, in having those meetings, to get a better sense of the regulatory pathway and time lines, and that will help us formulate the rest of the strategy in terms of how we commercialize in Europe.

Okay. Great. Thank you.

Your next question comes from the line of Geoff Meacham from J.P. Morgan. Please proceed.

Yes, hi. It's Matt [Rowdin] in for Geoff today. Thanks for taking the questions. The first one is, to follow up on Joel's question on the European opportunity, do you have any prior assumptions about will what will be required from a regulatory standpoint in Europe, or is that something that you just have to wait until you talk to the authorities about?

We're going to have to wait, Matt.

Is there any draft guidance or anything available that could guide your assumptions there?

There are some draft guidances. We actually don't think they are particularly relevant to Fampridine-SR. So that's another reason we need to actually wait to have the meetings.

I got you. And then just a follow-up here. You said in your filings and so forth that the seizure rate in Fampridine treated patients and long-term extension studies has remained low at about comparable to that seen in placebo patients in other Phase 3 MS trials. I'm just wondering if you could update us there if there is anything that you're seeing in those long-term extension studies? Thanks.

Matt, you recited it absolutely accurately, so I really don't have anything to add to that. There's no update on that.

Okay. Thanks.

Your next question comes from the line of David Amsellem from Friedman, Billings, Ramsey. Please proceed.

Hi. Thanks for taking my questions. I just have one quick one. Are you planning to present the detailed Phase 3 results at [Actions] this fall?

That's still to be determined, David. We certainly are going to look for the next available large MS-related meeting to present. As you know, it depends on deadlines, whether people accept late breakers and so on, but we are certainly going to look to present at the next available large MS meeting or neurology meeting that's relevant.

Okay. That's all I have. Thanks.

Your next question comes from the line of [Ram Salvera] from Rodman & Renshaw. Please proceed.

Hi. Thanks very much for taking my question. I just wondered if you could comment on any discussions that you have had vis-a-vis the EU regarding potential pricing for Fampridine-SR?

We have not had any of those discussions yet, Ram.

Okay. Thank you.

(OPERATOR INSTRUCTIONS) Your next question comes from the line of Phil Nadeau from Cowen & Company. Please proceed.

Good morning. Thanks for taking my question. First is on the Phase 3 data release. When you do release the data, are you going to release only results from the Phase 3 trial, or will you provide any sort of an update on the long-term extension experience as well?

My expectation, Phil, would be that it would be a release on the Phase 3 data. Historically, that's what we've done. If you look at the last Phase 3 press release as a template, we'll focus on the top-line data from the Phase 3 trial.

O kay. And I'm sure you're aware of the speculation that's in the market about what is or is not the safety experience in the extension in the Phase 3 trial. Can you tell us about how SAEs are typically handled in a study? Do letters need to be sent to investigators upon any SAE or is that not the case -- do incidences -- SAEs not really need to be disseminated to the community until after the studies are over?

I'm going to let Andy Blight, our Chief Scientific Officer, respond.

Yes. SAEs that are deemed to be reportable immediately to the FDA, which are essentially judged to be related and unexpected, are disseminated to the investigator community through an e-mail blast, and so those are widely disseminated. Anything that is considered to be expected is certainly recorded, and is submitted, but it is not routinely distributed to the investigator community. A seizure is something that has been identified in an initial agreement with the FDA that every instance of seizure is deemed to be reportable as an IND safety report, and it is communicated to the investigators through an e-mail blast within a few days of that occurrence.

Yes, Phil, I'll add that that agreement that Andy just mentioned with the FDA, what that means is that any report of seizure, regardless of whether it normally would have been recorded as an SAE, or not is automatically reported as an SAE in this context. So if anything, we are more sensitive to recording seizures in that category of SAE than otherwise would be the case.

Okay. That's really helpful. Thank you. And two questions on the P&L, just to make sure my model is correct. The interest income. Looks like you only recorded an interest expense this quarter. Is that because interest rates went down substantially, or is there something else that happened in that line item?

Yes. It's a combination -- so the way the full capital schedule amortizes interest, you have got heavier interest earlier in the schedule each year; and additionally, our interest income, we've taken a more conservative approach on our portfolio -- our investment portfolio. So interest income has come down based on the conservative investments we're making.

O kay. And you aren't caught in any auction rate securities or anything like that?

We have got no auction rate securities. We've got no asset-backed securities. We've got a very conservative investment portfolio.

Okay. And last, on the cost of goods, looks like it was running 26% this quarter. Is that a fair rate for COGs going forward?

The COGs include -- in the first quarter, we hit the last of the $5 million milestone payments to Elan, and those payments are amortized over the patent life. So for -- that's probably a good percentage to use, at least through 2008.

Okay. Perfect. That's very helpful. Thank you.

Your next question comes from the line of Caroline Stewart from Piper Jaffray. Please proceed.

Good morning. Most of my questions have been answered, so just a follow-up. In some European countries the compounded formulation of Fampridine-SR is available, and others it is not. I think you can import from other countries, although it is supposedly quite difficult. I guess how does this affect, you know, kind of the partnering talks; and also even though you wouldn't be necessarily commercializing there, what happens to the compounded formulation? I assume that is still available.

Caroline, we don't really see much of a distinction between compounding activity in Europe and the compounding here. What we found, at least in our initial discussions with key opinion leader neurologists in Europe is that their posture toward the compounding sounds very much like what we hear here in the U.S., which is they believe it is helpful for some of their patients. That's why they do it. They're well aware that it's compounded and that, therefore, they don't have a label. They are uncertain as to potency, stability, manufacturing, purity and so forth, and that they indicate at least that they would not use those formulations if there were an approved labeled formulation available.

Okay. Thank you.

At this time, I would now like to turn the call back over to Ron for closing remarks.

Thank you, operator. This concludes our conference call this morning. Thank you all for joining us.

Ladies and gentlemen, thank you for your participation in today's call. This concludes the call and you may now disconnect. Have a wonderful day.