Acorda Therapeutics Inc (ACOR) 2008 Q3 法說會逐字稿

Thank you for holding. Welcome to Acorda Therapeutics third 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 that 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.

(Technical difficulties, audio cut out.) -- Financial Officer.

This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts regarding managements expectations, beliefs, goals, plans, or prospects, should be considered forward-looking.

These statements are subject to risks and uncertainties, that could cause actual results to differ materially, including delays in obtaining or failure to obtain FDA approval of Fampridine-SR, the risk of unfavorable results from future studies of Fampridine-SR, Acorda Therapeutics ability to successfully market and sell Fampridine-SR if approved, and 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 it's pre-clinical programs.

These and other risks are described in greater detail in Acorda Therapeutics filings with the Securities Exchange Commission. Acorda Therapeutics may not actually achieve the goals or plans described in it's 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. Welcome everyone. This morning we reported our third quarter '08 financial results. During the quarter we made significant progress on the key initiatives that will drive Acorda's growth. Most notably on Fampridine-SR regulatory activities in both the US and Europe. I am going to give you an update on these initiatives, and then turn the call over to Dave, who will provide you with a financial summary, and then we will open the call for questions. We were pleased that the data from our second Phase III trial, Phase III clinical trial, the MS-204 study, were accepted as a late breaker at the World MS Congress in September in Montreal.

Among the new analysis that were presented, the poster highlighted that the walking response rate for Fampridine-SR treated patients was higher than placebo across all MS sub-types, and the walking response rates were similar between study participants who were being treated with immunomodulators as well, and those who were not.

The poster presentation attracted a large audience. We brought more than 300 reprints to the meeting. They were gone within the first hour, and Dr. Andrew Goodman, our principal investigator at the University of Rochester who presented the data, had a crowd around him throughout the session.

We also premiered a new exhibit booth at the Conference. It's goal is to educate healthcare professionals about the pathophysiology of demyelination in MS, and how that contributes to walking disability. I am pleased to report that our booth was the most crowded and popular stop on the exhibit floor throughout the conference. Over 1,600 people registered at the booth to receive additional educational materials, and many, many hundreds more visited the booth. The booth registrants alone represented about a third of the healthcare professionals at the conference.

I invite you all to visit the website that is associated with this effort. It is www.MSmobility.org. And that will give you a better sense of some of our pre-launch awareness building and education activities.

Separately, data from our MS-F202 Phase II Trial was published in the October edition of Neurology, and we are currently working with our scientific advisors to publish the Phase III data in peer review journals.

Moving on to our regulatory update, we are on-track to file the NDA in the US in the first quarter of 2009. Given the current staffing pressures under which the FDA has been forced to operate, we are evaluating whether or not it would also be advantageous to request priority review, which would be requested at the time of NDA filing if we decide that it is advantageous.

With respect to Europe, the potential market for Fampridine-SR in the EU is sizeable. There are approximately 630,000 people diagnosed with MS in Europe, according to the Atlas of MS. That is a collaboration between the World Health Organization and the Multiple Sclerosis International Federation, and this represents the highest estimated incidence rate of MS of any geographic region.

As we noted in this morning's press release, Acorda conducted scientific advice meetings with Regulatory Authorities in four key EU member states, to discuss the Fampridine-SR clinical program. The discussion topics included the acceptability of the outcome measures used in our Phase III clinical studies, and the adequacy of the program to support submission of a Marketing Authorization Application, or MAA.

Based on the feedback we received, we plan to submit a centralized MAA filing in 2009 to the EMEA, which is the European Medicines Agency, after the NDA is filed in the US. We are continuing to evaluate options to maximize the value of the product in Europe. We have launched several additional initiatives, including formal market research, pricing and reimbursement analysis, and also outreach to physicians, advocacy groups, payors, and other stakeholders in Europe. We will also be holding discussions with potential marketing and distribution partners, to further assess the relative value of partnering in Europe versus other strategies.

Turning to our existing commercial product, Zanaflex continues to perform well. Gross sales this quarter were $13.7 million, up approximately 19% from Q3 2007, and our total shipments were $15.7 million. Based on sales through Q3, we continue to expect that Zanaflex commercial operations will be net cash flow positive in 2008 on an operating basis. Zanaflex is continuing to meet our strategic goal of supporting full commercial operations at Acorda, and also providing us with the experience and infrastructure needed for a successful launch of Fampridine-SR if it is approved.

And now, I will turn the call over to Dave for a financial update.

Thank you, Ron. In our press release this morning we outlined our third quarter financial results for 2008. The Company reported a net loss of $18.9 million for the quarter ended September 30, 2008, or $0.53 per diluted common share, compared to a net loss of $8.5 million, or $0.30 per diluted common share for the same quarter in 2007.

Total operating expenses for the quarter ended September 30, 2008 were $29 million. Research & Development expenses were 8.7 million which includes costs related to our Fampridine-SR long term extension studies, NDA preparation costs, and continued development of our pre-clinical pipeline products for potential IND filings in late 2009.

Sales, General & Administrative expenses for the quarter ended September 30, 2008 were $20.3 million, and included expenses related to Zanaflex promotional activities, and Fampridine-SR pre-launch activities. Other income expense included 1.2 million in interest income from our cash investment activities, offset by $874,000 in interest expense, primarily due to the Paul Capital Healthcare agreement.

The financing we completed in August enabled us to substantially strengthen our balance sheet. As of September 30, 2008, Acorda held cash, cash equivalents, and short-term investments of $263.2 million. We expect this to be sufficient to fund the Company's operations through 2010, based on our current projected revenue and spending levels.

I will now turn the call back over to Ron.

Thank you, Dave. We will now open the call for your questions. Operator?

(OPERATOR INSTRUCTIONS).

Our first question will come from the line of Geoff Meacham with JPMorgan. Please proceed.

Hi, good morning. This is Matt Roden in for Geoff. Thanks for taking the questions.

Good morning, Matt.

Good morning. So a couple questions on the European regulatory discussions. First just to clarify, should we assume that no additional clinical trials would be required for filing an approval of Fampridine in Europe?

Yes, I am sorry, go ahead.

Okay, secondly, can you talk a little bit more about what lead to your decision to file through the central route, rather than the country by country basis, and then third, can you narrow it down a little bit in 2009, whether it will be the first half or the second half?

Okay. At this point, we don't believe that we will need to conduct additional studies based on the meetings that we have had. Obviously, the final decision is going to be up to the EMEA as a whole, but based on where we are, we believe, we plan to file based on the trials that we have, which are as you know the two placebo-controlled Phase III trials primarily.

With respect to how we arrived at the decision, we don't generally get into specifics of our conversations with regulators. We discussed several topics with them as I mentioned, in terms of the overall adequacy of the package that we have. Typically as you know, decentralized filing is used when you don't necessarily plan to launch in every country.

Typically, a centralized filing I would say is preferred, if you do want to have the flexibility to launch throughout Europe, it is a more efficient process and if there is no apparent reason not to do it, typically companies will opt for centralized procedure, and based on our current information, we think a centralized procedure is the way to go. We are not at this point prepared to give more specifics than to say that it is in 2009. Hopefully we will be able to narrow that down as we get into the New Year.

Okay, that is helpful, thank you.

Our next question will come from the line of Joel Sendek with Lazard Capital Markets. Please proceed.

Oh, hi, thanks. I have two questions. First, you mentioned that you might request parity review. I am wondering why you wouldn't?

Yes, I think, Joel, it's a new environment right now at the FDA. We monitor these things as closely as we can, as I think everyone else does in the industry, and it is clear I think to everyone who has been watching, that the Agency has been under increasing stresses, mostly induced by staffing issues, which in turn were induced by lack of funding until very recently.

That puts a huge amount of pressure on the existing staff at the FDA, and we have seen that, in terms of the output lately, in terms of PDUFA dates and meetings being delayed, postponed and so forth, so we are reviewing whether or not a priority review in this environment actually is going to be advantageous, as opposed to for example, possibly putting more pressure on an already stressed situation.

That is something we are assessing, and we will make the decision as we get to the filing, which is the time that we would ask for priority review.

So they might just create a PDUFA date, which they can't meet, in which case you create more problems for yourself?

I am not going to put words in the Agency's mouth. I just want to say that we are trying to be sensitive to the pressures that the Agency is under, which is really induced by factors beyond their control as well. You might want to look on October 30, just last week, Bloomberg ran a story about the numerous and unusual number of delays that have occurred in the regulatory process overall this year, and that's just another harbinger of what we see happening at the FDA, so that is the long and short of it.

Okay, and my second question, you obvious are well capitalized, had a great time over the summer time, but I am wondering whether the financial crisis that we've lived through here, might have an impact even on a company like yours, with obviously a very strong balance sheet, in the sense of does it impact your partnering strategy, and you will be more likely partner ex-US, as a result of all of these things that are going on?

If we decide to partner it would not be based on a feeling of extraneous financial pressure. As you say, we financed at a good time, we are very well capitalized, and we don't feel pressure to make a decision based on that. When we make that decision, it will based on fundamentals and the long term economic advantage to the Company.

Okay, thank you.

And our next question will come from the line of Larry Neibor with Robert W. Baird. Please go ahead.

Thank you, good morning.

Good morning.

As you go through your pre-launch activities with Fampridine-SR, are you getting any feedback on pricing or reimbursement that you can share with us, to tighten up the range you have talked about in the past? And could you repeat the same answer for your initial thoughts on Europe?

I am sorry, was that two questions, a question about Europe at the end?

Right. Two questions. Pricing US, pricing Europe.

Okay. We are not at a stage where we are preparing the guidance, although we are comfortable with the guidance we have been giving, and that is that we are focusing within the range of between $5,000 up to $10,000 a year. We are continuing to do our pricing research both here and in Europe, with respect to Europe, we don't have anything specific to say, except to point out that it is clear that in the MS field in any event, the reimbursement in Europe is at least on par with the reimbursement in the US for other products.

In some cases because of the exchange rate disparities, in dollar terms it might even be a little bit more. Now that does not necessarily mean that will be the same case for Fampridine-SR. We are studying that, and as you probably know, the pricing research gets very granular, and it is going to be taking place all the way into well into next year, so I don't know that we are going to have much more specific to say until we get further down the road, but based on the feedback we have gotten so far in the initial research, we are quite comfortable that it is somewhere in that range of 5,000 to $10,000.

Okay, and second question would be is there any possibility that you would choose not to have a marketing or distribution partner for the EU market?

Yes, sure. There is a possibility. We are going through our process. We have completed our regulatory analysis, and we have announced today what the output of that is, that we plan to file an MAA next year in a centralized procedure.

We are finishing up our market and initial pricing and reimbursement analysis, and then we are going to be talking to interested parties, of which there are several about what a partnership in Europe might look like, so that we can evaluate the value of those sorts of deals against the go it alone strategy, or something in between, which might involve a co-promote in selected territories, so all of that is still on the table, as we go and complete our work.

Great. Thank you.

Sure.

And our next question will come from the line of Phil Nadeau with Cowen and Co. Please proceed.

Good morning. Thanks for taking my questions. My first question is on the filings. Could you just update us on what remains to be completed before you can file in the US?

How much time do you have?

(laughter).

At this point, it is blocking and tackling, Phil. There is no one thing. It is everything. So it is, as you know, it is just a huge document is really not a big enough word. It is just a huge enterprise to put together all of the pieces of the NDA, and everyone here is working full steam to get it done, but there is no particular element that I would point to. It is just dotting all of the I's and crossing the T's, and lots and lots of blocking and tackling.

Okay, and what about priority to the EU filing? You mentioned you don't have to do any studies. Is there any new analysis that need to be done, or is it simply kind of taking what you are filing in the US and putting it into the European format?

A couple of things. First, I just want to be clear. We have spoken with four, we believe, influential member states, particularly knowledgeable in the MS and neurology space in Europe, and based on the collective feedback, we believe we can go and file through a centralized procedure. I just want to make sure everyone hears that ultimately, the EMEA is going to make the final determination.

In terms of what we have to do to file the MAA, once the NDA is in, there are several areas in an MAA where the formatting is different, and the way you construct the narratives is different, so there will be a fair amount of reformulating what we already have, but I don't anticipate that there will be anything substantively new and Andy Blight, our Chief Scientific Officer is here. Do you have any additional comment on what the MAA would require that is not already in the NDA?

Yes. There are primarily region-specific aspects of the CTD submissions, and they would have to be put together, and some of the elements of the NDA have to be modified into an MAA. It is not a direct shift from one to the other, although it is a common technical document, it is not so common that you can simply take an NDA, and put it in as an MAA. There are a lot of adjustments that have to be made for the European environment.

But is there anything substantive that we would have to add?

No. It s primarily an editing task.

And Ron, on your comments that the EMEA will make the determination where you can file with, do you now have to have a subsequent conversation with the EMEA, under what auspices would you get feedback from the EMEA, whether the filing is complete or not complete?

We are going to go through a formal process now with the EMEA, based on the advice we have gotten from the individual member states, we are comfortable doing that, but you always have to allow, that once you get into the formal process, the unified EMEA may come back with something different than what you heard earlier.

We think based on what we have heard from the four member states we have consulted with, we feel comfortable that we can go ahead and do this, but everyone just needs to be aware that that is not the final arbiter. The final arbiter is once you get into the formal process, the MEA may come back with something that you didn't anticipate.

Okay, that makes sense. At one point you had been suggesting that you would decide on European commercialization strategy by the end of the year. Does that guidance still hold, or is there some chance that you will still be evaluating your options into 2009?

Well, what holds is that we will have finished the research, both on the market analysis front, pricing reimbursement front that we wanted to get done, as well as what we have been asked today, which is the regulatory piece which we felt was a critical piece. So with that put to bed, the next step is really to talk in detail with some of these potential partners, and get a sense of what the level of interest is, what the terms of a partnership might look like in reality, versus what we might speculate it may look like, so we are going to go through that process.

That is going to obviously take a little while. I anticipate that will take us past the end of the year, and in those conversations, I think once we have a sense of what that option looks like in detail, we will be prepared to make a decision.

Okay. And then my last question is actually just a follow-up to Joel's. You mentioned you are going to decide on whether to go with priority review or not. Are you going to get any feedback from the FDA in that process, or is it just going to be you guys reading the tea leaves of the FDA environment?

In the NDA process, there are conversations that you have with FDA routinely on a pre-NDA basis, so we try to talk with them about a spectrum of topics where there may be uncertainty, or where we would like more clarity for filing the NDA, priority review could well be one of those topics, but at the end of the day that is part of the analysis, we are looking at the views of some of our trusted Advisors who have regulatory insight, just trying to gauge the current environment again, and what the impact of that might be on a priority review filing, versus letting it go on a standard review.

Putting it another way, if we were to believe strongly that there was a strong chance that a priority review would put so much additional stress on an already stressed situation, that it might be a net negative, versus letting the Agency have a little bit more leeway, then we might conclude that a standard review might well be more advantageous, and we might get there more expeditiously on a standard review. Again, I am not telling you we have come to a conclusion, but those are the things we are thinking about.

Okay. Fair enough. Thanks for taking my questions.

Okay.

And our next question will come from the line of William Ho with Banc of America. Please go ahead.

Hi, guys. Thanks for taking my questions, and congratulations on what turned out to be a very nice financing earlier this summer. My first question is did the EMEA accept the responder analysis that you did in the 203 and 204 studies, as the FDA has in the test VA?

Okay, a couple of things. So I just want to make clear again, that we did not seek advice from the EMEA per se, but rather from the member regulatory bodies, of four of what we think are key member states that belong to the EMEA, and again, we don't talk about specifics of the conversation we have, however, broadly speaking, we did talk to them about our trial design.

We talked to them about our outcome measures. We talked to them about the adequacy of the current trials, and the current package to support a regulatory filing, and based on all of those conversations, we have concluded that we should go ahead and do a central filing next year, and that we believe that we will not need any additional studies beyond what we have already done, and as you know, the two Phase III trials are based on the primary outcome of the walking responder analysis.

Great. And then finally, during the MS meeting in Montreal, several conversations with clinicians that I had, seemed to indicate that there are significant numbers of MS patients who are taking other symptomatic treatments for MS, both off label and out of pocket. What will be required for you to get Fampridine-SR finally reimbursed by third party payors? Outside of the label of course?

Are those two different questions, because I think I heard you say that MS patients were said to be taking off label drugs and paying out of pocket.

Yes, so I guess one of the concerns that docs had was with respect to reimbursement, some of those other off label symptomatic treatments that they are taking are not being reimbursed, so they are paying for it out of pocket, and they thought being reimbursed would be a big driver for uptake, so what would it take to get Fampridine reimbursed and paid for ?

Reimbursement is obviously always the key driving factor for any drug that is launched for any indication, so I don't see it as being fundamentally different for Fampridine-SR, than it would be for any drug in any other area or indication, and we have as part of our full pre-launch program, we brought in some very good people from other companies with lots of experience, specifically in preparing third party payors, having those conversations in advance, preparing dossiers, doing health economic studies to justify the benefit to patients, and we are going through all of that now, and we are going to be intensifying that as we get through next year.

Any thoughts as to the ability to get reimbursement?

I am not quite sure how to answer the question. Any thoughts about, can you rephrase the question?

I guess do you think you will be successful ultimately to get reimbursement for Fampridine?

Well again, we certainly hope so. We don't see any particular road blocks right now, but that is something that gets determined as we get, first of all as we decide what our ultimate price point is going to be, and that is going to be based on this very issue, which is going out and talking to the third party payors, presenting our data, presenting health economic data, and so on.

Let me also be clear that we will be aiming to get reimbursement for the labels indication, and that is also going to be determined much closer to FDA approval, when we actually have a much clearer sense of what the ultimate label is going to say, so what happens is you get a process that starts out more generically where you go to the payor, start the conversations, based on the target product profile that you have, and then as we get closer and closer, and we can cone down on what the ultimate label is actually going to say, we intensify those conversations and they become more specific, so this is not fundamentally different again, from any drug that is ever launched.

It is a very analagous process of getting the relationships with the payors, educating them as to the probable labeled indications, and also getting a sense of what price that they would support.

Okay. Thanks.

Sure.

(OPERATOR INSTRUCTIONS). And our next question will come from the line of Larry Neibor with Robert W. Baird. Please proceed.

Thanks, and thank you for taking my follow-up. Your sales and marketing costs were up about 80% plus year-over-year. Could you give us an idea of what portion of that was pre-launch spending for Fampridine-SR, and perhaps an idea of what your pre-launch spending might be budgeted up to launch?

Yes, Larry. As we have been guiding our pre-launch activities in the SG&A expense line have continued to increase, if you look quarter-over-quarter this year you will see that it has been gradually increasing, and this quarter it has taken a bit of a higher bump, and it is paying for all of the things that Ron was just speaking to, around these pre-launch activities.

We are not giving, the only guidance we are giving at this point is that the cash in the bank will last through the end of 2010, but in the SG&A line, the increases you are seeing are primarily due to the S, or the sales, which is pre-launch activities.

Okay.

Yes, let me, I just want to follow-up on my previous answer to Will as well, which is obviously as we talk to the third party payors, we are talking about reimbursing on label , so I just want to make that clear. We aren't going to be promoting off label, and that part of the system, we are not going to be directly requesting reimbursement for off label

One final question, please. Given what you have announced this morning, could you give us some idea of the timing of your planned sales force expansion?

We are going to monitor that, Larry. It really, we want to bring the new sales force in, somewhere between let's say three to six months prior to the anticipated launch, closer to three if we can swing it.

It becomes a bit of a dance, because you have to anticipate when you might be getting an approval, hopefully we will get an approval, so that becomes an issue of monitoring the progress with the FDA, what kind of feedback we are getting back from them along the way, and trying to get our best educated guess, based on reading those signs, as to when a launch will probably be, and then working back from there. I think on the current timeline, we will hope to bring them on board next year, but it won't be in the beginning of the year.

Thank you.

Our next question is a follow-up question from the line of William Ho with Banc of America Securities. Please proceed.

Sorry. I just wanted to clarify, I apologize if it didn't come out so clear. My understanding was just talking from doctors, that there really aren't that many symptomatic treatments out there, and that patients do take other drugs off label as symptomatic treatment, but it does seem to be a fairly large burden on them out of pocket, and so I was just wondering and trying to get an understanding of your reimbursement process, because I think that would ultimately be an advantage, if you could?

Well, again, we plan to get as broad a reimbursement as possible on the drug. I also, I should take the opportunity to just focus on the word 'symptomatic' because I think it is important. One of the things we are educating away from with respect to Fampridine-SR, is distinguishing it from other what people call 'symptomatic treatments'.

We think of Fampridine-SR as a new class of treatment, really a functional modifier, because it is in fact modifying the actual function of the demyelinated nervous system, and as such, it is acting to reverse part of the pathophysiology of the disease itself, and that is distinct from asymptomatic therapy, that is really treating a particular symptom, usually regardless of what the disease, or the etiology is, so a good example would be Zanaflex.

Zanaflex treats spasticity, painful spasms of the muscles, regardless of whether it is due to spinal cord injury, or stroke or brain injury, or MS, or some other cause of painful spasms of the muscles. That is a true symptomatic therapy. We see Fampridine-SR as a targeted therapy, that reverses the conduction block in demyelinated axons, and that is a fundamentally different and ultimately I think a more potent approach to these patients.

Now to your point, some patients are taking compounded versions of Fampridine itself, which are not FDA approved, and they generally pay for those out of pocket. There are other drugs as you note, that they take, that are not necessarily reimbursed. Our focus is going to be to again educate the payors about the potential for a First-in-Class drug that restores, or improves I should say walking ability, a critical function in MS, by modifying the function of the nervous system, we believe that that should command a premium price, and that it should be reimbursed, so that is what we are going to be working on.

Obviously, to the extent that there are co-pays involved in reimbursement, and people have a co-pay in their plan, our belief is that in most cases, the co-pay would not exceed what they are paying now, or maybe even be less than what they are paying now for other off label or compounded drugs.

Great. Thanks.

At this time, we have no further questions. I would now like to turn the call back over to Dr. Ron Cohen for closing remarks.

Thanks very much everyone for joining us. This concludes our conference call this morning. Have a great week.

Thank you for your participation in today's conference. This concludes your presentation. You may now disconnect. Good day, everyone.