Acorda Therapeutics Inc (ACOR) 2008 Q4 法說會逐字稿

Welcome to the Acorda Therapeutics fourth quarter 2008 year-end results conference call. (Operator Instructions) There will be a question-and-answer session to follow.

Now I would like to introduce your host for today's call, Tierney Saccavino, Vice President of 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 David Lawrence, Chief Financial Officer.

Before we begin let me remind you that this presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts regarding management's 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 its intellectual property or to defend against the intellectual property claims of others, and the ability to obtain additional financing to support Acorda Therapeutics operations, and unfavorable results from preclinical programs.

These and other risks you are described in greater detail in the Acorda Therapeutics filings with the Securities and Exchange Commission. Acorda Therapeutics may not actually achieve the goals or plans described in these forward-looking statements and investors should not place undue reliance upon 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 call.

I will now turn the call over to to our CEO, Ron Cohen.

Thank you Tierney. Good morning everyone and welcome. This morning we reported our Q4 and year-end 2008 financial results. 2008 was a year of exceptional achievement for Acorda. Today I will provide a brief review of some of the key milestones from '08 and '09 to date, and then I will turn the call over to Dave who will provide a financial summary. We'll then open the call for questions.

Turning to our existing commercial product, the Zanaflex franchise performed well in 2008 with continued increases in sales and prescriptions. Gross sales for the fourth quarter were $14 million, up approximately 9% from Q4 2007. Total shipments were $16.5 million. For the full-year, gross sales of Zanaflex Capsules and Zanaflex tablets were $53.4 million compared to $43.6 million for gross sales for 2007. As we had projected, the Zanaflex franchise was cash flow positive in 2008 on an operating basis, and we expect the sale in 2009. This business continues to meet our strategic goal of supporting commercial operations at Acorda and providing us with the experience and infrastructure needed for a successful launch of Fampridine-SR if approved.

We achieved several important milestones in our development of Fampridine-SR in 2008 and early '09, which I will review with you now briefly. We filed an NDA for Fampridine-SR on January 30th, 2009. We expect that the submission, if accepted, will be subjected to standard review, which would provide a target for the FDA to complete its review within 10 months. In June, we announced positive results from our second phase 3 clinical trial of Fampridine-SR, the MS-F204 trial on walking ability in people with multiple sclerosis. These results, along with the results of our first phase 3 study, MS-F203, were the basis for the NDA filing. As a reminder, both Phase III studies were conducted under special protocol assessments, or SPAs, from the FDA.

In January 2008 we announced the results of a successful study Thorough QT study. The FDA requires Thorough QT studies for all new drugs seek regulatory approval. We also conducted meetings with the regulatory authorities in four European union member states. As a result, we believe that the current data are sufficient to file a centralized Marketing Authorization Application, or MAA. We're preparing for an MAA as we determine the commercialization pathway that will optimize our ability to provide the drug to patients who need it and maximize the value of Fampridine-SR outside the US. In this regard, we have begun meeting with potential marking partners for ex-US territories.

We've also been conducting initiatives to increase awareness of walking disability issues among professional and consumer audiences. These activities included a partnership with the national MS S Society to sponsor 20 Walk MS programs across the country in 2008. In 2009, Acorda will be the national sponsor of the Walk MS program with a presence at 30 of the largest Walk MS events.

On the corporate front, we added several key senior team members. Tom Wessel joined Acorda as Chief Medical Officer. Most recently Tom was the Senior Vice President of Clinical Research at Sepracor where he led the central nervous system and respiratory medicine development teams and also served as the Medical Director for the Lunesta development program. Tom's expertise will be invaluable to us as we move toward potential approval of Fampridine-SR and advance our preclinical products toward INDs

Ruhi Khan joined Acorda as Executive Director of Business Development and will be spearheading our corporate partnering discussions. Previously, Ruhi was at Lexicon Pharmaceuticals, Fidelity Biosciences, and MPM Capital Advisors where she was responsible for numerous negotiations for in-licensing and out-licensing of biotech and pharmaceutical products. John Kelley, the President and COO of the Medicines Company, was elected to our Board of Directors. John has outstanding experience in pharmaceutical commercialization and strategy which will benefit the Company as we move toward the potential launch of Fampridine-SR.

Before I move on to providing an overview of Acorda's outlook, we have received a number of requests to clarify our updated guidance regarding our regulatory path and commercialization plans in Europe, and I would like to take a moment to do that now. As we said previously, in 2008, we reviewed with health authorities in four EU member states the existing Fampridine-SR clinical development program and data. Based on those discussions, we believe we can file an MAA through the centralized procedure with our existing data package.

Earlier this year we said we plan to file the MAA in 2009. Given our current status in exploratory discussions with potential marketing partners for EU and other non-US markets, we will refrain from commenting on a timeline for MAA submission. As potential partners may wish to participate in the MAA process, we want to have maximum flexibility for partnering discussions and not be prematurely anchored to a timeline. I want to emphasize, however, that we believe we have sufficient data to file at any time at our discretion. We believe that - - we expect that Zanaflex revenue will continue to grow modestly and that the franchise will continue to be cash flow positive on an operating basis.

In late 2009, we plan to complete pre-IND toxicology studies for GGF2 , and pending the outcome of those studies, submit an initial IND for congestive heart failure. We're also well capitalized and expect our cash on hand to last through 2010.

Now I will turn the call over to Dave for the financial

Thank you, Ron. For the fourth quarter ended December 31st, 2008, the Company reported a net loss of $20.2 million, or $0.54 per diluted common share, compared to a net loss of $13.7 million or $0.48 per diluted common share for the same quarter in 2007. For the year ended December 31st, 2008, the Company reported net loss of $74.3 million, or $2.19 per diluted common share, compared to a net loss of $38 million or $1.45 per diluted common share for the year ended December 31st, 2007.

Total operating expenses for the quarter ended December 31st, 2008, were $30.4 million and were $109.9 million for the full-year. Research and development expenses were $10.8 million for the fourth quarter of 2008, which includes costs related to our Fampridine-SR long-term extension studies, NDA preparation costs, and continued development of our preclinical pipeline products for potential IND filing in late 2009. full-year '08 research and development expenses were $36.6 million. Sales, general, and administrative expenses for the quarter ended December 31st, 2008, were $19.6 million and included expenses related to Zanaflex promotional activities and Fampridine-SR prelaunch activities. full-year 2008 SG&A expenses were $73.3 million.

Other net income expense for the quarter ended December 31st, 2008 included $1.2 million in interest income from our cash investment activities, offset by $589,000 in interest expense, primarily due to the Paul Capital Healthcare agreement.

We ended 2008 with a strong balance sheet. As of December 31st, Acorda held cash, cash equivalents and short-term investments of $246 million. We expect this to be sufficient to fund the Company's operations through 2010 based on our current projected revenue and spending levels. We expect our year-end 2009 cash, cash equivalent and short term investments will be in excess of $150 million. We will now open the call to questions. Operator?

Thank you. At this time we will take any questions you may have. (Operator Instructions) And your first question comes from the line of Joel Sendek from Lazard Capital Markets.

Hi, thanks. I have a question about the partnering. Obviously understandable that you don't want to be bound to a timeline. I'm just wondering if you don't get the deal you want, is it still a possibility that you file solo ex-US?

Yes, that's still a possibility, Joel.

Then the next has a financial component. I'm wondering, the $150 million for the end of the year, does that assume any partnering revenue at all?

No, Joel, there's no partnering assumptions built into our cash forecasts.

Then how about any capital expenditures?

Limited.

Okay. Then the final question is, any data at Neurology Meeting that we should look forward to?

We'll notify when you and if we have our presentation accepted.

Okay. Thank you.

And your next question comes from the line of Michael Yee from RBC Capital Markets.

Great. Couple questions. Can you comment on long-term safety, any update there, and confirming any or no additional seizures there? And then second question is just in terms of disclosure. Will you announce when the NDA was accepted, formally accepted?

Well, I'll tell you the second question first. Yes, we will announce when the NDA is accepted. With respect to the extension study, we provide overall updates periodically, and when you see the 10-K filing you can expect to see an update on the long-term extension studies. We don't historically give a blow by blow every time there's an event for any particular patient, but we do provide overall updates over time, which we think is really the more rational way to go. So we will have an update in the 10-K.

And actually just one last follow-up. Have you considered buying back the royalty from Elan before or after approval? Any thoughts on that?

That's something we don't comment on and can't comment on.

Fair enough, thanks.

And your next question comes from the line of Geoff Meacham from JP Morgan.

Hi guys. Thanks for taking the question. Quick question on your cash guidance. What can you tell us as to what it assumes for the number of reps that you may hire in the US? And then what can you tell us about your launch preparations so far in the US?

What we've said is that we expect to approximately double the current sales force. Current sales force is at 65. So something in the low 100's is where we think we're going to need to be. Could you remind me the other piece of your question?

Yes, just really, anything that you can tell us about your launch projections and the timing of that in the US.

No, we really can't. Obviously, the major gating factor will be the length of FDA review and what that entails, and we just don't have any insight into that yet.

Okay. And then is it fair to say that when you think about a European partnership, are you waiting to get any more input from perhaps the US process when you think about what questions regulators could have in Europe and how a partner may view that?

I don't think we feel that the discussions on Europe are contingent on any additional data or information. We're holding discussions now.

Okay. Thank you.

And your next question comes from the line (inaudible) of Deutsche Bank.

Hey, Ronald, it's Mark Schoenbaum. How are you? Can you help us understand the European market a little bit? I think a lot of this understand the US market given access to -- that a lot of them have had experience, compounded drug, or hoping that they have better experience with your formulation. What about in Europe? How widespread is use of the compounded drug, and do you have any sense for if the availability of the compounded drug is going to end up being a more significant barrier to reimbursement discussions over there than over here?

With the research we've done in Europe and here our impression is that it's very similar. Overall the picture is very similar in terms of key opinion leading familiarity with the drug, impressions of the drug, and the extent to which people may or may not be using compounded drug. Compounding does exist in Europe. Its differential across member states, so in some member states you see more of it, in some you see less. But just like in the US, you don't -- it's very hard to get a ham on precisely how much is being prescribed and for how many patience, because it's not a regulated activity, and you don't have the records that you have for approved ethical pharmaceuticals.

Having said that, our impression is that overall, it's approximately the same situation, and we would not regard compounding in Europe to be any more of an issue there with respect to the regulatory process and approval and adoption than it is here.

And just - - actually, one other question, Ron, on Europe, just to clarify. So you are in partnering discussions. You are no longer giving guidance on when you are going to specifically file in the EU, and, just to be clear, you are not giving guidance on when you may sign a partnership. And then the question is, is it still an option to go it entirely alone in Europe, or are you absolutely committed to partnership?

What we've said, Mark is that these are exploratory discussions. The overriding goal is to maximize the value of the asset in Europe and ex-US. So our - - to the extent that we have analyzed the situation, our belief is that the next rational step is to conduct exploratory discussion with potential partners and get a sense from those discussions about what that value proposition might look like. That does not in any way preclude us from pursuing other options if during those discussions we determine that we're not seeing the value that we feel we ought to be seeing.

And then the final question, any updated market research on the price point in US and Europe? Then I will drop off. Thanks, Ron.

We're continuing to do pricing research, and we're accelerating pricing research, particularly in the US, but that is a rather lengthy and iterative process. We continue to believe the price point in the US is likely to come in 5 to $10,000 range. We don't have anything more specific to say about Europe yet.

Thank you.

(Operator Instructions) We have a question from the line of Phil Nadeau from Cowen and Company.

Thanks for taking my question. First, Ron, I had a question on the IP extension strategy. Can you give us an update there? What's the latest on your process?

There are a number of elements to it. As I think you know, Phil, we have seven years - - we expect seven years of market exclusivity based on the orphan designation that we have in the US for MS. In Europe we expect to get the ten-year NCE exclusivity that they give for new chemical entities in Europe.

In addition, we have a number of other areas to look at for extending the effective life of the asset. One is the Hatch-Waxman provisions for patent life extension which potentially could give us up to five additional years of patent life on our key patent, which currently runs out in 2013. If we got the full five years, which we believe is a distinct possibility, based on the length of the program to date, that would take to us 2018. And, again, depending on when we got the actual FDA approval that could potentially be up to an additional year or so on top of the seven years.

In addition, we are looking at various formulation extensions to see whether there might be improved formulations that would be of value to patients and in the marketplace. And then we are also pursuing a patent application strategies. So we have filed additional patents and are filing patents as we go along that we believe could extend the patent life significantly, but obvious it would depend on getting those patents approved.

Could you give us some idea what's claimed in those patents?

Can't do that yet. Let me just - - hold on, let me just check. Can we - - Hey, Phil? Some of them have been published already, and they cover various methods and uses that are pertinent to the current projected indications for Fampridine-SR in MS. So we can provide you with the references.

Okay, Yes, I'd be interested to see that.

They're published.

One last question then, the EU partnering process. Could you give us some idea of the level of interest in Fampridine? Is it the established MS players that are interested? Are you having to beat off potential partners with a stick? Where along the spectrum is the interest falling now?

I think it's fair to say that there is - - it is a competitive process, and the interest is high.

Okay, great. Thanks for taking my questions.

(Operator Instructions) And we have a follow-up question from the line of Michael Yee from RBC Capital Markets.

Two questions. One, can you better characterize your thinking in the US? An ex-US partner, would you be open to them doing everything worldwide, then maybe co- promoting with your sales force? Is that an option, or are you basically committed to doing it here alone? And then secondly on the expenses, the SG&A actually came down from Q3. Is that a better run rate? Were there a lot of one-time expenses in the third quarter that caused that to spike? Similarly, with R&D, actually had big spike in the fourth quarter. Is that the best run rate to model off of going forward?

I will take the first piece, then I will let Dave respond on the financials. In terms of partnering, our goal is to keep the US. The entire strategy of the Company for the last several years has been to prepare the Company through the Zanaflex franchise to be a highly effective commercial force. I think we've achieved that through Zanaflex, as you can see from the track record. So from our perspective, the bar is extremely high to allow anyone to co-promote in the US with us.

Obviously everything has a price, and we're going to be guided by what we think optimizes the value of the asset. But from our perspective right now, the very much most likely way to optimize the value in the US is for us to do that, and to commercialize it ourselves. Whereas ex-US, the opposite obtains. We think that depending on the nature of the deal we could do, it's likely that partnering would be a more effective way to go. But again, that's an outlook. It really depends on what offers people make, and we have to assess those on a as they come basis. Dave?

Yes, on the SG&A expenses, we expect that he they will continue to increase next year, or in 2009 over 2008. We haven't given specific R&D guidance, although that coupled with our year-end cash balance should get you where you need to be.

Okay. I mean, fourth quarter basically the good run rate, the best run rate to go off of?

Again, it's - - we've given the guidance on SG&A and cash.

Thanks.

And your final question comes from the line of Mark from Deutsche Bank.

Okay, quick follow-up, Ron. Number one, do you expect the panel for Fampridine?

No way for us to speculate effectively on. That it would be just speculation. We have no indication yet one way or the other.

Okay. Then second of all --

But let me just make clear, we are being conservative planners, as we've always been, we're going to prepare as though we're going to have a panel until proven otherwise. So that we are completely ready if there is a panel.

And then final question. What's your tolerance for spending cash in 2009 on potential end-licensing opportunities?

I don't think it's substantially different from what it's ever been, which is we're always looking for ways to increase the value of the Company to shareholders, and part of that exercise is being alert to opportunities out there. There is a school of thought that says that the opportunities are greater than ever, given the general depression in valuations and the difficulties that some asset holders are experiencing now in developing their programs. So we're constantly alert to that. But as you can see, we haven't brought anything in over the last couple of years. We have a pretty high bar for bringing in something that we think has a high probability of success and is going to be significantly accretive. So that continues to be our measuring stick and we're continuing to look.

Okay, thanks.

And I would now like to turn the call over to Ron for closing remarks.

Well, this concludes our conference call this morning. Thank you all for joining us, and we'll see you next time.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a good day.