Acorda Therapeutics Inc (ACOR) 2009 Q1 法說會逐字稿

Thank you for holding. Welcome to the Acorda Therapeutics first quarter 2009 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.

Good morning, everyone, and welcome. With me today are Dr. Ron Cohen, our President and Chief Executive Officer; and David Lawrence, our 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. The 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 for 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 as Zanaflex capsules, competition, failure to protect intellectual property or defend against the intellectual property claims of others, the ability to obtain additional finance to support Acorda Therapeutics' operations, and unfavorable results from its preclinical programs. 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 the 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 the presentation.

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

Thanks, Tierney. Welcome everyone. This morning we reported our Q1 2009 financial results. Today I'll provide you with a brief review of some of the key milestones for the first quarter, which center around regulatory activity for Fampridine-SR in the US, and then I'll turn the call over to Dave, who will provide a financial summary and then we'll open the call for your questions.

I'm delighted to report that as we announced this morning, the FDA has accepted our Fampridine-SR NDA. As you may recall, we submitted the NDA about three weeks following receipt of a refuse to file letter from the FDA. We particularly appreciate the FDA's rapid turnaround as they accepted the filing less than two weeks following our resubmission. In addition, we were pleased to see that the FDA assigned priority review status to the NDA application with a target PDUFA date of October 22, 2009. We are continuing to explore potential partnerships in Europe and other markets outside the US. There is a high degree of interest and these discussions are ongoing.

We've also been conducting initiatives to increase awareness of walking disability and its consequences among professional and consumer audiences. At the American Academy of Neurology last week, we had one of the most popular booths on the exhibit floor, registering almost 1,200 healthcare providers who attended the meeting. We also sponsored a study presented by the North American Research Committee on MS, or NARCOMS, about the socioeconomic impact of early mobility impairment. The study found that even minor MS related mobility impairments contributed to loss of employment, productivity, and income.

From a consumer perspective, we're in our second year of supporting the National MS Society's Walk MS program. This year we were the national sponsor of that program, and Acorda employees staffed our I Walk Because booth at 14 of the biggest walks across the country. This is a unique program in our view. It establishes Acorda not simply as a provider of drug therapies, but as a valued partner to the MS community. To get more details on the program, I encourage you to go to www.iwalkbecause.org.

Finally, we were very pleased that the results from our first Phase III trial in MS, MSF203, were published in the February 28 edition of the Lancet. We're working on additional publications now, including for our second Phase III trial.

Turning to our Zanaflex franchise, gross sales in the first quarter were $14.6 million, up approximately 15.3% from Q1 2008. Total shipments were $16.3 million. We continue to expect the Zanaflex franchise will grow modestly in 2009 compared to 2008 and again be cash flow positive on an operating basis for the year. Zanaflex is meeting our strategic goal of supporting full commercial operations at Acorda and providing us with experience and infrastructure needed for a successful launch of Fampridine-SR if approved.

Now I'll turn the call over to Dave for a review of the financials.

Thank you, Ron. For the first quarter ended March 31st, 2009, the company reported a net loss of $18.7 million or $0.50 diluted common share compared to a net loss of $16.4 million or $0.54 per diluted common share for the same quarter in 2008. Total operating expenses for the quarter ended March 31, 2009 were $27.9 million, compared to total operating expenses of $24.9 million for the same quarter in 2008.

Research and development expenses were $7.9 million for the first quarter of 2009, which includes costs related to our Fampridine-SR long term extension studies, NDA preparation, costs, and continued development of our clinical pipeline products for potential IND filing for one of these products in late 2009. R&D costs were $9.6 million in the same quarter of 2008. The decrease in R&D costs in the first quarter of 2009 compared to the first quarter of 2008 is primarily due to the company's acquisition of in process research and development assets from NRI, which resulted in non-cash expense of approximately $2.7 million during the quarter ended March 31st, 2008.

Sales, general, and administrative expenses for the quarter ended March 31, 2009 were $20 million and included expenses related to Fampridine-SR prelaunch activities and Zanaflex promotional activities. Other net expense for the quarter ended March 31, 2009 included $797,000 in interest income from our cash investment activities, offset by $1.5 million in interest expense due to the Paul Capital Healthcare agreement. As of March 31, 2009, Acorda held cash, cash equivalents, and short-term investments of $226 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 equivalents, and short-term investments to be in excess of $150 million.

Now we will open the call for questions. Operator?

(Operator Instructions). Our first question comes from the line of Michael Yee, RBC Capital Markets.

Hey, good morning, Ron. Couple questions on the priority review -- was this requested by you guys, or was this proactive from them, or what was the discussion that went on there? And then in terms of preparing the MAA filing, is that suggesting you will go forward in Europe with or without a partner, and at what point do you decide or when -- what would be the defining point at which you would decide and [distribute]?

We did not request priority review. This was something the agency did on their own recognizance. Obviously we're pleased that they elected to do that. With respect to the MAA, what we've said is that we believe based on our meetings with the -- with four of the member state regulatory authorities last year, that we can file an MAA at will through a centralized procedure in Europe. We are balancing that a bit with the ongoing discussions for ex US partnering. Obviously in an ideal universe, if we were to go ahead and do a partnership, that partner would likely want to have some input into an MAA filing. So we haven't committed to a particular timeline on the MAA because we are dovetailing these different priorities. But we are preparing for an MAA filing to occur.

How much of that work is actually done? I mean, at what point if you didn't do it could you actually file -- this month, this year?

I can't give you that timing right now.

Okay. Thanks, Ron.

Your next question comes from the line of Geoff Meacham, JPMorgan.

Hi guys. This is Matt Roden in for Geoff today. Congratulations on the news. Just a question on the priority review and what it does to your commercial preparations for launch. Presumably you guys are going to be locked and loaded when that comes, but can you tell us where you are in the sales force doubling and what we should expect to hear in the lead up to the launch?

Well, we are planning to approximately double the sales force to prepare for launch. We did have a range of contingencies with respect to timing, so we are still well within the ranges that we've planned for. I think we've said all along that we will work very closely or as closely as possible with FDA to respond to their questions to help with the review in any way we can. And in that process we hope to get, over time, some sense of how the review is going, what we can expect in terms of timing for for hope for approval. And based on that, we'll factor that in, into timing for ramping up on the commercial infrastructure.

Okay. And can you remind us who is going to be leading the commercial effort from your organization?

I'm sorry, say it again?

Can you remind us who is going to be leading the commercial effort from your organization?

We have a head of sales, we have a head of marketing, we have a head of managed markets. They report in to me currently.

Okay. Thanks a lot and congrats on the news.

Thank you.

Your next question comes from the line of Joel Sendek, Lazard Capital Markets.

Hi, thanks, two questions and obviously very exciting news. What I want to know is with regard -- I know you can't tell us a timeline for the EU filing or the partnership, and all that. But I'm just wondering will the news on priority reviews, since you didn't request it, will that tend to accelerate those two milestones? Or might they push it back, because now you have to focus more effort on potentially launching in the US on the earlier side?

I don't think that the -- I don't think that the latter obtains, because as I said, or as we said earlier, Joel, the timeline is well within our contingencies. If you work your way back, we originally were continuing on standard review based on our January 30th filing. If you factor in the time on the turn-around for the RTF and acceptance and all of that, and then the priority review, it puts us about 1.5 months ahead of that original timeline, well within the range of contingencies that we had planned for. So I don't anticipate a significant difference in our internal focus on the launch. And, therefore, I don't think that that will impinge on our planning in terms of an MAA filing or the partnering discussions that are going on.

Okay. Great. And then my second question has to do with the financial guidance. As I compare your first quarter to my model, it looks like the spending came in light, but your projection of greater than $150 million in cash by the end of the year suggests maybe a spend of less than $25 million a quarter. Is that about right?

Sure, I mean, that is about right. Spending was a little lighter in the first quarter, but our guidance still applies.

I mean, this of course anticipates a ramp in expense as we move forward based on getting closer to an actual launch.

Got it. Thank you.

Your next question comes from the line of Mark Schoenebaum, Deutsche Bank.

It is Naveen in for Mark. Quick question on pricing. You spoke about the $5,000 to $10,000 range for Fampridine-SR. I just wanted to get a sense of if your market research has helped you honed in a little more tightly on that price range. And, secondly, how have your discussions with managed care been? And finally do you have any new insight into potential price ranges in the EU? Thanks.

With respect -- good morning, Levine.

Hi.

With respect to the pricing in the US, our guidance remains $5,000 to $10,000. We are honing in with much more granular detailed research with third-party payers, physicians, and consumers, but we anticipate that that research will continue for many months throughout this year, and I don't anticipate that we'll be able to give you a more specific price point until probably close to launch. But we remain quite comfortable with that range based on the discussions that we've had. Remember that one of the missing pieces at the moment is the final labelled indication. And, as I said, until we get well into labeling discussions with FDA, that is really the final piece that will help us determine it. But within the ranges of anticipated labels that we expect, we think the $5,000 to $10,000 is still a solid range.

With respect to the EU, we do not have guidance for you yet on that. And in part, that will depend on the partner we choose, the pharmaco economic case that that partner can build together with us, and so we're not making projections on pricing in the EU just yet.

I'm sorry, there was a third element to your question?

Yes, I just wanted to understand how your discussions of managed care have been?

We have been ramping up our discussions with managed care. We have an excellent head of managed care, who has 16 years of successful experience in big pharma. I can't give you specific details except to say we have been having meetings presenting the company and we're very pleased with the reception that we've been getting.

Right. Thanks, guys.

Your next question comes from the line of Phil Nadeau from Cowen and Company.

Good morning, thanks for taking my question. Ron, my first one is to you and it is on the priority review. Can you talk to us a little bit about how you were able to secure the priority review without requesting it? What criteria did the FDA look at, and did you have any discussions with the FDA prior to today in any of your meetings post the refuse to file letter about giving a priority review?

Well, just as a blanket statement, we historically don't discuss our discussions with the FDA in detail. But with respect to the particular priority review, our understanding is that they reviewed our application and based on the information that was contained in it, they independently decided that they were going to give this priority review, and that's really all we know.

Okay. And do you know if they have any criteria for either unmet medical need, or severity of the conditioning, given the priority review?

What we know is what's in the regulations. So there are criteria for priority review, which include addressing an unmet medical need. I don't have them at my fingertips at the moment, but that's one of the key ones. The other one, as I recall, has to do with being a significant improvement over currently-available therapies, so both of those factors can be taken into account.

Okay. And just going back to the refuse to file letter itself, obviously you were able to return it around very quickly, and so it doesn't seem like anything in the refuse to file letter was particularly serious. But now that you've completed the process, and we know the FDA has accepted it, could you maybe just go back through what exactly were the elements in the refuse to file letter and how simple they were to, or not simple, they were to rectify?

Well, I can't give more detail than we've given. There were just to refresh everyone's memory, there were three categories that they mentioned. One was what they called formatting issues in certain parts of the document. The second one was a request for some additional analytic information that we had said at the time was, and remains true obviously, was not related to any of the pivotal trials, but to other data in the NDA. And the third one was a specific request for PK data that related to a particular fed/fasted study. Those were the three elements.

I think you can fairly infer that the fact that we were able to turn it around in three weeks, including the discussions with the FDA, tells you that they were very readily addressable. And the fact that the FDA has accepted the filing has accepted the filing less than two weeks later is also a fair indication that we successfully addressed the concerns.

Great. Thank you.

Your next question comes from the line of Ram Selvaraju, Hapoalim Securities.

Thanks very much for taking my questions. I'd like to start by asking a few questions about the expectations for the label. Obviously I guess it is a preliminary stage right now. But can you talk a little bit about what you expect potential label might look like, and whether that might potentially include restriction against use in patients who have not yet begun to exhibit significant walking impairment? Or whether or not the drug could be used, for example, in patients who have significant walking impairment to the point where they might not be able to complete a timed 25-foot walk test?

It's impossible for me to speculate about the label. It is a subject of close negotiation with FDA after they concluded the review and indicated that they're inclined to provide an approval. So at this point it is premature to speculate. Again, it will be based on the data in the trials we submitted, but beyond that, very difficult for us to speculate what it is going in the label.

Understood. Can you provide us with some color on whether you would expect the projected doubling of the sales force to be complete by the time you expect to launch the drug?

Yes, we will aim certainly to have the full sales force on board and trained by the time of anticipated approval. In practice, what happens is -- it is very difficult to get the date exactly right, because you never know if there's going to be a delay, or additional questions at the end. So you do the best you can, and obviously to the extent that you have a band of time within which to operate, you try not to overspend too soon because we don't want to unnecessarily increase the burn. On the other hand, the highest priority is not to be caught short, and get an approval and not be able to launch at full strength. So the highest priority is to err somewhat on the side of being conservative and making sure that you've got everyone on board in time.

And then just very quickly a couple of things about Canada, which I guess is a market that we haven't really heard about much. Could you talk a little bit about what the size of the MS market that could be targeted by Fampridine-SR might be in Canada? Does Acorda plan to actively market the drug there, and how might it be priced?

So I can certainly address some of that. There, depending on which reports you read, there are between 55,000 and 75,000 MS patients in Canada. It is disproportionately high. Normally you expect about a 10 to 1 ratio. In the US we believe there are about 400,000 to 500,000 people with MS, but as you get into northern climates, the incidence of MS actually increases. So you have a higher incidence in Canada overall. With respect to who is going to commercialize, we believe we certainly have the ability to do that in Canada. The question will be if we do an ex US partnership, does the ex US partner want Canada and are the economics going to make it worth our while to give that up. So we are absolutely set on commercializing in the US. We are flexible with respect to Canada. So I think that's still an open question. With respect to pricing in Canada, I can't yet comment on that.

Okay. Thank you very much.

Thank you. Due to time restrictions, I would like to now hand the call to Ron Cohen for closing remarks.

Thank you. This concludes our conference call this morning and we appreciate all of you joining us. Have a great day.

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