Acorda Therapeutics Inc (ACOR) 2009 Q3 法說會逐字稿

Welcome to the Acorda Therapeutics Third 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, this call is being taped at the Company's request.

Now I'd 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, 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. 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, the ability to obtain additional financing to support Acorda Therapeutics operations, and unfavorable results from its preclinical programs.

These and other risks you 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 third quarter '09 financial results. Today I'll provide a brief review of the key milestones since our last quarterly report and then I'll turn the call over to Dave who will provide the financial summary and we will then open the call for questions.

On October 14 the Peripheral and Central Nervous System Drugs Advisory Committee voted 12 to 1 that clinical data on Fampridine-SR 10 milligrams twice daily demonstrated substantial evidence of effectiveness as a treatment to improve walking in people with multiple sclerosis. The committee also voted 10 to 2 with one abstention that this is a clinically meaningful benefit and that Fampridine-SR can be safe for use. The meeting was a critical milestone toward making Fampridine-SR available to people with MS who can potentially benefit from this novel therapy. Please note that the FDA is not bound by the recommendations of the advisory committee and the agency is still in the process of reviewing the Fampridine-SR NDA.

Following a productive discussion at the advisory committee meeting and the evolution of our commercial distribution plan, we submitted additional information to the FDA on our proposed REMS program which the agency considered a solicited major amendment, triggering a three month extension of the PDUFA goal date. On October 22 we announced that the FDA had extended the Fampridine PDUFA goal date until January 22, 2010.

Turning to our Zanaflex franchise, gross sales in the third quarter were $14.5 million up approximately 5.8% from Q3 2008. Total shipments were $15.3 million. We've seen a slight downward trend in new and total prescriptions over the last three quarters. We believe this is due to a combination of factors, including maturing of the franchise, cost pressures from managed care, and general economic conditions. Our guidance continues to be that Zanaflex will grow modestly in 2009 compared to 2008 and that the Zanaflex franchise will again be cash flow positive on an operating basis for the year.

With respect to the pending paragraph four amendment filed by Apotex on Zanaflex capsules, a Markman hearing on patent claim interpretation has been scheduled for mid November. We're also continuing to advance our preclinical pipeline and the Company and FDA have held a pre IND meeting on our GGF2 program for congestive heart failure which is the most advanced of the preclinical programs. Based on feedback from the FDA, we expect to file an IND in early 2010. Both our research and published literature support exploring GGF2 in a number of potential cardiac and neurologic indications, including congestive heart failure, stroke, spinal cord injury and MS. If we're able to demonstrate proof of concept in the early congestive heart failure clinical trials, we believe a collaboration with the Company with a cardiovascular focus would most effectively move GGF2 forward in that indication while we concentrate our development efforts on CNS indications.

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

Thank you, Ron. For the third quarter ended September 30 2009, the Company reported a net loss of $19.4 million or $0.51 per diluted common share compared to a net loss of $18.9 million or $0.53 per diluted common share for the same quarter in 2008.

Total operating expenses for the quarter ended September 30, 2009 were $31.4 million compared to total operating expenses of $29 million for the same quarter in 2008. Research and development expenses were $8.2 million for the third quarter 2009 which includes costs related to our Fampridine-SR long-term extension study, clinical and regulatory staff expenses and continued development of our preclinical pipeline products. R&D costs were $8.7 million for the same quarter in 2008. The decrease in R&D costs quarter over quarter is primarily due to a decrease in regulatory and clinical development expenses associated with Fampridine-SR partially offset by an increase in expense related to work on our preclinical pipeline products.

Sales, general, and administrative expenses for the quarter ended September 30, 2009 were $23.3 million compared to SG&A expenses of $20.4 million for the same quarter in 2008. This decrease is due mainly to an increase in disease state awareness programs and prelaunch activities associated with the commercialization of Fampridine-SR, if approved. Also contributing to the increase in expense are costs associated with medical affairs educational programs and SG&A staff and other costs related to supporting the growth of the organization.

As of June 30, 2009, Acorda held cash, cash equivalents, and short-term investments of $292.4 million. We expect the year end 2009 cash, cash equivalent, and short-term investment balance in excess of $250 million.

Now we will open the call to questions. Operator?

(Operator Instructions) Your first question comes from the line of Mike Yee with RBC Capital. Please proceed.

Hi, Ron. Thanks. Good morning. Two questions. One is can you remind me do you think you need to get an agreement on at least a design for a low dose study before approval and then is it your thinking that you would need to do a patient registry or that was not submitted as something you need to do?

The advisory committee recommended a lower dose study as a post-marketing commitment. Obviously we're going to continue to work with FDA as they finish reviewing the NDA. There's really no more to discuss with respect to that at this time. With respect to a registry, we have not submitted a plan for registry as part of the REMS. And as you know, the REMS is something you discuss and negotiate back and forth with FDA. So, we will be doing that. But our proposal does not include a registry.

And no RA proposal for at least a design on a low dose study?

No.

Okay. And then in terms of the sales people, remind me where you're at and where you want to get to by what point, as to mean approval by your PDUFA date?

We're going to approximately double the sales force. We have 52 in field reps right now. That would be increased to approximately 100 give or take. We plan to complete our hiring in advance of the January 22 PDUFA date in order to have a sales force that's prepared for a possible launch.

Okay. Thanks.

Your next question comes from the line of Geoff Meacham with JPMorgan. Please proceed.

Hi. This is Matt Roden on the line. Thanks for taking our questions. First, on the PDUFA extension, we understand that the REMS submission constituted a major amendment and triggered the extension but is there any way to know whether or not the agency had completed its review of the efficacy and safety at that point or is it your sense that the primary drug review is ongoing throughout the extension period?

There's not a good way for us to answer that. As you know, Matt, we don't provide details about our interaction with FDA back and forth, but fundamentally until the FDA gives us a response or an approval, they're reviewing the NDA. That's all we really know.

Okay. Then do you plan to submit any further amendments to the NDA with clinical data maybe from the extension trials or anything like that?

No. There are no plans to submit amendments other than routine safety updates and the usual ongoing updates from the extension studies. But there's no plan to submit another amendment to the NDA.

Okay. Then my second question is on how the proportion of Fampridine responders and non-responders relates to the commercial setting. So I would imagine in patients in the commercial setting won't be given a series of walk speed tests. So, it will be hard to know who the formal responders and non-responders would be. Ron, you've commented on this in the past but I was wondering if you have any updated thoughts following the FDA panel on whether or not the 60% of patients or so that would in a clinical trial would've been a non-responder, whether or not they would continue on the drug and how you're sort of thinking about that post the panel?

That's really not something that we are thinking about post the panel. What we're thinking about is promoting the drug on label which is what everyone's commitment needs to be. And the decision as to whether the patient is benefiting or not is going to be concluded in the clinic between the physician and the patient. That's also something that came out at the ad com where Dr. Miller and Dr. Goodman and Dr. Short spoke on behalf of the Company and actually some of the advisory committee panelists spoke in the same vein that this is really something that should be readily apparent with an appropriate history and exam in the clinic and physicians and patients are going to decide whether they're benefiting or not. Clearly, with respect to promoting the drug, we're going to promote it on label for whatever the label indication is which we assume will be some sort of walking indication.

Right. I guess what I was getting at was how much confidence you have that the benefits seen in leg strength and Ashworth score, some of the other secondary endpoints could help keep patients on drug over a longer period of time.

Not something we can comment on, Matt. We really need to stick to the primary outcome and the labeled indication. Any other benefits are going to be determined by the physician and the patient if there are any potential benefits.

Okay. Thanks for your time.

Your next question comes from the line of Joel Sendek with Lazard Capital Markets. Please proceed.

Hi. Thanks, I guess, for an inspirational quarter, Ron.

Thanks, Joel.

On the REMS, looking back through my notes, obviously the ad com asked for it, but I'm struggling with what's going to be in there besides history of seizures and maybe risk of overdose. Can you give us any clue? The panel did not ask -- they dismissed the MS relapse. They dismissed the EEG screening. What else is there?

The REMS is really more of an education and compliance document or program. So, it really almost irrespective of those specifics, clearly the issue of dose related incidence of seizure is the uppermost on everyone's mind. That came out in the panel as well. And our major thrust in the REMS is making sure that patients and physicians stick to the recommended dose and also that we're monitoring for seizures, investigating seizures that may occur and so forth. So, it really is a comprehensive education and monitoring program focused primarily on compliance with dosage.

Okay. Great. Thanks. Then just a financial question. I'm interested in your thought process. Assuming the FDA does request one or more post marketing studies what percentage of the R&D budget are you going to allocate to that and could that potentially have an impact on the rest of the pipeline development that you're obviously starting with this IND in early 2010?

It's a fair question but it's premature. We really can't -- we have no way to comment on that until we get a final from the FDA. So, right now there's really nothing to say about that because we don't know if and when and how big such a post-marketing commitment would be.

Okay. Thank you.

Your next question comes from the line of Mike King with Merriman. Please proceed.

Thanks for taking my question. And congrats on all the progress during the quarter. Just a couple of nuts and bolts questions. Can you talk on the Markman hearing in mid-November? Do you have a specific date, Ron? And then will you guys be informing investors and shareholders as to the outcome of that hearing?

Yes. The hearing is scheduled from November 18 to 20, Mike. Your other question was --?

Is that in New York?

New Jersey.

Will it be your obligation to inform investors as to the outcome of those proceedings?

Hold on just a second, Mike. We would comment when we had a decision from the proceedings. We would publically comment after we have a decision.

The Markman is just to establish whether this suit should go to trial, correct?

No. The Markman is to establish the meaning of key terms that are used in the patent or patenting question when the parties disagree about the meaning. So, the judge is meant to interpret what the appropriate meaning of certain key terms is.

Okay. And then just wanted to ask about spending levels. Should we be thinking about numbers for R&D in the fourth quarter increasing again? Or will they remain the same? Should we continue to see an upward trend in SG&A until sometime in 2010 I would imagine?

R&D in the fourth quarter should not differ meaningfully. We will probably see a ramp in R&D next year as we get into our GGF2 trials. And then SG&A, correct, yes, we expect to see a ramp into and through the launch year if Fampridine-SR is approved.

Okay. I think that's all I had. Yes. Thank you very much.

You're welcome.

Your next question comes from the line of Ram Selvaraju with Hapoalim. Please proceed.

Hi, Ron. Thanks very much for taking my questions. Can you hear me?

Yes.

First of all, with respect to Fampridine-SR and what was submitted to the FDA as an amendment, you had spoken during the advisory committee about the distribution plan. Could you give us any more details at this time as to what you submitted to the FDA with regard to the distribution plan for Fampridine-SR? What was furnished by you and what was specifically requested by them?

My understanding is the FDA doesn't really get into the distribution in great detail. We revised or updated our REMS plan based on our distribution plan. It's not that we're going to FDA with a huge number of specifics on our commercial distribution plan other than to update the REMS to take into account that it's a specialty pharmacy distribution model. So, that's really the long and short of it. We're going to be doing this through a special pharmacy distribution model and that called for different ways of implementing some of the REMS programs versus what we would do if it was a wide retail distribution.

But qualitatively that would essentially mean that a REMS would be more simple to implement given that you have this restricted distribution plan, right?

One of the several reasons for going to a specialty pharmacy distribution model with a drug like this is in fact that you get significant improvements in adherence control and data monitoring for the drug and that obviously helps with the REMS program.

At this point, have you identified those specialty pharmacies that are going to be involved in the distribution?

Tentatively, yes. There's a contracting process that goes on, but we're very close.

Okay. Moving on to the pipeline, I just wanted to make sure that I understood specifically what the plan was regarding GGF2. Would you sort of take this through proof of concept in congestive heart failure and then seek to out license it? And if so, what do you think the timing of that might be?

Hard to comment on the timing. But fundamentally, the way you posed it is correct. Our plan is to look for proof of concept in congestive heart failure early on and to the extent that we get that to then partner the cardiovascular indications with a cardiovascular focused Company which would free us up to focus on what we do best which is neurology.

Then can you give us an update on where the other elements of your preclinical or early stage pipeline are in development and what the timeline might be for advancement of those in 2010?

The monoclonal antibody for remyelination is -- we're working towards an IND for that. As you may recall, we had planned originally to have it filed almost concurrently with the GGF2 IND. We had some issues last year because in the economic downturn the manufacturer for that antibody filed for bankruptcy which necessitated a major shift of manufacturing elsewhere. That set us back quite a bit. But we are back on track in terms of the manufacturing. I don't have a particular date yet as to when we expect to file an IND for that which would be -- the initial indication would be for remyelination in MS but hopefully in the near future we will have some updates on that.

Okay. And with the chondroitinase, obviously you may have seen that there was a paper published in PNAS recently demonstrating that thermostabilization and addition of sugar might actually help with activity of chondroitinase in reducing glial scar formation. Are you familiar with this study? If so, do you think it might be applicable to your chondroitinase ABC program as you seek to move that forward?

Yes. We are familiar with it. We internally have our own work in terms of stabilizing chondroitinase which has met with some success internally. It's certainly a very interesting addition to the field and it's something we're aware of and potentially might factor into our plans.

Thank you very much.

Your next question comes from the line of [David Bacari] with Cowen. Please proceed.

Hi, guys. Thanks for taking the question. My question is on the launch of the drug, how long after approval would you be ready to launch Fampridine?

We expect right now to begin selling approximately six to eight weeks following approval.

And the hiring of the remaining 50 or so of the sales force, how far are you through that hiring process? Are those offers going out on a contingent basis or are these sales reps just getting hired?

We aren't providing detailed updates on our internal process other than to say we are conducting the process with an eye toward having the hiring complete by the January 22 PDUFA date. I can tell you that we have been actively interviewing.

Okay. And then lastly, any updates on I guess your pricing discussions? Can you give us any more color there?

Our guidance remains between $5,000 to $10,000 a year and that is not likely to be updated until we have the label. Once we have the labeled indication, we'll be in a position to establish the actual price and we'll let people know.

Perfect. Thanks.

Your next question comes from the line of Mark Schoenebaum with Deutsche Bank. Please proceed.

Hey, thanks, guys. This is Omar filling in for Mark. Just a quick question on the pricing front as well. Do the discounts differ in the specialty pharma space compared to just the normal formulary access discounts we've been seeing? That's number one.

I don't know the answer to that question. I'll have to check on that. I don't know if we're commenting on the specific discounts because, as you know, they're negotiated. Although you might be able to generalize, in the specific case we would not be commenting on our discounts and what we're negotiating across the board. It's a competitive issue.

I see. Any updates on formulary tier placement by any chance?

No.

Okay. Great. That's all I have.

Your next question comes from the line of David Amsellem with Piper Jaffray. Please proceed.

Hi. This actually [Amischa Determan] for David. I was just wondering if you guys had any updates as far as the REMS program and how far into the discussion you are with the FDA and if you've hammered out major points yet in that?

We're not discussing or commenting at all on the process. We never do with respect to our specific process with FDA. We're working in an ongoing way with them to help them complete their review of the NDA including the REMS.

Okay. And then just following up as far as the specialty pharmacies, have you established or can you at least provide us with details on how many of those you expect to have the drug provided through?

We're not commenting on that either at this time. Hopefully at the time we are approved we'll be able to discuss more of that.

Thank you.

Your next question comes from the line of Joshua Schimmer with Leerink Swann. Please proceed.

Hi. Thanks for taking the question. When do you expect an update from the USPTO on the patent applications for Fampridine-SR and if they do issue, Ron, does that at all impact how you think about managing the Company strategically over the next few years? Thanks.

Can't really comment on patent office timing, Josh. There's no way to predict when they're going to issue their opinions.

Okay. And then the latter part of that question? If they do issue it, does that strategically change the way you manage the Company or does that not really have any impact?

It certainly would be better to have it. (inaudible) if they issue those claims, we think it would be advantageous and it potentially could extend the exclusivity period of Fampridine-SR depending on the scope of the claims.

Right. I realize it would be favorable. I guess I'm wondering whether you would do anything different than what you already plan on doing if they did issue?

No. We're still planning to build a great neurology Company. I don't know that it substantially changes our outlook.

Ladies and gentlemen, this concludes our Q&A session for today. I would like to turn the call over to President and CEO, Ron Cohen. Please proceed.

This concludes our conference call. Thanks, everyone, for joining us and we'll see you next time.

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