Acorda Therapeutics Inc (ACOR) 2009 Q4 法說會逐字稿

Thank you for holding. Welcome to the Acorda Therapeutics fourth-quarter and year-end 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, Jeff Macdonald, Director of Corporate Communications at Acorda Therapeutics. Please proceed.

Good morning, everyone. Welcome. With me today are Ron Cohen, our President and Chief Executive Officer and Dave Lawrence, our Chief Financial Officer.

Before we begin, let me remind you that the 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, including management's expectations, beliefs, goals, plans, and prospects, should be considered forward-looking.

These statements are subject to risks and uncertainties that would cause actual results to differ materially, including Acorda Therapeutics' ability to successfully market and sell Ampyra in the United States, and to successfully market Zanaflex Capsules; the risk of unfavorable results from future studies of Ampyra; the occurrence of adverse safety events with our products; delays in obtaining or failure to obtain regulatory approval of Ampyra outside the United States and our dependence on our collaboration partner, Biogen Idec in connection therewith; competition; failure to protect Acorda's intellectual property or defend against the intellectual property claims of others; the ability to obtain additional financing to support Acorda Therapeutics' operations; and unfavorable results from our 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 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, Jeff. Welcome, everyone. Good morning. This morning, we reported our fourth-quarter and year-end '09 financial results. And today I will provide a brief review of the key milestones since our last quarterly report, as well as an overview of our priorities for 2010. And then I will turn the call over to Dave, who will provide you with a financial summary. And then we will open the call for your questions.

Most significant event since our last earnings call was the approval of Ampyra on January 22. Ampyra is indicated for the improvement of walking in patients with MS, and this was demonstrated by an improvement in walking speed. The label can be viewed at www.ampyra.com.

We are thrilled to have made a contribution to what many people with MS report is their biggest concern, the decline in their walking. In February, we announced pricing for Ampyra at $1,056 per month, and anticipate broad access for the drug. We have been meeting with managed care organizations since early last year to discuss the unique benefits of Ampyra and its potential role in the treatment of MS, and we have been encouraged by the reception to date. We will have patient assistance and co-pay programs in place to help make Ampyra widely available to people with MS who may benefit from therapy.

Ampyra will have seven years of exclusivity based on orphan drug status, which has been confirmed by the FDA. We also plan to extend two orange-book listed patents for Ampyra based on provisions in the Hatch-Waxman Act that allow for up to five additional years of patent protection based on the development timeline of the drug. This is with the understanding that we will ultimately need to select one of these patents for the extension if it's granted. These patents currently expire on December 6, 2011, and July 30, 2013. The application is due 60 days following approval, but there is no set time frame for a response back on the submission.

We expect to launch Ampyra in March. We are on target to complete the sales force expansion in March with 100 representatives fully trained and in the field. Our managed care team or manage market team is continuing to meet with payers to discuss Ampyra and enable access, and we've also put in place a team of 15 Regional Scientific Managers or RSMs, who will provide healthcare professionals with scientific and medical information about the appropriate prescribing and use of Ampyra and to help fulfill the goals of the REMS program.

We also will have a presence at major medical meetings, including two platform and two poster presentations, which have been accepted for the AAN meeting in April. And we have submitted additional abstracts for the ACTRIMS CMSC meeting in May. We will have a booth presence at both meetings.

In the coming months, we will also begin rolling out our professional and consumer marketing initiatives.

Turning to our Zanaflex franchise, total shipments in the fourth quarter were $18.4 million. Gross sales in the fourth quarter were $14.4 million, approximately the same as gross sales in Q3 of 2009. And for the year, gross sales were $58.3 million compared to $53.4 million in 2008. This is consistent with our previous guidance of a modest increase in 2009.

The Zanaflex franchise was cash flow positive on an operating basis in 2009. We did see a slight decline in prescriptions quarter over quarter in the last three quarters of 2009, and we expect to see sales decrease in 2010 due to increasing managed-care pressure, among other factors.

With respect to the pending Paragraph IV amendment filed by Apotex on Zanaflex Capsules, the 30-month stay will expire by early March. As of now, the case continues to proceed through the courts and we don't have any additional updates at this time.

The commercial launch of Ampyra is our highest priority. In addition, we are now increasing our focus on advancing the rest of our pipeline, and we expect to file an IND for GGF2 in heart failure and to start Phase I clinical trial in heart failure patients later this year. If we are able to demonstrate proof of concept in heart failure, we plan to seek a partner with a cardiovascular focus while retaining the rights to develop GGF2 for neurologic applications.

We are continuing toxicology work and ramping up manufacturing capacity for our remyelating monoclonal antibody, rHIgM22, which has shown significant promise in animal models. We're also working to advance toward the clinic our chondroitinase program for increasing plasticity in spinal foot injury and other CNS damage.

Looking at 2010, we are very excited about the opportunities we see. Our top priority, again, is the successful commercial launch of Ampyra. And in addition, we're working on our post-marketing commitments, including a lower dose clinical study in MS and a rental PK study. We're also focusing on life cycle management strategies for Ampyra. And we are advancing our pipeline assets, with GGF2 the furthest along in development.

We are also actively looking for in-licensing opportunities in the neurology space, with particular interest in Phase II or Phase III programs.

I'm now going to turn the call over to Dave, who will review the financials.

Thank you, Ron. For the quarter ended December 31, 2009, the Company reported a net loss of $22.5 million or $0.59 per diluted common share compared to a net loss of $20.2 million (technical difficulty) or $0.54 per diluted common share for the same quarter in 2008.

For the year ended December 31, 2009, the Company reported a net loss of $83.9 million or $2.22 per diluted common share compared to a net loss of $74.3 million or $2.19 per diluted common share for the year ended December 31, 2008. Total operating expenses for the quarter ended December 31, '09 were $33.4 million, and were $124.5 million for the full year 2009.

Research and development expenses were $10.6 million for the fourth quarter 2009, which included costs related to our Ampyra long-term extension studies and continued development of our preclinical pipeline products for a potential IND filing in early 2010.

Full-year 2009 research and development expenses were $34.6 million. R&D expenses are expected to increase in 2010 over 2009 due to the continued development of our preclinical programs and implementation of our post-marketing study commitments for Ampyra.

Sales, general and administrative expenses for the quarter ended December 31, '09 were $22.7 million and included expenses related to Zanaflex promotional activities and Ampyra prelaunch activities. Full-year 2009 SG&A expenses were $89.9 million.

SG&A expenses are expected to substantially increase in 2010 over 2009 due to launch costs, sales and marketing expenses for Ampyra, and implementation of our post-marketing study commitments for Ampyra. Other net income-expense for the quarter ended December 31, 2009 included $0.3 million in interest income from our cash investment activities, offset by $0.7 million in interest expense, primarily due to the Paul Capital Healthcare agreement.

We ended 2009 with cash, cash equivalents, and short-term investments of $272.1 million. Now we will open the call to questions. Operator?

(Operator Instructions). Geoff Meacham, JPMorgan.

Thanks for taking the question. Wondering if you could give us any details to the extent that you can on your payer discussions post-approval. I'm just curious if there's any language about how to -- how use of the drug practically could occur with respect to duration of therapy or any sort of trial period. That would be helpful.

Yes, you know, I can't really comment with specificity, Geoff, on the discussions except to say that we have either had or are scheduled to have between 70 and 80 meetings since approval between approval and launch in March. So we've had a lot of discussions preceded by, over the last year, a great many meetings just initially to familiarize the managed-care groups with the Company. So, I'm pleased with the access we've had to the managed-care groups -- the discussions we've had. And the tenor of the discussions has been encouraging overall; I can tell you that; in terms of our ability to gain understanding of the unique role of the drug, its unique potential benefits for MS patients and so forth. So those discussions have gone well. We are encouraged. Beyond that, I can't really give you word and verse.

Joel Sendek, Lazard Capital Markets.

Thanks. I have a follow-on to that question I guess. I know you can't give us the details. I'm just wondering what your objectives are in those meetings, Ron. For example, should we be expecting it to be likely that there would be pre-authorization or medical justification required? Or is the purpose of the meetings maybe to reduce the likelihood of that? Can you comment on that at all?

The purpose of the meetings is to give them as full an understanding as possible of the unique role of this drug and also, to touch on some of the issues you just mentioned in terms of how we expect physicians would apply it and gauge and respond. So the discussions do focus to some degree on those issues.

You know, I think maybe the best thing to do is to refer back to the advisory committee discussions, where the advisory committee took up exactly those kind of issues in terms of how do you tell if the drug is working? How does the physician know? How long to keep the patient on the drug?

And I think the conclusion of the panel at that time was that it was really going to be an individual issue because different physicians are going to practice in different ways. There are certain tests or history taking or physical exams that any given physician is more used to, not necessarily that one is better than another. It's just what a particular physician finds the most useful for his or her patients.

And so, they're really -- I think the conclusion of the outcome was there really wasn't a prescribed way of saying well, okay, I'm putting you on the drug and now here is how we are going to test for its effect and here's how we're going to know and here's when we are going to know. It's really as, with almost all medicine, it's an individual situation between a given physician and a given patient. And that has to be respected. So that is part of the tenor of the discussions that we're having.

How about with the providers? Are you having any meetings with them to facilitate them being able to get through any paperwork that they will have to get through or Internet sign-ups or anything like that?

You're talking about the prescribers?

Yes.

Yes. Well, one of the advantages of the specialty pharma -- pharmacy distribution system that we are adopting for Ampyra is that essentially, all of the prescribers that we are interested in who are dealing with MS patients already are quite familiar with this system because the [ABCRT] or immunomodulator drugs are largely distributed through specialty pharmacies.

So this is not foreign to them. They are well versed in how you file those prescriptions, either by fax or over the Internet. So for us, it's really more of a matter not of educating them about the system, but of just giving them the specific materials that are specific to an Ampyra prescription.

And our sales force is ready to do that. They've already been setting up appointments with key prescribers so that at launch, we are locked and loaded and ready to go.

Thanks a lot, Ron.

Michael Yee, RBC Capital Markets.

Good morning, Ron. Quick question. How do you think about your visibility on launch in terms of are there patients you can take off, studies that can move over to paid drug?

Are there patients in some sort of queue that you have visibility on? Are there any data points that you can point to, to help us understand what you are thinking about in terms of numbers at launch?

Not really, Michael. We're not giving any projections on launch. It's a bit of a fool's errand, maybe it's a lot of a fool's errand, to try to do that with any launch, as you know.

One of my board members is very fond of pointing out that there are two kind of projections in that scenario. One of them is lucky and all the rest of them are wrong. And so, we don't want to get into that. I think we will all learn as we go along.

In terms of the patients in the queue, we are certainly aware from a number of physicians and what patients tell us, that there are patients who have been approaching their physicians. I can't give you numbers. We don't know, broadly speaking, but we are certainly hearing a buzz about patients who have already approached their physicians; physicians who have approached their patients about being in the queue to prescribe as soon as the drug is available. So we think there's a healthy amount of awareness and buzz about the drug out there.

In terms of our studies, we do have several hundred patients in open label studies that are ongoing and which have been going on for as long as -- over 5.5 years at this point. We are discussing, internally, and also with our partner, Biogen Idec, what the disposition of those studies is, whether we will terminate those studies after launch, or whether there's some useful data that we can still get out of those studies that would contribute to the overall understanding of the drug. So that's in discussion right now. We have not made a determination yet about when we would terminate those studies and attempt to convert those people to regular prescriptions.

And what is the actual date in March that the drug is actually available?

We aren't giving a date.

Okay. Last question then is in terms of the patent extension plans, can you just kind of review those again? And what is your estimate as to how long, if you were to get extension, that would extend it by? What are the different scenarios? I thought it was only possibly a year extension with Hatch here. Can you just kind of review that?

I think I understand where you are coming from on this. What Hatch-Waxman provides for is up to five years. So it's five years maximum extension on a given patent. When you file within 60 days of approval, you can put several patents in there, which we did, because it was prudent to do so. At the time that they -- if they give you the extension, if they give you the designation, they tell you how long you have, and that's based on formulas with respect to how long the drug had been in development and regulatory review and so on. So, once you get that grant, you have to select which patent it will apply to because it can only apply to one patent.

So, we are -- in the application, we are putting in two patents that we have. One expires in 2011. One expires in 2013. Because there's no downside to doing that and leaving all of our options open.

If we were to get, and this is purely hypothetical, but by way of example, if we were to get the full five years of extension, at that time, we would designate one of those patents. So if we decided and the patent office agreed, that the 2013 patent was appropriate, that would theoretically extend it by five years. Now this is all theoretical, right? But it's by way of example.

So the one year that you are talking about, if that were to occur, then, currently, our orphan status would run out seven years from approval, which would be I think January of 2017. If we got five years extra on the 2013 patent, then theoretically, that would take us into [2013]. So you would have at least an extra year of protection based on that patent to the extent that that patent was protected.

Got it. Makes sense now. I see the math. Thanks.

Phil Nadeau, Cowen and Company.

Good morning. Thanks for taking my questions. First, just a modeling question. You guided to increases in both R&D and SG&A, but didn't really give much of a quantitative sense of how much those are going to go up. So I'm just wondering if you'd be willing to put in or give us any additional color on how large of an increase in those two line items?

Hey, Phil. It's Dave. As Ron said earlier, it's a launch year. It's very difficult to project, let alone project completely accurately. So we're just trying to give you an indication. We expect both categories to increase next year or 2010. And certainly SG&A significantly increased based on the launch spend and other factors.

Yes, but we're not able to give you more specific information at this time. As we go through the year, we will see if we're able to tighten that up for you.

Okay, great. And then, my second question is just an update on prescription data for Ampyra. In the past, you've said that you didn't think that prescription data was going to be available. Have you solidified your thinking around that point?

Our understanding is that IMS access to specialty pharmacy data is much spottier than it is through retail distribution. And that's pretty much all I know at this point. So, that it's not that there's no data potentially available. It's just that it's more difficult and not as complete. So that's my understanding at this time.

Okay. And you mentioned some lifecycle management for Ampyra. Can you give us some idea of the options that you are looking at? What avenues could you go down?

We're looking at various ways of doing it, from label expansion, new indications, and different dosage forms.

Okay.

So we're exploring all of that now.

Okay. And then just last on the Apotex suit, do you have any indication whether Apotex is going to launch at risk or import drugs from Canada or do you have any idea what their plans are?

No idea whatsoever. No indication at all.

Okay, great. Thank you.

And by the way, I just want to begin our marketing effort here because one of the occupational hazards of the name as it were is that it can be pronounced in two different ways. So we are educating the public and the prescribers that the name is Ampyra, with a long "E" sound as opposed to the pira.

Mark Schoenebaum, Deutsche Bank.

Hey, Ron. I had a question about Ampyra.

I'm sorry, that's another drug I guess you've got in mind.

I was wondering -- I was intrigued by your commentary that you are -- I don't mean to quote you, but you said something about how you are very interested in in-licensing Phase II and Phase III assets. How much are you willing to spend, Ron?

How much are you willing to give me, Mark?

I'll have to ask my esteemed clients.

Yes. You know, what -- there's not a direct answer to that because it's like how high is up? You really -- the priority is to find assets that we think are high-value and may be undervalued in our estimation, and that are going to provide an exciting return and also an exciting product. So we approach it from the bottom up. We are looking diligently at the opportunities and trying to determine whether they are exciting, whether they are going to be substantial products in our space. And then if we find one like that, then we look at the cost. And we will see whether we think it's worth it. So obviously, it's all relative. It depends on what the nature of the opportunity is.

Okay, fair enough. And then just building on some of the lifecycle/patent questions, I know you've filed a couple of patent applications. Can you help us understand what those patent applications are -- what they may -- what you are trying to claim in those applications around Ampyra? And also, any color on when they may issue?

I think you're probably referring to the patents that were filed at the end of '04, near '05 -- are those the ones you're referring to?

Yes.

Yes, so we have a couple of patents that were filed at that time on Ampyra. They look at various methods of use of the formulation that we're using. It's not possible to say how -- when the patent office is going to give us a ruling. It's been working its way obviously for the last several years through the patent office. If the claims were to issue, we can say that they would -- that the patents would last through -- or into 2024. So that would be extremely meaningful from our point of view.

In terms of the claims, I don't want to get on into a discussion now sort of off-the-cuff on the claims. What I would recommend is that if you or anyone else is interested, the filings are public, and you are certainly able to consult them and take a look. Our view is that they are meaningful patents.

Okay, that's very good. Thanks a lot. I'll get back in the queue. I appreciate it.

Ram Selvaraju, Hapoalim Securities.

Thanks very much for taking my questions. So very quickly, with respect to the R&D expense, just so I can get more of an idea of what the activities are that are planned for 2010; I believe that it was discussed during the advisory committee meeting that the start of the low dose study of Ampyra would depend on doing stability testing on the 5 milligrams tablets. So I just wanted to get clarity on whether or not you plan to actually start that low-dose study this year or not.

You know, I don't have an answer for you on that, Ron. I don't think we have a date yet in mind for the study. I just don't have the information. We're working on it. There are a lot of moving parts to it. So I can't tell you if we're going to start it this year or not. But, I can say that based on our commitment to the FDA, we do need to start it within a reasonable time frame. As to whether that is this year or not, I can't tell you at the moment.

Okay, fair enough.

Let me point out that one of the gating factors is we have to agree with the FDA on the actual study design before we proceed. So that's all in the works now, in terms of putting the protocol together, getting it in front of the FDA and then hopefully coming to an agreement with them so we can start the study.

Okay. And then with respect to the pipeline development activities, do you have a timeline with which you expect to get results on GGF2 in heart failure?

All I can tell you is that we will be filing -- we're planning to file the IND early this year. And then, to start the Phase I study in heart failure patients. So it will not be in healthy volunteers. It will be in heart failure patients later this year. So, we expect to be in clinical trials in heart failure patients. I can't, at the moment, tell you when we expect to finish that trial.

Okay. And then I recall that you had previously licensed the rights to an immediate release formulation for aminopyridine for use in various peripheral or neurological indications some time ago. Do you have any plans to develop that at this time? Or if not, what are your plans with that product candidate?

This was an acquisition we made of a small company called Neurorecovery, Inc. a couple of years ago that had patents on immediate release formulations for peripheral neuropathies. And we are still evaluating whether we will be going into that.

As I mentioned earlier, we have various indications that we are considering for potential future clinical trials in Ampyra. One of them potentially could be peripheral neuropathies, but we haven't made that determination yet.

Okay. Thank you very much.

Mike King, Merriman.

Good morning. Thanks for taking my question. Ron, remind us, do you have separate IP on a 5-milligram dose formulation of Ampyra?

Separate IP on a 5-milligram dose?

Yes.

We have -- I'll have to check that for you, Mike. We have various IP.

I just wonder what the lower end of the threshold is of the claims. That's all, in terms of dosage.

Yes. I just don't have that in my head for you. So I will have to look that up.

Follow-up. And then a separate question is can you just walk us through how the drug is going to get dispensed? And so let's say a patient comes in to the neurologist, gets worked up, decides that -- the physician and the patient decide that the patient wants to go on drug. Doc writes a script. What happens next? And how does the patient actually receive the medication?

You're talking about the mechanics of distributing the drug?

Yes.

Yes, through the specialty pharmacy system, what happens is the prescriber will submit a form, and it's a preprinted form, either faxed or online. And that form will go to our patient services hub. So we have the Ampyra patient services center, which we outsource to a group that we have contracted with that is outfitted to do this. When the prescription comes in, among other things, that group will check to make sure the prescription is accurate. They will check the insurance status of the patient. They will check to see if there is no insurance status, whether the patient is qualifying for any of our programs, such as the co-pay mitigation program or patient assistance program.

Depending on what that determination is, the services center will then take action. And usually, for the great majority of patients, that will be sending the prescription to one of the several specialty pharmacies with which we have contracted separately. And that will be determined based on the relationship that that specialty pharmacy has with that particular patient's third-party coverage, for example. So that will go to the specialty pharmacy.

The specialty pharmacy will then be their own checks, and then they will drop ship the prescription to the patient overnight or two-day delivery max. They will then follow up with the patient, usually by telephone, to make sure that the drug has been received, to make sure that the patient understands the medication guide, the dosing, make sure that if the patient has questions, that they are answered. So there is a direct contact with the patient.

One of the reasons we picked this model is specifically for that reason. Because it gives us much more control over the flow of drug and the flow of information to the patient and then back from the patient, and if necessary, the prescriber. So there's an ongoing relationship. We believe that that increases compliance as well as helps us ensure safety and safe dosing and appropriate dosing of the drug.

Right. So the patient will always receive it at their home? And then with a follow-up call from the specialty pharmacy?

Yes, that's my understanding. Now I don't know, once the patient is in a routine, after the initial prescription where all of this has been worked out, I need to check to see if every single time they get a call every month that they get drug on refills. So, that part, I'm not -- I don't have that information for you. But certainly in the initial prescription, they will get that contact.

I was just wondering if the patient had to go back to the physician's office for instructions for appropriate use and that kind of stuff.

No, I don't believe so. And I'm just being informed that, yes, they will have the contact with the specialty pharma even on refills.

On refills as well. Okay. Okay. Thanks very much.

Ladies and gentlemen, we have reached the conclusion of our question-and-answer session. At this time, I would like to hand the call over to Dr. Cohen for closing remarks.

Well, thank you, everyone. We appreciate your tuning in and have a great rest of your week.

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