Acorda Therapeutics Inc (ACOR) 2010 Q1 法說會逐字稿

Welcome to the Acorda Therapeutics first quarter 2010 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, Senior Vice President of Corporate Communications at Acorda Therapeutics. Please go ahead.

Good morning, everyone. 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 Acorda Therapeutics' ability to successfully market and sell Ampyra in the United States and to successfully sell Zanaflex Capsules, the risk of unfavorable results from future studies of Ampyra, the occurrence of adverse safety events with our product, delays in obtaining or failing 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 Therapeutics' 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 our preclinical programs.

These and other risks are described in greater detail Acorda Therapeutics' filings with the Securities and Exchange Commission. Acorda Therapeutics may not actually achieve these 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 first quarter 2010 financial results, and today I will provide a brief review of the key milestones since our last quarterly report and then I will turn the call over to Dave, who will provide a financial summary. And we will then open the call for your questions.

On January 22 of this year Ampyra was approved by the FDA for the improvement of walking in patients with MS. This was demonstrated by an improvement in walking speed. In February we announced pricing for Ampyra at $1,056 per month and the drug was launched on March 1.

We have been very pleased with the response to Ampyra's commercial availability with more than 2,000 physicians having written at least one prescription and a number of positive anecdotal reports coming in from the field. Now, that said, it is still very early in the launch and there are a number of variables that will determine the sales trajectory over time. At this point we don't have data on filled prescriptions, we can't project if physicians will be repeat prescribers and we don't know how many patients will continue on therapy or for how long. As we have a more complete picture we will provide that to you.

The pent-up demand for Ampyra has resulted in some delays processing prescription requests at our centralized hub, Ampyra Patient Support Services, with some patients waiting for up to 30 days for their initial prescription to be delivered. In response we have added resources at Ampyra Patient Support Services. The wait time has already been reduced and we expect it will continue to be reduced over time.

Two points to note. First, we expect most patients who have received an initial prescription will not encounter similar waiting periods for their refills; and second this situation is not related to a shortage of drug. We believe we have adequate supply to meet commercial demand.

We are continuing to meet with both public and private managed care groups and have had more than 110 meetings to date with targeted accounts, including more than 60 since the approval of Ampyra. We are encouraged that plans are interested in meeting with us to discuss Ampyra; but at this point we can't speculate as to what level of managed care coverage we will ultimately have or with whom and similarly we can't project what our payer mix will be including government and commercial plans since we only have very preliminary data at this point.

Turning to the Zanaflex franchise. Total shipments in the first quarter were $13.4 million. Gross sales in the first quarter were $13.8 million. As per our previous guidance we expect sales of Zanaflex Capsules will continue to decline in 2010, due to managed care pressures among other factors. The 30-month stay on Apotex's paragraph 4 filing expired in March. The schedule for the remainder of the case has not yet been set.

In March, we filed an investigational new drug application or IND for GGF2 which was accepted by the FDA. We expect to start a Phase 1 clinical study in patients with heart failure in mid 2010. GGF2 represents a novel approach to treating heart failure and we are excited to have this compound enter clinical testing.

GGF2 acts directly on heart muscle cells or cardiomyocytes. It is believed to improve the heart's ability to contract by promoting the repair of tissue damage resulting from heart disease or injury. Existing medications for heart failure primarily aim to modify the workload of the heart rather than to promote ventricular repair. So this would be a novel approach.

I will now turn the call over to Dave for a review of the quarterly financials.

Thank you, Ron.

For the first quarter ended March 31, 2010, the Company reported a net loss of $21.1 million, or $0.56 per diluted common share, compared to a net loss of $18.7 million or $0.50 per diluted common share for the same quarter in 2009. Gross sales for the first quarter were $17.3 million, comprising $13.8 million in Zanaflex Capsules and tablet sales, and $3.4 million in Ampyra sales. We began shipping Ampyra product on March 1 of this year.

Total operating expenses, which includes cost of sales, for the quarter ended March 31, 2010 were $37.9 million compared to $30.5 million for the same quarter in 2009. Cost of sales were $3.1 million for the first quarter of 2010, which included inventory costs related to recognized revenue, royalty costs, intangible asset amortization, and freight and stability costs.

Research and development expenses were $8.1 million for the first quarter 2010, which included costs related to Ampyra long-term extension studies, Ampyra inventory costs for product manufactured and received prior to regulatory approval, and development of the Company's preclinical pipeline products.

Sales, general and administrative for the quarter ended March 31, 2010 were $26.7 million, and included expenses related to our Ampyra prelaunch and launch activities, and Zanaflex Capsules promotional activities. We expect that Ampyra launch expenses will continue to increase significantly throughout the course of 2010.

We closed the first quarter of 2010 with cash, cash equivalents and short-term investments of $243.6 million.

Now, we will open the call to questions. Operator?

(Operator Instructions). And our first question comes from the line of Joel Sendek of Lazard Capital Markets. Joel, you may proceed.

Thanks a lot. So a couple questions. I'm wondering the $3.4 million in gross sales if that is -- is there any inventory build in there and is that sales to the specialty pharmacy or does it reflect filled prescriptions? Can you give us any detail on that, please?

Yes, sure, Joel. The $3.4 million is based on shipments to the specialty pharmacies. There is probably some build included in that as the pharmacies were gearing up for the launch. It is not a prescription number.

Okay. Can you quantify at all what the build might be or at least what the holding period is for the inventory in the specialty pharmacies?

No I can't. It's too early in the launch to tell.

Okay. And then previously you said you were going to target about 5,000 docs initially or neurologists initially. Now that you already have 2,000 that already at least prescribed one, are you going to increase the target doctors you are going to go after or is the 2,000 ahead of your expectation? Can you comment on the trajectory for the sales force?

Joel, it's Ron. You know, clearly having over 2,000 physicians write in the first month of the launch is quite encouraging. We are continuing to assess the target list as we go forward and we would be doing that in any case. So, we will continue to develop that as the launch proceeds. But, I guess the take home right now is that the over 2,000 physicians in the first month is quite encouraging for this early stage.

Sure, sure, yeah. Agreed. I'm just wondering if -- I guess you haven't talked about --

It is too soon to tell what that is going to translate into. It is encouraging for this early stage is the key message there. How that translates, as I mentioned when we went through the slides, how that translates moving forward we are just going to have to see.

Got it. Okay. Thanks a lot.

And our next question comes from the line of Michael Yee of RBC Capital Markets. Michael, you may proceed.

Thanks. Good morning, Ron. Two questions. One is you mentioned the 2,000 docs that have prescribed the drug. Can you characterize or break it down in terms of who are the high prescribers, what is the penetration there, what are the average number of scripts maybe that have been written? Just trying to understand, 2,000 is a great number but what about the high prescribers?

It is way too early to tell any of that, Michael, at this point. That is really all we can say in terms of numbers. We just don't have detail about which physicians are prescribing or how many per physician. We are talking about the first month of the launch here.

Anything anecdotal?

Well, you know, as a professor of mine used to say, the plural of anecdote is not data -- so we're going to wait for the data.

Okay. Second question is, you know, you are talking about trying to work through the pent-up demand. Maybe you can walk us through the logistics from script to drug. Where is the exact bottleneck that you see is causing the delay and what are you actually trying to do to relieve that dissonance?

We have had some growing pains, as it were, particularly at the level of the intake and evaluation. So the Ampyra Patient Support Services hub that we use to take in the service request forms, which essentially is the prescription from the physician's office, and then that hub has to go through multiple steps to check the patient's insurance status, to look at their copay status and if there is a copay mitigation that we need to provide then to arrange for that, if it is a patient assistance program candidate to arrange for that.

And once all of that is checked then the Patient Support Services sends the prescription to the specialty pharmacy.

Sometimes, and we have about 12 -- a dozen specialty pharmacies contracted. Sometimes the specialty pharmacy will have its own internal procedures where there are certain checks that they will want to do as well. But the primary sort of time involved here is at the level of Ampyra Patient Support Services.

And we have had significant pent up demand in the very early going in the first month. So we have increased the resources at the Patient Support Services. One of the nice things about this model is that it is very scalable, so that we can scale up or down in response to demand in the marketplace fairly rapidly and that is what we are doing here.

So, you know, we have a certain amount of time where we have a bottleneck, that is going be relieved and it is already being relieved based on the increases in personnel that we have put in.

Okay, thanks.

And our next question comes from the line of Phil Nadeau of Cowen, Inc. Phil, you may proceed.

Good morning. Thanks for taking my question. Ron, just first a follow-up to Michael's question. Can you talk a little bit more about the bottleneck in regards to whether the pent-up patient demand was more than you expected, or was it the workload per patient was somewhat higher?

It is primarily that the initial demand was higher than we anticipated. You know, we got approved in January, we got out five weeks later which was pretty quick and launched. And somewhere in the interim, you know, those people who were particularly enthusiastic in the upfront had prescriptions written and they came in very quickly. So that was really the primary issue.

Okay. And early in the launch when you were putting together or prior to the launch when you were putting together the APSS plan, can you give us some idea of what type of throughput you thought you would need?

You know, I'm not going to provide any numbers on that because then we would be giving you projections.

Yes, I didn't think you would. I just thought I would try.

You can try again if you would like.

Last question's on reimbursement. It sounds like you are still going through the process with many payers in order to get final placement or final status. But nonetheless, the payers, it seems like, are reimbursing or paying for patients in the interim.

So can you tell us how that works and kind of what status you have, or what type of interim status you have while you are awaiting a final decision?

I really can't, Phil. It is all across the map because there are just so many different plans. So anything I said would be an incomplete picture; and we are going to just need to wait for the data to come in and then share that with people.

Okay, great. Thanks for taking my questions.

And our next question comes from the line of Geoff Meacham of JPMorgan. Geoff, you may proceed.

Great, thanks. Question for you, Ron, just about your fill rate. Is there any way to determine what percent of your scripts are filled versus those written at this point? Is it 50, is it 75, is it 90?

Not yet. Not yet.

Okay.

Again, I want to emphasize here we are talking about it is the first quarter call but the reality is we are talking about one month and it is the first month at that. So it just necessarily we are just not going to have the data now that we are going to have later. And in future calls hopefully we'll have a better picture to give you. But right now we just can't tell.

Okay. And then with respect to the source of patients, are you able to tell there whether some of them are de novo versus 4-AP switches?

That also would be entirely anecdotal at this point so not really data-driven information.

And final question, where are you guys with respect to the P&T Committee? I know you said that could take maybe a quarter or two to check all those boxes. Just curious if you had made any good progress during the first quarter so far?

It just -- it entirely depends on the plan, Geoff. So every plan has its own cycle and timing. Some of them it could be by the end of the third quarter, frankly. There are many plans that just by internal process or standard operating procedure they don't take up anything for six months on a formal basis.

So it really -- again, as I said earlier, it is all across the map in terms of how quickly these plans are acting and what the process they use is and so forth. And we are just not going to know until the next few quarters roll out. So hopefully with each quarter we will have better and better information that we can share with you.

Okay. Thanks a lot.

And our next question comes from the line of Yaron Werber of Citigroup. Yaron, you may proceed.

Hey guys, it's Navdeep filling in for Yaron. I have a couple of questions. How do you plan to record the $19 million in stocking from Elan? And did you plan to provide this metric every quarter during the launch?

The $19 million is -- a portion of it was expensed because it was received prior to regulatory approval. The rest of it, well, basically the inventory on the balance sheet represents the stocking.

So, you know, we announced it because it was a material number in the first quarter. It will be business as usual going forward. We are likely not to continue to report inventory received. You will see the numbers on the balance sheet.

Okay. All right. In the press release you also indicated it is taking patients about 30 days to receive Ampyra. I was wondering where that stands now?

What we said, it is taking up to 30 days. Some patients are getting it in the first week. Some are two weeks, some are three weeks but we were saying up to 30 days, which is what we have been seeing.

And again what we can tell you is that we have substantially added staff at Ampyra Patient Support Services. That has made a major difference in their ability to process the number of claims per day or number of -- not claims but requests for service or prescriptions per day.

So we are making good progress in getting through the backlog as well as processing all the new incoming prescriptions as they come in. But that is all we can tell you right now. We don't have anything else more specific.

Okay. Thanks a lot.

I guess the other thing to say is we expect that that 30 days is already coming down, and we expect it to continue to come down as they work through the backlog.

Our next question comes from the line of David Amsellem of Piper Jaffray. David, you may proceed.

Thanks. Just so we're clear on the backlog, just as we get to sort of a steady state and you work through this, I mean how should we be thinking about the waiting time steady state for a patient to expect to receive his or her prescription?

Yes, David, I don't have a new way to answer the question. We have added staff. They are working through the backlog. The times are coming down and we expect that over the next reasonable period of time that we will get through the entire backlog and then be on a steady state basis.

Okay. And you may have answered this before but do you know -- do you have a sense of what portion of patients who have gotten a prescription for Ampyra have gotten a repeat prescription or is it too soon?

Much too soon to tell.

Okay. And then one last question on the R&D spend. I don't know if you mentioned this earlier in the call, I mean how should we think about, you know, the ramp in spend as the year progresses? And can you comment on what we should be thinking about for next year on R&D?

Well, our year end guidance on our last call we guided that R&D expenses are expected to increase in 2010 over 2009 due to preclinical programs, GGF2 Phase 1 study and post marketing study commitments. That is the guidance that we gave at that point.

And we can't give anything more specific right now except to say there will be an increase over the year.

All right. Thanks, guys.

And our next question comes from the line of Josh Schimmer of Leerink Swann. Josh, you may proceed.

Great, thanks very much. Just wondered of the 2,000 prescribers or so, do you have any sense what percent of those of are MS specialists?

We don't, Josh.

How about of the 5,500 physicians that you are targeting, what percent of those would be MS specialists?

You know, the vast majority of them are MS specialists. The vast majority are neurologists with substantial portions of their practice in MS. There are some others who deal with MS as well but it is really primarily neurologists.

Okay. Then in the press release you comment that the Company believes it has adequate supply to meet demand. Can you give us a sense, is there a lot of cushion here? Is there some point where we need to come back and ask whether we are going to be running into supply constraints? Or are you taking actions now to adjust the supply and inventory on hand to meet the maybe greater than expected demand that you are seeing?

To what decimal place of specificity would you like me to project that? We can't give projections.

What we can tell you is that we have adequate supply and we have a system in place with Elan who manufactures it so that periodically we reassess based on demand and what we see in the market. We reassess where we are and order more inventory as needed. It is standard procedure there.

We believe that what we have on hand is an adequate supply for the initial inventory stocking and then we will continue to adjust that as needed.

Okay, great. Thanks very much.

And our next question comes from the line of Mike King of Wedbush Securities. Mike, you may proceed.

Good morning, guys. Thanks for taking my question. I just wanted to maybe pick up where Josh left off in that I'm wondering is any of your marketing effort, the CME activity directed towards the non-neurologists at all or is that something for the future?

You know, I actually would have to talk to our Medical Affairs group to get the up to the minute. I will tell you that overall, the effort is going to be geared at educating neurologists and other specialists who deal with MS, particularly physical medicine and rehabilitation who also have a significant presence in treating MS, as well as allied healthcare professionals, so nurses, physical therapists and others who deal with MS.

That would be the major focus. Clearly the focus has to be on those healthcare professionals, physicians and allied healthcare professionals who deal substantially with MS and that is what we are gearing it to.

Okay. And then you may have said this and not answered, but do we know what the number of patients in the backlog is?

Well, I don't think you know.

I'm sure I don't. That's why I asked you guys.

You know, we are not going to give specific numbers on the backlog or the forms that have come in for the good reason that, again, it is an incomplete picture at this point. Until we get well rounded data where we can really extrapolate what is going on, any number we give other than the sales number is going to be partly speculative and we don't want to do that.

Okay. Fair enough. And then just as far as penetration of reimbursement is concerned, Ron, did you say that there were 60 plans that are currently reimbursing Ampyra?

I don't think I said any number of plans that are reimbursing Ampyra.

Okay.

Oh, I'm sorry I think -- hey, Mike, I think what you might be referring to is the meetings that we have had.

Oh, okay.

So we have had over 110 meetings and 60 of those have been since the approval.

Oh, I see. Can you say anything about what the target number of accounts is?

No.

Okay. And then finally is there any effort on your part to secure a code from CMS? Is there an appreciable Medicaid population that could be a target for Ampyra?

Again, too soon to tell. You know, we are going to have to wait until we get a reasonable sampling over time under our belts so that we can get reliable figures on what percent, you know, falls into each bucket, whether it is government pay or commercial pay and what sorts.

At this point, you have got the first month with a lot of pent-up demand in there. It is just not going be reliable at all. And we just have to wait for the next few quarters to roll out until we get a good picture of what the balance of payers is.

At this time we are showing no further audio questions available. Ron Cohen, you may proceed.

Thanks. Well, this concludes our conference call this morning. And thank you all for joining us.

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