Acorda Therapeutics Inc (ACOR) 2010 Q3 法說會逐字稿

Welcome to the Acorda Therapeutics third-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 and welcome. With me today are Dr. Ron Cohen, our President and Chief Executive Officer; David Lawrence, our Chief Financial Officer; and Lauren Sabella, our Executive Vice President of Commercial Operations.

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 market Zanaflex Capsules, third-party payers, including government agencies, may not reimburse for the use of AMPYRA at acceptable rates or at all and may impose restrictive prior authorization requirements that limit or block prescriptions , the risk of unfavorable results from future studies of AMPYRA, the occurrences of adverse events within 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 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 in Acorda Therapeutics' filings with the Securities and Exchange Commission. Acorda Therapeutics may not actually achieve the goals or plans described in these forward-looking statements and investors should not place undue reliance on these statements. Forward-looking statements made in the presentation are made only as of the date hereof and 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.

Now I will turn over the call to our CEO, Ron

Thanks, Tierney. Welcome, everyone. This morning, we reported our third-quarter 2010 financial results. We continue to be pleased with the progress of the AMPYRA launch. Today, Lauren will provide an update on our AMPYRA and Zanaflex businesses, following which Dave will review financials for the quarter. I will then provide an update on our corporate growth strategy and we will then open the call for your questions.

Please note we are aiming to provide as much date and color as we can during the launch of AMPYRA to assist investors in understanding key metrics. However, we may not continue to provide updates on all of this information as the launch progresses. Lauren?

Thanks, Ron. Hello, everyone. We are very pleased with AMPYRA sales for the quarter, which totaled $52.6 million. As of September 30, approximately 6300 physicians have written at least one prescription for AMPYRA. Importantly, almost 90% of the physicians in our top five deciles have written at least one prescription. This is a significant penetration only seven months after commercial availability. Based on data from the field, we have expanded our initial list of 5500 target physicians to approximately 10,000 targets.

Through the end of the third quarter, we were in the initial phase of the AMPYRA launch. The uptick of AMPYRA was very rapid, driven by higher than expected pent-up demand. We are now building on the base we have established. I will provide some additional detail in the following slides.

As we acknowledge the initial influx of prescription requests was so great that we were not able to process requests as quickly as they were coming in. We resolved that issue by increasing staffing at AMPYRA Patient Support Services and streamlining our processes so that by mid-summer, we had caught up in terms of initial processing of requests. However, it took us through early September to actually fill the qualifying prescriptions. Therefore, total prescriptions through that timeframe reflected a combination of current demand and workdown of the backlog.

To put this bolus in perspective, as of the end of April, the Street's consensus for full-year 2010 AMPYRA sales was $73 million and we have already booked over $85 million in sales through September 30.

Looking ahead, we expect that the number of new patients starting on AMPYRA will no longer be augmented by patients from the backlog and there may be some lag as we build on the current base of demand. Therefore, fourth-quarter sales may be lower than third quarter.

This slide reflects the data collected from our specialty pharmacy's year to date on new patients to therapy and total prescriptions. Please note that these numbers are approximate. Prescriptions were significantly impacted by the large backlog of prescription requests that were submitted earlier in the year, many of which were not filled until the third quarter. This backlog was eliminated by early September.

We are defining new patients to therapy as unique patients who fill their first AMPYRA prescription. These patients are counted once in our system and are not recaptured as a new Rx when a new physical prescription is written for this continuing patient.

Please note an exception could be when a patient switches health plans. By contrast, other external data sources that report new Rxes often include any new prescription written, whether it is for a unique patient or a refill from an existing patient.

Through September 30, approximately 31,000 unique patients have received AMPYRA. This is approximately 8% of the MS population in the United States. As we are still early in the launch, our refill data is limited. We have analyzed a cohort of patients for whom we have clean data and who we have received an initial one-month prescription. This cohort represents approximately half of the patients who have received AMPYRA. The rate of first refill in this group is approximately 67%. We do not yet have enough data to report refill rates beyond this first refill. As expected, our patient base includes both patients using and not using DMPs, as well as patients with all four types of MS.

As of September 30, 2010, specialty pharmacies were holding on average two weeks of supply. All the specialty pharmacies in our network are contractually obligated to hold one month of inventory or less.

During the initial launch phase of a new pharmaceutical, the key goal with respect to healthcare professionals is to change prescribing behaviors by persuading as many physicians as possible to prescribe the product for appropriate patients. Through the first seven months of launch, approximately 6300 physicians, including almost 90% of our initial top target physicians, have prescribed AMPYRA at least once. We believe this is a great start.

Our objective during the next phase of the launch is to extend our reach to a larger set of physicians and to work with those physicians who have already used the product to identify additional patients who may benefit from AMPYRA.

We're executing across the programs you see listed on this slide. For example, we are emphasizing physician to physician programs in which trained MS experts speak to other MS treating physicians. We are conducting these programs in a variety of ways to make it as simple as possible for busy physicians to participate. We receive positive feedback from many participants in these programs.

Our first priority at launch was to educate physicians about AMPYRA before beginning our consumer outreach. This helps ensure that physicians prepare to respond appropriately to patient inquiries about AMPYRA. Since many prescribers now have experience with AMPYRA, we are increasing our program to educate MS patients about the brand. These programs are being conducted live through Web programs and teleconferences to reach as many people with MS and their caregivers as possible.

This slide highlights the need for addressing walking impairment in MS. Walking impairment is a pervasive problem for people with MS. In a 2008 Harris Poll, 64% of people with MS reported walking impairment. Of particular interest, new data presented at the 2010 ECTRIMS conference found that 28% of patients have walking impairment just two years following diagnosis. This is an important finding because many physicians may assume that patients early in the course of their disease are not affected by walking impairment. These data clearly show that they are affected and provide a further opportunity to educate people with MS and their physicians to discuss walking issues early on.

We continued to see improvement in managed care access and coverage this quarter with approximately 75% of commercially covered lives having either limited or no prior authorization for AMPYRA. Our managed markets team continues to meet with plans that have more restrictive PAs or have not yet formally reviewed AMPYRA to further educate them about the unique benefits of AMPYRA for their patients.

We were pleased that United Healthcare, the largest managed care organization in the United States, announced in October the inclusion of AMPYRA on their preferred drug list in the second tier. While we are pleased with coverage to date, the landscape continues to evolve and [as] plans to review AMPYRA or reassess drugs on their formulary list, we may see changes in the future.

I will now discuss our Zanaflex performance in the third quarter. Total shipments of Zanaflex Capsules and tablets in the third quarter were $14.6 million. Gross sales in the second quarter (sic-See Press Release) were $13.6 million. As per our previous guidance, we expect sales of Zanaflex Capsules to decline in 2010 over 2009. Our litigation against Apotex continues to move through the court system, but the court has not yet scheduled a trial date. Now I will turn the call over to Dave.

Thanks, Lauren. For the third quarter ended September 30, 2010, the Company reported net income of $12.4 million, or $0.32 per basic EPS and $0.31 per diluted EPS compared to a net loss of $19.4 million, or $0.51 per basic and diluted EPS for the same quarter in 2009. Gross sales for the third quarter were $66.2 million comprising $52.6 million in AMPYRA sales and $13.6 million in Zanaflex Capsules and tablet sales.

Discounts and allowances for the third quarter ended September 30, 2010 were $4.9 million. $2.8 million were attributable to AMPYRA sales and $2.1 million where attributable to Zanaflex sales. For the nine months ended September 30, 2010, discounts and allowances were $9.8 million. $5 million were attributable to AMPYRA and $4.8 million were attributable to Zanaflex sales. Discounts and allowances include cash discounts, AMPYRA product return estimates, chargebacks and rebates, data and service fees and co-pay mitigation.

Total operating expenses, which includes cost of sales for the quarter ended September 30, 2010, were $50.4 million compared to $34.2 million for the same quarter in 2009. Cost of sales were $11.7 million for the third 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 million for the third quarter of 2010, which included costs related to AMPYRA long-term extension studies and development of the Company's preclinical products. Due to the delay in production of GGF2 clinical study medication and the subsequent delay in the start of the Phase I trial originally targeted for mid-2010, we expect that R&D expenses for 2010 will slightly decrease over R&D expenses incurred in 2009.

Sales, general and administrative expenses for the quarter ended September 30, 2010 were $30.7 million and included expenses related to our AMPYRA launch activities. SG&A expenses decreased in the third quarter as compared to the second quarter, but we expected SG&A expenses for 2010 will be substantially higher than in 2009. We closed the third quarter of 2010 with cash, cash equivalents and short-term investments of $245.8 million. I will now turn the call over to Ron.

Thanks, Dave. Looking ahead, we are focusing on three initiatives to drive Acorda's future growth -- maximizing AMPYRA's potential, advancing our current pipeline and acquiring additional products.

With regard to AMPYRA, Lauren has already discussed our current programs for maximizing the commercial opportunity. We are also working to grow the AMPYRA franchise through IP extensions, new formulations and new indications. We previously announced that we had filed for Hatch Waxman patent life extension. If granted, this could potentially extend the life of our 2013 patent through July of 2018.

In addition, we are preparing to respond to the nonfinal rejection letters we have received on US patent applications that we filed in 2004 and '05. We are pleased that, in October 2010, the EU patent office published a notice of grant of a patent that covers composition for use and other use claims directed to sustained-release aminopyridine compositions. The 2005 US application corresponds to this EU patent.

Please note, however, that the EU patent system differs from the US and the EU results should not be taken as indicative of the outcome of the US patent application.

We are also working on development of a once-daily formulation and we are funding additional studies to assess potential new indications for AMPYRA, both within MS and other disease states.

I will now update you on development of our preclinical pipeline, which is advancing toward the clinic. Our monoclonal antibody for re-myelination in demyelinating diseases such as MS or rHIgM22 is currently being scaled up for clinical trial manufacturing. We are also developing an assay that will be needed for filing an IND. We are also continuing our work on chondroitinase, an enzyme that has shown promise in enhancing CNS plasticity and recovery of function in animal models of brain and spinal cord injuries.

I want to focus in particular on our neuregulin portfolio and specifically Glial Growth Factor 2, GGF2, our most advanced preclinical compound. Acorda has a large patent portfolio on neuregulin proteins and GGF2 is the lead molecule to emerge from that program. Neuregulins are highly protective and promote repair of cells in both the nervous system and the heart. Published papers of animal studies have shown efficacy in MS models, stroke, heart failure and cardiotoxicity after chemotherapy.

We filed an IND for treatment of heart failure earlier this year and experienced the delay due to manufacturing issues in filling of the vials. These issues have now been resolved and we are now completing preparations for the Phase I clinical trial in patients with heart failure.

Preclinical stroke data on GGF2 was published in neuropharmacology in the third quarter. Data from two studied showed that GGF2 promoted functional recovery from a stroke even when treatment was initiated up to seven days after the event. An accompanying editorial highlighted the unique promise of these data given GGF2's long window of opportunity for treatment after a stroke.

As we have stated previously, we are also seeking to acquire additional products to expand our pipeline. We are focusing on neurology products that can benefit from Acorda's expertise in identifying, developing and commercializing products in this space. We are interested in both clinical and commercial stage products.

With respect to the clinical stage, we are focusing primarily on Phase II neurology products. While we are open to assessing compounds at other stages as well, we believe that Acorda's expertise and capabilities are most likely to enhance the value of products at this stage and to provide the most favorable return on investment.

In addition, we are assessing opportunities for products in our space that may be commercialized sometime in 2012. We want our salesforce to remain focused on AMPYRA through 2011 to maximize the launch. With that, we come to the close of our formal comments and we will open the call to your questions. Operator?

(Operator Instructions). Michael Yee, RBC Capital.

Hey, thanks, Ron. A couple of questions. The first, just trying to figure out the difference here between the refill rates and also the impact of, I guess, when you said 20% of people are subject to restrictions, trying to figure out do you think that, if you try to break down the difference between people actually not responders versus people who are just subject to restrictions, how do you think about what you think is hurting here in this quarter and going into next quarter?

And then a second question is just trying to figure out the timing and the impact of your targeting the 10,000 physicians. When do you think we should see that impact and do you think you have the right salesforce? Thanks.

Okay, well, in terms of hurting, we don't think of it as hurting. We think of it as having just gone through a significantly above expectations pent-up demand, which carried through into the third quarter and we are now coming down the back side of that. So we are building on a base of demand from there.

There is no way for us to parse out how much of an issue that 20% of covered lives that have more restrictive PAs is versus anything else out there. It is really a global picture and we are addressing the issues out there on all fronts. So in terms of educating patients, educating physicians, we do have programs in place both at APSS and with an internal group to actually help physicians' practices understand the prior authorizations that they have in their practice, understand what the breakdown is and which patients they need to focus on.

And also just to help them in general think through how they can best expedite the process on behalf of their patients, which the vast, vast majority of these physicians want to do in our experience. They want to do the best thing for their patients.

So with respect to the expanded list, that expanded call list is based on feedback from the marketplace and the analysis we have done about who is actually prescribing. In any launch, you start out with a list based on comparables that you think you have got on metrics, but, of course, when you have a first-in-class drug, that takes you so far. And then you have to adjust your list based on actual practice in the marketplace. So we have done that and we anticipated that that would be the case. So the salesforce is still right-sized for even that expanded call list of 10,000.

Okay, thanks.

Joel Sendek, Lazard Capital Markets.

Hi, thanks a lot and I really love all the detail. It gives us a lot to think about. I have two questions. The first is with regard to your 4Q commentary, are you seeing anything in October that at all colors the commentary that you make that the sales might be down or is it just a natural result of the backfill that you described?

Well, we are not commenting on October or any specific month following the third quarter. But what I can tell you is that our comment on the fourth quarter versus the third is a function of our understanding of what we saw in the first three quarters, which is this huge bolus that came in and the fact that the third-quarter numbers were augmented by leftover or carried-over prescriptions that hadn't been filled in Q1, Q2 and were then filled from that initial bolus in Q3. So we are looking at that and thinking, well, now that we are on the back end of that and we are no longer augmenting conservatively, we may see a lower number in the fourth quarter.

Okay, so you are specifically saying that is conservative. Okay. The next question --

Joel, I am specifically saying that our guidance is that fourth-quarter sales may be less than third-quarter sales based on the analysis that I just described.

Understood. Okay. And then I have a question about the operating margins as well. Right now, I calculate it is about 20%, 21%. I am wondering if that is sustainable or if that is also a reflection of the backlog and not having to -- I will just leave the question there. If that is a number that we can project at all?

Joel, this is Dave. We are just -- the guidance we have provided for 2010 is all we are doing at this point. Earlier in the year, we guided that SG&A expenses would be substantially higher, and given the delays we had with the GGF2 manufacturing, R&D expenses are expected to be slightly less than they were last year. So at this point, that is as far as we are going with guidance.

Okay, all right, that's all. Thanks a lot.

Yaron Werber, Citi.

Hi, thanks for taking my question. So I have two questions. One, just for Ron, give us a sense as to the patent in Europe, how long do you think it is going to last until, when is the expiration and any sense as to when do you think you are maybe expecting to get approval?

And then secondly, can you give us any sense at all, what do you think is -- what should we use as a good baseline for demand in Q2 or Q3 for AMPYRA? So maybe so we can really try to figure out what to ex out from the inventory stocking. If you look at the NRx in the first four weeks of the fourth quarter, they were down about 39% from Q3. So is that a good run? We are just trying to get a sense as to what do you think is a good run rate.

Okay, we are not projecting any run rate. I guess you have a few questions in there, so let's try and take them in sequence. With respect to the EU approval, we expect that patent to go 20 years from filing, which would be into 2025. So I think that was your first question.

With respect to the EU application, that is something that, by mutual agreement, we are letting Biogen comment on. Biogen Idec is responsible for ex-US and so we are letting them comment on that.

And then with respect to -- I am not sure I caught fully your question on second and third-quarter baseline and future. We are not projecting future demand. We can tell you that inventories are tight. They are an average of two weeks at this point. And contractually, just to make sure everyone grasps this, by contract, our specialty pharmacies are not allowed to have more than 30 days on hand. And in fact, in the third quarter, by end of third quarter, they had about two weeks average on hand. So we think the inventory management is quite tight and at this point in terms of demand, we are coming off the back end of that initial very large bolus. We have a new base and we are going to build from there.

But does that mean that they have to keep 30 days or they could be under 30 days? Are you expecting an inventory buildup again?

Yaron, let me try and be more clear. As of September 30, we actually checked specifically with all our SPs. They had an average of two weeks, not 30 days, two weeks of demand, about two weeks of demand on hand in inventory. They are not permitted to have more than 30 days. So if they choose to get -- to stock up, they can't go beyond 30 days. But at this point, they are actually at half of that approximately, about two weeks.

Okay, great. Thanks, Ron.

Geoff Meacham, JPMorgan.

Thanks. Congrats on the quarter and thanks for taking my question. A question here on managed care. So what is your sense as to the managed care organization? Does that actually use United Health as a benchmark? And then what is your ballpark of MCOs that haven't yet reviewed AMPYRA and what is the timing there? And I have one follow-up.

I can't really comment on -- or really don't know about how many other plans would use United Health as a benchmark. I will talk you that when our team goes out, we certainly consider it more helpful than not that United Health made that decision and that we can refer to that. But in terms of quantifying it, that is quite challenging.

In terms of plans that have not yet reviewed AMPYRA, at this point, that would be a small minority, a very small number of plans. So really the great majority of plans have already reviewed it and come to decisions now with the understanding that, particularly in the current environment, plans review their formularies all the time. So periodically, you'd suspect that they will re-review and revisit in six months or a year or whatever. So we are constantly engaged with the plans, working with them so that, for those that ultimately make a decision to review their formularies, we are still there, still educating them, still giving them the latest information on what AMPYRA is doing out there, the benefits and so on.

And then in addition, as I think you heard on the presentation earlier, we are still very much engaging with those plans that have made decisions that have more restrictive PAs. There is still a lot of education to be done there and as we get more experience in the marketplace and generate data that is useful to the plans in terms of actual usage and appropriate usage, we take that back to the plans, show that to them in an effort to have them revisit their original decision and make their PAs less restrictive.

So the message overall from us on managed care is seven months into the launch, we are very pleased that 75% of covered lives at this point have minimal or light PAs -- excuse me -- no or light PAs. The ones that have more restrictive PAs, we are continuing to work on. But overall, what we are viewing now is that the managed-care situation is encouraging and that it is rarely blocking people or very infrequently blocking people from getting drug. The most it is doing is slowing it down in some cases.

Got you. Okay, thanks for that. And then just on the EU patent, so what does the communication tell you about prior art in Europe and would prior art be any different in the US versus Europe?

It is very difficult for us to comment on those issues. What we can tell you is that the European patent system is independent, it is different from the US system and that is all we can say. So we are guiding that nobody should infer from Europe anything in particular about the US. We are delighted to have the US grant obviously and we are still working on -- I'm sorry -- the EU grant and we are still working on the US.

Got you. Okay, thanks.

David Amsellem, Piper Jaffray.

Thanks. Just a couple of quick ones. Just want to clarify something on the expanded doctor target list going to 10,000 docs. Does that contemplate any expansion in the salesforce headcount and is there any plan to bump up the size of the salesforce in 2011?

Yes, hi. No, when we first put the salesforce in place, there were plans that we would go beyond the original 5500 targets and the salesforce was sized appropriately to get to the additional target universe. We also look at metrics to see what our share of voice is in the marketplace compared to the other companies that are promoting in MS and we feel confident at this point in time that we are in a good place in terms of our salesforce sizing and our share of voice.

Okay. And then on the once-daily formulation that you alluded to, Ron, have you identified a lead candidate and when do you expect to be in a position to move a once-daily into studies?

Well, it is not so much identifying a once-a-day candidate as it is actually formulating it. So we are in the process of working with outside groups to do that. I am sorry. If some of you are hearing a buzz, it seems that a fire alarm was just triggered outside in the building. I don't believe we actually have a fire, so we are just going to continue. Does that answer your question, David?

Yes, so just to be clear, you have yet to identify the formulation, you are in the process of formulating?

We are in the process of working with outside groups to actually formulate and develop a GMP once-a-day formulation to our specifications.

And then timing on when that may go into the clinic, do you have a sense?

No update on that yet.

All right, thanks.

Chris Raymond, Robert Baird.

Thanks. Two questions and I understand you are definitely not looking to project Q4 numbers and I won't ask you that, but I haven't heard anybody ask and so I am just going to throw this out. Is there any way you could quantify the bolus that you incurred in the third quarter, sort of fill in the backlog?

And then the second question is we have picked up with some of our work a lot of evidence that source of patients is primarily folks who are naive to 4-AP. Can you maybe talk about -- number one, verify that or counter that and maybe talk about plans to get at those patients. And part of that too is your targeting expansion to the 10,000 physicians, is that part of that plan? Thanks.

Okay. So first of all, in terms of quantifying the backlog, I would refer you to the TRX numbers that we just provided today and the fact that, as of the end of the third quarter, about 31,000 patients have tried the drug. And you can see, in the TRX numbers, sort of the build.

Now what that doesn't particularly get at is when those TRXes came in, but I can tell you that a lot of the ones that were filled in the second quarter and even the third had come in in the first and then ditto the ones that had come in in the second quarter because we were taking it -- it took us time to ramp up. Those wound up being backlogged and then being filled in the third quarter. So we wound up having an augmentation in the third quarter based on prescriptions that had actually come in earlier and were backlogged.

I can't quantify it for you more than that except to say that, by early September, we had worked through the entire backlog. And following that, what you see is what you get. It is much more -- it is reflective of real-time demand as opposed to real-time plus the augmentation that we saw before.

So just to clarify, should we look at NRx in September as perhaps the run rate that is most appropriate?

I am not sure how you would be using that. I mean you have got to use a combination of NRx versus discontinuations, which we don't know yet with great specificity. So we are going to have to see as we go along.

With respect to the patients who are naive to 4-AP or not, we have always said from the beginning of the launch, from way before the beginning of the launch when people would ask about compounded 4-AP that the numbers are very difficult, if not impossible to get at because there are no databases where you can look and say how many patients are on compounded 4-AP.

The best estimates were a pretty wide range back then of somewhere between -- anywhere at the low 3000 to 4000 patients with MS, all the way up to maybe about 10,000. But in any case, still a very small minority of the total number of MS patients. And also a small minority of physicians who actually were prescribing compounded 4-AP. It was not a massive effort out there or a massive practice out there.

So at this point, we certainly are aware anecdotally of physicians who have large numbers of compounded 4-AP patients who have been switching patients over, but there is really no way to quantify that. I think the reality is that, from the beginning of the launch and also currently, the vast majority of the business is people who are, as you say, naive to 4-AP. So that has not changed throughout the course of the launch.

With respect to the 10,000 call list, bear in mind that a call list doesn't mean that every single doctor on that call list gets called with equal frequency and that our 100 or so sales people are out there calling on every single one every month. As with any call list, it is prioritized depending on the size of the practice, the appropriate practice for the drug, so that obviously once the salesforce has visited their doctors, gotten a sense of what the practices are like, they are much more likely to emphasize those practices that have the most patients. So that is really how you segment it.

So by expanding the list, we expand the opportunity to identify those practices, identify those doctors and address a larger percentage of the available MS population who can qualify for the drug.

Thank you.

Phil Nadeau, Cowen and Company.

Good morning, Ron. Thanks for taking my questions and let me add my congratulations to you on the quarter. First, just a brief follow-up to the comment you just made. Do you know what the approximate MS patient number is that was represented by the first 5,500 physicians that you called on and how that number is going to increase with the 10,000 physician callers?

I don't think we have that number, Phil. Yes, we don't. Sorry.

Okay, fair enough. And then second, on some of the prescription data that you mentioned in your prepared remarks, do you have a sense for what the duration of prescriptions is? And when you measure a discontinuation, how do you know that patient is discontinued and not simply somewhat tardy in getting their new prescription?

Yes, hi. For that question, I need to ask you what you mean by length of therapy. Are you talking about the size of the prescription or the prescription with the number of refills?

I guess both.

Okay, so what we can tell you is the size of the prescription. It looks about right now that around 85% to 90% of all prescriptions are one month in duration and about 10% to 15% are actually getting a first prescription for three months in duration. What we don't have any information on is the number of refills that are actually written on the prescription form. We don't capture that metric.

Okay. And when a patient gets a refill on the initial script, it is recorded as a total script, but not a new script. Is that correct?

That's absolutely correct. In our system, the way it works is they only receive a new prescription once, when they get logged into the system for APSS. Every prescription after that would be considered a refill and a TRX with the exception if a patient changes health plans. Now this is different from what you are going to see with external organizations that provide data. When they have a new RX, what you are going to find is, for instance, if Ms. Jones went to the doctor and got a prescription for a one-month supply of a drug with four refills, she would be counted as a new prescription and then every refill she got after that would be part of the total prescription. If she stayed on drug after that point in time, she would have to go back to her doctor and get another new prescription. And that would count as a new Rx even though she was not a new unique patient. So in our system, we are really capturing for the most part unique patients to therapy and not unique new prescriptions.

And let me add that, even within our system, it gets more difficult as you go forward because, as you get to the end of any calendar year, that is when you see patients switching insurance plans so that, as of the end of the year, even we will have more difficulty tracking unique patients because when they switch to a new plan, as Lauren said, that is going to come in as NRx even though the patient may have been on drug for a year before that. So it will be progressively harder for us to identify accurately the unique new patients. And that is something that everyone should realize.

Okay. And one final question, if I may. Ron, I know I am going to risk annoying you with this question, but I will ask it anyway. Looking at the IMS prescription data from this week, I do acknowledge that new scripts are down about 40% quarter-over-quarter. According to the IMS prescription data again for this week, total scripts are still up somewhere around 10% quarter-over-quarter.

So it seems to me like in most drugs, total prescriptions correlate more with quarter-over-quarter sales growth than new prescriptions. So the fact that we are one-third of the way through the fourth quarter and your total scripts are still up modestly quarter-over-quarter, would suggest to me it is unlikely that you are going to have a dramatically down Q4.

So I guess my question is, are the IMS total scripts so far off that it is still possible, or is there some other factor that we should be considering; totally acknowledging that there was a bolus of new prescriptions early on, but just continuing patients do still seem to be up somewhat quarter-over-quarter?

So I am reminded of a comment from one of my favorite TV serials that occurred many years ago which most people never saw, but the comment is, you might say so but I am afraid I couldn't possibly comment. And I'm going to leave it at that. We just can't comment, as you know. But thank you for a very well-articulated question.

Well, thanks for taking it.

Mark Schoenebaum, ISI Group.

Hey guys, thanks. So this has been -- Chris kind of asked around this. Maybe I will just ask it in a more direct way so that you can evade it again. Is there any way when you just look at September -- so you gave us a lot of detail. You gave us the new patient starts and you gave us the TRxs. Is there any way you can tell us what the new patient starts were if you were to take out what you believe the backlog to be?

No.

Okay, I figured, but I had to ask. And also is there any way you can tell us how many patients total were on AMPYRA at the end of 3Q?

That would be over --.

I think he is saying how many were actually still on. No, we can't.

I'm 0 for 2. One more and I am automatically disconnected. Then I also heard you say on the call, or maybe I misheard which is why I am asking, Ron. Did you say you worked through the backlog in early September in answer to a question, or did I mishear?

Yes, by early September, the backlog was completely gone so that the actual filled prescriptions were no longer reflecting the augmentation from previously pent-up backlog.

So in other words, the September numbers that you have given us have some impact of backlog, but perhaps not dramatic?

Early September would have been the trailing end of it.

Okay, but September is as close as we can get to a normalized month. And then, finally, and Joel asked about this, but I think I missed part of the answer. He asked it in a different way, but you guys put up a profit this quarter, which is impressive. Is that something we can -- is that something you think is sustainable?

I mean minus any -- on a non-GAAP basis at least?

The World Series is still going on and there is your third one. Wow. We are not commenting or projecting on profitability. I mean what we can say is, as I think you heard in the presentation or I think we said in the presentation, we are focused on growth. We are focused on investing in expansion of an extension of the AMPYRA franchise, of our preclinical products, some of which we think are quite exciting, particularly the GGF2 program. So we are focused on investing growth in the Company, but we can't comment on how that is going to factor into profitability moving forward.

Okay, and then I promise this is the last one. In your 2Q press release, there is a statement in here that has been confusing to a couple people. In your second-quarter press release, you said that, quote, the prescription request backlog on AMPYRA patient services experienced early in the launch has been cleared based on process improvements and staffing adjustments. So can you explain the difference between that and what you are saying now?

Yes, absolutely. That was referring to the actual prescription requests that were coming into APSS. Let me review for a second what actually happens in this system, in this closed SPP system. When a doctor writes a prescription, it is actually called a service request form, but we won't get into jargon. It is a requested prescription. That is faxed into APSS, which is our central clearinghouse.

Now when it comes in, several things have to happen. It has to be logged in with all the appropriate data logged into the computer and a file created for that patient and assigned a unique tracking number. It has to then be triaged for benefits investigations, so what kind of insurance do they have, do they have insurance, what are the PA requirements for that, what are the co-pay requirements. And then depending on that, it is then triaged to one of several places.

If there is a co-pay mitigation requirement, so the co-pay is more than $40 and we want to pay it down to $40, it goes to our co-pay mitigation group. If it is someone who has no insurance and who may qualify for our physician assistance program, it gets triaged there. If it's someone who has insurance, you get through the co-pay mitigation, then you have to triage it to a specialty pharmacy who -- one of the dozen that we have who is actually going to fill the prescription.

And the way it works now actually is after APSS does the early sort of initial take, they will farm it out to the SPPs, the specialty pharmacy, who will complete the benefits investigation and so on.

And then in addition to that, if there are prior authorizations, they have to inform the doctor's office if those have not been fulfilled that they need to fulfill those. So there is a lot that needs to get done when one of these prescriptions comes in -- when one of those prescriptions comes in.

So okay. I'm being told -- I'm sorry that -- I am being told we had a -- not this is not true. All right, it had to do with that fire drill, but let me -- someone is investigating it. Sorry about that. So let me go back to my train of thought. So there is a lot that needs to be done obviously.

Now what happened in -- what we reported in the second quarter was that we had an initial backlog of prescription requests, which is what it says. So the prescription requests, which means they were flooding into APSS and they weren't even being logged in. They were just piled up on a desk, if you will, somewhere because there weren't enough people even to handle that load. So no benefits investigations were even started, no co-pay mitigation was started, none of that was even started and the patients weren't even being logged in.

So it took us a few months to staff up to the point where they could actually log in all of those requests and begin the process of getting them to the point where you could fill the prescription or not depending on the request.

So by the end of the second quarter, what we reported was that we had cleared the backlog of requests, meaning that they were in the system, they were being processed and triaged for eventual resolution. What we are telling you now is that of all of those prescriptions that were in the system at that point, by early September, they had all been fully processed and filled or dispensed with.

So putting it another way, the impact on actual filled prescriptions was being felt extensively in the third quarter because all of those prescriptions that we finally logged in in the second quarter were wending their way through and ultimately getting resolved and filled.

Got it. Thank you very much for taking all of my questions. And good luck with the fire.

Ladies and gentlemen, that concludes the question-and-answer session. I would now like to turn the call over to Mr. Ron Cohen for closing remarks.

My closing remarks are that this concludes our call today. Thank you, everyone, for tuning in.

Thank you for joining today's conference. That concludes the presentation. You may now disconnect. Have a great day.