Acorda Therapeutics Inc (ACOR) 2012 Q3 法說會逐字稿

Thank you for holding. Welcome to the Acorda Therapeutics 3rd Quarter 2012 Financial Results Conference CallAt this time, at participants are in 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. Before we begin, let me tell you that we are having a little bit of technical difficulty with the slides, soI won't be presenting slides today, and will be sending them out later on. Also, with me today are Dr. Ron Cohen, our President and Chief Executive Officer, and Dave Lawrence, our Chief Financial Officer.

So let me remind you that this presentation contains forward-looking statements within the meaning the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts regarding management's expect expectation's beliefs, goals or prospects should be considered forward-looking.

These statements are subject to risks and uncertainties that could cause actual results to differ materially, including our ability to successfully market and sell Ampyra in the United States. Third party payers, including governmental 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, or from our other research and development programs, including any acquired or unlicensed programs, the occurrence of adverse safety events with our products, delays in obtaining or failure to obtain regulatory approval of or to successfully market Ampyra outside the United States, and our dependence on our collaboration partner, Biogen Idec, in connection therewith.

Competition including the impact of generic competition on ZANAFLEX capsules revenues, failures to protect our intellectual or to defend against intellectual property claims of others, or to obtain third party intellectual property licenses needed for the commercialization for our products,failure to comply with regulatory requirements that could result in adverse action by regulatory agencies, and the ability to obtain additional financing to support our operation.

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 statement, and investors should not place undue reliance on these statements.

Forward-looking statement are made in this presentation are made only as of the date hereof, and Acorda Therapeutics disclaims any intent or obligation to update any forward-looking statement as a result of developments occurring after the date of this presentation. A housekeeping note for Q & A. We are going to ask everybody limit themselves to one question and one follow-up. I will turn the call over to our CEO, Ron Cohen.

Thanks, Tierney. Good morning, everyone. Hopefully, you are all digging yourselves out of the recent Sandy disaster, and everyone is safe and warm. Also, apologies again for the lack of slides.

Apparently, there's some technical issues at Thomson's but if we can't get those rectified, as Tierney said, we will send the slides out. On today's call, I'll provide comments on AMPYRA's third quarter performance, and then review revenue from Zanaflex and our [ex-US] partnership with Biogen.

I'll also provide an overview of progress and upcoming milestones for our product development programs. And Dave will then provide the financials for the quarter, after which we will open up the call for your questions. Starting with AMPYRA, we were pleased with AMPYRA's performance in the third quarter with net sales of $69. million. RThat's an approximate 5% increase over Q2, and a 28% increase over Q3 over 2011.

We continued to make good progress with managed care. Last month, Medco revised their assessments to make them more clinically appropriate for AMPYRA, so that a three - month follow-up visit is no longer required. Overall, approximately 75% of covered lives in the US continue to have open access or limited prior authorizations, and even for the 25% with stricter PA s, we are finding that the vast, vast majority of patients are able to get access to the drug.

We recently renewed Tier 2 access with the three largest healthcare plans in the country, including Aetna, Cigna, and United Healthcare. I'm told that the slides are now up, so if you want to turn to your screens, hopefully you will be able to access them. Turning to our additional sources of revenue, combined third quarter net revenue from our Zanaflex franchise was $3.8 million.

This included net revenue from ZANAFLEX capsules and tablets of $1.9 million, revenue from Watson's authorized generic capsules of $1.4 million,and a $0.5 million in sales of generic capsules to Watson. We received $1.5 million in royalties from Biogen based on net sales of FAMPYRA in markets outside the US, with sales in Germany comprising the majority of the overseas sales.

FAMPYRA is now available for commercial sale in more than 15 countries. As noted last quarter, FAMPYRA revenues in Germany are being recorded at a reduced rate until final pricing has been established. Last week during the earnings announcement, Biogen stated that they expect pricing to be finalized in Germany in Q1 2013. Biogen has planned launches in the remaining EU markets, and is planning regulatory submissions in additional markets.

Next, I will provide an update on the status of our product development programs. We believe we have one of the most interesting pipelines in the neurology space. We have five programs including AMPYRA, itself, that are in clinical testing or expected to be shortly. Our approach is characterized by disciplined investment, in which each program is structured to produce clear go/no-go signals, so that our resources can be directed to the areas that are most likely to be successful.

As we announced in August, the post marketing commitment trial for AMPYRA, exploring a 5-milligram dose, showed that this lower dose did not demonstrate efficacy. We are in the process of preparing the full study report for submission to the FDA. We have completed the first part of the AMPYRA Cerebral Palsy Proof of Concept study.

This first phase of the study comprised ten adults with Cerebral Palsy, each of whom received a single dose of AMPYRA to assess safety. No safety issues were detected, and we have begun to enroll the second part of the study, which is a 20 person crossover design that will look at both safety and efficacy. In this phase, participants will receive twice daily dosing of AMPYRA for a week. We expect to announce results of this part of the study by mid-2013.

The AMPYRA Proof of Concept study in post-stroke deficits began enrolling in the second quarter. The study will enroll 66 participants, and we expect to announce results in Q2 of 2013. We are also working with our external partners on a once daily formulation of AMPYRA, and we expect to begin human pharmacokinetic testing shortly.

Moving to our other pipeline products,the pre-NDA preparations for the Diazepam nasal spray are continuing at Neuronex. Acorda can elect to close the deal to acquire Neuronex within 45 days after receipt of pre-NDA meeting minutes from the FDA. We continue to be excited about this product, and its potential to address a substantial unmet need in people epilepsy.

We have submitted the Phase Two clinical trial protocol to the FDA for AC105, an acute spinal cord injury, and we are continuing preparations to initiate that trial. Enrollment in the GGF2 Phase One clinical study in heart failure has been completed. This was a dose-escalating trial designed to test the maximum tolerated single dose, with follow-ups planned at one week, three months and six months.

We will have the three-month data analyzed by the end of the year, which we plan to present in a peer review setting, and we'll also discuss results with FDA before proceeding to a multiple dose study. We submitted an investigational new drug application or IND to the FDA for our remyelinating antibody, rHIgM22. We received questions from the agency and expect to submit all responses by the end of the year. Now I'll turn the call over to Dave for review of the financials, following which I will come back with a closing summary. And then we will open the call for your questions. Dave?

Thanks, Ron. For the third quarter, ended September 30, 2012, the Company reported non-GAAP net income of $15.2 million or $0.38 per diluted EPS, compared to non-GAAP net income of$16.2 million or $0.40 perdiluted EPS for the same quarter in 2011.

Total revenue this quarter was $77.4 million compared to $93 million in the third quarter of 2011. Total revenue in the third quarter of 2011 included $25 million in milestone revenue received from Biogen Idec for the conditional approval from the European Commission for FAMPYRA.

Total operating expenses, including $5.6 million in share-based compensation expense for the quarter ended September 30, 2012, were $67.1 million compared to $72.4 million for the same quarter in 2011.

Total operating expenses in the third quarter of 2011 included $15.5 million in accounting adjustments related to ZANAFLEX capsules, and $ 5.1 million in share-based compensation expense.

We have updated our R&D expense guidance for the full year 2012 downward to approximately $45 million as a result of changes in timing of several R&D programs. This guidance excludes share-based compensation and future expenditures related to the potential acquisition of Neuronex and its Diazepam nasal sprays product.

We continue to improve on our strong financial position with cash and investments increasing to $318.7 million, an increase of$15.7 million over the second quarter of 2012. I'll now turn the call back over to Ron.

Thanks, Dave. So in summary, AMPYRA continues to grow in its current indication, and we have ongoing clinical trials studying the use of AMPYRA in adult Cerebral Palsy and post-stroke deficits, both of which we expect to read out in 2013. We believe our pipeline is one of the most interesting in the neurology space.

We continue to be excited about the Diazepam nasal separate opportunity as it approaches the NDA stage, and we also have three additional innovative products, GGF2, AC105 and rHIgM22, which are either in clinical development or expected to be in the clinic shortly.

On the business development front, we continue to be evaluate commercial and near commercial opportunities in neurology that could be accretive in the near-term, and we are also remaining alert for earlier stage programs in the neurology space that offer true therapeutic breakthroughs. With that we will open up the call for your questions. Operator ?

Thank you. (Operator Instructions). Your first question comes from Michael Yee of RBC Capital Markets. Please, proceed.

Hey, Ron. My question -- first question is on the 5-milligram, 10-milligram study. I know you are finalizing the report. Has there been any discussion or conversations with FDA, at all ? Was there any response? What do you, ultimately, expect them to say? And then my follow-up is on the pipeline. You are talking about Cerebral Palsy and post-stroke studies, and this data is coming in 2013. Can you better explain what your hurdle is to move into Phase Three? I understand the primary endpoint is time 25 foot walk, I think, for one of the studies. So, that's going to be pretty hard to tease out (inaudible) significant differences. So, what are you, exactly, looking for in these studies to move forward?

Okay. Hi, Mike. So with respect to the 5-milligram, just by way of reminder, we -- just as a matter of course, we never discuss interactions with the FDA or conversations until we have something material, usually in writing, from the agency. So what we have said is that we are still preparing the final study report for the FDA, and we remain confident that the 5-milligram dose did not show efficacy in that study. That's really all we can say at this time. We have, based on the post market commitment, we have a deadline of March in which to submit the final study report.

With respect to the CP and stroke, you know, we have designed those with multiple outcome measures based on our extensive experience already in measuring function success fully in neurological conditions, such as MS and spinal cord injury. We are looking in these Proof of Concept studies, not necessarily for statistical significance, that would not be reasonable, although, obviously, it would not be rejected by us if it happened.

But what we are looking for is clear signals that the drug is having a meaningful clinical impact in some measure that makes sense. Whether it's an upper extremity functional measure, a lower extremity functional measure, a global walking measure, but something where we can point to it and say we and the clinicians, the expert clinicians can point to it and say that is a clinically meaningful improvement in these patients. And we see it more in the drug group than we see in the placebo group.

And then once we have that, if we have the luxury of more than one outcome measure that meets the criteria, we will talk about the FDA about how we want to design the trial, and what we want to be a primary outcome, and what kind of label we would be seeking. So it's going to be a process based on the results that we see.

So we should be looking more at trends in the secondary endpoint, not like the time 25 walk

Not necessarily, we do have a time 25-foot walk along with other measures. I guess, maybe, the other way to put it is going into any study, we cannot know for a new indication, what is going to be the most interesting. So that's why we are doing the study. So you have to wait and see what the data are. If the time 25-foot walk looks really good, there's nothing that stops us from going ahead and using that outcome again. In fact, in many ways, that would be ideal, because we have a template for it. So it might be the time 25-foot walk. It might be something else. Obviously, it needs to be something that's meaningful to the patient and to the clinicians.

Okay. Thank you.

In queue your next question comes from Mark Schoenebaum from ISI. Please, proceed.

Hey, Ron. This is Salim in for Mark. First question, given all the wind from Hurricane Sandy, can you give us the status of your hair?

You know, Salim, I was hoping that you might not be infected with the virus. I should have inoculated you before you joined Mark. I'm sorry. It's too late.

I guess so. I guess so

I've stayed indoors.

Good thing. It's a good thing. Now, here for the real questions, I guess on the data side, Ron, why was the guidance changed from early 2013 to second quarter 2013 for this stroke data? And then on the CP front, why aren't you presenting the detailed data ? And then on R&D, can you just give us some thoughts on how do things look going forward, given that the guidance was changed for 2012?

What was that last piece ?

On R&D, guidance was changed -- revised downward for 2012, because of several R&D programs.

Yes. Right. Actually, nothing has really changed on timing for the CP. In the past, when we said early 2013, we meant to convey first half. And so we are actually honing that down more, now,and saying -- what did we say?

Second quarter.

Second quarter. Yes Second quarter. So, that really hasn't changed.

Okay.

And then you had another question on stroke ?

No, that was the stroke. That was --

Yes.

On the CP, I take it you aren't presenting the detailed data for the first part.

Oh, yes. That was it, sorry. So, yes. No. It was a -- it's a safety study, as we have said all along. It's ten patients who received one dose of drug. And the reason we were cautious there is that Cerebral Palsy does have -- people with Cerebral Palsy, as a population, do have an elevated seizure risk, so we wanted to be extra cautious before going into the actual efficacy part of the trial.

So we gave a single dose to ten patients. Obviously, when you have that small a group and a single dose, you don't expect to see efficacy data, which is what we have said all along. Because you wound up -- what we wind up having is a lot of noisy data. What we are doing, now because the safety looked very good, is we've moved into the Proof of Concept efficacy side, which involves two dose doses a day, just the way it does for the MS drugs, or 10 milligrams twice a day. They will receive that for a week. And then we will be comparing efficacy measures of walking, motor function, upper extremity function, after a week of drug versus baseline.

And there's also a crossover design component to it. So we will be comparing patients to their own performance on placebo, and they will crossover, some of them will get drug first, wash out, then get placebo. Some of them will get placebo first wash out, and then get drugs. Even with 20 subjects in the trial, we expect we will have a fair amount of statistical power to see differences if those differences are there.

Okay. So you are not going to present the safety data; right? On the first ten patients?

No, I mean there's really nothing to present other than to say we didn't see any safety signals.

Or efficacy ?

I think I just went through a whole explanation that this is a safety part of the trial.

Okay.

And there's really nothing that we expected to say about efficacy in this, which we have been consistent about saying all along.

Okay.

So on the expenses, that is -- that's a timing issue. There were certain programs that, particularly clinical programs, that just were deferred or delayed. Some of that was related to just simple things like the time it took to get meetings at FDA to talk about them. It looked to us like for whatever reason, FDA was getting jammed up, at least in our division the second half of the year. So it was taking longer than usual to get certain meetings. Overall, it's really a timing issue. And that's what led to the decline in the expenses.

Will that shift over to 2013, I guess, was my question?

We are not giving guidance yet for 2013, but it's a fair assumption that those expenses, or most of them, will be deferred.

Got it. Okay. Thanks, Ron. And glad the hair is doing okay.

Thanks, Salim.

The next question comes from Joel Sendek from Stifel. Please, proceed.

Hi. Thanks a lot. My question has to do with reimbursement. Certainly, in the prepared remarks, it seems as though the reimbursement on AMPYRA is at worst stable, and at best getting better. Can you just confirm that? And if you have any evidence you can give us as to how the situation might be improving on the reimbursement front, or any trends in that direction. Looking at past calls, it seems like there's been this 75 %/25 % split between restrictive and nonrestrictive prior authorizations. If you can give us any about that?

Yes. We don't expect dramatic shifts in that. That percent -- distribution of 75 %/25 % approximately, that became established last year, early in 2011, and it's been stable ever since. And that really reflects the distribution of different types of plans that are out there, and the approaches that they take to specialty pharmacy medicine. So we don't expect that to change, substantially. Now, having said that, we still are seeing improvements along the lines.

So it's not a black or white. There are real nuances here in terms of access. The first thing, and the most important thing to understand, is even for the 25%, almost all of those people get the drug. It's rare that someone actually can't get the drug. It requires more work on the part of the physician, the prescriber, the practice, the nurse, the administrators in the office, just to get through the PA regimen.

So that's something that we have worked on the other end, which is we have sent reimbursement specialists into the field to work with the practices, to help them streamline their own processes, to understand the reimbursement environment for their practice better for AMPYRA, so that it's easier for them to get through those PAs. And that's been very successful. We get very good feed back from the practices about that effort.

We also have a bank of people on the telephone, sort of at our national AMPYRA hub, and all they do is, they are assigned to various practices. And they are there at a moment's notice to call and help with any prior (inaudible) issues, or looking for data, or providing the practices with health, or providing our reimbursement specialists in the field with help. So it's one -- two program, and that's been very successful for us. So that's the first thing, again, is that 25% doesn't mean they don't get drug. It just means it's more time-consuming and challenging but they still get drug. The second thing is we have been making inroads, so we have been able to push some plans back on their prior [offs]. This quarter, we have a very nice improvement in Medco.

Now, Medco -- we always considered Medco be part of the 75%, because the PAs, themselves, were not particularly restricted. But one thing they were doing was requiring a reauthorization three months after the initial prescription, which is a bit challenging, because you have to get the patient to come back in and do another piece of paperwork. So they have now removed that requirement and they cover 20 million lives. So that actually is very helpful just in terms of reducing some of the hassle factor out there. We have had some other winds, if you will, in terms of persuading some of the plans to roll back some of their requirements. We didn't talk about them on the call,but they are there in the background.

And then just to get a sense of the overall milieu, the fact that we were able to renew Tear Two status with the three largest plans in the country, Aetna, United Health, Cigna, tells you that, overall, we are in a very good position with managed care right now. And that over time it's actually getting better as opposed to being stable, and certainly not worse.

Those renewals in the Tier Two, is that on an annual basis?

It varies by the plan. It's, at least, an annual basis. It's no less than a year.

Okay. Thanks a lot, Ron.

Thank you. Jour next question comes from the line of Geoff Meacham from JPMorgan. Please, go ahead.

This is Mike in for Jeff. Thanks for taking the question. If I could just follow up on the reimbursement question, are there more pay payers that are up for renewal of access this year, and is there any risk that some of these might drop a tier?

You know, that's very hard tomorrow say off the cuff. The three biggest ones are the ones that we care the most about. The others you get into much -- on a one-by-one basis, they are much less impactful. So I don't know the answer as to what's renewing or not. I think the risks are low that we are going to have any substantive drop in tier status. And, in fact, quite the opposite. As you see, we are having very good success at maintaining good tier coverage where it counts, in the larger national plans, and also in, as I indicated earlier, in rolling back some of the more challenging PA s even among some regional plans.

Got it. Andthen maybe if I could a follow-up on the Cerebral Palsy studies and post-stroke studies, assuming those Proof of Concepts are positive, is there any chance you guys might be considering a [QD] dose.

Yes. So one of the strategies under consideration is that, hopefully, the [QD] work continues as it is, and we are able to finalize and get a good formulation, before or around the time that we also, hopefully, have positive data in CP or post- stroke or both. And then at the time that we are prepared to go into registration trials, we actually can use the [QD] formulation, which opens up, we think, additional IP opportunities, potentially.

Great. Thanks.

Thank you. Your next question comes from the line of David Ansellemfrom Piper Jaffray. Please, proceed.

Hey, Ron. Just a couple of questions. First, latest thoughts on possible uses of cash, is it still primarily for asset acquisitions, and are you still prioritizing commercial stage and near commercial stage neuro-focused assets. And what your thoughts are on possible share buybacks. That's number one, and second, switching gears to Cerebral Palsy, to the extent you have had dialogue with the FDA, can you try to tease out what endpoints the agency has indicated to you as being the most clinically important? Thanks.

Sure, David. With regard to the balance sheet, we are constantly alert to our cash on the balance sheet. We like the fact that we have flexibility, now represented on a contingency planning represented on the balance sheet. We are looking for additional commercial or near commercial stage products. The ideal kind of opportunity is the Neuronex type of opportunity. Obviously, where the upfront is relatively modest, the deals tend to be back-weighted but we have near-term commercial opportunities that could have considerable upside.

So that's the sort of deal we are emphasizing. That doesn't mean we are closed off to other structures of deal or other types of deal. It really depends, opportunistically, on what we come across, and where we they the ROI is going to be, and what the value proposition of the deal will be. So that's what we are emphasizing on the business development front. It's not that we wouldn't bring in a bigger product. We absolutely would if it made sense. If what we were paying made sense relative to what we thought the opportunity was for shareholders.

It also doesn't mean that we wouldn't bring in a somewhat earlier stage, still, hopefully, clinical stage, but a somewhat earlier stage product if we thought it was very high potential and breakthrough. The board conditions to review, on a regular basis, the balance sheet among all the other aspects of the company, and what makes the most sense in terms of how we are deploying that capital. Whether in the future we might talk about or might decide that share buybacks makes sense, or some other way of returning capital.

That's something that's always under discussion or regularly, I should say, under discussion of the board, and at such time as we make a decision of that kind, obviously, we will let everybody know. With respect to CP, this is one where we think it's more akin to what we did with MS and walking. Where we will look at the data with the experts in the field, make a determination as to what makes the most sense.

Obviously, assuming that we get a good positive signal on an outcome measure, and efficacy outcome measure. We will make a determination as to what makes sense, clinically, in terms of being meaningful, and then we will go to FDA with the experts and make the case for the clinical trial design. It's not really the other way around. It's not that the FDA comes to us and says well, here's A B C and it has to be one of these three.

It's the other way around. We come to them with the data, and we say, look, this is a meaningful result for these patients who have no other option. We bring experts in the field who support that point of view, and then we negotiate a clinical trial design. That's exactly what we did with the time 25-foot walk responder analysis that we used successfully for MS.

If I may just follow up, when you talk locations with no other option, I mean, in the study that you are currently running, I mean you, how heavily pretreated are these patients? Let's say anti-spasticity agents. Generally, these patients have they cycled through in numerous other options ? Is that generally fair?

With very few exceptions in terms of con-meds or concomitant medications, the patients are allowed to stay on their existing regimen. These are adults so you can safely assume that by that time, they have already been tried on everything they could possibly be tried on, and whatever regimen they are on is their stable regimen, and it probably has been for some time. Whether it's baclofen or tizanidine are some other anti-spasticity therapy, they are stabilized on it, and so we would be adding on to it, which is very much what we did with MS, as well.

Okay. Thanks.

Thank you for your question. The next question comes the of Chris Raymond Baird. Please, go ahead

Just a couple questions really quickly. The adult CP trial, I know you've had a few questions on it. But I just want to understand a little bit about the gating factor for enrollment. Kind of looking back, this trial got underway in 2011, and understanding you've gotten through the first ten patients with a single dose trial. What is the gating factor for enrolling in this, I guess for sort of the uneducated, it would seem that you would be able to enroll and get results from a ten - patient, single dose, safety trial fairly quickly.

Yeah. So just to be clear, the study started at the very end of 2011 in December. So, you know, functionally, it did take, whatever it's been, nine months or so. And that's much longer than we would have liked. We could have -- we should have done a better job early on. What we did was we enrolled one center to start. I think we got overconfident in that. We enrolled one center. That center turned out not to have the patient population that we thought they had. And it took us several months to realize that we weren't getting the enrollment that we thought we had signed up for there. So once that happens, it then takes several months to identify the other centers, get them on line, get through the IRB's and set them up. So we lost quite a bit of time there. Once, we got the other sites up and running, it went pretty smoothly.

Okay. That's fair enough. If you don't mind, I can sneak another one in here on the pipeline. The rHIgM22 antibody, just curious. At the R&D day, I think you guys were talking about a delay that was pending the availability of an assay, and now it looks like FDA is requesting additional data. Can you give a little more color? Is it related to that assay, or is there some other issue FDA has?

No. I don't believe it's relayed to the assay. The team did a great job actually plowing through that and figuring it out. So that was a bit of an R&D tour de force trying to figure that one out, and they did it. The questions are, let me put it this way, the questions are such that the team believes that we will be able to answer them adequately by the end of the year. So we don't see any show stoppers here. Obviously, we will have to wait and see how the FDA responds to our responses.

Great. Thank you ?

Thank you. The next question comes from the line of.

Thanks so much for taking my questions. Can you hear me?

Yes. Hi, Ram.

Very quickly. I just wanted to ask what your qualitative impressions were following the recent MS conference in Europe at Ectrims, whether you got feedback from people who you knew were over there, or whether you had people on the ground over there? From physicians, in particular, regarding their impressions of AMPYRA at this juncture, and what their prescribing behavior looks to be likely to be trending towards. If they really do feel that AMPYRA provides a cost effective option, what their usage rates are likely to be in the progressive MS patient population? If you can just give us your thoughts there. And then with respect to the QD formulation, could you give us an idea what this means going forward with respect to the already approved indication, and whether there is any possibility at all of getting a QD formulation approved through an a abbreviateed pathway like the 505(b)(2) route?

Okay. With respect to Ectrims, I actually don't have any firsthand response to give you, because I, unfortunately, had to miss it this year, for the first time, due to a conflict with another conference. So I don't have that information. Anecdotally, what we are hearing, particularly from our friends at Biogen Idec, is that there is a great deal of enthusiasm for the drug, that the uptake has exceeded their original expectations overall, so that the physicians are quite enthusiastic in Germany and elsewhere for the drug.

As you know, we have hit some headwinds in Germany with the (inaudible) process, and in terms of the amount of reimbursement, and Biogen is currently negotiating with the German authorities for a final price. I think they have guided that they expect that to go on for a few more months. And, hopefully, by first quarter of 2013 we will have a price on that. In terms of the actual enthusiasm, if anything the uptake curves on a per capita basis exceeded what we have seen in the US. So we think that's all to the good.

With respect to the QD formulation, hard for me to speculate on a 505(b)(2), now. I can tell you that the QD has factored into our strategic planning for quite some time, and as you heard earlier, in particular, we would be very interested if we have another indication -- another disease indication, such as post-stroke and/or CP. We would be very interested in getting the QD into development so that becomes the approved formulation.

And we see a variety of advantages in doing that. The QD, if we were to just get it on the market on its own, as let's say a replacement or alternative to the BID, we obviously, would need some kind of bridging studies for the BID. But I can't speculate beyond that now.

Okay. Then finally with respect to AC105, I think you indicated that the Phase Two trial protocol has been submitted. Can you give us an idea on the timeline for the FDA's response to that protocol, and how long it would take for you to respond?

Yes. I wish I could. I would love to be able to predict the FDA timelines. You know, as we said -- as I said earlier in the call, it has been our impression that of late, things are taking a little bit longer in terms of getting meetings scheduled and so on. That may just be a temporal issue. They could have been jammed up. I would be purely speculating. But overall, we don't expect it to take an undue amount of time. Hopefully, they will get back to us in a reasonable amount of time. But I can't speculate, specifically, how long that's likely to take.

Thank you very much.

Next question comes from Marko Kozul from Leerink. Please, proceed.

Good morning. Thanks for taking questions. This is Irene Lau for Marko. For (inaudible) and post-stroke deficit patients, what do you perceive to be meaningful on the time 25-foot walk test? Would it be 10% to 20% improvement? Can you provide us with more color on why is there a slight delay on the data reporting?

You know, I didn't quite catch that question. You said something about the time 25-foot walk being meaningful. And which study are you referring to?

The post-stroke deficit patient study.

Okay. So just maybe adding a little color to what I said earlier, we are looking at several different outcome measures in the post-stroke study, not just -- we are looking at the time 25-foot walk. We are looking at other measures of walking, other measures of lower extremity function, other measures of upper extremity function, certain global measures. If you focus just on the time 25-foot walk, in general , it is felt that around 20% -- 15% to 20% improvement in time 25-foot walk, on average, is considered to be clinically meaningful, but that's a simplistic way of expressing it.

There are more things that we would need to look at, in terms of the data as a whole, to come up with the value proposition. You know, what is it we think the drug is doing for these patients on the whole. It could be upper extremity and walking. It could be time 25-foot walk, and a global measure of walking together. So it's not really possible to isolate one outcome measure and say that's what's going to be meaningful in this study.

We are looking at a whole host of them. Obviously, in the ideal universe, they would all be effective. They would all be meaningful. Even if one solid one is meaningful, such as the timed walk, that would be great. So we are just going to have to wait and see what the data look like in that regard. The second part of your question, I'm not sure I understood. If you would like to repeat it.

I think you previously mentioned that the data reporting will be around in the 5th year. I was just wondering --

Which data reporting are you talking about?

The post-stroke deficit patient trial.

No. I don't believe we ever said the reporting on that would be the end of the year.

Okay. Thank you.

Yeah, we always expected that to be in 2013.

I see.

And it will be in Q2 of 2013.

One last question. Do you have any update on the University of Miami investigative-sponsored trials for Parkinson's disease optic neuritis?

No.

Okay. Thank you.

Thank you for your question. Your next question comes from Phil Nadeau of Cowen. Please, proceed.

Hi, Ron. Thanks for taking my question. Two quick questions. First, on the First Step program, could you give us an update on where that is now located? What proportion of centers have access to it, and what proportion of new patients starts use it? And second, just briefly,on inventory was there any meaningful change in wholesale inventory level during the quarter?

I'm sorry what was the last piece there, Phil?

Just inventories. Was there a change in wholesale inventory levels (inaudible) during the quarter?

Right. So First Step continues to be quite successful for us with a very nice ROI. We have actually looked at of it using matched controls of prescribers who haven't used it, who are very similar demographic criteria to the ones who have used it. And you do see a significant bump for the physicians who are using First Step. Not only, interesting enough, not only in their use of First Step, but in their use of regular prescriptions, as well. So it seems that there is something about prescribing it through First Step that also reminds them about the drug and encourages them to prescribe overall. Virtually, all the physicians in the, let's say the top five deciles or so, have been exposed to First Step by now, so we have thousands of prescribers who have access to First Step.

The other thing we did differently this year, beginning at the beginning of the year, was to make vouchers for First Step available to the consumer through digital means at physicians' offices, at speaker programs, at MS walks. So really, across the board, and in our advertising -- magazine advertising. And that clearly has helped where patients are able to come in and ask the physician for their free two - month drug trial. At this point, somewhere, depending on what month you look at it, somewhere between 40 % and 50 % of all new prescriptions are First Step. So it's really taken hold, and as I said, the ROI on it is quite substantial . Was there -- oh, there was the inventory. Yeah, you know, as I said earlier, inventory is about two weeks across the board.

And the only thing to keep in mind, as I always remind people, is that we have 13 specialty pharmacies, plus the VA, plus Kaiser out there ordering from us. And we check every quarter, in fact we check every week many times, and it's always about two weeks. We haven't seen any notable shifts in that.

But bear in mind that two weeks could be plus or minus a couple days here and there depending on the specialty pharmacy. We don't have insight into that, so in the very short term, there could always be a shift of a million or two, let's say, that we just can't account for. In the longer term, it should all even out, because as long as the overall average is about two weeks, it should even out and right now, it's still at about two weeks.

Great. Thank you.

Thank you for your question. Your next question comes from the line of Bill Tanner from Lazard. Please, proceed.

Thanks for taking the question, Ron. Back on the Medco reauthorization change. I'm just curious, with respect to them specifically, [the incidence of the] prevalence of the denial of the reauthorization in any kind of conversion on appeal, and then what's the dynamic with other plans. You know, here just really trying to get a sense as to how much these changes could move the needle. Thanks.

Bill, could you maybe rephrase the question?I'm not quite sure I know what you are going for.

So I 'm just trying to get a sense of -- is the change at Medco where the reauthorization is no longer required,I mean would you view that as something that's going to change utilization, and if so, if you have a sense as to how much. So I'm just trying to understand -- have there been -- has the denial of the reauthorization been relatively prevalent?

Yes. so as I said earlier, denials have been rare across the board,so it's rare even for the non-MedcoEven for the hard P A plans, the 25% covered lives that we talk about having harder PA's. A harder PA would be something like well, you have to do a timed 25-foot walk, and then three months later you have to do another one, and it has to be X percent faster in order to get reauthorized, and so on. That's what we consider a hard PA. But even in those cases, the physicians have figured out how to get their patients on drug. So absolute denials are rare. What you are looking at, though, is less quantifiable, but it's more qualitative. It has to do with the hassle factor.

Yes.

And it's very hard to quantify what that does to you overall, becausewhat we can say is, if the prescriber writes a prescription, the patient almost always gets it regardless. Right? We have all these mechanisms in place, and we help them do it, and so on. What we cannot quantify is how many times the hassle factor actually prevents physicians from writing to begin with. Right? Because you can't prove a negative. So,to the extent that there's a cumulative effect at certain practices where if too many of their prescriptions are challenging, and require going the extra mile, and doing more things, after a while, there's a subtle reluctance on the part of the practice to set themselves up for more of the same. So they forget, you know, they don't prescribe and so on.

So something like this Medco thing could be very significant in terms of removing, not a hard PA, but a significant hassle factor. Because every time you have to reauthorize three months after you write the first prescription, when usually you are not bringing the patient in until six or 12 months later, that's a hassle. It's not -- you know, you can get through it. But it's a hassle.

But if you have got ten of those it's a big hassle. Now you are going to have none of those for any of your Medco patients. That's really good. That improves the overall milieu for us out there, and it really expands our universe of being able to work within a re regime that is less constrictive, less challenging, less of a hassle. So, we can't quantify it, but we can say it's a good thing. And we would expect overtime that it's going to help us.

Presumably, then this was affected by some activity on the quarter's part that you could replicate with other payers then if we --

Well, we certainly hope so. We have a great managed markets team. It's been absolutely terrific. They have terrific relationships with the payers across the country. And we are constantly revisiting them , bringing them in with data. They bring me in, actually, they bring our chief medical. They bring our chief scientific officer. They will bring me in, personally, when they think it's important enough to change an opinion, or provide data in a way that they haven't seen before. And that has been bearing fruit, as you see, with the Medco change.

Okay. Thank you.

Your next question comes from the line of Mark Schoenebaum from ISI. Please, proceed.

Hey, Ron. I just had two quick follow-ups. On the growth-to-net discount space (inaudible) hasn't been talked about in a while, can you just give us -- I know you probably can't state numbers -- but ideas of some sort of trend. Is it increasing? Is it flat?

And then just also on the stroke, can you just confirm that there's been -- I guess like the change in the guidance. You said it was because you are honing it. It's getting closer to the day, but it's not because of some sort of safety issue (inaudible) the trial? It's more of enrollment, I guess?

Say that thing about stroke again.

I guess the guidance changed from early 2013 to Q2, 2013. You mentioned earlier --

Cree, let me handle that one first. Because I think I already dealt with that. When we were saying early, we meant the first half of 2013, and probably our bad if we gave people the impression that was going to be January 2nd. But we never expected it to be -- I should say, we always expected it to be somewhere in the first half of 2013. Enrollment has been going well. There'sabsolutely nothing to write home about, here and it's -- as far as we are concerned, it's all on track. So let's put it that way.

Okay.

In terms of gross to net, Dave?

Yeah, Mark, it's over the year it's relatively flat to a slight decrease. It's just the way some of the D&A comes in. Doughnut hole, for example, is more heavily weighted to the first two quarters of the year.

Got it. Thank you.

Thank you. The final question comes from Chris Raymond from Baird. Please, proceed.

Thanks for taking the follow-up. Just a strategic question. In just noticing, you know , you recently had an organizational change with a new president of international set up. And I think you guys describe it as, primarily driving the Biogen Idec relationship, but also to look for in-licensing opportunities outside of the US. Can you maybe talk about the rationale there? Much of your infrastructure, I believe, is in the US. What's the thinking there?

Yeah. Well, our President of International is sitting here with me. Jane, you can say hello.

Hi, Chris. How are you?

Hi, Jane.

So this is, I think you should not -- nobody should read anything imminent into it. It is a signal of what have we have always intended, which is to be open to opportunity, not just in the US. We have a number of products that are coming through the pipeline, now, in which we do have rights, ex US, so we need to be thinking about that. We are looking for additional commercial stage products, and if we can get products that have rights ex US as well as in the US, that's all to the good, particularly if they are-if the target market is small enough.

In other words, an orphan type market, where we can get a foothold, let's say in Europe, in ex US, without undue amounts of investment, but preparing ourselves for growth in the future. So it's really preparing the company to take advantage of opportunities as they come along, both in our business development, and in our product development. And meanwhile, it also requires managing the Biogen Idec relationship for FAMPYRA, which Jane is also doing.

Great. Thanks.

Thank you for your question. I would like to call turn to call over to Dr. Cohen for closing remarks.

Thanks, everybody. Appreciate your being on the call. And this concludes the call. Have a great day.

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