Acorda Therapeutics Inc (ACOR) 2013 Q4 法說會逐字稿

Welcome to the Acorda Therapeutics fourth quarter and full year 2013 financial results conference call. At this time, all participants are in a listen-only mode. There is a question-and-answer session to follow. Please be advised that this call is being taped at the Company's request.

I would now like to introduce your host for today's call, Jeff Macdonald, Senior Director of Corporate Communications at Acorda Therapeutics. Please go ahead.

Good morning everyone and welcome. With me today are Dr. Ron Cohen, our President and Chief Executive Officer, and Mike Rogers, 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 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 or other products 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 other research and development programs, including Diazepam Nasal Spray or from our other research and development programs, or any other acquired or in-licensed programs.

We may not be able to complete development of, obtain a regulatory approval for, or develop -- or successfully market Diazepam Nasal Spray or other products under development. 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 of 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; failure to protect our intellectual property to defend against the intellectual property claims of others or to obtain third-party intellectual property licenses needed for the commercialization of our products. Failure to comply with regulatory requirements could result in adverse action by regulatory agencies and the ability to obtain additional financing to support our operations.

These and other risks are described in greater detail in Acorda Therapeutics' filings with the SEC. Acorda 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 this presentation are made only as of the date hereof. Acorda disclaims any intent or obligation to update any forward-looking statements as a result of developments occurring after the date of this presentation.

On a housekeeping note, during Q&A, we'd ask participants limit themselves to one question and one follow-up and I'll now turn the call over to our CEO, Dr. Ron Cohen.

Thanks, Jeff. Good morning, everyone. Thanks for braving the weather to be with us today. On today's call, I'll provide a recap of our 2013 milestones and will follow that with an update on AMPYRA, some color on PLUMIAZ, which is the proposed brand name for Diazepam Nasal Spray and also updates on our other product development programs. And then Mike will provide the Q4 and full-year financials and he'll review -- will review our 2014 guidance and then we'll open the call for your questions.

We achieved several milestones in 2013. Importantly, we further strengthened our IP position around AMPYRA, with the issuance of two new US patents that gives us a total of four Orange Book patents and in addition, a fifth patent was allowed and is now awaiting issuance.

We filed an NDA for PLUMIAZ, which is the proposed trade name for Diazepam Nasal Spray, and we're preparing for a potential launch this year. In April, we announced positive findings from our dalfampridine proof of concept study post-stroke deficits and based on those results, we're planning to initiate a Phase 3 post-stroke walking deficit study in the second quarter of this year.

We also completed the acquisition of a new product franchise in neuropathic pain. This includes the QUTENZA capsaicin patch, which is in market and also a second-generation Phase 3-ready product, NP-1998. We recently relaunched QUTENZA and we're moving forward with development of NP-1998.

In addition, we initiated clinical trials for three other drug candidates in 2013. We expect that the Phase 1b trials for GGF2 in heart failure and rHIgM22 in remyelination for MS will read out in 2015.

Turning to AMPYRA. For the fourth quarter, net sales were $84.6 million, and full-year sales were $302.6 million; that represents a 13.7% increase compared to the full year of 2012 sales. By way of reminder, as with a number of specialty pharmaceuticals, first quarter sales for this product typically have been lower than the preceding Q4 sales due to factors such as inventory build in the fourth quarter, temporary effects of people changing insurance plans and entering the Medicare doughnut hole at the beginning of the year. We expect a similar trend in 2014, and we've taken this into account in our guidance for the year.

AMPYRA has become a standard of care for improving walking in people with MS. Since launch, approximately 90,000 patients in the US alone have tried it. As I previously noted, AMPYRA is protected by a robust patent portfolio that now includes four Orange Book patents with an additional patent allowed in 2013 and awaiting issuance now. We believe these patents are strong and will provide us market exclusivity to 2027.

It's worth noting that in November 2013, we successfully defended a European dalfampridine patent against opposition. While the EU intellectual property laws differ from US law, we're pleased by our team's demonstrated ability to defend our IP position around this product.

Our most advanced development program is PLUMIAZ, or Diazepam Nasal Spray. PLUMIAZ is a treatment for people with epilepsy who experience cluster seizures, which are also known as acute repetitive seizures that are not well-controlled by their antiepileptic medications. We submitted an NDA to the FDA last year in a 505(b)2 filing using DIASTAT rectal gel as the reference drug. We're preparing for a potential launch later this year and we anticipate that our current infrastructure will support the sales and marketing of the product.

By way of background, of the 2.3 million people with active epilepsy in the US, about one-third are treatment resistant and of these, approximately 175,000 experience cluster seizures. The only approved outpatient treatment is DIASTAT and because that product has to be rectal administered, the vast majority of its use has been in young pediatric patients. And many adult patients either visit the emergency room or take no action, which places them at increased risk of serious, sometimes permanent, injury, as you can imagine with cluster seizures.

PLUMIAZ is highly portable and convenient as a rescue medication. Our market research shows a high level of enthusiasm about -- among epilepsy patients, specialists, and caregivers for a rescue medication of this kind. We, therefore, believe this product has the potential to generate peak annual sales significantly higher than $100 million.

Moving to our other pipeline products. In the second quarter, we began -- we plan to start a Phase 3 post-stroke study with Dalfampridine-QD; the study will use a once daily formulation of dalfampridine. We've completed the analysis of a multi-dose PK study using this formulation and while we're unable to show you the data for proprietary reasons, I'm very pleased to report that the PK characteristics met our model projections and surpassed our expectations for a QD formulation for this product. We're proceeding to scale up manufacturing for clinical trial use and to complete the PK where, with a very short routine fed/fasted study that should not impact the timeline.

We're also in continued discussions with the FDA on the Phase 3 study design as we've previously announced we had a quite constructive meeting with the FDA in December and we're currently incorporating the agency's feedback into the study design. The study design incorporates an interim look as well to confirm that the trial is adequately powered and if this is confirmed, we then plan to start a second pivotal trial at that time, which would accelerate the overall Phase 3 program.

With our acquisition of QUTENZA and NP-1998, we've now expanded into the neurology subspecialty of pain management. In January, our commercial and medical teams relaunched QUTENZA, which is enabling us to meet with physicians, educate them about the use of capsaicin in neuropathic pain management as well as to gain a better understanding of the needs of that community. Our market research shows that the concept of non-systemic pain management therapies is highly appealing to the pain management specialists.

Like QUTENZA, NP-1998 is a capsaicin-based therapy but we believe it has key advantages over the patch. There are several underserved neuropathic pain conditions that, together, represent approximately four million cases in the United States alone. In addition to the current indication for QUTENZA, which is postherpetic or post-shingles neuralgia, these include painful neuropathies due to diabetes, chemotherapy, and also HIV/AIDS.

Astellas Pharma Europe Limited, which has the rights to the QUTENZA capsaicin patch and the opportunity to obtain the rights for NP-1998 in Europe, is currently assessing the effects of QUTENZA in painful diabetic neuropathy and a data readout is expected this year. Next week, beginning on February 21, data from another Astellas trial, called the ELEVATE Study, will be presented at the 14th Asian Australasian Congress of Anesthesiologists in Auckland, New Zealand.

This was an open-label, randomized, multi-centered, non-inferiority trial, which compared the efficacy of tolerability and safety of the QUTENZA patch versus oral pregabalin in several neuropathic pain conditions. Pregabalin is an oral medication, which is indicated in the US for treatment of certain neuropathic pain syndromes. So we're looking forward to that presentation and once it is out, we'll be able to talk more about that.

NP-1998 represents a potential paradigm shift in the treatment of neuropathic pain, both as a stand-alone therapy and as an adjunct to the existing systemic therapies. We're currently designing a plan to expedite development of what we believe is a truly exciting product.

Looking at the rest of the pipeline, over the past two years Acorda has introduced six new therapies into clinical development. And in addition to the products I've just discussed, we initiated three new clinical trials in 2013. Each one of the products that you see on this slide targets a very large unmet medical need. We expect the trial results for rHIgM22 in remyelination and GGF2 in heart failure to read out in 2015. I'll now turn the call over to Mike, who will review with you the financials and our 2014 guidance. Mike?

Okay. Thank you, Ron. Good morning, everyone. AMPYRA net revenues for the fourth quarter of 2013 was $84.6 million, up 16.4% from $72.7 million for the same quarter in 2012. For the full year 2013, AMPYRA revenue grew approximately 13.7% to $302.6 million from $266.1 million for the full year 2012.

The FAMPYRA royalty revenue from sales outside of the United States was $9.3 million for the full year 2013. Overall revenue from ZANAFLEX for the full year 2013 was $15.1 million. This includes our own sales as well as product sales to Actavis and royalties received on Actavis sales of generic tizanidine.

Total operating expenses for the quarter ended December 31, 2013 were $79.8 million, including $7.1 million in share-based compensation expense, compared to $80.1 million, including $6.1 million in share-based compensation expense for the same quarter in 2012. Full-year operating expenses for 2013 were $306.1 million, including $25.1 million in share-based compensation expense, compared to $280.2 million, including $21.4 million in share-based compensation expense for the full year 2012. The increase in operating expenses is related to the overall growth of the organization to support AMPYRA and the dalfampridine franchise, the expected launch of PLUMIAZ and the development of our pipeline products.

Our financial position is strong with cash, cash equivalents, and investments, totaling $367.2 million as of the end of the year.

Moving onto our 2014 financial guidance. In January, we announced guidance for several financial measures for 2014. First, our net sales guidance for AMPYRA of $328 million to $335 million represents growth of 8% to 12% over 2013. The guidance on revenue from FAMPYRA royalties, ZANAFLEX sales and royalties, on the authorized generic, is approximately $25 million, and this includes $9.1 million in amortized FAMPYRA license revenue.

2014 R&D expense guidance is $60 million to $70 million, excluding share-based compensation. The increase in spend in R&D over 2013 is a result of advances in our pipeline. We expect at least four clinical trials to be active during 2014.

SG&A guidance of $180 million to $190 million, excluding share-based compensation, includes the investment we're making in preparing for the potential launch of PLUMIAZ as well as supporting AMPYRA. With that, I will now turn the call back over to Ron.

Thanks, Mike. So in conclusion, our key priorities for 2014 are listed here. The post-stroke program is built on compelling data from our proof of concept study that indicates that our new QD formulation of dalfampridine has the potential to be the first medical therapy to improve walking in people who have suffered strokes and have permanent walking impairment as a result. A published data indicates that about seven million Americans have had a stroke in the past and about half of these suffer from continued walking impairments.

PLUMIAZ, if approved as anticipated this year, would represent a substantial addition to Acorda's commercial product line and a much needed option for people with breakthrough seizure clusters who currently don't find the available rectal gel acceptable and have to default to emergency room care or no care at all.

We have both preclinical and clinical data suggesting that NP-1998 is as effective as the QUTENZA patch, which is already on the market for postherpetic neuralgia. However, we believe there are several advantages with respect to the mode of delivery and that therefore, NP-1998 represents a potential paradigm shift for the treatment in neuropathic pain of various causes, which affect approximately four million Americans. We expect to develop and begin to implement our strategy for expediting the development of NP-1998 this year.

Importantly, as Mike mentioned, our financial position is strong, with a growing base of over $335 million in annual net revenue, $367 million in cash and negligible debt. We intend to use this financial strength to invest in our highly promising pipeline and potentially to acquire additional products that will fit into our commercial structure and expertise in both neurology and specialty pharmaceuticals. Our goal is to create a balanced portfolio that creates significant near-term value as well as intermediate and longer-term opportunities for further value accretion. With that, we will open up the call for your questions. Operator?

Thank you.

(Operator Instructions)

Mark Schoenebaum, ISI Group.

Hi, Ron. Hi, Mike. This is to Salim Syed in for Mark. Hope you're doing well.

Is Mark watching the Croatian hockey match? Is that why he couldn't be with us?

That is exactly why he couldn't be with us. Actually, no, no. Actually, no. He -- I guess the weather played into it, too. But I had two questions for you.

One is a patent question and one is a tax question. So on the patent, can you just remind us, Ron, what's -- what are the key differences between the 2025 patent that was upheld in Europe and the 2027 patent here in the US?

And then, on tax, Mike, so taxes seem to be jumping around from quarter to quarter. If you could just talk about what -- how we should think about taxes going forward and what are the cash taxes coming out? Thank you.

Yes. So Salim, I'm not in a position to talk about the finer points of the patents. There are similarities and some overlaps there, as I think you've noted. That's something that we could probably take offline and maybe have you talk with our internal IP person to the extent that she can.

And I'll have to check and see how comfortable people are getting into the weeds on that. But an overall comment would be that the European patent had a number of overlaps and similarities to our US patents. Having said that, I just want to make sure that it's clear that the EU intellectual property laws differ in some respects from the US.

So you really can't do a direct read through from our perspective. Obviously, we're encouraged that at least in the EU venue, our team did a really nice job of defending our patent position. But the rules are a bit different and that's something that anyone who's interested would have to parse through with their own patent counsel who is knowledgeable about it. Mike, you want to (multiple speakers) --?

Yes, on the tax side. All right, Salim, a couple of things. One is that, in general, we're not providing guidance on our effective tax rate at this point. With that being said, there are a number of things that I can point out.

Obviously, some of this was, I'm sure, obvious to you, but there's clearly a difference between cash taxes and the effective rate. On the cash side, we had NOLs at 12/31/2012 of about $205 million. Those have come down a little bit. They'll be reported in our 10-K coming up in the next week or so.

But we can use those NOLs to offset taxable income up to a certain point. You have, just like individuals do, you have alternative minimum tax and so you could see cash tax rates that are quite low because we can offset most of the income.

On the effective tax rate, it's a little different. You have a statutory rate, which is 35%, federal, and state for us is somewhere in the 6%-plus, maybe 7%. That's our statutory rates. Now there are going to be differences between book and tax which cause the effective rate to fluctuate.

For a lot of companies, if profit is fairly low, then small changes in the difference between book and tax can have a big difference in the effective rate. So for instance, if our difference is in book and tax, for instance in the, for the -- let me say, for the fourth quarter, I think, were $1 million different, then the tax rate, instead of being 50%, which you'll see, would have been 43%.

So you can see that it can have a big difference. As profits get higher, the impact of the difference between book and tax rates is -- does not have such an impact on your effective tax rate. So although we're not providing guidance, we do expect some variability in the effective tax rate.

But our statutory rate is in the 41%, 42% range and our cash tax rate is going to be substantially lower because we have a good deal of NOLs right now offsetting income -- taxable income. I hope that answers. That's the best I can do for you at this point.

That helps. Thanks so much.

Okay. Sure.

Michael Yee, RBC Capital Markets.

Thanks. Good morning. Hi, Ron, two questions. But first, we're just trying to understand the timelines for the post-stroke program to the best of your ability. I guess you're trying to start a Phase 3 in Q2 of this year.

So when do you think an interim could read out, that's 2015 and walk me through a second study and filing? Does that sound like a 2016, 2017 timeframe? Do you think those are reasonable since you're doing two studies? And then some (multiple speakers) --

Mike, I can't -- unfortunately (multiple speakers) -- what's that?

Just broadly speaking? Are those crazy timelines?

I can't give you broadly or narrowly because I'm much more comfortable waiting until we get the final agreement on the protocol. We have the exact numbers of prospective enrollees and then frankly, you really don't get a handle until you start the study and just start seeing how your assumptions about enrollment play out.

But once we're ready to start, I think we'll have a better handle on that. But for now, I don't want to speculate until I get the final on what we're doing in the study.

But our timeline should at least include two studies though? (multiple speakers)

Yes. And again, assuming the interim [look] looks good, then we continue, then we would start the second study at that point.

Okay. Perfect. And then the follow-up is on paragraph four, which you've discuss before. Remind us when the earliest that you think we could see that. I think there's a 60-day acceptance window so would we expect to see that? I think we're aware of, or at least we are aware of, a couple of DMF companies who requested a DMF so -- what are you hearing in your channel? Do you expect multiple filers? What are you expecting?

Yes. We don't have any more information than you do on it at this point. Your information is the same as ours. FDA has 60 days by statute to accept the filings and then after that, the ANDA filer actually has 20 days to notify us. And then if an Orange Book listed patent is being challenged by the ANDA filer, we have 40 days after they notify us to file a patent infringement suit.

Okay. Thank you.

David Amsellem, Piper Jaffray.

Thanks. Just a couple. So the big picture question, given that the stock, since the commercialization in the US of AMPYRA has essentially moved sideways, thinking forward, how aggressive do you feel you need to be on acquisition strategy? In other words, do you think you need to prioritize accretive transactions along the lines of what we're seeing in the broader pharma space as a means of driving value creation? Just give us a sense there how you're thinking about that? Thanks.

Yes. It's a bit of a mystery to us why we're not getting more credit for what we actually have going on in the Company, let alone AMPYRA as it exists commercially. But be that as it may, we like the pipeline right now a lot. We think it's got some major shots on goal, only one of which -- any one of which if it hit, would be a game changer for the Company.

We like the nearer-term commercial opportunities that Diazepam Nasal Spray. It's not a mega opportunity but if you look within our P&L structure, a product that is significantly north of $100 million annual sales is significant for us. So we think that's a good thing.

We like the NP-1998 a great deal. We think that, that actually has potential to be a surprise to people when you look at the magnitude of the potential market and the unmet need and you look at what the product potentially can do, we like that a lot. So we are prioritizing that heavily this year in terms of getting a development strategy in place, a Phase 3 program in place and moving that, hopefully, toward the market.

Now having said that, we do feel that, from a shareholder point of view, it's important that we leverage the strengths of the Company and we have a very strong financial position right now. There are assets out there that we think could be short-term accretive and that is a very high priority for the Company.

As I said, we're looking at creating a company that has a balanced portfolio and balanced opportunities for growth over time, and that means short-term opportunities as well as intermediate and long term.

I think we have some terrific intermediate and long term; we even have a short term or two in the bag right now -- or in our portfolio right now. There's room for more short-term and we are going to prioritize that.

Okay. And then a follow-up, not really a follow-up but it's a question on Diazepam. Latest thoughts on pricing? How we should think of pricing and in the context of brand DIASTAT, either [dalfampridine], and any color on that would be helpful. Thanks.

I'm sorry. Say -- could you say that again? That was a little garbled, Mike.

Sure.

I'm sorry, David. That's how garbled it was. I thought you were Mike.

Okay, sure. No problem. Mike, that's a good one. So on Diazepam Nasal Spray is up on pricing and should we think of pricing at parity or premium to brand DIASTAT?

I think for obvious reasons, we can't commit on pricing right now. I think if you wanted to model on parity with branded DIASTAT, that's probably a good place to start, although we can't commit to where we're going to wind up around that. But I think that's a reasonable place to start your modeling.

Okay. All right. Thanks, Ron.

Joel Sendek, Stifel.

Hi, thanks. Just a couple of quick ones, Ron. Just to be 100% sure, this AMPYRA and stroke, the second trial, will that be the identical design?

It should be. There's always -- I mean, look, I'm speculating here but I can give you what ifs. So we're going to have two dose-arms of drug versus placebo so it's a three-arm trial. If in the interim [look], we get information that allows us to eliminate one of the dose-arms, that's a possibility but the fundamental design would remain the same.

Okay. Good. So you met with the FDA already and you're doing a fed/fast study. You need to have another -- is there another hurdle with the FDA to review that or is it more of the (multiple speakers) --

Not to my knowledge. I mean, as long as it looks the way we expect it to, it really has to do with how we designed the study. In other words, when people are allowed to take the drug.

If we don't have the fed/fasted data, then we have to make sure they're -- everyone is fasting for a certain amount of time before they take their morning dose, which we'd rather not do. We'd rather just alleviate or eliminate that requirement so the fed/fasted study would allow us to do that, provided that it came out as we expect. It's a very short study. It should not be a gating factor.

Okay. Got it. So and anything else that you need to do before starting that Phase 3? Is that --

Yes. We need to finalize our agreement with the FDA. There -- as you can imagine, there are quite a number of moving parts. They made some -- we thought actually very good suggestions when we went with them in December. We have incorporated that into the trial design now.

We are going back to them and hopefully, they agree that we have incorporated correctly what we believe that they were saying to us. If not, then we'll have to go through another go around. So that would be a potential gating factor depending on how long that took.

Okay. Thanks, Ron.

Chris Raymond, Robert W. Baird.

Yes, thanks. This is Blake calling in for Chris. My question is on FAMPYRA. Has BIIB articulated anything to you with regards to the biggest barriers, uptake in Europe and what the company might be doing to address them?

And then just a quick follow-up to that. Is the FAMPYRA sales force in Europe, is that separate from the Tecfidera force?

So I can't comment on the sales force. That's really for Biogen to comment and just under the terms of our agreement, I can't comment about how they structure that.

With respect to uptake, the uptake actually has been outstanding in just -- in terms of volume, in terms of patients who are trialing it, it's been extremely popular. They've done a good job on that front.

The big issue in Europe has been reimbursement. The reimbursement has been below what all of us hoped and expected that it would be and part of it is the perfect storm of getting on the market just as the new regime was beginning to bite with IQWiG in Germany and elsewhere in Europe.

So those are issues that BIIB continues to work on with respect to generating additional data from additional trials that they've been running with FAMPYRA. And then hopefully going back to the authorities and trying to get some better terms over time.

But that's a process and I have no insight that I can give you as to if or when they will succeed in that. So again, the big issue is not uptake. It's been reimbursement.

Okay. Great. That's very helpful. Thanks.

Yaron Werber, Citi.

Hi. This is on Kumar Venkatesaran on for Yaron. What are you seeing with the QUTENZA relaunch and when can we expect any meaningful revenue?

Okay. So we actually have just relaunched QUTENZA. It's been less than a month so we're not seeing anything. It's -- there has not been enough time.

We just trained the sales force and all of the adjunct field force, medical affairs and so on, so they're out there now. But we have always said that QUTENZA -- we don't expect a lot from QUTENZA at this point. We think it's actually a highly effective and important medication but there are various barriers in the marketplace to widespread and high-volume use.

We believe that the real interest here is NP-1998 because of its mode of delivery. It addresses and overcomes the major challenges that the patch has had in the marketplace we believe. So really, that's where we're focusing our interest. We would not expect significant revenue.

If you have -- you're talking about a product that at peak, before we acquired it, I think in its best year, it did about $2 million. So obviously, that's not moving -- even if we double or triple that and I am not saying we will, but even if we were to, it's still not moving the needle significantly.

What it does do is that it gives our commercial and medical organizations the opportunity to become familiar with the space and to learn from the people in the space and prescribers and whatnot and have conversations about their needs, so that hopefully if we do develop NP-1998 successfully, we're locked and loaded. We're just ready to go.

If you think about it, that was very similar to the strategy we had at the very beginning where we brought in ZANAFLEX when we had no commercial organization. And that enabled us to get familiarity with the neurology specialty marketplace.

So by the time that AMPYRA was launched, we had already had time under our belt and the education to have what, by many accounts, was the most successful launch of 2010. So that's really where we see the value of QUTENZA right now.

Okay. Thank you. And for DZNS, do you plan to do the -- for your approval date and do know if Pfizer has filed for their auto-injector?

I'm sorry. I didn't quite hear the question. Can you say it again?

Do you know if Pfizer has already filed for their auto-injector [Rebiject] pen?

We do not know.

Okay. Thank you so much.

Geoff Meacham, JPMorgan.

Hi, Good morning guys. Thanks for taking the question.

Hi, Jeff.

Ron, a question for you on the Phase 3 for post-stroke. What do you guys view as a clinically meaningful improvement in walking speed that you use to inform your [power] assumptions? And then a follow-up, would that be, would be for the interim look, are you just assuming one interim look to inform the next Phase 3?

So the answer to the second question is yes. We're assuming one interim look to inform the next Phase 3. With respect to the meaningfulness, that was part of the discussion with FDA about what they wanted to see and what we agreed would be meaningful.

So we're still in the final stages, as I indicated earlier of the back and forth with them to verify that we are all in agreement. But fundamentally, we actually looked at it in more than one way when we were powering the study. Because, based on our MS experience, we were able to do that because in the MS experience, we had a number of different ways that cross-validated the clinical meaningfulness that included the 20% threshold.

So it was already present in the literature that about a 20% improvement in walking speed was highly correlated with various measures of improved clinically meaningful measures of improvement in walking. We found that, that was also true actually to be exact in the MS trials; it was about 17%.

We also were able, even from the proof of concept study, we had some measures, some global measures in the proof of concept study that we were able to map back to the walking speed increases and it looked very much like what we had seen in MS.

So we were able to triangulate across the global measures that we used, the 20% threshold that we used, compared to the MS results, and it all looked consistent no matter what we did, so we gained a lot of confidence there in being able to power the study off of those assumptions.

Okay. That's helpful. And then just for PLUMIAZ, do you guys expect to have any sort of incremental additional investments in the commercial infrastructure and does the timing of 2014 of the launch matter? I just want to get a sense for your SG&A guidance, what it is --

Right. Yes. So the SG&A guidance took into account the potential launch of PLUMIAZ and obviously, there's a fair amount of prelaunch activity that goes into that, that requires some investment. But that's really on the marketing side.

On the sales side, this fits neatly into the bag of our existing sales force so we do not need to expand the personnel on the sales force. Actually, we don't need to expand personnel period. I don't know, maybe one or two marketing people.

One or two marketing people but that's it. So that's one of the reasons that we like the product as much as we do. It's really promotional spend specific to the product but otherwise it fits completely into the bag.

Okay. Perfect. Thanks a lot.

Thanks John.

Phil Nadeau, Cowen and Company.

Good morning. Thanks for taking my questions. Just first on NP-1998, at your R&D Day, I think you said that there was an Astellas study of QUTENZA and PDN that was going to inform your development plans for NP-1998. Is that still the case, is that Astellas study still on the critical path and if so, could you give us some update on when you expect to see data or whether -- if you have the data, how does it look?

Yes. So we no longer think it's on the critical path because we have some other data; meanwhile, that has been encouraging to us. And also in examining or in diving deeply into it, our teams have come up with some interesting ways where we might be able to accelerate development.

So it's still an important study and we still are looking for those data. They will -- we will have them this year. We can't tell you exactly when because it's an Astellas study. I think on clintrials.gov, if I'm not -- I need to double check this. I believe that on clintrials.gov the study is due to have closed by the end of the first quarter.

And so obviously then they have to have time to analyze it and so on, so I would go with the publicly available information on that. We do think that, that's going to be very interesting information and that will potentially open up an additional avenue that we can pursue but we don't need it to move forward right now with a development plan.

Okay. Great. And then just second on PLUMIAZ, do you expect there to be an FDA panel for that or -- because it's a 505(b)2, do you think that one may not be necessary?

It would be pure speculation. We have no information at this point that there would be a panel. It does not mean that there won't. I guess I'd be somewhat surprised if there were just given that it's a 505(b)2 off DIASTAT, and is obviously very well-known medication. But I'd be speculating so we'll just have to wait and see.

Great. Thanks for taking my questions.

Yi Chen, Aegis Capital.

Hi. Thank you for taking my questions. My first question is how does PLUMIAZ compare to the other intranasal Diazepam products, like the way Neurelis formulation, NRL-1, currently being developed by Biotie Therapies in Finland?

Okay. So I can't comment on comparisons to other products. There's no other intranasal Diazepam that is on the market at this time. There are some other formulations out there that, as far as we know, are in earlier stages of development.

Certainly none that we know of that has filed an NDA, so that's really all that I can tell you about that. There is another benzodiazepine in the later stages of development as a nasal spray. That's Midazolam, which is being developed by Upsher-Smith and as far as we know, based on clintrials.gov, they are still doing their Phase 3 trial because they cannot do a 505(b)2, as there is no reference product as there is for Diazepam in the form of DIASTAT rectal gel.

Thank you. My second question is in the Phase 3 post-stroke study for AMPYRA, would there be a responder analysis included, like what was the case in the Phase 3 multiple sclerosis trial?

There will be a responder analysis among the analyses that are being done. It will very likely not be the original responder analysis that we used in the MS study. You might want to look at the MS label.

You will see a couple of bar graphs that are a post-talk responder analysis that we did using thresholds of improvement, 10%, 20%, 30%, and so on. It's much more likely to look like that.

So additionally, is there any potential to seek approval after only one trial considering the -- it is a severe unmet medical need?

Well, never say never. If we get a very good result, it is certainly an open possibility that we would discuss it with the agency. But the plan is to do two and to have the second one begin after, hopefully, a successful interim analysis.

I see. My last question is do you know who would be the most likely paragraph four filers for AMPYRA?

It would be pure speculation at this point. We'll all find out in the next couple of months probably so I'd just wait until then. Again, regardless of who it is, they all have to get through four Orange Book patents plus what we believe will be a fifth patent through the issuing this year.

Okay. Thank you very much.

Thank you.

Marko Kozul, Leerink Partners.

Hi, thanks for taking the question. This is Irene in for Marko. For the Phase 3 post-stroke interim, I believe you filled in an adaptive design. Can you talk a little bit about that with therapy and all or none sample size adjustments?

Okay, well, I can't go into great detail but the adaptive design is in effect represented by the interim look that we've mentioned. And it is specifically to confirm that we have powered the study adequately for the [adequate] measures that we care about.

The ideal situation, of course, would be that we do the interim look and that what comes back is just keep going as is. But there is the possibility that they could come back and say, well, keep going but increase your sample size by X. And so that is built in to ensure that we have sufficient power to hit the endpoints at the end.

Thank you. Thanks for taking the question.

Thanks Irene.

There are no further questions. I would now like to turn the call back over to Dr. Cohen for closing remarks.

Well, that concludes our call for today. Again, thank you all for joining us and have a great rest of the week. Stay warm.

Thank you. You may now disconnect. Please have a good day.