Acorda Therapeutics Inc (ACOR) 2014 Q3 法說會逐字稿

Thank you for holding, ladies and gentlemen. Welcome to the Acorda Therapeutics third quarter 2014 financial results conference call. At this time, all participants are in listen-only mode. There will be a question and answer session to follow. Please be individuals that this call is being taped at the company's request. Now I would like to introduce your host for today's call Mrs. Felicia Vonella, Director of Investor Relations at Acorda Therapeutics. Please go ahead. Thank you

Thank you, everyone and good morning. 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 that you 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 fact 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. For more information on these and other risks, please refer to our filings with the SEC. I will now turn the call over to Ron Cohen.

Thanks, Felicia. Good morning, everyone. Today I'll provide an update on Ampyra, I'll recap the strategic rationale around our acquisition of Civitas, and I'll review our product development programs. Mike is going to review the third quarter financials, and after that we'll open up the call for your questions.

Starting with Ampyra, I'm pleased to report that the third quarter net sales were $96.4 million. That's up 24% from third quarter last year. Year to date, net sales in 2014 are up 18% compared to the first three quarters of last year. A number of factors contributed to this strong performance. Our educational programs have steadily increased awareness among consumers and neurologists, increasing the view of Ampyra as a key MS therapy and a standard of care. In addition, our First Step program, which we launched four years ago, continues to be a meaningful component of the marketing effort, more than 60% of people who start on Ampyra now do so through First Step and we're finding that patients who start on First Step have a higher persistence and compliance rates over time compared to non-First Step patients. Based on this performance, we're increasing 2014 Ampyra net revenue guidance from the previous guidance of $328 million to $335 million now to $345 million to $350 million. And we'll provide guidance on 2015 net sales in January.

Last week we announced that we completed the acquisition of Civitas Therapeutics. I'll review some of the highlights of that transaction in the next few slides. As part of the transaction, we obtained worldwide rights to CVT-301, a Phase III-ready inhaled formulation of levodopa, or L-dopa for treatment of off-episodes in Parkinson's disease. CVT-301 is a strong strategic fit for Acorda. It's a late stage asset with compelling science, clear clinical need, and the potential to be a transformative therapy for people with Parkinson's disease. It also aligns with our core development and commercial expertise, and it provides a potential starting point for us to expand globally. We're projecting that it if approved, peak sales in the US alone could exceed $500 million.

In addition to CVT-301 we acquired the proprietary ARCUS technology, which is a dry-powder, pulmonary delivery system that we believe has applications in multiple disease areas. For example an inhaled triptan product is already in preclinical development for the treatment of migraine. We also acquired a GMP manufacturing facility for products based on the ARCUS technology. This facility is producing CVT-301 clinical trial material, and it's already been scaled up to manufacture commercial product.

We also have retained the Civitas team, who have decades of experience in the technology and in neurology and in various aspects of product development. And in that regard, I'd like it take this opportunity to recognize the remarkable work that the Civitas team has done to bring CVT-301 and the ARCUS platform to this promising stage of development.

A little background on Parkinson's. Parkinson's is a progressive, neurodegenerative disorder that results from the gradual loss from certain neurons in the brain that are responsible for producing dopamine. It's characterized by symptoms such a tremor at rest, rigidity, and impaired movement. The standard of care for Parkinson's is oral L-dopa. But there are significant challenges in creating a dosing regimen that consistently maintains therapeutic effects. The unpredictable reemergence of symptoms is referred to as an off-episode, and current strategies for treating off-episodes are widely regarded as inadequate.

People experience off-episodes at different intervals, and a majority of patients have multiple off-episodes per week. In a Phase IIb clinical trial, which recruited people with off-episodes, the average number of users with CVT-301 was twice daily. The market research we conducted to date with physicians, payers, and patients, indicates a large market need. More than 70% of people in the US with Parkinson's are treated with L-dopa, and about half of those will experience off-episodes within five years of starting therapy. Overall, we believe there are approximately 350,000 people in the US with Parkinson's who would be eligible for CVT-301 therapy.

CVT-301 is based on the proprietary ARCUS technology platform, which we also acquired in the deal. This platform allows delivery of significantly larger doses of medication than are possible with conventional dry powder formulations. This, in turn, provides the potential for pulmonary delivery of a much wider variety of pharmaceutical agents.

Turning to the Phase IIb data that was announced last spring, this was a study in 86 patients, again, presented at the American Academy of Neurology annual meeting. Motor responses were evaluated during regularly scheduled clinic visits using the unified Parkinson's disease rating scale or UPDRS part 3. This is a standard measure in both clinical trials and clinical practice. Efficacy was also evaluated during outpatient use with diary-based outcome measures. CVT-301 met the primary endpoint of mean improvements in the UPDRS, demonstrating clinically meaningful reductions in average UPDRS 3 motor score versus placebo at time points ranking from 10 to 60 minutes post- administration and P value less than 0.001.

With self-administration during at-home use, CVT-301 use was not associated with any increase in either non-troublesome or troublesome dyskinesia. All doses of CVT-301 were safe and well-tolerated, and the CVT-301 inhaler was also shown to be easily utilized by Parkinson's disease patients even in their off state. We expect to begin the Phase III program by Q1 2015. The program includes a Phase III efficacy trial and safety expension, two PK studies in specific subpopulations seen here, and a separate safety study will also be required, and this can be completed following the NDA submission. The regulatory path will be a 505(b)(2) filing referencing the branded L-dopa product Sinemet. Based on Civitas's interactions with the FDA, we believe a single Phase III efficacy study will be needed for filing, supported by the existing Phase IIb data. Top line details of the Phase III efficacy trial are shown here. The primary outcome measure is similar to the primary outcome in Phase IIb study and we expect results from this trial in 2016, followed by an NDA filing in late 2016.

CVT-301 adds another late stage opportunity to Acorda's high-potential pipeline. Our two highest priority programs are dalfampridine and post stroke walking deficits or PSWD and CVT-301 in Parkinson's disease. We're on track to initiate the Phase III dalfampridine trial by the end of this year, and study details are now posted on clintrials.gov. The rHIgM22 and ggf2 programs are expected to read out in early 2015 and second half of 2015 respectively, and we're continuing to discuss the Plumiaz and MP 1998 programs with the FDA. The acquisition of CVT-301 and the ARCUS technology platform underscores our focus on aggressively building shareholder value and in that regard, we're in the process now of reprioritizing the company's R&D programs. We're going to provide an update on this process in early 2015.

I'll now turn the call over to Mike, who will review the financials for the quarter. Mike?

Thanks, Ron. And good morning everyone. Ampyra net revenue for the third quarter of 2014 was $96.4 million, a 24% increase over Ampyra revenue of $77.8 million for the same quarter in 2013. Through three quarters, Ampyra net revenue was $256.3 million, an 18% increase over the corresponding period in 2013. As Ron mentioned we are increasing our guidance for Ampyra net sales from a range of $328 million to $335 million, up to $345 million to $350 million.

Overall revenue from Zanaflex for the third quarter of 2014 was $4.5 million, and that includes our own sales, as well as product sales to Actavis and royalties received on Actavis's sales of generic tizanidine. The Ampyra royalty revenue from sales outside of the US was $2.5 million for the third quarter of 2014, compared to $2 million for the same quarter in 2013.

Moving on to the expense side. Total operating expenses for the quarter ended September 30, 2014, were $85.1 million, including $7.3 million in share-based compensation expense, compared to $73.5 million, which includes $6.5 million in share-based compensation expense, for the same quarter in 2013. We are reiterating our 2014 R&D expense guidance of $60 million to $70 million and our SG&A -- SG&A expense guidance of $180 million to $190 million. As Ron mentioned, based on our recent acquisition of Civitas we are in the process of reprioritizing the company's programs. I want to highlight that regardless of any reprioritization, we are expecting a significant increase in R&D expense in 2015, largely related to the fact that we will be conducting Phase III clinical trials that we didn't have in 2014. We will provide more specific expense guidance in January of next year.

A brief note on the tax line. On a year to date basis our effective tax rate is 44%, which translates to our tax provision of $13.4 million for the nine months ended September 30. However, cash taxes for the first nine months of 2014 were $1.8 million. There are a number of factors that can cause significant differences between the effective tax rate shown in our financials and our actual cash tax position. As a reminder, we had available federal NOL carry forwards of approximately $174 million as of December 31, 2013, which are available to offset future taxable income. For this reason, we do not currently pay substantial US federal income taxes, and we adjust for the noncash tax portion in our non-GAAP presentation.

Finally, a note on the balance sheet. Our financial position remains strong. At the end of the quarter, 9/30, at 9/30 our cash equivalents and investment balance was $766.4 million. Our current cash, cash equivalents, and investment balance is approximately $275 million. And this factors in the purchase price and deal expenses related to the Civitas transaction, as well as the cash we acquired from the Civitas balance sheet.

With that, I'll now turn the call back over to Ron.

Thanks, Mike. As we discussed in recent quarters, the three pillars of Acorda's growth strategy are first, maximizing the growth of our Ampyra business, and second, advancing our pipeline through clinical development, third, acquiring additional assets that add significant value. In the third quarter, we made exciting progress on all three fronts. The growth of the Ampyra business, which had been strong notice first six months accelerated in the third quarter with 24% growth year over year in Q3, and 18% growth for the year to date. Our pipeline now has products about to enter Phase III for two major indications, post stroke walking deficits or PSWD and Parkinson's. Our rHIgM22 and ggf 2 programs, also for major indications, will produce clinical data in 2015 and we're continuing to discuss the Plumiaz and MP1998 programs with the FDA. Finally, and not least, we completed the Civitas acquisition, which we believe is potentially transformative for the Company and a major value add.

I'll now turn the call over to the operator for your Q&A.

(Operator Instructions). Your first question is from the line of Michael Yee from RBC Capital Markets. Please go ahead.

Thanks, good morning. Hey Ron two questions. One is with regards to the Civitas program, I notice you acquired a factory. I'm just trying to understand within your clinical development plan and the studies you laid out there, what other things need to be done as regards to manufacturing, stocking up supply, CMC approval, those types of things. And I presume there's going to be a big ramp up of R&D because of awful that and all that drug is being booked as R&D and, therefore, going forward when you launch the drug in 2016 or 2017, all of that drug sold is that comp zero. Is that correct? And then secondly, you mentioned something very interesting which is reprioritize your R&D program. Can you just expand on that a little bit I know you'll get specific in January but could you expand on that does this mean you would consider outlicensing things? Is that how we should think about it?

Okay. Thanks Mike with regard to the manufacturing facility, the -- the facility is already scaled up to commercial scale. It's a full GMP manufacturing facility. The team there has done a phenomenal job. They have been engaged in ongoing discussions with FDA every step of the way. So we've been very pleased with the way that relationship has gone. And they have -- they have now scaled up manufacturing to the point where we actually could launch with the facility as it is right now. So that's a big plus. I'm going to let Mike talk to you with respect to the financial treatment.

Yes, Michael. I guess as is typical -- big pharma may do this a little bit differently. As is typical for companies our size, anything you manufacture for commercial use prior to typically approval would be expensed as R&D and then so your -- some of your initial load or your initial sales are at a -- at a zero or low cost of goods. So you're correct on that. And then with regard --

Have you stocked up like a year supply of drug already? Have you already done that or is that all to be done in 2015?

No. There's no need to do that at this stage. There is a plan in place, so that's -- it's locked and loaded but there's no need to actually incur that expense right now.

With respect to the reprioritization, when we look at the profile of the company now that we've added Civitas, it's, obviously very exciting and we think it is potentially transformative for the company and for shareholder value. And as we look at that and we look at our pipeline and the expense line that goes with it, it's clear that we need to as a management team take a fresh look in the context of the Civitas additions at the whole pipeline and just make sure that -- that the -- that the returns on investment are at a level that we -- that we believe matches up with an aggressive focus on building shareholder value. So that's what we are doing now as a management team.

There's -- there are no decisions yet with respect to any of your questions, are we going to sell off things, what are we going to do. This is merely by way of telling people that management has a focus on aggressively building shareholder value and we are going to take that focus to the pipeline and make sure that anything we're investing in has a very clear return at a level that we think justifies the investment.

Okay. Okay. Thanks.

Thanks very much for your question. Our next question is from the line of Mark Schoenebaum with ISI Group. Please go ahead, sir, thank you.

Yes. Hey, Ron, hey, Mike, this is Salim in for Mark. Two questions just on Ampyra, so -- so it looks like this quarter was particularly strong. Can you just maybe comment on inventory and growth and then if that had any impact? And then also for the implied guidance by my math it looks like 4Q is supposed to be down somewhere in the range of 2% to 8% versus 3Q. Can you just comment -- comment on that as well, please. Thank you.

Yes, Salim. So it was a great quarter. And I think when you look at our projections for the four -- the implied projections for the fourth quarter in the range, I'll point out a few of the highlights here. Number one, if you look, let's say, at the top of the range that we have for -- the new range, $350 million, that would imply -- even though it's a slight down, as you pointed out from third quarter, that would imply about a 11% increase over the fourth quarter of last year. And, obviously, the overall yearly projection is now higher than we had at the beginning of the year. So all of that is good news. The reason we're not being more aggressive in the projection is that the third quarter was particularly strong even against the context of an overall strong year, which we saw in the first two quarters.

The -- as I said during the -- during the slide show, we believe we understand most of the reasons for that. Inventory is not a reason for that. Let me just state that flatly. Inventory is not a reason for that. It is -- sorry. Hold on a second. Yes. We have tight control over our inventories now, much tighter than we've ever had in the past. And inventory levels now are, if anything, tighter than they've been in the past. So that -- that is not a factor at all. This is a reflection of actual TRXs and actual sales of the drug.

Now, having said that, there are always fluctuations quarter over quarter, and we don't want to take a single particularly strong quarter and impute that going forward full bore. So that's what you're seeing in our overall projection. We want to get comfortable over the next few quarters about what the change in trend this year really means and how -- how this plays out on a quarter by quarter basis or a seasonal basis because this has all been going on just over the last year. Again, we believe we understand the reasons for it in terms of our education programs, increased usage of First Step and so forth. But we do want to be careful.

And then one other thing to consider just by way of example of what I'm talking about is that in the third quarter, for example, we had more selling days or more shipping days this year. Right? And a single shipping day increase on the right day can account for a pretty meaningful swing between the third and fourth quarter. So we're just being, I think, appropriately conservative. Overall, the news is very good. We're having a strong sales year for Ampyra, and that was reflected even more in the third quarter

Got it. Thank you.

And thanks for your question. And the next question is from the line of Yaron Werber with Citigroup. Please go ahead.

Hi. This is Kumar Raja in for Yaron. Thank you for taking my question. So for the rHIgM22 antibody, what are you seeing in terms of penetration in the brain in, like, animal models and how -- what are you expecting to see in, like, human patients?

Yes. This -- this was actually covered in a R&D day we had that -- or actually not that we had but the New York Academy of Sciences had earlier this year in which they had an entire day on remyelination. So we have had radio labeling studies in animal models and mouse models, and really it's hard to know how that translates. What we can say is that the antibody given systemically does get into the brain in animal models. And so that -- that's clear. We're going to have to wait and see what the story is in humans, although it's encouraging that in animals we see it. And we're just going to have to see what the results are in the human trials before we can comment further.

And I also have a question on the First Step. In the press release you said there's a higher compliance in persistency in these patients. Is there any specific reason for that?

Is there a specific reason why patients on First Step are more compliant?

Yes.

And more persistent?

Yes.

Yes. Look, that -- I'm sure there are. We can speculate about why that might be. clearly, if you have someone who is getting free drug, is not paying anything out of pocket up front, and they try the drug for them to make a decision to go ahead and then pay for the drug after two months, that's a bigger hurdle than if you just put them on up front and they're paying a copay up front and then they decide, well, I'll just, maybe -- maybe I'll -- I'll see how this is going. But if they actually then after two months for the first time have to pay, that adds another level of -- of difficulty, right, to making that decision. So the odds are that when they make that decision, if they're on First Step, they're even more convinced that the drug is really working for them and more likely to stay on drug.

Thank you.

Thanks very much for your question. And the next question is from the line of Phil Nadeau of Cowen. Please go ahead. Thank you.

Thank you for taking my questions and congratulations on the quarter. Ron one on Ampyra, and one on CVT-301. So on Ampyra I guess I'm still trying to understand what has produced the growth, and what's changed in the year. I think earlier in the year, you guided to modest organic growth for Ampyra. But clearly, you had the programs that you're attributing the -- the uptake in place at the time. So have those programs been more effective than you thought or has -- has their success been earlier than you thought earlier in the year? And then kind of a related question, the total IMS scripts haven't really moved much so again is it just that the scripts aren't accurate or is there something else going on?

Okay. So -- so, we're, obviously, always limited, Phil, in how certain we can be about what is driving the growth. We can point to factors that we know about that are contributing. How much each factor contributes on a relative basis is difficult, even for us. But I -- I think it's clear that the education programs and the promotional programs are playing a role. Because you get to a point where there's a -- a cumulative effect, if you will, where you know you're out there, you're delivering the messages, you're delivering the messages, and we know from just basic marketing 101 that most people, most physicians, even patients, don't absorb and act on a message the first time they hear it. And in fact if you look at sort of classical marketing, they will he tell you it's usually six to seven exposures to a message before they take action. That's an average. Some people will be early adopters, some will take longer. So we are getting to a point where people have heard the message enough in enough different ways and they've seen the data. And also, where there's the prescribers have had more and more experience and seen more and more patients of theirs have results from the drug. So there is that aspect of just a cumulative of gathering of force.

So I think that's part of it. Clearly, First Step continues to add to that because now that we have over 60%, and that -- that's continuing -- that's been continuing to increase, those patients clearly are staying on drug longer, more persistent for the reasons that I just discussed on the last question. So you put that all together, and I think that gives you a sense of it. Plus the fact that there probably has been some expansion of the MS market due to the new oral entrance.

I can't account for IMS. I can tell you from an internal tracking point of view our TRXs are up and up very healthily this year.

Great. That's helpful. And then on CVT-301, can you talk a little bit more about the safety -- specifically, the pulmonary safety data that you think the FDA will want to see? It does look like you have the efficacy study, a long term safety study, safety in asthmatics, and safety in smokers. So can you give some sort of global understanding of exactly what the FDA wants it see, how many patients and what -- when pulmonary measures you'll need it take in all those safety space?

Yes. I -- I don't have a very specific answer for you on that. It's just not in my head right now. But I can tell you that the Civitas team and our team -- our medical team do. There are specific guidelines that are published for this sort of thing. I believe it's -- typically, on safety you want 100 patients for a year, 300 patients for six months who have been taking it. And then you do an array of accepted pulmonary function tests, which is all going to be part of the safety study. All of that has been baked in and discussed explicitly in detail with the agency, with the FDA, as have the entire safety program. So from animals to humans, the work they've already done with pulmonary function tests in the previous clinical trials, all of that has been in lockstep with what the agency has recommended, and we're very comfortable that the agency is both aware of everything that we're doing and also is accepting of what we're doing. And it's worth noting that there had been no safety -- no safety signals so far and specifically, no pulmonary safety signals so far even in patients.

Thanks for taking my questions.

Sure.

Thank you for your questions. Our next question is from the line of David Anselm of Piper Jaffray. Please go ahead. Thank you.

Hi, guys Traver Davis on for David. Thanks for taking the questions. Congrats on a strong quarter for one. And second, just to kind of piggyback off the last question that was asked on the Civitas product and on safety, but, how are you thinking about the regulatory risks here given the incidents of cough and also the FDA sensitivity to pulmonary delivery products for non-pulmonary conditions. And then just second on that product, how are you guys thinking about pricing here. Is this something that gets priced more like other brand, injunctive therapies in PD or, say, closer to where L-dopa is priced. And then just lastly, any update, I might have missed it, on the diazepam nasal spray product? How are you guys thinking about that opportunity now that Uphsur Smith's product may have had a little bit of a head start now. Thanks, guys.

Okay. Traver, that sounds like many questions in one.

Yes. I apologize. I apologize. I tried to --

No. No. It was deftly done. With respect to the safety profile, I'd like to point out -- let me just take this moment to point something out to you all. Those of you who were on the call a year ago at this time which was exactly Halloween time will really that last year I did this call wearing a velociraptor outfit. I'm pleased to report that I'm currently wearing the same velociraptor outfit. So for anyone contemplating going outside our rules on questions, I just wanted to make that clear. Okay.

It's our Halloween party today.

It is our Halloween party today. So -- and we may have -- we may have a photograph up there shortly on Ron Cohen's hair. So with respect to the safety profile and cough, there were, I believe, four reports of cough in an 86-patient study in the drug group and one in the placebo group. All of those were mild. They were -- they were rated as mild. No one dropped out as a result. We consider it a nonevent from that study. There has been so far no indication of safety issues with respect to this product, and in particular with respect to the -- the inhalation. And it's not uncommon that when people use any kind of inhaler, that some of them might have a tickle or maybe have a little cough that's mild. So I would not read anything into that. With -- does that answer your question on the cough?

Yes. Absolutely.

with regard to pricing we don't have any numbers to give yet. It's early days for this. But what we have done as part of our diligence is a full market analysis. Our commercial team has been all over this. We actually even did some primary payer research in addition to prescriber and patient research. And what we can tell you is no matter which way we cut it in terms of the pricing sensitivity, the toggle is if you increase the price beyond a certain level, you risk reducing access. If you bring the price down, you get to increase access in general. And we believe there's about 350,000 patients in the US who could benefit from this therapy. We also believe as a company it's our responsibility to make sure that they have as much access as possible. So any way you cut it, when you look at the numbers and you look at reasonable pricing assumptions, we still get to in excess of $500 million US market opportunity. And then with regard to Plumiaz we don't have anything new to say about that. We are still actively engaged in conversations with the FDA and as soon as wave a conclusion, we're going it come out and tell you all.

Great. Thanks, guys.

Thanks for your questions. Our next question comes from the lane of Bill Tanner of FBR Capital Markets. Please go ahead, thank you.

Thanks for taking the questions. Just a couple for you Ron on the Ampyra performance, just curious some of the feedback from the field if that's giving you reason to increase the marketing support. It sounds like the DTC efforts are paying off and I'm wondering if incremental spend would get incremental usage or you think you're a bit playing catch up to what's been done in the past.

And then just to go back to Plumiaz actively discussing things with the FDA, is the contemplation still nothing will be he required as relates to any outcome studies? Thanks.

Okay. Thanks, Bill. So we -- we have -- we look at this repeated lid. To your question, and you'll be happy to know we have certain board members who ask us the same question about the marketing spend on a regular basis. So we're all over this. I will tell you that one of the keying toggles that I didn't mention earlier but I really should have because they deserve it, is that our sales force has been doing a phenomenal job out there in terms of hitting their targets, getting in front of prescribers, getting the messaging out, responding to issues and questions. At this point, after having been doing this for well over four years on the launch, the sales force is at peak -- at a peak of efficiency and performance, and they're doing a fantastic job. We do not feel that we need to increase the size of the sales force. They are doing -- we're fully covered for the prescriber universe that we need right now.

In terms of promotional spend, likewise. We've actually reduced the promotional spend commensurate with the stage of the product. And we don't see any reduction in efficiency of our promotional activities. In fact, on a cost effective basis, it's more efficient now because we are heavily using digital marketing techniques where we can target at a much finer level than we ever could before, and we're seeing -- we can actually track results far better than we used to before. So whereas you have the old line about I know 50% of my advertising dollar is wasted, I don't know which 50%. We now know maybe not the whole 50% but we know a lot more of it so we can pare away the stuff that hasn't been working, and that's what we've been doing. So the short answer is, no, we feel we are at just the right level of spend now.

Now, with respect to Plumiaz, I don't have any more than I can say right now. Our view has been all along that based on the CRL, we would need to do another clinical study or studies depending on where the conversations with the agency go, and we are still trading thoughts with the FDA back and forth. Hopefully we'll come to a conclusion on that soon and then be able to give you more detail. Just to be clear, we like this product a lot. We always have, and we're pushing forward with the FDA.

If I can just follow up quickly on that. You know as relates to the ARCUS technology it seems if you wanted to leverage that you could really transform the nature of the pipeline. I guess you'll speak to that next year. But I'm just curious if we should be thinking about Plumiaz as also being potentially the -- I don't want it say the target or the subject of reprioritization or you're still very much commits to do taking it --

It is fair to say that we are really happy with the ARCUS technology and that our R&D team is already in close contact with the Civitas R&D team. Now it's all part of one R&D team. And we are looking at where we should be taking the ARCUS technology next.

Okay. Great. Thank you.

Thanks so much for your question. Our next question comes from the line of John Newman with Canaccord. Please go ahead. Thank you.

Hi, guys. Thanks for taking the question. The question about Ampyra and your guidance for this year, so it looks like your guidance implies about 3% to 4% of demand growth above the 10% price increase that you take on an annual basis. I'm just wondering is that sort of a good way to think about Ampyra long term, or do you expect that the efforts that you have put in place should sort of accelerate that growth, or do you think that the growth will sort of steadily settle in? Thanks.

Yes, John, the earlier part of this year, we -- we told everyone that we were expecting low single digit organic growth coupled with the price increase. One thing to say about the price increase, we took 10.75% the last two Januaries in a row. Remember that that -- we don't realize the benefit of that entire increase because you have to pull out the D&A line. So it's a smaller number that's net to us in terms of looking at what the growth is. But if you look at let's say 2013 over 2012, I believe that amounted to about a 10% year over year growth, if I'm remembering correctly, factoring in the organic growth and the net effect of this same 10.75% increase. So you can kind of look at that and get a sense for at least 2013 over 2012 how that translated.

Moving forward, it's difficult to say because the organic growth this year has been higher than we projected at the beginning of the year, and that's all to the good, obviously, and we do believe that our programs have had significant role in that. But because we're just seeing the results of that this year, it's very difficult to project what the longer term trend will look like off of that. So we need several more quarters under our belt to get a better handle on that.

Okay. And one additional question. What can you tell us about the status of the once-daily formulation work for dalfampridine which could potentially be tested in a stroke study at some point?

Yes. That -- that work is ongoing. We have several collaborators now that are working in parallel, and our intention is basically spreading our bets so that hopefully we have the best chance of getting a good usable formulation the quickest out of that process. And our intent would be that whoever gets there first with the right formulation, that's the one we'll use.

Okay. Great. Thank you.

Thanks for your question. Our next question is from the line of Tom Schrader at Stifel. Please go ahead. Thank you.

Good morning. Some questions on CVT-301. Given that First Step is working so well, should would he envision that kind of program for the new drug and is that a significant expense we should be thinking about?

Well, Tom, I think it's -- it's -- it's early to be thinking about that. And I think it's worth reflecting on the fact that they're two very different types of drugs. In Ampyra, you have a specialty-only distributed -- a closed-system distributed drug through specialty pharmacies, drop shipping to all patients, and so on. So it's -- it's a different level. We envision that CVT-301 would be distributed through more conventional retail channels, for the most part, and would really be a different tier of drugs. So it's not clear that we would need to go into something as involved as a First Step program, but, we'll be assessing all -- all possibilities we can think of as we go forward.

and a quick additional question. I don't know how patients feel after a rapid blast of L-dopa, but is there any concern this is an abuseable drug? Has the FDA brought that up?

Yes. There is zero concern that this is an abuseable drug. It's -- if you think about it, the drug has been in use for, I don't know, 40 years or something as an oral formulation. And there's absolutely no hint of abuse potential for this drug.

Okay. Great. Thank you.

Thanks for your question. Our next question is from the line of Mark Schoenebaum with ISI Group. Please go ahead, thank you.

Wait are we double dipping here?

We are. We are. Ron, I don't mean to belabor the point here, just --

Hey.

Hello.

Yes. Hey, Salim?

Hey

Did you hear the part about the velociraptor mask?

I did. I did. We're looking for the picture.

Wow. Wow. Okay. Wow. Thank you. Really, I mean you're a courageous man.

Appreciate it. So Ron, I don't mean to belabor the point, but you mentioned something about shipping days being more in this quarter. I just wanted to be clear do you know exactly how many shipping days more versus what quarter are you comparing it to? 3Q of last year or 2Q of this year? Thanks.

We're comparing it this year to fourth quarter, third quarter this year to the fourth quarter, and the anticipated shipping dates and I don't have the exact number in my head, no.

Okay. Do you have a rough -- is it single -- like low single digits?

No. I don't have a rough or anything. Although let's face it. It would be unusual to have more than a small handful of days different. It's not the number of days. It's the quality of the days. Depends on -- we have specific days of the week where most of the shipping occurs, actually essentially all of the shipping occurs. And if a month includes an extra one of those days, it -- there's a meaningful shift from one month to the next or from one quarter to the next.

Got it. Okay. Thanks for letting me double dip.

No problem. Sure thing.

Thanks for your questions, ladies and gentlemen. I would now like to turn back to Dr. Cohen for closing remarks. Thank you.

Well, it was a great quarter from our perspective, and we certainly hope you agree. We're looking forward to reporting on the year in January and meanwhile, Happy Halloween, everyone.

Thank you, ladies and gentlemen, for participating. That now concludes your conference. You may now disconnect. Have a great day. Thank you.