Acorda Therapeutics Inc (ACOR) 2016 Q3 法說會逐字稿

Welcome to the Acorda Therapeutics' third-quarter update. At this time, all participants are in a listen-only mode. There will be a question-and-answer session to follow. Please be advised that this call is being taped at the Company's request.

Now I would like to introduce your host for today's call, Felicia Vonella, Executive Director of Investor Relations at Acorda. Please go ahead.

Good morning, everyone. 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. For more information on these and other risks, please refer to our filings with the Securities and Exchange Commission.

With me today are Ron Cohen, our President and Chief Executive Officer; and Dave Lawrence, Acorda's Chief Business Operations and Business, and Principal Accounting Officer. I'll now turn the call over to Ron.

Thanks, Felicia. Good morning, everybody. AMPYRA revenues for the third-quarter 2016 were $128.8 million, up 10% from the third quarter of 2015. That represents the 14th consecutive quarter of double-digit year-over-year growth for AMPYRA, which was launched in 2010. AMPYRA results continue to be strong, with outstanding performance by our commercial and medical teams. We are reiterating our 2016 AMPYRA guidance of $475 million to $485 million.

AMPYRA's continued growth is fueling investment in our pipeline, including our late stage program, CVT-301 and tizanidine in Parkinson's disease, and dalfampridine in post-stroke walking difficulties or PSWD, as well as earlier stage programs, which include CBT-427 for acute migraine.

On the IP front, we're defending our patents vigorously. We plan to submit our post-trial answering brief tomorrow as part of the ANDA litigation with the four remaining generic filers. Our legal team is pleased with the case that we presented, and our post-trial brief will seek to address the questions the judge posed at the end of the trial. There is no prescribed timeline for the judge's ruling. We expect a decision from the TTAB on the pending IPR petition in March of 2017.

Moving to our late stage programs, we expect the last patient out of the 301 Phase III efficacy study by the end of this year, and will announce topline data in the first quarter of 2017. We also expect to announce results then from our 12-month safety study -- Study 005 -- which is a 12-month, open label study evaluating the safety of CVT-301 against non-interventional standard of care. This study is primarily assessing pulmonary function, and the key measures include FPV-1 and BLCO, which is carbon monoxide diffusion.

We had our pre-NDA meeting with the FDA and we're awaiting the minutes from that meeting, following which we'll confirm the timing of the NDA submission. And by the end of this year, we'll also expect to announce results from our dalfampridine trial in PSWD, as well as results from a multidose PK study for our once-daily, or QD formulation. If the data proposed are positive, we plan to move forward with the Phase III program in the second half of 2017, contingent on our discussions with the FDA and the outcomes of our IP litigation.

On September 30, Acorda set a security for the payment of the redemption price of the final 3% of the outstanding Biotie shares, and we received title to all the remaining shares. We now own 100% of Biotie. There are a few remaining procedural issues that will need to take place as mandated by the Finnish authorities, and we expect the purchase to be completed in the first quarter of 2017.

The tizanidine Phase III study is currently enrolling. Biotie expects that the study will be clinically complete by the end of 2017. Atoz, if approved, would be in the first new class of drugs for Parkinson's disease in more than 20 years.

I'll now turn the call over to Dave.

Thanks, Ron and good morning, everyone. I'll now review some of the financial highlights from the third quarter. AMPYRA net revenue for the third quarter of 2016 was $128.8 million, a 10% increase over the $117 million we recorded for the same quarter in 2015.

For year-to-date, AMPYRA net revenue grew 15% to $361 million from [$350 million] from the same period in 2015. AMPYRA royalty revenue from sales outside of the US was $2.6 million for the third quarter of 2016. Royalty revenue for ZANAFLEX authorized generic was $1.1 million, and royalty revenue related to sales of Selincro were $1.1 million in the third quarter of 2016. As a reminder, Selincro was acquired in the Biotie transaction.

Moving to expenses, research and development expense for the third quarter were $54.8 million, including $2.9 million in share-based compensation, up from $43.4 million, including $2.3 million of share-based compensation for the same quarter in 2015. The increase in R&D expenses in the third quarter of 2016 is attributable to R&D expenses for Biotie and increased investment in our late stage development program.

Sales, general administrative expenses for the quarter ended June 30, 2016 were $54.4 million, including $7.1 million of share-based compensation, compared to $51.1 million, including $6.7 million of share-based compensation for the same quarter in 2015. This year's third-quarter SG&A expenses exclude transaction expenses related to the Biotie acquisition, which is shown separately on the press release income statement, but include SG&A expenses for Biotie.

For the third quarter of 2016, we reported a net tax provision of $3 million. However, cash taxes for the third quarter were $1 million. There are a number of factors that can cause significant differences between the effective tax rates shown on our financials and our actual cash tax position. As a reminder, we had federal NOL carryforwards of approximately $195 million at the end of 2015, which are available to offset future taxable income. For this reason, we do not pay substantial US federal income taxes.

I'll conclude with a brief note on our balance sheet. Our cash position remains strong. At September 30, 2016, our cash and cash equivalents balance was approximately $127.9 million.

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

Thanks, Dave. In closing, over the next 12 months, we expect multiple, potentially-transformative clinical and corporate milestones; AMPYRA continues to grow well; and we're defending our intellectual property vigorously. We have contingencies to address the range of potential outcomes of the AMPYRA patent challenges, and importantly, irrespective of the outcomes, we believe we'll be able to fund Acorda's operations through approval and launch of CVT-301.

By the end of this year, we intend to -- or we plan to announce topline findings from our post-stroke study and QD formulation PK study; and in the first quarter of 2017, data from our Phase III CVT-301 efficacy and safety trials. The Atoz Phase III study continues to enroll, and if successful, could represent another important relatively near-term product opportunity. And we're also enthusiastic about advancing the clinical program for CVT-427, which has the possibility to be a valuable new product in the treatment of migraine.

And with that, operator, we will take questions.

(Operator Instructions) Phil Nadeau, Cowen and Company.

Thanks for taking my questions. Congratulations on the progress. Ron, just two follow-ups to some of the prepared remarks. First on the distaclor case. I know you said there's no set time for the judge to make a decision, but can you remind us of some of the other milestones in regards to the IP? Specifically, when does orphan drug expire? And when does the 30-month stay expire?

And then second on the post-stroke trial, what's your latest thinking on how much data you release at the end of this year?

Okay. Thanks, Phil. So on the IP, we're going to file the post-trial brief tomorrow. There is no set time for the judge, so it really depends on the judge's timetable to render a verdict. If the verdict is positive, obviously, that's great. If it's not, then we would appeal. And appeals -- it varies; I'm told that they take approximately a year.

With respect to the IPRs, there is a presentation before the PTAB on December 9, which I believe is open to the public, and then a verdict would be rendered by the PTAB in March of 2017. And once again, if that were to go our way, that's great. If it doesn't, we would appeal, and that would go for approximately a year.

The date of the orphan expiration is in January of 2017. I believe it's geared to the approval date, which was January 22, so it's somewhere around then. And on the 30-month stay, I believe that's somewhere in mid-2017.

Now with regards to post-stroke, the -- we expect to release topline data, so we will give you some of the key data, primarily the two-minute walk outcome.

Okay. It seemed like in your prepared remarks, there were more contingencies on the conditions to move into the subsequent trial in today's prepared remarks versus prior quarters. Has your thinking changed on the hurdle to moving forward into that next trial? It seems like you were looking for more.

Yes. So, as we looked at it -- studied it a bit more deeply, the two -- well, so the one -- what I'll say, standard one -- is that obviously we have to talk to the FDA and come to an agreement on the design of the Phase III trials, and so forth. So that's going to be contingent on the data that comes out of the trial, and then our discussions with the FDA.

So that's standard procedure. With respect to the IP, which is the other thing we mentioned, in the event that there is a generic b.i.d. AMPYRA on the market, our Commercial Group believes that it would be challenging to have the QD formulation and introduce that for stroke. So that's something that we would have to take into account if we were to lose the exclusivity prematurely on the AMPYRA patents.

So that's what we're signaling there, that it would be challenging. It's something we're studying and continuing to study, but it's something we wanted to make people aware of.

Got it. Fair enough. Thanks for taking my questions.

Salveen Richter, Goldman Sachs.

Thanks for taking my question. So just with regard to CVT-301, could you just comment on what topline data we'll see beyond the primary endpoint of UPDRS improvement? And whether we'll see safety as well as kind of secondary endpoints around responder rates and off-times, along with quality of life?

And then on the Biotie pipeline, maybe just an update on progress and timeline for some of the earlier assets, like FYN-120 and DTT-1023? And if you do decide to go forward with AMPYRA in post-stroke walking difficulties, what are the possible designs here for pivotal study? Do you need one or two programs going forward? Thank you.

Wow, that's a lot, Salveen. Okay. So, with respect to the topline data, I don't -- I can't give you word and verse every piece of data that we'll provide. The key as to measure in that study is the two-minute walk. We will provide that.

As we have said in the past, there are good reasons for not getting into excessive detail on the data from that study. Recall that this is not a completed study. This was originally designed as a Phase III study for various -- using the b.i.d. formulation. For various reasons, we have chosen to underline the study before completion of the trial.

So it is not a valid study in the sense that we don't have the -- we're not going to have a completed study the way you normally would. So we will be presenting topline data, enough to get people a sense of whether the trials work and justifies moving on to Phase III or not.

With respect to 301, here again, I can't give you word and verse what we're going to be presenting. We will present topline data. And I expect it would be within the norms that we normally do, and that others in the industry normally do, with respect to both the safety and the efficacy data in the study. Remember we also are going to be having data from the actual 005 safety trial. And the key outcomes there are the pulmonary function test, the FED-1 and the carbon monoxide diffusion DLCO, and we'll be presenting those data as well.

With respect to the -- I think you asked about the Biotie programs?

Yes.

CIM-120 -- I don't have those timelines off the top my head. That study is being supported by the Michael J. Fox Foundation. It's ongoing and I don't have a timeline for you on that. Likewise with BTT -- the BTT program is not one that is in our neurological sweet spot. It's being looked at for primary scleroses and colonitis. And the primary outcome is -- the forward outcome -- but it's at out-FOS levels.

We think it's a very interesting molecule, and it potentially has very interesting applications. It is not likely that we will keep that solo and that we will very likely look to partner that asset. Obviously we're going to wait to see what the Out-FOS data looks like. And we should have that -- at least an interim look -- within the next several months, I believe. But that's all I can say about those programs.

All right. Thank you.

Tom Shrader, Stifel.

Thanks for taking the questions. I had a question on CVT-301. I guess there's some question about first thing in the morning use of the drug? And can you remind us -- I think you have a trial going on. Is that required for approval? Will those data be kind of at the same time as everything else? Can you just talk about that aspect of the drug?

Yes, thanks, Tom. You're talking about the early morning off?

That's right.

Yes. So we're dealing a small early morning off-study -- it's really a safety study, just to make sure that when they take the inhaled L-DOPA after having gone all might without having taken their Symmetrel or whatever L-DOPA formulation they're taking, just to make sure that we've covered -- we've checked the safety box on that. And that when we submit the NDA, we can submit safety data, so there's not -- hopefully, if it's -- hopefully, a benign study, that there's no signal there that the FDA would have any concerns about, and then try to put something in the label with respect to early morning offs.

It's not an efficacy study; that is something that we may or may not choose to do later. As we have pointed out in the past, the -- by far, the major concerns for patients and their physicians in Parkinson's, is not the early morning offs. Those are regimented.

In other words, patients expect those. They know when they are going to happen, they bake it into their day-to-day routine, so that when they get up, they immediately take their medication and they are good to go. And they did get dressed and then, by then, the medication is taking effect. What bothers people is the unpredictable off periods that occur during the day, and that's obviously what we're aiming for in the clinical trials.

Okay. Perfect. And then so the hope is that the label just doesn't mention when the off is?

Right. We just don't want the label to raise any concerns or potential concerns that, well, it hasn't been studied in off, and might there be a safety signal and so on? So we're just looking at safety so that we can include that in the data package.

Okay. And then one question I'm not sure you will answer. But do your lawyer say there's very little or there's no reason to expect both cases to wrap up at once? I know sometimes they try to harmonize; in this case, the arguments are almost completely different. So do you have any guidance there?

As far as I know -- you are talking about the IPR versus the ANDA court case?

That's right.

Yes. As far as I know, these are completely independent procedures. They have nothing to do with one another, so they operate on their own time scale. So to the extent that anything happens at the same time, it's coincidental.

Okay. Great. Thanks a lot.

John Scotti, Evercore ISI.

This is Mike DiFiore in for John Scotti, and congrats on a good quarter. Two questions. One with regard to CVT-301 and the expected reimbursement environment. I know you said you were in conversations with payers, but I was wondering if you could provide any more color on what those conversations may have entailed, and if the possible reimbursement -- the possible likelihood of payers step-editing 301 after trying injectable apomorphine, might be? And I do have a follow-up after that.

Yes. Mike, I don't think I have any specific way I can answer that question. It's way early in the process. We are engaging with payers and we will continue to do so. I'll point out that we have a huge store of experience in working with payers, particularly on symptomatic neurological therapies, through our entire AMPYRA experience.

And if you followed us through that, you know that our team did phenomenal work in managing through what initially were very difficult pushbacks by managed care, and then getting to a very good place across the board. So I have a lot of confidence in them that we are going to be doing very similar work here.

The key issue, we think, actually is just educating managed care about off periods and the essential nature of the need that these patients have for an acceptable therapy. I'll also point out -- you mentioned APOKYN. APOKYN is a very small product. I think last time I looked, it was something like $20 million a year. And this is after years and years and years on the market.

And there's a very good reason for that. It's an injectable. It has extremely serious and widespread side effects, such as major nausea and vomiting in a huge number of people who take it. So, even though it is an active agent for off periods, it has not been used widely because patients simply can't tolerate all of the side effects and the injectable nature of it.

So that would not be a good model. And, in fact, we think that's a very straightforward case to be making to managed care.

Got you, No, thank you so much. Very helpful. And just my follow-up question is with -- in regards to AMPYRA. Were there any inventory issues or changes to the number of shipping days that that impacted sales in 3Q? And could you possibly comment on AMPYRA's script trends going into Q4?

I'm sorry -- could you just repeat the question?

Yes. I was wondering with -- regarding AMPYRA sales in the third quarter, if there was any inventory issues or changes to the number of shipping days that may have impacted the quarter? And if you could provide any color if -- on script trends going into Q4 for AMPYRA?

There are no inventory issues at all, Mike. We continue to have our usual approximately two weeks in the channel. And our TRXs so far are as expected and our guidance is what we gave, which is that we are reiterating guidance. And I think it's fair to say that we are comfortable more toward the top of the range that we've given -- which, by the way, is consistent with what I believe The Street consensus is.

Okay. Thank you very much, Ron. I appreciate it.

Paul Matteis, Leerink.

Thanks a lot for taking my questions. I have two. The first one is, I'm curious, Ron, if you could talk a little bit about the safety monitoring that's going on in the CVT-301 study? It sounds like this open label study is single arm. I would imagine (technical difficulty) So, from what information on the long-term safety on the product have you been able to glean thus far?

Yes, so it's actually not a single arm. There is an observational cohort with standard of care for comparison. So we are actually comparing in real-time to people who are not taking the inhaled therapy, and doing pulmonary function tests on everyone. And that was necessary, because people with Parkinson's have issues with musculature and expanding their chest. So they are not going to behave necessarily the way healthy volunteers would, with pulmonary function tests.

So we are comparing it in an ongoing way. All I can tell you in terms of the ongoing monitoring is that there is a Data Safety Monitoring Board, or DSMB. They regularly are monitoring the study. And to date, they have allowed us to continue moving the study forward.

Okay. Got it. Thank you. And then, Ron, I'm wondering how you think out SG&A infrastructure over the long-term in these various scenarios? And I guess specifically in the scenario where the court cases don't go your way and, as you alluded to, you decide not to pursue stroke, can you just -- can you effectively move all your MS reps onto CVT-301? Do you need more reps to sell CVT-301? I'm kind of wondering what the SG&A looks like in that scenario where you transition from an MS business to a Parkinson's business without stroke?

So you are talking about if we don't keep the AMPYRA franchise? Or if we do?

Yes, if you don't.

If we don't -- okay. So it would be approximately the same sales force numbers as we currently have for AMPYRA. So we would not expect a significant change to SG&A or certainly not increase for the sales force.

Okay. And then maybe one more, Ron. Have you guys thought at all -- any more about looking at the QD formulation in MS? I mean, it seems like if you could probably do some quick PK work and get that approved, at least on a much quicker path than in stroke. So I'm wondering if that's in any -- in all of your contingency plans? Thanks a lot.

Yes. You know, we have not guided to that. Our teams are continuing to assess that. And obviously once we have our QD data out, we will be looking at it even more deeply. So I'll just reserve comment on that for now.

Okay. Fair enough. Thanks a lot.

Michael Yee, RBC Capital Markets.

This is Andrew signing on for Michael Yee. I just wanted to confirm a SARNEX scenario, I just wanted to make sure that if the IPR is not cleared March 2017, that would -- is it correct to think that you probably won't advance the post-stroke program? And if that's the case, would that imply that your 2017 R&D numbers could potentially go down year-over-year? Thanks.

You're saying -- when you say the IPR doesn't clear, you mean that we don't win?

That's correct.

Okay. All right. So, first of all, just to make sure everyone understands -- if the IPR is not favorable to us, we will appeal it. So there's another year or so after that, during which we will appeal it.

And what we said is that with respect to post-stroke, we do believe that it would be challenging to commercialize the QD in the presence of a genericized AMPYRA market. That's all we can say at this point. We want to signal that it would be challenging, but we are continuing to assess that.

And once we have the data from the post-stroke trial and the QD formulation, we'll be able to dive into that more completely, particularly with the efficacy data that we have from the post-stroke trial. So that's all we can say right now.

Okay. Thank you.

I'm showing no further questions at this time. I'd like to turn the call back over to Ron Cohen for closing remarks.

Okay. Thank you very much, operator, and thank you all for joining us. We will see you next time. Have a good week.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. Have a wonderful day.