Acorda Therapeutics Inc (ACOR) 2017 Q4 法說會逐字稿

Welcome to the Acorda Therapeutics Fourth Quarter 2017 Update. (Operator Instructions) Please be advised that this call is being taped at the company's request.

I will now 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 all that this presentation will contain forward-looking statements. More detailed disclosures can be found in our SEC filings, which are public, and we encourage you to refer to those filings.

I will now pass the call over to Ron.

Thank you, Felicia. Morning, everyone. Diving right in, we achieved a number of key milestones in 2017. We reported AMPYRA net sales of $543 million, which was a 10% increase over 2016. This success reflects the health that AMPYRA is providing to tens of thousands of people with walking impairment associated multiple sclerosis, and it also highlights the strength of our neuro-specialty commercial organization, which has been recognized for its creative approaches to serving the needs in the MS community and also to risk-sharing and reimbursement.

We continue to vigorously pursue our appeal of AMPYRA, with replied briefs filed in November 2017. The next step is the oral argument, which we believe most likely will be scheduled in the next few months.

Our most important achievement of 2017 was the positive safety and efficacy data for INBRIJA, our Investigational Inhaled Levodopa Treatment for symptoms of OFF periods in people with Parkinson's disease. After we received a Refusal to File letter at the end of August, we refiled the NDA within approximate 3 months in early December. We took the time to respond to the 2 RTF issues and also to other questions that the FDA had indicated they otherwise would have asked during the standard review process. We expect the FDA response to the refiling any day. We ended the year in a strong financial position with $307 million on the balance sheet.

Moving to INBRIJA. This is an inhaled levodopa for people with Parkinson's disease. It is self-administered to address systems of OFF periods, and it uses our proprietary ARCUS technology for inhaled delivery. More than 1,000 subjects were studied in multiple clinical settings across the development program, which included a positive Phase IIb study, a positive Phase III safety and efficacy study and quite encouraging long-term safety data.

INBRIJA represents a significant commercial opportunity. It addresses a large unmet medical need, and we have a patent portfolio that goes into the early 2030s. In addition -- very importantly, in addition to the patent portfolio, we have a large body of trade secrets and know-how, which we believe gives a particularly long tail to the exclusivity on the technology.

We believe that approximately 350,000 people in the U.S. have both Parkinson's and OFF periods, and based on our continued market research, we believe the market opportunity for INBRIJA in the U.S. is greater than $800 million, and that does not include ex U.S. projections.

I'll now pass the call on to Dave, who will review the 2017 financials with you.

Thanks, Ron, and good morning, everyone. I want to take a minute to comment on a few key items of note in our financial results. As a result of the termination of 2 programs in the fourth quarter of 2017, we recorded asset impairment charges of $233.5 million for the tozadenant program as well as a $23.8 million impairment charge for the SYN120 program. These charges are included in our GAAP statement of operation net loss. However, when these and other charges are adjusted for non-GAAP reporting purposes, we ended 2017 with net income of $80.7 million.

In the fourth quarter of 2017, we received approximately $13 million for the monetization of Selincro royalty revenue. This transaction was recorded as royalty revenue in the fourth quarter.

We also received $40 million from health care partners in the fourth quarter of 2017 in exchange for the right to receive royalty revenue on FAMPYRA. This transaction was recorded as a liability on our financial statements. We will continue to record royalty revenues based on the actual Biogen royalties received. However, the royalty revenue payments to health care partners will be recorded as an offset to the liability and interest expense. On the balance sheet, we ended 2017 in a strong cash position, with cash and equivalents of $307 million.

Moving to our guidance for 2018. We project AMPYRA net revenues to be $330 million to $350 million. We expect to maintain exclusivity of AMPYRA through at least July 30, 2018. This guidance is subject to change based on the appellate court's decision. R&D expenses for the full year 2018 are expected to be $100 million to $110 million. These expenses include manufacturing costs associated with INBRIJA. SG&A expenses for the full year 2018 are expected to be $170 million to $180 million. Year-end cash for 2018 is projected to be healthy at over $300 million.

I'll now pass the call back to Ron.

Thanks, Dave. So we expect a number of key milestones, clinical and corporate, in 2018. They include the ones you see here. I won't read them all, but I will highlight that we are expecting the NDA acceptance for INBRIJA this month and really, any day now. We are also looking to file our MAA in Europe by the end of this quarter, the first quarter, and we would expect a PDUFA date also this year in the fourth quarter and looking to potential approval and commercialization of INBRIJA by the end of the year. Obviously, we're also looking for a decision in the AMPYRA patent appeal this year.

In closing, our strategic priorities are to advance INBRIJA toward approval and commercialization, maximize the value of AMPYRA, which includes vigorous prosecution of the appeal and also, continued financial discipline to ensure that we remain well capitalized.

We will now take your questions. Operator?

(Operator Instructions) Your first question comes from Michael Yee from Jefferies.

Two quick ones for you. You suggested that you will, or should, get a notification of the acceptance of the NDA filing. I guess, is there anything you can communicate to us that could give us confidence that, that should be no problem? I know that you had initial filing previously and this all isn't really in a black box, so presumably you've had some communications with the FDA in general about any deficiencies. So that's the first question. And then the second question is, there was another program that reported out Phase III data recently with pretty high efficacy. Maybe you could just talk to that data, and how you think your program stacks up to it, and/or whether you think the efficacy differences are clinically meaningful, because we've gotten some various feedback around that.

Okay, great. Thanks, Mike. So with respect to the filing and hearing back, we have high confidence that we should get this accepted and we'll hear back. If the FDA keeps to the statutory timelines, then we should hear back any day now, literally. It's usually around 74 days after submission. So technically, I believe that would be this Saturday. So it would be somewhere before or after that. The -- we can't give any more particulars on that except to say, at this point, we have not heard from them already. Usually, if we had heard from them in advance, we would expect that, that would not be for -- usually, for the best reasons. So we're -- we have high confidence. And more than anything, we have high confidence in the quality of the NDA. And that's really the bottom line.

With respect to the data you've referred to, I believe you're referring to the sublingual film technology. So first of all, let's just say, from the top, we don't comment on other people's data. We leave that to them. We think that's fair, other than in broad terms. I think what we can say is that nothing in those data changes any of our thesis that we've articulated for some time about these products for OFF periods in the market. We've said consistently that we believe we will take -- or that INBRIJA will take a majority share of the market. But that -- if the other product comes to market, we would expect it to take a significant minority share. And the greater-than $800 million projection for INBRIJA sales in the U.S. takes that into account. So that's -- $800 million is the INBRIJA share that we project, but it does take into account that there is another player in the market taking a significant minority share. You have to be very careful in comparing data across products and across studies and especially in Parkinson's disease. Parkinson's is notorious for major variability in the patients and studies and, more than anything, major variability in the placebo effect. So if you look -- even at our own program, if you look at our Phase IIb study, we showed a placebo -- which, by the way, that was a robust placebo-controlled, randomized, adequate study, which is being used as 1 of the 2 studies for the NDA -- main studies for NDA. If you look at that one, we showed an over 8-point placebo-adjusted change difference in the UPDRS Part III. If you then look at our Phase III, we showed about a 4-point placebo-adjusted difference. But the difference is, between the 2 studies, were almost all based on placebo effect. If you looked at the absolute changes in UPDRS, they were about the same in both studies. So you have to be very careful and especially now -- so these are the same product. When you're dealing with different products, different populations across studies, you really cannot make valid comparisons in that regard. Obviously, we need to see their detailed data, and we're looking forward to that whenever they choose to present that. But as an overall, I would caution everyone, we caution ourselves not to try to make those comparisons, because they're not valid. What I will say is that for INBRIJA, we had high statistical significance in both studies on primary outcome. We hit a number of secondary outcome measures that were important and are important. We like the fact that this is L-dopa. And in fact, if you look back on why Civitas, which was the company we acquired to get the ARCUS technology and INBRIJA, why they originally formulated L-dopa rather than apomorphine for OFF periods, which was a choice at the time, it's because the market research came back strongly saying that L-dopa is the gold-standard therapy that the prescribers in the Parkinson's space immediately gravitate toward L-dopa. They're comfortable with it. They understand it deeply. They've been using it for decades. So that drove the original decision, and I will tell you that our market research, ever since then and into today, continues to validate that assumption.

Your next question comes from Cory Kasimov from JPMorgan.

This is Carmen on for Cory. For INBRIJA, could you speak to how ex U.S. partnership discussions are going? You've guided to an MAA filing in the first quarter. Given that timeline, what do you see as the optimal timing for getting a partner on board to support launch there?

Well, I would say, overall, that the optimal timing for getting a partner is when you get a partner with a deal that you think is excellent. So I -- obviously, you'd like to do it before approval so that you're ready to launch. We announced last year that we were exploring ex U.S. partnerships versus go-it-alone strategies in various parts of the world. We're continuing to have those conversations, and I think I'll leave it at that. We're -- that's continuing to develop. And we're not letting that wag -- that tail wag the dog. The most important thing is to get the MAA in, in a timely way. We have time on the rest of it.

Great. And then, one other question on AMPYRA, if I could. What are your expectations for the pace of erosion post-July, assuming it does lose exclusivity at that point?

Yes. So obviously, the main imperative there is for us to win our appeal so that we don't have to deal with that. If we do have to deal with that, and we lose exclusivity by the end of July, we expect a pretty dramatic erosion curve. That's what you expect. We've got 10 or 11 generic filers, several of whom have gotten conditional approval already. So we would expect multiple entrants into the market and a pretty rapid erosion curve. We are taking whatever steps we can to mitigate that curve, because anything we do to mitigate it is worth a significant and meaningful revenue to the company. So we are taking steps to do that. And our year projections for AMPYRA this year take as a base case that we lose exclusivity at the end of July. And you can just extrapolate, based on what those numbers look like, how rapidly the curve will decline.

Your next question comes from Phil Nadeau from Cowen and Company.

First one on INBRIJA. In the Refuse to File Letter, there were a couple of elements that referenced manufacturing. Can you talk a bit more about what those elements were, how you rectified them and I guess, more importantly, where you are today with INBRIJA manufacturing? Are you ready for an inspection? What else do you need to do to be able to commercialize INBRIJA later this year?

Thanks, Phil. So yes, we're ready for an inspection. Let me just put that right out there. There was really only one -- there was really one manufacturing-related issue other than the inspection issue, which I'm going to submit was trivial. And it wasn't so much an issue of whether we were actually ready or had the right stuff going on in manufacturing. It was more about the way in which we presented certain data in the NDA, and the FDA preferred something else, and we gave that to them. And frankly, we were able to do that very rapidly. The only reason it took 3 months to resubmit was not that, because if we'd had to rectify only that, it would have been a matter of probably a couple weeks. The only reason it took 3 months was we took the time to answer all their other questions, which were ordinary review questions, so we got those out of the way ahead of resubmitting of the NDA. So we are as prepared as we believe it's possible to be at the manufacturing plant and all aspects around manufacturing. We have done our own mock inspections, mock PAI inspections with external experts, many of them ex-FDA people. So we're feeling as confident as we can about that, absent actually having had the PAI from the FDA. So we're doing everything, I think, you would reasonably or even unreasonably expect that we would do to ensure the integrity of the entire manufacturing chain.

Great. And are you able to manufacture product today to stockpile in advance of an approval?

We are -- I don't want to get into the weeds too much on this. We are -- we will be stockpiling adequately this year for an expected launch.

Good, okay. And then, just second on the pipeline, one of the events is the rHIgM22 Phase Ib data later this quarter. Can you give us your thoughts what we should be looking for in that data? Is it simply a safety look, or could there be any signals of efficacy?

So the primary end point, if you will, was really safety in people who were experiencing acute relapses, given the fact that they are in an immune-charged state, if you will, and we're introducing an antibody. So we wanted to make sure that there was no untoward interaction there within an acute relapse state. But having said that, we are looking at various markers or indicators of myelination in the study. Probably, the most interesting one is the magnetization transfer ratio on MRI, which is felt to be one of the better ways to look at myelination in the CNS. So we'll be -- we are crunching all those data. And the difficulty here is because it was designed as a Phase I safety study, you have a relatively small number of participants in the study. Very highly variable conditions. So you take what you can get in this kind of a situation. If we have a signal of some kind, that'd be great. But it is a very small number of patients relative to the power you would need to really come home with a conclusion.

Got it. And one last question for me. Just on the AMPYRA potential generics. What are your thoughts on an authorized generic? Is that something you would consider?

We're very [familiar] with authorized generics. We did it, for example, with ZANAFLEX, after we lost exclusivity there. So we have experience with that. I guess, what I'll say, Phil, is we have explored every potential way of preserving a revenue stream and mitigating the tail on the loss of exclusivity. We have certainly explored authorized generic. I don't want to commit right now to what we -- which of those different ways we are choosing. But you should be comfortable that we have explored it thoroughly.

Your next question comes from Charles Duncan from Piper Jaffray.

Wanted to ask you a question about the Refuse to File and subsequent regulatory interactions on INBRIJA. Doubt that you'll be able to speak about specifics. But wondering if you could provide any additional color on some of the other kind of subjects that were addressed and whether or not you think that this process could actually have been value-creating in terms of, ultimately, the clarity of an approved label or at least kind of regulatory review?

Well, thanks for the question, Charles. So look, overall, let me just say, we were not happy to have gotten the Refuse to File; and that we have recovered from it, and that's great, and we hope never to repeat that. But having said that, your -- I do see your point, and it's something we've contemplated internally as well. We do have a drug-device combination, the pulmonary drug and things that people have pointed to as less usual and therefore often more complicated during an FDA review process. So anything you can do to mitigate that or make it more straightforward or easier for FDA in their review is a good thing. And it did give us -- the silver lining, which you point out is, it did give us the opportunity to respond to multiple questions that they came up with during their first couple of months of review of the original NDA. And in doing that, our hope is that, with the new NDA, they're starting from a point 2 months further ahead in their review, because we've already responded to the first couple of months’ worth of questions. So hopefully, what we get now is going to be the questions that would come beyond that, which means it gives us a leg up on this new timeline. Now there's no way to project for sure how that works out, but I will say, we think it's a silver lining in that respect.

Okay, that's helpful. And we'll look forward to the PR in the near term. Wondered, and this may seem like a naive question, but is there any chance that they could bring up the idea of conducting a panel -- an AdCom panel? Are you contemplating that?

Well, when we get the letter, it should indicate -- if they are contemplating a panel, we expect the letter would indicate that. We have not heard anything about that in any of our conversations with the FDA. It doesn't mean it won't happen. It's just that we have no insight into that, because they have never raised the possibility so far. From our own perspective and that of our consultants, we're not sure what it is they would be trying to accomplish with a panel. L-dopa is a well-known drug. The only difference here is the mode of delivery. And frankly, that comes down to usability and safety, more than anything. Our long-term safety data looked terrific, from our perspective on it. So it's not clear to us what they would be trying to accomplish if they were to want an AdCom. Now having said that, we have to wait and see. If they decide they want an AdCom, presumably we'll find out in the letter.

And that's a great segue to my last question, talking about the mode of delivery being really the key question here in terms of approvability. I'm assuming approvability and eventually -- and I guess, with that regulatory review, assuming that it's not overly challenging, could you foresee further application of the ARCUS technology to emerge in, call it, the next 12 to 18 months? Would you contemplate expanding the use of that technology?

Yes. So we've already looked at a triptan for migraine, an inhaled triptan for, hopefully, rapid release of migraine. That was CVT-427. We reported last year that we ran into a bump on that one with some bronchoconstriction, seen particularly in people with histories of asthma bronchoconstriction. So we felt that there was a need to tweak the formulation. Because of some of the issues elsewhere that we encountered last year that required the focus of the organization, like the RTF and the refiling, the MAA, and so on, we have not been able to accelerate that reformulation, but it is our plan -- that's a high priority, once we get a little bit further ahead in this year's priorities on INBRIJA, the patent appeal, and so on. It is our plan to accelerate that program as well as other programs involving the ARCUS technology. We reported at the JPMorgan conference this year that we have a couple of really interesting programs for orphan lung diseases that some of -- one of which is being funded by the Bill Gates -- Bill & Melinda Gates Foundation. So we're looking to continue to build on that.

Your next question comes from Laura Chico from Raymond James.

Quick one, if I could just revisit the R&D expense. I think you mentioned that manufacturing would be influencing kind of where you are in that band. We're just wondering if you could give us a little bit more color in terms of what extent that is for the guidance. And also, how we should be thinking about the underlying R&D going forward? And then, I have a follow-up.

Yes, Laura, the -- so you're right, we -- the R&D guidance for next year -- or for 2018 includes all the costs around manufacturing, preparing for launch. I can't get specific into the exact breakout of those numbers. But it's fully loaded for the cost to the launch the product.

Okay. And then, I guess, just a follow-up question kind of related to FDA and the RTF. I think FDA senior leadership has definitely emphasized more recently, putting out greater clarity around guidance for complex products, like drug-device combos, yet 3 of the last 4 RTFs we've seen come out have been issued for drug-device combinations. So I guess, with that backdrop, I'm just wondering if you can opine perhaps with your own experience, given AMPYRA and INBRIJA, how you might see the agency kind of changing direction, or if communication has changed at all just compared between INBRIJA and AMPYRA?

Yes, it's hard to answer that question. I will say that, yes, the FDA -- I think the FDA has acknowledged and realizes that they can be doing better with respect to the clarity that they -- with which they deal with drug-device combinations and the guidance they're giving to sponsors who have drug-device combinations. So we see that as a good thing. And we certainly hope and encourage them to accelerate that process.

Your next question comes from Jay Olson from Oppenheimer.

I guess, with the potential loss of exclusivity for AMPYRA in July, and then the PDUFA for INBRIJA coming in the fourth quarter, can you just talk about how you're going to transition your sales organization over to prepare for the launch of INBRIJA? And then, how they line up in terms of the number of representatives and the doctors they're calling on?

Sure. So the sales force, if we have a loss of exclusivity at the end of July, it would be a seamless transition. It's essentially one for one. It's the same-size sales force, the same sales force, same commercial organization, it just transitions over to the Parkinson's space. We've already got all the territories mapped out. There'll be some realignment of territories just to take into account areas where there wasn't overlap. There's a fair amount of overlap, but obviously not complete. But it would be the same sales force. I will say that our sales force is very excited about the prospect of launching a brand-new drug, important drug in the Parkinson's space. I'll also pitch for them and say that you can see what they've done with AMPYRA. It's just an outstanding, outstanding, neuro-specialty force out there. They're very well respected by the prescribers. And they take real ownership and real pride in delivering important medicines to these communities. So we're very excited for them and for us to have that happen. During the transition period, so if we have a loss of exclusivity, let's say, at the end of July, and we don't expect an approval until, let's say, the fourth quarter, they're still going to be out there working to mitigate the tail on AMPYRA. So they will be fully employed, as they are now, continuing to do the best possible job with AMPYRA, delivering it to [patients, delivering] the messages about the importance of it to people with MS and walking disabilities, and they are already being trained. They're being fully trained on Parkinson's disease, on INBRIJA. Obviously, once we get the label, they will complete the training. So they will be ready immediately. As soon as we're ready to launch, they will be making that transition. And until they make that transition, they will be maximizing the AMPYRA potential. Now if we win the appeal, which is every bit our intention, and we keep AMPYRA, that comes under the heading of very high-quality problem to have. We would expect in that case that we would increase the sales force. We would expand it by about 30%, 35%, something like that. We currently have, call it, around 100 people in the field. It depends on who you're counting. But -- so we would add another 35 people-or-so to that, realign the territories, and then we would have them promoting both AMPYRA and INBRIJA.

Okay, great. And then, can you please update us on your latest thoughts about how you plan to price INBRIJA? And then, if you've had any discussions with payers, any feedback from those discussions?

Yes. So we have -- yes, we have had conversations with payers as part of our ongoing market and pricing research. We will be having many more conversations over the next several months into the approval and launch. We have developed, we think, a pretty robust sense of where the market is here, as I alluded to in my original remarks today. We're not prepared to talk about price as of now, and we will not -- I don't expect we will talk about price until we're right around launch, when we make a final determination. What I'll say overall is, we've been very encouraged by the trends we see in the overall movement disorder space, new entrants into the market, the market research on INBRIJA, in particular the payer research in terms of receptiveness to the value proposition of an OFF period drug. So putting it all together, I think the best statement I can make about it is point to our increase in projection on the market potential in the U.S. for INBRIJA, which is now, we're saying, over $800 million. And that is a reflection of the entire picture that we're getting from our market and reimbursement research.

(Operator Instructions) Your next question comes from Raghuram Selvaraju from H.C. Wainwright.

This is Julian on for Ram. You previously indicated that the oral argument for the AMPYRA patent appeal is expected to take place first half of this year. How soon after this takes place would you expect to receive a decision from the appellate court?

That -- it's really not possible for us to know that. It's entirely dependent on the judges and their docket and all the factors that go on their end. Typically, it would be months; you measure it in months, but how many months, we don't know. And it's worth, again, repeating that if the timing is such that we don't have a verdict prior to the July 30 end of exclusivity on the existing patent, we would request an injunction to prevent the generics from launching until we have the verdict.

(Operator Instructions) We do not have any questions over the phone at this time. I will turn the call over to the presenters.

All right. Thank you, operator, and thank everyone for joining us. Look forward to updating you next quarter.

Thank you.

This concludes today's conference call. You may now disconnect.