Alkermes Plc (ALKS) 2010 Q3 法說會逐字稿

Ladies and gentlemen thank you for standing by. Welcome to the Alkermes conference call to discuss the Company's third quarter fiscal 2010 financial results. I will be you r operator for today's call. 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 recorded at Alkermes request.

At this time, I would like to introduce your host for today's call Ms. Rebecca Peterson, Vice President of Corporate Communications at Alkermes. Please go ahead.

Thanks very much. Good afternoon and welcome to the Alkermes conference call to discuss our financial results for the third quarter of fiscal of 2010 which ended on December 31, 2009. With me this afternoon are Richard Pops, Chairman, President, and CEO of Alkermes and Jim Frates our CFO. Before we begin, let me remind you that during the call today we will make forward-looking statements relating to, among other things our expectations concerning the commercialization RISPERDAL CONSTA, VIVITROL and exenatide once-weekly. Our future financial expectations and business performance, are expectations concerning future business development transactions and our expectations concerning the therapeutic value and development of our product candidates. Listener are cautioned that these statements are neither promises nor guarantees but are subject to risk and uncertainties that could cause our actual results to differ materially from the results contemplated by the forward-looking statements. You can find a complete list and detailed description of these and other risk in our annual report on our Form 10-K, our quarterly report on form 10-Q, which was filed this afternoon as well as the other periodic reports filed with the SEC under the Securities and Exchange Act of 1934 as amended. We undertake no obligation to update or revise the information provided in this call.

This afternoon, Jim Frates will discuss our third quarter financial results and Richard Pops will provide an update on the company. After our remarks, we'll open up the call for Q&A. Now, I would like to turn over the call to Jim.

Thanks, Rebecca. Good afternoon, everyone.

Overall, this has been a strong quarter from a financial point of view. Both RISPERDAL CONSTA and VIVITROL achieved record quarterly sales. On a revenue basis, RISPERDAL CONSTA the primary engine of revenue growth here at Alkermes continued to perform very well, growing operationally at over 18% year-over-year. In addition, we're making progress toward our goal of reaching operational break-even for VIVITROL in the alcohol dependence indication. With 17% sequential growth in net sales. During the quarter, our strong revenue performance coupled with our expense management aloud us to record a small pro forma net income and generate $6.4 million of cash from operations. Finishing the quarter with approximately $358 million in cash. As Rich will discuss further, our strategy is to make disciplined investments in our pipeline with the cash flow we generate to lay the ground work for the next stage of our growth.

To provide more detail on this quarter's financials, total revenues were $44.2 million, attributable to strong manufacturing revenues and record royalty revenues from RISPERDAL CONSTA based or $400 million in end market sales. As J&J stated on its recent quarterly earnings call, "RISPERDAL CONSTA achieved fourth quarter sales growth of 18.1% on an operational basis. US sales growth was 13.7% with increased script share and market growth contributing to the results. Sales outside the United States were up 20.6% operationally with double-digit growth in all of the major regions and the launch earlier this year of RISPERDAL CONSTA in Japan".

These strong revenue results from RISPERDAL CONSTA were notable as they occurred during the first full quarter that Johnson & Johnson was promoting both RISPERDAL CONSTA and their long-acting form of Invega, demonstrating an additional promotional activity in the market place may in fact serve to grow this class. There is room in the market for multiple long-acting atypical products. Based on sales during our first three fiscal quarters of 2010, RISPERDAL CONSTA continues to be a blockbuster product. On track for another year of growth with expected sales in excess of $1.4 billion for our fiscal year. RISPERDAL CONSTA has patent protection through 2020 in the United States and 2021 in the, EU and so, we expect RISPERDAL CONSTA will continue to generate a profitable revenue stream for Alkermes for years to come.

With respect to VIVITROL, net sales for the third quarter were $5.5 million, an increase of approximately 17% compared to the second quarter. In addition for the fourth consecutive quarter, we have reduced our SG&A expenses associated with VIVITROL. The big news was the positive results from our phase three study of Vivitrol and opioid dependent. We intend to file an SNDA for that indication by April of this calendar year and plan to leverage our current commercial team to sell the drug.

Turning to Exenatide once-weekly, or EQW, the pudafa date of March 5, 2010 is rapidly approaching. Our partner Amylin is preparing for all aspect of product launch including manufacturing. During this quarter, we recognize manufacturing revenues in the amount of $1.5 million related to our supply agreement with Amylin for polymer for Exenatide once-weekly. We expect EQW to provide a substantial revenue stream for Alkermes upon the launch of this product. With our royalty on net sales and no unreimbursed expenses, we'll have a significant stake in the profits from EQW.

Turning to expenses, total operating expenses for the third quarter were $50.4 million which included $3.4 million of charges for noncash compensation, $2.1 million of R&D expense related to our license agreement with the seller Pharma and $3.6 million of mostly noncash charges associated with our relocation of our headquarters from Cambridge to Waltham, Massachusetts. We'll continue to incur relocation costs through our fourth fiscal quarter and expect our move to generate annual savings of approximately $10 million to $15 million in fiscal 2011 and beyond. Excluding our headquarter relocation cost and noncash compensation expense, we reported a pro forma net income of approximately $147,000 this quarter. On a GAAP basis, we reported a net loss of $6.8 million or a basic and diluted loss per share of $0.07. For a full reconciliation of our pro forma net income to GAAP as well as details of our quarterly revenues and expenses, you can review the press release issued this afternoon on our web site.

We ended the quarter with $358 million in cash. In view it as a strategic asset. We're deploying are cash opportunistically, for example in December we licensed a medifusion technology platform from [exceleron] for an up-front cash payment of $2 million. As part of the transaction we also made an $8 million equity investment in exceleron which carried under other assets on our balance sheet.

In closing, we're pleased with our strong performance this quarter, especially with the growth of RISPERDAL CONSTA. We're pursuing our corporate goals while maintaining our cultural of fiscal discipline and we remain well positioned to invest in our research and development efforts and explore future opportunities to build value. For more on that, I'll turn the call over to Rich.

Thank you, Jim. Good afternoon, everybody. So, we had a good quarter in what's shaping up to be a very good year for Alkermes. We expect 2010 to be a transformative year for the Company and we entered the year with momentum. We're in the unusual position of having two promising late stage products that could receive FDA approval this year. We have a solid foundation of revenues from first in class products and financial strength and we have a promising pipeline of new medicines becoming increasingly visible to you and to potential pharmaceutical company partners. During the last quarterly conference call in November, we outlined our plans to accelerate the development of our own portfolio to reinvigorate the Company's scientific initiatives and expand the scope of our business. Since that call in November, we've been focused on executing our plans and we've already made significant progress. I see the Company at a point of shifting into a higher gear. We've got more going on, more late stage programs, more mid stage programs, more regulatory interactions, more science and more business development discussions. This is an exciting time and an exciting place. So, here are some of the key highlights to focus on.

Let's start with the major near-term driver for Alkermes. Namely, Exenatide once-weekly or EQW. Since we're quickly approaching the March 5, pudafa date, just last week, even though it seems like a month ago, the FDA approved [vicktoza], a once-daily injectable GLP one analog for the treatment of type II diabetes. This is big news and we believe positive news for those of us developing therapies in this class and for patients with type II diabetes. We think the launch of [vicktoza] into the US market is a good thing for a couple of reasons. First, and perhaps most obviously, it shows that the FDA is willing to approve long-acting GLP one analogs. Second, the launch of [vicktoza] should help to broaden the awareness and adoption of this important new class of diabetes medications. The growth of this new class will come from expanding the number of patients treated and this will come from expanding the number of prescribing physicians. Multiple entrants in the class will increase the educational efforts directed toward endocrinologists and importantly, expand the market to primary care physicians as well. So, in an environment where physicians are increasingly aware of and more comfortable prescribing GLP one analogs, the unique features of EQW stand out. Amylin strategy has been to position EQW for market dominance. And it is not just talk. They've invested in the significance series of clinical superiority studies for EQW called duration. The results of these have been steadily building over the past few years. With EQW already having demonstrated superiority to Atlantis, [Actos, [Genuvia] and [Viaida]. Amylin also announced the initiation of duration six to show superiority over [vicktoza] with results expected in 2011. There are also plans to initiate a large cardiovascular outcome study called excel designed to compare the CV profile of Exenatide once weekly to the current standards of care for diabetes treatment. Which is expected to enroll over 12,000 patients and generate results in 2016.

So, in summary, we believe that EQW can be a game changing medication. We think it has the potential to define a new standard of care in the typement of -- in the treatment of type II, I am sorry, and we're anticipating its approval. While nobody can predict with accuracy the timing or the nature of the FDA review process, we're moving steadily toward the pudafa date.

Turning to Vivitrol, last November, we announced the positive type line data from the Vivitrol face three study in opioid dependence and the rules were conclusive. The six month study met its primary efficacy end point as well as all of the secondary end points. The data showed that patients treated once monthly with Vivitrol demonstrated higher rates of opioid free urine screens compared to patients treated with placebo. Based on their compelling results of the study, we plan to file an SNDA with FDA by the end of April and will request a priority or six month review. The results are very significant in Vivitrol has the potential to be the first and only long-acting nonnarcotic, nonaddictive medication for opioid dependence. This could significantly change in advance the treatment paradigm for these patients. As you may be aware, unlike alcohol dependence, opioid addiction is frequently treated with medications. The leading product in the market [lavoxone] generated approximately $840 million in sales in 2009. So with our phase three data in hand, we're actively researching and quantifying the medical and market opportunity for Vivitrol in this new indication.

So, let me switch gears now and review some of the progress we've made in a short period to expand the technology platforms. This morning, we announced a new proprietary technology platform called LinkeRx.

LinkeRx is designed to create injectable sustained-release versions of important drugs including those in an area where we have some expertise, atypical antipsychotic therapies. You should think of LinkeRx as enabling the next generation of injectable sustained-released medications from Alkermes. This new generation of product candidates moves away from being dependent on microsphere and polymers to provide the extended release. We achieve extended release through the application of proprietary chemistry to create new drug molecules designed specifically for this purpose. This has certain advantages in terms of manufacturing, handling, reconstitution, refrigeration, et cetera. ALKS 9070, the first candidate to be developed using this technology is designed to a once-monthly injectable, extended-release version of aripiprazole commercially known ABILIFY. ABILIFY had worldwide sales in 2009 in excess of $4 billion. This is clearly a significant market opportunity. A long-acting version of ABILIFY, a drug with proven safety and efficacy has the potential to improve patient outcome, reduce costs and provide physicians and patients with another important option to manage this serious and chronic disease. From a business perspective, the success of CONSTA reveals the need for broader range of injectable extended-release antipsychotic. RISPERDAL CONSTA is an important drug in part because Alkermes technology and in part because the active agent is RISPERDON. Aripiprazole is a mainstay in the atypical antipsychotic class and approved in six indications. A long-acting version of this particular medication would be a significant addition to the treatment options available to patients and physicians. Based on encouraging free clinical results, we expect 9070 to enter the clinic in the second half of this calendar year. We've submitted a number of patent applications to the US PTO in order to protect the LinkeRx technology and ALKS 9070. We're also applying this technology platform more broadly to other select molecules.

In addition to LinkeRx, in November, we added the medifusion technology platform from [Exceleron] which is designed to extend the circulating half life of proteins and peptides. Medifusion represents another opportunities for Alkermes and like LinkeRx, it is based on this idea of direct molecular modification to enable sustained release. Our first drug candidate using medifusion will be for long-acting version of an established blockbuster product. What we call ALKS 6931 is a long-acting form of a TNF receptor SC fusion protein for the treatment of rheumatoid arthritis and related autoimmune diseases. So, ALKS 6931 is structurally similar to Enbrel which had world wide sales of more than $6 billion in 2008. We expect to file an IND in the second half of this calendar year for 6931.

So, as I mentioned earlier, we have more candidates in the pipeline than ever before. We expect progress across the whole portfolio. We're not going to review the whole portfolio in depth today. But let me just give you a couple points related to upcoming news for some of the early stage candidate we didn't talk about. ALKS 33 is an oral opioid modulator for the potential treatment of addiction and other CNS disorders. We expect interim efficacy data from the phase two study of ALKS 33 in alcohol depending patients by the end of the calendar year. ALKS 37 is an oral peripherally restricted opioid antagonist with potential opioid induced constipation. We expect to report top line results from the phase one clinical study of 37 in the first half of calendar 2010 and we plan to initiate both phase one B and phase two studies before the end of the year. So, put it all into perspective. In the last quarter, one, we reported record sales for RISPERDAL CONSTA. Two, we announced positive phase three results for Vivitrol. Three, our products entered three new clinical studies. Four, we announced two novel technology platforms with two new drug candidates based on existing blockbuster drugs. And we're just getting started.

So, with that, I'll finish and throw the call back over to Rebecca for questions.

Operator, we'll now open it up for Q&A.

(Operator Instructions). Thank you. We'll now begin the Q&A session. Our first question comes from Cory Kasimov from JPMorgan. Please go ahead.

Thanks. Good afternoon, guys. Thank you for taking the questions. Let me start off with today's news of what came out this morning. And I guess two questions on this. First, can you talk about the IP around ABILIFY at least what you know of it? And then also assuming nothing unexpected jumps up as this starts to progress through the clinic, can you discuss a little bit of what the development plan may look like? Is this something that goes straight from phase one into pivotal phase three program? Sure, I'll answer both, Cory. It is Rich.

The IP around ABILIFY is interesting. One of the things we learn from RISPERDAL CONSTA is if you look at the sales at a billion four, 2/3 comes from outside the US. The IP strategy is a global IP strategy. I won't be able to answer it and I won't answer it in granular detail on the call but we -- we do know on a global basis, number one. Number two, the IP is fluid in these various jurisdictions. And number three, it is important to point out that our molecules are new molecular entities and separately patentable on their own. We don't expect the Bristol Patent to be impediment to our launching the product. Second one, a development plan, some word to answers I've given you before on this where given the nature of these development programs, they're real important study is the first study where we determine the PK profile. If the PK profile is within plasma concentrations that are relevant to previous studies of the drugs, we have probably a more accelerated route than if we're forging new ground scientifically. We'll move as fast as we can to get the dosage form into its first human study to see if it recapitulates what we see in the animals. When we have that data in hand, we'll guide you how we're going to go from there.

Ok, great. Regarding VIVITROL, now that you have the positive phase three data and opioid addiction, any inside that you can share with us post that from your interactions you can share with us post that from your interactions with KOLs or potential market research you might have conducted in the intervening time period?

Much of that is on-going. We'll be getting data over the next several weeks from our first forays into the more formal market research. That said, one of the most interesting things was really just looking at where the suboxone number ended the calendar in 2009 year. Our number was around $840 million. What that does is two things. Number one, it quantitate with one data point, a market opportunity. But number two, the more people that are on suboxone, the more people that are in treatment with pharmaceutical products and also the more people who are being treated [with-in against] which increase the demand for antagonists because people -- the more and more they use agonist, they realize the benefits of them but also the limitations of them. There is a general treatment of opioid treatment building in the community. You may have seen that here in Massachusetts, it is all of a sudden over the last three or four months becoming a political and an economic story because the cost of treatment opioid dependent in the common wealth is getting to be so excessive. Part of that is because more and more payors are paying more and more money for suboxone as well as methadone. So, there is an increasing interest in the use of antagonist but I could go on forever. We'll wait until we get some of the more quantitative market research and we'll share that with you.

Ok. Thanks for taking the questions.

Thanks, Cory.

Our next question comes from Steve Yoo from Leerink Swann. Please go ahead.

Thanks for taking the question. I just had a couple of questions. One is the cost of goods for VIVITROL. Right now, I understand because it is not selling that much, it is kind of variable. Where do you expect it to normalize that once you hit several hundred million dollars worth of sales or $100 million plus in sales?

Hey, Steve, so, actually, the last few quarters, we've actually been doing better production and our margins, our gross margins now are in the same 70% to 80% range that RISPERDAL CONSTA has been. The more VIVITROL we make, the more likely we are to have those consistent margins but we think it will be near RISPERDAL CONSTA going forward.

Ok. Let's see. On a more bigger level question, you have -- you have a lot of cash and you are using money to get some R&D programs up and running. As far as future deals, are you thinking more along the lines of exceleron like deals early stage or later stage? How do you envision cash use going forward?

Well, we're not planning on any large deals right now. I mean never say never to anything. But right now, the internal pipeline is so rich, we've got enough just as evidenced by today with the LinkeRx stuff that we're talking about. We're interested in kind of selective acquisitions to build on a product by product basis but we're not looking at anything seismic for the Company. The other thing, it is important to point out is that the more we build the technology platform, the more we put more product into development, the more opportunities we have to partner and generate revenue with Pharma. Because we're not dependent upon their capital or anybody's capital at this point, we can advance these things as far as we need to advance on our own without being dependent. But it gives us an opportunity always to be questioning the opportunity for business development along the way.

Ok. Thank you very much.

You're welcome.

Our next question comes from Dave Windley from Jefferies & Company. Please go ahead.

Hi, thanks. Good afternoon. Jim, would you be willing to comment on the VIVITROL sales from the J&J Russia partnership? For licensing?

Sure, Dave. I won't break them out specifically. But they're really diminimus compared to -- so they don't come in the VIVITROL revenue line at all at this stage.

Ok. The ALKS 6931 , what would you be -- what would you anticipate targeting as a dosing frequency and if it is too early to give an answer along those lines, maybe answer what do you think the minimum dose -- or the minimum duration between doses would need to be to make it a viable commercial

Going in, our objective is once a month.

Ok.

And I think that's -- I think you could argue for once every two weeks. We're going go for once a month.

Ok. And on EQW and thinking about that versus [vicktoza] , Nova had some comments about their own views of the comparison. Don't know if you got a chance to hear those or read the transcript but I wondered if you might offer your views on the comparison between the

I didn't look at their transcripts so I don't know exactly what the comparisons would be but the comparisons we're probably most interested in are the ones that have been published in major scientific fora in the form of the duration studies where we show comparative data to other diabetes medications. So, the advantages are self-evident of once a week So, the advantages are self-evident of once a week dosing with unsurpassed glucose control, weight loss, well tolerated and potential cardiovascular evidence. But the most important thing for us now is to get the drug approved and I think it will do just fine in the market place.

Ok. And Richard, last question for me is as you're building -- as you said, your pipe line is getting richer and you're building more opportunities, would you anticipate continuing to effectively keep your foot on the accelerator across the waterfront of programs here? Or are you going to prioritize -- I guess it is basically an R&D spending question. Do you have a -- do you have a tolerance or an appetite Do you have a -- do you have a tolerance or an appetite to keep ramping the R&D spending number as programs warrant that. Or are you going kind of keep a cap on that vis-a-vis revenue?

A little of both. Because we're at the face now with the -- when we put things into clinic, they're not particularly expensive. In order to get the key go, no go or even human proof of concept results. So, take 9070 where we run a human PK study, the discount rate we would put against that program would drop dramatically if we saw the profile we wanted long before we initiated a complex phase three program or even accelerated phase three program. So, the answer is we're going to hammer to get as many things into man to approve this year and next year. And as we start then modeling out what the later stage programs are going to look like, we'll have the ability to partner and we'll have the ability to see how EQW is doing and make that determination in real time.

Ok. That's helpful.

The top of the funnel is the most important right now. Most companies, the top of the funnel for them is earlier stage discovery stuff. For us, the top of the funnel are products that are really almost ready for clinic. And given the nature of the drugs we develop, we learn very, very quickly in the clinic whether these things are doing what we expect them to do.

Got it. Understand.

Thanks, Dave.

our next question comes from the Tom Russo from Baird.

Good afternoon, I wanted to revisit the LinkeRx update today as well. Maybe just to push a little further. I heard new molecular entity and things of that nature. Could you be specific. Is your understanding that this would qualify in FDA's eyes as exclusivity and also for a true composition of matter patent? I'm thinking back to new rivers platform technology and wondering if there is any analogy between that and what you're looking at doing.

Well, I think the answer is yes to both of those questions about whether from the FDA's point of view and certainly in terms of IP. Actually, one of the things that we sought to do was leverage some of the pharmacology associated with the known atypical but embody that in a new molecular entity that was separately patentable.

Ok. And then I wanted to also just ask the VIVITROL opportunity and opioid addiction, hearing, a proxy that $840 million is potential for another drug in the category and also that there is currently no plans to increase the sales force and could you comment maybe on -- at what point might you consider that or what you would need to see in order to consider putting it bigger SG&A effort behind that opportunity?

I think just to be clear, when I cite the 840, I want to make sure people don't think that I'm saying that VIVITROL will be $840 million. I don't know yet. What -- the point I was making is that there's $840 million of doctors and patients and payors involved in the commerce associated with treating this disease which is so different than what we went into with alcohol. So, VIVITROL is a very different product because it is injectable product. It is priced differently and it will appeal to a different footprint of patients and doctors than suboxone will. That said, to answer your question, what's remarkable about the sales of suboxone is that about 2,000 doctors are doing about 80% to 90% of all of that business. So, it is not a subspecialty or an indication that requires large mirrored national footprint to go after but that's precisely the work that we're doing right now. Because we can identify those suboxone docs, it is a tractable number and it maps well against the specialty capability that we have. We're doing that work now.

Ok. And then last question, you know, obviously J&J put up a big number for CONSTA this quarter. And I know your last call, we talked a little bit about the supply chain changes and your guidance update at that time. Can you give us a sense from your viewpoint, was the December quarter reflective of underlying demand and is the supply chain kind of unlikely to result in any disconnects going forward?

Well, Tom, it is Jim. I'll tell you what we know which is what we quoted from Johnson & Johnson. They talked about increased prescription share in the United States as well as a growing market. And I think that's very, very important for us because you know, related to an earlier question as we consider how much we're going to spend on R&D, if RISPERDAL CONSTA is continuing to grow at a double-digit pace for the next few years, that's obviously a very, very important aspect for us. So, I think it remains early in this face of RISPERDAL CONSTA now with other products on the market. We've been in the market now, that's been in the market for four months. But clearly, the growth that we saw in the United States, really their best quarter ever for CONSTA is a great way to start from our perspective.

Ok. Thanks for take, the questions.

You're welcome.

Thanks, Tom.

our next question comes from Ian Sanderson from Cowen and Company. Please go ahead.

Good afternoon. Thanks for taking the questions. Actually, a couple of financial ones for Jim, first. Where were most of the relocation costs booked? Either in R&D or SG&A? Just trying to get to kind of a representative number there.

Mostly in R&D, Ian.

Ok. And was the $2 million up-front payment to exceleron expensed in the quarter?

Yes, It was detailed in the expense release it was $2 million booked up-front then $100,000 of R&D essentially in December. So, it was $2.1 million of costs associated with exceleron.

Ok. And so the polymer manufacturing revenues for Exenatide once-weekly, is that something that's going to be a steady revenue number looking forward? Are you always going to be booking polymer manufacturing revenues?

Well, a little too early to know right now what their launch quantities are going to be. So, I think before the drug is approved, it is probably too early to speculate on what the future is going to hold but we're their exclusive polymer manufacturer here for the time being and so as the drug launches, you will see some polymer manufacturing revenue consistently come in if sales are growing.

Ok. And any like very rough indication of what the percent of the end market sales value it would be?

Well, if I knew what the sales for Exenatide once-weekly were going to be next year, I would certainly be willing to put a stake in the ground. But we'll give you a much better look forward on that when we update for our fiscal year 2011 guidance in May.

Ok. Then finally, on VIVITROL, follow-up on an earlier question. You mentioned in your prepared remarks that making progress toward break even on VIVITROL. But presumably, six months from April, you may go into an investment phase there again. Would that be the proper way to look at this?

Well, I think -- yes, I think it has been very much a goal of ours. Did we get the alcohol dependence break even. We're making progress toward that. Hopefully we'll break-even in fiscal 2011 for alcohol dependence. As Rich said, we're going to make an investment in the launch of opiates -- the opioid indication. We think it will be a reasonable one. A contained one. The real backbone of that will be the current sales force that we have. The infrastructure that we built to deliver the specialty product after we get the product back from cephalon is built, we'll use the same infrastructure. So, again, we'll give you a lot more of an indication once we get the NDA in. Once we finish the work most likely at our yearly update in May. But we will invest in launching this product. We think it warrants it. At the same time, it will be a controlled investment.

Ok. And just out of curiosity, can you apply for reimbursement at the same time you file or do you have to wait for the label on this particular product? In opioid dependence before you can apply for reimbursement? Just wondering if you have a head start because it is already on the market for a different indication.

Ian, you can have discussions with payors about the product profile but you can't file per se for reimbursement in advance of approval.

Ok. Thank you.

Thank you.

Operator, I think we have time for one more question.

Our next question comes from John Lecroy from Hapoalim.

Thanks for taking my call. Two quick questions. One on the new technology you guys are using to develop drugs. Is that something where you could go after drugs maybe right when they launch or even maybe late stage drugs and other people's pipelines where there is less competition? And then the second question is the guidance you gave earlier in the year on line items, should we still use that as kind of where you're going to be in the next quarter?

Jim, why don't you take the second one?

John, we haven't updated our guidance. So, absolutely. In fact, we updated it on our last quarterly conference call. That's the first place to go. The call we had in November. And we feel like we'll be in those ranges that we outlined.

I'll take the first part. The answer is really dependent upon the nature of the underlying patent for the originator molecule. In some cases, you've actually seen drugs come to market with fairly short IP life, really data exclusivity only that protects them and as I said, ours are new entities that leverage what they've done before. But it -- in many cases, we don't think the underlying patents will be impediment to making our drug.

Ok, thanks.

You're welcome.

Great. Well, thanks everyone for dialing in tonight. If there are any subsequent questions, certainly don't hesitate to call either Jim Frates or myself. Have a good evening.

Thank you ladies and gentlemen. This concludes today's conference.