DURECT Corp (DRRX) 2010 Q2 法說會逐字稿

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  • Operator

  • Ladies and gentlemen, welcome to the second quarter 2010 earnings conference call.

  • - CFO

  • Good afternoon and welcome to second quarter earnings call.

  • This is Matt Hogan, the CFO of DURECT.

  • This call will begin with a brief review of our financial results and then Jim Brown, our President and CEO, will provide an update on our business.

  • We'll then open the call for Q&A session.

  • Before beginning, I would like to remind you of our Safe Harbor statement.

  • During the course of this call, we may make forward-looking statements regarding DURECT's products and development, expected product benefits, our development plans, future clinical trials or projected financial results.

  • These forward-looking statements involve risks and uncertainties that can cause actual results to differ materially from those in such forward-looking statements.

  • Further information regarding these and other risks are included in our SEC filings including our latest 10-Q under the heading "Risk Factors".

  • Let me now turn to our financials.

  • Total revenue was $7.3 million in the second quarter 2010, which compares to $4.9 million in the second quarter last year.

  • Revenue from our R&D collaboration was $4.7 million in the second quarter this year as compared to $2.6 million last year.

  • Revenue from this source always fluctuates from quarter-to-quarter depending on the state of the development under the various programs and our role in those programs.

  • Product revenue from sale of the ALZET pumps and LACTEL Polymers increased by about $385,000 or 17% from $2.3 million in the second quarter last year to $2.7 million in the second quarter this year.

  • Our gross margin on these products was about 68% in the second quarter this year.

  • And these product lines continue to be strong cash flow positive for us and grow nicely.

  • R&D expense was $9.2 million in the second quarter this year as compared to $7.9 million in the second quarter last year.

  • These figures included stock-based compensation of around $1.3 million in both periods.

  • Selling, general, and administrative expenses were $3.6 million in the second quarter this year as compared to $3.8 million in the second quarter last year.

  • These figures included $662,000 in stock-based compensation on the second quarter this year and $863,000 of stock-based compensation in the second quarter last year.

  • So if you exclude the stock-based compensation, SG&A expense was essentially flat.

  • Our net loss for the second quarter this year was $6.3 million compared to a net loss of $7.5 million for the same period last year.

  • As you know, we signed an agreement with Hospira covering US and Canada commercialization rights to POSIDUR in June.

  • Jim will go into detail into the collaboration in more detail in a minute but from a financial standpoint, we received the $27.5 million upfront license payment during the quarter, which immediately improved our cash position.

  • Going forward, we will also equally share the remaining US development costs, which clearly helps our cash burn rate.

  • Just to be clear on this point, our guidance at the start of the year had been that we would have a cash burn rate of $23 million to $27 million absent any BD or any milestones.

  • Given the Hospira deal, we'll now be cash flow positive for 2010.

  • At June 30, 2010, we had cash and investments of $57.2 million compared with cash and investments of $41.6 million at December 31, 2009, and $35.8 million at the end of the first quarter this year.

  • And as a reminder, we essentially have no debt.

  • Excluding the upfront payment that we received in the quarter, our net cash consumed during the second quarter this year was $6.1 million, pretty consistent with the $5.8 million consumed in the first quarter of this year.

  • On July first, we announced we had established a $50 million committed equity line with Azimuth.

  • There might have been some confusion as to how this works and what it means, so let me take a minute to just share my perspective on it.

  • In my mind, this is no different than establishing a shelf registration statement, which is a standard practice for public companies, and as with shelves, these committed equity lines become a fairly common instrument.

  • Azimuth has raised over $7 billion in the last ten years for biotech and pharmaceutical companies with several clients using the structure multiple times.

  • Now, we didn't pay anything to Azimuth to establish this facility, no warrants, no upfront commitment fees.

  • It cost us some modest legal expenses to get it set up, much like a shelf and so in my mind why wouldn't you want to have a facility like this in place in case circumstances arose where you wanted to raise additional equity in a manner that's cost effective?

  • It's just one more arrow in our quiver that we may or may not utilize.

  • If we decide at some future point to take down any money under this facility, we set the parameters including a floor price below, which we wouldn't do a takedown.

  • If we do utilize a facility, there are no underwriting fees as would be typically associated with a financing that might average around 5%.

  • Under this structure, the discount to the recent volume-weighted average price prior to the financing is in the range of 5% to 7%, depending on where our stock price is at the time, which is tighter pricing than one might expect from most underwritten offerings in all but very unusual circumstances.

  • I also would say that having the structure in place may also enhance our future licensing posture as third parties recognize we have committed access to capital beyond what's on our balance sheet, should we so choose.

  • So for all the above reasons, it struck us as an intelligent corporate finance move to put the facility in place now, at a time right after the HOSPIRA deal when we don't necessarily need more capital.

  • Let me remind everybody that we don't take issuing equity lightly and we've tried to establish a track record of prudently managing our cash burn rate and cash position while building our late-stage pipeline.

  • At the end of 2010, we'll have more cash in our balance sheet than at the start of the year and our average burn rate over the last six years will have been about $10 million per year.

  • If we do raise money, it will only be after a lot of careful thought and we'll seek to do it in the least dilutive manner possible which includes minimizing our transaction cost.

  • So with that, let me turn the call over to Jim to discuss some non-financial matters in greater detail.

  • - President and CEO

  • Thank you, Matt, and hello, everyone.

  • The first quarter of 2010 was indeed a strong quarter for us.

  • The major event was the signing of HOSPIRA deal for POSIDUR.

  • We have the right partner under the right terms and significantly strengthened our financial position.

  • As Matt stated, in the beginning of the year, we gave cash burn guidance of spending $23 million to $27 million and now we expect to end the year with more cash than we started with.

  • With regard to POSIDUR, we continue to enroll and invest the pivotal phase-three study.

  • For REMOXY, we continue to support King's progress towards resubmission of the NDA in the fourth quarter.

  • As well, we continue activities on in fronts including ELADUR, which initiated a large phase-two B study in chronic lower back pain.

  • Let's now go through the additional programs in greater detail.

  • REMOXY is our 12-hour extended release in tamper resistant form of oxycodone.

  • Our ORADUR technology allows for resistance to snorting, smoking, injecting, as well as dissolving in drinks.

  • A brief regulatory history of the REMOXY NDA is that PTI, Pain Therapeutics, our first partner here, received a complete response letter in December of 2008.

  • King, the partner that is now in control of commercialization of the product, assumed control of the NDA in March of 2009.

  • King then met with the FDA in July of 2009, following that meeting, King stated that they have established a path to address the FDA's comments.

  • As we sit here today, we are now one quarter closer to the NDA resubmission.

  • King expects to resubmit the NDA in the fourth quarter of this year.

  • It's expected that the PDUFA date would be six months after resubmission.

  • Recently, King and Pain Therapeutics revised their deal for the EU rights to REMOXY.

  • And just to clarify, this revision had no impact on Durect's 6% to 11.5% royalty that we will be receiving on any REMOXY sales in that region.

  • With regard to the potential financial impact of REMOXY sales in the United States to Durect, if we look at OxyContin sales in 2009 for Purdue Frederick, they were $3.2 billion.

  • Durect will receive a royalty on net sales starting at 6% and going to 11.5% with the 11.5% being around $1 billion in sales.

  • So if we do just a quick look at this, if REMOXY annual sales are in the range of $500 million to $900 million, this would represent somewhere between 16% to 28% of the 2009 Oxycontin sales and the royalty range to Durect, would be $36 million to $72 million.

  • As Matt just reviewed to you, for a Company that has been consuming on average about $10 million a year for the past six years,this would be significant to us.

  • Now I want to change to POSIDUR.

  • POSIDUR is a first in class opportunity, the first injectable product that will be available to surgeons which is designed to control pain locally for two to three days post-surgery.

  • In a 120 patient phase-two B hernia study for POSIDUR, we demonstrated a 30% improvement in pain control versus the standard of care as well as we demonstrated a reduction in the narcotic use by our patients by over threefold.

  • We have a very extensive Phase I/II program in place for this product.

  • Over 13 studies have been completed, one remains in progress.

  • And these studies have involved numerous surgical models including hernia, hysterectomy, epidectomy and shoulder surgeries.

  • Over 440 patient exposures, so far, with no significant clinical safety concerns observed.

  • In the first quarter of this year, we announced the initiation of BESST, the POSIDUR phase-three program.

  • BESST stands for Bupivacaine Effectiveness and Safety in SABER Trial.

  • It's a multi-center, randomized, double-blind, controlled trial in various surgical procedures using five mL of POSIDUR.

  • We expect approximately 300 patients to be dosed in BESST and we continue to anticipate completion of enrollment of this study in first half of 2011.

  • We had an FDA interaction with regards to this program in April of this year.

  • This interaction increased our confidence in the best design and overall NDA strategy for POSIDUR.

  • Of course, this is subject to data review from the entire POSIDUR development program.

  • BESST involves three cohorts.

  • The first two cohorts are active comparator testing POSIDUR versus the Bupivacaine solution in laparotomy and laparoscopic cholecystectomy, or gallbladder removal, vis-a-vis a laparoscopic-assisted procedure.

  • The third cohort is a placebo-controlled arms.

  • Here we're testing POSIDUR versus SABER placebo after a laparoscopically-assisted colectomy.

  • The two co-primary endpoints for Cohort three, are the mean pain intensity on movement, area under the curve, during the first zero to 72 hours post-dose and the mean total morphine equivalent opioid dose for supplemental analgesia during the zero to 72 after dose.

  • These are the same endpoints as we used in our successful hernia trial.

  • We have in place two collaborations with regard to POSIDUR.

  • The first is with Nycomed, which is primarily it's our ex-US relationship and for this relationship, we received $14 million upfront, an additional $8 million on the clinical milestone for the phase-two Bdata from the hernia trial.

  • We still have $181 million of potential additional milestones for this collaboration.

  • We would receive 15% to 40% blended royalty on net sales, as well as a manufacturing mark-up.

  • Nycomed has the commercialization rights for POSIDUR in Europe and other countries around the world including China.

  • They are responsible for sales, marketing, and launch costs in their territories.

  • The big news this quarter was our collaboration with HOSPIRA.

  • Now I would like to review why we selected HOSPIRA as our partner.

  • In a nutshell, they have the right experience, they're the right size and these were the right terms.

  • HOSPIRA is the former Abbott's Hospital Sales Product Divisions.

  • They spun-out in 2004.

  • Their 2009 sales were $3.9 billion with $404 million in net income.

  • They are a major player in injectables.

  • They are successfully selling Precedex in the hospital to anesthesiologist and they have a dedicated acute sales force with the relationships in place.

  • They are also our POSIDUR manufacturer and they know the product well.

  • HOSPIRA is also making a big push into branded acute care products.

  • They recently acquired Javelin, with the associated Dyloject product, which is IV diclofenac.

  • This is a hospital-based pain product which is completely synergistic with POSIDUR.

  • In fact, HOSPIRA is a partner to whom POSIDUR is extremely important strategically.

  • They are a motivated and committed partner and DURECT retains equal control of the NDA.

  • The terms of this collaboration are such that we receive $27.5 million upfront, with another $185 million of potential additional milestones.

  • We will receive double-digit royalties on sales that are modified, and modeled after the Nycomed deal.

  • DURECT retains commercial rights in Japan for a future potential deal.

  • HOSPIRA's received the commercial rights for POSIDUR in the US and Canada where they will be responsible for sales, marketing, and launch cost.

  • To give you a sense of the value of POSIDUR as a phase-three asset, if we look at both of these deals and add up the upfronts and milestones received to date, it's $49.5 million for this phase-three asset with additional potential milestones of $365 million.

  • DURECT's market research and pricing studies indicate that POSIDUR has the potential to have sales of greater than $1 billion.

  • Now I want to change gears and talk about ELADUR, our TRANSDUR-Bupivacaine Pain Patch.

  • This is a differentiated therapy for acute local pain.

  • ELADUR provides three days of extended pain relief as compared to Lidoderm, the market leader in the space, which is 12-hours on and 12-hours off with associated breakthrough pain.

  • ELADUR is a thinner system with a breathable backing and has the potential for less irritation with four times fewer (inaudible).

  • ELADUR is also more patient-friendly in that one can exercise and shower with it on.

  • ELADUR has the opportunity to be a best-in-class product in a market that is over $750 million.

  • Our partner for ELADUR is King Pharmaceuticals.

  • The deal is one that we put in place, actually, initially with Alpharma.

  • We received $20 million upfront, we have a potential of $243 million in additional milestones.

  • DURECT receives royalties on net sales and reimbursement for development expenses.

  • King is responsible for all remaining product development sales, marketing, manufacturing, and launch costs.

  • In April of this year, King commenced a 260-patient phase-two B study in chronic lower back pain for this product.

  • Now I'll talk a little bit about our TRANSDUR-Sufentanil pain patch.

  • Here we have the potential to be a best-in-class therapy, especially as one considers our TRANSDUR-Sufentanil pain patch versus the two-to-three day fentanyl patches or the less potent seven-day [Buphenorfen] patch or additionally, the twice-daily oral opioids.

  • We offer advantages to the patients as well as to the healthcare system.

  • The patients' advantages are uninterrupted delivery of pain relief, smaller size, about one-fifth the size of Duragesic, about that of a postage stamp.

  • We have the potential for less irritation and the potential for having advantages vis-a-vis side effects of both fentanyl patches and for the oral oxycodone product.

  • From the healthcare system, we have an opportunity vis-a-vis [REMs] with potential for less diversions with only four patches per month versus ten or more as far as fentanyl patches are concerned or over 60 pills, if it's a twice daily pill.

  • The potential to reduce the cost of therapy for fewer interventions, excuse me, as well as potential for lower cost of goods, as well as the potential reduction of concomitant meds and breakthrough meds.

  • The commercial opportunity for TRANSDUR-Sufentanil is quite large.

  • In fact, the extended oral and patch release -- control release opioid market in 2009 was more than $4 billion.

  • We believe that with this product we have an opportunity here to capture significant market share.

  • The product is phase-three ready with a 505b pathway to approval.

  • We retain the worldwide rights for this product.

  • Now that we have a partnership in place for POSIDUR, we are currently evaluating how far to carry TRANSDUR-Sufentanil on our own.

  • We are finalizing the commercialization strategy for this product.

  • This work is being done especially in light of the recent approval of the seven-day [Buphenorfen] patch as well as our own phase-two data with this product.

  • We will be making a decision with regard to partnering it in the near term versus advancing the product into the clinic on our own.

  • Now I want to update on our earlier stage programs, starting with ORADUR technology.

  • Here we're building on our efforts that we started with REMOXY.

  • Our ORADUR technology allows for extended release oral product that are tamper-resistant.

  • In the second category of drugs, which are widely abused, are those involving the treatment of ADHD.

  • In fact, drug sales in this category were over $4 billion in 2009.

  • Here we're working with Orient Pharma, to develop a ORADUR ADHD product initially for selected Asian and South Pacific countries.

  • Orient Pharma will fund the phase-one program as well as the first phase-two study.

  • DURECT will then retain the rights for this product to be commercialized anywhere else in the world.

  • We received -- excuse me, we recently a phase-one study with multiple formulations.

  • With regard to our other earlier R&D activities, we have here our SABER Injectable Depot Technology, here we're working on a number of feasibility projects with an opportunity here to create BioBetter products.

  • Our goal is to develop small volume injectable products, these are products that would deliver a 0.25cc to 0.50cc subcutaneously that would last from one week to a month.

  • And we have numerous feasibility programs ongoing.

  • In summary, our key drivers over the next 12 to 18 months are as follows.

  • With regard to REMOXY, it's resubmission of the NDA by King in the fourth quarter with an expected PDUFA date six months after resubmission, we have the potential for launch in 2011.

  • For POSIDUR, it's the conducting of BESST, our phase-three program for POSIDUR, with completion of the BESST trial projected for the first half of next year.

  • We have the potential for new collaborations.

  • It would be POSIDUR in Japan, Sufentanil patch on a regional basis or worldwide, as well as other undisclosed programs.

  • For ELADUR, it's conducting and completion of the 260-patient lower back pain phase-two B study by King.

  • For the TRANSDUR-Sufentanil, it's establishing the commercialization strategy and restarting the clinical activities as well as potential partnerships.

  • Additionally, we look forward to advancing our other programs, that is our ORADUR ADHD program as well as our other ORADUR opioids, our biotech feasibility projects, and other undisclosed projects.

  • We would now like to take any questions you may have.

  • Operator

  • Thank you.

  • (Operator Instructions) Thank you.

  • Our first question is from Jeffrey [Deseifert].

  • Please go ahead.

  • - Analyst

  • Good afternoon.

  • A couple of questions.

  • First of all on REMOXY, can you specifically comment as to whether to date DURECT has experienced any problems with regards to the stability of the ORADUR formulation in REMOXY?

  • - CFO

  • Yes, first of all, hello, Jeffrey.

  • We can't make a lot of comments with regard to this program other than we are working closely with King, although we have not reported out any issues of stability with regard to this product ourselves.

  • I think if one looks at any time you manufacture batches for a registration, one always need to set up stability studies and so I do think there may have been some confusion when one says we're setting up stability studies, between that and major issues.

  • The only thing I can say is we haven't made any changes to the formulation, ie, any changes in the components of it.

  • - Analyst

  • Thank you.

  • A question on BESST.

  • Can you comment in any way with regards to -- among the patients who have been enrolled so far, has the percentage of voluntary withdrawals been consistent with what you originally were expecting when you designed the study?

  • Have you had more or less voluntary withdrawals?

  • - President and CEO

  • Yes, we'll let Joe answer that question.

  • Go ahead, Joe.

  • - CMO

  • Hello, this is Joe Stauffer, Chief Medical Officer.

  • We have had very, very few voluntary withdrawals and now that's separate from people who are screened prior to getting randomized.

  • So,as you know, patients are screened before their surgery, they go into the operating room and in the operating room, the surgeon will make the decision as to whether or not the patient is still appropriate for placement of the drug.

  • There have been only a handful of patients who have not been able to actually be dosed once they're randomized so it's quite small and actually much -- actually, lower than what I thought we would have so I'm feeling pretty good about that.

  • - Analyst

  • All right.

  • So to be clear I understood -- so explain so well one of the challenges of the BESST study is you have to do fair amount of cardiac monitoring after and patients who might otherwise have been out of the hospital, have to spend an extra day or two and there's a risk that -- percentage of them might say, "well, I'm fed up with this, I want to withdraw from the study." That's what I'm particularly concerned about.

  • Have you had a problem with that?

  • - CMO

  • Oh, no, not at all.

  • In fact, most of the patients -- in two of the cohorts, Cohort 1 and Cohort 3 -- all of those patients have to be in the hospital by design, whether or not they were going to be in this clinical trial or not for at least two days and likely three days.

  • So those patients expect to be in the hospital post-operatively and monitoring them is no big deal for a two-to-three-day stay.

  • It's just the extra monitoring for the cardiac piece, which is the halter monitor and the other blood withdrawals.

  • The patients, I think you're speaking about, are the patients, in the laparoscopic cholecystectomy, the laparoscopic gallbladder arm.

  • In that case, that cohort is doing quite well.

  • In that case, yes, those patients are in and out of the hospital in one day.

  • However, because they realized they're in a clinical trial, they get more care and are able to stay in the hospital longer.

  • Believe it or not, some patients actually like that and are willing to come in to the trial just for that reason even though that particular cohort is a relatively one-day, what I call, almost outpatient procedure.

  • So in terms of expectation from what patients want, it's right along with where we want it to be.

  • - Analyst

  • Thank you.

  • A question for Matt, as we look at the cash burned for this quarter of $6.1 million, if the HOSPIRA deal had been effective as of April 1, could you give us an idea of what the cash burn would have been?

  • - CFO

  • Let me take my stab at it this way.

  • During the quarter -- I actually know this one -- during the quarter, we had one month where, in theory, they would share our costs, and when we file our 10-Q tomorrow, you'll be able to look up that number.

  • For that one month, the number was $445,000.

  • Now, having said that, because of the nature of this, you start to do the accounting and then you send them the invoice and then you get paid within the following 30 days.

  • We didn't actually receive any money other than the upfront payment during the second quarter from HOSPIRA but if you then project forward and you say $445,000 one month times three, round figures, that's about $1.5 million.

  • That would be, in rough form or magnitude, the effect on our burn rate going forward.

  • - Analyst

  • All right, thank you.

  • So I had a couple of other questions about depreciation and amortization and deferred revenue, but the 10-Q will be out tomorrow and I presume they will be on it.

  • - CFO

  • Yes.

  • And then if you have questions after you read that, I'll be happy to try and respond.

  • - Analyst

  • All right.

  • Thank you very much.

  • That's it from me.

  • Operator

  • Our next question comes from Andrew Hilgenbrink.

  • Please proceed with your question.

  • - Analyst

  • Hello guys.

  • Thanks for taking the questions.

  • Had one question around timing on when you would expect results out from the ELADUR and ORADUR ADHD programs?

  • - President and CEO

  • First off, with regard to the ELADUR product, I think it'll be sometime next year and we'll have to leave that up to King.

  • Typically, these are longer duration studies.

  • I think each patient is dosed, Joe, three months, correct?

  • - CMO

  • Correct.

  • - President and CEO

  • 12 weeks.

  • So it's going to be awhile.

  • For the ORADUR Phase I, we are testing multiple formulations in that.

  • We won't reporting out specific data out of Phase I PK study.

  • We'll be actually just testing multiple formulations, probably multiple rounds of these Phase I exposures, I would expect, before we get the formulation that we're comfortable with.

  • But once we're ready to start Phase II, at that point we'll probably say, we started dosing at phase Phase II.

  • That would be my guess.

  • - Analyst

  • Any rough guess on when a Phase II could begin?

  • Are we talking 12 months?

  • Are we talking 18 months?

  • - CMO

  • Perhaps not that long, just to chime in.

  • I think the whole point we're trying to convey here is we've got multiple formulations that we like and we're going to review those and if one of those is really compelling, you take that to Phase II.

  • If you want to, you may learn from it and then optimize the formulation and that's what goes to Phase II.

  • We should have data from this first round of studies this year.

  • It's highly unlikely the very first round will be ready to rock and roll.

  • So we're looking at something next year would be my guess.

  • - Analyst

  • And then with TRANSDUR, seeing now from your commentary is you're trying to decide whether you will take that forward yourselves into Phase III or still partner it?

  • Is that correct?

  • - President and CEO

  • Exactly right.

  • We're looking at it in light of having the POSIDUR deal in place and have the financial burden for the US program of POSIDUR taken off our shoulders and now with the restructuring.

  • And with Nycomed deal, we have no further obligations really of any merit outside the US so out in we have an opportunity to look at this asset and carry it forward.

  • We think that it's only getting stronger, especially if one looks at the Buprenorphine seven-day patch that was approved by Purdue.

  • We believe we'll have -- we should have (inaudible) advantage, much more potent narcotic.

  • We may have side effects advantages versus the fentanyl and oral products -- oxycodone products.

  • So we're right now evaluating all the commercial opportunities and typically the longer you can hold the product, the greater the value it creates.

  • - Analyst

  • I think that's all the questions I have.

  • Thanks, guys.

  • - President and CEO

  • Sure.

  • Operator

  • (Operator Instructions) Our next question is from Nick Farwell.

  • Please proceed with your question.

  • - Analyst

  • Can you hear me?

  • - President and CEO

  • Yes.

  • - Analyst

  • You faded in and out so I wasn't sure.

  • Under what circumstances might you decide to retain the rights for the TRANSDUR program to distribute the patch yourself?

  • - President and CEO

  • That would -- that's a ways out, Nick, because we would have to complete our work now and then conduct the entire Phase III program, which would take from start to finish at least a couple of years and then you've got to submit and then after that, you don't -- prepare for launch.

  • So it wold be a ways out, under what conditions, it would be, I think, under the conditions where REMOXY sales are going well, POSIDUR is moving forward.

  • If we're making some money as we hope to -- I certainly expect to but just right now, only hope to because we can't know -- with these other products, then we'll be in a financial position to do that.

  • So it would depend on how REMOXY sales go, what happens with POSIDUR and then how the world unfolds.

  • - Analyst

  • But it was my impression in the comments made today that you suggested that this is an alternative.

  • - President and CEO

  • Absolutely and the further we carry -- with this POSIDUR, right?

  • We carried that into Phase III.

  • - Analyst

  • Right.

  • - President and CEO

  • With the intent of taking it as far as needs be and then we were able to have a partner come forward that -- it was a perfect fit and wonderful terms.

  • So we were able to put that partnership in place so that could happen with Sufentanil, we could put it into place in Phase III and a year into that or so, a partner steps up and we move to the next thing for ourselves.

  • It really just depends on the deal terms and what other opportunities we have in front of us.

  • - Analyst

  • On a second thought, it is your expectation that you will accelerate spending or better way to say it, maybe spend that incremental $1.5 million that basically has HOSPIRA has picked up in its agreement?

  • - President and CEO

  • We're evaluating that.

  • We save that money but right at the moment we're not spending a lot of money on the Sufentanil patch.

  • Should we decide to put that into Phase III ourselves, that changes the equation.

  • So I think a lot depends on that one decision point.

  • - Analyst

  • Okay, but there are a number of early-stage programs that I'm under the impression you could allocate incremental resources to.

  • - President and CEO

  • We could but we're being cautious.

  • - CFO

  • They don't particularly cost a lot of money.

  • It's really when you get into -- it's Joe's area that really spends the money.

  • So once you get him to clinic, that's when you spend the big bucks.

  • - Analyst

  • Thank you.

  • Appreciate it.

  • Operator

  • Our next question is a follow-up from Jeffrey [Deseifert].

  • Please proceed with your question.

  • - Analyst

  • Two follow-ups.

  • First of all, with regards to POSIDUR, could you give us any feeling about the one remaining area that you still don't a partner for which is Japan, South Korea?

  • You have alluded a number of times in discussions in the past.

  • How should we be feeling about that particular perspective partnership area?

  • - President and CEO

  • Well, we continue with those conversations.

  • Those of us who have done deals in Japan know it takes long time, typically.

  • It's -- what can take months in United States and sometimes take years in dealing with Japan.

  • It's just a different way to do business.

  • But we have some great potential partners that we've been dealing with for a long time.

  • They know the product well.

  • So we look forward to it at some point in the future, having a partnership in place that will exploit this product to Japan.

  • And we think the Japanese market actually will be a very good market for POSIDUR.

  • - Analyst

  • Did you find that the announcement of the HOSPIRA deal had any impact on the level of interest you're getting out of that part of the world?

  • - President and CEO

  • We are already well into discussions with people so I think they know that and I'm sure it piqued some interest but the reality of it is they are their own people and make their own decisions, so --

  • - Analyst

  • All right, thank you.

  • And then the other follow-up question is -- it's about a year ago that you announced, I think it was a total of five of these small feasibility study-type programs.

  • When could we expect that we might hear that either -- they worked or didn't work -- what would be a reasonable timeline to get a little bit more color on them?

  • - President and CEO

  • We constantly have an inclusion -- basically we're every working with potential partners here so we have feasibility projects that start and feasibility projects that end in any given quarter all the time.

  • We just happened to make that announcement last year because I think we had four or five in one quarter, it was an unusual quarter.

  • But sometimes we'll end working with a company not for any other reason other than we proved out what we wanted to prove out and they may come back later or they may not.

  • In other cases, things work out well and some decisions are made and in other cases it doesn't work out well.

  • So it's an every evolving process.

  • These are very early-stage projects and we won't be making any real public announcements on those until one actually matures into the point of a development deal and then the amount of information that can share will depend on what our partner wants to say.

  • These are typically quite large companies that are very secretive about what they want to talk about early on so they may or may not allow us to disclose much.

  • We may just -- it will depend, I guess, on who the partner is and what is said.

  • - Analyst

  • But would you expect to make some announcement that a collaborative deal was signed with the XYZED company regarding the ABC product?

  • - President and CEO

  • At some point when one matures to that point, if when a development deal is signed , then we will certainly have to make that announcement.

  • We'll make that announcement because it will be significant for us.

  • I don't expect to do that at any point of time, But at any point of time I can think of, a number of them that may get there but you can't say for sure.

  • That's why we call them feasibility deals -- they're

  • - Analyst

  • All right, thank you.

  • Operator

  • There are no further questions in the queue at this time.

  • I would like to turn the floor back over to management for closing comments.

  • - CFO

  • Okay.

  • Well, thank you for participating.

  • If people have questions or think of them, especially after they read the 10-Q or whenever, please feel free to reach out and we'll have be happy to respond.

  • Thank you.

  • Operator

  • Ladies and gentlemen, this does conclude today's teleconference.

  • You may disconnect your lines at this time.

  • Thank you for your participation.