DURECT Corp (DRRX) 2010 Q4 法說會逐字稿

Welcome to the DURECT 2010 earnings call.

Good afternoon, and welcome to the year end 2010 earnings conference call.

This is Matt Hogan, 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 up the call for a Q&A session.

Before beginning, I'd 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 in development, expected product benefits, our development plans, future clinical trials or projected financial results.

These forward-looking statements involve risks and uncertainties that could 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 10-K under the heading Risk Factors.

Let me now turn briefly to our financials.

Total revenue grew to $8.5 million in the fourth quarter of 2010 from $4.9 million in the fourth quarter of 2009.

Revenue from our R&D collaborations was $5.9 million in the fourth quarter 2010 as compared to $2.8 million in the fourth quarter 2009.

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

Product revenue from the sale of ALZET pumps and LACTEL polymers increased by about $491,000 or about 24%, from $2.1 million in the fourth quarter last year to $2.6 million in the fourth quarter of 2010.

Our gross margin on these products was around 54% in the fourth quarter.

These businesses continue to be strongly cash flow positive for us, and our LACTEL product line in particular is continuing the growth pattern it has shown over the last few years.

Just to highlight this for a second, our total revenue for the year from these two product lines was $10.5 million, and they generated $6.6 million in gross profit, an increase of 15% versus 2009 on the top line and 13% in gross profit.

R&D expense was $9.4 million in the fourth quarter 2010 as compared to $9.3 million in the fourth quarter last year.

SG&A expense were $4 million in the fourth quarter this year as compared to $3.4 million in the fourth quarter last year.

Our other income in the fourth quarter benefited from $733,000 that we received as grants for three qualifying projects under the Patent Protection and Affordable Care Act of 2010.

As a result of the above, our net loss for the fourth quarter declined to $5.3 million, compared to a net loss of $8.6 million for the same period last year.

Probably the most relevant financial metric for us at this stage, compared to our net loss, is the net cash consumed during the quarter, and that figure was $3.4 million in the fourth quarter.

For all of 2010 we were actually cash flow positive by $8 million, largely due to our collaboration with Hospira around US and Canadian rights depositor.

At December 31,2010, we had cash and investments of $49.6 million compared with cash and investments of $41.6 million at December 31, 2009, and we have essentially no debt other than normal liabilities associated with running the business.

Over the last six years, during which we invested in building and advancing our pipeline of late-stage products, our burn rate has averaged out to less than $10 million per year.

In large part, this has been a function of our success in corporate licensing activities.

Let me now turn to our financial guidance for 2011.

Our net cash consumption is heavily influenced by the timing and structure in new corporate collaborations, as well as outsourced preclinical and clinical expenses.

While we anticipate entering into new collaborations in 2011 and beyond, we believe it's more conservative to give financial guidance based on an assumption of no new collaborations, no milestones, no royalties and aggressive funding of our R&D programs, many of which are in clinical development.

Based on those key assumptions, we anticipate net cash consumption in 2011 of approximate $23 million to $27 million.

I would note we have multiple programs that may potentially be partnered over the next 12 to 18 months, including transfers through funnel for which we have worldwide rights, POSIDUR for Japan, ORADUR ADHD, as well as a number of internal programs we haven't described publicly in detail yet.

Thanks again for joining the call, and I will now turn it over to Jim for a discussion of non-financial matters.

Thank you, Matt, and good afternoon, everyone.

I'd like to start with the 2010 accomplishments for DURECT.

2010 was a year of significant progress for DURECT.

We commenced the POSIDUR's pivotal US Phase III program BESST chain commenced an ELATOR Phase IIb study.

We also started the ORADUR ADHD program -- Phase I program, we established a US and Canadian POSIDUR collaboration with Hospira.

And most importantly, the REMOXY NDA was resubmitted by King.

On the business front, Pfizer began the progress of acquiring King.

2010 was also a direct first cash flow positive year.

Now to update for the fourth quarter of 2010 and this year to date.

On the REMOXY front, its resubmission of the NDA in 2010 with the PDUFA goal date set for June 23, that's three months three weeks from today.

The Pfizer acquisition of King is completed.

This bodes well for the commercial success of REMOXY, as well as the four other development programs we will now have with Pfizer.

For POSIDUR is the recent Phase II shoulder study results from Europe, and our amended Nycomed agreement, as well as continued enrollment in the BESST, the pivotal US Phase III trial.

For ELADUR, it's continuation of the Phase IIb study in chronic lower back pain, where we expect top line results in the first half of this year.

We also continued activity on other fronts.

Let's now go through the major programs in greater detail.Beginning with REMOXY, REMOXY is our 12 hour extended release and tamper-resistant form of oxycodone.

In our ORADUR technology, these products are more resistant to tampering in the form of snorting or smoking or injecting or dissolving in various solvents and drinks.

To be clear on our role with REMOXY, we developed and licensed the drug delivery technology and dosage form that is REMOXY.

This is based on our ORADUR technology.

DURECT is the intel inside.

We own and control the patents.

We work directly with Pfizer to support certain aspects of the NDA.

We look forward to meeting with Pfizer with respect to the three other opioid ORADUR based products.

We will receive a royalty on Pfizer sales of between 6% to 11.5%.

We also have a long-term supply agreement in place whereby we supply two of the key excipients in REMOXY to Pfizer on a cost plus basis.

REMOXY has been attracting more and more formidable partners over time.

We started the program early on and did a deal with Pain Therapeutics in December of 2002, when the program was in the preclinical stages.

In November of 2005, after completion of the first successful Phase III trial, King Pharmaceuticals then took over the commercial control of the product.Then in October of 2010, as the product neared NDA resubmission, Pfizer began to take over the control of King Pharmaceuticals.

We believe that this acquisition by Pfizer of King and our ORADUR technology in these areas validates our technology platform and the potential for tamper-resistant opioids.

There is a strong fit with Pfizer's desire to grow their pain franchise in support of Celebrex and Lyrica.We also feel this will be a substantial increase in the sales and marketing muscle that can be applied to these products, as well as the ability to exploit these products on a worldwide basis.

The NDA was resubmitted in December, the PDUFA goal date is set and the clock is ticking.

The potential financial impact of REMOXY to DURECT is very significant, and OxyContin sales in 2009 were $3.2 billion.

DURECT will receive a blended royalty on Pfizer's net sales that start at 6% and grow to 11.5%.

And whatever you thought King would be able to do with REMOXY, you have to believe that Pfizer will significantly do better than that.

In fact, if Pfizer is able to achieve somewhere in the range of 30% to 50% market penetration, the royalty check that DURECT would receive for that kind of penetration would be between $80 million and $100 million on an annual basis.

This, if you compare it against what Matt -- the information he just gave you, considering that we've spent on average $10 million a year of our own cash over the last six years would be very significant

Now, I want to change gears and talk about POSIDUR, our post operative pain control product.We believe that POSIDUR offers a new paradigm for postoperative pain control.

This product is designed to control pain locally for three days post surgery.

In a Phase IIb hernia trial, POSIDUR demonstrated a 30% better pain control versus placebo, as well as a threefold reduction in the use of systemic narcotics.

We have a very extensive Phase I/II program that has been completed for POSIDUR.

We've actually completed 14 studies over multiple -- representing multiple surgical models, and over 490 patients have been exposed to the drug with no significant clinical safety concerns observed.

Recently, Nycomed announced some Phase II shoulder data with regard to POSIDUR.

We believe this was a positive study and particularly useful to our US program.

Given that this Phase II study had a relatively small number of patients per group, we were pleased to have statistically significant signals from the placebo group, especially if you consider that the placebo group received its background medicine, two to four grams per day of intravenous acetaminophen.

Depending on their body weight, they received the maximum that would be allowed for these patients.

Even given that background, from the placebo group we saw a statistically significant reduction in their pain scores over the first three days after surgery.

We also saw what Nycomed described as a clear clinically relevant trend in opioid sparing over the three days.

And this signal was also statistically significant as demonstrated by the prespecified sensitivity analysis.

In addition, the safety profile was clean, which adds to the safety database that will be a key part of our NDA submission.

From a European perspective, we did not see a statistically significant signal over the entire three day period between POSIDUR and the active comparative group.

This could have part have been due to the relatively small size of the patient groups in this study, as well as the study design and conduct.

A comparison to some standard of care is an important aspect of what is required for European approval and pricing purposes.

Nycomed feels they need to find another surgical model that they are confident will show statistical significance against an active comparator.

We have three abdominal surgical models incorporated into our BESST trial, two of which have active comparator arms.

Hence, the BESST data are going to be important for Nycomed to make decisions as to what to do next for this program in Europe.

We've amended our program with Nycomed so that during this interim period when they will not be initiating any new clinical trials, they won't be funding 50% of the non-clinical and CMC activities that we were previously jointly controlling and funding.

Meanwhile, DURECT, along with our partner Hospira, will control and drive forward the CMC and non-clinical development activities in anticipation of preparing for our US NDA submission.

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

It's a multi-sender, randomized double-blind control trial in various abdominal surgical procedures, using 5 mls of POSIDUR .

In April of 2010, we had FDA correspondence which increased our confidence in the BESST design and overall NDA strategy.

300 patients are expected to be dosed in BESST, and we anticipate completion of enrollment in the first half of this year with a potential submission of the NDA early in 2012.

With regard to our collaboration with Hospira, we selected Hospira as our partner in the US and Canada based on a number of important facts.

The first was their history in the hospital space.

Hospira is the former Abbott hospital products division, they were spun out in 2004.

They are a major player in injectables.

They have been successfully selling Precedex in the hospital to anesthesiologists.

They have a dedicated acute care sales force, so they have the relationships in place on the commercial side.

They are our POSIDUR manufacturer, so they know the product well.

Hospira is making a strong push into the branded acute-care products space, so this fits well with our strategic direction.

Their acquisition of Javelin, the Dyloject IV diclofenac product contained within that, is complimentary to POSIDUR.

This collaboration afforded DURECT $27.5 million up front and another $185 million in potential additional milestones.

We will receive double digit royalties on net sales, DURECT retains the commercial rights in Japan and Korea, and we maintain equal control of the NDA, which was very important to us.

Hospira will have the commercialization rights in the US and Canada, and will be responsible for the sales, marketing and launch costs in the US and Canada.

We are equally responsible for the development activities and expenses for this program.

To review our commercial partnerships in general for this product, if we look at the efforts and milestones received to date, we've received $49.5 million for POSIDUR between our Nycomed and Hospira deals for this product.

We have potential additional milestones of $365 million, about 20% of those are regulatory and developmental milestones.

The remainder are sales milestones.We've completed a number of market research studies over the years for POSIDUR, and it's allowed us to be able to circle a market opportunity for this drug that is in excess of 30 million patients.

And it's also led us to believe that we could achieve, or our partners could achieve, somewhere in the range of around 30% market penetration, which means about 10 million procedures a year in the US.

We've also done two different pricing studies that gave us a range on pricing from $250 to $400 per procedure, which means the potential US market for this product ranges somewhere between $2.5 billion to about $4 billion.

Now I want to talk about ELADUR, our TRANSDUR-Bupivacaine patch.

This is differentiated therapy for local acute pain.

ELADUR provides three days of extended release, versus the market leader in this space, which is Lidoderm, which provides 12 hours of relief.

And during the 12 hours when Lidoderm has to be removed from the body, about two out of three patients have breakthrough pain.

ELADUR is quite thin and has a breathable backing.

In fact, ELADUR is about as thick as the piece of paper you might have in front of you.It has the potential for being less irritating, including in patients with PHN.

It's very patient friendly.

The patients can wear it for three days, they can wear it in the shower, they can go swimming with it, they can exercise with it on.

And the opportunity is quite large.

The Lidoderm market opportunity is over $750 million, and we have an opportunity to be a best-in-class product.

Our partner for this product is now Pfizer.

We originally did the deal with Alpharma where we received $20 million up front.

It's a worldwide deal, we have $243 million in potential milestones to come.

$93 million of those are development and regulatory, $150 million are sales.

DURECT receives a royalty on net sales and reimbursement for development expenses.

Pfizer is now responsible for all remaining product development, sales, marketing, manufacturing and launch costs.

We think there are numerous healthcare advantages to Lidoderm, including the three days of wear and the capacity to use it when you exercise and you take a shower.

The possibility of reducing breakthrough pain and also the possibility of reducing cost of goods in this area, because we're talking about one patch versus three.

We also think there is a nice fit with this product in Lyrica.

In April of 2010, King commenced a 260 patient Phase IIb study in chronic lower back pain.

We expect top line results in the first half of this year.

This Phase II study is being done in a complex disease setting, and we really don't expect to see a statistically significant difference and would be quite pleased to have a positive trend come out of this trial.

Now, I want to talk about TRANSDUR-Sufentanil patch.

Once again, we have the potential here for best in class therapy for chronic pain.

We have seven days of delivery versus the two to three days for our fentanyl patch or the twice-daily oral opioids.

We offer numerous potential advantages to the patients, as well as to the health care system for this product.

The DURAGESIC revenues for the fentanyl patches in 2010 were still about $750 million, and the US extended release opioid market in 2010 was greater than $4 billion.

We retained worldwide rights for this product.

Most recently, we have conducted significant market research and are incorporating this information into developing new development plans.

We are also in active discussions with potential partners, both on a worldwide and regional basis for this product.

Now, I'm going to get into some of the other programs that we're looking at.

We wanted to briefly note the launch of the first FDA approved SABER injectable peptide product.

This is SucroMate Equine.

As you can imagine from the name, this is an animal health application.

This delivers the peptide deslorelin to regulate ovulation in mares.

It is developed by a private company CreoSalus, and is distributed by Bioniche.

There's a modest royalty opportunity for DURECT from this product, but the significance is not in the royalty or the economic return.

Rather, it's in the FDA approval of this product.

It represents a regulatory milestone for DURECT because of the similarities between a new drug application and new animal drug application, CMC section or chemistry manufacturing and control section requirements.

SABER technology is the basis for POSIDUR, a product that is currently in our pivotal Phase III clinical trial, as well as multiple ongoing feasibility projects seeking to deliver proteins and peptides for periods of up to one month from a single injection.

Now an update with regard to our ORADUR -- other ORADUR R&D activities.

Here we are building on the efforts that we started with REMOXY.

Our ORADUR technology allows for extended release oral products that are also tamper-resistant.

The second most widely abused category of prescription drugs is in the area of the stimulants to treat ADHD.

In fact, ADHD drugs sales in 2009 were over $4 billion.

There we're working with our partner, Orient Pharma, who are about a $100 billion in revenue Taiwanese based company to develop an ORADUR ADHD product for selected Asian and South Pacific countries.DURECT will retain the rights for this product for the rest of the world.

Orient Pharma will fund the Phase I as well as the first Phase II study.

And during 2010, we will be conducting Phase I studies with multiple formulations in order to select the right one for Phase II.

So, to sum up what are the key potential drivers over the next 12 to 18 months for DURECT.

Starting with REMOXY is the PDUFA goal date of June 23 and the potential launch of this product this year by Pfizer.

For POSIDUR, it's conducting and completing the BESST trial in preparation of an NDA submission in 2012.

For ELADUR, it's reporting on the Phase II top line results by Pfizer, and then working with Pfizer on the remaining program -- clinical development program for this product.

For TRANSDUR-Sufentanil, it's establishing commercialization and development strategy and a potential partnership.

We have potential for new collaborations, with POSADUR in Japan and Korea, for sufentanil on a regional or worldwide basis, for ORADUR ADHD in the US, Europe or Japan, and as well as other disclosed programs.

As well, we have potential advances for our other programs.

These would be the three other ORADUR opioids with Pfizer, the ORADUR ADHD program, our biotech feasibility projects, and unselected or undisclosed programs that we might have.

With that, I would like to close and open up for

Thank you.

We will now be conducting a question and answer session.

(Operator Instructions).

One moment while we poll for questions.

Our first question comes from David Amsellem.

Yes, hi, guys.

This is actually Mische for David.

Quick question on REMOXY in the marketplace there.

As far as the new formulation for OxyContin, are you hearing anything regarding the new crush resistant formulation and that it may not be working as well as the older formulation and how that might impact the current market?

I will let Joe speak to the efficacy kind of concerns.

What I would just want to add to this is that we don't believe that Purdue has particularly set the bar for tamper-resistance all that high and really in a meaningful way with regard to this product.

We think that our ORADUR technology will have improvements with regard to tamper resistance over that.

And, so, really what they've done is made them slightly more difficult to crush tablet, but I'll let Joe speak to the [Inaudible].

Thanks, Jim, and I think beyond the tamper resistance portion, some of the things that I have heard and have read as well, actually relate to patients' experience with the drug and whether or not the drug is causing them more side effects, particularly in terms of GI side effects than they might have had with the regular OxyContin.

So, those are the things that I have heard and read.

Beyond that, we do know it's a bio equivalent to OxyContin, but that doesn't necessarily mean that patients will perceive it that way or even necessarily physiologically see it that way as well.

Great, and then a quick question on TRANSDUR, do you think that the availability of produced endorphin BuTrans impacts your ability to secure a partnership for TRANSDUR?

Actually, we think -- sorry, go ahead.

And, also, is it going to impact -- or do you think it will impact opioid patches like DURAGESIC or non-opioid patches like Lidoderm, or --

Yes, I think it's interesting that Bupanorfine kind of fits in between.

It's not as potent as Fentanyl or Sufentanil by any stretch.

So, I think it bridges the Lidoderm to Fentanyl, and I'll let Joe speak to those clinical pieces.

But, from a commercial standpoint, we are actually quiet pleased to see it out there, because we think it will set a new bar for a seven-day narcotic patch in treating the pain space, and I'm sure they will price it as they feel best.

And, then, on the heels of that, we can come along with a seven-day patch that is going to have greater potency and a greater reach.

And, then Joe, if you want to speak to --

Yes, I would agree with that.

I think that now having a once a week patch out in front of us that is number one, not as potent as Sufentanil, is actually a good thing for us.

Not only strategically, but also helping us get the message out with potential partners, it has actually generated renewed interest in the product with new potential partners that are actually active in our data room as we speak, which is exciting for me.

And, so, from my view, it's all good.

These are two different APIs.

As you know, Bupanorphine is a partial agonist where Sufentanil is a full-on new opioid agonist, So, there is clearly an advantage there, just simply in terms of potency.

And, you asked a question about Lidoderm as well.

Lidoderm is really a targeted peripheral product approved for PHN.

I think we all know it's used primarily off label for low back pain.

Whereas sufentanil TRANSDUR is truly a transdermal project that is designed to give you blood levels of drug for chronic severe pain.

Great, thank you.

The only last comment I might chime in with is, if you actually look at this market, when new products get introduced, everybody immediately assumes you're just going to steal market share from somebody else.

And, the truth is, what happens is the overall market expands because frankly, there's kind of an insatiable demand for these pain products, especially as the population is getting older.

And, plus, there's just so much unmet need out there, and we've seen that with the Fentanyl patches, with the orals.

It's been 30 years now of this.

[Inaudible].

Thank you.

Our next question is coming from [Jeffrey Deceifert].

Good afternoon.

I have a series of questions so I might ask a few and then put myself back in the queue.

First of all, with regards to REMOXY, we've been told to expect publication in a peer-reviewed journal of what we could call a likeability study.

And, there was something from the Journal of Applied Research that was published, is that the peer-reviewed article we're supposed to expect ,or is there something else coming down the pipeline?

I'm not 100% positive, Jeffrey.

I think that your reference is to something that King Pharmaceuticals said some time ago.

And, the only thing I can add is that Pain Therapeutics, not long ago in their earnings release, they referenced the fact that there would be some kind of a presentation at the American Pain Society meeting in May, that may well be a poster.

But, I think that we probably, when it comes to publication strategy, we have to let Pfizer now take the lead with respect to what the publication strategy is going to be.

When we learn about things or they're willing to talk about it, then we'll be able to repeat it.

But, I don't think we can get out in front of what they plan from a disclosure standpoint and a marketing standpoint.

So, the expectations that were set by Brian Markison in previous calls about publication in a peer-reviewed journal, we need to put those on the back burner and assume that they may not happen?

No, I'm not trying to say that, I just don't feel comfortable giving any additional detail on it, because it's not our place.

We have to let the Pfizer launch team -- they're the ones in the driver's seat and will dictate disclosure.

All right, thank you.

And, staying within the field of ORADUR opioids, I presume that, when you publish your 10-Q or your 10-K shortly, you'll give us a breakdown of actual activity in the fourth quarter, but can you give us a preview of what, if any, activity we might be able to infer took place on the hydrocodone, hydromorphone and oxymorphone ORADUR opioids during the fourth quarter?

And, can you give us an idea of whether that's a continuing effort?

I think the only thing I could say, Jeffrey, would be, again, a little bit following the disclosure from our partners is Pain Therapeutics mentioned in their disclosures that and IND was filed and accepted by the FDA with respect to oxymorphone in the fourth quarter.

And, that's about the only thing I think I'm comfortable saying right now.

So, that's one piece of forward progress that occurred recently.

Beyond that, I think we should probably wait and see what Pfizer wants to say.

So, will the detailed information you provide in your quarterly filings give us a breakdown as to which particular products you are working on, or will we just have generic payments received from pain therapeutics, King, now Pfizer, et cetera?

I'll have to go check, but I that -- I wouldn't expect a whole lot of gory detail, quite frankly.

I think what's been disclosed now is what the API is for those three other programs.

But, beyond that, I don't think there's a whole lot of detail that's going to be provided.

All right, thank you.

Shifting to POSIDUR, we all followed the IPO of Pacira and the presentations they did as part of their roadshow.

And, I suppose this is a question more for Joe more than anybody else, but I will let you gentlemen decide who should answer.

There seems to be quite a difference in terms of the depth and breadth of Phase III trials that BESST seems to be doing when compared to Pacira's Phase III trials.

Can you help us understand a little bit while they are confident that they will get FDA approval and a broad surgical label based on their trials, as opposed to what the much -- what appears to be the much more complex and detailed BESST trials?

In fact, I was not able to find any trace of any cardiac monitoring taking place within the Pacira Phase III trial.

So, if you could give us a little color on that, I'd be very grateful.

First off, I probably can't give any comment with regard to their understanding or their appreciation for what their approval might be.

That would be pure speculation on our part.The things that we do know is they have had, I believe, two failed and one withdrawn or interrupted Phase III trial in various surgical models.

They were able to have two successful Phase III trials.

One where they saw data that was positive for three days in hemorrhoid -- in eastern European hemorrhoid study.

And, another where they saw in a bunion surgery, I think 24 and from one point I think 36 hour data.

Those were both pain at rest, not pain on movement as ours, so a very different kind of pain observation.

I do believe they did a QTC study in general for their cardiovascular monitoring, I don't know what they've done beyond that.

And about that's all I can really comment on.

Joe --

Yes, Jeffrey, from my view, one of the things that we wanted to do, that I really wanted to do with POSIDUR was demonstrate its efficacy and safety in very, what I believe to be relevant surgical models.

So, big models in the abdomen.

So, laporotomy and laproscopic assisted colectomy, hernia as well.

So, from my view, those models are clinically relevant, important, big, well represented in the United States.

I think very important to the FDA.

Don't forget that we were coming behind Pacira, so oftentimes the agency, and I can't speak for them now, but I can tell you having been there that sometimes they will create new hurdles for people.

Not because they want to, just because of other things that they are learning about other products, as you come through the development process.

And, so, sometimes that helps you and sometimes that hurts you.

And, in our case, I think that -- I approach that as something of a helpful thing.

They simply wanted us to demonstrate some cardiovascular data.

We didn't have to do a formal QTC study.

In fact, we were able to blend that into our Phase III pivotal trial in what I believe to be a much more relevant situation, and that is actually in the surgical patients who are having the trial at the time when they are having the drug applied.

We can blend that along with any type of exposure in the blood that we might see and help build -- really build a good safety story, which I think we've been building all along, and this would just confirm that.

So, that's another big difference amongst the programs.

But, I think simply because someone has filed and NDA, and I can't speak to why Pacira thinks they have such positive trials, and that's good, and hopefully we will be the same way, it doesn't mean the FDA is going to see it that way.

It doesn't mean the FDA will necessarily see the clinical relevance in the models or the trials or the P values.

There's a lot of stuff that goes in the clinical trials and interpretation of data.

So, for us, I think what we've got so far is moving along just fine.

I like what we are seeing and also, when it does come down to it, the broad labeled indication you talked about, that's a negotiation that will happen with Pacira and with us only after the agency has made a determination that they really want to approve the drug.

The labeling negotiations can take a couple of different turns, and just because you are proposing something doesn't mean that that's what you're going to get.

And I think the more relevant data you have with relevant surgical models that you have, I think helps your cause to get you a broader label.

From my view, bunionectomy, hemorrhoidectomy, they are painful surgeries, they're nice surgeries.

How broadly can they be applied?

I'm not so sure, which is exactly why we chose not to do those types of models for our development program.

Thank you for that very detailed response.

On the subject of BESST, you've kept a very generic update, we are in March with a targeted end of H1 date.

Can you give us any color on how far you are from that light at the end of the tunnel in terms of completing enrollment?

I wish I could give you more color Jeffrey, but, so far, we're targeting end of June.

That's the first half for enrollment.

All right.

Basically, the new news is there is no change.

I think that's a better way of saying it, yes.

When we started, we were assuming a year and a half, and we are right on track.

So, the bottom line is you're -- at this point in time, you not telling us you're not telling us you're pushing it out by another three to six months?

That's correct.

And, we can presume that you've had no significant safety issues come back through the patients enrolled to date in BESST?

That's correct.

We are still unblinded, but that is correct.

I mean we're still blinded, I'm sorry, we're still blinded.

We're not unblinded, we're still blinded.

But, you're correct, no significant safety issues.

All right, well, I've got a few more questions, but I think I will put myself back in the queue and let somebody else ask them.

Thank you.

Thank you.

(Operator Instructions).

Mr.

Deceifert, if you could just push -- thank you.

I will -- we now have Mr.

Deceifert back online.

Gentlemen, I apologize, I guess I'm the talkative one today.

On the subject of TRANSDUR, in previous communications, you've alluded to two possible paths over forward for this product.

One is successfully finding a partner and the second is deciding to move this into Phase III yourselves in a somewhat similar fashion to POSIDUR, while continuing to evaluate a prospective partnership opportunities.

And, you've also shared that financing is obviously an issue, so approval of REMOXY would change the company's perspective somewhat.

Can you share with us whether -- if that's the path you choose to go down, is there significant preparatory work being done now so that it's -- come July, you haven't found the right partner for TRANSDUR, this is something you could move forward fairly quickly?

Or is it something where it's still very just much wait and see and you're not doing any prep work at all on a possible direct sponsored initial Phase III trial for TRANSDUR?

Yes, we're certainly doing the preparatory work and, as you said, it's about minding our Company and advancing and staying within what can afford to do.

So, certainly an approval of REMOXY changes our fortune, as does the closeout of the POSIDUR Phase III program.

As that advances forward, that changes where can put our dollars, so.But, Joe and his team are definitely laying out the various regulatory strategies, both here and for a European first kind of opportunity as well, so we're looking at both markets.

Yes, I can add to that.

There's definitely active work in terms of overall macro strategy, both in US and in Europe, as well, for this product.

I'm responsible and accountable for that, and I can tell you that I've been paying a lot of attention to that in working on that, as well.

So, that is something that we just haven't put on the shelf that we're actually, at least moving that macro strategy piece from a clinical development plan standpoint ahead.

And, as -- so, as a follow-up to that, so another possible source of funding for moving the TRANSDUR into a direct sponsored Phase II might be a significant development milestone that might be receivable under one of the partnership programs upon the announcement of positive BESST results?

We haven't gone into gory details as to what are the benchmarks, specific benchmarks under each of the programs to achieve milestone payments.

I think -- so, I think I'd rather not be -- not add anymore to what we've already said.

All right, thank you.

On the subject of ORADUR ADHD, you've shared with us that a Phase I or a series of Phase I programs -- or trials were launched to establish best possible dosage environments.

Can you tell us a little bit more about that and what a timetable might be as to when we might hear from you -- fine, the Phase I's were okay and we're moving into a Phase II study?

It's impossible to predict with these things.

When you're doing formulation work at this kind of product, what you're doing is deigning formations and testing multiple formulations in patients to get a sense of where the release rates are and what they look and trying to establish what we're trying to do with the product.

And, until you discover it, you don't discover it.

So, I think we just have to let the trials unfold as they will, and when the timing is right, we'll make the announcement.

So, basically, it could be three months, six months, a year, two years?

We have no idea.

We don't.

It may never happen.

That's the reality.

We feel confident that we've got a good shot at it, but you can't -- this is early stage development.

That's why we don't typically talk about these programs too often.

All right, thank you, that completes my questions.

Thank you.

Thank you.

(Operator Instructions).

We appear to have no further questions.

I'd like to turn the call back for any closing comments.

Okay, well, hearing no questions, management is always available if people do want to later talk, so please feel free to reach out to us.

And, with that, thanks for your interest and support.

Take care.

Thank you.

This does concludes today's teleconference, you may disconnect your lines at this time.

Thank you for your participation.