DURECT Corp (DRRX) 2015 Q3 法說會逐字稿

Greetings and welcome to the DURECT third-quarter 2015 results conference call.

(Operator Instructions).

As a reminder, this conference is being recorded.

It is now my pleasure to turn the conference over to your host, Matt Hogan.

Good afternoon and welcome to our third-quarter earnings call.

This is Matt Hogan, the CFO at 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 will then open it up 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 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 10-Q under the heading risk factors.

Let me now turn briefly to our financials.

Total revenue was $4.7 million in the third quarter of 2015, compared to $4.3 million in the third quarter of 2014.

Excluding all deferred revenue recognized for upfront fees from our agreements, revenue from our R&D collaborations was $1.9 million in the third quarter 2015, as compared to $1.7 million in the third quarter last year.

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, largely from the sale of ALZET pumps and LACTEL polymers, was $2.7 million in the third quarter of 2015, as compared to $2.5 million in the third quarter of 2014.

Our gross margin on these products was 67% in Q3 2015.

And these product lines continue to be strongly cash flow positive for us.

R&D expense was $6.7 million in third-quarter 2015, as compared to $5.5 million in Q3 2014.

SG&A expenses were $3.2 million in the third quarter 2015, as compared to $3.1 million in the comparable quarter last year.

Our net loss for Q3 2015 was $6.5 million, as compared to $7.1 million in Q3 2014.

At September 30, 2015, we had cash and investments of $32.4 million, which compared to $34.9 million at December 31, 2014.

We have $19.7 million in long-term debt.

Our cash burn rate in the third quarter was $5.4 million.

I would just like to make one last comment, which is on the housekeeping front.

We plan to file our 10-Q tomorrow, and at the same time, we're going to file for a new shelf registration statement for $125 million and, as a subset of that, have an additional $40 million available under our ATM facility.

Our shelf would've expired in a little over a year, and once declared effective, it will have a new three-year life.

From a logistical and cost standpoint, it's a lot more efficient to do these types of filings at the same time as our other SEC filings, like a 10-Q.

With that, thanks again for joining the call and I'd like to turn it over to Jim to go through the rest of the business.

Thank you, Matt.

We made significant progress on multiple programs since our last earnings call.

I will now highlight some of that progress, focusing on our most important development programs.

I'll start with DUR-928 and our epigenomic regulator program.

I will then cover our later-stage product candidates that are pursuing the 505(b)(2) route for approval.

The discovery of DUR-928 is a potential major advancement for medicine.

DUR-928 is the lead molecule from DURECT's epigenomic regulator program.

It is an endogenous small molecule, the first in a family of newly discovered endogenous sulfated oxysterols.

DUR-928 is an epigenomic regulator of lipid homeostasis, inflammation, and cell survival.

No toxic effects have been seen to date in the preclinical toxicology studies conducted and we have not seen any safety signal in the Phase I studies we have conducted, despite achieving plasma concentrations of DUR-928 that were 500 times the normal endogenous level in the subjects tested.

We are pursuing two distinct programs with DUR-928, an oral program that is targeting chronic metabolic diseases and an injectable program targeting acute organ injury.

Today, we have two announcements regarding DUR-928.

The first is our reporting positive data from an important animal model of lipid metabolism and the second is positive results from our Phase I injectable study.

Turning to the data from the latest animal model with DUR-928 and its effect in the leptin-deficient rat model, with the positive results from this study, DUR-928 has now demonstrated positive effects in eight different animal models.

This study was conducted by a contract research organization in southern California.

This study demonstrated that DUR-928 provided protection against fat accumulation in liver of animals that are genetically predetermined to accumulate fat in their livers.

In my opinion, the remarkable results from this trial are that DUR-928 was able to reverse the damage and notably improve liver morphology in these genetically deficient animals, and this was accomplished by dosing DUR-928 for only three weeks.

In this study, leptin-deficient Zucker rats are given a normal diet for 11 weeks.

These rats then weigh about two times more than normal rats of a similar age and their livers have accumulated a substantial amount of fat.

These rats are then treated with varying doses -- or were then treated with varying doses of DUR-928 or placebo for three weeks.

In this study, dosing with DUR-928 significantly reduced the hepatic triglycerides, total cholesterol, and free fatty acids.

The liver morphology and lipidosis were also noticeably improved, which was consistent with the biochemical changes.

The data from this leptin-deficient rat model provides further support to the other chronic animal models and is further support of DUR-928's potential use against chronic metabolic disease.

There are two important points to take away from today's data regarding the effect of DUR-928 in the treatment of leptin-deficient rats.

The first is that the effect of DUR-928 was to reduce liver cholesterol, triglycerides, and free fatty acids and to restore liver morphology in a therapeutic, rather than a preventative, mode.

The second is the point that DUR-928 was able to repair the damage caused by the accumulation of lipids in the liver of these genetically deficient animals after only three weeks of treatment.

Our animal data are divided into two main categories, that of safety and efficacy.

Regarding safety, in the pharmacokinetic and toxicology studies that have been conducted in mice, hamsters, rats, dogs, and monkeys, DUR-928 has been found to be safe at all doses tested to date.

These nonclinical results supported the initiation of DUR-928 into human safety trials.

Regarding efficacy, the biochemical and biologic activity of DUR-928 has been demonstrated in eight different animal disease models involving three animal species.

Four of these models represent chronic disorders of lipid accumulation, lipid dysfunction, inflammation, and fibrosis, such as what is seen in NAFLD and NASH.

And four of these models represent acute toxic or ischemic organ injury demonstrated in the liver, kidney, and the brain.

In the pharmacology studies supporting the chronic indications, DUR-928 has demonstrated improved liver morphology and reduced liver triglycerides and cholesterol in high-fat diet fed mice -- mouse models and in high-fat diet fed hamster models, and after only six weeks of treatment.

We have also seen a reduced fibrosis and NASH activity scores in a mouse NASH model with four weeks of treatment.

And today, we announced improved liver morphology and reduced liver triglycerides, free fatty acid, and cholesterol in the genetic model of leptin-deficient rats after only three weeks in treatment.

In the pharmacology studies supporting the acute indications, DUR-928 demonstrated an improved survival after injury from acetaminophen and ethanol toxicity in mice, improved survival from exposure to endotoxin in mice, and reduced ischemic injury in a kidney model and in a stroke model in rats.

In March, we reported results from our initial Phase I safety study, and in May, we announce results from the multiple ascending dose Phase I study.

Both of these used oral administrations.

They were single-site, randomized, double-blind, and placebo-controlled studies.

The single ascending dose trial was conducted in 30 subjects and the multiple ascending dose in 20 subjects, which had daily dosing for five consecutive days.

The high dosage resulted in plasma levels that were, at a minimum, 100 times greater than the endogenous levels.

And DUR-928 was well tolerated at all doses.

There were no severe or serious drug-related adverse events.

There was no accumulation in plasma concentration observed with repeated dosing.

And dose-related increases in plasma concentrations were observed, with peak plasma concentrations being achieved at two to six hours after dosing.

Today, we are reporting positive results from our single-site, randomized, double-blind, placebo-controlled, single ascending dose study of DUR-928 when injected.

This study was conducted in 18 subjects, consisting of three cohorts.

The high doses resulted in plasma levels that were 500 times higher than the endogenous levels found.

DUR-928 was well tolerated at all doses and there were no treatment-related adverse events.

We are now moving on to the multiple-dose Phase I trial with the injectable formulation, which will start shortly.

We are pursuing two therapeutic programs for DUR-928.

The first is for acute organ injury and the next is for chronic liver disease.

The DUR-928 acute organ injury program will use our injectable formulation.

The initial indications of interest are acute kidney injury, acute liver failure, as well as ischemia/reperfusion injury.

These indications each include potential orphan indications.

And the supportive animal models for these indications are, for the mouse, acetaminophen and ethanol exposure; as well as in the mouse, endotoxin exposure; and in the rat, the renal ischemia reperfusion injury and the rat stroke model.

The DUR-928 chronic liver disease program will use our oral formulation.

The initial indications for our chronic use program are nonalcoholic fatty liver disease, as well as nonalcoholic steatohepatitis.

Additionally, there are multiple orphan indications we plan to investigate.

The supportive animal models for these applications are, in the mouse, the high-fat diet studies; and in the hamster, the high-fat diet model as well; as well in the mouse, the STAM NASH model, and most recently in the rat, the leptin-deficient rat model.

The multiple-dose injectable Phase I study will begin shortly.

Initial trials in patients are set to begin in 2016 in multiple patient populations.

We've been working with KOLs very closely over the past six months to define the patient studies we plan to conduct in 2016.

We'll provide more color on the initial trials in due course once we have finalized our study designs.

I will now move to POSIMIR.

First, what's the reason for the name change from POSIDUR?

It turns out as a routine matter the FDA considers proposed product names, to reduce the potential for any confusion in the marketplace.

The FDA indicated that they had concerns about POSIDUR and that is the reason for the name change.

POSIMIR has passed the initial confusion assessment, although it will have to be reconfirmed at the time of approval.

But for now, it's POSIMIR.

We reported last quarter that we'd wrapped up our discussions with the FDA and had settled on a path forward for POSIMIR.

Since then, we have been gearing up to start the PERSIST trial.

PERSIST is a Phase III trial consisting of a little over 300 patients undergoing laparoscopic cholecystectomy, or gallbladder removal.

This will be a randomized, parallel group, double-blind, placebo-controlled, multicenter trial conducted in the United States.

The primary efficacy and point will be pain intensity on movement over the first three days after surgery.

We believe the data from this trial would be confirmatory of the data we have seen in our hernia repair and shoulder surgery pivotal trials and that these three surgical models will support a robust NDA resubmission.

There are a number of reasons we like this surgical model and the trial design.

Laparoscopic gallbladder removal is one of the most common general surgeries performed in the United States each year.

There are about 800,000 procedures per year, mostly conducted on an outpatient basis.

With the trend towards less invasive procedures where possible, this would give us an additional efficacy data in a laparoscopic surgical procedure.

Lastly, our confidence is based on the positive experience we have had with laparoscopic gallbladder removal in a previous 50-patient study comparing POSIDUR to bupivacaine hydrochloride.

And using this same statistical methodology we will employ in our new study, we saw roughly 25% pain reduction over the first three days after surgery, with a P value of [0.0225].

And this was against an active comparator.

In terms of timing, we have been signing up and training our clinical sites, and we are announcing today that we have begun recruiting patients.

We believe that it will take about a year to enroll the trial.

After the last patient enrolls, we believe it will take a few months to get the topline data and then a few more months to finalize the reports and prepare the NDA resubmission.

After resubmission, there will be a six-month review, per PDUFA guidelines.

What are some of the differentiating features that this resubmitted NDA will have?

First of all, the NDAs plan to include efficacy data from three common surgical models.

We will have hernia, shoulder, and gallbladder.

We will be aiming to be the first product to demonstrate efficacy in laparoscopic procedures.

We will have our superior duration of action -- that is, in the three days.

Our SABER formulation allows for dosing 660 milligrams, about 2-1/2 times more than other bupivacaine products.

No other product in this space has demonstrated clinically meaningful efficacy beyond 24 hours.

We also have our simple and rapid administration directly into the wound under visual supervision.

This puts more drug closely aligned to the impacted nerve and also facilitates the use in laparoscopic procedures and port procedures.

We are often asked, where are we with regard to partnering this program?

There is strong interest in the program from multiple parties.

The interest in POSIDUR is driven by the substantial market opportunity for a true three-day postsurgical pain product that has the potential to meaningfully reduce opioid use.

We would like to reiterate a couple of principles.

First, we are not letting our licensing discussions slow down our plans to conduct this trial.

We view POSIDUR as a very valuable asset, and as such we are open to a partnership, if the terms are commensurate with the value.

I now want to move onto REMOXY.

On July 23, Pain Therapeutics provided an update on REMOXY and I'd like to repeat a few of the things that they said.

First, they are focused on the NDA resubmission and have substantially completed the transition of REMOXY from their former partner.

Second, they have received -- recently assessed the long-term stability of REMOXY and found that the stability testing at 12 months was within the specifications.

Third, they early had announced positive topline results from a human abuse potential study with REMOXY.

This study demonstrated with statistical significance that both intact and chewed REMOXY were less liked -- that's in quotes, liked -- than immediate-release oxycodone on the two primary endpoints, and those endpoints were drug liking and drug high, as determined by non-dependent recreational users.

Fourth, Pain Therapeutics stated that their previous partner had reached a written agreement with the FDA on the specific content of an acceptable NDA resubmission and that Pain Therapeutics has recently received written confirmation from the FDA that this key regulatory document remains valid and applies to their NDA resubmission.

Lastly, they reiterated an expectation of resubmitting the NDA in the first quarter of 2016.

After resubmission, there will be a six-month FDA review, and as such we look forward to the potential approval of REMOXY in 2016.

While there are a number of products in development, to date no new controlled-release abuse deterrent oxycodone product has been approved and the current estimate for resubmission would mean that REMOXY will be eligible for approval in the third quarter of 2016.

So potentially a year from now, we could have our first product on the market.

US sales of OxyContin were about $2.4 billion last year, so it's a very large market opportunity.

And REMOXY has the opportunity to be a highly differentiated product.

REMOXY takes a straightforward approach to abuse deterrence by not requiring a second agent be added.

It's an oral gel cap that is highly viscous.

It isn't just another tablet that might be a bit harder to crush.

Even after crushing, REMOXY's viscosity makes it practically impossible to inject through a needle, nor can one physically snort it.

If one mixes it with common drinks in an attempt to release the drug more quickly, the oxycodone doesn't burst out.

So we believe REMOXY has the potential to be a best-in-class product, providing the pain relief you would expect from a legitimate chronic pain product, while deterring multiple common methods of abuse.

As a reminder, we have seven patents issued that go out to at least 2031 and we will receive a royalty of 6% to 11.5%.

So even if the sales ultimately peak in the $300 million to $400 million range out of that $2.4 billion market, our royalty stream would be quite lucrative.

Moving on to Relday, in late September, Zogenix reported positive results from their 60-subject Phase Ib multidose trial.

Risperidone plasma concentrations in the therapeutic range were achieved on the first day after dosing and reached steady-state levels following the second dose and consistently maintained these therapeutic levels throughout the four-month period of the trial.

Zogenix has stated they intend to seek a development and commercialization partnership and that they are well positioned to start Phase III once a partner is secured.

If they do partner, DURECT will receive a portion of what Zogenix receives.

We will receive also milestone payments for the end of Phase II meeting with the FDA and for the start of Phase III.

We feel Relday would be a nice product opportunity for treating schizophrenia in patients.

In the Phase I trial, therapeutic plasma levels were achieved on the first day of dosing, followed by a controlled-release profile over a four-week period.

Relday offers a simpler dosing regimen as compared to the current therapies because the patient would most likely not have to be weaned off the oral medication as they are transitioned to the long-acting injectable.

Relday offers a simple subcutaneous injection rather than IM, and unlike some of the leading injectables in this category, with Relday there is no need for reconstitution prior to use.

Market research on this product is quite positive and we look forward to potentially having another drug in Phase III.

With that, we'd be happy to take any questions you have.

(Operator Instructions).

Annabel Samimy.

Hi, this is Andrew in for Annabel.

I just had a few questions.

First on 928, you mentioned before I think on a previous call that you were looking for a bio market to aid in the utility of 928.

Any updates there?

And when do you plan on initiating the second Phase I study for 928, the injectable?

And I have another couple questions on POSIMIR, but I'll start off on that.

Sure.

First off, with regard to biomarkers, there are a number of biomarkers that we track, both for liver disease.

We have seen in the animal models a reduction of ALT/AST.

We have seen reduction of TNF alpha, IL-1/IL-6, COX-2, things like that.

And so, there are a number of inflammatory markers, as well as biochemical markers, and, of course, the cholesterol and the lipids and the like that we can track to look for activity.

Then with regard to starting the multidose injectable, that will be started shortly.

So by year end, we can --

Yes.

That's our objective.

Yes.

Great.

And on POSIMIR, when do you plan on securing the partner for that?

It's up in the air right now.

We're talking to a number of people.

As I said, we are not letting that be a gating item.

But there is a lot of interest, as you can expect, with the success of Pacira, especially with them kind of getting back on track now with their, whatever it was, $59 million in sales last quarter.

And they really are a 20-hour or less product in true efficacy.

So we think our ease of application, not requiring refrigeration, two, three days, and the fact that we will have much more significant surgeries than their bunion and hemorrhoid, we think it's a -- we know it's a very valuable asset and there's a lot of interest.

And will you be taking POSIMIR through resubmission or will that be the partner?

It depends right now.

I could see it going either way.

But regardless, if we partner, which there is a substantially good chance we could, we will still want to make sure that we control this through resubmission.

We're not to give up control of it.

That's not -- we have been through that too many times in the past with our other partner products.

We're going to make sure (multiple speakers)

Got you.

And you see yourself -- DURECT commercializing this product?

Or will the partner be taking on that role as well?

Most likely, we will have a partnership in place for that.

If we didn't have 928 in the wings, that probably would be a different discussion point for us because one can see great success, obviously, with Pacira with a much lesser product.

But we think that the value of 928 is such that we wouldn't want to see that kind of dilution against 928 in order to launch this product.

[James Malloy].

Thanks for taking my question.

Just a quick follow-up on POSIDUR.

I know that you are in discussions with a number of partners.

Are you guys able to frame how many partners you're talking?

Are there hundreds coming through or a couple, three?

And the stage of where they are.

I know that Matt had said previously that it would probably be either somewhat near term, perhaps, or maybe later when the data comes out, you either get it before the trial goes too far along or wait to see what the data says.

I believe -- hopefully, I'm paraphrasing what Matt have said correctly.

Can you please talk a little bit about that?

Yes.

We are in discussions with a number of partners.

It's not hundreds, but it certainly -- it's a good number from a pharmaceutical standpoint.

It's about what you would expect, I think.

We have been doing this for many, many years.

As far as the timing, it really depends on the competitive nature of the discussion.

You can sign something up.

I've seen deals get done two weeks before the data are announced.

So I think it's all open.

It'll just depend on the market and how things go, and also what's happening within these various companies that we are talking to.

But there is a lot of interest.

The marketplace has been well defined, as we thought it would.

And even, as I said earlier, with a product that isn't as good as it could be, look at the success out there.

So we think with something like POSIMIR where you get truly three days and it's easier to apply, you can use it in abdominal surgeries, a lot of laparoscopic surgeries, these things don't afford themselves really well for a product that has to be injected around.

You just simply can't cover the space.

And so with our product, you just squirt it in the wounds and you're done.

It would take -- if you could even do it with some of the other products, it would take you so long to inject it that I'm not so sure the surgeons would be excited about doing it.

Thank you for that.

Can you talk a little bit about the clinical trial for POSIDUR?

Any chance of speeding up that from one year?

We're looking at first quarter of 2017 for topline data.

Any chance that could move into 2016?

I don't think so.

Right now, we're just projecting what we are, which is one year.

That's 300 patients, so it's a lot of patients.

And we are signing up -- we have got a number of centers already signed up, have gone through their initial training and all that.

So I think we will be cranking along nicely, but we're just trying to be realistic.

Thank you.

And then on REMOXY, I know that PTIE obviously on their second-quarter call referenced this FDA document and the confirmation of the FDA that you highlighted on the call earlier.

Have you guys seen this document?

Is this something that you guys would see as well?

Can you confirm this thing exists and all that?

Do you know where they may be?

I can't confirm it exists.

Well, I guess I can, because we had seen part of it.

We have the right to see the CMC components of it, so we have seen some of it, and everything we have seen makes us feel very comfortable that this thing should be able to receive it and should be approvable.

I mean, it's really (multiple speakers) it's getting down to just a few issues now.

The third time around, there isn't much left to continue to discuss.

Thank you.

Then, maybe, I know that PTIE has been clear that they are not going to sell REMOXY themselves.

I know it's hard to judge when your own products will be licensed out, but how about when do you think they might be announcing a partner?

Hard to say.

I mean, they play things pretty close to the vast, so it's probably best to ask them.

I don't know, Matt (multiple speakers)

But we think from our space, it is an asset that should be eminently partnerable.

It's a late-stage asset.

Somebody under due diligence can clearly look at the FDA correspondence, all the data that has been gathered.

And it's a big market.

It's $2.4 billion to fight over.

And even if there are a few players, that's a big market opportunity for a late-stage asset.

So, logic suggests they should be able to find a decent partner for it.

Yes.

And while it is more crowded than it was if it had been approved way back when, we still have what we feel is really the lead tamper-resistant product with all the multiple methods.

Most everything else out there is just crush resistant in one form or another.

And so, we offer a lot more than that.

Then last question, I know you've got a busy pipeline, but have you guys thought to in-license any additional products yourselves?

Unlikely.

We're not spending any effort on it right at the moment.

We kind of feel like DUR-928 could be a family of products and indications in and of itself.

So why look for something new to displace that?

I think our plate is pretty full with the assets we have.

(Operator Instructions).

[Adam Cohen].

Thank you for taking my call.

I, too, have a question about 928.

So it being an endogenous compound, can you tell us about its patentability, what you hold right now?

And also, are there -- is there the possibility for other corporations to replicate similar analogues, such as like Lipitor and Zocor, something like that?

Well, the pharma industry is ever inventive, and so I will answer the second one first.

That's one of the reasons why we kept it quiet for so long.

We have been working on this thing for 4-1/2 years, long before NASH was a real popular thing to do and everything else.

And we have had a very active analogue program and we continue to.

It's actually one of a family of molecules.

We have actually seven patent families going forward.

Although it's difficult to get a composition of matter, you're right; for a naturally occurring molecule, you can get utility use of it, therapeutic uses.

There are a whole host of them and we have just about everything we can conceive of.

We are pretty good at getting patents here.

We got way more patents than we do employees at this Company, so it's been a legacy of us -- of our Company, and so I think we're in a very strong position with regard to patent opportunities.

I might just add we have six patent families, which include pending applications, and two granted US patents.

The US patent coverage is to at least 2026, plus some eligible patent term extensions and adjustments.

And then, of course, the more recent filings would have a longer patent life than that.

So we're trying to be very diligent in a broad-based patenting strategy.

Even though, as you rightly point out, with endogenous molecules, you can't get the natural compound itself.

You can get these patents on the formula compound, the pharmaceutical composition, the method of treatment, the medical use, synthesis methods, and all those kinds of things.

That's what's going into our patenting strategy.

How is it manufactured?

It's a cholesterol-based molecule, so it's a pretty simple small molecule manufacturing process, and we've scaled it up to the 1 kilo level at GMP.

Okay.

So Relday, that's interesting because you've been compared to Risperdal Consta.

Now a lot of psychiatrists are using INVEGA SUSTENNA right now because Risperdal Consta, you have to refrigerate it and it's sort of clunky.

Do you have to refrigerate Relday?

I guess I will breaking it out.

I don't think so.

Right.

The nice thing about it is I think the advantages of Relday is it is subcu and it's like a CC or less.

So it's something that psychiatrists can actually do right in the office.

And it lasts -- not only does it start working immediately, which is obviously a huge advantage over what's out there, but then it lasts with very nice kinetics for a full month.

Okay.

I think one of the issues with Risperdal Consta is when you first the patient on it, you have to wean him off his oral meds for the first couple of injections until he gets to the right steady-state level.

You don't have that phenomenon with Relday.

And often times by the time a patient presents to be switched over to an injectable kind of circumstance, oftentimes the patients aren't being compliant and they're a little out of balance.

And so to have to kind of get them, bring them in, give them a shot, and then make sure they stay or get back on their orals can be a bit of a challenge.

So in this case, once you can give them the shot, they are going to be compliant.

Now some of your other products -- for example, your ORADUR-ADHD, so I guess you are looking to prevent abuse, but you also have to compete with stuff like Concerta and how would you work about being reimbursed because Concerta is on the -- I don't know if it is generic, but it's on the verge of becoming generic.

So how would you -- what kind of reimbursement would you expect for something like that?

I think for that product, what we are doing right now is we actually have a partner, Orient Pharma, who are doing Phase III work right now in Taiwan.

And they are doing that work on their own dollar base and we will be the recipients of their data.

So the advantages that we will have with our product is it will be a smaller capsule size, which is important, especially for children.

It will have the abuse deterrence, as you reference.

And then, it is all about what are the duration of activity and those kind of things that get you that activity, but then allows the children to go to sleep at the end of the day.

As far as reimbursement is concerned and the like, that's something that would be something that we would be in close conversations with potential partners on and probably not get into strategically in a public forum, I wouldn't think.

But you are right.

There are certainly -- Concerta is in a position of going generic and the marketplace is ever shifting, but that doesn't mean that there isn't an opportunity for a new product to be able to present itself.

Jeffrey Silber.

I would like to circle back to POSIMIR, if I may.

We have heard you over the last six to 12 months talk about how you wouldn't really do a deal unless the terms were right.

And can you give us a sense -- you've shared with us there's quite a bit of activity.

There are a reasonably large number of people who have shown interest; it is not just one or two people competing against each other.

But can you give us in general terms a sense of what you feel about the discussions and are you seeing preliminary indications of terms that would make sense to actually partner POSIMIR with?

I think we are.

We are seeing preliminary presentation of terms.

But we don't want to get into too many details, nor do we want to speculate, Jeffrey, on timing.

As you know, that just puts the power in the hands of those to whom you are having your discussions, with whom you're having the conversations.

But as a broad outline, we would expect a meaningful upfront payment as a license fee.

And then, we would expect that we would continue to run the Phase III trial because we don't want any disruption to it with a new person being deeply involved or trying to take it over.

We would expect a large milestone payment on approval, and then we would expect a royalty probably around 20%-ish, something like that, and then a series of sales-based milestones, something like that.

And lastly, those are just the economic terms.

But I don't think we'd want to do this unless the other party was somebody that we were confident would do a really strong marketing job with the product.

So those are kind of the screens that somebody has to pass in order for us to complete a deal.

And we've talked in turn about some of those terms with some people, and if we completed one, we are in the right ballpark for discussion.

That's very helpful.

Thank you.

And I appreciate, Jim, that you can't say too much, but I just wanted to get a general sense of whether you were at least in the same ballpark as the people you're talking to.

So, thanks very much.

There are no further questions at this time.

Would the Company like to make any other statements?

I don't think so, but thank you for your interest.

If any shareholder or possible investor ever have questions, please feel free to reach out to us.

We'd be happy to talk to you at greater lengths.

So thank you very much for participating today.

Thanks.

Bye.

This concludes today's conference call.

You may disconnect your lines at this time.

Thank you for participating.