DURECT Corp (DRRX) 2017 Q2 法說會逐字稿

Greetings, and welcome to the DURECT Corporation Second Quarter 2017 Earnings Conference Call.

(Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Matt Hogan, Chief Financial Officer of DURECT Corporation.

Thank you.

Mr. Hogan, you may begin.

Okay.

Good afternoon.

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 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-K and the 10-Q we will file tomorrow, under the heading Risk Factors.

Let me now turn briefly to our financials.

Total revenue in the second quarter was $4.3 million compared to $3.2 million in the second quarter of last year.

Revenue from our R&D collaborations was $1.3 million in Q2 2017 compared to $0.4 million in Q2 2016.

And revenue from this source fluctuates from quarter-to-quarter depending on the state of development under various programs and what our role is in those programs.

Product revenue, largely from the sale of ALZET pumps and LACTEL polymers, was $3.1 million in Q2 2017 as compared to $2.8 million in Q2 2016.

This increase was largely driven by strong demand for our LACTEL polymers.

Based on our backlog, our LACTEL product line should have a record year in 2017.

And our gross margin on these 2 product lines was 70% in Q2 2017.

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

R&D expense was $9.1 million in Q2 2017 as compared to $7.9 million in the second quarter last year.

SG&A expenses were $3.7 million in Q2 2017 as compared to $2.9 million in Q2 2016.

But I want to briefly explain that virtually all of that increase was due to an advisory fee we owed upon signing the Sandoz agreement for POSIMIR.

So it's a onetime event due to that.

Our net loss for Q2 2017 was $9.9 million, which compares to $9 million in the second quarter last year.

And at June 30, 2017, we had cash and investments of $33.6 million compared to $25.2 million at December 31, 2016.

With that, let me turn over to Jim to go through the programs in some detail.

Thank you, Matt, and hello, everyone.

We began this year by outlining 6 deliverables we were looking forward to in 2017.

They were as follows: first, reporting our DUR-928 Phase Ib and other data at scientific meetings; second, commencing at least one Phase II trial with DUR-928 with PSC likely the first indication to be pursued; the third was selecting lead topical formulations for DUR-928 that will be taken into a proof-of-concept clinical trial in psoriasis; the fourth was to potentially establish a commercialization partnership for POSIMIR; the fifth was completing enrollment in the Phase III POSIMIR clinical trial, PERSIST, and announcing top line result; the sixth was reporting on results from the Phase III clinical trial for ORADUR-Methylphenidate in Taiwan.

As the second quarter has drawn to a close, I'm pleased to be able to give the following update with regard to these.

For the first, with regard to reporting our DUR-928 Phase Ib and other scientific data at scientific meetings, in March, we presented data from the STAM NASH model -- NASH model in mice at the AASLD meeting held in Washington, D.C. And near the end of April, we presented the NASH Phase Ib data at the EASL meeting in Amsterdam.

For the second, regarding commencing at least one Phase II trial for DUR-928, we now have completed the DDI studies, these are the drug-drug interaction studies, that are precursor to initiating the Phase II work in the United States.

Primary sclerosing cholangitis has been selected as the first oral indication that we will be pursuing for DUR-928.

We expect to begin dosing this trial in the fourth quarter.

For the third, topical formulations of DUR-928 had been screened and 2 formulations have been selected for a Phase II proof-of-concept clinical trial in psoriasis.

For the fourth, a U.S. commercialization partnership for POSIMIR has been established with Sandoz Novartis, and the partnership is well underway with the Sandoz team actively engaging in preparing for a potential launch of POSIMIR in 2018.

And the fifth, enrollment in the Phase III POSIMIR clinical trial, PERSIST, completed ahead of schedule, and we look forward to announcing top line results in the fourth quarter of this year.

And the sixth, the last of these, today we announced positive results from our Phase III trial with ORADUR-Methylphenidate in Taiwan conducted by our partner, Orient Pharma.

This is an exciting time for DURECT with very positive developments in a number of our programs.

I'll begin with POSIMIR.

In the second quarter, we established and kicked off our U.S. commercialization partnership with Sandoz, a division of Novartis, and completed enrollment in the PERSIST trial ahead of schedule.

POSIMIR is our investigational postoperative pain relief depo that utilizes our patented SABER technology and is intended to deliver bupivacaine to provide up to 3 days of pain relief after surgery.

We're delighted to be working with Sandoz as our commercialization partner for the United States.

With Sandoz, we get the best of both worlds.

As a division of Novartis, Sandoz brings the benefit of one of the world's largest pharmaceutical companies with the resources and expertise to support a successful launch and commercialization.

And within the Sandoz division, we get a dedicated team of institutional sales professionals focused on the U.S. hospital market, where they're in about 95% of the hospitals, with their significant presence.

As a reminder of the economic terms, we received a $20 million upfront payment with $43 million in additional development and regulatory milestones that can potentially be earned over the next approximate 12 months.

One meaningful milestone that could be achieved in 2017 -- excuse me, one of these milestones is a meaningful one that could be achieved in 2017, and the second one can be achieved early in 2018.

We are also eligible to receive $230 million in sales-based milestones.

While we can't break these out, these milestones are structured in multiple tiers around reasonably achievable targets, and several have the potential to be achieved in the first 3 years after launch.

Finally, we will receive strong double-digit tiered royalties on sales.

With regard to responsibilities, DURECT will complete PERSIST and resubmit the NDA and is in charge of the process through approval.

We are using the expertise and the talent of the Sandoz Novartis team to aid us in this process.

Sandoz is responsible for all and will pay for all commercialization activities in the U.S.

Regarding the progress this quarter, the Sandoz commercial team has initiated preparations assuming approval to assemble and ensure a successful launch in 2018.

This includes, as one would expect, KOL development, message preparing, medical affairs prep, Phase IV planning and the like.

That team has vast experience and relationships in contracting and selling within the hospitals.

With this relationships and expertise, they're able to get on the formularies to ensure these surgeons have access to the product.

As an integrated pharmaceutical company, Sandoz has the resources available within Novartis to support the POSIMIR launch, including a very large medical affairs and medical communications organization.

These are important functions for a product such as POSIMIR.

The PERSIST trial completed enrollment ahead of schedule, and the team is on track to report top line data in the fourth quarter of this year.

Assuming positive results, we are targeting the NDA resubmission to be in the first quarter of 2018, and the resubmitted NDA could potentially be approved in the second half of 2018.

With regard to the market opportunity, there's a large and relatively untapped market with substantial room to grow.

There are over 70 million surgical procedures per year in United States.

We think a realistically available market for a product like POSIMIR is in the range of around 30 million surgical procedures per year.

A competitor has a forecast of approximately 300 million in sales this year, which suggests about 1 million procedures or about 3% market penetration.

This leads a substantial opportunity for Sandoz to do well with POSIMIR in this under-penetrated market.

The key competitive features for POSIMIR are that POSIMIR has the opportunity to be a best-in-class, non-opioid pain relief product for post-surgical pain.

Given the known side effects of opioids plus concern about the overuse and abuse of narcotics, treating pain with non-opioid alternatives clearly has medical benefit.

As a result of these concerns, there's a trend toward treating pain after surgery with our multimodal approach.

And POSIMIR, if approved, can play a central role in these strategies.

POSIMIR also provides for a potential duration of activity of up to 3 days, which is driven in part by the large amount of -- by the large amount of drug we're giving, 2.5x greater than competing products.

POSIMIR offers an administrative technique that is simple and rapid, continuously releasing bupivacaine into the wound next to where the nerves have been affected, rather than blindly injecting into the issue in the hope of getting enough drug close to the affected nerves to impact the pain signals.

If approved, the POSIMIR label should include data from well-controlled studies in such common and important surgical procedures as hernia, shoulder and laparoscopic gallbladder removal.

The next steps for POSIMIR are we expect to have top line data in the fourth quarter of this year and to resubmit the NDA in the first quarter of 2018.

And with the 6-month review by the FDA, this can set up commercial launch for POSIMIR in 2018.

I'll now move on to DUR-928.

DUR-928 is the lead product candidate in our Epigenetic Regulator Program.

DUR-928 is an endogenous small molecule, new chemical entity, which may have broad applicability in several metabolic diseases such as nonalcoholic steatohepatitis, or NASH, and primary sclerosing cholangitis, or PSC, and other disorders of the liver.

It also has the potential to be used in acute organ injuries such as acute kidney injury and in autoimmune and inflammatory skin disorders such as psoriasis.

We are developing DUR-928 for 3 different routes of administration: orally for chronic metabolic disorders, by injection for acute organ injury and topically for localized dermatologic conditions.

A poster was presented at the European Association for the Study of the Liver, or EASL, meeting in Amsterdam earlier this year, detailing the results from our Phase Ib NASH study.

The patients in this study were either confirmed cirrhotic or non-cirrhotic NASH patients.

Although this study was not designed to assess efficacy, we observed a dose-dependent reduction of certain biomarkers after a single dose of DUR-928.

We observed a statistically significant reduction of IL-18, of high sensitivity C-Reactive Protein, a full-length cytokeratin-18, cleaved cytokeratin-18 and total bilirubin.

The patients with more severe liver disease who have liver cirrhosis or elevated bilirubin levels showed larger responses to DUR-928 but greater reduction in full-length and cleaved CK-18 and bilirubin.

The poster from EASL can be found on our website.

Now on to an update with regard to the oral program.

We are actively working towards initiating a Phase II trial in PSC with orally administered DUR-928.

PSC is a chronic liver disease characterized by a progression of cholate stasis that causes a decrease in bile flow with inflammation and fibrosis of the bile ducts.

There is no established medical treatment for this chronic disease that can ultimately lead to liver transplant or bile duct cancer.

We recently applied for and have received orphan drug designation for PSC with DUR-928.

We are pursuing PSC as our first oral indication based on DUR-928's activity in various animal models as well as the biomarkers and clinical chemistry changes we observed in the NASH patients in the Phase Ib study.

DUR-928 could potentially enable changes to a number of clinical chemistry and biomarkers that are important in both NASH and PSC.

In PSC, the measurements of these effects of DUR-928 can be evaluated using plasma samples rather than depending on liver biopsy.

The potential exists to achieve a readout from this study in 2018.

We recently conducted in vivo drug-drug interaction studies in human volunteers with both orally administered and IV injected DUR-928.

The results demonstrated that DUR-928 did not have effects on the safety and pharmacokinetics of midazolam.

Midazolam is a drug that's used for detecting drug-drug interactions via the enzyme CYP3A4.

This enzyme is commonly associated with causing many clinically relevant drug-drug interactions.

And these data will be included in the upcoming INDs submitted to the FDA.

The team is currently finalizing the PSC Phase II protocol by incorporating input from the FDA and with the plan to begin dosing patients in this trial later this year.

Now to the injectable program.

We recently completed the Phase Ib kidney study in Australia with DUR-928.

This study was an open-label, single ascending dose, safety and pharmacokinetics study in patients with impaired kidney function, they were Stage III and Stage IV kidney disease patients, and matched control subjects.

The study was conducted in successive cohorts evaluating single-dose levels, first a low dose and then a high dose, which was 4x higher than the low-dose cohort.

DUR-928 was administered by intramuscular injection.

The low-dose cohort consisted of 6 kidney function impaired patients and 3 matched control subjects.

And the high-dose cohort consisted of 5 kidney function impaired patients and 3 matched control subjects.

In this trial, DUR-928 was well tolerated among all subjects, and the pharmacokinetic parameters between the kidney function impaired patients and the matched control subjects were comparable.

While we are still waiting for the biomarker data, the safety and pharmacokinetic data we generated were the primary goals of the study and are clearly beneficial to this injectable program.

We are working closely with expert advisers to design Phase II trials for indications with an injectable formulation of DUR-928.

We expect to start dosing in our first injectable indication Phase II study either late this year or early in 2018.

Finally, the topical program update.

As previously disclosed, we completed an exploratory Phase Ib trial in psoriasis patients and 9 evaluable patients utilizing intralesional microinjections of DUR-928.

And promising activity was observed, which we believe warrants further investigation.

In the first half of 2017, we developed and evaluated a number of topical formulations of DUR-928.

And I think it's interesting to note this work was done under the guidance of the same team that worked with [Anacor], some of the work they were doing in selecting their formulations.

We've selected a couple of formulations from this work that we plan to use in the Phase II topical application psoriasis trial.

This trial is slated to begin early in 2018.

We believe there's a large unmet need for a new topical drug for inflammatory and skin diseases such as psoriasis and atopic dermatitis.

And with the earlier trials, there's a strong opportunity for this trial to be read out next year as well.

The next step for the DUR-928 programs.

For the oral program, we are working to initiate a Phase II study in primary sclerosing cholangitis this year.

For the injectable program, we are working to initiate a Phase II study in acute organ injury late this year or early 2018.

And for the topical program, we are preparing for a Phase II proof-of-concept study in psoriasis to begin early in 2018.

I will now briefly update on our ORADUR programs, beginning with our ORADUR-Methylphenidate program.

ORADUR-Methylphenidate ER capsule is an investigational drug candidate for the treatment of attention deficit hyperactivity disorder, or ADHD.

It has the potential for rapid onset of action and long duration with once a day dosing.

It utilizes a small capsule size when compared to the leading existing long-acting products that are on the market today.

And it incorporates our order anti-tampering technology.

Orient Pharma is our licensee in certain Asian and South Pacific countries.

And they conducted a Phase III study in Taiwan with ORADUR-Methylphenidate ER that achieved the primary endpoint.

This Phase III study was a multi-center, randomized, double-blind, placebo-controlled, 2-way crossover study designed to demonstrate the efficacy and safety of ORADUR-Methylphenidate in children and adolescents with ADHD that range from 6 to 18 years of age.

There were 110 subjects enrolled in this study and 99 evaluable subjects completed the study.

The primary efficacy measured in the study was to demonstrate superiority of ORADUR-Methylphenidate over placebo using the Swanson, Nolan, Pelham-IV, or SNAP-IV, teacher form score.

The SNAP-IV rating scale contains 26 questions that are classified under the 3 components of ADHD symptoms.

Those are inattention, hyperactivity/impulsivity and oppositional defiant disorder.

For the primary efficacy endpoint, the ORADUR-Methylphenidate was superior to placebo in a statistically significant manner.

There were no serious adverse events in this pivotal study, and Orient Pharma's safety analysis indicates that the incidence of adverse events was generally consistent with other ADHD products.

ADHD is estimated to affect over 5 million children in the United States between the ages of 3 and 17, which is approximately 9% of the population.

And the prevalence of ADHD in Taiwan has been reported to be approximately 5% to 7% among schoolchildren.

It is estimated that over 50% of the children with ADHD in the United States are being treated with medication, with stimulants such as amphetamine or methylphenidate as first-line treatments.

The U.S. sales of ADHD treatments were approximately $10.4 billion in 2016.

And the 2010 National Survey on Drug Use & Health estimates that 1.1 million Americans over the age of 12 abuse stimulants for euphoric highs and increased performance or wakefulness.

We retain rights for this product for all other markets of the world, notably the U.S., Europe and Japan.

We intend to reach out with these Phase III data to potential development and commercialization partners for major worldwide markets.

The last update is with regard to REMOXY ER.

We don't have much to report on REMOXY as we're waiting to see what update Pain Therapeutics provide.

As a reminder, in March of 2017, Pain Therapeutics announced that it plans to resubmit the REMOXY NDA after completing 2 additional studies of REMOXY ER based on guidance obtained in the meeting with the FDA.

The 2 studies are a clinical abuse potential study via the intranasal route and a nonclinical abuse potential study using household solvents.

Pain Therapeutics stated that it expects to complete these studies by the end of the year, after which it intends to have a pre-NDA meeting with the FDA followed by resubmission of the REMOXY NDA.

With that, we'd like to thank you for your time.

And we'll now take any questions that you might have.

(Operator Instructions) Our first question comes from the line of Adam Walsh.

Adam Walsh from Stifel here.

So I had a couple of questions.

First on ORADUR-ADHD.

I'm just curious if you can remind us of the royalty rate coming from Orient, when you think they could file for approval, and if you think any royalties would be material.

Yes.

I think the royalties are actually small.

It's in the single-digit range, and the market is very small.

So I don't think it's going to be a substantive thing for us.

But I think it's important to the standpoint of business development opportunities outside that market.

Absolutely.

And that leads to my follow-up question there.

Can you speak to -- a little bit about the prospects for deals for this compound in the U.S., Japan and Europe?

I know it's early days.

You just got the data, and you're thinking about getting out there and talking to people.

I'm just curious what you think about the prospects for that is in terms of getting it done and then also any kind of thoughts on timing.

Yes, I think the timing is -- I never like to project timing on business development.

It's just impossible to do.

I can tell you that when we have spoken with people previously, they always wanted to see clinical data.

We show them these things that we call the dream curve and all these different things that what we expect the performance to be like, and it's all well and good.

But it's nice to see actual clinical data.

So I think having these data in hand will definitely enhance the potential for a deal.

Hard to say though.

I mean, it's a huge market, as you know, and there seems to be an opportunity for another product out there.

But we have to find the right partner.

So I would -- in fact, we're going to give this some time, I think.

Fair enough.

And then one final one, if I could, just get one more in there.

Jim, I get the question a lot about the evidence, and you touched on it a little bit in your prepared remarks, the evidence of -- that's available for taking 928 into PSC.

And I know that we talked in the past about the rat bile duct ligation model.

Can you just remind us what you saw there in the animal studies that got you interested into the PSC indication?

Yes, happy to, yes.

It was actually recommended to us by a physician, Frederik Nevens, who's at the University of Leuven, who is an expert in the field.

He treats a lot of PSC patients.

That region of the world seems to have quite a few.

And some others in the area, notably ones who've recently gotten some clinical data, actually had tested in this model.

And the way this model works is they actually tie off the bile ducts of these rats and then they dose them with DUR-928 -- excuse me, with whatever they want to, to look for an effect.

And when other molecules have been tested, a lot of times the animals don't survive.

And particularly, if the molecules have a structural relationship to bile acid, you tend to get back up of that and it makes it worse for their livers and makes it worse for the animals, obviously.

And so they undergo with miniscule doses that frequent -- in-frequent dosing, average 3 days or so in order to get through the study.

So we use this as a go, no go for us, basically saying could we test the dose that we thought would be applicable and then we actually went to a higher dose.

And we were quite -- and our anticipation going in was if it was good, then we obviously look at PSC as potential indication.

But if it wasn't, then we look elsewhere.

And we were actually very surprised and very pleased with the results.

And the results were that even at the highest dose that we dosed, all the animals survived.

And not only did they survive, but we saw improvements in liver function.

They were making the ATPs.

They had better body temperatures.

They had improved weight gains.

And I think the most impressive thing was we saw the total bilirubin was down.

We saw the indirect bilirubin was down.

We saw the direct bilirubin down.

And they were all down statistically significantly.

And this directly correlates with what we saw in those NASH Phase Ib patients when we gave them a dose of 928.

We also saw that they had a statistically significant drop in their bilirubin, with it being most notable in the higher and more severely ill patients.

Yes, we think that fits really well.

When you've got a disease that is causing bile to back up, that is making it more difficult for the liver to function in that regard, and you have something that can help relieve that.

And we know the genes that 928 is associated with as far as reducing the production of some of the stuff, reducing the resorption of it and all the rest of it, it all kind of comes to play.

And then you add, of course, the anti-inflammatory component, 70% of these patients or more have inflammatory bowel disease.

We know 928 has all these anti-inflammatory kind of components to it, so it should be helpful there, which we know.

And they probably have leaky gut.

They probably have endotoxin issues.

We know that we've got effects there.

We've seen paperwork there -- excuse me, we've got a paper recently published there.

So I think we've got a lot of reasons to believe that this will help these patients, a naturally occurring molecule on top of that, that would [signal] a wider therapeutic index.

So we're really excited about it and the potential to help the patients.

Our next question comes from the line of François Brisebois.

So I just wanted to touch on just this drug-drug interaction.

I know for you guys, in this DUR-928, especially if you're thinking back bone therapies so far, the safety has been great.

But can you just give us a little more color on, again, how many people are in this trial?

And is this understood that looking at this specific enzyme is usually acceptable for DDI or going forward?

Yes.

Actually, we reviewed that protocol with the FDA.

So that was important for us and it should be.

And I'll let WeiQi speak to the number of patients.

Yes.

The reason is we are looking at this particular enzyme, CYP3A4, in our in vitro DDI studies.

Apparently, this one is the one that's worthwhile to look at.

The other ones are really 928 doesn't affect that much.

That's why we thought that, in particular, this 3A4 is the most important enzyme involved in drug-drug interaction.

So we thought we'll just, as well, move forward with Phase I trial and then -- after discussing with FDA.

So the trial actually includes 18 subjects, healthy human subjects, which is more than enough to -- for the meaningful results.

And the result that came out was very clear, very obvious that 928 does not affect the safety and PK of midazolam, which is very clean for that.

And so after we -- basically, that study was also -- we discussed with a number of consultants.

And the design of the study includes both orally administered as well as IV infused DUR-928.

Therefore, the program actually covers both of our oral program as well as injectable program.

Great.

And then just a follow-on on that.

So should we be expecting an IND filing this quarter?

Or is this -- and then I know you're looking at PSC, but I'm just trying to get a better idea of the time line here.

I think I've got it right.

But just if you can touch on the injectable again, the oral and when you expect to have this IND filing ready to go.

Yes.

We already have -- we have actually -- I'm [not going to get into] a lot of detail on it, but we have one open IND already.

And we'll have 2 more INDs, I hope, open by the end of the year.

One will be for injectable, one will be for oral and one will be for topical.

So we'll have 3 INDs at the end of the day.

And it's really more important now about using the INDs to interact with the FDA with regard to what kind of structure and what kind of protocol we want for the Phase II trials for these 3 indications -- or 3 programs.

It's better to kind of think of them as 3 separate programs, I think, oral, topical and injectable.

And so we will be giving more clarity as -- I think what we'll do is -- I don't know, Matt, when we announce the, I mean...

I think when we finished work with our advisers on the exact outline of the protocol, then we'll feel more comfortable giving a little more color.

Yes, yes, how many patients, yes.

We don't want to do it now and have to change it later and then we'll get some later advice.

So I'm sure through the course of the fall, you'll get more description.

Yes.

So we'll say, okay, we started this trial, I think, with x number of patients, and this is the structure and that kind of thing.

Okay, okay.

That's make a lot of sense.

And then in terms of REMOXY, I know it's out of your hands a lot.

You've got pain involved here.

But should we -- when you say it's completed by fourth quarter '17 here, the additional testing, should we be expecting data by year-end?

Or do you mean complete the testing and then probably data early '18?

I have no idea.

I mean, that's -- I just -- kind of we're all spectators on this.

So we're -- they have said they expect to complete it, and I think they will.

I mean, they have got a very professional group going after it.

So I assumed that they will complete these studies by the end of the year.

And then they said they want to have a pre-NDA meeting.

I don't know when that will occur, but I would assume early next year.

And then sometime after that they would resubmit depending on input they got from the FDA.

So it's -- I think we have to just tune into them when they do their call, which has got to be pretty soon I would think.

Okay.

Great.

And then lastly, this is probably more for Matt.

The R&D had a little jump here, $9 million.

Should we be expecting that to kind of -- $9 million on average to keep going or more of $7.5 million, which has been in the first quarter?

Well, we don't usually give granular guidance.

However, let me, at a high level, make a couple of comments.

Jim mentioned that we finished enrolling the PERSIST trial ahead of schedule.

So that would have been in the throes here of the second quarter.

And so that drives up the expense.

And I guess a little anecdote is we wound up actually enrolling 294 patients in part 2 of PERSIST.

We'd originally targeted 264 but the enrollment ramped very nicely at the end.

And we didn't want to turn away any surgeons or patients who had gone through screening and then say, "Oh, you're not in the trial, sorry." And we also thought that on the margin, it's helpful.

You got more safety data to present to the FDA when we submit our NDA and it probably helps with the p-value.

But each patient does cost you a little bit more.

So that was a long-winded way of saying that number includes a lot of money for the POSIMIR Phase III, which is now in the phase where you're not enrolling patients.

You're cleaning up the files of each patient and then we're doing the data analysis of it.

So at least the POSIMIR piece will go down.

And then probably late this year or next year, as the Phase II studies for 928 kick in, then the clinical trial expenses for those will go up somewhat.

So even if I didn't give you a number, was that directionally helpful?

That was very helpful.

Our next question comes from the line of Ed Arce.

I just wanted to start off with POSIMIR.

And just I know Sandoz is working with you in sort of planning out the whole commercial strategy.

But if you could go over that again, just outline the time lines and how you see that rolling out.

And then I've got a couple of follow-ups as well.

Yes.

I wouldn't presume to outline that, and I don't think they want to -- their commercial strategy.

But I can give you some sense of timing of the whole thing.

We will have the data in the fourth quarter this year.

And assuming those data are good, we all expect they will be and hope they will be, then we will look to resubmit the NDA in the first quarter of 2018.

After that resubmission, there's a -- because it's a resubmission, there's a 6-month PDUFA time line.

So from whenever we submit it, you can add 6 months on.

And our objective and Sandoz and their team's objective is to be able to launch the product as quickly as possible after approval.

So we would have clinical -- excuse me, commercial batches in place and everything ready to rock and roll, labeling and everything.

So you just kind of back up from what that date might be and you start doing all the work.

And then they do all the prep work for -- with the thought leaders and with all the work they do on committees and everything else within the hospital.

So they've got a machine and they can put that into their place.

As I said, they're in about 95% of the hospitals.

They've got, I think, over $10 billion in sales.

So they know what they're doing.

Okay.

Great.

And with the data that you released from your licensee out of Korea earlier today in ADHD, it's a very large competitive market, as you well know.

I'm just wondering if you could sort of highlight for us what you see as critical differentiating attributes and what those might do from -- especially from the perspective of any likely potential commercial partners.

Yes, I think it's -- appreciate the question.

I think Orient Pharma had been great partners, by the way.

They're regionally in Taiwan, a very strong company.

And it's been a pleasure working with them.

And so we want to thank them and all the work they've done in this regard.

And part of the relationship that is very helpful for us and for our shareholders is that we have the rights of this product for most of the rest of the world out of Southeast Asia.

And so what are the advantages of this technology?

I think the advantages are, first off, that it does have that tamper-resistant characteristic that is ORADUR.

And so it fits within everything that we have hoped for and dreamed of one day for getting REMOXY out there.

And that is that it's nearly -- I would say it's impossible to snort it because it's got the viscosity of Vaseline.

It doesn't mix with alcohol and come out readily.

You can't smoke it or inject it and those kind of things, chew it to get it out.

So it makes it much more difficult to abuse.

And the other thing that is a nice piece of it all is it's a relatively comparatively to the other methylphenidate products out there.

It's a relatively small capsule.

And that's important because remember, these are for children.

And so you've got small capsules, which will be easier to swallow.

So I think those are the kind of things.

And then one always looks at the duration and I think we play in the right game there as far as being in kind of the right duration, the duration being we want the kids to be able to pay attention during school, get their homework done after school.

Then you don't want them up all night.

So you want it to be able to drop of such that they can go to bed and get a good night sleep.

And so we're hoping that we have those kind of components, the right duration, the right size and then some of these deterrent characteristics that can help us -- or our new partner, whoever that might be, to be able to compete in that space.

Thank you.

There are no further questions at this time.

I'd like to turn the floor back over to management for closing comments.

Okay.

Well, by way of closing comment, we'd just like to thank you for participating.

And as always, if you have further questions, do please feel free to reach out to management.

We'll be happy to chat with you some more.

Thank you very much.

This concludes today's teleconference.

You may disconnect your lines at this time.

Thank you for your participation.