Endo International PLC (ENDP) 2003 Q4 法說會逐字稿

Good morning, and welcome to the Endo Pharmaceuticals' fourth-quarter 2003 teleconference. This call is being recorded.

Before we begin, I would like to remind you that during the course of this call, Harold, Jack or David may make forward-looking statements concerning such topics as future results, product performance, anticipated timing of FDA approval of certain of the Company's drugs, and possible timing of the commercial launch of certain of the Company's products, as well as other nonhistorical facts that reflect Endo's current perspective on existing trends and information. As you would expect, these statements will be made with appropriate qualifying language such as -- we believe, expect, plan, anticipate, predict, or similar expressions. By their nature, these forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results to be materially different from those -- from any other future results expressed or implied by these forward-looking statements. Listeners should not rely on any forward-looking statement, the Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise. Reported factors that may affect Endo's future results include, but are not limited to, those factors discussed under the heading forward-looking statements in Endo's SEC filings and under the heading risk factors in Endo's registration statement on form S-3 filed with the SEC on July 1, 2003. We urge you to review these factors.

In addition, during the course of this call, Carol or Jeff may refer to non-GAAP financial measures, such as consolidated EBITDA, adjusted net income, and adjusted diluted earnings per share. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles in the United States, and may be different from non-GAAP financial measures used by other Companies. Investors are encouraged to review Endo's earnings press release issued this morning for Endo's reasons for including these non-GAAP financial measures in the earnings announcements and to see the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures. Now I would like to turn the call over to Carol Ammon, Endo's Chairman and CEO.

Good morning. Earlier today, we reported our financial results for the 2003 fourth quarter and full year. We are happy to have this opportunity to discuss those results with you, as well as other recent developments.

Joining me on the call this morning is our CFO Jeff Black, and our Head of Regulatory Affairs and R&D, David Lee.

First, I would like to highlight our outstanding financial results. As a result of the continuing strong growth of Lidoderm and Percocet, we had another outstanding year in 2003. Net sales grew 49 percent to $595.6 million. Gross profit was 459.9 million, up 53 percent from 2002. Net income for 2003 was $69.8 million -- more than double the 30.8 million in 2002. Adjusted net income for 2003 increased to 173.6 million, compared with 85.9 million in 2002. Earnings per diluted share for 2003 were 53 cents, compared with 30 cents in 2002. On an adjusted basis, diluted earnings per share were $1.31 for 2003, versus 84 cents in the prior year. A detailed summary of adjusted net income and adjusted earnings per share for the twelve months and the quarter is provided in today's press release. 2003 was another great year for us and we enjoyed many successes.

I would like to point out that our outstanding results for the fourth quarter and full year in 2003 were achieved against the backdrop of generic competition for two of our leading project products -- Percocet and our genetic generic morphine sulfate, extended release tablets. While we expected the competition will adversely affect sales of these two products in 2004, we remained confident about our prospects for the future, given the continuing success of Lidoderm and the products that we hope to bring to market from our near-term pipe line, extended and immediate relief Oxymorphone, DepoMorphine, and generic extended release OxyCodone tablets.

To reiterate our current guidance, we expect net sales in 2004 to be approximately 570 to $580 million -- which includes Lidoderm net sales of approximately 300 million.

We forecast GAAP earnings per share for the year ended December 31, 2004, to be approximately 80 to 85 cents per share, and adjusted earnings per share to be approximately 85 to 90 cents. Which excludes estimated payments to partners for successful achievement of regulatory milestones, net of tax of 5 cents per share. Now, I would like to turn the call over to Jeff, who will review in greater detail our 2003 full year and fourth quarter results. Jeff?

Thanks Carol. As Carol mentioned, we had an outstanding year in 2003. Net sales for the twelve months, ended December 31, 2003, were 595.6 million, a 49 percent increase from the same period in 2002. For the fourth quarter of 2003, net sales were 142 million up 25 percent from the fourth quarter of 2002.

Net sales of Lidoderm grew 114 percent to 178.3 million for the year, and were up 109 percent to 48.7 million for the fourth quarter of 2003. A patent protected product that has (indiscernible) drug status through March 2006, and patent protection beyond that, Lidoderm continues to experience rapid growth as more and more physicians and patients become aware of the product's benefits.

Prescription growth for Lidoderm was up 89 percent, and dispense unit growth was up 99 percent for the full year in 2003 versus 2002. Prescription growth for Lidoderm was up 79 percent, and dispensed unit growth was up 88 percent in the fourth quarter of 2003 versus the comparable 2002 period. Based on IMS data, the run rate on Lidoderm is now approximately $220 million.

Net sales of Percocet increased 48 percent to 214.2 million in 2003, and were up 7.6 percent to 47.3 million for the fourth quarter. During the fourth quarter, Percocet was impacted as a result of the entrance of competition in October 2003 to the largest selling strength of Percocet -- the 7.5 325 and 10 325.

Prescription growth of Percocet was 16 percent and dispense unit growth was 28 percent for the twelve months in 2003 compared with the same period of 2002. Prescriptions for Percocet were down 9 percent and dispensed units were essentially unchanged in the fourth quarter of 2003 compared with the year ago quarter.

Driven primarily growth by growth in morphine sulfate, extended release tablets and Endocet, net sales of our generic products grew 22 percent in 2003 to 181.3 million. For the fourth quarter in 2003, generic sales were up 8.3 percent from the same period of 2002, reflecting the impact of competition for our morphine sulfate product, which was offset by the launch of two new strengths of Endocet.

Gross profit rose to 45 -- 459.9 million for 2003, up 53 percent from 2002. For the fourth quarter of 2003, gross profit was 87.2 million, up slightly from the 2002 fourth quarter. Gross profit margins were 77 percent and 61 percent for the year and fourth quarter respectively in 2003, versus 75 percent and 76 percent in the same periods of 2002. The gross profit margins reflect the impact of the $24.6 million charge to cost of sales in 2003, and the $8 million charge in 2002 -- both in connection with our decision to fully reserve for inventory of our generic extended release OxyCodone tablets. Excluding these charges, gross profit margins were 81 percent and 79 percent for the year and fourth quarter respectively in 2003, compared to 77 percent and 83 percent in the same periods of 2002.

For 2004, we expect gross profit margins to decline compared to 2003, due to competition with Percocet and extended release morphine sulfate. In addition, we will experience lower gross profit margins on Lidoderm, due to our introduction in 2004 of a child resistant single patch package.

Selling general administrative expenses of 155.8 million for the twelve months in 2003 were up 41 percent from the same period in 2002. For the fourth quarter of 2003, our SG&A expenses were 42.1 million a 36 percent increase from the year ago fourth quarter. This increase reflects the promotional efforts and support provided to Lidoderm and Percocet, as well as to our new product pipeline.

Research and development expenses for 2003 were 51 million versus 56.8 million in 2002. For the fourth quarter, R&D expenses were 8.9 million in 2003 and 12.9 million in 2002. The lower spending in 2003 reflects the stage of development of our R&D pipeline.

Net income for the full year of 2003 rose to 69.8 million compared to 30.8 million for all of 2002. Adjusted net income for the year was 173.6 million in 2003, versus 85.9 million in 2002. Diluted earnings per share for 2003 were 53 cents, compared with 30 cents in 2002. On an adjusted basis, diluted earnings per share for the twelve months in 2003 were $1.31 versus 84 cents per diluted share in the comparable 2002 period.

Net loss for the fourth quarter of 2003 was 31.7 million or 24 cents per diluted share, versus net income of 21.7 million or 21 cents per diluted share in the same period of 2002. Adjusted net income for the fourth quarter of 2003 grew to 37.2 million or 28 cents per diluted share, compared with adjusted net income of 30.5 million, or 30 cents per diluted share in the fourth quarter of 2002.

As previously announced, during the fourth quarter of 2003, we decided to manufacture additional launch quantities of our extended release OxyCodone tablets to provide us with the opportunity to launch our generic product in the event we want our litigation with Purdue Frederick and make the determination to launch. We fully reserved for this inventory and accordingly recorded a charge of 24.6 million or 11 cents per share net of tax during the fourth quarter of 2003.

In addition, as we announced, we recorded a non-cash compensation charge of 96 million or 45 cents per share net of tax in the fourth quarter of 2003, as a result of divesting of the 4.8 million outstanding class C-4 stock options. No additional shares of Company common stock will be issued, however, because these stock options are exercisable only into shares of Company common stock that are held by Endo Pharma LLC -- an affiliate of Kelson & Company (ph), in which certain members of management have an interest. Accordingly, these stock options will not dilute the ownership of Endo's -- their public stockholders.

We also decided during the fourth quarter of 2003 to discontinue our development program for an oral rinse product for the treatment of oral mucositis that we purchased through our acquisition of BML pharmaceuticals in 2002. In doing so, we extinguished a contingent liability related to this program, resulting in a gain of $7 million or 5 cents per share net of tax.

I am pleased to note that we generated a cash flow from operating activities of 218.3 million for the year in 2003, compared to 109.6 million in 2002. And our cash and cash equivalents totaled 229.6 million at December 31, 2003.

We feel our solid financial position provides us an opportunity to pursue acquisitions and other strategic alliances, which would, we believe, accelerate our growth as a premier specialty pharmaceutical company. I would now like to turn the call back to Carol for some additional comments about our performance in 2003 -- and a preview of some upcoming milestones in 2004.

Thanks, Jeff. Before we take your questions, I would like to take a few moments and provide my perspective on our performance in 2003, and bring you up-to-date on where we are in 2004.

From a financial standpoint, as you have just heard, we again had a terrific year. Beyond the numbers, however, we also were very active in advancing our vision of becoming a premier specialty pharmaceutical company, anchored in pain management, with a balanced focus in complementary areas.

For example, we received approvable letters from the FDA for the NDAs (ph) for our Oxymorphone extended release and immediate release tablets. We're working closely with the FDA to clarify and respond to several issues in these approvable letters, including the need for some form of additional clinical trials in order to finalize the approval of these two products. These are the first two NDA's that Endo has filed, which we consider to be a remarkable accomplishment for a Company that was formed just six years ago.

Our development partner, Sky Pharma (ph), filed an NDA with the Food and Drug Administration for DepoMorphine -- which was accepted for substantive review on September 18th. We look forward to receiving an action letter from the FDA regarding this NDA in mid 2004. DepoMorphine is a novel sustained released injectable formulation of morphine for control of moderate to severe postoperative pain.

In addition to these developments, we were active in further expanding our organizational infrastructure to support our continuing growth. We completed the internalization of our sales force, and now have this function completely in-house, with a total of 230 sales representatives. This gives us a formidable field sales force that in 2004 will be promoting Lidoderm full-time as a treatment for post hepatic (ph) neurology to our target market of some 35,000 physicians throughout the US.

We also made considerable progress during the year in the areas of manufacturing and research, completing the transfer of substantially all of our manufacturing operations to Novartis Consumer Health Care (ph). And to meet the demand of our continuing growth, we added depth to our senior management team through the addition or promotion of individuals to head such critical functions as Sales and Marketing, Operations, Scientific Affairs, Corporate Services, Corporate Development, and Strategic Partnerships.

As you can tell, we had a busy year in 2003 and we look forward to another productive year in 2004. In terms of upcoming milestones that you can expect, we plan to meet with the FDA by the end of the quarter to gain additional clarity on our Oxymorphone and NDA's. We look forward to receiving an action letter from the FDA on DepoMorphine in mid 2004. We expect Propofol IDD-D to enter phase III clinical trials in the coming months, and we will continue to be active on the corporate and business development fronts as we seek to expand our portfolio of on market and pipeline products through acquisitions and in-licensing opportunities.

In addition, as you all know, on January 5, 2004, we received a favorable opinion and order from the US District Court for the Southern district of New York which dismissed the claims of Purdue Frederick that Endo's OxyCodone extended release tablets 10, 20, 40, and 80 milligrams -- a bioequivalent version of Purdue Frederick's OxyContin -- infringed Purdue's patents. This opinion and order declared the patents invalid and (indiscernible) Purdue from enforcing the patents.

We did recieve tentative approval of our ANDA for these products in July of 2002, and we are awaiting final approval by FDA.

A few weeks ago, Purdue Frederick filed a petition with the FDA, asking for a stay in the final approval of any generic extended release OxyCodone, until a risk management program is put into place for such generic extended release OxyCodone. Although under regulations relating to the development and approval of ANDAs, risk management programs are not required. We believe that the FDA may ask for a risk management program prior to the final approval of any generic extended release OxyCodone.

Since a significant portion of our businesses is in controlled substances, we feel that we are well equipped to deal with the development and implementation of a risk management program if such a program is required or requested by the FDA. In particular, we included a risk management program in our NDA submission for extended release Oxymorphone, and we have been working with the FDA to finalize that. We also met with the DEA at their request to discuss risk management measures that we have developed, and are continuing to develop, that could have relevance to the marketing of generic extended release OxyCodone.

We have not made a determination at this time and to whether we will launch our generic OxyCodone extended release upon receipt of the final FDA approval, or whether we will wait until the appellate decision. We are considering many factors in this decision, and while we have made such determination, we will announce our intent. Now, I would like to open up the call for any questions that you may have.

(Operator Instructions). Angela Larson, Smith Barney CitiGroup.

On Oxymorphone, you mentioned that letter from the FDA -- the approvalable letter -- had said that there may be the need for additional clinical studies. At this time, have you met with the FDA and are you planning those studies?

As we have I think already indicated, we are anticipating a meeting with the FDA before the end of the first quarter. And it is our expectation that from that meeting we will have clarity on the steps needed to reach the final approval of both extended release and immediate release of Oxymorphone.

And obviously, when we have any material information relating to the outcome of that meeting, we will make that public. We are, of course are, making plans to do an additional clinical study in the event that the FDA does require that as a condition for approval. We are still hoping and expecting that the presentations that we will be making to the FDA at a meeting will convince them that there is no need for additional clinical studies. But of course, if there is such a requirements that we will be in a position to move forward straight away.

And David, if I can follow up with you? There's been some changes in the staffing on the R&D side. Could you elaborate on how you're strengthening the team?

Yes. We have been very fortunate, in that we have a number of new additional people that have come in to strengthen up in the clinical area -- in the preclinical area, as we are now considering partnerships per early stage development products. And also, in the area of our strategic partnerships, which is very key for us. We have brought in Dr. Roland Garretts (ph) and Vander Hope (ph) who has a lot of experience in drug development. And also, in partnerships between large Companies and small Companies. And his primary role is to manage these very important strategic partnerships for us.

What was the impetus to bring these people on now?

I think that, when you look at the plan to enhance the infrastructure, this has been part of, really, our long-term business plan over the last several years. As you know, Angela, we are starting to move towards the introduction of MDA (ph)-type products, and we have been ramping up the infrastructure over a period of time. We have some great opportunity in front of us when you look at the number of milestones that are coming up. And we want to make certain that we have staffed the organization appropriately.

We have been quite clean lean -- and really bring in multiple talents to be able to commercialize the products that are coming to market. And also, because we are very active on the acquisition front, we want to make certain also that we have a very strong base of people in to be able to continue to be able to analyze the opportunities before us, so we can take advantage of continuing to grow the business.

Excellence. Thank you.

Corey Davis, J.P. Morgan.

The RMP program on generic OxyContin -- a lot of that refers to physician type things that are not really relevant to a generic. So -- do you think you have to exactly copy the Purdue program? Or could you just come up with your own and that approved by the FDA? And also, do you need to wait for the FDA regs to come out on what they are going to look for in the opioid RMP's before you can move forward with yours?

We understand that the FDA is currently evaluating its policy towards both the need and -- need for and the extent of any risk management plan for a generic version of extended release OxyCodone.

We know also that they are in general -- they are evaluating what they want to see in a risk management plan for any opioids. The timing of, really, of both of those is a little unclear. We know that their general guidelines, they've sort of given some indication, may come out towards the end of this year.

As an opioid based Company, we obviously have already a lot of experience in sort of risk management measures associated with the marketing of these products. And in the event that we were required or requested to provide such a risk management program for a generic version of extended release OxyCodone, we would certainly be in a position to do that.

In the meantime, because we think it's the appropriate thing to do, we have gone ahead and actually voluntarily submitted a risk management program that we think is appropriate for a generic extended release OxyCodone to the FDA.

Okay. And just the next question on Oxymorphone is -- that if the FDA does require you to do this additional study, how long would take?

I think that is something that I would rather not speculate on at the moment. Because we don't exactly know -- if we did have to do a clinical trial, whether it's -- well, exactly what stage in the, let's say, in the review and approval process it would be required or what the duration of the study would be. Whether we -- the duration would sort of fall under, let's say, the regulations or the agreements that we had with the FDA when we began the Oxymorphone program. Or whether a study would be required that fits the requirements of today, a sort of three-month study. So that something that if it was necessary, you obviously it will learn from our upcoming meeting with the FDA.

Okay. And last question is, Jeff, you mentioned that gross margins would probably continue to come down. Quantify that at all?

No. We have not quantify it. Certainly with Percocet -- the Percocet margin itself will not be impacted, but with more of this business shifting over to the generic side of the house from the branded side of the house, there will be some margin contraction there.

We also, obviously, are getting price competition on morphine sulfate from Malacross (ph) introductions of generics as well there. And then, again, that child resistant packaging on Lidoderm, that sort of third factor once we introduce that during 2004. That's going to impact us as well. So, combination of that will cause a decline in 2004 versus 2003, but we have not quantified what that would be.

Okay. Thanks.

Michael Tong, Wachovia Securities.

Just a follow-up on the Oxymorphone question. If during the meeting -- during the FDA meeting -- it is determined that you don't need to do additional clinical studies, would the approvalable letter -- based on what you know now in the approval letter, would you still need to submit an amendment to the FDA even if you don't need to do additional studies? And my second question has to do with Percocet. Are you currently working on a line extension opportunity for Percocet?

Yes. You know, the approvable letters for both the extended release and immediate release Oxymorphone, had (indiscernible) is normal in the situation when one files in NDA. There were a number of issues, or questions, that the FDA had. So, following the meeting that we're anticipating having with them, we will file what is called a complete response to the approvable letter, which addresses all the points both on the clinical and nonclinical, and on the manufacturing side. Once we have filed that complete response, which we would anticipate would happen very soon after the meeting, assuming that the FDA agrees with our approaches, the review and approval clock restarts, and the FDA has in principle under the regulations, six months to get back to us with a further action; so which, at that time, of course, would hope would be final approval.

And, Michael, let me just follow-up on the Percocet question. As you know, since we introduced this product, we reintroduced the product, so to speak, when we started the Company in 1997 -- we've made two significant improvements to the product. We will continue to manage the lifecycle of Percocet, because we believe it is a very important product with important brand equity. But because of the competitive nature of the product, and the fact that this is covered an ANDA (ph), we do not disclose what we're working on. But please suffice it to say that -- we believe this is a very important brand and we will manage the lifecycle of it.

Great. Thank you.

Richard Watson, William Blair & Co.

Question. Is it safe to say that thus far, the Percocet and morphine sulfate erosion has been below what you would've expected? And if so, can you give some color as to what may be going on there? And then, just question on the status of the Chronologesic program -- should we be thinking of this as a viable program or one that is potentially in danger of the being discontinued?

I'll let David do the Chronologesic question. As far as the erosion in our expectations -- the Percocet erosion is about what we had anticipated -- within the sort of range of expectations. We (indiscernible) with the erosion on this particular product in the past when Lawson introduced generics to some older new strengths back in April 2001. So that erosion is occurring about as expected. And the brand Percocet has retained about 35 percent of the tablets to date for those two strengths. So it's a sort of going as expected.

Not as quickly as typical generics, but eventually they end up getting into the same place where about 90 percent of it gets eroded.

We did, as you know, launch our own generic to that, and when Watson came out, and we currently have about 57 percent of the generic side of the business. So maybe a little higher than what we expected from the beginning -- expecting sort of a 50-50 split.

For morphine sulfate, that erosion has actually been slower than what we expected. Nowlacrog (ph) came launched, we believe, in the third quarter of 2003, and to date have taken about 14 percent of the generic share to our 85, 86 percent of the generic shares. So pricing did decline on that product from where it was, with the introduction of a competitor. However, the generic erosion has been slower than what we would've expected to date.

We remained actually very excited about the prospects for Chronologesic. We think that its success fully developed -- this will actually represent a very significant advance in the way in which chronic moderate to severe pain can be treated. Our partners at Durect (ph) our currently working on tweaking the -- the tube -- the Chronologesic tube to overcome some technical issues that have arisen -- particularly related to a premature shutdown of the device. That I should stress, obviously, is a far more preferable situation than the situation where, for instance, the tubes which release all the contents of the (indiscernible) in one go. So that is not the situation, it's a premature shutdown and they are working to correct that. Studies are ongoing at the moment, and we continue to remain optimistic that the issues that have arisen to be successfully handled.

Just as a follow-up, do you know historically whether the alsa (ph) product had any kind of similar problems during its development program? Are you aware of any of the history there?

Yes, as your indicating the Chronologesic is based upon technology that is already out in the marketplace. The product is currently marketed, of course, is a very different product and we believe that the issues with Chronologesic are actually related to the nature of the active ingredient. So, it's a formulation interacting with the tube and the design of the tube. So I think the fundamental technology is proven and is excellent. And it is just a question of making sure that we get formulation absolutely right so that the tube functions as it is intended to.

Thank you.

(Operator Instructions). Kent Katori (ph), SG Cowen & Co.

A question for Carol. Has there been a hearing date yet for the Purdue appeal? And do you have any expectation on when this whole process, the appeal process, with play itself out?

And for Jeff -- I don't know if you were asked this question already -- on the R&D, can you give us a little bit of guidance on where we will see this line trending -- seemed well below what we were looking for in Q4?

And, David, it was mentioned that the Propofol phase III program may start shortly -- any timing on when you're going to release the phase II data? Thanks guys.

Relative to the appeals process, Purdue Frederick has appealed the lower court decision. And we in turn have appealed from the district court's ruling that are OxyCodone extended release product infringes produce patents. Purdue will be the first to file an appeal brief, which will be due in about two months.

However, I should say, Purdue is seeking to expedite the appeal and may file its brief earlier. It's our understanding that the appeals process generally takes 12 to 18 months to an appellate decision. However, there is no statutory time frame for the appeals process to render a decision. So we will have to wait and see what the timing is on that.

Okay, great, thanks.

As far as the R&D line, I'm not sure what the expectations were out there. We did give guidance that we thought the year-over-year in 2003 versus 2002 based on where our pipeline was in terms of development stage at 2003, would be down versus 2002 and we also -- on our 2004 guidance call -- that we thought it said that, we thought that the R&D line would also be slightly down from where it ended up in 2003. So it really just reflects the stage of development of our various products -- whether they be NDA (indiscernible) -- some of the cost is being borne by partners on their financial statements, and we pay for that in the form of milestones. Etc. upon successful achievement of regulatory milestones.

So I can't really answer what expectations were, but it's reflective of, basically, where we are in the development stage of our various products in our pipeline.

With respect to Propofol, we anticipate initiating the phase III program in the first half of this year and think will be making an announcement around that, because our milestone payment will be due at that time to our partner, Sky Pharma.

With respect to release of any data, we time very much the release of clinical data to our anticipated launch and marketing strategy. And so we will decide on where and when we will be releasing any data in collaboration with our marketing colleagues.

Okay, thank you.

John LaForge, First Albany.

Carol, in your prepared remarks for the Oxymorphone, again not trying to beat it to death -- but you had remarked about the FDA potentially requiring, and actually in your prepared remarks you didn't say potentially you just said may be requiring. And yet later in the conversation there was some discussion about that you're still hoping and anticipating that you will not need another trial. Is there a difference in opinion there between you and your staff, or is a still the same -- you've got no indication from the FDA, Oxymorphone-wise, at which way they're leaning?

No, no, difference in opinion amongst the staff here. And I will ask David to jump in. But clearly. there's a reason we're having this meeting with the agency is gain more clarity around the letter that came. And that's exactly what we hope to do over the -- at the meeting and prior to the end of the first quarter. So, David, do you want to add that all?

Yes. I think, as Carol indicated, we do anticipate that we will have clarity as to whether the clinical data that we have already generated, including data that have been generated since we filed the NDA, or any additional analyses that we may have done -- whether that will be sufficient to satisfy the questions that the FDA has. We will get clarity at that time. And again, if we have to do an additional clinical trial, we are prepared to move forward with that as expeditiously as possible.

Do you know if there is a history with the FDA, that even though you had this meeting that they might even push it out even further before giving you an answer? Or are you fully expecting clarity on this next meeting?

Yes. You can never be 100 percent certain with the agency -- meetings do tend to get postponed. For absolutely no reason related to the Company or the product, just for internal reasons at the agency. The meeting, as of we're anticipating having, though, is a meeting that which, if properly prepared for, and we will be filing a briefing package to the agency, and submitting a list of questions, we should get clarity at the meeting. The final, let's say, the evaluation of this always comes based upon the FDA's official minutes of the meeting. Which usually arrive around the month or so after the meeting has taken place. Those meeting minutes do very much define what happens at the meeting and the agreements between the agency and the Company. But again, we do expect to get clarity.

Okay.

Angelua Shaw (ph), Wells Fargo securities.

Earlier you mentioned that you expected an action letter regarding DepoMorphine in the middle or second half of 2004. Do you anticipate, or is there any indication, that you'll need to have an advisory panel prior to any action?

Yes. I think it's unlikely that this will go to an advisory panel. Because, we are dealing here, of course, with a known molecule -- the active ingredient of course is morphine. And generally speaking, the approach that's being taken here -- an epidural injection of morphine -- there are already products on the market that are based upon that principal.

The unique feature of DepoMorphine, of course, is that it is a sustained release injection. Given into the epidural space. So, I think it's unlikely that this will go to a an advisory committee, but in the end, that decision is taken by the division. But we have certainly had no indication that is going to be the case.

Okay, thank you.

At this time, there are no further questions. Miss Ammon, do you have any closing remarks?

Yes, I would just like to say thank you to everybody for being on the call. And to say on behalf of our entire organization, we look forward to keeping you apprised of our activity and highlights in 2004. So, thank you.

Thank you for participating in today's conference call. You may now disconnect.