Teva Pharmaceutical Industries Ltd (TEVA) 2012 Q1 法說會逐字稿

Good morning and welcome to NuPathe's first-quarter 2012 results conference call. Today's call is being recorded.

For opening remarks and introductions, I would like to turn the call over to John Woolford from Westwicke Partners. Please go ahead, sir.

Thank you, Operator, and good morning, everyone. With me on this morning's call are Jane Hollingsworth, NuPathe's Chief Executive Officer; and Keith Goldan, Vice President and Chief Financial Officer.

We announced first-quarter 2012 financial results today, before the open of the US financial markets. For those of you who may not have seen the release, it is available on our website at www.nupathe.com in the Investor Relations section.

The format of today's call is as follows. Jane will begin with an overview of recent corporate highlights; Keith will then provide a summary of our financial results for the quarter; and Jane will end the prepared remarks with a brief closing followed by a Q&A session.

Before we begin, I would like to remind you that we will make various remarks during this conference call that constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. All remarks that are not historical facts are hereby identified as forward-looking statements for this purpose, and include among others, statements regarding our ability to address the questions contained in the FDA's complete response letter and obtain approval of our migraine patch; the timing of our NDA resubmission; the potential benefits of and commercial prospects of our patch and other product candidates; the sufficiency of our cash to fund future operations and capital requirements; our ability to obtain additional capital; our plans and objectives for future operations; and our expectations and beliefs.

Forward-looking statements are subject to numerous risks, uncertainties, and assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements, including those factors discussed under the heading Risk Factors in our Form 10-K for the year ended December 31, 2011, which is on file with the SEC and available through the Investor Relations section of our corporate website.

As a result, you should not rely on any such forward-looking statements. While the Company may elect to update forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. Also, today's call it may not be reproduced in any form without our express written consent.

I will now turn the call over to Jane Hollingsworth, the Company's Chief Executive Officer. Jane?

Thank you, John. Good morning, everyone, and thank you for joining us this morning. In the first quarter, we made substantial progress toward our goal of resubmitting the NDA for our migraine patch. During our last conference call, we outlined the remaining tasks needed to complete the work related to our resubmission. I will quickly review these items.

First, we have made a minor packaging modification to address the FDA's questions regarding containment and uniformity of dosage. As a result of the improved packaging, patient instructions for patch application have been simplified. We are now in the process of conducting the patient usability study discussed last quarter, with the improved packaging and simplified instructions.

Next, we have developed a device enhancement to prevent skin adverse events that could result from incorrect patch application. We have completed extensive bench testing and a pilot clinical trial, and will soon initiate a final small Phase I trial with 30 subjects to confirm its performance.

Also, as we noted last quarter, we have already successfully repeated a Phase I bioequivalent study and developed a new in vitro method that is more closely correlated with our clinical data.

Finally, as we've noted previously, our NDA resubmission will include a justification for a waiver for a dermal carcinogenicity study. In order to qualify for a waiver, we must demonstrate that sumatriptan is not passively absorbed through the skin. We have significant clinical and preclinical data confirming that there is no path of absorption through the skin; and, therefore, continue to expect that this requirement will be waived.

While the device enhancement and packaging modification were motivated by regulatory requirements, we are really excited about our final product. Both the packaging modification and device enhancement improved the patient experience. We have a lot of confidence these changes will lead not only to a positive regulatory outcome, but also to an enhanced commercial opportunity for our patch.

In summary, there have been no major changes in our efforts or expectations regarding completion of the key items needed to resubmit our NDA. Now, while our primary focus has remained on resubmission of the NDA, we have also continued to push forward on engagement with physicians and education around migraine-related nausea, or MRN.

As we look forward to the premiere headache meeting, the annual Scientific Meeting of the American Headache Society, or AHS, being held next month in Los Angeles, we are excited to present new clinical data for our migraine patch. Throughout the course of AHS, we will have data presentations, a scientific exhibit booth, and a series of meetings with commissions to increase understanding of the prevalence and debilitating impact of migraine-associated GI issues, including MRN.

We are ever more bullish on the opportunity for our patch to address the needs of a substantial percentage of the migraine population, particularly the millions whose migraines are accompanied by debilitating MRN. Last month, data from NP101-008, our 12 month repeat-use study that assessed the long-term safety and efficacy of our migraine patch, was published in the journal Headache. As noted in the publication, the results of this study strengthen our Phase III efficacy data and demonstrate that our patch maintained a consistent tolerability and efficacy profile with successive uses over the course of the 12-month study.

In addition, we continue to focus on our business development efforts to maximize the commercial opportunity for the patch. By leveraging a partner's commercial depth, our overall addressable market will expand, and our ability to drive revenue will accelerate. This is true for the US market as well as for markets outside of the US.

Moving to our earlier stage pipeline, we are on track for an IND in 2013 for NP202, our three-month treatment for schizophrenia and bipolar disorder. We are also progressing with our efforts to seek a development partner for NP201, our two-month treatment for Parkinson's disease.

With that, I'd like to turn the call to our CFO, Keith Goldan. Keith?

Thank you, Jane, and good morning, everyone. We reported financial results for the first quarter 2010 this morning. In addition, we will very shortly be filing our form 10-Q with the SEC.

For the first quarter, we reported a net loss of $6.3 million compared with a net loss of $3.7 million for the first quarter of 2011. Research and development expenses were $3.5 million in the first quarter compared with $1.6 million in the first quarter of 2011. The increase is primarily attributable to a $1.5 million credit for our NDA filing fee that was refunded to the Company in the first quarter of last year. Excluding the impact of this credit, R&D expenses for the first quarter of 2011 would have been $3.1 million compared to $3.5 million in the same period 2012. The remainder of the increase in R&D spend is primarily a result of higher CMC costs related to the CRL response, partially offset by lower clinical and medical affairs expenses.

Selling, general and administrative expenses were $2.4 million in the first quarter this year compared with $2 million for the same period in 2011. The increase is primarily attributable to increased headcount in the sales and marketing area.

Net cash used in operating activities for this quarter was $6.2 million, primarily the result of spending for normal operating activities; activities to address questions raised in the CRL; and, then, continued development of NP101. We also used $0.1 million of cash in investing activities, and $2.2 million of cash for financing activities related to contractual debt repayments. At the end of the first quarter, NuPathe had $14.6 million in cash and cash equivalents and $3 million of working capital compared with $23.1 million in cash and cash equivalents, and $11 million of working capital at December 31, 2011.

We continue to expect our existing cash and cash equivalents will be sufficient to fund operations, debt service, and interest obligations into the third quarter of 2012. We are currently considering multiple financing alternatives, including equity and debt financings; corporate collaborations; and licensing agreements; as well as other non-diluted financing to fund our operations and meet our capital requirements beyond that point.

I'll now turn the call back over to Jane for closing remarks. Jane?

Think you, Keith. In summary, we expect to resubmit our NDA in the first half of this year, and feel confident about the ultimate approvability of our migraine patch. We continue to believe that the patch will be well-received by millions of migraine patients, especially those who suffer from debilitating MRN along with their headache. We again thank all of our stakeholders for their continued support.

That concludes our prepared remarks. We are now happy to answer your questions.

(Operator Instructions). Liana Moussatos, Wedbush Securities.

When will you start the Phase I with the 30 patients, and how long will that take?

We are preparing to start that study right now; so, obviously, there's not a lot of time between now and the end of this quarter. So we're getting very close to beginning that study, and obviously will complete it in short order.

Okay. And business development -- you mentioned potential for a commercial partnership. How far along are you with those kind of discussions?

Well, we are continuing to have those discussions. We're really not going to get into the level and depth and likelihood of a conclusion. But we are very pleased with the interactions and the progress.

Would the trigger be for a partnership approval?

That's always been our view. And the only way we would advance that is if we had some real pressure to do that from a value perspective, and it looks like it really made sense.

And for NP201, what kind of status?

NP201, we are continuing those discussions. I can't really comment about whether we are going to complete them in the near-term. But those are going well, as well.

Thank you very much.

Bill Tanner, Lazard Capital Markets.

On the waiver on the dermal carc study -- how confident are you that the FDA is going to do that? And in the event that they do not, what would be the timeline in terms of having to do that -- getting it done?

First of all, we are very confident, because in our interactions that we've had with them since the Complete Response Letter -- we've had quite a bit of them -- they've made very clear that it's about the path of absorption. And we have an immense amount of data, I would say, demonstrating there is no path of absorption. The fallback -- you mentioned that as well -- would probably be something post-approval, because I think the FDA really does recognize the data that we have.

Okay. And then you did mention that you continue -- or the Company continues to be engaging with the physicians. Just curious as to what that actually means in the level of activity, I guess, on a pre-approval basis, that you could engage in?

Well, we are continuing to do what we have been doing, and that is really a lot of education and interaction around migraine-related nausea. That's the medical education component of it, which we can do right now. And it's really worth our while doing it, because there is no other product out there that really addresses that particular part of the market. So we feel very confident in spending and using our resources now to build the understanding of that part of the market.

And just since you've been doing this for a while, what's the general feeling as to the change in the awareness, or the change in enthusiasm in the treatment community?

It's absolutely building. We've had a number of discussions with the leaders of headache, leaders of American Headache Society, about building this whole GI component into their education -- not just at any given meeting, but over time. And as you know, there hasn't been a lot of advance in the area of headache from a scientific perspective for many years, and so there's a real growing excitement about this whole GI component. There hasn't been a lot of research into it until now, or focus until now. So a lot of the leaders in the community really see this as the next wave of advance in their field, and we are the leaders of that.

Okay, great. Thanks very much.

Michael Schmidt, Leerink Swann.

I was just wondering, on the skin irritation study, the 30% Phase I study -- can you talk a little bit more about that? What are you measuring? And how frequently are those patients treated? And how fast do you think you can complete that?

The study that we are preparing to begin is on the device enhancement, which will really tell us whether the device enhancement we've built into the patch works. And what that means is, the patient would need to put the patch on incorrectly and show that it did not go on. So that's the real way the study would be conducted. So it should not take that long. We are expecting to have 30 subjects in that study so it's a typical Phase I size.

Okay, great. In terms of potential partners that you've been mentioning, how do you think about a partnership, in terms of addressing the market? Are you looking more for a specialist focus type of commercial partnership? Or are you thinking about, maybe, the primary care market as well, at this point?

What we're trying to do is really increased the depth and breadth of our marketing. So, in a perfect world, we would have a partner that could really go out way beyond what NuPathe can do and allow that launch curve to accelerate and increase the value of the entire product. So that's our primary goal. This product is a product that has applicability throughout the specialist arena; but also, broadly, in the primary care arena as well. So it's not part of the market that we cannot address ourselves, especially in the early phase of our launch. And we would like to do that with a partner.

Okay, great. Thanks a lot.

(Operator Instructions). Daniel Cheng, Stifel Nicolaus.

Just to get back to the incorrect device enhancement study-- can you characterize what the adverse events are, and how potentially serious those are, just from your initial data?

Sure. So, in our overall Phase III program -- which included the pivotal trial as well as the two long-term studies -- we had four instances of the 10,000-plus patch applications where incorrect application -- it was always about incorrect application, where the pads were not appropriately on the electrodes; then you can have severe skin irritation. It is not deemed to be permanent in any respect. Dermatology experts believe that, and have explained that to us.

So it really is just about eliminating that very small percentage and very small chance that you could have something that could go on for a period of weeks or even months, which you don't want. In an abundance of caution -- and, obviously, that was a question asked by the FDA -- we decided to implement the device enhancement, which now virtually eliminates that possibility for patients.

So would this be something that would potentially go on to the label for patient education, so that it wouldn't inhibit launch if the patch gets approved?

Well, the way it works is, it will not go on -- the patch will not activate -- if the pads are not correctly applied. So it's a failsafe measure. Obviously, the instructions will really apply to the application. And that's why we were doing the usability study, because we have new instructions. So we'll be testing those instructions. And we are doing that as we speak, actually.

So patients will put the patch on; if it's put on correctly -- which we think is highly unlikely at this stage of the game -- but if it is, it will not activate.

Great. And then, just as far as financing is concerned, can you talk about -- or, actually, can you provide an update on the Aspire Capital deal, if there's anything new to add there? And also, if you're thinking about as far as timing and size of financing, how are you thinking strategically about that?

Sure. I'll let Keith address that.

In terms of the Aspire equity facility that we have in place, we have not put any shares to Aspire under that facility. So really, no update. And again, just to remind everybody on the call, it's an equity line that we've put in place with Aspire last August. It allows us to sell up to 2.9 million shares under certain terms and conditions to Aspire Capital. But really, no update. We haven't put any shares to them up to this point.

In terms of financing, we are not going to be any more specific as to timing and amount. We always, of course, look to balance dilution with a strong balance sheet. But at the end of the day, the most important element of the financing is going to be to finance appropriately and give us the capital we need to move forward. So other than what we've stated, not much more to report on that front.

Okay, great. Lastly, could you just characterize how you're thinking about commercialization, just given that -- obviously, approval is the first priority, but it's a pretty short time frame. As far as building out your commercial infrastructure, how are you thinking about that?

We are continuing with our plan. Obviously, we've had more time than we anticipated, after we got the Complete Response Letter. So we are using our core commercial team which we have in place -- it's a very strong team -- to build out the plan, do all the things that you need to prepare for launch. So we're really well-prepared, at this point.

We've built a whole mapping tool, for example, so we know exactly where we want to have our reps. It's a fluid database. So we continue to put data in it and hone that. And we will do that right up until the time of launch. So we feel like we're in really good shape there. And our plans have not changed.

Thank you very much.

Elliot Wilbur, Needham & Company.

I jumped on the call a bit late, so I apologize if you've already addressed this in your prepared comments. But I think back in late April, you guys filed an 8-K around a credit purchase agreement with Automated Engineering. Obviously, I guess we would look at that and consider that to be a positive, a Company committing additional funds to moving forward with commercial-scale production of the patch.

But just wondering maybe if you can drill down on that a little bit more -- and even more specifically, I guess the question would be, what kind of additional funds commitment is that going to require over the next six months or so? And number two, does any aspect of this purchase agreement -- is it going to change any of the timing elements or actual submission components of the NDA for the product? Thanks.

Thanks, Elliot. And no -- no one has asked that yet. So you didn't miss anything.

The agreement itself is all part of our plan. There's nothing new there from our perspective. We do have most of the entire process now automated. This is one piece of it that had not been automated, and we had planned to put him at this stage of the game. You can see in the 8-K, the financial commitment is about $900,000, close to $1 million. That's built into our projections, built into our forecasting.

So it's all part of the plan. I think it does speak to our bullishness on approvability, as well as the size of the commercial opportunity. Because we weigh all of that when making decisions like this. So we feel like the timing's right, and it's a good time to do it.

Does that answer your question, sir?

Yes, thank you. And I have no further questions.

David Miller, Biotech Stock Research.

Can you talk a little bit about what type of partner you're looking for? I assume this is going to be, perhaps, maybe a co-promotion deal; or you're just looking for a sales organization that would take a sales commission?

Well, obviously -- and good morning, David. Obviously we are looking for an organization that has the scope that we do not have. But more important, perhaps, is the commitment and the ability and the timing to be right. And so, that's one reason why waiting until approval is an advantage, because we want to make sure that it really fits with the organization that would be partnering with us. So, in terms of the actual structure, we are open on that one. The goal is to make sure that the commitment is there, and that they have the scope that we don't have and can really help us, in terms of expanding our value.

Okay. And what are you looking for in a partner for NP201? Is that more like a straight out-license, or something similar?

One of our goals there is to -- it's really co-development. So it could be geographic deal, for example. We will not go into Europe ourselves. It's very much a worldwide product and a worldwide market. So that is one approach, and we are having some of those discussions. So we would, in a perfect world, like to keep the US market. But if that's really important to a prospective partner, we are happy to discuss that as well.

It sounds to me like you're going to -- upon approval, you're going to start kicking off your own sales efforts. And you wouldn't have to wait for a partner to start those sales efforts. Is that correct?

That is correct. We are planning our own commercial launch, which will include about 100 sales reps. We are mapping for that right now. We have our team in place -- the core team that will run that effort -- and we will do that, regardless of the partnering opportunity.

It's always hard to tell in advance, but what are your goals for getting that partner on board to expand your reach? When would you like to do that, in terms of post-launch?

What we've been saying, and we continue to believe, it will be post-approval. Because there clearly is more competition at that stage. There is more clarity for everyone around timing. We would know what kind of commitment we be getting, and also really give ourselves the best chance on value. So that's our goal right now.

I mean, are you looking at first three months, six months, year?

Well, our goal is to be in a position to be close to closing on something like that post-approval. So that might allow us to do is to launch with a partner. But if it takes too long, then we will launch without them.

Finally, about how long after approval would you think you could launch marketing of the product?

Given our timeline of resubmission and our expectation of a review cycle -- which would be six months post-resubmission -- we are clearly into 2013. In terms of when in 2013, we are really balancing all the things that you typically balance -- how much we would spend pre-approval versus post-approval on manufacturing; as well as, we would like to have our marketing materials through the FDA before we launch. Because we think that will give us a more powerful launch, and eliminate the possibility of a marketing hitch once we have launched. So that -- it's a minimum of three months, and probably longer than that; more than likely, closer to six.

Great, thank you very much. And congratulations on the progress.

Liana Moussatos, Wedbush Securities.

Can you give us some more color on the new clinical data coming out at AHS?

I would love to, Liana, but AHS has their rules. So when we are closer, in terms of the embargoes, we'll be able to do that. So unfortunately, we can't do that right now.

Did this come out of your CRL -- that kind of data? Or was this before?

It was before.

Thank you.

At this time, we have no further questions in queue.

Thank you all for joining us this morning. And we look forward to speaking with you again in the near future.

That does conclude today's conference, ladies and gentlemen. We appreciate everyone's participation today.