Vanda Pharmaceuticals Inc (VNDA) 2010 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the First Quarter 2010 Vanda Pharmaceuticals, Inc. Earnings Conference Call. My name is Jasmine, and I will be your operator for today. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Ms. Stephanie Irish. You may proceed, ma'am.

Thank you, Jasmine. Good morning, and thank you for joining us to discuss Vanda Pharmaceutical's first quarter 2010 performance. Our first quarter results were released this morning and are available on the SEC's EDGAR system and on our website, www.vandapharma.com. In addition, we are providing live and archived versions of this conference call on our website, and a telephone replay of the call will be available through May 11, 2010.

Joining me on today's call is Dr. Mihael Polymeropoulos, our President and CEO. Following my introductory remarks, Dr. Polymeropoulos will update you on our ongoing activities. Then I will comment on our financial results for the [first] quarter before opening the lines for your questions.

Before we proceed, I would like to remind everyone that various statements that we make on this call will be forward-looking statements within the meaning of Federal Securities laws. Words such as, but not limited to, believe, expect, anticipate, estimate, intend, plan, target, likely, will, would and could, and similar expressions or words will identify forward-looking statements. Our forward-looking statements are based upon current expectations that involve changes in circumstances, assumptions and uncertainties, and other risks. These risks are described in the Risk Factors section of our annual report on the Form 10-K for the fiscal year ending December 31, 2009, which is also available on the SEC's EDGAR system and on our website. We encourage all investor to read this report and our other SEC filings.

The information we provide on this call is provided only as of today, and we undertake no obligation to update any forward-looking statements we may make on this call on the account of new information, future events or otherwise, except as required by law. With that said, I would now like to turn the call over to our CEO, Mihael Polymeropoulos.

Good morning, and thank you for joining us. First of all, I would like to update you on our progress with Fanapt, our product for the treatment of schizophrenia. Fanapt was launched in the US by our partner Novartis on January 11, 2010. Fanapt is indicated for the acute treatment of schizophrenia in adults, a mental health disorder which affects more than 2.5 million Americans and millions more worldwide.

Schizophrenia is a chronic debilitating disorder causing hallucinations and delusions and a significant loss of social and occupational functions. The most commonly used medications are atypical antipsychotics. Introduction of antipsychotics has offered significant improvement to the lives of these patients and has allowed for the patients to be treated in outpatient settings more than in the psychiatric institutions of the past.

The total US market for atypical antipsychotics is $14 billion, and the worldwide market is in excess of $20 billion. The smallest mature product in the class of atypical antipsychotics is revenue in excess of $1 billion a year. One of the new entries is generating revenue now in its third year of marketing in excess of $400 million annually and its revenues are still growing.

Notwithstanding the ability of multiple products in the market including Fanapt, the market continues to grow as the beneficial effects of these drugs are recognized for a number of indications. This market growth is despite the availability over the last two years of a generic form of one of the market leaders, suggesting that the response of these drugs is idiosyncratic and not predictable. New treatments are still required as different patients respond differently on both efficacy and side effects.

Fanapt is the most recently launched atypical antipsychotic and has proven efficacy in addressing the symptoms of schizophrenia in a safety profile that may differentiate itself from others in the class, especially with respect to movement disorders and metabolic effect.

The data from the first few months following the launch are encouraging, although it is too early to predict the potential growth of the product. While it is true for almost every new product that it is difficult to gauge its potential from only a couple of months of sales data, this is especially true for Fanapt. Novartis has less than six weeks from the date on which our agreement with them became effective at the end of November 2009, to prepare for the launch, including forming a new sales force, creating awareness of the product among psychiatrists, and securing access through third-party payers. Despite these challenges, the early data are encouraging on several fronts.

Many of the doctors that are already using Fanapt report positive experiences both in the efficacy of the product and the tolerability with reported side effects. The experiences from these doctors confirm the mild movement and metabolic profile of the drug can validate the efficacy seen during the clinical studies.

We are also receiving positive feedback on our titration pack, which is patient friendly and allows for reaching the effective dose in four days with good tolerability.

Significant progress is also being made on the payer access front. It is important to know that Fanapt belongs to the class of atypical antipsychotics which is protected under CMS rules and therefore cannot be excluded from state Medicaid formularies. The majority of patients with schizophrenia are covered via Medicaid or Medicare Part D is duly eligible. Under Medicaid, already more than half the states are providing easy or moderately easy access, and Novartis is working hard to secure easy access in the remaining states.

One prime example of easy access is the inclusion of Fanapt on the preferred drug list formulary for the state of Texas. Similar progress has been made with respect to Medicare Part D, which accounts for about the other half of our patients covered.

Novartis reported approximately [$21] million in sales for the first quarter of 2010. As with every launch, the first quarter figure includes the filling of the supply line and therefore it is not necessarily a good reflection of demand. For now, however, and for the next quarter or two, the prescription data may act as a better target for performance with emphasis on the growth rate.

In summary, we are confident that Fanapt is a key priority for Novartis and even while the company has announced layoffs in the pharmaceutical division, they have not reduced the marketing and sales team for Fanapt. The early data we have indicates good experiences by physicians and patients alike. We are very excited to have helped bring Fanapt to the market and very optimistic regarding its commercial presence.

I have two more updates on Fanapt regarding the further clinical development of the oral formulation, as well as the four-week injectable, or depot, formulation. We have been told by Novartis that they continue to work towards the initiation of a number of clinical studies which will satisfy the first marketing commitment required by the FDA and include, among others, a long-term maintenance placebo results study.

The results of this study will be used by us in our regulatory submission in the European Union. With respect to the depot formulation, we had a very significant development with the allowance by the US Patent and Trademark office of the microsphere patent, which will allow protection of the Fanapt (inaudible) in the US into early 2020.

We are working with our colleagues at Novartis to facilitate the development of the depot formulation including manufacturing work and clinical trials in the near future. Vanda has no financial obligations with respect to the further development of the depot formulation, but has the right to use the data for submission outside the US and Canada. As we have previously reported, Vanda has retained exclusive rights to Fanapt outside the US and Canada.

Over the last few months we have made significant progress understanding regulatory requirements around the world and began discussions with various supporting regulatory authorities. We believe that we will be able to begin regulatory submissions in certain countries during the third quarter of 2010. We also plan to begin discussions with the European regulatory authorities later this year. EU markets account for revenues of more than $6 billion annually for antipsychotics with one depot formulation driving approximately $1 billion in annual sales in the EU.

I will now turn to our second compound, Tasimelteon. Over the last quarter we have made significant progress [climbing the] path forward for Tasimelteon, our proprietary circadian rhythm regulator. In January 2010, the FDA designed Tasimelteon as an orphan drug for the treatment of non-24 hour sleep/wake disorder in blind individuals with no light perception. This disorder which affects approximately 80,000 Americans poses significant disability. Individuals that suffer from non-24 hour sleep/wake disorder are not able to rest their body clock -- to reset their body clock which governs the sleep/wake cycle on a daily basis. As a result of this inability to reset the circadian rhythm, they have significant difficulty sleeping at night accompanied by significant difficulty staying awake during the day. These symptoms further compound the disability of blindness and further impact the social and economic difficulties that are prevalent among the blind.

Our prior investigation of the compound in Phase II and Phase III studies have suggested that the compound is able to set the body clock and may be able to correct the symptoms that are associated with the dysfunction, including the difficulty sleeping at night and staying awake during the day. Despite this very serious disorder, there is no approved treatment today that addresses the mechanism of the disease and resulting symptoms.

Over the last quarter we have accelerated our efforts to further understand the disorder and develop a plan that we hope will lead to the registration of Tasimelteon for non-24 sleep/wake disorder and the ultimate commercialization of the compound.

We are planning to begin work on the pivotal clinical studies during the second quarter of 2010 with the result expected towards the end of 2011. As significant preclinical manufacturing and clinical studies have been completed already for Tasimelteon, we expect that we will be able to seek regulatory approval in the US by early 2015. We believe that a similar timeline can be accomplished as well for Europe.

In addition, we believe that Tasimelteon can help Vanda create significant value for its shareholders by commercializing the product which addresses an unmet medical need in a differentiated manner and by affecting the mechanism of the disorder and not just its symptoms.

Beyond the treatment of non-24 sleep/wake disorder, [evidence of] the circadian regulator that Tasimelteon may be able to address the symptoms of disorders that affect millions of people worldwide including disorders such as delayed sleep phase disorder, shift work sleep disorder, and jet lag.

Now, Stephanie will address our financial results for the quarter ending March 31, 2010. Stephanie?

Thank you, Mihael. We are very pleased to announce that Vanda recorded its first quarter of positive earnings. Net income was $500,000 for the first quarter of 2010, compared to net losses of $9.2 million for the fourth quarter of 2009, and $6.5 million for the first quarter of 2009. Basic and diluted net income per common share for the first quarter of 2010 was $0.02 compared to a net loss per common share of $0.34 for the fourth quarter of 2009 and $0.24 for the first quarter of 2009. Approximately 27.9 million shares of Vanda common stock were outstanding as of March 31, 2010.

The primary driver of first quarter net income was the increasing Vanda revenue for the first quarter. Total revenue for the first quarter of 2010 was $12.4 million, which was an increase of $7.9 million from the fourth quarter of 2009. First quarter 2010 revenue consisted of $6.6 million in licensing revenue due to the amortization of the upfront payment received from Novartis in the fourth quarter of 2009 under the amended and restated sublicense agreement.

$3.37 million in product revenues for the inventory sold to Novartis, and $2.1 million in royalty revenue was based on the first quarter of 2010 net sales of Fanapt in the US by Novartis. The increase in revenue from the fourth quarter is due to the increase of $4 million in licensing revenue and $1.8 million in product sales to Novartis, coupled with the $2.1 million in royalty revenue.

Cost of sales for the first quarter of 2010 of $1.8 million consisted of $400,000 resulting from the amortization of the capitalized intangible assets related to the milestone payment to Novartis and $1.4 million to the inventory sold to Novartis. This compares with cost of sales for the fourth quarter of 2009 of $2.3 million, consisting of $400,000 resulting from the amortization of the capitalized intangible assets, and $1.9 million for inventory sold to Novartis.

Research and development expenses of $2 million for the first quarter of 2010 consisted primarily of $700,000 in salaries and benefits, $900,000 of noncash stock-based compensation costs for R&D personnel, and $200,000 for overhead allocated for research and development. This compares with $2.3 million for the fourth quarter of 2009, and $2.3 million for the first quarter of 2010.

General and administrative expenses of $2.5 million for the first quarter of 2010 consisted primarily of $600,000 in salaries and benefits, $200,000 of noncash stock-based compensation costs for G&A personnel, as well as $500,000 of legal fees, $300,000 of audit and calculated costs, and $200,000 of insurance costs. This compares to $9.2 million for the fourth quarter of 2009 and $4.2 million for the first quarter of 2009.

The decrease in G&A expenses in the first quarter of 2010 relative to the fourth quarter of 2009 is primarily due to the lower consulting and advisory fees relating to the transaction with Novartis completed in the fourth quarter of 2009, and lower noncash stock-based compensation in the first quarter of 2010.

Vanda reported a tax provision of $5.7 million in the first quarter of 2010. The tax provision is based on an annualized effective tax rate for 2010 applied to the first quarter pre-tax booked income. The quarterly tax provision is not indicative of estimated cash tax payments. The provision applied in the first quarter of 2010 was determined primarily based on a net increase in valuation allowance for the access of the deferred revenue reported from the upfront milestone payment received from Novartis over the existing tax attributes utilized.

Vanda's cash and cash equivalents, marketable securities as of March 31, 2010 totaled approximately $202.4 million, a decrease of $2.9 million compared to the $205.3 million as of December 31, 2009.

We are encouraged by the early prescription data for Fanapt as reported by IMS. However, at this time we cannot forecast future revenues based on sales milestones and royalties. We expect that R&D expenses related to the initiation of the Tasimelteon program in the non-24 hour sleep/wake disorder will increase approximately by $7.5 million for the full year 2010. We anticipate that approximately 75% of these expenses will qualify for the orphan drug tax credit.

We submitted a project letter ruling request to the Internal Revenue Service in March 2010 to clarify the application of certain code sections regarding the use of prior net operating losses that may be used to offset some of the tax liabilities, which is related to the $197.4 million of deferred revenue from the upfront payment received from Novartis, which will be recognized as income for tax purposes in 2010. Following the determination of the IRS on this matter, we may choose to provide further financial guidance for the full year. At this time, I will turn the call back to Mihael.

Thank you. This week, of course, marks the one year anniversary of winning regulatory approval for Fanapt in the US, and I want to congratulate again my colleagues for this monumental achievement and to further extend my thanks to the Novartis team for their hard work and dedication bringing Fanapt to the market and working towards building it into a significant commercial success for both of our organizations. I finally would like to thank the Vanda team's dedication in bringing Tasimelteon forward for the treatment of non-24 hour sleep/wake disorder in the blind.

We would be happy to address any questions at this time.

(Operator Instructions) And your first question comes from the line of [Bram Salbocha] with [Hapoline] Securities. You may proceed.

Hi. Thanks very much for taking my questions. Can you hear me?

Yes.

First of all, a couple of financially related items. With respect to the tax provision that was put in for the first quarter, would it be reasonable to assume that that would remain the same going forward, or is this part of what will be determined by your ongoing discussions with the IRS?

Well, first, the short answer is no, it would not be reasonable to expect that this is the same, may increase, may decrease. But I would like Stephanie is going to give detail on that.

Yes. So, that provision is based on the annualized effective tax rate for the year, so we do expect that that provision will, like Mihael said, increase or decrease, and it does depend somewhat on the IRS outcome. And as we gain further information, we hope to update the investors as we hear back from the IRS.

But to be clear, this is not, if you take this number and you multiply it by 4 to get the tax numbers for the year. This is under GAAP accounting. Yes, we have this tax provision which does not make [intuitive] sense since the effective tax rate would be something like 110% in this case.

Your next question comes from the line of Corey Davis with Jefferies. You may proceed.

Hi. This is Oren Livnat for Corey. Several questions. Can you maybe expand a little bit on the reimbursement situation of Fanapt? I understand, you said it is more than 50% of Medicaid that is "easy" or moderately easy. Can you relate this to where you expect to be, you know, several months into the future, how that can be thought to affect the actual doctor prescribing experience? Because I understand that being on state Medicaid isn't exactly the same as being on a subformulary, so-to-speak, at a hospital, clinic-by-clinic basis. Can you just give us some more color?

Certainly. Thanks for the question. So, let's go back for a second. As I said earlier, antipsychotics under CMS, a protective class, which means that for the patients on Medicaid, they will be able to get the drug because they cannot be excluded from the formulary. However, given the tremendous pressure of the healthcare system and the attention the antipsychotic class receives in terms of management of cost, you can see that within different states they adopt different mechanisms to curb prescriptions. And that happens to atypical antipsychotics as well. And, therefore, while all of these medications are on the formulary, in some states they institute prior authorization or step [edit] will create some hurdle in the immediate access for the drug. So, the situation now is that we want to make sure, Novartis wants to make sure that when a doctor writes a script, the patient in a very easy way seamlessly can fill the script.

Where we are now is, I believe about 27 of the 50 states, you can get Fanapt easily or moderately easily, which means there may be a hurdle, but it is very small to overcome to doctors. While in the remaining states there still would be situations that prior authorization is required or failure to prior treatment, etc.

Now, several months from now, as we go forward, we fully expect that the easy access on the state formularies will continue to expand in the remaining states. So, it is a matter of time. You addressed the question around how does that trickle down to hospital formularies, community health center formularies, etc. All of this in different states are managed differently, but you would imagine while there is a state formulary, different hospitals have to develop their own, which will be similar to the state formulary, but it does take time.

So, going fast-forward a few months from now, we fully expect that the majority of institutions that do treat patients with schizophrenia including hospitals, community mental health centers, will be able to have Fanapt on their formulary in an easy access position.

To also give you a comparison, if you look at public data around the states and compare the access of Fanapt and the recently launched drug by Merck, Saphris, another atypical antipsychotic, the access is very similar from state to state. Which means that any slow or fast progress we are making with specific states, it is paralleled by the [attitudes] of the state for the class of atypical antipsychotics.

So, bottom line, the access today is good, is improving, but we fully expect over the next few months to make significant improvement to provide coverage for all those that may need the drug.

Your next question comes from the line of David Moskowitz with Madison Williams. You may proceed.

Okay, thanks and good morning. I have several questions here. First one is, can you clarify for us what the actual sales of the product were in the fourth quarter, given the $21 million reported by Novartis. And in conjunction with that, can you talk about the net price that you used to calculate those actual sales?

Thank you, David. First of all, the first question. So, the sales are what we reported, $21 million that Novartis reported. Just to clarify for everybody, no pharmaceutical company (inaudible) to pharmacists into doctors and patients. So, they receive invoices from those who want to start the drug and that is how they (inaudible).

Now, the question may refer how much of this filling the pipeline was pulled down through prescriptions. And, as I said earlier, we believe that the majority of these $21 million as with every other launch, would be mostly to fill the pipeline. That meant that there is this starting in the pharmacists today demand continues to grow, and as demand continues to grow, the amount of stocking will decrease and how this is replaced. And when it is replaced by the wholesalers and pharmacists, that information I do not have and we have to wait and see how it develops.

So, the important (inaudible) here to remember is $21 million is a good number, but the caution for everyone is that it reflects stocking plus what we believe is a smaller percentage of actual demand. As the demand continues, eventually this quarter's revenue numbers will be more reflective of demand itself.

So, what is important to look now is, if you are trying to understand how the product is doing, we are looking at the growth. And what we have seen, we have seen a significant and sustained growth of the product over the last eight weeks or so, very early still on the launch. We have to, however, be patient, look at the data, and again, remember it is going to take a quarter or two before these revenue numbers are reflective of demand.

Your next question comes from the line of Bram Salbocha with Hapoline Securities. You may proceed.

Hi. Thanks very much for taking my follow-up. With respect to Tasimelteon, could you clarify again the R&D expense impact and how quickly that would show up on the R&D expense line in the P&L? You said that you expect a kickoff of the Phase III study this quarter, correct? So, I just wanted to know when you expect the bulk of the expenses associated with the program to accrue?

I think I will pass it on to Stephanie.

For the second quarter 2010, we are discussing with the CROs out there. It is more in the planning, so we expect that the bulk of the expenses will be seen in the last half of 2010. The total expenses for 2010 are estimated at $7.5 million. But to again to remind you that we anticipate 75% of these costs will be eligible at the end of the year for the orphan tax credit.

Your next question comes from the line of Corey Davis for Jefferies. You may proceed.

Thanks, this is Oren again. I guess just a follow-up on the last question. You mentioned these will be eligible for tax credits. Of course, we have no, I guess, idea of how that factors into your overall tax exposure given sort of where we have been earlier in this discussion. So, I guess we're just trying to figure out maybe from a cash perspective, are all of these provisions for taxes that you are accruing now, which I guess the amount for the whole year is up in the air at this point. Is some or all of this actual cash liability, and how does this potentially affect your NOLs, and do we know where your NOL value is in general at this time?

Let me try to answer this question, Oren. First of all, for everyone, orphan tax credit is a provision that allows you to claim 50% of eligible R&D costs that are attributed to the development of drugs for orphan indications as tax credit. So, conceivably, half of the R&D spend, and earlier Stephanie clarified about 75% in this early case would be eligible for the 50% tax credit.

Now, in modeling the tax provision, we have taken into account some of the potential orphan tax credit. However, as you pointed out, it is very early for us to give a forecast of the actual tax that we may or may not owe to the IRS. Where we are today is that we and our advisors believe and we remain optimistic that we should be able to use some or a significant portion of our past net operating losses and therefore we can offset our tax liability for the deferred income from the upfront Novartis payment.

The steps that we have taken is we have presented this case to the IRS in the form of a request for a private letter ruling. We expect this to take some time before being evaluated, and what is the core of the matter here is the 382 regulation which suggests that upon ownership changes -- of course, we do not have any ownership changes that you and I would clarify, but turning over of shareholders at one point of more than 50%, you can imagine in 2008 we may have experienced one, this may limit some of the net operating losses forward.

But there is sufficient unclarity within 382 and sufficient unique circumstances of Vanda's case that after our analysis with our advisors we became convinced that we have to pursue this clarification from the IRS that may, we believe it could, allow us to use some or all of our net operating losses. But, again, it is currently under review with the IRS.

Your next question comes from the line of David Moskowitz with Madison Williams. You may proceed.

Yes, hi again. Can you clarify, you talked about this long-term placebo withdrawal study that the FDA has required on a post-marketing basis. Can you explain what that is? And also would you let us know if Tasimelteon has been tested in the blind for circadian rhythms? Do you actually have data on that?

Thank you. First of all, on the Fanapt first market clinical placebo result study, the FDA has requested of all atypical antipsychotics as first market commitment to conduct long-term maintenance studies in which patients start on the drug and then they will be randomized whether drug or placebo, and you will measure some outcomes such as the compensation of the disease, etc. Every atypical antipsychotic that has performed the study so far as succeeded in showing separation from placebo. I would also remind you that this is not the only design of long-term maintenance. And, of course, more popular in the past were studies where the active drug was compared to another approved compound.

To remind you again, as we have discussed before and published, Novartis and Vanda have conducted the studies in the past in more than 1500 patients over the year and have shown that Fanapt, when compared to Haldol over a long period of time, 12 months, has shown similar efficacy in maintenance. So, the placebo withdrawal study is another form of maintenance study requested by the FDA and maybe requires for new submission. So, we are very happy that Novartis is doing it, paying for it, and we can use the data for the European submission.

Now, on Tasimelteon, you asked whether we have done any studies in the blind and whether we predict how it is going to work? As you may know, we have in the past conducted an extensive clinical study program with Tasimelteon, some of it directly relating to circadian rhythm regulators. In fact, we have reported positive results of the ability of the compound to immediately upon first night of administration reset the body clock to an earlier time. This is exactly the same mechanism that we were after in the blind. People with no light perception have the inability to use light to reset their clock. And because body clock is about 24.5 hours, not 24 hours, you end up shifting every day by 15 minutes and a few months later people find themselves in the middle of the day where their body clock says it is night.

So, what are effort will be with clinical studies is to demonstrate that like we have demonstrated before, administration of Tasimelteon at night we can reset and fix their body clock at the time of administration, stop this internal shifting due to the absence of light in the circadian resetter. So, in terms of predictability of outcome, we are very encouraged from the prior Tasimelteon results that Tasimelteon will be effective in treating this disorder.

In addition, when you look at the literature, studies that have been conducted with the food supplement, melatonin, in patients with non-24 sleep/wake disorder they have shown good results in that the natural substance melatonin has been able to reset the body clock. However, it is not a drug and for many reasons as we have discussed before, melatonin is not used.

So, we believe that Tasimelteon will be effective in setting the body clock in non-24 hour sleep/wake disorder, and by doing that helping patients both on improving their sleep but also improving their awake time.

Your next question comes from the line of Bram Salbocha with Hapoline Securities. You may proceed.

Yes, just one question regarding the development of the injectable form of Fanapt. Do you have any indication from Novartis when the Phase III program would start and, if so, what form it might take, if this might include some sort of comparator controlled type of study?

Thank you. First of all, Novartis is not making announcement on the timeline of the program. On the other hand, as I said before, we are working closely with the project team to make sure that the manufacturing work is done and that they could move into clinical studies soon. But I cannot give you that timeline.

From our point of view, the clinical development program can be completed by pharmacokinetic studies first, to understand better the kinetics, dose tolerability, etc., followed by a single Phase III study. A comparator will not be required and therefore the study, as others have done, will be a comparison between Fanapt depot and placebo. Typically this is a study where you give three or four injections, so it is a three-month study, and measure outcome. This is a program similar to the one that others like Risperdal Consta and Invega Sustenna have recently used. So, we are hoping that the program will enter the clinic soon. We believe that all the activities could be concluded within a three-year frame resulting in a submission within that timeline.

Now, we are very eager to see the depot formulation of the (inaudible) as we believe that the depot formulation program can become an anchor in our outside the US submissions. As I said earlier, one of the mature programs, the Risperdal Consta, is generating $1 billion a year in solid sales in Europe. Our vision has been to submit in Europe at the same time or very close to each other both the oral formulation application and the depot. This way we will extend the patent protection in Europe simultaneously in this 10 plus 1, or 11 years from the time of market authorization. As you know, Europe has a provision that you get 10 plus 1 years from the date of the first market authorization. So, if, for example, we submit in Europe in 2012 or 2013 both formulations, the patent protection in Europe would extend sometime into the early to mid 2020.

Your next question comes from the line of Corey Davis with Jefferies. You may proceed.

Hey, folks. Just trying to get a sense of where you think we are on DDMAC material approval? If and when that comes do you expect that to have sort of immediate impact or should we expect not to see any sort of hockey stick acceleration at any point and just hope for a steady-eddy climb up and to the right?

Corey, I do know that your Washington (inaudible). The hockey stick is very appropriate, but I will not venture into making comparisons. But to answer your question on DDMAC approval, for everyone, Novartis launched within six weeks from conclusion of our (inaudible) and approval of -- the regulatory approval of our deal. So, within the time frame it was impossible to develop all the material and all the market preparation that goes typically into a launch. So, today promotion by the new sales force is done with the PI only, the package insert. So, promotional materials are important because they are communication (inaudible) and facilitate to introduce the key themes in the key attributes of the drug to a doctor for any drug to any doctor and therefore it is an easier way to promote.

We know that all these materials are in the process of being finalized and regulatory approval for the safe time. We are hopeful, though, that these materials will become available sometime in the second quarter, and we certainly hope that this material will further accelerate what we have seen already as a good growth of the product. But stay tuned and data will speak.

Ladies and gentlemen, this concludes our question-and-answer session for today. I would like to turn the call back to Ms. Stephanie Irish for closing remarks.

Thank you, Jasmine. Thank you, everyone, for your questions, and I'm going to turn the call over -- back to Mihael for some final comments.

Well, I thank you very much for all your participation, questions and support of the Company, and we look forward to speaking with you again soon. Thank you.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a wonderful day.