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Acorda Therapeutics, Inc. (NASDAQ:ACOR)

31st Annual JPMorgan Healthcare Conference

January 07, 2013 2:00 pm ET

Executives

Ron Cohen - Founder, Chief Executive Officer, President and Director

Analysts

Geoffrey C. Meacham - JP Morgan Chase & Co, Research Division

Geoffrey C. Meacham - JP Morgan Chase & Co, Research Division

Good morning. Welcome to the Day 1 of the 31st Annual JPMorgan Healthcare Conference. My name is Geoff Meacham. I'm a biotech analyst here at JPMorgan. It's a pleasure to introduce Acorda Therapeutics, one of the leaders in the neurology space. And speaking on behalf of Acorda is its CEO, Ron Cohen. Ron?

Ron Cohen

Thank you very much, Geoff. Thanks for having us, and welcome, everyone. We're looking forward to giving you an update on Acorda this morning.

Before I begin, just a reminder that the presentation will contain forward-looking statements, and we encourage you to consult our detailed filings at the SEC.

I also want to remind you all that after -- immediately after this session, there will be a breakout session in the Yorkshire Room, which I'm told is in immediate left out the door and the first door on the right.

So today, I will be taking you through a quick summary of our achievements in 2012, as well as giving you a commercial update on AMPYRA, an overview of our newly acquired asset, Diazepam Nasal Spray, a look at the progress of our pipeline programs, our business development focus, and then finally, a financial summary and our guidance for '13.

Acorda's corporate objective is to be the leading biopharmaceutical company, delivering therapies that restore neurological function to people with these terrible conditions affecting the nervous system that remove function, and thereby, improve the lives of those people.

Looking first to 2012. Our AMPYRA unaudited revenue, net revenue for the year was $266 million. We also, as I mentioned, acquired Diazepam Nasal Spray, which I'll talk more about in the next few slides. We initiated 2 Phase II proof-of-concept studies of AMPYRA, our lead commercial asset, looking at post-stroke deficits and also improving functions in cerebral palsy.

We completed all of our FDA commitments, our post-approval commitments for AMPYRA, as well as completing a Phase I trial, safety trial, for GGF2, one of our pipeline products looking at heart failure. And we filed and now have an open IND for rHIgM22, which is our remyelinating antibody, and I'll cover all of these in more detail in the ensuing slides.

Looking first at AMPYRA, just a snapshot. Since our launch in March of '10, and you see a very nice progression, very nice year-over-year growth, which included about a 26% year-over-year growth, '12 to '11.

The success of AMPYRA in '12 was driven in part by our new commercial and educational initiatives. In particular, we broadened access to what we call our First Step Program. Now again, for those of you who may not have been following us as closely, AMPYRA is indicated to improve walking in people with multiple sclerosis. A walking disability is one of the most common and one of the most feared aspects of multiple sclerosis as it inexorably removes independence and ability to function in these people. AMPYRA is the only drug that has been approved to improve walking function in MS. And we initiated this -- or rather broadened last year our access to a program we called First Step, in which the patients are given a 2-month free trial of AMPYRA. And this was in response to the fact that there is a subset of responders to the drug as there is with any drug, but we've been able to characterize that subset at about 40% of the people who tried the drug. And this is a way for people to try the drug and for clinicians to prescribe it without getting into issues of reimbursement, any other issues they might have, until they know whether the patient is a responder or not. And once they do know that the patient is a responder, they're highly motivated to keep the patient on drug, and the patients are highly motivated to stay on drug.

So that has been extremely successful for us. And we married it with another program that we call Step Together. And there's a prize at the end for anyone who can see the common thread in our marketing logo here or our marketing themes. It is the word "step". And Step Together allows the patient and the doctor to sign up at the time that the drug is prescribed, and we then give the patient the ability to fill out a specific questionnaire on how the drug may be affecting their walking ability, and then the physician is given access to those data. And this is in response to our recognition that for most of these patients, they'll come see the doctor once every 6 months or so. So they get the prescription, and then the doctor never hears again or doesn't hear again for a very long time. And this is a way of giving the doctor, in real time, feedback from the patient and also giving the patient the opportunity to communicate with the doctor about how they're doing on the drug. And this has been very well received by both the patients and the prescribers.

We've also enhanced our consumer outreach both digitally and at various functions, speaker programs, MS Walks and the like. And to-date, since launch, over 73,000 people with MS have tried AMPYRA.

We're also continuing also to improve our access to managed care. We've been very successful in 2012. Some of the more notable wins in that regard were with Medco, which had a particular -- or reauthorization requirement. They covered 20 million lives, and we were able to have that reauthorization requirement removed. Three of the biggest payers in the country, Aetna, Cigna and UnitedHealthcare, re-upped for Tier 2 status for AMPYRA. And we had several other wins along the way. So we're very pleased overall with our managed care access now.

Looking ahead, in 2013, we are looking to continue to establish AMPYRA as the standard of care for improving walking in MS. We will have increasing presence at consumer health fairs this year. We're also going to be initiating an ePrescribing pilot program, which will help further streamline the reimbursement process for those physicians' offices that participate. And we're also going to be increasing and actually initiating several persistency programs through our specialty pharmacy network. Our drug is distributed exclusively by mail order through specialty pharmacies. So we have over a dozen specialty pharmacies in our network. And what we're finding is that this provides us with a very important opportunity for high touch with our patient population, getting calls directly to them and helping them through any issues they might have, which might otherwise cause them not to refill the drug but which, if they can be addressed, will allow them to persist and continue to benefit.

Now moving from AMPYRA to our pipeline. This is a snapshot of the pipeline, and as you can see, it's shaping up to be one of the more interesting pipelines in the neurology space, we believe. I'm going to cover these in order.

So first, AMPYRA itself. We believe that AMPYRA, based on its mechanism of action for improving conduction in the nervous system and areas that are conduction impaired, may have applications beyond MS. We have a trial in post-stroke deficits. Now, stroke is familiar, I think, to all of you. There are about 7 million people in the U.S. alone who are living with the consequences of a prior stroke, and about 1/2 of those actually continue to have permanent mobility issues afterwards. About 800,000 new people have strokes every year. So this is a growing issue. There's no drug therapy currently indicated to improve function in people with post-stroke deficits. And we have robust preclinical data in animal models of stroke, and this is chronic stroke, showing improved fore limb and hind limb function in a dose-dependent way when AMPYRA or dalfampridine, which is the core molecule, is applied. Now it's very important to realize that we are not looking at acute stroke here. I know in our industry at this point, many of us have a visceral reaction when we hear about stroke, and part of that involves a very marked rolling of the eyes upward, with some good reason. But it's important to realize that what you're remembering is trials for acute neuroprotection and stroke, which indeed are very challenging.

Here, we're talking about chronic stroke or post-stroke. So the patients in our trials are at least 6 months following the stroke. This trial was initiated in the second quarter of last year. We expect it to read out in the second quarter of this year, and it's a double-blind randomized crossover design. These are people with stable, fixed deficits, including walking deficits, at least 6 months after stroke, and in many cases, many years after stroke. So there's no upper limit.

So again, we're taking people not with acute stroke, but with chronic deficits, very analogous to what we already do in MS with the commercial drug, and looking for improvements in those motor functions in upper limb and lower limb. And we're looking at walking measures, upper extremity, lower extremity functional measures as well as global measures. And as I said, we're looking to read that trial out in the second quarter. And if we see a positive signal, we will then proceed to develop that, hopefully, for approval.

We're also looking at adults with cerebral palsy. Cerebral palsy involves damage to the brain, usually due to oxygen deprivation around the time of birth. These results in poor brain myelination and poor conduction in various pathways in the brain that in turn, leads to walking impairment, weakness and spasticity. And in this regard, again, there are some important analogies with the mechanism in multiple sclerosis. There are about 400,000 adults living in the U.S. with cerebral palsy, and again, no treatments indicated to improve their function.

We completed a 10-person safety study. This was just a single-dose safety study last year. And seeing no safety issues, we then initiated a double-blind crossover design trial in a 20-person trial, again, looking for a signal, very much like in the stroke trial, for increased functionality. And we expect results here, also in the second quarter. We originally said the middle of this year, but in fact, I'm very pleased to say enrollment went faster than we originally anticipated. So we now expect that to read out in the second quarter as well.

Moving to Diazepam Nasal Spray. We were delighted to be able to close this deal with Neuronex, Inc. at the end of the year. Just to refresh your memory, this is an intranasally delivered form of diazepam, otherwise normal known as Valium. We originally paid $2.0 million plus $1.5 million in R&D expenses last year to Neuronex for an option to acquire the drug, based on our meetings with FDA and the progress we made during the year with Neuronex and the program. We opted to close the deal and paid $6.8 million additional to do that. We have additional milestone and royalty payments that will be due as we progress with the drug and hopefully get it to market, as you see here.

We're looking for an indication for acute repetitive seizures. About 2.3 million Americans have active epilepsy. And of those, up to 175,000 have breakthrough episodes of acute repetitive seizure clusters, even though they're taking stable doses of anti-epileptic medicines. So in other words, they are not fully controlled on their stable regiments, and they require acute rescue medication periodically.

The standard of care for outpatient treatment of these seizures is DIASTAT. In fact, it's the only approved medication. DIASTAT is also diazepam, but it's delivered as a rectal gel. So it's an intra-rectal administration. And as you might imagine, that has impeded usage widely at the [ph] Community. About 70% of the usage has necessarily therefore been pediatric use, even though the majority of patients who suffer from ARS and who may have this condition are adults.

A nasally-delivered form of Valium, therefore, will be far more practical far more socially acceptable, and we believe it will address a far bigger segment for the market than DIASTAT has been able to address. Right now, if you're not using DIASTAT, then your option is to go to the emergency room, which is obviously extremely inconvenient, especially for someone who's just had a seizure. It's extremely expensive. So we believe that the nasal delivery form is meeting an extremely important unmet need for this very needy group of patients. Our plan is to file an NDA this year based on a 505(b)(2) pathway that will reference the DIASTAT NDA. We've shown that the intranasal form is bioequivalent to the rectal form. We also have an orphan drug designation for acute repetitive seizures. And what we like especially about this product is that it leverages very nicely Acorda's existing commercial organization in neurology specialty sales. So we would not anticipate having significant increased sales expense, other than marketing and promotion, and of course, some cost of goods.

DIASTAT itself went generic about 1.5 years ago. But at the time that it went generic, it had peaked at about $100 million in sales. We believe, preliminarily, that we will be able to do at least as well and probably, significantly better than that, based on the profile of the drug and based on the increased penetration into this population that will be afforded by the intranasal pathway.

We are awaiting some additional data before the NDA, some CMC work that's being done. This is Chemistry, Manufacturing, and Controls. And also just finishing up one last PK study that you can find on ClinicalTrials.gov. Hopefully, if there are no curve balls, there, we'll proceed to file the NDA. And then if all goes well with that, we could be on the market as early as '14.

And that's actually on this slide. I was wondering where it was. I have therefore nothing else to say on this slide, and I'll move to the next slide.

Looking at our additional pipeline. AC105, we acquired this from Medtronic. It is a proprietary formulation of magnesium that has been shown to be neuroprotective, and in particular, to result in marked perseveration of tissue in spinal cord injury animal models, as well as traumatic brain injury models, and not only preservation of tissue, but along with that, significant preservation of function, motor function, in particular. This has Fast Track designation from the FDA, and we expect to begin a Phase II multicenter trial in acute spinal cord injury in the first half of 2013. This is of great interest to the Department of Defense, among others, and we have a $2.6 million contract to help fund the Phase II trial as well. So we're quite excited by this. There is a very lengthy literature on the use of magnesium in the central nervous system. It has repeatedly been shown to be beneficial and to improve function and preserve tissue after these injuries. The problem has been that you cannot get enough magnesium into the central nervous system by administering it peripherally or systemically. This formulation does that. So you can give a reasonable amount peripherally preferably and get high concentrations in the CNS. So we're quite excited by this opportunity.

In addition, we are developing GGF2. Glial Growth Factor 2 is a member of the neuregulin family of growth factors that are related to epidermal growth factor. We have just completed in '12 a Phase I heart failure study. We're looking at heart failure first, although we believe this may have applications in neurology as well. And the very large catalog of published animal data on heart failures show that this molecule is capable of restoring damaged or diseased heart muscle cells to a functional level that appears far more normal in terms of having processed glucose and so on, and resulting in much better cardiac function and survival in animal models. So we will be discussing the results with the FDA before proceeding to our next study.

Our rHIgM22 molecule is an IgM monoclonal antibody. We've been collaborating with the Mayo Clinic for many years on this. This is a very exciting molecule. It has shown an ability to stimulate dormant oligodendrocytes, which are the cells that make myelin in the nervous system, and it causes them to lay down new myelin and repair nerves that have been denuded of myelin, and that's typically what occurs in multiple sclerosis. Right now, there is no approved therapy to repair damage to myelin that has already taken place, so we're quite excited by this. We have filed an IND. The IND is now open, and we expect to begin our Phase I study in MS patients in the first half of '13.

So you can see a very nice pipeline now shaping up all the way from near NDA to Phase I and Phase II clinic.

A few notes on our business development strategy. We are continuing to focus primarily on commercial and near-commercial opportunities that will leverage the strengths of the company. Our strengths are in neurology development and also in neurology specialty sales, and secondarily in specialty sales overall. So if we were to find a commercial or near-commercial opportunity that wasn't quite neurology but that we felt leveraged our expertise in specialty very well, we would consider that also. And that's the range in which we are exploring now. You can see that DZNS was one such opportunity that we actually have now brought in. We're looking at others that are analogous to that. We're open to earlier programs as well. It is not our primary focus, but if we were to find a very exciting opportunity in the neurology space in particular, where we really have our expertise, that offered compelling innovation and value, we would consider that as well.

We'll be -- we will be discussing our year-end financials, our audited financials, at our upcoming year-end call in February. For now, just a snapshot from our last call and the 9 months ended September 30, '12. You can see that our balance sheet is quite strong, and the other numbers here, I won't take you through in detail. You can read them from the slide.

Let's look at our guidance for 2013. We're looking for AMPYRA net sales this year of between $285 million and $315 million. Other revenue, combined of $25 million, that would combine x U.S. sales of FAMPYRA, which is the x U.S. name that our partner, Biogen Idec, sells AMPYRA under, and ZANAFLEX. We continue to have some branded sales of ZANAFLEX, as well as our authorized generic through Actavis, formerly Watson Pharmaceuticals. And it includes about $9.1 million in amortized licensed revenue from our FAMPYRA deal with Biogen.

SG&A at $170 million to $180 million, and R&D at $60 million to $70 million. I should point out very importantly that the increases over last year are by far primarily driven by our DZNS acquisition. So we are required -- we're making some additional R&D investments, as well as market planning investments in DZNS. We think that's obviously very worthwhile for an asset that could come to market in 2014. We do expect to be cash flow positive this year, although not at the level that we saw in 2012, again, related to the DZNS preparations.

So in summary, it was a very productive year for Acorda. We've put ourselves, I think, in excellent position to show continued growth and continued value building over time. AMPYRA is continuing to grow in the current indication. We have some very exciting potential new indications that we're exploring and we'll get more information on in the second quarter.

DZNS has now been added to the portfolio, which gives us a genuine, quite exciting new commercial opportunity that perfectly leverages our existing infrastructure. And our pipeline is now coming of age, and we have several very exciting opportunities addressing large, unmet needs in the neurology space, primarily, now coming into the clinic and progressing into later stages of clinical development. Our business development strategy is focusing on leveraging our core competencies even more, as I've discussed. So it looks to be a very interesting year, and please stay tuned.

We look forward to answering your questions at the breakout session.

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