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AMAG Pharmaceuticals, Inc. (NASDAQ:AMAG)

J.P. Morgan Global Healthcare Conference Transcript

January 9, 2013 11:30 AM ET

Executives

Bill Heiden - Chief Executive Officer

Chris White - Chief Business Officer and SVP, Business Development and Corporate Planning

Frank Thomas - Executive Vice President and CFO

Analysts

Geoff Meacham - J.P. Morgan

Geoff Meacham - J.P. Morgan

Good morning and welcome to day three of the 31st Annual J.P. Morgan Healthcare Conference. My name is Jeff Meacham, I’m the biotech analyst here at JPMorgan. It’s a pleasure to introduce AMAG Pharmaceuticals and speaking on behalf of a AMAG is CEO, Bill Heiden. Bill?

Bill Heiden

Thank you very much, Geoff. I thank the team at J.P. Morgan for having us at this important healthcare conference.

Disclaimer, that I will be making some forward looking statements, so I’d like to call your attention to that in this particular slide. Let me jump to 2012 AMAG results and highlights. It was really a seminal year for AMAG. We put Feraheme on a solid growth trajectory driving 17% volume growth and improving net revenues per gram. We submitted our sNDA for the broader label and initiated launches outside the U.S. through our partner to Takeda Pharmaceuticals.

We downsized and stabilized the organization creating a strong base on which we’re now ready to build by acquiring additional assets and financially the Company is now stronger with a leaner cost structure, we continued to deliver growing top line revenue numbers.

I’m proud of our accomplishments of 2012 as we’re making tangible progress on our goals to build a profitable multi-product specialty pharmaceutical company. This slide provides an overview of the company, but I actually prefer to show you a more visual version of how we are building at AMAG.

In this slide you can see that we’re building off a base of a commercial infrastructure of more than 50 highly effective field sales people, an experienced management team that knows how to execute. We recently announced the addition of Greg Madison to our executive team. Greg is a commercial executive with 15 years of experience at Genzyme, Santa Fe.

We have a strong balance sheet with more than $200 million in cash and investments and no debt. We have FDA approved product called Feraheme, which has four distinct growth opportunities. We currently market Feraheme in the U.S. for IDA associated with CKD, iron deficiency anemia associated with chronic kidney disease. We recently applied for an expansion of that label to include all patients with IDA who cannot tolerate oral iron.

We believe that there’s a significant opportunity for market expansion and I’ll be talking about that more in a few moments. And we began our ex-U.S. launches last year and those will continue throughout the year this year.

With a commercial team in place, we have, that’s proven its effectiveness with the success of Feraheme, we’re now pursuing a strategy to use some of our cash to acquire additional products to accelerate our transition to a profitable specialty pharmaceutical company.

Now I’ll start with a brief overview of our U.S. Feraheme opportunity and our performance to date. The current U.S. non-dialysis IV iron market is about 800,000 grams per year, which in Feraheme dollars is about $400 million market.

Today we compete for about half of this market with those patients with IDA associated with CKD. We focus our sales forces promotional efforts calling on hematologists and oncologists who administer about a third of the IV iron that’s given in the U.S., here shown in green as well as the hospital IV infusion centers and those grams are located in the light blue portion of this chart.

The patients themselves are referred to these sites of care to receive their IV iron from many different specialty groups. We believe that these 800,000 grams are really just the tip of the iceberg. Today we compete in the existing IV iron market for CKD and that equates to about 250,000 patients this top dark blue on the triangle. This equates to about 400,000 grams or about $200 million market per year.

Then there are another 1.6 million anemic CKD patients who are diagnosed and have likely tried oral iron, which doesn’t work for many patients. Many, many of these patients live with chronic anemia and I’ll show you just how bad those patients feel in just a moment.

Let’s talk first about Feraheme’s performance today in the U.S. On this graph you can see that our market share in blue and we highlight our Q3 performance which has grown nicely over the last four years since launch. This success is due to the quality of our product, our commercial team, the AMAG sales force by the way has the largest share of voice in this market providing consistent educational support to physicians where our competitors have either cut back or disappeared.

Today our market share has grown to 26% of the dollars in this market, which is about a 14% share of the volume of this 800,000 gram market, so good results to date but plenty of room to grow.

So why has Feraheme performed so well? IV irons have historically been associated with a difficult dosing schedule paradigm. These IV infusions are administered in 5 to 10 infusions over a month with each infusion lasting up to an hour. Some of the products also have black box warnings associated with the safety of those products. Feraheme is different.

Feraheme has many benefits, but these benefits can be summarized easily, as easy as one, two, three. Due to Feraheme’s unique formulation one full gram of iron can be administered in two short infusions under a minute divided by three days, easy as one, two, three; easy for physicians, easy for nurses and easy for patients. I believe it’s a best in class product and our customers seem to agree.

We achieved strong double-digit volume growth in 2012 versus 2011 across our key customer segments highlighted by color in this graph. Our fourth quarter volume share of 14% was driven by a 26% share of the hem/onc segment and a smaller share of the hospital segment of about 9%, but a segment that we’re growing very quickly our growth is now exceeds 30% quarter-on-quarter and it’s the fastest growing segment for Feraheme.

Finally, we continue to maintain a strong share in the smaller nephrology segment so, excellent performance for Feraheme in 2012 but again room to grow in our current indication in 2013. And so as we lookout even more room to expand Feraheme.

We filed an sNDA in December 2012, for the broadening of our approved label, which we believe would double our market opportunity within the existing IV iron market to $400 million. And the potential for market expansion in the [oral] cause IDA market is even larger than the CKD market with more than 2.4 million patients diagnosed with anemia and having tried oral iron therapy.

Importantly, as this market expands and more patients get referred for IV iron, they’ll be referred to the same sites of care that administer IV iron today, the hem/onc offices and the hospital outpatient clinics. And these are the exact same sites of care where our sales force is focused today and where we have a growing market share, so let’s quickly review the broad IDA Feraheme program.

We completed our 1400 patient global Phase 3 clinical program for Feraheme last year and both pivotal trials one versus placebo, one versus active comparator were very successful. Achieving primary end points with high statistical significance and doing so with no new safety issues. And we submitted the sNDA to the FDA just before Christmas.

We estimate that our partner in Europe Takeda Pharmaceuticals will submit their IDA submission in the first half of this year. We anticipate that the U.S. approval should come before year end and the EU approval in 2014 which would trigger a significant milestone payment from Takeda.

We have previously released the results of our registration trials and recently presented those results in more detail at the American Society of Hematology Meeting in Atlanta. I’d like to now show you one slide that really drives home the clinical benefit for those patients who suffer from Anemia.

Across both trials we saw robust increases in hemoglobin in this placebo controlled trial, 1 gram of Feraheme resulted in an average 2.7 gram hemoglobin rise. And all these patients had tried oral iron before, but either couldn’t tolerate it or didn’t receive the intended clinical benefit.

Not only did we see improvements in the hemoglobin but Feraheme treated patients also received interesting clinical benefit that we captured these patient reported outcomes or PROs where we assessed clinical benefit. We saw statistically significant improvements across each measure, measures using validated instruments of fatigue energy and vitality. To put this data in perspective, on the first measure of, fatigue, using a validated instrument called facet fatigue.

These anemic patients reported pre-treatment fatigue levels seen previously in the studies of anemic cancer patients on active chemotherapy. And the majority of these patients where otherwise young healthy women and you can see that anemia clearly had a negative impact on their life, and the improved scores reported at 5 weeks post Feraheme treatment were similar to those reported in the normal healthy population.

These data are very important, not just to support the approval of Feraheme for the broad IDA label but also we think as we think about the many anemic patients who are placed on oral iron therapy fail and simply remain anemic.

Of the more than 4 million anemic patients where oral iron therapy is recommended many are currently under the care of a specialist such as an OBGYN, a gastroenterologist, a rheumatologist who today, don’t think of IV iron as a treatment option for many of their patients. And market research indicates that for the patients who are unable to tolerate oral irons the most common solution is keep trying.

We believe that this is a big opportunity for Feraheme today and even more so late this year assuming approval of the broader IDA label. As we think about the various specialists who manage these patients and the typical patient profile, we’ve been studying where the best opportunities lie for Feraheme so that we can focus our resources on where we can most effectively expand the market for Feraheme.

While each market is interesting for different reasons. I’d like to focus in on one segment to give you some of the insights as to why we believe the gastroenterology segment is especially interesting.

In terms of patience we see chronic iron deficiency anemia across a number of patient types in gastroenterology for example, patients who suffer from inflammatory bowel disease and patients who had bariatric surgery, many of whom suffer from chronic anemia and a great difficulty tolerating and/or absorbing oral iron.

These 300,000 anemic patients represent an opportunity for Feraheme and we know from primary market research that today only a small minority of these patients are referred for IV iron, even though they’re excellent candidates for treatment. And you can see on the right hand side, these patients are treated by a relatively small and focused group of positions specialist.

For example, there are only a 150 IBD centers in the United States. Many of these centers are located in the hospitals that our existing sales representatives already call on. These two patients population alone represent about a $250 million Feraheme sales opportunity. Many of these patients are currently living with chronic anemia and with all the adverse effects of their lives that I showed you just a moment ago.

And as we’ve shown in our recently completed clinical trials Feraheme, pending approval for this indication, has the potential to help these patients. So how do we approach the market expansion? We’re now on the pre-launch planning phase, where we’re working to really understand this market segment. Conducting market research, advisory boards, meeting with key physicians in these specialties, as well as initiating contact with patient advocacy groups to really understand the patient perspective.

We’re also preparing to make presentations and publish our clinical data from these patients subgroups. During launch mode later this year, assuming approval for our sNDA, we’ll then begin to actively educate the broader group of physician specialists, using our own existing sales force or a co-promote with a company or a combination of both.

So, lots of opportunity for Feraheme growth in United States and our international expansion continues a pace with several launches taking place last year and more expected across Europe this year. Our partner Takeda Pharmaceuticals has done an excellent job of executing a well designed launch plan and we expect their success to drive increasing royalties for AMAG as well as future milestone payments.

So, as we think about the longer term revenue opportunity of Feraheme, we consider our current CKD indication, international expansion, the label expansion for oral IDA and the market expansion opportunity that I just discussed.

Over the next few years we expect to drive Feraheme revenues to $250 million or more annually. And with Feraheme firmly on its near and long term revenue growth trajectory I’d like to touch on our portfolio expansion initiative which we began in the second half of last year.

We are focused on acquiring commercial products to complement our Feraheme business and leverage our commercial infrastructure. We’re targeting relatively modest products up to $60 million in annual revenue, and we’ve made good progress over the past several months evaluating many different opportunities, passing on many and focusing our work on those assets that we believe, have the best potential for future revenue and profit.

I obviously can’t give you much detail at this point and exactly what we’re looking at, I can say that we recently signed an exclusive negotiation arrangement whereby we are the sole player engaged in negotiating rights for a U.S. commercial asset. And so we’re actively in the hunt and an optimistic that we will conclude one or more transactions this year.

I’d like to now review some of our preliminary results for Q4 as well as full 2012 and to provide some guidance for our numbers in 2013. We estimate that 2012 fourth quarter total revenues will be just over $21 million representing a 43% increase over Q4 2011. Feraheme U.S. products revenue grew 14% in dollars versus Q4 2011; operating expenses were lower by just over 30% versus Q4 2011. Our cash and investments were only slightly changed versus our ending cash and investments of 2011.

For the full year versus our guidance, we came in right on target with our recently revised and increased guidance for net full year Feraheme U.S. revenues, of $59 million. Our operating expenses also came in at our revised guidance number an expense estimate that we recently revised downward based on aggressive cost management of the company or $89 million for the year and our end of year cash balance was also on target with our previously issued guidance so solid top line growth; very good expense management in 2012.

Before moving on I would like to focus on a one element within our revenue numbers and specifically say a word about net revenues per gram. This slide depicts, our net effective price per gram for the last few quarters, that is the revenue that we realized per gram of Feraheme sold.

The figure is impacted by a number of factors including our gross price, the discounts our rebates, the mix of our business, et cetera. But since launch our net revenues per gram have been steadily declining every quarter. And so our dollar growth was constantly watered down by declining revenue per gram. I’m happy to report that we reversed that trend starting in Q3 2012, driven in part by our first price increase ever, which we took in the second quarter of 2012, followed by another small price increase in Q3.

We saw the benefits of these actions continue in an increasing net revenue per gram in the fourth quarter of 2012. Along with increasing net revenue per gram it’s worth mentioning that we’re also seeing an improvement to our average selling price or ASP, which is the basis of reimbursement for many of our customers. Our ASP increased for the first time ever, in the fourth quarter of 2012.

And we’ve also seen it increased in the newly released Q1 2013 number, we recently instituted a small price increase as of January 1st and combined with some recent changes to our contracting strategy project that we will see a rising net revenue per gram moving forward multiplied by increasing volumes.

I’d like to now close our presentation with a look forward to 2013. And first, I’ll look at our cash flow trajectory. In 2012 we would have used approximately $35 million of cash had it not been for a large approval milestone we received from Takeda.

In 2013 we plan to continue to close the gap towards profitability with rising sales and continued, sound operating expense management and we anticipate closing the gap by Q3 of this year. And then assuming approval of the broader label indication in Q4 we do plan to step up our investments in Q4, the benefits of which would be largely realized in 2004 and beyond when -- as we see significantly higher sales.

This slide is really just for illustrative purposes and let me go to the actual guidance that we have for 2013. We forecast total revenues of between $73 million and $77 million, driven largely by U.S. Feraheme sales and those are in dark blue in the graph on the upper right side of this slide.

Feraheme sales of $63 million to $67 million so we expect Feraheme sales in 2013 to accelerate, growing nearly 20% versus prior year performance and that’s before the accounting adjustments that took place in 2012. This growth will be driven by double digit volume growth and increasing net revenue per gram.

Operating expenses are forecasted between $78 million to $82 million and approximately 10% reduction versus 2012 and we plan to continue to reduce spending in R&D, while at the same time making some new investments in Feraheme as we prepare for the potential launch of a new broader indication.

Cost of goods are anticipated to come in lower than 2012 approximately 14% to 18% of revenue and finally we expect to end 2013 with over $200 million in cash and investments not including any cash that we may use to acquire additional products.

So in closing we truly turned a corner with our accomplishments of 2012, stabilizing and strengthening the company in terms of human resources, U.S. commercial success with Feraheme, submission of the U.S. sNDA for the broader IDA indication and now international launches in Canada and across Europe. We delivered strong revenue growth and a new streamlined, lower cost structure to head into the New Year.

And now, on the right hand side of this slide, we’ve established a new set of ambitious business goals for 2013 achieving accelerated growth for Feraheme in the U.S. and our current CKD indication through volume growth and increasing net revenues per gram, with our sNDA submitted we’re now targeting potential approval in Q4, 2013, in fact we expect to receive a formal FDA acceptance notification this quarter we continue to work on concluding one or more business development transactions this year and we’re preparing for launch of the broader IDA indication and those preparations will accelerate as the year goes on.

And finally we’ll be working very hard once again to meet or exceed the financial guidance that we presented here today. And with that I’ll end my prepared remarks I want to thank you very much for your time and we’ll be taking a Q&A across the street, excuse me, across the hallway in the Georgian Room. Thank you. Thank you very much for coming to the Q&A session. We are just going to go ahead and open it up if you have questions. You could raise your hand and then, sure, right over here.

Question-and-Answer Session

Unidentified Analyst

You mentioned (inaudible) quite a negotiation for NASDAQ (inaudible)

Bill Heiden

Sure. So the question relates to the comment I made around an exclusive negotiating agreement that we have with a party and some question about the detail of that, obviously, we can’t provide too much. But I’ll ask Chris White, who is our Chief Business Officer, in charge of business development perhaps to make a comment.

Chris White

Sure. And just sort of build on Bill’s comments during the presentation, we’re obviously very focused and have been for the past six to eight months to build on our portfolio. We intend to do so in ways that synergize with our current commercial and promotional focus, which obviously is very targeted to hematology, oncology segments and hospital segments.

I think Bill laid out the criteria that we’re working against the type of product and the size of product, and I guess what I can say about the specific comment is that that’s a good -- illustration of the type of work that we’re doing. I think that we’re very confident that this year we’ll execute one or more transactions with commercial products to further round out our commercial portfolio.

Bill Heiden

Okay.

Unidentified Analyst

Specifically, on that how long it will take for (inaudible)?

Bill Heiden

Your question regarding, how long this difficult transaction take or how long this transaction take in this case with some negotiation agreement?

Chris White

I think once you get to this stage things can move very quickly both parties willing, it’s often difficult to provide specific timeframes. But I would emphasize that our goal is very specifically to execute one or more transactions this year with commercial-stage products.

Bill Heiden

Other questions, well, right here in the front row.

Unidentified Analyst

You mentioned (inaudible)?

Bill Heiden

Sure. So, just asking a question regarding some more details around the gastroenterology opportunity, is that the only opportunity or the other segments interesting and what is the potential clinical benefit for these patients?

So let me start by saying gastroenterology is not exclusively the only segment we’re interested in. So we’re interested in the other segments of rheumatology, OBGYN, cardiology, they are also quite interesting.

I wanted to give today a little more detail about one of those segments and I chose gastroenterology, because particularly interesting. Primarily because and I used two examples of IBD patients or patients who had bariatric surgery.

You recall that our trials and the requested label that we’ve gone to the FDA with is all IDA for patients who have failed or cannot tolerate oral iron, turns out that this particular patient group is particularly not appropriate for oral iron. They can’t take it. They can’t tolerate it. And they certainly can’t orally absorb oral iron.

So, an obvious opportunity. Gastroenterologists do use in their offices IV infusions, many of them. So perhaps that’s also an opportunity that they would use IV iron in the office as opposed to refer those patients.

The specialist community that treats those patients is fairly narrow. So, from a commercial point of view fairly easy to get to, fairly concentrated patient pool, but it really is only an example, the other patient pools, the specialists are also interesting for different reasons.

In terms of the particular clinical benefit of those patients, we haven’t disclosed publicly the individual sub-segments. We are preparing to present data at the upcoming DDW, the Digestive Disease Week, where we’re going to look a sub-segment of our 1,400 clinical patients -- clinical trial and look only at the gastroenterology patient.

But I can tell you that the benefits that we’ve seen, the rises in hemoglobin, the improvements in fatigue, energy, vitality are similar or better than what we’ve seen in the entire patient population.

So the data is going to be very, very compelling and again, for these particular patient types where oral iron therapy is just not appropriate, these patients suffering from anemia really don’t have another treatment option.

Unidentified Analyst

(Inaudible)

Bill Heiden

Why wouldn’t they be using the other IV irons? We think in general and market research supports this that many physician specialists who don’t focus on hematology or IV iron have an old view of IV irons. They perceive IV irons as 10 infusions, hour long, over a month, black spot warnings.

They simply don’t know about Feraheme, as easy as one, two, three and we believe that if we can get the message out about this new option for their patients, if we can communicate how badly these patients feel who are living with chronic anemia and how good they can feel that that will be compelling for them to refer a higher percentage of their patients.

Unidentified Analyst

(Inaudible)

Bill Heiden

Do we currently have…

Unidentified Analyst

(Inaudible)

Bill Heiden

Very little, there is very little actual IV iron administered currently by gastroenterologists.

Unidentified Analyst

(Inaudible)

Bill Heiden

So the -- I imagine the doses are similar an average anemic patient uses about 1.5 grams of iron in a year. We calculate that these 300,000 patients, just these two small segments are worth about $250 million in terms of our annual revenue opportunity. The current market that we compete in just for comparative purposes is about $400 million. So it’s a big growth opportunity and we’re just talking about a sub-segment within gastroenterology. So it’s quite large. The growth opportunity -- the market expansion opportunity is quite big. Yeah?

Unidentified Analyst

You mentioned some of the quantitative metrics around the acquisition (inaudible)?

Bill Heiden

Sure. So the question is regarding some of the quantitative analytics that we’re applying to the business development opportunities?

Chris White

Just to build on that a little bit, I think as Bill mentioned in the presentation, what we’re focused on are commercial opportunities that many larger companies might consider modest in size, in that roughly $10 million to $60 million an annual revenues.

And how we go about getting those assets whether it’s through a licensing initiative or through M&A, or whatever means. Our intent is to own these products and commercialize them on our own.

I think it’s very difficult to go into other financial metrics. I mean, obviously, we’re sensitive to COGS and then and gross margin and all those things are taken into consideration. And in terms of, again to emphasize, what we’re looking for is commercial assets so things that could be immediately additive to earnings.

Unidentified Analyst

(Inaudible)

Bill Heiden

Okay.

Chris White

It’s hard to take these things in absolute. But we really would like to do is fully leverage the infrastructure, the 50 people that we have in the sale -- in the field today, the current focus on hematology, oncology which is very extensive and our focus in the hospital setting.

Bill Heiden

Frank, anything you want to mention on the financial analytics there?

Frank Thomas

Well, I think just to add, I think Chris has mentioned most of it. But, certainly, any commercial product that we think we’re going to add, we believe there’s going to be synergies that we can capture on day one. So we do expect it to be accretive to earnings obviously day one.

Aside from really cost of goods and potentially some additional marketing spend. We -- a number of the opportunities that we’ve looked at and are looking at wouldn’t require any other OpEx expenses. So you can -- you would expect in those situations that we could drop more than 50% of the topline right to the operating margin line.

Bill Heiden

Just to think a little bit more broadly, we were mentioning gastroenterology. As we’ve done research around the market expansion opportunity, it does open up interesting longer term opportunities for example, there were a company out there that had an asset in gastroenterology and had a sales force calling on gastroenterology, that would be quite interesting for us even in terms of an acquisition candidate, if it were an interesting product with a growth opportunity, because we could perhaps combine the companies, strip out huge part of the overhead but also have a huge benefit to Feraheme in terms of market expansion through a gastroenterology focused view force.

So we also -- are also thinking bigger and broader as we go forward, as well as some of this baseball parlance, singles or doubles that we could hit with a fairly simple product acquisition. Please, at the back here.

Unidentified Analyst

Yeah. I just wanted go two questions.

Bill Heiden

Sure.

Unidentified Analyst

So, I think, I start practicing an oncology (inaudible)?

Bill Heiden

You are going to give me his name, okay?

Unidentified Analyst

So actually our oncology as far as biggest use (inaudible)?

Bill Heiden

All right. I’ll buy you a coffee after I’ll answer?

Unidentified Analyst

(Inaudible)

Bill Heiden

Okay.

Unidentified Analyst

So I was thinking. I agree with you that GI and GI general practice and OBGYN are the big things. And traditionally these have always been given in oncology offices.

Bill Heiden

Yeah.

Unidentified Analyst

And the hospitals, at least our hospitals (inaudible). And I think the opportunity in GI is they already have always being (inaudible) endoscopy suites that already have nurses, they already have people plugged in (inaudible). It wouldn’t be a big stretch (inaudible).

Bill Heiden

That’s right. Right. I think you’re right.

Unidentified Analyst

But then you have to do it outside of the context of whether they’re going to get a colonoscopy or endoscopy. It’s just a separate little set-up. So is that kind of your intention, as opposed to getting these people referred (inaudible)?

Bill Heiden

No. It’s a good question. I’m agnostic to be honest with you. Our interest is to ensure these patients get treated and they get treated with Feraheme. If a gastroenterologist wants to use an IV iron, wants to use Feraheme, obviously, we would help him do that.

Unidentified Analyst

(Inaudible) What would the finances be?

Bill Heiden

These are all buy and bill products and so the current reimbursement environment runs from Medicare patients, which are reimbursed at ASP plus 6%, all the which, the commercial payers which are -- reimbursements are different. But these physicians are buying the product and then being reimbursed for the product, plus an administrative fee and then they also get paid for administration. So economically, I think it’s a reasonable type of infusion for physicians to do. But that’s not obviously the primary driver.

The primary driver for us is that what is sad is that many of these patients simply live with chronic anemia. They just get up every morning and feel like a cancer patient on active chemotherapy and it’s a shame. And the reason those patients live that way is because they tried oral iron, they can’t tolerate or can’t absorb it. So they stop taking it and just live with anemia. They’ve never been offered the option, hey, if you’d be willing to go to my colleague, a local hematologist, a couple of days next week to get an IV infusion of Feraheme and your anemia problems would be resolved.

The patients just haven’t been offered that option. One of the reasons, they have been offered that option is because we haven’t been able to get out of these specialist to let them know about the availability of Feraheme as a treatment option. So lot of this is education and obviously that’s what we do in this industry. And so I think it’s a big opportunity.

You can actually draw on the analogy from when we initially launched Feraheme in -- for it’s current indication in CKD. The nephrologists, there is a small number of nephrologists that currently administer IV iron in the practices but many of them do still refer patients to the heme/onc practice or to a hospital. So I think we think the gastroenterology market could be very similar but we do want more referrals, more identification, more diagnosis.

Unidentified Analyst

I guess, what I’m saying will be more direct (inaudible) next level of referral to do it in the endoscopy suite. If you could set up a program for them, this is how you can do it, everybody comes in on Monday for their shots.

Bill Heiden

Right.

Unidentified Analyst

(Inaudible) get reimbursed.

Bill Heiden

We absolutely could. And by the way, there are a large group, a large percentage of gastroenterologists who do today IV infusions, buy and bill products in their offices. So for those physicians, my guess is they will come onboard fairly quickly.

For the other physicians, again, I’m agnostic. If they want to do it, we’re happy to help them. If they don’t want to do it we are happy that they continue to refer.

Unidentified Analyst

So the next would be, another question I had is, so we’re in a two -- Phase II trial, the Phase II trial you just reported. What was the incidence of that lactic reaction which just always comes up?

Bill Heiden

Right.

Unidentified Analyst

So there’s kind of a lactic reaction, then they just kind of reaction (inaudible). So what is the incidence (inaudible)? Did you find providers not wanting to continue?

Bill Heiden

No. So to answer your last question, was there any issue? These were -- none of these were surprising. Obviously, these are known reactions to IV iron. And the physicians that we work within our clinical trials are all very experienced hematologist/oncologists and infusion centers.

I don’t recall, honest, the number off the top of my head but they were similar to what we’ve seen in previous clinical trials, similar to what we’ve seen in usage. Now, four years post-launch, we now have something like 0.5 million exposures to Feraheme in the United States and there has been no change to the safety profile.

Unidentified Analyst

(Inaudible)

Chris White

0.2%.

Bill Heiden

In our current label, in the CKD studies, 0.2% of patients experience some sort of serious hypersensitivity reaction. Yeah?

Unidentified Analyst

So the competitive landscape is set to evolve probably in the next year or so, that’s something we are discussing. Any competitor can tell from you guys with regards to where (inaudible) stands with its (inaudible) facility and the launch of (inaudible).

Then to layer that on, can you gain share in Europe without a broad idea label against those guys? And the second part would be, how do you guys and (inaudible) compete with you in the U.S. if they (inaudible) knowing that they are, I believe, one infusion rather than two and knowing that they are not (inaudible). A lot to think about, but I assume -- and I’m not saying that’s not what I believe, but that’s the common…

Bill Heiden

Sure. So the broad question was regarding new competitors coming to the market in the U.S. and we don’t have any additional information other than what’s been published. Lots of rumors, I could tell you all kinds of rumors that we hear but no new official information. Our anticipation and we’re preparing as if there is a competitor coming, and one of the -- I think a silver lining to this is that if there were two active competitors out there talking about IV iron, that the market would grow. We are talking about market expansion.

And one of the great things that you see in our industry is where there are more than one competitor talking about something, the market tends to expand. So we view that as a potential positive. In terms of the specific profile of Injectafer, a lot of that is going to be determined by the FDA and by the ultimate label. You obviously are informed and so you know some of the issues in terms of a dosing regimen which is not the norm, 1.5 grams, when the standard is 1 gram.

You know about the incidence of increased hypophosphatemia. I don’t know what that’s associated with. So I think there are some questions that people have asked us and again, we don’t have any insights. We read what’s published. We’ve read the original FDA review of the product and I think you have to read those and then make your own conclusions.

But for us, we’re assuming that there will be a competitor. We are out there now being somewhat offensive in terms of thinking about a potential competitor. But I really do believe that if we had another active competitor out there talking about IV iron that the market would expand.

Unidentified Analyst

Did they have anaphylaxis (inaudible)

Bill Heiden

I assume they do. All IV irons are associated but again I haven’t seen any published reports. Much of what we have seen has been through the reviews that have been written by the FDA.

You asked about Takeda in Europe. Takeda has launched the product in Europe in several markets and continues to roll out launches. And so they and we believe there is an opportunity, a very nice commercial opportunity for ferumoxytol or Rienso as it’s known in Europe.

So those launches are taking place. And as I mentioned this morning, we expect that they will be filing for the broader IDA label in the first half of this year. And so expect approval in Europe sometime next year.

Chris White

And in terms of the product’s competitive profile in Europe, a significant portion of the market in Europe is now geared towards pre-dialysis and the dialysis segment. So it’s a very competitive label in Europe. It will be additionally beneficial when the label expands to the broader IDA label. But the product’s profile, the dosing and administration schedule and all of that is very competitive for the European market.

Unidentified Analyst

You guys have two doses five times a day and (inaudible)?

Bill Heiden

In Europe. In Europe. Unlikely that they will get that label in the U.S. based on the data that we’ve seen.

Unidentified Analyst

(Inaudible)

Bill Heiden

Sure. In Europe, this product (inaudible).

Chris White

Ferinject.

Bill Heiden

Ferinject. Thank you. In Europe, it is 1 gram. It’s one injection, 1 gram. In the U.S. what’s most recently been studied is 1.5 grams. It’s actually 2.75 injections to equal 1.5 grams. And so in Europe, they have a label which I’m guessing will be different than what they ultimately receive in the U.S. if they get approval. Any other questions? Great. With that, we will close the Q&A and again thank you very much for coming.

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