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Ligand Pharmaceuticals Incorporated (NASDAQ:LGND)

Q4 2012 Earnings Call

February 13, 2013 05:00 PM ET

Executives

Jennifer Capuzelo - IR

John Higgins - President and CEO

John Sharp - CFO and VP of Finance

Matt Foehr - COO and EVP

Analysts

Joe Pantginis - ROTH Capital Partners

Gene Mack - Brean Capital

Carol Werther - Summer Street Research

Irina Rivkind - Cantor Fitzgerald

Ed Arce - MLV & Company

Nick Farwell - Arbor Group

Operator

Greetings, and welcome to the Ligand Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

And it’s now my pleasure to introduce your host, Jennifer Capuzelo, Investor Relations for Ligand. Thank you, Jennifer. You may now begin.

Jennifer Capuzelo

Thank you. And welcome to Ligand’s fourth quarter financial results and business update conference call. Speaking today for Ligand are John Higgins, President and CEO; Matt Foehr, Executive Vice President and COO; and John Sharp, Vice President of Finance and CFO.

As a reminder, today’s call will contain forward-looking statements within the meaning of federal securities laws. These may include but are not limited to statements regarding intent, belief or current expectations of the company, its internal and partner programs including Promacta and Kyprolis, and its management. These statements involve risks and uncertainties and actual events or results may differ materially from the projections described in today’s press release and this conference call.

Additional information concerning risk factors and other matters concerning Ligand can be found in Ligand’s public periodic filings with the Securities and Exchange Commission, which are available at www.sec.gov.

The information in this conference call related to projections or other forward-looking statements, represents the company’s best judgment based on information available and reviewed by it as of today February 13, 2013, and do not necessarily represent the views of GSK, Onyx, or any of our other partners.

Ligand undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.

At this time, I’ll turn the conference call over to John Higgins. John?

John Higgins

Jennifer, thank you. Thanks for joining our all and welcome, 2012 was a very transformation year for Ligand and truly an outstanding one as well. We turned profitable and cash flow positive on an operating basis in the fourth quarter. We had strong business execution and good management of operations and we enjoyed a remarkable series of highly significant and positive developments for the company.

Fourth quarter financial performance was especially strong and John our CFO will go into that in more detail in just a moment. You will see in our reported financials GAAP accounting requires us to record a noncash charge for the estimation of a CVR liability. Now the amount of the contingent expense has gone up due to the increased positive outlook for particular assets. But I want to be clear it has no impact on Ligand directly. Accordingly we are helping investors and analysts understand our true operating performance by backing out those numbers. Now over the past 12 months, we have evolved from a smaller lesser known under followed company to a company that we believe now has a true leadership position in the small cap biotech financial markets. We are on the map.

I've been at Ligand now for six years and I can tell you I've never been more excited or confident about our prospects in future. Now if you are on this call, you most likely already know our story, while we possess some highly attractive revenue and pipeline assets, what is most compelling about our company is our business model. This is a financial growth company first. It's built upon a biotech and pharmaceutical programs and it's a company that is dedicated to minimizing the risks and costs associated with typical biotech businesses. Now we held an analyst day in New York in December, if you have not seen those slides yet or the presentation I encourage you to study them. They share our business philosophy and vision for the future.

The core of our message is that a company has not created real value until it has created sustainable cash flow and profits. We think we are at a point in time where we have a very compelling and unique story. When we look at our projected income statement there are five elements that standout. First, the business financials are built around a strong and diverse revenue base. Our main revenue drivers for Ligand over the next few years are Promacta royalties, Kyprolis royalties, Captisol material sales and deal revenue.

But our revenue growth potential is underscored by the fact that we actually have seven products generating royalties for us today, with a potential for six more royalty bearing products to be approved in the next three years.

Second, we enjoy high gross margins, nearly 90% gross margins across all of our revenue on an average basis. Accordingly for every $1 of revenue about $0.90 passes through our income statement.

Third, our expenses are low and very well managed. And now if you exclude non-cash expense, we anticipate spending only about $20 million to run our entire company this year. I will add we are running a sustentative and complex business. One key to our low cost is we only have 21 employees, i.e., this is a very hard working and a highly productive team.

Now fourth, another standout factor with our financials is we have extremely lucrative tax assets. They're valuable to Ligand partly because it is a big number, nearly three quarters of a $1 billion of gross tax assets. but mostly they're valuable because we are now turning profitable so expect to use these tax assets immediately.

And fifth, another strength of our financial story is that we have a low base of shares, about 20 million outstanding which means today for about every 20 million of net income that translates to $1 in EPS. Few shares mean as we drive profits there will be attractive profits attributed to each share. Ligand is in a great place at a great time, we believe we have good visibility on the business over the next couple of years and as a sign of our success in growth we're now looking to invest and add even more assets to the company that can help us continue to drive our growth after the next years. I'll now turn over to John our CFO to review some financial highlight.

John Sharp

Thanks John. I will begin by discussing a few of the highlights from our earnings release and then also cover a few other topics related to the financial health of our business. As you saw from our press release revenue for the fourth quarter were $13.6 million up from $12.5 million last year and slightly better than our expectations as we reported full year revenues of $31.4 million compared to our guidance of $30-31 million. Royalty revenues were higher on continued strong growth of Promacta, material sales and licensed milestone revenues were down slightly compared to last year due to timing of shipments and milestone events. On the expense side our combined R&D and G&A expenses for the quarter were $6.8 million, our combined R&D and G&A expenses for the year were slightly higher than expected primarily due to cost associated with tax planning.

Total combined expenses for 2012 were $26.9 million and that included $6.8 million of non-cash expenses. As John mentioned this quarter we presented our results using non-GAAP financial measures specifically by excluding the effects of the change in our contingent value rights that we mark to market each quarter. Due to the unpredictability and non-cash nature of this item we feel that providing these adjusted financial results is more closely aligned with the way we monitor our business. So on adjusted basis our fourth quarter net income was $3.9 million or $0.19 per share. For the full year on an adjusted basis we reported net income of $1.1 million or $0.06 per share.

Taking a look at our financial guidance for 2013, for the full year we expect revenues to be between $41 and $44 million. We expect combined R&D and G&A expenses of approximately $27 million, including about $7 million of non-cash expenses and we expect cost of goods sold for the full-year to be between 40% and 45% of material sales.

With this outlook, we project a range for earnings per share of $0.35 to $0.39 per share.

On the cash side, we finished the year strong with $15.1 million of cash, cash equivalence and restrict investments up significantly from $8.4 million at the end of the third quarter.

During the fourth quarter, we enjoyed strong financial performance that generated positive cash flow. In addition, we received equity in a publicly traded company and we sold approximately 150,000 shares to our ATM program for net proceeds of $2.9 million.

With our outlook for 2013, we expect our operations will generate significant cash flows which will be used to pay down our debt that begins advertising next month and finally with respect to taxes as I mentioned that our Annual Day in December we have spent the past six months working with our tax advisors to complete tax studies relate to net operating losses and our R&D tax credits.

As a result of those studies, we estimate that we now have approximately three quarters of $1 billion in gross tax assets and due to the nature of these assets we believe that our effective cash tax rate for the next six to eight years will be in the range of 2%.

For book purposes as I have mentioned before, it is a little more complicated. We would expect to record about $0.5 million in tax expense for the next year or so then assuming we remained profitable over the next few years.

We will release our valuation allowance against our tax assets and at that point record a very large tax benefit which as of today would be several hundred million dollars and subsequent to that our book tax expense is expected to be at the statutory rates for about 38% of pretax income.

Again, while we continue to only pay about 2% in cash taxes and with that I will turn the call over to Matt.

Matt Foehr

Thanks John, the quality and value of our portfolio fully funded partnership increases as drug progressed through the development process and we see clear evidence that our shots on gold model is really working and creating significant value.

Just to highlight some of the now our partners as Pfizer announced in Q4 that the FDA accepted for review the NDA for bazedoxifene with conjugated estrogens. This is a potential new medicine for non-hysterectomised women for the treatment of moderate-to-severe vasomotor symptoms in vulva and vaginal atrophy associated with menopause as well as the prevention of postmenopausal osteoporosis.

Pfizer's PDUFA date for this acid is October 3rd of this year, so it’s less than eight months away. The medicines company continues to progress MDCO-157 the Captisol enabled intravenous (inaudible) and reported that at the JPMorgan Healthcare Conference that they're targeting launches in the U.S., Europe and Middle East in 2015, and Lundbeck also reported at JPMorgan that they plan to submit their NDA for Captisol enabled IV (inaudible) later this year. Our partners at Rybax received significant funding late in 2012 and are now well poised to initiate a Phase 3 trial of Delafloxacin in the first half of this year, and while our partners continue to make progress and add value to Ligand's partnered portfolio our team here at Ligand continues to advance our internal R&D programs that we feel can fuel future partnering activities.

We initiated a 60 patient multicenter pivotal trial for Captisol enabled IV melphalan in December and the trial is ramped up very nicely according to our expectations and we plan to complete this trial this year. Conditioning treatment with high doses of melphalan plays an enduring and central role in stem cell transplantation for multiple myeloma and we believe Captisol enabled melphalan could have distinct advantages over the currently available form. It's also worth mentioning briefly that additional data from our previously successful phase 2 trial is being presented at a poster session this evening at the bone marrow transplant Tandem meeting in Salt Lake City.

And the investigators sponsored work being presented tonight suggests that our Captisol enabled melphalan may induce higher remission rates in multiple myeloma patients undergoing auto stem cells transplant. As we discussed previously, this is a very special asset for which we can see a path forward to market it ourselves, that said, we're in active dialogue with multiple (inaudible) oncology players who have expressed interest in partnering now that the pivotal trial is advancing and we're obviously evaluating that interest and the partnering option.

Switching programs now, we also continue to work on our potent (inaudible) bio available small molecule glucagon receptor antagonist for the treatment of type 2 diabetes. What we call LGD 6972. We announced part of the preclinical data last year at the American Diabetes Association meeting and our team is now focusing effort on getting an IND submitted later this year.

Glucagon receptor antagonists are clinically validated in a new class of molecules and we believe our molecule may have significant advantages in potency and other attributes as compared to other glucagon antagonists. Because of this we see 6972 as one of our most promising unpartnered assets here at Ligand and with that I'll turn the call back over to John Higgins.

John Higgins

Super, thank you Matt, so that is an overview of some of the highlights the last quarter or so, we'd like to turn it to the operator to open the lines up for questions.

Question-and-Answer Session

Operator

Thank you, we’ll now be conducting a question and answer session. (Operator Instructions). Our first question comes from Joe Pantginis from ROTH Capital Partners.

Joe Pantginis - ROTH Capital Partners

Couple of things I just want to follow up on maybe dive down little bit more, first, one of the programs you didn’t mention I was just wondering we could get some information on Merck's based program and Alzheimer disease. Have you been able to confirm whether you’d receive a royalty on this program and can you update us on the status of this program?

Matt Foehr

Yes, this is a program we have not talked about a lot previously but certainly does warrant discussion now at our Annual Day. in December we disclosed for the first time that we are entitled to royalty on Merck’s lead based compound that is in phase II, III trials right now for Alzheimer disease, so this is something that really was not prominently on the radar previously for those that followed the Ligand story.

We’re not actively involved in the development but obviously are following Merck's progress we’re closely. just a couple of weeks ago in their Q4 earnings call they highlighted the program again and they’ve been talking about it a lot. They say they’re very excited about it. They’re calling it a potentially transformative candidate in their pipeline and we agree with them, we’re excited about it as well. obviously Alzheimer is a huge global market and having a great partner like Merck putting such significant resource behind the program is important and exciting to see.

In terms of the program status, early last year Merck present a clinical data showing that the lead based inhibitor can lower CSFA beta levels in people by over 90%, I believe it was 92% without having untoward effects and for those that might not follow the science in the space the amyloid hypothesis is really a leading approach for disease modification in Alzheimer's disease. so with that finding that they presented last year, it gave them the confidence that to kick off the phase II, III outcomes trials in Alzheimer's that’s in progress.

Now, they have talked a little bit about general design of the trial and they’ve begun in enrolling initial cohorted patients in mild-to-moderate Alzheimer's disease and they'll look at that for set period of time, look at safety issues and then if the safety issues were clear, that they are expecting a read on that late in the year this year. they’ve designed it in such a way that they can move seamlessly into a Phase 3 trial portion, in the mild to moderate population.

Then also we understand looking at a prodromal population or basically the patients at their earlier stages with mild cognitive impairment that have a higher propensity to progress to Alzheimer's in a short period of time. so they're going to look at that data later on this year, we're obviously cheering them on. Very excited about the program and excited to have that as part of our royalty bearing portfolio.

Joe Pantginis - ROTH Capital Partners

And then just out of curiosity, did you disclose, forgive me if I don't remember, in December what the, or a range of what the royalty rate would be.

Matt Foehr

No, we have not.

Joe Pantginis - ROTH Capital Partners

Okay, understood, and then maybe just a follow up question for John. John obviously the Ligand business model over the last few years has been clear with regard to how you bring assets in. You also alluded to that earlier on the call about adding assets to the company in that potential. I was just wondering if you can add anymore color to that about what you might be looking for and that you are actively looking at things now as a potential, because you certainly have your hands full now as well.

John Higgins

Little bit of a record, last four years we've acquired, we've made five acquisitions and we continue to turn over the stones in the field so to speak for other opportunities. unlike specialty pharma companies or more small cap commercial companies, we don’t have to make acquisitions, we don't have to buy revenue to keep growing. We're focusing on buying technologies or partnered programs and we're finding opportunities in small biotech companies that may have had disappointing data recently, they're looking at fund raising requirements or frankly still have a very, very long time before they can have any financial returns for their investor.

So those are the things we're looking for, technologies, fully funded partnered programs that are embedded into these biotech companies. We're very disciplined, I'll say we don't make promises about deal making, we're very disciplined about structure and value but frankly we do see opportunities out there and it's not just what good deal might be for Ligand but an opportunity for a target company to really combine or merge into the Ligand business model, to leverage our rolodex, our business experience and our overall model. so we are committed to it but again, we don’t have to do acquisitions and we’re being very selective and disciplined in the type of deals we’re going to pursue.

Operator

Thank you. Our next question comes from Gene Mack from Brean Capital.

Gene Mack - Brean Capital

John, I was wondering understanding you sort of on the outside looking in terms of Promacta a little bit in terms of development and label expansion so forth. Wondering if you just remind us what your near term expectation would be for some new data from Promacta in some of the cancer indications where it’s been looked at. Do you have any again understanding that you’re sort of a bit on the outside looking in on this two like the rest of us, but can you just give us a essence of what maybe your expectations might be for this year's ASCA Conference. If there might be anything new there and if not, if you’ve gotten a real clear read on that and maybe just what you might expect would be the next sort of milestones in that development plan? Thanks.

John Higgins

Yes Gene thanks. I’m going to share this answer this Matt. I’ll make just an introductory or kind of an overview remark about Promacta and what it means for Ligand, it’s a very important financial asset and I’ll say a strong relationship with GSK and then I’ll invite Matt’s comment more specifically on trial and/or data that might be coming out.

The product for those who are just learning about Ligand and launched essentially in early 2009, so you’ve got a four-year commercial record but it launched U.S. first and then Europe and now its rolling out around the world, it’s in 92 countries, its approved in 92 countries approved for ITP. so the context I want to give first about the potentially of this product is that it is we think a very significant potential billion dollar plus blockbuster revenue product. In the opportunity, it’s drug that boosts platelets that could be labeled for a whole range of indications. The opportunity for Ligand and especially with GSK marketing it is first to promote it for ITP. These new markets are still being launched and rolled out.

Secondly, we are seeing label expansion and as you know in December, the drug was approved for the use in HSV thrombocytopenia, HCV related patients and we expect a European approval and other territories will be approved later in 2013. So geographies are rolling out, new indications are rolling out.

And thirdly we have a tier of royalty and in 2012 GSK posted over 200 million in royalties which means that now over 200 million we are enjoying a third tier of royalties. So these are just some factors why while it's a young product, it's a growth brand and it's early days.

Now I'd like to turn it to Matt to talk about the other indications. And we think the promise, the scientific promise of this molecule and the other markets is very exciting.

Matt Foehr

Yes, thanks John and Jean thanks for the question. Obviously GSK has been prolific in their timely publishing of data. They've got an active and global real high quality development team working on the program their running dozens and dozens of trials. We've seen them publishing data at ASCO, at ASH, at EHA, the European Hematology association. we expect that to continue this year. so we expect to see more data coming out coming out at those major meetings. Probably the data of most interest and attention MDS, obviously they're running trials in MDS as well as in AML, also we expect to see more data in the chemotherapy induced thrombocyte apnea fields. there was also some work late last year in NIH sponsored study looking at Promacta in a plastic anemia that suggests potential disease modification properties of elthrombopang as well. so we expect to see more data in those areas scattered among probably the ASCO, the ASH and the EHA meeting. probably more to come, but GSK is putting a lot of resource behind it. They've said they've got a high quality team working on it and we're obviously cheering them on.

Operator

Thank you, our next question comes from Carol Werther from Summer Street Research.

Carol Werther - Summer Street Research

The guidance, does that include any new partnerships?

Jack Higgins

No. It's not of any substance and generally best way we approach the guidance is, we make projections on royalty revenue assumptions. We have some insight as to what the orders for Captisol will be, for the next few quarters, and then we do take into consideration expected milestones for deals that are already signed and we don't count all milestones but those that we think are fairly high probability. So that's where we get to the revenue guidance for 2013 of 41-44 million. if there’re new deals and I’m not talking small upfront option or license fees but new deals of any material size would be beyond that range that we’re describing here.

Carol Werther - Summer Street Research

Okay and with the IV Melphalan, do you think you’ll have the result top lined by the end of the year or might you see that there?

Jack Higgins

Yes, we’re aiming to complete the trial this year, so obviously we’re ramping up now. we’ve seen nice enrollments. so we expect to have the trial complete by end of the year, yes.

Carol Werther - Summer Street Research

So the data would be early next…

Jack Higgins

Depending on when we want to publish it either be late this year or early next year.

Carol Werther - Summer Street Research

And then if you would just talk a little bit about the decision on whether or not to partner it or launch it yourself?

Jack Higgins

Sure, I know you’ve done some work on this program it’s a very exciting program, Matt spent some time in his narrative talking about it. We have two options, launching it ourselves and why we’re not a commercial business, we do not today have sale and marketing infrastructure. We are seriously exploring this because the gross margins are very high, we believe that the target market it’s about 200 transplant centers, is small enough that we could variably sell this product with a lean focused commercial team. so that is one scenario and frankly we’ve been considering this ever since we acquired the assets through the CyDex acquisition a couple of years ago.

The alternative course is to license this out to a specialty oncology company and I can plainly tell you that this program, some recent scientific announcements at the initiation of our trials some other data that’s coming out, its garnered a lot of interest by multiple players and we’re now at a process where we’re evaluating various potential deals with a licensee. so we are not committing to path yet, we are not predicating timing for decision or any deal but we do feel that we’ve got some very strong options and frankly it’s driven by the quality of this asset and the fact that a company of Ligand size or certainly any one of these specialty oncology player could variably sell it.

Operator

Thank you. Our next question comes from Irina Rivkind from Cantor Fitzgerald.

Irina Rivkind - Cantor Fitzgerald

I just wanted to expand a little bit on the six royalty bearing products that you expect to gain approval on in the next three years. I think you may be mentioned five of them on the call, but just wanted to make sure that we have visibility on the six. And then the other question I have is just more around Promacta and HCV, and maybe you could comment on any color you may have around reimbursement for that indication or how Glaxo is rolling it out for HCV. Thanks.

Jack Higgins

Thanks Irina. So the six products in the next three years, I'll list them off. First is an undisclosed target partnership, it's a partnership with Merck, Captisol enabled partnership separate from Base and others we've talked about on this call. So a Merck undisclosed Captisol program, we have a partnership with Hospira also for an undisclosed Captisol program. The medicines company with IV clopidogrel, Lundbeck with IV Carbamazepine, Aprela with Pfizer for which the PDUFA data is obviously in October and Rib-X Delafloxacin IV. So those are the six. And the seventh one is Melphalan. We are committing to it as a royalty bearing product because we have not decided to out license it, but certainly within a three year window I believe that Melphalan will enter our picture as a revenue generating asset, whether it's direct product revenue to us or through a royalty relationship.

And then your second question around reimbursement profile for Promacta, obviously Promacta enjoys a positive and competitive favorable reimbursement environment currently, I think it's important to keep in mind that the diseases that it's treating, is it the significant unmet medical needs especially in hep C where these are subsets of patients that really have no treatment options at all. They won't be able to be treated if not for Promacta, so we expect that reimbursement profile to continue. Obviously GSK manages all of that but that's our expectation.

Irina Rivkind - Cantor Fitzgerald

And if I may just a follow up on the six, on the two undisclosed targets. Should we assume similar types of royalty levels that you have on some of your other products, like Kyprolis for those? Thanks.

Jack Higgins

Yes in general I think that's a fairly safe assumption.

Operator

Thank you. Our next question comes from Ed Arce from MLV & Company.

Ed Arce - MLV & Company

Just a couple of follow ups, just wondering if you have any more clarity or can discuss any further, where things stand perhaps with the approval in the EU for Promacta and HCV?

Jack Higgins

Yes, based on the timing around GSK's announcement when they announced the filing last year, we'd expect sort of second to third quarterish timing is sort of the range.

Ed Arce - MLV & Company

Okay. And I realize it's prior to Onyx's release themselves, but is there any qualitative discussion that you might be able to share around the latest sales numbers on Kyprolis?

Jack Higgins

No.

Ed Arce - MLV & Company

No, okay. Just one last on the contingent value rights. I appreciate that these are numbers that you really need to back out to get the underlying trend. Just wondering really if you could just remind us how far out these go and until when could we expect to have these on the books?

Jack Higgins

So for this CyDex contingent value right which is the majority of the numbered, those go through 2016. There are really two triggers to them, one is related to our deal with the medicines company and clopidogrel related to specific milestones being met. And then the other piece is the revenue sharing piece with CyDex revenue in general. And so for the most parts it's just through 2016.

Operator

Thank you. Our next question comes from Nick Farwell from Arbor Group.

Nick Farwell - Arbor Group

Thank you. Just a couple of quick add-on questions if I may. John, how do you value and plan, assume you do eventually, to monetize 620,000 shares of Retrophin if I'm pronouncing that correctly. I realized a very same trader but I'm curious if you have some thoughts on that.

Jack Higgins

Sure. So the stock was issued via our partnership and license agreement with Retrophin. One of the conditions was a reverse merger or some sort of monetization which they successfully achieved at the end of last year. For Ligand it's a tangible asset, it is somewhat of an illiquid company all the way public company. Frankly we are not concerned or focus on monetizing it in the near term. We're very proud equity holders, we're encouraged by Retrophin's development plan for the asset and ultimately this equity could return guided to Ligand if we found, let's say an institutional buyer or some other group that wanted a large block of shares. Retrophin investors or frankly even our investor should not assume that we're going to start to dribble these shares out. That's not the focus. This is a business partnership and we're pleased to have, what is not a trivial equity stake in Retrophin.

Nick Farwell - Arbor Group

And how do you carry it on the books?

Jack Higgins

So it's actually carried, as an investment it will be mark-to-market each quarter based on their trading price.

Nick Farwell - Arbor Group

Okay. And then I'm a little, I apologize but I'm a little unclear what the embedded tax rate guidance you're providing us John for the guidance of $0.35 or $0.39? Are you assuming that there is sort of 2% book and reported rate or mid 30's rate?

Jack Higgins

Yes, for the next couple of years we're expecting about $0.5 million in tax expense, and so that would be built into the '13 guidance.

Nick Farwell - Arbor Group

Got you, okay. And then with respect to Promacta revenues, I realize a lag quarter. Can you provide us with what they were in the fourth quarter that is the December quarter. I realized that will be reported literally for the Q1 '13.

Jack Higgins

Right. A real nice revenue growth story, $62 million is what GSK announced couple of weeks ago and that was up from $57 million in Q3. And Matt might have it handy, but on a percent basis that was up about 70% year-over-year. So obviously solid quarter-to-quarter growth, but year-over-year very impressive growth. And again significantly the HCV indication, it was approved in early December. So by the time you actually rollout a launch and then you hit the year in holidays, frankly we don't really expect much of the HCV uptake to even be reflective in that fourth quarter. But what's exciting for us is that new markets are being added, there is clearly still growth in the existing territories, new indications are coming out and we're heading these higher royalty tier. So it's performing beautifully, we're really excited about it.

Nick Farwell - Arbor Group

On Melphalan, are there no CDR contingent specific to Melphalan other than aggregate sales John for CyDex?

Jack Higgins

That's correct. No, none.

Nick Farwell - Arbor Group

And then last question is, what is your expectation of a commercialization timeline for the product. I realized you haven’t even determined the distribution model yet. But in general would you expect if you get data at the end of this year, positive data.

Jack Higgins

Filing first half of 2014 and it is designated indication, it's an important indication. The question is approval timeline, whether to 6 or 10 months review. So there's a scenario where it could be approved at the end of '14, otherwise should be the first half of 2015 and a launch could happen very shortly thereafter.

Operator

Thank you. At the time we have no further questions. I'd like to turn the call back over to John Higgins for closing comments.

John Higgins

Okay. Well thank you, appreciate the attendance and thanks for the interest over the last several months and quarters. We had great turnout at our analyst day, I alluded to the increase in visibility for the company. A year ago we had three analysts covering us, today we have six and I think the enquiries from investors and invitations to conferences, it continues going up, so what we're excited about that support we value our relationship with investors and analysts and we're going to be on the road a fair amount the next several months starting with the (inaudible) conference, the (inaudible) graciously offered us a one hour presentation slot we're going to have a very robust presentation and I’ll be joined by Nishan DeSilva our Head of Corporate Development and Matt for that. We'll be at the Deutsche Bank conference in May and then Jefferies in June. So if you want to meet with us let us know and we look forward to reporting the year as we progress, thank you.

Operator

Thank you, this does conclude today's teleconference you may disconnect your lines at this time. Thank you for your participation.

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