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Dyax Corporation (NASDAQ:DYAX)

Q4 2012 Earnings Call

February 13, 2013 5:00 PM ET

Executives

Jen Harsey

Gustav Christensen – President and CEO

Rick Berard – SVP, Commercial

Ivana Magovcevic-Liebisch – EVP and COO

Burt Adelman – EVP and Chief Medical Officer

George Migausky – EVP and CFO

Analysts

Joseph Schwartz – Leerink Swann

Phil Nadeau – Cowen & Company

Ted Tenthoff – Piper Jaffray

Serge Belanger – Needham & Company

Operator

Good afternoon and welcome ladies and gentlemen to the Dyax Corp’s Fourth Quarter and Full Year 2012 Financial Earnings Call. At this time, I would like to inform you that this conference call is being recorded and that all participants are in a listen-only mode. At the request of the company, we will open up the call for a brief question-and-answer period at the end of the presentation.

Before turning this call over to Gustav Christensen, President and Chief Executive Officer of Dyax, the company will now read their Safe Harbor Statement.

Jen Harsey

This afternoon, Dyax issued a press release concerning its fourth quarter and full year 2012 financial results. Dyax would like to remind everyone that statements made today reflect current expectations, estimates and projections about the products, programs, collaborations, strategies and financial performance, and are forward-looking statements.

These statements, including those related to Dyax’s FDA-approved product KALBITOR, are subject to risks and uncertainties that could cause actual events and results to differ materially. Important information concerning these risks and uncertainties is contained in Dyax’s press release today, and described or referred to in its most recent Form 10-K and other periodic reports filed with the SEC, and are also available on the company’s website at www.dyax.com.

I will now turn the call over to Gustav Christensen, President and CEO of Dyax. Gustav?

Gustav Christensen

Thank you, Jen. And welcome to our fourth quarter and 2012 earnings call. On the call today we’ll review our performance over the past year, as well as discuss some of the compelling value creating milestones on the horizon for this year. 2012 was another strong year for the KALBITOR business. Behind, KALBITOR we are building a promising pipeline focused on plasma kallikrein mediated angioedema. 2012 was also an important year for our Licensing and Funded Research Program, which began demonstrating its true potential for value accretion following the release of the first positive phase III data in this very deep pipeline of potentially blockbuster drug candidates.

In our angioedema portfolio, KALBITOR continues to show a strong growth trajectory with sales reaching $39.8 million for 2012, the top end of our guidance range. This is a significant increase over 2011 and a clear validation of our commercial strategies.

On a stand-alone basis, the KALBITOR business is cash flow positive. Importantly, if success speaks to the strong presence KALBITOR has within the HAE market. We’ll continue to build on this position in 2013 by adding more treating patients in what remains a relatively under penetrated market.

We will also leverage our position by expanding our angioedema portfolio. Later this year, we expect to file an IND for DX-2930, a fully human monoclonal antibody directed against plasma kallikrein. The goal is to develop a potential prophylactic use in HAE and other angioedemas.

We also moving forward with our suite of diagnostic assays, which will enable us to identify patients, the plasma kallikrein mediated angioedemas. These assays should help us expand the overall treatment market available to us.

Lastly, we have made important progress in identifying and working with partners to make KALBITOR available in markets around the world with the announcement of two new partnerships. Also in 2013, as I mentioned, our Licensing and Funded Research Program is entering an important phase of its evolution. They will be immutable; they will be multiple data read-out throughout 2013 as well as possible regulatory milestones with the LFRP lease candidate, ramucirumab.

For more detail on our accomplishments during 2012 and the very exciting year ahead, I’ll now turn the call over to our executive management team. First, Rick Berard, Senior Vice President, Commercial will discuss our progress for KALBITOR in the U.S., Dr. Ivana Magovcevic-Liebisch, Chief Operating Officer, will discuss our global expansion efforts for KALBITOR, as well as the Licensing and Funded Research Program, Dr. Burt Adelman, Chief Medical Officer, will then discuss our research initiatives in the angioedema portfolio, and finally, George Migausky, Chief Financial Officer, will present our financial highlights and financial guidance. Following these updates I will provide some remarks and then open the line for Q&A.

At this time, I’ll turn the call over to Rick, who will review the progress of KALBITOR in the U.S.

Rick Berard

Thank you, Gustav, and good evening. We had another great year with the KALBITOR business in 2012 and believe that the strong momentum throughout this period will continue into 2013.

The success of our marketing strategies has translated into significant quarter-over-quarter and year-over-year growth. As of December 31, KALBITOR net sales reached $11.8 million for the fourth quarter, a 9.3% increase over the third quarter. For the full year 2012, KALBITOR net sales sold $39.8 million, a 74% increase over the prior year.

These results were driven by KALBITOR’s favorable clinical profile combined with our suite of innovative service and support programs, which are collectively referred to as KALBITOR Care.

KALBITOR Care is designed to achieve a level of individualized care within the HAE marketplace that is distinct and has no equal, one that establishes and maintains strong lines of communication with the HAE community and allows us to provide a valuable, differentiated and complete set of services and support programs.

Among these programs are, the KALBITOR access hub, which focuses on reimbursement, financial assistance and nurse outreach for individual patient education.

Treatment size and production distribution options, including Patient Supply Drug and KALBITOR Home Infusion Services, genetic counseling and support for HAE diagnostic testing in physician and patient education programs. Of these programs KALBITOR Home Infusion Services deserves particular attention and it has been well received by patients, physicians and payers Dyax has developed a unique perspective for how patient to manage and treat their attacks, allowing us to adapt our patient programs to more fully fit the needs of this community.

This feedback is important, as we continue to grow the KALBITOR business. There remains a great opportunity within this market as approximately 60% of identified HAE patients are still not benefiting from novel therapies. Dyax is uniquely positioned within this market and we planned to capitalize on this position in the coming year.

Our key goals in 2013 are to; grow the HAE market, to provide our education in patient identification and treatment, promote awareness of our KALBITOR HAE programs including the benefits of our add-home services in the value of keeping a trained healthcare professional in the treatment equation. Optimized access to KALBITOR by working to ensure its coverage and further increase payer penetration and focus on long-term patient experience and retention to KALBITOR Care, as well HAE community outreach.

At this time, I would turn the call over to Ivana to discuss our global commercial efforts with KALBITOR and to discuss the LFRP portfolio.

Ivana Magovcevic-Liebisch

Thank you, Rick. Let me begin by updating on our KALBITOR global strategy. We’re making significant progress with our efforts to develop and commercialize capital in major markets around the world. Most recently, we signed strategic partnership agreements with KALBITOR in two major geographies. For the first, we announced a partnership with Novellus Biopharma to develop and commercialize KALBITOR for HAE and other angioedema indications in Latin America. We considering Novellus to be an excellent strategic partner as they’re committed to rare diseases and have an understanding of regulatory, marketing and commercialization strategy in the orphan disease space.

The second partnership, we’ve recently announced is with CVie Therapeutics, a subsidiary of Lee’s Pharmaceutical Holdings for the development and commercialization of KALBITOR in China, Hong Kong and Macau. Our partnership with CVie represents a significant opportunity for KALBITOR to become the first novel therapy available for HAE patients in China, where presently only steroids are used.

HAE is a pan-ethnic disease with a prevalence of approximately one and 30,000, making China a major potential market for KALBITOR. We look forward to working with CVie through like Novellus is committed to the rare disease space and well positioned from a development, regulatory and commercialization standpoint.

In addition to new partnerships, our existing partners are making meaningful progress. In Japan, Dyax has successfully started their 10 patient open label study and assuming successful completion of the study is on track to launch KALBITOR in 2014.

For the Middle East we made our first shipment to partner taiba this January. This is our first shipment outside the U.S., an exciting step for HAE patients and KALBITOR. This progress in key geographies around the world highlights the growing value potential of KALBITOR outside the U.S.

Now turning to the Licensing and Funded Research Program or LFRP, this portfolio is based on a gold-standard phage display technology and is known as one of the most successful licensing programs in the industry. The LFRP consistent and contributes $10 million to $15 million in revenues each year through licensing fees, milestone payments and new agreements. Without patent protection through 2024 and royalty agreements extending 10 years beyond a product’s first commercial sale, the LFRP has a long runway and significant future revenue potential. The breadth and depth of this portfolio is supported by world-class biopharmaceutical partners, multiple indications and targets and the evergreen nature of the pipeline.

The pipeline currently has 13 royalties and a milestone-based clinical stage candidate that address major therapeutic markets with three programs in Phase III and four in Phase II. Behind this clinical portfolio is a deep and robust preclinical pipeline of approximately 20 candidates two of which recently entered into Phase I clinical trial. With a number of candidates in late stage development, new ones entering the clinic and new licensing agreements being executed, this business had substantial upside potential. This potential is being illustrated by the most advanced candidate in the pipeline ramucirumab.

Ramucirumab is a VEGFR-2 targeted fully human and monoclonal antibody that was originally developed by ImClone Systems and now Eli Lilly. At the recently held ASCO GI Conference, Lilly presented Phase III data from a placebo control study in patients with metastatic gastric cancer showing a survival outcome of which the company plans to file for marketing approval in the U.S. and Europe.

As Lilly characterize it, it is a first study to show both an overall and progression free survival advantage in this difficult to treat patient population. One for which there are currently no agents specifically approved for second-line treatment. This study is also the first of six Phase III trials for ramucirumab to reach data read-out.

Right behind, ramucirumab Lilly have said that they expect data read-out for necitumumab and EGFR targeting antibody currently being started in a Phase III trial for the first-line treatment of patients with squamous non-small cell lung cancer. This study called SQUIRE is expected to yield data later this year or early next year. Lilly has pointed through this compound as a key part of the lung cancer strategy and is important asset for them strategically.

For Dyax, the potential of this program is significant, following approval we are eligible to receive a 2% to 3% royalty on the first 10 years of commercial sales. Given the market sizes being targeted, this amounts to significant potential in revenues over time and the franchise with important near and long-term values.

With that, I will turn the call over to Burt to discuss our KALBITOR development programs. Burt?

Burt Adelman

Thanks, Ivana. Today at Dyax we are focusing our research and development efforts across the spectrum of disease states in which angioedema is a primary or contributing component. For patients with types 1 and 2 hereditary angioedema, we are working to expand the current portfolio of therapeutic options by developing DX-2930. DX-2930 is a fully human monoclonal antibody derived from our proprietary phase display platform.

DX-2930 is a specific high-affinity inhibitor of plasma kallikrein. Early stage indicate the DX-2930 has a long half-life in non-human primates. Based upon the attributes of selectivity, specificity and long half-life. We have chosen to develop DX-2930 as a self-administered subcutaneous injection for chronic prevention of HAE attacks.

During the past year, we made great progress with DX-2930. We’ve completed GMP manufacturing to support Phase I and Phase II studies. We have developed a high concentration formulation that will permit subcutaneous dosing. This formulation has been manufactured and is now on long-term stability.

We’ve also begun a comprehensive preclinical toxicology program that will support Phase I and Phase II studies. And recently we have held a very successful pre-IND meeting with the FDA.

Our current plan is to file the DX-2930 IND by the end of Q2 this year and initiate our Phase I program early in the second half of 2013. Phase II dosing is planned for early 2012. And we are planning a worldwide clinical development effort.

It should be clear to you that we at Dyax are very excited about the DX-2930 program. We know that our deep understanding of HAE learned through our development and commercialization of KALBITOR, the first specific plasma kallikrein inhibitor approved for this disorder, will enable us to accelerate DX-2930 development. For any of you who maybe attending the AAAAI meeting in San Antonio, Texas later this month, we invite you to visit our presentation of early data from the DX-2930 program.

As I have said to you before, we believe that plasma kallikrein driven vascular leak, the underlying process of angioedema is a likely component of many disease states. In fact, articles appearing in the medical literature are beginning to confirm this belief. A list of possibly related disorders includes Type 3 HAE, idiopathic angioedema, diabetic macular edema and retrovascular disease, stroke and traumatic brain injury and various auto-immune disorders.

To characterize the roll of the plasma kallikrein-bradykinin system in these and other disorders, we have developed a suite of assays that allow us to specifically identify and quantitate kallikrein generation in patient blood. The assays will be used to screen blood samples from patients with disorders in which kallikrein activation may contribute to the underlying clinical conditions. We have already transferred these assays to a partner CRO and it begun to test clinical samples. Obviously, once identified, these disorders will become potential candidate indications for KALBITOR or DX-2930 treatment.

So to summarize, we’re keeping our attention fixed on both recognized and susceptive disorders in which angioedema is initiated by pathologic plasma kallikrein generation. We are aggressively moving the DX-2930 program forward for Types 1 and 2 HAE, and we are utilizing our assay program to screen for new clinical disorders that might respond to KALBITOR or DX-2930.

At this time, George will walk you through our financial highlights. George?

George Migausky

Thanks, Burt. I hope you have all had a chance to read our press release on 2012’s Q4 and year-end results, which was issued after the market closed today. First, I’ll take you through the fourth quarter and full year 2012 financial results and then we’ll review our financial guidance.

As reported this afternoon, our total revenue for the fourth quarter 2012 was $16 million compared to $8.5 million for the same quarter in 2011. This revenue increase is due to both our growing KALBITOR net sales and higher license fee revenues. KALBITOR net sales have been growing quarter-over-quarter for what is now the 11th sequential quarter of growth and it reflects the growing number of patients treating with KALBITOR.

First quarter 2012 KALBITOR net sales were $11.8 million as compared to $7 million last year. The sales in Q4 are net of adjustments of approximately 10% of gross sales.

Looking ahead, we anticipate the gross to net sales adjustments in 2013 to be in a range of 8% to 10%. For the full year 2012, KALBITOR net sales increased to $39.8 million and total revenue for 2012 was $54.7 million compared to $48.7 million in 2011.

Operating expenses, which include both R&D and SG&A costs, for the fourth quarter of 2012 were $18.1 million, down from $19.5 million last year. And for the full year, operating expenses were $73.5 million and $73.6 million in 2012 and 2011 respectively.

Research and Development costs for the fourth quarter of 2012 were reduced to $7.4 million as compared to $8.4 million last year.

For the full year 2012 R&D costs were $30 million versus $34.7 million in 2011. The 2012 fourth quarter and year reflect reduced expenses due to lower clinical trial and personnel costs as well as a reduction in the pass-through license fees paid by Dyax licensees under the LFRP.

Selling, general and administrative costs, which include commercial costs for KALBITOR, were $10 million in the fourth quarter of 2012 and $39.9 million for the full year. This compares to $10.6 million and $37.7 million respectively for the same periods last year.

For the fourth quarter of 2012, Dyax reported a net loss of $4.8 million or $0.05 per share, and this compares to a net loss of $13.5 million or $0.14 per share in the fourth quarter of 2011. For the 2012 year, Dyax net loss was $29.2 million or $0.30 per share, as compared to a net loss of $34.6 million or $0.35 per share for the year 2011.

With respect to our cash resources, as of December 31, 2012, Dyax had cash, cash equivalents and short-term investments totaling $29 million, exclusive of restricted cash.

Our operating cash burn in the fourth quarter decreased to approximately $3.5 million, down from $5 million in the preceding third quarter, $7 million in Q2 and $8.5 million in Q1 2012. With costs carefully planned and with growing revenue, the recurring operating cash burn is expected to continue to decline in 2013.

In 2012, the KALBITOR business reached an important milestone. It was profitable and generated positive cash flow for Dyax over the course of the entire year. This was important for us as it set the stage for building the company in 2013 and beyond.

Now, for our 2013 financial guidance, our total top-line revenue for 2013 as expected to be in a range from $65 million to $70 million. This guidance includes KALBITOR sales of $52 million to $56 million. Based on this guidance, we also expect to reach cash flow breakeven during the latter part of 2013.

Let me summarize how we get there. KALBITOR business, we continue to operate profitably and generate positive cash flows. KALBITOR sales are expected to grow to $52 million to $56 million. Our operating costs, both R&D and SG&A, will increase by less than 5% in 2013. And then, the operating cash burn will continue to decline as it has during 2012.

The path to cash flow break-even may not be linear. Our operating costs for 2013 should increase by less than 5%. These costs are not always incurred on a linear basis. In fact, our planned Q1 2013 expenditures in cash burn are expected to be higher than in Q4 2012, but this is included in our planning and guidance to reach cash flow break-even.

Over the past year, we have proven that we can execute on strategic and financial initiatives by growing KALBITOR sales and reaching profitability in that business, focusing our R&D on HAE and other plasma kallikrein mediated angioedemas and reducing the operating cash burn quarter-after-quarter. These accomplishments are characteristics of a disciplined company, and then we planned to carry this approach forward as we reach cash flow breakeven and from there manage our operations around the breakeven point.

The company does not expect this to result in positive earnings in 2014, as we will invest in plasma kallikrein-focused development, either alone or appropriate through partnerships. This should provide us with the operating flexibility to execute our strategy and continue to build value for shareholders.

Now I will turn the call over to Gustav.

Gustav Christensen

Thank you, George. So we had another very successful year in 2012, based on a focus strategy and solid execution. By concentrating our efforts on our angioedema portfolio and the LFRP, we have been successful in moving these businesses forward and generating value for our shareholders.

Looking forward to 2013, we have an exciting year in front of us that includes a number of pivotal milestones. First, we will continue to build on our momentum by KALBITOR, driven by our innovative KALBITOR Care services and support programs. Second, we expect a number of Phase III data read-outs from candidates in the LFRP. Third, we planned to file an IND in mid 2013 for DX-2930 with the goal of developing this antibody for potential prophylactic use in HAE and other angioedemas.

And lastly, we are developing a suite of diagnostic assays with the goal of allowing us to identify and treat a broader range of disorders associated with angioedema. But this well-defined strategy is successfully translating years of know-how and expertise, both in angioedema and antibody discovery, to create meaningful value for our shareholders.

We look forward to a productive 2013 and to updating you on our progress throughout the year. With that, I’ll turn the call over for questions. Operator?

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) First question is from Joseph Schwartz of Leerink Swann. Your line is open.

Joseph Schwartz – Leerink Swann

Thank you and congratulations on the great execution. I was wondering if I could ask first about the rest of world opportunity and when you would expect to start seeing meaningful patient accrual in some of these markets, and can you give us any inside into the pricing that you expect to be able to achieve outside the U.S. Thanks.

Gustav Christensen

Thank you Joe. And I’ll turn the call – that question over to Ivana.

Ivana Magovcevic-Liebisch

Hi Joe, very good question. So I think Japan is the market where we see there is a significant opportunity, there is an unmet medical needs to the opportunity through the orphan drug legislation to demand orphan drug pricing. This is a pen-ethnic disease, which we’ll see affects all races equally, so we’ll expect that there will be the same prevalence in the Japanese patient population and we expect if everything goes well with the study, which is ongoing then we will be on the market sometime in 2014. So I would say that’s probably the one where we could see the meaningful numbers coming in.

Joseph Schwartz – Leerink Swann

Great. And If I could just ask one more question. This one on DX-2930, which obviously seems very exciting and now that you are accelerating the development. It might not be too early to ask what Phase I trial design would look like and Phase II to the extent that you can look out that far?

Burt Adelman

Sure. This is Burt. Phase I design is going to be pretty straightforward single-dose, dose escalation study in normal volunteers. And we’re still starting to think about Phase II, but I think we would want to come out of Phase II having a good understanding of how effective the drug was, what the safety and efficacy activity are. So it will be a placebo-controlled, adequately sized trial to hopefully discern the statistically significant effect.

Joseph Schwartz – Leerink Swann

Great. All right. Thanks very much.

Operator

Thank you. Our next question is from Phil Nadeau of Cowen & Company. Your line is open

Phil Nadeau – Cowen & Company

Good afternoon, and thanks for taking my questions. First on KALBITOR, I think you mentioned one of your goals for the year is to increase the number of patients treated. Where did that figure stand during Q4? I’m sorry if I missed during if you said in your prepared remarks.

Gustav Christensen

Ivana?

Ivana Magovcevic-Liebisch

No. No, you didn’t miss it. I think we mentioned this on previous calls, is that we have decided, because as you know, of the competitive nature of the space that what we’re going to be focusing on going forward is really the revenue because we think that’s the best reflection of what going on in the marketplace. We feel very comfortable that this market, as Greg mentioned, is still far from fully penetrated and we feel that our efficacy profile as well as the support and services we provide for the patients through the home nursing option that were extremely well positioned to continue to grow the number of patients that choose KALBITOR as their primary treatment.

Phil Nadeau – Cowen & Company

Okay, Fair enough. Second on DX-2930, I realize it when we have preclinical data, but could you just give us some idea of how that can be differentiated from the C1 inhibitors. What could be some either efficacy, safety of convenience of anginous?

Gustav Christensen

Burt?

Burt Adelman

Sure. Well, as you well know many monoclonal antibodies that are used for chronic treatment have a very infrequent dosing schedule. Many of them are given subcutaneously once or twice a month. So our product profile for DX-2930 anticipates once or twice a month dosing with a single subcutaneous injection. So the patient can treat themselves easily and infrequently. So that right there would be a major difference between the – purify from human plasma products Cinryze or Berinert.

Obviously, if you look into Package Insert of those products, the efficacy profile got them approved, but it’s not what I would define as prophylaxis. Patients still are having attack and we know just from the market experience that many of these patients also are on KALBITOR or other acute interventions, because they’re still having attack. So again the product profile that we anticipate would be one coming closer to what I think the real definition of prophylaxis is, which is no attacks. Obviously as you say we’re not in the clinic here. We don’t know. But we think should be part of the expectation.

And then finally, in general, fully human monoclonal antibodies are relatively shaping well tolerated, they tend not to have a lot of problems with immunogenicity. They tend to be very specific, not have a lot of half target effects. And we would hope that to be the same here, and remember that this antibody is essentially developed out of our knowledge and understanding of KALBITOR, which is itself a short acting, but direct highly specific plasma kallikrein inhibitor. So we basically taken our understanding of the pathobiology of the disease and the efficacy of KALBITOR and turned it into the sort of standard therapeutic molecule of the biotech industry, a fully human monoclonal antibody.

Phil Nadeau – Cowen & Company

Okay. That’s very helpful. Thank you. And then just two last questions for George on the financials. George based on what you said in your prepared remarks it seems like the non-cash costs in the quarter above $1.3 million is that – is that correct?

George Migausky

Yeah, so the operating burn of about $3.5 million. But the absolute change in cash was only $1.4 million. So there’s some other non-operating things. For example, we’ve received the cash from the license of DX-2400 in the quarter and that’s one of the elements that we would not call operating, it’s not recurring in nature.

Phil Nadeau – Cowen & Company

Okay. And then last on long-term guidance. In the past you’ve said, you expect $180 million to $210 million in revenue in 2016, is that guidance still stands?

George Migausky

I think what we actually did we are not going out that far back several years ago, when we didn’t quite understand this new emerging markets needed that the analyst, he went out and said that if we look forward five years this is what we think it will look like. But now we have gone to a more traditional guidance, which means that we guide the next year and we have also this year have said that at the end of the year we should turn break-even and in 2014 we do not expect that to turn into profitability, but we will invest it in our ongoing programs. So we have gone to a more traditional guidance.

Phil Nadeau – Cowen & Company

Okay. Thanks for taking my questions.

Operator

Thank you. Our next question is from Ted Tenthoff with Piper Jaffray. Go ahead, sir.

Ted Tenthoff – Piper Jaffray

Great. Thank you very much, and my congrats on really a great year and I’m looking for – to an exciting 2013. As I look to your guidance in terms of continuing to convert patients with KALBITOR Care and then maintain these patients on your very high level of service and really patient focused approach. I wanted to ask you a kind of a higher level sort of marketing or sales question in terms of, when it comes to the patients that you are converting, and the patients that are sticking to your approach.

What is it that, what is the hurdle there? It seems to me like this is something that would be very, very compelling to these patients. So what’s kind of a hurdle to actually get a new patient to switch over to the in-home nursing reports, and why would they may be not stick with that approach once they’ve had it. Is it an issue of may be inconvenience or not comfort of having someone that come to the home? Can you give us sort of the flipside in terms of what some of the hurdles are or some of the reasons why may be someone wouldn’t stick with the nursing approach to care.

Gustav Christensen

Ivana, do you want to...?

Ivana Magovcevic-Liebisch

Yes. Ted, thanks for that question. So as you know, there is a high, high amount of variability among the HAE patients. They are calm and many different types, right. There are patients who are severely affected, there are patients who are less severely affected, there are patients who are in prophylaxis, there are patients, and you know one acute therapies for their breakthrough attacks. There are patients who are not on anything. This is a highly depressed patient population. They’ve been kind of living on the frontiers of society for many years. They have been mistreated by the medical community.

And so, sometimes it’s difficult to reach them, but what we see is once we’ve reached them and they have tried KALBITOR, majority of them come back to retreat and whether that retreats through having the patient supply drug and going to the treatment side of choice or having the nurse. It depends on patient’s preference. Some patients if they live very close to their community, emergency room, everybody knows them they are, they might choose that. We have patients who the emergency room is challenging, they would prefer the home. So, I think that once there on KALBITOR, it becomes a completely different picture. What is challenging is obviously to get these patients to consider therapies and once they’ve chosen KALBITOR, we see that that the retention rate is very, very high especially because of the support and services, we provide. Burt, do you have anything you want to add.

Burt Adelman

No, I think you’ve covered, Ivana.

Ted Tenthoff – Piper Jaffray

That’s actually helpful to put that on perspective. Thank you.

Ivana Magovcevic-Liebisch

Sure.

Gustav Christensen

Thank you, Ted.

Operator

Thank you. Our next question is from Serge Belanger of Needham & Company. Your line is open.

Serge Belanger – Needham & Company

Hi, good afternoon. Just had a couple of questions. First, on the rest-of-world opportunity. You mentioned you did different shipments to, I guess, your partners in the Middle East in January. Just wanted to know if these sales are included in your guidance for KALBITOR this year of $52 million to $56 million.

Ivana Magovcevic-Liebisch

No, they’re not. We have not included anything except for the U.S. revenues.

Serge Belanger – Needham & Company

Okay. And then, on your new partnerships that you’ve announced with Novellus and CVie, just wanted to get an idea of when you expect to see sales in these territories.

Ivana Magovcevic-Liebisch

So with Novellus, I think the idea does in some Latin American countries you can sell name patient basis before you get registration. In China, there is no orphan drug legislation, so we got with our partner go to the Chinese Regulatory Authorities and see what if anything is going to be required for approval. So China is going to take sometime before we know exactly what the path forward is and in Latin America, we would expect that to reasonably quickly we can see some name patient sales.

Serge Belanger – Needham & Company

Okay. Then one last one, I know there is some work that was ongoing to extend the current KALBITOR label to pediatric patients. Just wanted to get an update on that, and if you expect any movement from the FDA sometime this year?

Ivana Magovcevic-Liebisch

Burt.

Burt Adelman

Yes, so we are working on that. We’re putting together our existing data. I – it would be very unusual if we were to get a label extension this year. I think maybe sometime early next year.

Serge Belanger – Needham & Company

Okay. And in terms of the patient population of these patients, I mean is that a very small percentage or what are we thinking of?

Burt Adelman

The data suggest that symptomatic disease starts to occur around puberty, so adolescence. Interestingly, there’s recently been some data published that will be presented in AAAAI suggesting that kids who start having attacks sort of prepubescent or around that time are at risk for having more frequent attacks in adulthood. So I think there is a increasingly compelling data set, advancing our concern and interest in getting the product available to adolescence and just the younger age, pushing the population.

Serge Belanger – Needham & Company

All right. Thank you. That’s all I have.

Burt Adelman

Okay. Thank you, Serge.

Operator

Thank you. This ends the Q&A portion of today’s conference. I’d like to turn the call over to Mr. Christensen for any closing remarks.

Gustav Christensen

Well with no more questions, we all want to thank you for listening in, and we wish you a good evening. Thank you very much.

Operator

Ladies and gentlemen, thank you for your participation in today’s conference. This concludes the program. You many now disconnect. Have a wonderful day.

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