NPS Pharmaceuticals' CEO Discusses Q4 2012 Results - Earnings Call Transcript

| About: NPS Pharmaceuticals, (NPSP)

NPS Pharmaceuticals, Inc. (NASDAQ:NPSP)

Q4 2012 Earnings Call

February 21, 2013 4:30 PM ET

Executives

Susan Mesco – Senior Director, IR and Corporate Communications

Francois Nader – President and CEO

Eric Pauwels – SVP and Chief Commercial Officer

Luke Beshar – EVP and CFO

Analysts

Salveen Richter – Canaccord

David Friedman – Morgan Stanley

Nick Abbott – BMO

David Nierengarten – Wedbush Securities

Jim Molloy – Janney

Carol Werther – Summer Street

Jonathan Aschoff – Brean Capital

Operator

Good day, ladies and gentlemen, and welcome to the quarter four 2012 NPS Pharmaceuticals earnings conference call. My name is Ian, I will be your operator for today. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of the conference. (Operator Instructions)

Now I would like to hand over to Ms. Susan Mesco, Senior Director of Investor Relations and Corporate Communications. Please proceed ma’am.

Susan Mesco

Thank you, Ian, and welcome to our fourth quarter conference call. Before we start, let me remind you that today’s call will include forward-looking statements based on current expectations. Such statements represent our judgment as of today and may involve risks and uncertainties. Please refer to our filings with the SEC, which are available from the SEC or our website for information concerning the risk factors that could affect the company.

Joining me on today’s call are members of our executive management team, including Dr. Francois Nader, our President and Chief Executive Officer; Luke Beshar, our Chief Financial Officer; and Eric Pauwels, our Chief Commercial Officer.

I will now turn the call over to Dr. Francois Nader.

Francois Nader

Thank you, Susan. Good afternoon, and thank you for joining us today. The past several months has been an exceptional period for NPS, very rewarding to achieve something that so few other companies have done. Successfully turning around the company and then transitioning it from a development stage organization into a growth oriented commercial entity that is delivering a groundbreaking therapy in the orphan space.

As we head into 2013, we are focused on three strategic priorities. First, a flawless execution of the Gattex launch. Second, filing the BLA for Natpara in hypoparathyroidism. And third, creating long-term sustainable growth opportunities to position NPS as a leading orphan specialty company.

Let me provide some color on each of these strategic priorities starting with the launch of Gattex. Thanks to the fabulous work of our key account directors, I am happy to report that Gattex is already covered by a number of national and regional players who recognized, as we did, the value that Gattex brings to the patients, the caregivers, and the healthcare system.

I am also pleased to report that our first short bowel syndrome patients are now on Gattex, well ahead of our projections. A couple of weeks ago, I participated in our national sales meeting. And I was very impressed with the caliber of the team that joined NPS. They have highly successful track record, commercializing orphan drugs and biologics at premier companies but more importantly, their excitement about the Gattex opportunity.

Our 27-person strong sales force is now deployed. And their initial order of business is to call upon the physicians who are treating the 1,000-plus patients that were already identified at launch and validate the 6,000 target prescribers.

As I mentioned earlier, our three account directors are engaging with the 75 critical target payors that represent about three quarters of the insured population in the U.S.

We are also pleased with the growing number of short bowel syndrome patients who have sent their referral forms to NPS Advantage, and are currently interacting with our care coordinators to secure coverage and initiate Gattex treatment.

Along with these exciting launch-related activities, NPS had its first commercial presence at the American Society of Parenteral and Enteral Nutrition conference last week. We sponsored a CME symposium on current and emerging approaches in adult short bowel syndrome. This event was filled to capacity with an estimated 225 healthcare providers in attendance.

In addition, our investigators presented several posters on Gattex, including one that described the characteristics of the first patients who achieved independence from parenteral support in the STEPS 2 study.

One critical aspect of the successful Gattex experience is ensuring that healthcare providers working with short bowel syndrome patients on Gattex have a practical and an effective approach for weaning patients off parenteral support.

To this end, I’m happy to report the timely publication of an article that described best practice recommendations for intestinal rehabilitation in short bowel syndrome that included the integration of Gattex in the clinical pathways.

This article was published in the Journal of Parenteral and Enteral Nutrition last month. Within the first week of publication, it was among the top 25 most read articles since the journal’s inception back in 1977.

Last, but certainly not least, we recently had our last patient last visit for STEPS 2, our 24-month open label extension study of Gattex in short bowel syndrome. And we expect to report top-line results in the second quarter.

In summary, even though it is early days, the Gattex launch has so far exceeded our expectations when it comes to patients, when it comes to prescribers, and when it comes to payors. Eric will give you additional details in a couple of minutes.

Now, turning to our second strategic priority, filing the Natpara BLA in hyperparathyroidism. As noted in today’s press release, we shifted our BLA submission timeline to the second half of this year. We had a good meeting recently with the FDA and are on track to complete the final user study of the Natpara injection pen by the second quarter. We are also advancing multiple tracks to resolve certain finish issues. This is a very high priority for NPS.

But our progress last year was somewhat hindered by the challenges of scheduled additional production runs at the external contract manufacturer. This challenge has been addressed and we now have scheduled multiple runs this year. We expect to have our analysis complete in the second quarter, which will give us a much better sense for timing. However, given inherent uncertainties, we wanted to be transparent and alert you that this process will likely shift our submission date into the second half of the year. Meanwhile, our net product relaunch activities are proceeding according to plan.

One of the significant misconceptions about hypoparathyroidism is the burden of illness of this condition, and its impact on patients, caregivers, and the healthcare system. While current palliative options help patients manage the symptoms of hypoparathyroidism, they do not treat the underlying condition, which is the deficit in parathyroid hormone. To better characterize the burden of illness of hypoparathyroidism and its impact, we commissioned the largest epidemiological study ever conducted in this condition.

PARADOX, as the study is named, was run in partnership with the Mayo Clinic and with the Hypoparathyroidism Association. The study results are compelling when it comes to the physical, emotional, and financial challenges hypoparathyroidism patients experience every day, despite being on calcium and vitamin B supplementation. This landmark study will be reported in connection with the end of conference in June.

Our third strategic priority is to continue building NPS as a leading orphan specialty company, focusing on growth drivers that create value for our patients and create value for our shareholders. In 2013, you will see us implement the following value creation initiatives. First, we will maximize the potential of Gattex through proactive lifecycle management with the first program being pediatric short bowel syndrome.

For many months now, we have been working with pediatricians and short bowel syndrome experts who have been eager to support our efforts in developing a treatment for this life-threatening condition in children. To this end, we have requested a meeting with the FDA to discuss our pediatric short bowel syndrome clinical development plan. We will provide you with additional specifics as our plans are finalized with the agency.

Second, we are currently assessing the business case and the opportunity that the calcilytics would represent in the ultra-orphan disorder called autosomal dominant hypocalcemia with hypercalciuria or ADHH. We believe that given the mechanism of action, the calcilytics may represent a treatment breakthrough in this ultra-orphan indication.

Third, as you know, and by design, NPS does not have internal discovery or research capabilities, rather our strategy to strengthen our pipeline is through search and development. Therefore, we will be selectively looking outward for additions to our product portfolio via in licensing of clinical or marketed assets. But as I said it earlier, the successful launch of Gattex in the U.S. remains our number one priority.

And at this time, I would like to give Eric the opportunity to share some additional exciting details on the progress of Gattex launch. Eric.

Eric Pauwels

Thank you, Francois. And good afternoon everyone. While we remain in the early days of a launch, I am thrilled to report that we are on track or ahead of plan across all fronts. Including already having our first commercial Gattex treated patient.

As Francois mentioned, our national sales meeting was conducted earlier this month here in New Jersey and the following week we featured our first commercial exhibit booth for Gattex at A.S.P.E.N.’s Clinical Nutrition Week. Both were overwhelming success. Of note, while we were at A.S.P.E.N., we received more than 200 Gattex enquiries from healthcare providers.

Our sales team is now fully deployed with their detailed launch playbooks that include information about their territory, a list of prioritized leads and key account profiles. By the end of this month, the sales team will have conducted in-service meetings with the majority of our 70-plus targeted centers of excellence. Now that Gattex is approved, we are significantly geared up our efforts to identify the SBS patients who are eligible for Gattex.

In addition to the patients already identified within our specialty distribution network, we have continued to look for new SBS patients leveraging other sources. For example, through our website, ShortBowelSupport.com we are building the single largest database of SBS patients in the U.S.

We send an electronic notification to the many registrants who elected to be notified when Gattex was approved. And the number of new registrants on this site has grown substantially since approval.

In addition, many key advocacy groups like NORD, The SBS Foundation and the Crohn’s & Colitis Foundation have already distributed information about the availability of Gattex to their members. All of these activities, including the patients identified through our interactions with the centers of excellence, further support our estimate Gattex has addressable patient population of 3,000 to 5,000 patients in the U.S.

Our reimbursement efforts are going very well and feedback from payors, thus far, is better than expected. Over the last few weeks, our key account directors have concluded clinical reviews with 12 key private and public payors covering over 80 million lives.

So far, every national and regional payer that we have interacted with has indicated they will cover Gattex with Q3 or core placement. And only a few have specified prior authorizations to the label. Several regionally and nationally recognized insurers have already added Gattex to their formularies.

And one of the nation’s leading managed care organizations viewed the clinical profile of Gattex and requested that the product before Gattex was even available through the channel. As predicted, we designed our patient-centric strategy, NPS Advantage. And this is proving to be critical in terms of resources.

And the level of interest we are seeing from patients and healthcare providers is gaining momentum every day. Many Gattex referral forms have already been received and a number of benefits investigations are underway. I am also happy to report that coverage has already been secured for a number of patients, as Francois mentioned, some of them are already initiating therapy. As expected, so far, the vast majority of prescribers are gastroenterologists.

Lastly, our specialty distribution network is fully operational, and the Gattex, NPS Gattex commercial and medical affair teams have been actively working with our network of five specialty pharmacies to train their clinical personnel and initiate the interactions with the healthcare providers of short bowel syndrome patients.

So, in summary, we are seeing solid execution and we are ahead of our launch plan. While it remains the early days, we are confident in our team’s ability to build on the strong momentum thus far.

With that, I will turn the call over to Luke for his financial report.

Luke Beshar

Thank you, Eric. Good afternoon to all joining us on today’s call. From a financial perspective, this is also a very exciting time for NPS. As Francois and Eric both mentioned the first Gattex commercial shipments have commenced. Our patients are on trial and will now beginning recognizing revenues from our first marketed products.

With respect to our 2012 financials, I’d like to begin with royalties, which for the fourth quarter totaled $27 million versus $26 million last year and for the full year were $106 million versus $97 million in 2011. As you know, our royalties our driven by Amgen sales of Sensipar.

For seven straight quarters, Sensipar has delivered double-digit growth with fourth quarter royalties increasing by 19% to $24 million and for the full-year Sensipar royalties were up 15% to $89 million. Under the repayment terms of our royalty advance from Amgen, we received the $16 million cash payment for fourth quarter royalties and Amgen retained the remaining $8 million to repay the interest in principle on the advance. We expect the remaining balance of this advance of $80 million to be fully repaid in the middle of 2015.

After repayment, we will receive 100% of the Sensipar royalties to the March 2018 patent expiring in the U.S. until the end of 2018 for the rest of the world. With Sensipar now under the annual run rate of more than $1 billion in sales and NPS earning a royalty of approximately 10%, this asset provides tremendous financial flexibility to NPS.

We’re also receiving cash balance royalties on Amgen sales of NUCYNTA. For the fourth quarter NUCYNTA royalties increased by more than 30% to $800,000 and for the full-year grew by 27% coming in at $2.8 million.

Fourth quarter R&D expenses this year were $24 million versus $22 million in 2011. For the full year, research and development expenses increased to $95 million as compared to $74 million in 2011, principally due to pre-launch Gattex (inaudible) inventory, regulatory activities and personnel related costs including the build out of our medical affairs function and certain equity based compensation divested with the FDA’s approval of Gattex.

General, administrative expenses increased to $11 million for the fourth quarter of 2012 versus $7 million for 2011. On a full-year basis, G&A expense was $37 million, a $15 million increase over last year, driven by our commercial radius activities for Gattex including the commencement of build out of our commercial infrastructure, as well as equity based compensation that again was triggered by the Gattex approval.

We were pleased to end the year with $101 million in cash, which is better than the $92 million that we previously guided to. We believe our cash on hand along with the cash influence from Sensipar and the Sensipar royalties leave us adequately capitalized to launch both Gattex and Natpara.

However, consistent with our track record we will of course continue to be proactive in evaluating opportunities to enhance our balance sheet in ways that are in the best interest of our shareholders.

Looking ahead to our guidance, with respect to revenues, while we are off to a great start, we are very encouraged by the early days of the launch and wish to remind you that we do not anticipate meaningful Gattex revenues to begin until the third quarter.

We’ll provide you with the number of patients on Gattex at the end of each quarter beginning with our second quarter conference call and continuing to our fourth quarter call.

As previously indicated, we expect to end the year with between 200 and 300 patients on Gattex with the majority of the patients initiating treatment in the latter part of the year. With respect to expenses, we expect to report operating expenses for 2013 in the range of $135 million to $145 million.

In closing, we are highly optimistic that 2013 will be another terrific year for NPS with the launch of Gattex now underway, followed by the BLA filing of Natpara and the launch of new early stage programs like our pediatrics SBS later this year.

With that, I’ll now turn the call back to our operator, Ian, to begin the Q&A session. Ian.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) We have a question for you straightaway, it’s from the line of Salveen Richter of Canaccord. Please go ahead.

Salveen Richter – Canaccord

Hi. Thanks for taking my questions. I’m just wondering, before you had provided guidance of prior authorization, requiring about three to six months until you actually would be able to book revenues. And as you’ve met with these payors, is that still the feeling that you are getting? And the payors that are saying that they will not require prior auth, is that majority of them or few of them? And then I have a follow-up to that, thanks.

Francois Nader

Yes. Good afternoon, Salveen. I’ll ask Eric to answer your question, Eric.

Eric Pauwels

Yes. Salveen, thank you for the question. I think we are still guiding to that because it is very early in the current launch stage. And as you know, this is a one patient at a time with every insurance policy.

So the first few patients, some of them have not required prior authorizations. But the color that we’ve had behind this is that payors certainly have said that they were, that they would put this on third and fourth tier that some prior authorizations will be required. Then we’ve actually had one payer who suggested that maybe a reauthorization, although they didn’t necessarily indicate, if you will, any particular volume. So I don’t think there’s anything right now that would suggest us to change that guidance, given the early stages of the launch. Did you have a follow-up question, Salveen?

Salveen Richter – Canaccord

Yes. Sorry. The patients that are on the short bowel syndrome patients that are now on GATTEX, do you have a sense of what, maybe you could help us understand the patient characteristics here?

Francois Nader

It is probably too early to say. The numbers, we are just starting. Actually, we’re thrilled that we were able to enroll patients as early as we have, but at this stage I think it will be really premature to start talking about the profile of these patients.

Eric Pauwels

One thing we can say, Salveen is that clearly, it is not unexpected, the patients are sort of within the age range we expected. And in addition to that the prescribers, over 90% of them are specialists. So they are gastroenterologists, they are the right physicians who are treating the disorder.

Salveen Richter – Canaccord

Thank you.

Operator

Thank you very much for your question. I have another question for you. This one is from Alan Carr with Needham & Company. Please go ahead, Alan.

Unidentified Analyst

Hi this is actually Mark on for Alan. Thank you for taking my call. I have one clarification question and then I’ve got a follow-up. I was wondering if you could talk a little bit about the numbers in that commercial organization right now. I have written down that Luke in his remarks said a 27-person sales force. But I see in the press release it’s actually this 30-person sales force. I was wondering if you could just give us a little bit detail on the structure of the commercial force right now?

Eric Pauwels

Sure, no problem. The simple answer is we have 27 people within the sales force, which includes our regional managers and our business specialists. The additional three that you have are actually key account directors. So they are the ones that actually call on a different customer base that’s actually the insurers and payors, so that adds up to the 30.

Unidentified Analyst

Okay. Thank you very much for that. I was wondering if you guys could shed a little light for us on what the timelines you see playing out for reaching the place where you are comfortable in updating the Street on public and private payors? And how reimbursements are filling out for 2013?

Francois Nader

You’re cutting off a little bit, Mark.

Unidentified Analyst

Sorry, I was just wondering if I could get a little bit more information on timelines of progression regarding negotiations with payors over the course of the year. What sort of timeframes you guys have put into place for that?

Francois Nader

Well basically, what we have said is we are targeting about 75 payors. These are the critical payors that represent about three quarters of the insured population. Our three account directors have been deployed now since I would say October, November. So they have been working with these critical accounts for a couple of two, three months. Yet, our ability to interact with the payors was hindered by the fact that Gattex was not approved until, as you know, December 21. Since then, they have now in their hands the elements to interact with the payors in an efficient and effective way, not the least being the AMCP dossier.

So as the year progresses, it will be probably a combination of two factors. And this is probably the best way of thinking about it. One is, the outbound is that we and our key account directors will be targeting certain payors on the 75, if you will, institution list. So this is one approach. However, there are the inbounds.

And the inbounds are really characterized by patients getting into our NPS Advantage and triggering, if you will, an interaction with the payors that might or might not be on this target list of 75. And frankly, the consolidation of both will give us the coverage we need. So that’s all I can report at this stage. All I can say is qualitatively, we are very pleased with not only the number of payors that have coverage now, but also diverse activity, which is exactly in line with our previous market research.

Unidentified Analyst

Great. Thanks very much for taking the questions.

Francois Nader

Thank you.

Operator

Thank you. We have another question for you. This was one’s from David Friedman of Morgan Stanley. Please go ahead, David.

David Friedman – Morgan Stanley

Hi. Thanks for taking the question. I just had a couple more around some of the payer discussions. So I guess the first is, can you maybe just talk a little bit about the nature of the discussions, public versus private. And are you using the same type of pharmacoeconomic information? Or if you can just sort of shed a little light into the pitch you are making to the payors and whether that differs public or private? And then, a quick follow-up also.

Francois Nader

Yes, Eric.

Eric Pauwels

Yes, David, thank you again for that great question. First of all as we said we were really pleased with the initial response that we’ve had. We got really no major surprises in really the ongoing discussions that we’ve had with the payors. We mentioned we have already conducted 12 clinical reviews with these payors. And they clearly do see the clinical burden of SBS, or outline, if you will.

How the burden of the disorder is and how comparable that is potentially with other ultra-orphan diseases. We also outline some of the direct and indirect costs associated with SBS, which they seem to be pretty well aware of, too. One thing that’s come up that’s consistent is that they do see SBS as a very small population. It’s not a very big, or if you will, management priority, or put that the other way around, it’s pretty much a low-cost management priority at this point due to the lower number of patients they have.

They’ve all indicated that they’re going to place this, if you will, with tier placement either tier three, tier four, specialty tier. And as we talked a little bit about earlier, some have requested prior authorizations per label. Although, again, that’s a small number so far in our initial discussions.

And generally, they have out-of-pocket, so co-pays that they’ll renew of their memberships. So overall I think, they see the burden, they actually see some of the direct and indirect costs and it’s been quite favorable. I mean, overall, I can say right now that we have about a dozen or so national and regional payors that are covering this product. Three of them, I would say are fairly notable payors. They’re the ones who have national plans and they’ve actually placed it on their formularies.

David Friedman – Morgan Stanley

Okay. And then just a quick follow-up. Have there been any payors that of not been willing to cover it thus far? And have any payors or maybe just more broadly, how are your discussions been around duration of use? And whether the payors are sort of anxious to put restrictions around the duration of use based on any degree of response?

Eric Pauwels

So, David thank you again for that question. David, I would say, I mean, so far it’s very, very early here. So far, all of the payors, both public and private have said they would cover the product. So we’ve not had anyone who has said they would not cover the product itself. So that’s an important data point; that obviously can change. We’re still very early in the game here.

Regarding our restriction of use, we’ve only had one payer that has come back and said we may actually put reauthorization as a mandate and that would be to look at the product and the effectiveness over a six-month period. However, they never mandated any specific volume and they said they would always lead back to the physician to reauthorize, as long as they are seeing improvement. So that’s really, and only one that we talked to at this point in time. We’ve really not seen too any degree except for this payer on the authorization and time points.

David Friedman – Morgan Stanley

Great. Thanks.

Eric Pauwels

Sure.

Operator

Thank you very much for your question. We have another question for you. Now this was from Jim Birchenough from BMO. Please go ahead, Jim.

Nick Abbott – BMO

Good afternoon. This is Nick standing in for Jim this afternoon. I have a question on the Natpara PARADOX trial and whether you can you provide a little more detail on the type of data we’ll see at end. For example, are you using a validated quality of life to either generic or specific for hypoparathyroidism in the trial? And as a following, can you impute any qualitative adjusted life benefits for Natpara or pharmacoeconomic benefits for Natpara? Thank you.

Francois Nader

Sure. Well, just to clarify, the study that I was referring to, PARADOX, is an epidemiological survey. And from this perspective there is no validated, actually there is no validated instrument for hypoparathyroidism to start with. I’m not aware of any validated instrument related to quality of life.

And so the purpose of the PARADOX is really to look and we had, if I recall 473 patients, I think hypoparathyroidism patients that were involved in this massive epidemiological study. The context for the epidemiological study when it comes to burden of illness is, as you know different from the context of the clinical study and the context of the quality of life instrument added to a traditional clinical study, which as we know by experience, is not very relevant in the sense that for the quality of life instrument to be meaningful, usually you have either the condition to be acute and this particular situation is chronic.

But second, you have either a long period of time in the study or a high number of patients. So the context is entirely different. Stay tuned. I don’t want to divulge more than that, but I can tell you that internally and with the experts with whom we share this study, there was a very, very high degree of excitement related to the results of this particular study. And I don’t want to jeopardize the end of communication. So, we’ll have to wait couple of two to three months before we’ll be able to release the results publicly.

Nick Abbott – BMO

Okay. Thank you.

Francois Nader

Sure.

Operator

Thank you very much, for your question. We have some more questions coming through. Our next one is from the line of David Nierengarten from Wedbush Securities. Please go ahead, David.

David Nierengarten – Wedbush Securities

Hi, thanks for taking the question.

Francois Nader

Sure.

David Nierengarten – Wedbush Securities

My question is on exactly I guess the source of patients that are currently on Gattex. Did they come off of the clinical trial program? Or have they been recruited or prescribed kind of de novo by the prescribing physician? Thanks.

Eric Pauwels

Thanks for that question David. So on the patients so far, all of them have been de novo. None of them have come from the clinical trial study.

David Nierengarten – Wedbush Securities

Great. That’s great news. Thanks a lot.

Operator

Thank you for your question. And we another question for you. This one is from James Molloy at Janney. Please go ahead, James.

Jim Molloy – Janney

Hi, guys. Thanks for taking my question. I just want to touch base. I know that I guess the high level of confidence, I would say the 200 to 300 patients by year-end and you guys reiterated that again on the call here. How do you guys feel about the 3,000 to 5,000 patient market, I know that that was recently put out that number? And I just want to get your thoughts now, a little further into the launch, is that a still a good number there, or is it a little higher, a little lower?

Francois Nader

So, the number 3,000 to 5,000 was the outcome of a bottom-up analysis that we conducted in the very, very few months before the product was approved.

I can tell you that based on the early data points that we currently have coming from multiple sources, whether it’s home infusion companies, whether it is our ShortBowelSupport.com, whether it is the number of patients that are coming from the centers of excellence with whom the MSLs have interacted over the last many, many months, whether it’s coming from the patient’s advocacy groups. So, I believe at this stage the 3,000 to 5,000 is a solid number. Now, all this being said, we are in the orphan or ultra-orphan business here. And we know that numbers can change.

But based on what we have done before the product was approved and based on the data points that we’ve had since then, I am pretty comfortable that the addressable population for the label that we have is in the range of 3,000 to 5,000.

Jim Molloy – Janney

Excellent. Maybe just a quick follow-up. I know that on the Natpara manufacturing, you guys are making everything you can to get that squared away. And to get the new deadline when you think you’ll be able to file BLA. When do you think you will know, when were you going to tell us, on the outside looking in, for certain the manufacturing issue is fixed and we’re on target for second half?

Francois Nader

Right. I would like to ask Luke to answer this question. You might or might not know that technical operations reports into Luke. Luke, would you care answering this question?

Luke Beshar

Yeah, I think, Jim, there’s (inaudible), we expect by the end of the second quarter for the various experiments that we have run. We have a number of experiments that are being run in parallel to isolate and identify and confirm the root cause so that we can then put in an appropriate remediate actions. So, with the various fork streams have readouts between now and the end of the second quarter. So, I would think that by the second quarter call, which would be in late July, early August, if not before, we should be able to give much more transparency and granularity to define resolution of the problem and the timeline to completion to the BLA.

Jim Molloy – Janney

Great. Thanks for taking the questions.

Francois Nader

Thank you.

Operator

Thank you. And we have a further question for you. This one is from Carol Werther of Summer Street. Please go ahead, Carol

Carol Werther – Summer Street

Thanks for taking my question. So...

Francois Nader

Sure, Carol.

Carol Werther – Summer Street

I wondered if you can give us any kind of an update about Europe, Gattex in Europe in terms of approvals, pricing, et cetera?

Francois Nader

So, as you know, Gattex in Europe is currently, I mean, it is licensed to Takeda and they are fully in charge of the commercialization of both actually Priotec and Revestive as Gattex is called in Europe. Revestive was approved back in August and what that the communication that they gave us is the fact that they are in the process of working on reimbursement, which is a very lengthy, tedious and at times frustrating processing in Europe. That’s the only update that I can give you. And I would say, for further questions or clarifications, I would suggest that you get in touch with Takeda directly.

Carol Werther – Summer Street

Okay. And I have another question. Do you know how many surgeries that people end up with short bowel syndrome are done each year? And would these patients be good candidates for Gattex? Thank you.

Francois Nader

Let me see if I understood the question, so you’re asking how many surgeries patients undertake before becoming short bowel syndrome patients?

Carol Werther – Summer Street

No, that would pretty much they would result having a short bowel syndrome after the surgery?

Francois Nader

Right, right.

Carol Werther – Summer Street

If there is any way to get at that number?

Francois Nader

So this is more an art than science and the reason it’s more an art than a science is there is a definition, if you will, or a convention, that some say it is definition either. The convention that says that when a patient loses over 50% of their small bowel, they are technically short bowel syndrome patients, okay. So that’s kind of the general rule. Now this rule suffers major exceptions because we have seen the patients who have one foot left, one foot of small bowel left and yet they were able to adapt and with the help of Gattex significantly reduce their dependence on parental support. We’ve seen patients with much longer remaining small bowel that either did not respond or did not respond, if you will, any way that is proportional to the remaining gut.

There are many reasons why this happens. But remember, short bowel is a condition of a condition. So if I take two extremes, for example call you have your 21-year-old young man who was in a motorcycle accident and then unfortunately, overnight lost a pretty significant portion of their small bowel. Yet their remaining is extremely healthy. And therefore their ability to absorb is significantly higher proportionately. Through the same remaining length of a person who is 85 years old, sclerotic, have suffered a colorectal cancer, have a remaining, if you will, gut not in so good condition.

So that is diversity if you will of this patient population. The good news for all the patients is the fact that independent from their geology, independent from the remaining length of the small bowel, independent from whether these patients have the colon incontinuity or not, patients tend to respond to Gattex in very significant numbers.

And this is why I get it in the size of our clinical study, it was very difficult, if not impossible, frankly to segment this population. Only post-marketing data supported for example by our registry will enable us, maybe, maybe, to, if you will, cross for patients that would be more, that has a higher probability of responding to Gattex versus others.

Carol Werther – Summer Street

Okay. Thank you.

Operator

Thank you very much for your question. And we have one more question for you. This one is from the line of Jonathan Aschoff from Brean Capital. Please go ahead, Jonathan.

Jonathan Aschoff – Brean Capital

Hi. Thank you. A question for Francois. Would it be fair to characterize those entries in Gattex presently as relatively wealthy or at the very least, are they very good private health insurance?

Francois Nader

I don’t have an answer to your question because, frankly, these patients are insured. And even within one insurance, one payer you have multiple different plans. We certainly do not ask whether these patients are wealthy or not. Our objective with Gattex is really twofold. One is to ensure that we support the patients through, if you will, work or interactions with the insurance to ensure that they will get Gattex covered and reimbursed. So this is one aspect.

The other aspect is working with either internal capabilities or outside organizations, depending if the patients are public or private patients. We want to ensure that the co-pay or the coinsurance is not a hindrance for them to be on Gattex. And that we have a very comprehensive assistance when it comes to co-pay and co-insurance.

And as a matter of fact we were very pleased, as I said earlier by the uptake of patients so early after launch. But more importantly, as Eric mentioned, by the fact that virtually every payer we’ve dealt with so far has accepted to cover and reimburse Gattex.

Jonathan Aschoff – Brean Capital

Thank you. Lastly, what was the range of discount to which you offer TPN providers you offer Gattex to them?

Eric Pauwels

We haven’t really offered any specific product related discounts. So we currently where TPN providers actually do make money, these are our five top home infusion partners that we’re working with, they do a comp pay discount which is the standard industry trade that’s a very low-single digit discount. And then what they do is they actually have contracts which they manage with the payors. So they have very broad-based contracts nationally with all the leading insurance companies. And they make a certain margin after they dispense the product. And that’s sort of in the mid to upper single-digit, based on black price. So between the two is where they actually make their margin.

Jonathan Aschoff – Brean Capital

Thanks a lot.

Francois Nader

Sure. You’re welcome.

Operator

Thank you very much for your question. There’s no further questions. So I’d now like to turn the call back to Doctor Nader for closing remarks.

Francois Nader

Thank you, Ian, and thank you everyone for your questions and participating with us this afternoon. 2012 was an outstanding year for NPS. It was highlighted by the approval of Gattex. And frankly, 2013 seems to be off to a great start with the execution of the Gattex launch, in line with or even exceeding our expectations. So we really appreciate your time today and we look forward to updating you again on future calls. Have a great rest of the day.

Operator

Thank you for your participation in today’s conference. Ladies, and gentlemen, this concludes the presentation.

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