Savient Pharmaceuticals, Inc (SVNT) Q4 2008 Earnings Call February 26, 2009 10:00 AM ET
Welcome to Savient’s year-end 2008 earnings call. (Operator instructions). I would now like to turn the call over to Philip Yachmetz, Senior Vice President, General Counsel for Savient Pharmaceuticals. Please, go ahead sir.
Good morning and thank you for participating in today’s fourth quarter, year-end 2008 financial results conference call. Last evening we issued a press release providing details and highlights of the fourth quarter and year-end results. The press release and others are available on our website at www.savientpharma.com.
Before we begin, I would like to read our safe harbor statement. Comments made my management during this conference call will contain forward-looking statements that involve risks and uncertainties, regarding the operations and future results of Savient Pharmaceuticals. In particular, we need to stress that when we discuss information regarding the efficacy and safety of KRYSTEXXA or pegloticase, our BLA filing with the FDA and the priority review process, the arthritis advisory committee, the possibility of obtaining regulatory approval for KRYSTEXXA in the United States or outside the United States, or preparations for commercialization of KRYSTEXXA, no inference of the overall success with respect to these matters, nor guarantee of approval, can be implied.
As these matters are subject to the independent review, analysis, and approval of regulatory authorities, and are also subject to a number of risks and uncertainties.
We encourage you to review the company’s past and future filings with the Securities and Exchange Commission, including without limitation, the company’s quarterly reports of Form 10-Q and our annual reports on Form 10-K, which identify important risk factors that may cause actual results or events to differ materially from those described in the forward-looking statements.
Furthermore, the content of this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, February 26, 2009. We undertake no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.
Joining us on this call this morning are Paul Hamelin, President and David Gionco Vice President and Chief Financial Officer. I’d like to now turn the call over to Paul Hamelin.
Thank you, Phil. Good morning everyone and thank you for joining us today. I’d like to start, actually, by welcoming David Gionco, who has recently been appointed to Vice President and Chief Financial Officer.
David has been a member of this Savient team for the three years, serving as Vice President of Finance and Controller, and he has a proven track record as a qualified and experienced leader within our organization. We’re going to hear from David a little bit later in this webcast on the financials.
The focus of today’s discussion will be really to review the highlights of the last few weeks and update our progress in the review process with the FDA. We will then turn the call over to David, to review our fourth quarter and year end 2008 financials, followed by a discussion about our transection to a commercial organization and the potential for KRYSTEXXA.
Just to summarize the last four months, we filed our BLA on October 31 of 2008. And then in mid-November, the board formed a BLA oversight committee to work with the new leadership of the company.
Shortly thereafter, the new management team and the BLA oversight committee began the process of bringing external, independent leading experts in to conduct a rigorous review and to generate additional analysis and interpretation of the BLA application that we filed in October.
In January, we strengthened our interactions with the oversight committee, when we retained Dr. Lee Simons, as a consultant, to serve more directly in the day to day management of activities relating to the FDA’s review of our BLA, as well as preparations for advisory committee.
In parallel to these efforts, we were and continue to be, receiving review related requests from the FDA for additional information or analyses relating to our submission. We believe the formation of the committee and the review by independent experts, has had a very positive impact on our overall efforts in this regulatory process.
At the end of December, we announced the FDA’s agreement to file our BLA and a grant of priority review. A priority review designation is assigned to drugs that are deemed by the FDA to have the potential to provide an important advancement in treatment, or provide a treatment for which there is no adequate therapy available.
In January, we submitted several amendments to our application, which we believe have strengthened and clarified the BLA. This key step, we believe, will lead to a more successful advisory panel review and a greater potential for positive action by the FDA on or around the assigned PDUFA action date.
In our conference call on February 12, two weeks ago today, we provided a comprehensive and extensive review of the safety data for KRYSTEXXA, including the data from a Phase-3 studies, the open label extension, and the 120-day safety update.
To assure absolute clarity, at this time, we would like again, to review the Cardiac Adjudication Report for the Phase-3 study. To be clear, this is the same information that we reported on the February 12th webcast from the independent post-hoc blinded and un-blinded cardiovascular adjudication that was completed last month and filed with the FDA.
We believe this clarifies the cardiovascular safety profile of KRYSTEXXA. A group of three independent cardiovascular experts, which we’ll refer to as the Cardiovascular Adjudication Committee, conducted a blinded post-hoc adjudication of cardiovascular serious adverse events from a Phase-3, double-blind controlled studies.
The purpose of this committee was to perform the adjudications utilizing the anti-platelet trial list collaboration, or APPC criteria to determine if there was a cardiovascular APPC or non-APPC event that occurred during the trial. This is a standard type of cardiovascular analysis that is well accepted by the FDA and is quite common today and provides a rigorous level of analysis.
The panel of experts found that three APPC cardiovascular events and 10 non-APPC cardiovascular events occurred in the treatment arms and no APPC or no non-APPC events occurred in the placebo group.
As reported earlier, the total number of APPC and non-APPC adjudicated cardiovascular events were therefore, imbalanced across the three treatment arms of the Phase-3 trial. We have also reported that the clinical investigators, the adjudication committee, and the company do not believe there’s a causal relationship of these events to KRYSTEXXA.
This imbalance does not necessarily imply a causal relationship or link to KRYSTEXXA, due to several factors. Therefore, we believe we will not have a negative impact in the review by the FDA of our BLA.
Let me cover these confounding factors. As we reported earlier, first, there was no functional clustering of the cardiovascular events, determined either in the APPC or non-APPC events.
Second, it was a small sample size. This small sample size, in association with the inherent imbalance of the 2 to 2 to 1 randomization, along with a small number of events, either APTC or non APTC, is a confounding factor.
Third, it is very difficult to assign causality in this sick population, which we’ve noted on review of the baseline risk factors, for cardiovascular outcomes were 84% of these patient’s had preexisting cardiovascular conditions, upon entering the trial. And a third of these patient’s had between three or six independent, known cardiovascular risk factors prior to study entry.
Furthermore, we know from numerous epidemiologic studies, the patients suffering from the consequences of hyperuricemia include an increased risk of a poor cardiovascular outcome without drug therapy.
Therefore, we’ve concluded and we believe that appropriate product labeling and a high quality, detailed REMS program, will provide the FDA and healthcare professionals the ability to provide the treatment failure population with what we believe is a disease modifying therapy, while further monitoring the safety of KRYSTEXXA.
Commercially, we’ve slowed down our efforts in hiring and completing key prelaunch programs, in recognition of the 90-day extended review class by the FDA. For those of you who have listened or participated in past webcasts, know that we’ve intentionally, for at least the last year, laid out our commercialization spend and hiring to mirror or to follow the review process. This allows us as a company to manage our cash burn efficiently.
We also took the opportunity in December, when I took over my new responsibilities, to institute some new additional internal cost savings programs, in order to continue to manage our cash efficiently and allow us the opportunity to launch KRYSTEXXA with an approval in 2009.
At this point, I’d like to turn the call over to David to review our year end financials.
Okay, thanks Paul. Let’s review the operating results for the fourth quarter and year end results of 2008 that we reported in last night’s press release. Since I will only be discussing highlights from our financial results, I refer you to our annual report on Form 10-K for more specifics and detail. We plan to file our Form 10-K next week on Monday, March 2.
The net loss for the fourth quarter of 2008 was $24.2 million or $0.45 per share, compared with a net loss of $16.6 million or $0.31 per share for the fourth quarter of 2007.
The increase in the loss from Q4 2008 versus Q4 of 2007, resulted primarily from $3 million in higher expenses relating to the continued manufacturing of Launch quantities of KRYSTEXXA, technology transfer, and clinical development work.
Additionally contributing the higher net loss was a $2.5 million reduction in investment income, due to lower cash and short-term investment balances, coupled with lower yields on those investments.
Looking more closely at the detail, total revenues for the fourth quarter of 2008 were $1.1 million, a reduction of $800,000 for the same period in 2007, as a result of increased generic competition for Oxandrin and our own authorized steric product of oxandrolone.
We expected sales of Oxandrin and oxandrolone will continue to decline or remain consistent in future periods, due to the impact of generic competition. Research and Development expenses were $17.7 million in the fourth quarter of 2008, up from $14.7 million in Q4 2007, and increase of $3 million.
The increase in R&D was mainly due to $4.6 million in higher manufacturing related expenses, related to the completion of the first commercial batches of KRYSTEXXA and the process validation of technology transfer to our secondary source supplier of KRYSTEXXA, bulk active pharmaceutical ingredient, which we referred to as ACI.
These increases were partially offset by lower clinical trial expenses of $2.3 million, as our Phase-3 clinical trials for KRYSTEXXA were completed in late 2007.
Selling, general and administrative expenses were $8.3 million in the fourth quarter of 2008, a decrease of $1.5 million from Q4 of 2007. The decrease was primarily due to a $3.2 million reduction in stock based compensation expense related to a restrictive stock award that contained a market condition for which the derived service period was not met.
In addition, stock based compensation expense related to restricted stock awards that contain performance conditions also decreased from the prior year quarter, as the majority of these awards were expensed in the fourth quarter of 2007, as a result of performance objectives being met or expected to be met. Partially offsetting these decreases in expense was the crude severance costs.
We reported net investment expense of $600,000 compared with net investment income of $1.9 million for the fourth quarter of 2007, a decrease of $2.5 million. The lower investment income is due to decreases in dividend and interest income, driven by lower cash, cash equivalent, and investment balances, in addition to lower yields earned on these investments.
The decrease in the current quarter is also attributable to approximately $700,000 of realized investment losses resulting from redemptions and impairment write-downs from our investment in the Bank of America’s Columbia Strategic Cash Portfolio.
We ended the fourth quarter 2008 with $78.6 million in cash and short-term investments, down $63.8 million from the year-end balances, which was in line with our expectations. Most of our investments are maintained in highly liquid treasury-only money market funds at the end of 2008.
We continue to monitor our cash levels through our current operating plan and have instituted various strict cost-savings initiatives to reduce or cash burn rate.
Based on our current operating plan, we are forecasting that we have enough cash to fund our operations for the next 12 months. During this period, we will continue to support the development of KRYSTEXXA and most importantly, prepare for the launch of the product.
Let me now touch on some of the year-to-date highlights, for which explanations are fairly consistent with the activities for the fourth quarter. The net loss for the year was $84.2 million or $1.57 per share, compared with a net loss in 2007 of $48.7 million or $0.93 per share.
Revenues in 2008 were $3.2 million, down $10.8 million from 2007, mainly due to increased generic competition for Oxandrin and oxandrolone, as previously discussed. R&D expenses in 2008 were higher by $4.6 million due to an increase in manufacturing related costs for the production of our first commercial batches of KRYSTEXXA and process validation and technology transfer to our secondary source supplier.
Additionally, we incurred increased expenses associated with the preparation of our BLA filing. These increases and expenses were partially offset by lower clinical trial expenses, as our Phase-3 clinical trials for KRYSTEXXA were completed in late 2007.
SG&A expenses were higher in 2008 by $4.5 million due to an increase of $3.9 million in legal expenses, as a result of our patent infringement litigation with Upshur Smith, and the settlement of loss contingencies related to two legal proceedings.
The increase in expense was also driven by higher marketing costs of $1.9 million relating to the preparation for the commercial launch of KRYSTEXXA, as well as the crude severance costs.
Partially offsetting the increased costs were $1 million in lower bonus expense and the reversal of approximately $1.5 million in stock-based compensation expense related to a restricted stock award that contained a market condition.
Investment income for the year ended December 31, 2008 was $1.1 million, compared with $8.8 million for the year ended December 31, 2007, a decrease of $7.7 million or 87%.
The lower investment income was due to decreases in dividend and interest income, driven by lower cash, cash equivalent, and investment balances, in addition to lower yields earned on those investments.
The decrease is also attributable to approximately $1 million of realized losses resulting from redemptions and impairment write-downs on our investment in the Columbia Strategic Cash Portfolio during 2008.
This concludes the financial piece of the conference call and I’d like to now turn over the call to Paul.
Thank you, David. In the last 11 weeks, starting in mid-December, much has been accomplished, as we outlined earlier in this call. We’ve spent significant amount of time with outside experts analyzing and reanalyzing the data from the totality of the clinical trial and open-label extension programs.
On February 12, Dr. Lee Simon provided a comprehensive and extensive report on the cardiovascular safety and patient deaths during the entire program, including the Phase-3 placebo controlled trials, the open-label extension, and we also included additional safety data from the 120-day safety submission to the FDA.
I'm actually pleased this morning to report that the 120-day safety update will be filed on time tomorrow with the FDA completing the reporting of safety data to the FDA for consideration as part of their review for (inaudible) of DLA. We reported on February 12 that our independent and company experts concluded that there is not an all cause death in balance in the trial.
The company believes the adjudication report of the cardiovascular events has improved the understanding of the cardiovascular risk. And along with the proposed REMS program will improve the likelihood of a positive outcome at Advisory Committee and for final approval.
The company firmly believes that the benefit to risk profile of the safety and efficacy of KRYSTEXXA is highly favorable for the treatment failure population who is severely crippled by pain and has significant disability. And we look forward to an Advisory Committee meeting when we can demonstrate our convictions and beliefs backed by the data that we have generated for this very ill population.
As a company we've now commenced the final conversion from a predominantly development stage company to a commercial entity. We've already begun the manufacturing and have shipped to the U.S. a significant quantity of bulk pegloticase product to ensure adequate launch supply and several months of supply beyond launch.
When we receive final labeling we will fill and finish the product for distribution here in the United States. And we'll continue to manage closely our technology transfer from the BTG facility Diosynth here in the U.S. as our secondary API supplier.
We anticipate that this U.S. facility will be approved as early as late 2010. Our team of medical sciences liaisons has recently begun interacting with many thought leaders in rheumatology across the country.
A key objective here is to raise awareness to the practicing physician of the unmet medical needs in the treatment failure population. The Savient sponsored natural history study titled Quality of Life and Disability in Patients with Treatment Failure Gout was recently approved for publication.
This publication will appear in the May issue of The Journal of Rheumatology. This is not a study of patients on KRYSTEXXA therapy. But it is current best practices in treating patients with treatment failure gout. This journal article is authored by several of the leading rheumatology/gout experts in the United States.
One hundred and ten of their patients who were treatment failure gout patients were followed for one year in their practices. These authors concluded the study provides evidence that symptomatic treatment failure gout has a significant impact on patient's health related quality of life and disability especially in the realm of physical functioning.
We believe these studies clearly demonstrate the enormous unmet medical need in this gout population and the growing need for new therapeutic options like KRYSTEXXA. Most of you are aware of the recent approval of febuxostat.
We view this as a very positive sign and we feel this approval will help build the entire market and it importantly signifies that the regulatory authorities also agree there need to be new treatment options for these patients suffering from either general gout or treatment failure gout.
When we do an evaluation of the febuxostat approved U.S. label we see the indications for febuxostat is a xanthine oxidase inhibitor indicated for the chronic management of hyperuricemia in patients with gout and is not recommended for the treatment of asymptomatic hyperuricemic patients.
When you compare this label – this approved febuxostat label to our proposed label submission we have submitted KRYSTEXXA is a biological pegylated uricase indicated for treatment failure gout to control hyperuricemia and to manage the signs and symptoms of gout including the improvement of tophi, the improvement of chronic pain, the improved physical functioning, and a decreased frequency of flares.
If the FDA agrees with our submission and grants us this label it should be very clear that we're in distinct populations and the drugs are intended for totally different outcomes. KRYSTEXXA would be the first gout therapy indicated to derive medically and clinically relevant improvements in patients.
We also believe that the medical management goals for the treatment failure population are different and distinct than the medical goals for the general gout population where xanthine oxidase inhibitors like alipurinol and febuxostat are targeted.
The goals for the treatment failure population are to rapidly eliminate tophi, reduce or eliminate flares, improve chronic pain by lowering the total urate pool which will lead to an overall improvement in physical functioning and health related quality of life in these patients.
Before we turn the call over to Q&A I would like to reiterate our belief that we currently have sufficient cash to operate the company through the anticipated approval of KRYSTEXXA and its commercial launch. We have and continue to have plans in place that pace our spending on the ramp-up to commercial launch with the FDA approval process.
With that being said let me be very clear the management and our board continually evaluate the financial position and financing needs of the company. I also want to make mention that the management of the company and the board also continue to remain open to various strategic alternatives for KRYSTEXXA and the company including global partnering as part of the commercialization of KRYSTEXXA both here in the United States and internationally as a means of increasing shareholder value.
So in summary the company firmly believes that the benefit to risk profile of the safety and efficacy of KRYSTEXXA is highly favorable for the treatment failure population who is so severely crippled by pain and has significant disability.
And we look forward to an Advisory Committee meeting where we can demonstrate our convictions and beliefs backed by the data that we have generated in this very ill population. So at this time I'd like to turn the call back over to the operator so that we can open up for questions.
(Operator instructions) And we'll go first to Eric Varma with Leerwink Swann.
Eric Varma – Leerwink Swann
Hey, good morning I had a quick question on a follow-on about febuxostat. If you can just kind of remind us how the CV incidents compare between febuxostat and pegloticase and in addition if you think that febuxostat might be a good use for maintenance therapy for patients who started on pegloticase and then normalized uric acid?
Yes, first of all I would really refer you or suggest that you go back in and listen to the Advisory Committee panel presentation and the cardiovascular adjudication that was presented by Tecadah at that time is a good source of quality information.
I think what was reported at that time was the cardiac adjudication one has to remember is in a totally different population so that if febuxostat trials were in general gout populations which had a far lower cardiovascular risk profile upon study entry than what was in our pegloticase trial group.
So it's hard to compare the cardiac adjudication between the two study groups. Having said that, as you know, there was an imbalance in the febuxostat trials, as well, and despite having an imbalance in that trial the Committee and the agency ultimately approved febuxostat.
So as I mentioned earlier I think that's a positive signal for us as we continue to go through the review process with the FDA on pegloticase.
Eric Varma – Leerwink Swann
And then on using febuxostat potentially as a maintenance after uric acid normalization (inaudible)?
Yes, at this time we've not conducted any trials, you know going into if you will step down or crossover therapies to oral xanthine oxidase inhibitors or anything of that nature. You know our trials were predominantly in I think 82% of the patients in our trials could not take allopurinol because they were medically contraindicated.
So there is no alternative right now. Although to your point maybe some of these patients in the future might be able to tolerate or handle febuxostat after you know a course of therapy on pegloticase or KRYSTEXXA.
Our next question comes from Salveen Kochnover with Collins and Stewart.
Salveen Kocknover – Collins and Stewart
Thank you for taking my questions. Do you intend to submit any additional amendments to the FDA ahead of a potential upcoming panel and any time points for a potential panel?
Yes, Salveen, right now we've filed a number of amendments late in January and we're – right now we do not see filing any additional amendments going forward. The totality of the data in the studies have gone in. We continue to respond to you know questions and inquiries that we get from the FDA but we do not see beyond our 120-day safety update filing which will go in tomorrow into the FDA.
Salveen Kocknover – Collins and Stewart
But the briefing book that was submitted is sufficient?
Yes, well the briefing book, of course, is the summation or the of all of the work that we've submitted in the BLA and in the subsequent amendments that we filed late in January. So it reflects all of that.
Salveen Kochnover – Collins and Stewart
Okay and just one other question, just given the amendments to the BLA and the REMS what patient population particularly are you currently targeting and how many patients do you assume fit these restrictions?
Yes, the amendments and everything still represent the same clinical trial population that we've been studying the last few years. It is that treatment failure population. And we've all always believed going back actually to our 2002 Orphan Application that the treatment failure population of less than 200,000 here in the United States.
And, in fact, we're finding that in recent years through market research and we've noted that this research indicates the population – the treatment failure population is probably between 25,000 and 125,000 patients. But we have to recognize that not all of these patients are sitting in rheumatology practices today.
They're actually scattered through the healthcare system. So we do not expect even though a number of these treatment failure populations are in the primary care practice we do not expect that primary care physicians will infuse these products.
So the first few years we'll actually treat the patients are who are in the treatment failure population that's in the rheumatology current practices. And we feel that there is probably plus or minus about 50,000 patients in current rheumatology practices that would be candidates for KRYSTEXXA.
And then I think longer term we would look to mobilize the treatment failure patients who are out in primary care practices and try to mobilize those and move those to the rheumatology practices where they might be able to get a course of.
And we'll go next to Kim Lee with Pacific Growth Equity.
Kimberly Lee – Pacific Growth Equity
Good morning, just a couple of questions. First can you give us an update on your pre-launch outreach program and any feedback that you've received so far from U.S. payers and even the European government?
Yes, Kim, you know we've got a number of different activities in our kind of pre-launch market preparation activities. Several on the managed care side, and as we've noted, we have some medical science liaisons now out here in the United States interacting with rheumatology thought leaders.
Both of those have been very good yet early outreach programs. Our managed care meetings have gone very well. The product seems to be very well received and people understand that this is a high-unmet medical need in this treatment failure population. And so the managed care discussions have gone well as have discussions with thought leaders.
We've seen increasing trends in our market research here in the United States on physicians and rheumatologists really understanding and acknowledging the unmet medical need. And the high level of pain and disability that these treatment failure patients represent.
So again very good work that way and we feel we're making some excellent progress. In Europe we've spent less time as we have less resources. We do try to spend time at the European rheumatology meetings from a Congress standpoint and we've had some good successes that way. I think, frankly, one of the biggest impacts will come from this Journal of Rheumatology article which is now accepted for publication and will be out in the May issue.
This is clearly going to, we believe, establish the severe disability and the pain and the loss of quality of life and health related quality of life that exists in this population and so I think that's just a terrific publication to really boost everyone's understanding of this true unmet medical need.
Kimberly Lee – Pacific Growth Equities
And also can you remind us your timelines for the EMA filing?
Yes, we've been focusing, great preponderance of our efforts here on U.S. approval process and priority review and Advisory Committee. We continue to make progress on our European filing and we anticipate filing yet this year in Europe. And we continue to work that way. But again our focus really is you know on our U.S. activities.
We also want to make mention that we did receive an official letter this week from the FDA which communicated to us that our PDUFA date is actually on August 1, 2009. Now that's a Saturday and being it is a Saturday you know we assume that we will receive a response from the FDA either shortly before or shortly after that Saturday August 1st date.
And that's a little bit different than the date that we publically announced being July 30. That was based on verbal communication that we had had from the agency and this formal letter that we received is now the PDUFA date of August 1, 2009.
And our next question is from Rachel McMinn of Cowen.
Rachel McMinn – Cowen and Company
Good morning, Rachel. Rachel, we could not make out a single word of your questions. I'm not sure where the technical difficulty lies there but can you try again?
Rachel? Well Rachel can you maybe…
Rachel McMinn – Cowen and Company
Can you hear me now?
Rachel McMinn – Cowen and Company
All right, sorry about that. I'm having headset troubles. All right I'm going to start again. Sorry about that, so the first question is you talked a little bit about Europe and your strategic options, you talked about – you mentioned that you're open to but I'm just wondering just how active you are there?
And then secondly on your BLA filing you know you've made all these amendments here has that impacted your view on pricing at all?
You know we as a company and I know we have stated this on a couple of past calls and really want to reiterate here again today we're extremely focused on all of our activities as it relates to the approval process and doing everything we can that way.
Having said that you know we as a board – we as a management team with the board in conjunction with our advisors continually examine all kinds of strategic options and potential partnerships and a way to optimize shareholder value.
So we remain very open to those things. Really don’t want to comment any deeper than that on any discussion that may or may not be happening. But we remain open to this but our focus truly is on preparing for Advisory Committee and getting a favorable review process here in the U.S.
As it relates to the second part of your question about pricing, as you will recall, I think you and I have talked on past calls about we did embark this fall on a – or fall of 2008 on global quantitative pricing study. And we had indicated that the final results of that study would be in in February. And indeed we have those study results.
So we were very pleased with the outcome. We're very pleased with the process and the depth of information that we received from physicians and payers in Europe and physicians and payers here in the United States.
But as I've stated in the past I really don’t want to comment about what the research states as it relates to pricing recommendations because we still have to go the next step which is ultimately to see what a final U.S. label would be in order to set the final U.S. pricing. So anything that I would say as it relates to specific pricing right now would be way too premature and preliminary because we don’t have our final approved label within the U.S.
And the same thing you know is true over in Europe. You know we would need to see what the label would be over in Europe before we could ultimately determine the final price in Europe, as well.
Rachel McMinn – Cowen and Company
Just a quick followup on FDA inspections, any update there on manufacturing?
Yes, actually we have an inspection going on today in our facilities here. And we continue to have you know we reported two weeks ago about a number of inspections that are set up and lined up. And those are in process and ongoing. So we continue to have open activities and the inspections going on with the FDA.
And we'll go to Andrew Vaino with Roth Capital.
Andrew Vaino – Roth Capital
Hi, just a quick followup on that one, in terms of FDA inspections you mentioned ongoing there were you were. Is there any update on the FDA inspections at the API manufacturing site in Israel?
Yes, we continue to dialogue with the FDA. We want to continue to obviously reschedule that. We've reported a couple of weeks ago that we had an inspection date that was agreed upon and both you know ourselves and the agency was prepared to do that. But due to travel restrictions we had to cancel that.
So we continue to be in dialogue with the FDA and we continue to attempt to reschedule this. But we need regional stability to settle in so that we can get final dates on the calendar.
Andrew Vaino – Roth Capital
Okay, and secondly, you guys have had a couple of fairly substantial management changes in the past three months. Can we expect any more changes going forward or is this most likely done?
Yes, and again, in that case our business in the pharmaceutical or the speciality pharmaceutical is a dynamic business and there is a lot of volatility and various things that go on. So we don’t anticipate you know if there will be or won't be any additional changes going forward in the company.
We'll go next to Eun Yang with Jefferies and Company.
Eun Yang – Jefferies & Co
Thanks very much, could you give us an update on the retreatment study that you have planned and secondly would you have some data in hand when you have a panel meeting – an FDA panel meeting sometime in June?
Yes, we have filed as mentioned earlier within our 120-day safety update which will go in tomorrow and earlier filings we've included the retreatment to re-exposure. So that's already been submitted. It will again in a submission tomorrow. And there's really nothing to update as it relates there other than what we've reported in the past which there have been no unexpected you know events or anything upon re-exposure in the small number of patients that have been re-exposed to the drug.
Eun Yang – Jefferies & Co
Okay, thanks and then last question is on your financial assumptions and you had mentioned earlier that you guys are going to also going to be preparing for commercial launch of the product this year. And can you kind of give us a little bit more detail on how many sales reps are you thinking and kind of the amount that you spend before the drug is approved?
Yes, let me, as it relates to the personnel ramp-up we have sized our needs to basically be 66 people at the field level, 60 of those being sales representatives and 6 being regional managers to manage 10 individuals each.
Now the hiring for those are very late in the approval process. The actual hiring of 60 sales representatives we will not do until we have an approval from the FDA. So right now if following our current PDUFA timeline of August 1st, if we receive approval on August 1st then we would do the sales rep hiring after that time.
And we would immediately move to a launch. The district sales managers we would hire earlier than that but again in a very staged and very cash conserving way. So those from an overall burn and ramp standpoint are still out into our future.
We'll go next to John Newman with Oppenheimer.
John Newman – Oppenheimer & Co
Hi guys, thanks for taking the question. Can you make any comments on what the safety looks like in the 120-day safety update? And also do you think there is any possibility that you can have a joint panel potentially with rheumatology and also with safety? Thanks.
Yes, John, we reported and Dr. Simon reported actually on February 12th all the safety information as it relates to both our randomized control trials and our Open Label extension and the 120-day safety update. So substantially everything that we have from a safety standpoint has been reported as of two weeks ago.
We also – as it relates to I'm sorry, John, the second part of your question was?
John Newman – Oppenheimer & Co
I'm just wondering if you think there is a possibility of a joint FDA panel between the rheumatology division and potentially also the safety division?
Yes, it's hard to speculate at this point in time who the actual panel members will be as the FDA goes through that process. So we just don’t have any idea and won't know until much closer to the Advisory Committee itself.
John Newman – Oppenheimer & Co
Okay, just one last one. The APTC analysis that you guys previously conducted you mentioned that you talked about sort of the full breadth of exposure. Did the APTC analysis encompass the Phase 3 portion, the extension trial and also this 120-day safety update, as well.
Yes, what Dr. Simon reported on two weeks ago was APTC, non-APTC of the Phase 3 trials which I just went through and repeated again here just a little bit earlier on the call. But he also reported on the APTC and non-APTC of the Open Label extension and of the Phase 2. But again we have to keep in mind the Phase 2 and the Open Label extension have no comparator arms.
There is no one on placebo. They're all on drugs so the meaningful information in those two populations really doesn't have a lot of meaning. Where the meaning is important is in the randomized control trial where you do you have a placebo arm.
So it's hard to well you can't add those or you can't pull those together just because they're just totally different populations, if you will. Or without controls.
We'll take our next question from Carol Wether with Summer Street Research.
Oh thank you, could you just update us on how much product you can make in the current plant?
Yes, we have a number of batches that we already have here that have been shipped from our API manufacturing at BTG in Israel. And those are here in our fill/finish supplier which is Enzon in Indianapolis. So we've already brought over a number of batches.
And we believe that the number of batches that we currently have here in the United States at Enzon is very sufficient for launch and several months after launch here in the U.S. So we think we're in pretty good shape from a product supply standpoint.
So can you can give us sort of an estimate you might be able to treat and or how many several months you think you've got product for?
I understand you know the question that you're asking you know looking for number of patients and/or number of batches or number of vials that we have in the in the United States. I prefer actually not to get into that level of detail. But just you know please feel confident that we have launch quantities and several months of post-launch product here in the U.S.
And we continue to make product and to bring it over from BTD to Enzon, as well. So in future months we'll continue to bring product over.
And our final question comes from Kim Lee with Pacific Growth Equities.
Kimberly Lee – Pacific Growth Equities
Great, just a followup question – a financial question. The R&D expenses for this past quarter would you say that would be a good base to start Q1 '09.
Kim, I'm going to throw it over to David.
Kimberly Lee – Pacific Growth Equities
Hi Kim, this is David. The – in the quarter we produced a fair amount of batches that Paul just touched on in an amount of about $4 million that is included in the R&D amount, as well as, some other excipient materials in an amount of $2 million. So that impacted the quarter fairly significantly in our stock up of inventory for KRYSTEXXA. As far as going forward we typically don’t provide guidance and so I'd rather not comment on that.
But you know hopefully it give you a little idea of what occurred in the quarter.
Kimberly Lee – Pacific Growth Equities
Right, and do you expect to make additional batches this quarter or are you finished with that for now?
We do but not at the same level.
Kimberly Lee – Pacific Growth Equities
Okay, great. Thanks.
That does conclude our question and answer. At this time I'd like to turn the conference back over to Paul Hamelin for any additional or closing comments.
Thank you everyone and thank you to the operator. We've made tremendous progress over the last several months and we believe that we're going to be well prepared for the upcoming Advisory Panel when it is rescheduled if we continue to respond to review related questions from the FDA as they arise.
The members of the Savient team, the BLA Oversight Committee of our board and our panel of experts have worked tirelessly and we appreciate everyone in the company and the effort that they are putting forward to this review process.
We're looking forward to the future ahead as KRYSTEXXA (ph 00:51:58), if approved will provide a great hope to those patients who are suffering from this very painful and debilitating treatment failure gout. Thank you everybody.
That does conclude today's conference call. Thank you for your participation. You may disconnect at this time.
Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.
THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.
If you have any additional questions about our online transcripts, please contact us at: firstname.lastname@example.org. Thank you!