Amylin Pharmaceuticals Inc (AMLN) Q1 2009 Earnings Call April 16, 2009 5:00 PM ET
Daniel Bradbury - President & Chief Executive Officer
Mark Foletta - Senior Vice President, Finance & Chief Financial Officer
Vince Mihalik - Senior Vice President, Sales and Marketing & Chief Commercial Officer
Orville Kolterman - Senior Vice President, Research and Development
Michael York - Senior Director of Investor Relations
Thomas Wei - Piper Jaffray
Matt Osborne - Lazard Capital Markets
Cory Kasimov - J.P. Morgan
Tom Russo - Robert W. Baird
Jim Birchenough - Barclays Capital
Craig Gordon - Frontside Research
Good day ladies and gentlemen and welcome to the first quarter 2009, Amylin Pharmaceuticals Incorporated earnings conference call. My name is Stacey and I’ll be your conference moderator for today. At this time all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of the conference. (Operator Instructions)
I would now like to turn the presentation over to your host for today’s call, Mr. Michael York, Senior Director of Investor Relations; please proceed.
Good afternoon. Welcome to Amylin Pharmaceuticals quarterly update conference call. Today’s discussion will contain forward-looking statements that involve risks and uncertainties. These risks and uncertainties are outlined in today’s press releases and in our recent filings with the Securities and Exchange Commission. Our actual results could differ materially from what is discussed on today’s call.
Let me introduce the other members of the Amylin management team here today; Daniel Bradbury, President and Chief Executive Officer; Mark Foletta, Senior Vice President of Finance, and Chief Financial Officer; Vince Mihalik, Senior Vice President of Sales and Marketing and Chief Commercial Officer; and Orville Kolterman, Senior Vice President, Research and Development.
I’ll now turn the call over to Dan Bradbury.
Thanks Michael. This afternoon we will build on the press release issued earlier today and provide additional color in detail around the company’s progress and performance in the first quarter. We’ll then update you on the five primary areas that we are focusing on, to create value for Amylin shareholders. These are (1) BYETTA; (2) exenatide once weekly; (3) SYMLIN; (4) our obesity programs and (5) improving our operating results.
First, I want to frame the call with our major highlights of the first quarter and remind you that we have uploaded a presentation on our website that provides additional background on the quarter.
(1) We improved our non-GAAP operating loss by 55% over the same period in 2008 and we remain on track to achieve our stated business objective of generating positive cash flow from operations by the end of 2010.
(2) We have strengthened our alliance with Eli Lilly and Company an initiated ExenatideOne; an integrated co-located medical development and commercial team for the exenatide franchise. I will comment on this exciting development later.
(3) We reported positive results of exenatide once weekly from DURATION-2; the first comparative efficacy trail ever undertaken against maximum dose of two commonly used brands, Actos and Januvia.
Now, I will highlight our progress on the five areas I mentioned earlier. First is BYETTA; the only GLP-1 receptor agonist currently on the market, which was added late last year to the American Diabetes Association treatment guidelines the type 2 diabetes.
In spite of the addition the revise treatment guidelines, BYETTA sales have remain relatively flat quarter-over-quarter, due in part to the overhang of concerns regarding pancreatitis, as well as broad economic factors that appear to be impacting the way people with diabetes are managing their diseases. Vince and Orville will comment on these topics later.
I’d like to turn to an exciting alliance development that we’re announcing today, the creation of ExenatideOne. Building on the successes of the partnership between our two companies, Amylin and Lilly continue to fortify their relationship. To improve operational effectiveness, increase financial and process efficiencies across the Amylin, Lilly alliance and to maximize the value of BYETTA and exenatide once weekly; we are restructuring our exenatide operations with Lilly.
This restructuring resulting from engagement at the higher levels of Amylin and Lilly leadership is called ExenatideOne. We result in one integrated team, co-located in San Diego. This team will have single points of accounts ability across most functions. My expectation is that in this restructuring, along with future enhancements will result in more efficient and effective execution.
Vince Mihalik, our Chief Commercial Officer who joined us in January, will speak to the details of the new structure in a few moments. I believe that with the implementation of exenatideOne, the resolution of the pending regulatory issues and strong execution of our plans with physicians and other constituents, we have the opportunity to return BYETTA growth and position exenatide once weekly for a strong launch.
In the first quarter, we made significant progress in our second area focus; that is exenatide once weekly. In DURATION-2, the second in the series of head-to-head studies designed to test the superiority of exenatide once weekly, against other diabetes medicines, patients on exenatide once weekly experienced a statistically significant reduction in blood sugar, compared to maximum doses of two of the newer widely-accepted diabetes treatments, Actos and Januvia.
Additionally, we reported data from the DURATION-1 extension that we believe will demonstrate comparability between intermediate scale clinical trial material made in Alkermes manufacturing facility and the commercial scale drug product made at Amylin’s manufacturing facility. This enables us to maintain our goal of submitting exenatide once weekly to the FDA this quarter.
Moving onto SYMLIN, our third opportunity for value creation, our compound addresses the unmet needs of patients using mealtime insulin. We will continue to focus on growing SYMLIN revenue, which was flat quarter-on-quarter. While SYMLIN addresses a smaller portion of the diabetes marketplace, we believe that we can grow this product, which is an important contributor to the physician’s range of treatment options and remain a key economic contributor to the company’s finances.
Our obesity program represents the fourth area of value creation. We remain on track to complete our two clinical trials with Amylin and leptin analogs later this year. Our pramlintide/metreleptin Phase 2b study finishes up in the third quarter and our Phase 2 study with davalintide completes in the fourth quarter of this year.
While not likely to be at the front of peoples minds at present with regards to Amylin’s near term prospects, these remain very exciting longer-term programs and opportunities for future growth for the company. We will finalize our obesity funding and development strategy later this year.
Lastly, the fifth area of value creation; we continue to reduce our expenses and improve operating results and are on track to the goal of achieving positive operating cash flow by the end of 2010.
I will now turn the call over to Mark to review our current financial performance in detail.
Thanks Dan and good afternoon. I’ll start by quickly reviewing selected first quarter figures from our earnings release earlier today. As I discussed last quarter, the key metric to track our progress is non-GAAP operating loss. We believe this metric is an important measure of the performance of our business, as it approximates our use of cash for operations before working capital changes, as we drive towards our stated goal of positive operating cash flow by the end of 2010.
As a reminder, non-GAAP operating loss is defined as our GAAP loss, less non-cash items, principally equity compensation, depreciation, amortization and any one-time charges. Non-GAAP operating loss was $19.9 million compared to $44 million for the same period in 2008, a $24.1 million or a 55% improvement.
Total revenue was $193.7 million, including net product sales of $179.3 million in the first quarter, compared to total revenue of $197.2 million, including net product sales of $178.7 million for the same period in 2008.
Product sales in the first quarter were $157.7 million for BYETTA and $21.6 million for SYMLIN. Net product sales in the first quarter were impacted by a reserve of $5.8 million associated with the Tricare Retail Pharmacy program; the majority of which relates to BYETTA and represents rebates retroactive to January 28, 2008, pursuant to a final rule implementing this program that was issued last month. Of this $5.8 million, $4.8 million relates to retroactive rebates for 2008.
Excluding the impact of the Tricare reserve, net product sales for BYETTA were $163.1 million for the first quarter, compared to $158.5million for the same period in 2008. Net product sales for SYMLIN excluding the impact of the Tricare reserve was $22 million in the first quarter, compared to $20.2 million for the same period in 2008.
Additionally, we believe that we experienced a slight destocking of a couple of days in wholesaler inventories during the first quarter. The inventory drawdown appears consistent with published reports that indicate wholesalers may have worked down inventories in the first quarter.
Cost of goods sold was $18.6 million reflecting a gross margin of approximately 90%. The improvement in margins primarily reflects higher net sales prices per unit. Selling, general and administrative expenses decreased to $87.6 million compared to $98.2 million for the same period in 2008. The decrease is primarily attributable to lower promotional spending for BYETTA and SYMLIN and our reduced cost structure following the restructuring at the end of 2008.
Research and development expenses decreased to $60.0 million compared to $77.2 million for the same period in 2008. The decrease in the current year is primarily attributable to lower development expenses for exenatide once weekly and BYETTA, and our reduced cost structure following the restructuring at the end of 2008. Research and development expenses for the first quarter of 2008 also included an $8 million license payment for drug delivery technology.
Net loss for the quarter was $47.8 million or $0.34 per share, compared to a net loss of $71 million or $0.52 per share for the same period in 2008. At quarter end, we held approximately $711 million of cash, cash equivalents and short term investments.
I now like to review and reiterate previous financial guidance. We continue to expect our non-GAAP operating loss to be between $75 million and $100 million in 2009, compared to a non-GAAP operating loss of $137 million in 2008. Non-cash expenses projected for 2009 were approximately $100 million, and consist of $60 million to $65 million of stock-based compensation, and approximately $35 million to $40 million of depreciation and amortization. Our expected GAAP operating loss for 2009 is between $175 million and $200 million, compared to $242 million in 2008 before restructuring charge.
To assist you in understanding the rest of our income statement, I will provide some additional information. We expect collaborative revenue in 2009 to be comparable to 2008 and will consist primarily of cautionary payments from Lilly to equalize exenatide development expenses. We expect that our gross margins will remain strong in 2009 at approximately 87% to 89%.
Consistent with our prior expected expense reductions, we believe our total GAAP operating expenses in 2009 will be between $600 million and $625 million. We now expect that net interest expense will be $20 million to $25 million for 2009. This reduced guidance primarily reflects a reduction in the impact of non-cash interest expense, net of capitalize interest, associated with the adoption of FASB staff position APB 14-1, effective January 1, 2009, which was finalized in the first quarter.
To finish up on the cash flow front, we offer the following additional guidance. We expect capital expenditures to be approximately $100 million in 2009, driven largely by activities necessary to complete and validate our Ohio manufacturing facility. This is down from capital expenditures of approximately $300 million in 2008.
Maturities of our long term secured debt will result in payments of approximately $30 million. We are continuing to pursue options to offset the research and development expense associated with our obesity and early stage programs. The cumulative effect of this guidance suggests that we expect to finish 2009 with a substantial cash balance of approximately $600 million, with access to an additional $165 million from Lilly.
There is potential from modest downside associated with working capital investments we may chose to make in late 2009, in preparation for the launch of exenatide once weekly. Most importantly, I want you to know that driving toward positive operating cash flow and maintaining a strong position are our top priorities in managing the business.
In summary, I’ll remind you the statement we made in November 2008 in connection with our strategic restructure. We said that actions taken would result in expense reductions in 2009, and even greater reductions in 2010. Our first quarter financial results, demonstrate the impact of these actions. We will continue to manage our spending inline with revenue expectations, enabling us to reach the stated operating results targets in 2009 and our stated goal of positive operating cash flow by the end of 2010.
I now like to turn the call over to Vince Mihalik, to review our current commercial efforts and provide further details regarding our exciting new organization initiative with our Exenatide partner Eli Lilly.
Thank you Mark. I will now provide an update on our commercial activities here at Amylin. First, I want to start by reinforcing my commitment to accelerate the growth of BYETTA and SYMLIN, as well as maximize the launch of commercialization of exenatide once weekly.
We have an opportunity to help more patients, comprehensively manage their diabetes and we’ll do just that. To accomplish these objectives and be more effective and operationally and financial efficient in our commercial activities, we are restructuring exenatide operations with Lilly and we are creating a more integrated efficient approach to development, sales and market for BYETTA and exenatide once weekly.
In this restructuring named ExenatideOne, we have created one integrated team to drive our plans and address competitive dynamics in the marketplace. Clearly, ExenatideOne demonstrates both Lilly and Amylin’s long term commitment to the exenatide franchise.
The integrated team, which will be located here in San Diego, will report to the alliance steering committee, co-chaired by Dan Bradbury and Bryce Carmine, who is the Global Head of Sales and Marketing at Lilly. This closer engagement of senior leadership reflects the shared vision of Amylin and Lilly.
ExenatideOne is a single commercial Medical and Research Development team with single accountability for aligning strategy and a tactical execution. I expect this integrated and collocated team to help me turn BYETTA to grow and to effectively launch once weekly. I want to thank our colleagues at Lilly for working with us on this truly unique and integrated approach, to commercializing the Exenatide franchise and I expect additional enhance to the alliance as we go forward.
Now, I’ll provide a brief overview on the current business. As noted earlier, 2009 we’ll marked the fourth year on the market for BYETTA and it has been used by more than 1 million patients and physicians have written in excess of 7 million prescriptions since launch.
BYETTA is the first and only FDA approved GLP-1 receptor agonists available on the market. BYETTA occupies a unique place in the treatment of type 2 diabetes, by addressing significant unmet needs, with the dual benefits of powerful glucose controlled with weight loss, supported by a low of risk of hypoglycemia in a favorable cardiovascular risk profile.
BYETTA has not only been accepted by patients, but also by advocacy groups and key opinion leaders. In their upgraded treatment guidelines published at the end of 2008, the American Diabetes Association and the European Association for the study of diabetes endorsed the approach of treating diabetes with glucose controlled therapies that promote weight loss without increasing hypoglycemia.
This recommendation of therapies that promote weight loss is an important update, as excess weight is a challenge for 80% to 90% of the 25 million people living with type 2 diabetes in the United States. More importantly, it is further evidenced that the weight key opinion leaders view diabetes therapy is shifting. These treatment guidelines have not been updated in over two years and were written after careful consideration of the efficacy, safety, tolerability, cost and ease of use of currently available medicines. BYETTA was the only new edition to the revised guidelines.
Now let’s talk about our results in the first quarter. Before we get into the specific details of our brands, I’d like to establish the context of the market in which we are operating. As Dan mentioned earlier, the economy is having a negative impact on branded medicines as well. Earlier this week, the associated press highlighted this issue as they described how people living with diabetes were skimping on medicines, doctor visits and supplies during this difficult time.
Against this backdrop, adjusted sales were flat quarter-over-quarter, while total prescriptions by of BYETTA were down modestly compared to the fourth quarter of 2008, following the decline in the second half of last year based on the FDA posting on pancreatitis. As Orville will discuss later, we’re continuing to better understand the relationship between BYETTA and pancreatitis in continuing our discussion with the FDA.
Now moving on, lets discuss our BYETTA sales and marketing efforts. While BYETTA’s inclusion in the treatment guidelines and the anticipated monotherapy indication are very important, we are continuing to take aggressive actions to promote the unique profile of BYETTA and capitalize on the ships and clinical thinking and return the product to grow.
As an example, our physician and patient support programs like BYETTA by your side for primary care are having a positive effect. These programs are designed to better support BYETTA new patient starts and improve long term patient adherence. Further, we continue to educate physicians on the broad 85% Tier 2 access for BYETTA across commercial managed tier providers.
The combination of a favorable shift in clinical thinking in the medical community, and our focused marketing and sales efforts position BYETTA well for future growth. We remain committed to optimizing the potential of the only type 2 diabetes medicines available, that provides the two benefits of powerful glucose controlled with weight loss, supported by a low risk of hypoglycemia and a favorable cardiovascular risk profile.
Now let’s move onto SYMLIN, which is the first and only FDA approved Amylin analog. It too is in its fourth year on the market in 2009 and address unmet needs in insulin therapy by reducing blood glucose fluctuations, improving glucose control and causing weight loss for people with type 1 and type 2 diabetes, who use mealtime insulin.
Overall prescription for SYMLIN declined approximately 8% quarter-to-quarter. Although with the new and innovated convenient SymlinPen, which now represents about two thirds of all prescription and with our focused efforts, prescriptions for SymlinPen NRx grew by 4.8% Q1, 2009 to compared to Q4, 2008.
During the quarter, we have reassessed our physician targeting and going forward our plan is to sharpen our physician targets, depending SYMLIN adoption by current prescribers and simplifying patients’ selection, while managing expectation and supporting our patients. Our goal is to increase adherence through a high tough, high support marketing strategy.
I’ll now turn over the call to Orville
Thank you Vince. As Dan mentioned earlier, we continue to work to better understand the relationship between BYETTA and pancreatitis described in some spontaneously reported cases. In keeping with our focus on patient safety, we continue to pursue our drug safety program that includes thorough investigation of individual’s spontaneous case reports, along with clinical and epidemiological studies.
Within the detection limits of an initial epidemiology study, we have not observed an increased incidence of pancreatitis associated with BYETTA compared to other treatments for diabetes, and thus believe a definite causal relationship between BYETTA and pancreatitis as not been proved. This data was published in Current Medical Research and opinion found that the risk of acute pancreatitis among initiatives of BYETTA or sitagliptin was similar to initiatives or metformin or glyburide to older more traditional therapies.
Additionally, another study published last quarter also helped to furether characterize pancreatitis in the type 2 diabetes population. This manuscript published in diabetes care downs the risk of pancreatitis in patients with type 2 diabetes to be roughly three times that of people without diabetes.
The FDA is continuing with its review of the regulatory application from monotherapy and several other prescribing information updates; including revision of safety language, including pancreatitis. While this process has taken considerable time, we continue to be encouraged by our interactions with the FDA and a careful review of the data we have provided and remain confident of resolution of this issue in the near future.
Again, we continue to further understand this relationship and have shared the recently published studies and other information with the agency. We believe that with the resolution of dependant regulatory issues and strong execution of our plans with physician and other constituents, we have the opportunity to continue to grow BYETTA in the near term and position once weekly for a strong launch.
Now, before I highlight the regulatory progress to the plan submission for exenatide once weekly, I want to provide perspective on the recent advisory panel for the liraglutide. Keep in mind that in Amylin, we are grounded in science, science is our strength. We have been investigating the GLP-1 area since 1996 and we established ourselves as leaders in 2005, when we launched BYETTA with our partner Eli Lilly.
At the recent FDA Advisory Committee meeting concern was raised regarding a preclinical cancer finding in the liraglutide development program particularly malignant C-cell carcinoma of the thyroid.
Let me first highlight, what we know. Currently, there is no clinical evidence that thyroid cancer of any type is a GLP-1 class effect. The discussions at the recent Advisory Committee meeting highlighted that risk benefit considerations are key for any potential therapeutic agents.
Drugs within the same class often have distinct efficacy and safety profiles due to differences in structure, mechanism of action and metabolism. Within the area of diabetes, we have three distinct examples. First, the biguinides where you can contrast phenformin with metformin, the thiozolidinedione class where you can contrast Actos with Avandia, and with resilient and the DPP-4 inhibitor class where you can contrast Januvia with [galvas].
Regarding efficacy, BYETTA and liraglutide appear to have similar results in terms of both glucose and late lowering FX. Yet BYETTA has no preclinical signals of cancer, but instead had established a well documented safety profile. BYETTA has been used in more than 1 million patients with over 7 million prescriptions written since introduction to the market. BYETTA and liraglutide are distinct molecules with significant differences in structure and metabolism.
BYETTA is not a GLP-1 analog instead BYETTA is a synthetic provision of a naturally occurring peptide that function as GLP-1 receptor agonists. BYETTA achieves clinical efficacy at much smaller doses of peptide and liraglutide. BYETTA is administered at low doses 5 or 10 micrograms and largely cleared intact through a well characterized renal elimination pathway. Liraglutide is administered at high milligram doses of peptide and circulates at high concentrations in the blood stream.
To achieve clinical outcomes similar to those achieved with BYETTA, first a patient must be exposed to approximately 90 to 100 or more liraglutide per day based on a weight basis of the drug. The drug substance that is administered the greater the potential for undesired for half target effects. The regulated bricks down into metabolite that circulate in the blood stream, the effects of these biologically active bi-products are not well characterized.
BYETTA has a different more typical peptide construct and is cleared largely intact by the kidneys and then fully eliminated from the body. In carcinogenicity studies, liraglutide was associated with increased malignant C-cell cancers in both males and females and rats and mice. In addition, the significant increases in malignant progress are commerce of the scan was seen in male mice.
Now, let’s focus on BYETTA. BYETTA is the only GLP-1 receptor agonist currently available for clinical use offering powerful sustained A1C reductions with weight loss. There is no limit association with evaluate C-cell carcinoma and BYETTA based upon preclinical trial data and post marketing surveillance data. Preclinical findings are outlined in the prescribing information for BYETTA.
To summarize, in BYETTA preclinical studies, beanie thyroid tumors were observed in female rats at all exenatide doses in a two year study. No tumors were observed in male rats or mice of either sex. For BYETTA, extensive clinical studies as well as post marketing data do not suggest an association of thyroid tumors of any type. As of 30 September, 2008 experience of BYETTA included more than 5500 subjects exposed in clinical trials with greater than 4600 total subject years of exposure.
Some advisory panel members questioned, there was a concern about thyroid cancer might apply to BYETTA. In response the questions of the post meeting press conference a senior FDA official stated that “the agency looked back at the clinical data for BYETTA and didn’t see any thyroid cancer risk and the agency so for hasn’t detected an increased risk and looking at post marketing data” but also said there are limited data to the preventively rollout it possible increased risk.
Now let me help you understand, what this data means to once we got. If approved exenatide once weekly will be the first once a week therapy for the treatment of type 2 diabetes. It has the potential of significantly advancing the treatment of type 2 diabetes as demonstrated by efficacy data from DURATION-1 and DURATION-2 studies and its novel once weekly administration.
In these comparative studies the exenatide once weekly as demonstrated a greater glucose lowering effect than three recently approved widely used medication for type 2 diabetes namely Actos, BYETTA and Januvia. In the preclinical program a two year study in rats employing three doses of exenatide once weekly demonstrating a finding similar to that seeing in the BYETTA program, an increase incidence of benign thyroid tumors called C-cell adenomas.
These tumors were observed in both males and females. In this study C-cell carcinoma a slow growing malignant tumor is also seen. While observe at all doses in both males and females the incidence of these malignant tumors was significantly increased only in female rats treated with the highest doses, the doses that provided tissue exposure approximately 30 times that seen with the intended human doses. Again I want to emphasis that the apples ability of these findings to human diseases has not been clearly established.
In addition no evidence of C-cell cancers received during exposure in primates in studies that extended over 11 months, that no time during either the BYETTA or exenatide once weekly program that malignant fibrosarcomas been seen this contrast to the liraglutide program.
Moving back to the clinical program, in late March 2009 we announced positive results from DURATION-2. The second in a serious of comparative studies designed to test a superiority of exenatide once weekly and investigational diabetes therapy as compared to other diabetes mitigations.
DURATION-2 a 26 week clinical study compared to exenatide once weekly from maximum doses of both sitagliptin and pioglitazone. In 491 patients with type 2 diabetes taking stable doses of metformin. After completing 26 weeks of treatment the valuable patients randomized to exenatide once weekly experience the spastically significant reduction and A1C of 1.7 percentage points from baseline. This contracted with a reduction of 1.0 percentage point sitagliptin and 1.4 percentage points were patients treated with pioglitazone.
This finding represents a spastically significant benefit of exenatide once weekly over both sitagliptin and pioglitazone. Treatment with the exenatide once weekly also produced spastically significant difference in weight, but weight loss of 6.2 pounds at 26 weeks compared with a loss of 1.9 pounds for sitagliptin and a weight gain of 7.4 pounds for pioglitazone.
Together with our collaboration partners Lilly and Alkermes, we are pleased that exenatide once weekly met the primary end points of the superiority study and show a greater reduction in A1C in sitagliptin and pioglitazone. Additionally, from an averaged based line of 193 pound at the end of the study patients on exenatide once weekly weight an average of 14 pounds less than patients on pioglitazone and four pounds less than patients in sitagliptin.
These data continue to establish the value proposition for a once weekly treatment that if approved as the potential to help patients improve their diabetes management. I want to reinforce that we are progressing steadily toward the NDA filing for exenatide once weekly by the end of this quarter.
As you know, there are four important components to the submission. Pivotal safety and the efficacy data; two, comparability of manufacturing our commercial scale versus clinical scale; three, analyses of cardiovascular risk; and four, risk benefit assessment.
First through our ongoing interactions with the agency, we continued to believe that the DURATION-1 study provides the necessary pivatol safety and efficacy data for the submission.
Second, the agency has also indicated that the ongoing extension of the DURATION-1 study, employing across over design is appropriate as the basis for demonstrating comparability of intermediate scale clinical trial material made in Alkermes manufacturing facility and commercial scale drug product made in Amylin’s manufacturing facility.
I am pleased to report that we have completed the analysis to demonstrate comparability necessary for the regulatory submission of exenatide once weekly, and those analysis will be a part of the new drug application submitted to the FDA in the near future. We are confident that we will have a strong submission package.
Third, as we announced a few weeks ago, we conducted a meta-analysis of primary cardiovascular that’s across controlled clinical studies of three months or greater duration from the BYETTA exenatide injection database. This analysis showed no increased risk of cardiovascular events associated with exenatide use. This analysis was done in a manner consistent with U.S. Food and Drug Administrations updated guidance for evaluating cardiovascular risk in type 2 agents and is also aligned with the additional insights provided by the agency at the recent Advisory Committee meeting.
Results of this analysis indicate that the relative risk of cardiovascular events in exenatide treated patients compared to control was 0.7, with a 95% confidence in overall of 0.38 to 1.31. In this analysis cardiovascular events included cardiovascular mortality, myocardial infarction, stroke, hospitalization for acute coronary syndrome and revascularization procedures.
Finally, the potential benefits of exenatide once weekly are represented by comparative efficacy against leading diabetes medicines. Robust glucose lowering, no increase in hypoglycemia, weight loss instead of weight gain, favorable changes in cardiovascular risk factors complemented by the favorable meta-analysis results from the BYETTA safety database and once weekly administration. These potential benefits need to be weight against what is still a theoretical concern of C-cell tumors in human.
Before turning this back to Dan, let me emphasize that we will finalize the remaining aspects of the data analysis for our NDA filing for exenatide once weekly over the next few weeks and again remain on track to submit the filing within the current quarter.
Thank you, Orville. I’ll add a few comments before we close and take your questions. I would like to quickly preview the American Diabetes Association scientific meeting that will be held June 5, through June 9 in New Orleans. Once again, we’re planning to have a significant, scientific and commercial presence at that meeting.
I’m pleased to announce that we have had more than 20 abstract accepted at the meeting. These studies reflect the breadth and depth of our scientific and clinical programs and the tremendous interest among the medical community for our novel approach to developing first-in-class medicine to address diabetes and obesity.
Also several other studies have been submitted as late breakers. We have provided educational grants to support two medical education symposia and we’ll have a commercial exhibit where attendees can learn about Amylin, BYETTA and SYMLIN. Of particular note, please mark your calendars for a webcast of our annual investor reception on Sunday, June 7 at 7.45 pm Eastern Time to review meeting highlights. We look forward to see many of you in New Orleans. A preliminary list of abstracts and other activities at ADA will be posted shortly on our corporate website.
Now also as many of you have seen, we recently announced our direct nominees for election at the 2009 annual meeting stockholders schedule for Wednesday May 27, 2009. Over the past several months, the company’s corporate governance committee, in close consultation with the independent directors, engaged in a through process to identify a slate of highly qualified and experienced nominees that the board strongly believes will best serve the interests of all Amylin shareholders.
New nominees to the board are Paul Clark, former Chairman, Chief Executive Officer and President of Icos Corporation and Paulo Costa, former President and Chief Executive Officer of Novartis U.S. Corporation. Both Paul and Paulo possess valuable operational and commercial experience in the biopharmaceutical industry, which will serve to augment the strengths of the board.
Eastbourne Capital and Icahn Partners have both publicly indicated that they intend to separately nominate the slate of five directors for election at the meeting. It is important to note that we have met with both of these shareholders and welcome the opportunity to meet with them again, either separately or together.
On a related topic, you may have seen our news yesterday filed in an 8-K, that we have reached a partial settlement with San Antonio Fire & Police Pension Fund. This settlement validates our view that our shareholders should have the right to make decisions on the matters such as board competition. We have always been and remain committed to doing what is in the best interest of all our shareholders.
We publicly disclosed all of the information that is available on our proxy situation as of today. We are in the process of finalizing our proxy materials and will be reaching out to shareholders to discuss these matters in the near future. As we move to the Q-and-A portion of the call, I’d ask that you focus your questions on our progress and performance for the quarter and our business plans moving forward.
In closing, I want to reinforce that we remain focus on executing our business plan to drive sustained value creation and growth and we are committed to achieving positive operating cash flow by the end of next year.
Thank you for your attention today. I will now ask the operator to open the lines to question.
(Operator Instructions) Your first question comes from Thomas Wei - Piper Jaffray.
Thomas Wei - Piper Jaffray
A couple of question on the thyroid cancer front; first just clarification, did you say the highest dose in the once weekly carcinogenicity study that you achieved, 30 times the human exposure; and then I also just wanted to check, have you actually had a chance to talk to the FDA about whether or not you have sufficient data for filling? It sounds like you don’t plan to wait for feedback from the FDA before filling the application and I’d like to understand why that might be.
Thanks for the question. You’re absolutely correct. Orville did make the remark that in the two year cost initiative study in rats, that the highest exposure that was used was approximately 30 times the human exposure. I would reiterate Orville’s point that we’re talking about rat data here and there has been no maternally thyroid cancer seen in the human studies, with exenatide once weekly state.
With regards to your question regarding consultation with the FDA, we’ve had continuous consultation with the FDA as part of our development program four exenatide once weekly and we’ve received no indication from the agency at this point that there’s any additional toxicology data are required for our submission. I’ll ask Orville to comment about whether you have anything to add to that?
Just a thing that I would add is we also have been in dialogue with the agency about the fact that we are nearing the end of the completion of the application and the file in the near future, and the agency is informed and expecting to receive the application.
Thomas Wei - Piper Jaffray
I guess just to clarify, have you actually talked to them since the Liraglutide panel and have you specifically asked about their comments on long acting formulation seeming to have a different thyroid simulation profile and you might need to do for LAR?
Thomas, we’ve had no response from the agency or no comment from the agency since the Liraglutide panel in that regard.
Your next question comes from Matt Osborne - Lazard Capital Markets.
Matt Osborne - Lazard Capital Markets
[Audio Gap] that you’re compiling for Exenatide on the DURATION trials. Are you measure calcitonin levels at baseline and ultrasound also and CEA markers at baseline; if not you planned to do that in the Duration-5 trial?
Matt sorry, the first part of your question, I think was cut off. Could you just repeat what you said in the first part of your question?
Matt Osborne - Lazard Capital Markets
Sure, are you measuring clinically with exenatide LAR or have you been measuring since baseline calcitonin levels or have you taken ultrasounds of the neck or measured CEA markers for clinical signal of thyroid cancer from baseline in any patient in the DURATION trials?
Yes, so the answer to that is that we haven’t been measuring calcitonin levels in the exenatide once weekly program. We recently initiated DURATION-5 study; we are measuring calcitonin levels from baseline and we’ll continue to do so. Again Orville, perhaps I don’t know is there’s any additional comment you have on that?
Well the comment that I would have is that we had no indication based on our data from the book-to-buy program and the exenatide once weekly program; that would indicate a need to measure calcitonin level. This has just become an issue that’s come to our attention, following the availability of the greeting materials for the Liraglutide Advisory Committee meeting.
Your next question comes from Cory Kasimov - J.P. Morgan.
Cory Kasimov - J.P. Morgan
Just one more on this LAR exenatide once weekly potentially thyroid signal here for this class. Has the FDA made any comments, I guess and/or request to you since you file that to your toxicology data last fall for exenatide once weekly; have they had anything to say about it?
Thanks for the question Cory; no, they haven’t.
Cory Kasimov - J.P. Morgan
Then going to pancreatitis for a second; you’ve done a good job explain or demonstrate the lack of the cause of the relationship, but can you characterize the extent of the pancreatitis overhang at this juncture in the marketplace or in the marketplace today. You had indicated in prior public comments that it seemed to be dissipating to a certain extent and I’m just wondering how much of an impairment it represents today?
Thanks Cory, it’s a great question. I’m going to ask Vince Mihalik to answer that question it seems closest to the market in the last few months.
So Cory, despite the FDA posting, we did spend the fourth quarter of last year focused on trying to answer a lot of questions around pancreatitis. We have now shifted our focus and released coordination, but really been spending our time returning back to focusing on the key messages that supports the unique profile BYETTA has, which of course is glucose control with a potential for weight loss, a low risk of hypoglycemia and favorable cardiovascular risk profile.
Those messages have been resonating well. I think we’re seeing a bit of the economic downturn in the first quarter, but from our data you can see despite the economic downturn, we have stabilized BYETTA scripts.
Cory Kasimov - J.P. Morgan
Okay and then finally one last sort of housekeeping question. Mark had mentioned in his comments that there was slightly de-stocking that took place in the quarter; was that your opinion offset at all by the recent price increase you took or have you see no impact from that?
I’d say actually, I don’t think it was offset at all. This is actually the second quarter in a row that we’ve actually seen some de-stocking. What I think is going on here is, is that what we’re seeing is during this time of significant economic pressure, that you’re seeing wholesalers really managing their capital extremely tightly and what they’re doing is tightening up and so we’ve seen it now. Literally since last September, a couple of days each quarter has been timed up, almost a week now in terms of decreased stock taken from the distribution channel.
Your next question comes from Tom Russo - Robert W. Baird.
Tom Russo - Robert W. Baird
So, something you could comment a little bit more on the actual comparability results and if it takes a period of time for the clinical and the commercial material to kind of behave the same.
As the FDA indicated that they’re okay with that or kind of how they’re going to look at the results as opposed to that the approach is acceptable and then I was also hoping you could comment on what regulatory submission’s DURATION-5 is required to support and where the additional data on the commercially manufactured product is intended to help out?
So, with regards to the comparability analyzes, firstly we’ve exceeded last year as we actually informed the investment community at the time we received the input from the agency of what they would be looking for in terms of the analytical undertaking with regards to demonstrating comparability. As Orville indicated on the call, we have completed those analyzes and we believe that we meet the criteria with regards to demonstrating comparability, and therefore we’re going forward with the submission.
With regards to DURATION-5, DURATION-5 is being undertaken for a number of reasons. It would be also important for us in terms of being a second study to demonstrate superiority with regards BYETTA. Secondly, it does as you indicated, it does have a near final form of a commercial presentation in it being use and that will provide feedback from patients, which will enable us to provide better educational material at the time of launch.
Then thirdly, as you also indicated in your question, it will be used to augment overseas submissions. I don’t have on the tip of my fingers the specific countries that it will be useful, but of course it also depends on the timing of the submissions, both submission diabetes.
Tom Russo - Robert W. Baird
I think I know the question was asked earlier about kind of reconfirming with FDA that the preclinical talks work that was done; have you had a chance dialog specifically on the results of the comparability, the DURATION-1 extension comparability data with the FDA?
We’ve just taken the guidance that they gave us and have completed the analysis, which we believe meets the criteria.
Tom Russo - Robert W. Baird
Okay and then last question and then I’ll step aside. Can you comment on whether the label updates or the discussions, they are including potential for class label for the tumor signal that got so much attention at the panel meeting a couple weeks back? Thanks.
So I think what I will do is I’ll ask Orville to comment on that question, because he was actually at the panel, but I would remind you that the panel was specifically around Liraglutide and it was not with any regard covering the toxicology program of any other GLP-1 receptor agonist. Orville, could you comment?
Just to remind you that for the label update we are talking about BYETTA, therefore the data set that’s relevant is the data from the BYETTA development program and that was the robust package that showed no issue in terms of the C-cell cancers and that’s the trust of the intension for labeling and the labeling update.
Tom Russo - Robert W. Baird & Co.,
So at this point it would be unexpected for the new BYETTA label to address this as a class effect?
Absolutely would, in fact we are not aware of any conversations in that regard. Indeed I point to comments made by an FDA official following the panel, of which they stated specifically that they had looked at this issue with regards to the exenatide data that they had and have not seen any signal in this regard.
It’s also just important to remember here that exenatide is a different molecule from where liraglutide has a different chemical construct. It is not metabolized to any extent, then the body is filtered intact at the kidney and removed or eliminated from the body by the kidney in this contrasts with a much more complex metabolic pathway for liraglutide in the body.
Your next question comes from Craig Gordon - Frontside Research.
Craig Gordon - Frontside Research
Just a couple of questions; are you guys are anticipating the SMBL monotherapy and the label revision for pancreatitis to still occur this quarter?
At this point we’re just saying that within the near future it’s very difficult to predict exactly what the timing will be with regards to that update. As Orville mentioned in his prepared remarks, we are pleased with the diligence with which the agency is reviewing and has been willing to receive additional data from us, in regards to this situation. At this point, we are not providing any specific guidance with regards the timing of when we may or may not receive the monotherapy indication and the label update from the FDA.
Craig Gordon - Frontside Research
Another question about the comparability results, would we expect those to be presented ADA or are we’re going to have access anymore detail besides just that it met FDA requirements?
I think at this time there are no plans for the comparability data to be presented at the ADA. It would not really been a appropriate form frankly. As you’re looking at PK and looking at a comparability or manufacturing site, so the American Diabetes Association meeting would not be in a appropriate form for the presentation of that data.
At this point, as I said earlier believe that we have met the criteria based on the agencies guidance to us and we intended to go forward on the basis of the analysis that we’ve undertaken today.
Craig Gordon - Frontside Research
Then on the remaining ongoing DURATION trials and perhaps even in DURATION-2, are you able to go from the blood samples you guys have collected to look a calcitonin levels?
That’s a great question Craig. I’m afraid I don’t know the answer. I’m going to pass it over to Orville and see whether or not that’s possible to do it.
That’s an issue that is under active investigation following the liraglutide panel. There are a number of things that we’re looking at as to whether we should consider undertaking to provide additional clarity regarding that.
One of the issues related to those samples is that calcitonin measurements were not included in the informed consents in those places. So if we do have adequate samples to make the measurements, we then have to look at the logistics of making sure that we are compliant with the patient confidentiality issues and the other informed consent issues.
Your next question comes from Jim Birchenough - Barclays Capital
Jim Birchenough - Barclays Capital
So just, I guess it seems inevitable given the discussion at the liraglutide panel that FDA is going to pay some attention to C-cell cancer risk with LAR. So what do you doing proactively to establish that LAR has a different signal than what we say with liraglutide. I think Orville suggested that and we shouldn’t consider Lira and exenatide LAR is comparable in terms of C-cell. Is that’s were you’re doing anything, working at different effects on the C-cell of those two drugs to bear that case out?
Jim it’s a good question. Clearly first and foremost I think it’s really important to reinforce the fact that both exenatide and liraglutide are very different molecules. Chemically they’re extreme, they are different; they metabolized very differently and so of course one of the things that we will be doing is insuring that we highlight those differences in any correspondence that is undertaken.
In terms of specific additional action, as Orville just indicated in responding to the previous question we are looking that whether there are other activities that we can undertake to provide greater confidence to the agency.
That being said, we do believe that actually the profile is very different and our understanding is extremely different and it’s further supported by the fact that we do have already very significant clinical exposure to exenatide, from which we have never seen a clinical signal of C-cell thyroid cancer associated with the exenatide use. Orville, I don’t know if you want to add additional thoughts to that.
I would just remind everyone that with the registration of the exenatide once weekly, we’re pursuing a line extension strategy and that strategy is based upon consideration that the molecule has been qualified and so again I refer you back to the robust preclinical program that we had for BYETTA which I did not identify this issue as a problem with BYETTA, and that is a view that has been conformed by the agency and the comments following the reason advisory committee.
Jim Birchenough - Barclays Capital
I guess just to follow-up on that, I guess what I am wondering is, do you have any intention to do some in vitro work looking at relative C-cell effects of Lira versus exenatide, that might be helpful for FDA, why not do that?
I guess the other part the people are struggling about this and I’d interest in your comment; how do you maintain a line extension designation when FDA itself has distinguished between longer acting and shorter acting GLP-1 drugs with the thyroid cancer signal?
I guess a Jim a couple of things. Firstly, as I did say previously, we are trying to and are looking at a number of different things that we could undertake. At this point we haven’t decided on a specific plan going forward; however your comment with regards to looking at different in vitro studies is something that is being considered.
The point would be that we have already conducted with the FDA our pre-NDA meeting with them and conformed with them that the registration strategy is a line extension strategy.
I would point out that that the time of that pre-NDA meeting occurred, the agency within full position of the preclinical program of liraglutide. This finding was actually many years old and indeed so they will fully aware of that at the time they agreed to a line extension strategy designation and for application.
Jim Birchenough - Barclays Capital
Okay thanks Dan, very helpful.
Well, thank you. At this point I will close the call and I want to say, again thank you for interest and your questions and finally finish by saying at Amylin, we do remain focus on our five point plan to maximize shareholder value and look forward to seeing many of you at our shareholder meeting and at the American Diabetes Association meeting New Orleans made to this year. Thank you.
We thank you for your participation in today’s conference. This does conclude your presentation. You may now disconnect. Have a great day.
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