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Acura Pharmaceuticals, Inc. (NASDAQ:ACUR)

Nasal Study Results Conference

August 27, 2013 8:30 am ET

Executives

Peter A. Clemens - Chief Financial Officer, Principal Accounting Officer, Senior Vice President and Secretary

Robert B. Jones - Chief Executive Officer, President and Director

Analysts

Robert Cummins Hazlett - Roth Capital Partners, LLC, Research Division

Graig C. Suvannavejh - MLV & Co LLC, Research Division

Operator

Good morning, ladies and gentlemen, and welcome to the Acura announces results of nasal study conference call. Today's call is being recorded. I would now like to turn the meeting over to Mr. Peter Clemens, Senior Vice President and CFO. Please go ahead, sir.

Peter A. Clemens

Thank you. Good morning. I'm joined on this call today by Bob Jones, our CEO; and Dr. Al Brzeczko, our Vice President of Technical Affairs. The purpose of today's call is to review top line results from our clinical study AP-ADF-301.

But before I begin, I'd like to remind you that any discussion that takes place during this conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements reflect management's current view of future events and operations, including statements pertaining to the company's expectations regarding our AVERSION hydrocodone with acetaminophen product; our expectations of the results of Study 301; our expectations relating to the suitability of the 301 results filed with the FDA; the expected timing of submission of the NDA for our AVERSION hydrocodone with acetaminophen product; the expected results of our meeting with the FDA to discuss the results of Study 301; and our ability to file and obtain FDA approval of the NDA for our AVERSION hydrocodone with acetaminophen product.

Forward-looking statements involve certain significant risks and uncertainties and actual results may differ materially. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Certain factors that may cause actual results to differ materially from the forward-looking statements are discussed in our press release issued yesterday evening and in the Risk Factors section and other sections of our company's Form 10-K for the year-ended December 31, 2012, and our subsequent Form 10-Qs, each as filed with the Securities and Exchange Commission.

I'll now turn the call over to Bob Jones. Bob?

Robert B. Jones

Thanks, Pete. Good morning, everyone. I'll review some of the detailed findings from our Study AP-ADF-301, and then we'll take a few questions from the analysts, and we will be limiting it to the analysts in deference to their timelines. We will refer to the study today as Study 301. These are the top line results from Study 301. More data will be forthcoming for us to evaluate, particularly the pharmacokinetic data.

Study 301 was a nasal abuse like/dislike study we ran for our AVERSION hydrocodone with acetaminophen product. We'll refer to that product today as AVERSION H&A. Study 301's design was a 5-arm crossover. The 3 primary arms of interest were placebo, AVERSION H&A and a generic hydrocodone/acetaminophen of comparable strength that is on the market today. We'll refer to that latter product as Generic H&A.

The 2 other arms in the study were active comparators used for blinding purposes and to elicit more data about the specific functionality of the AVERSION ingredients that was requested by the FDA. FDA's January 2013 draft guidance for the evaluation and labeling of abuse deterrent opioids specified category 2 studies, which collect pharmacokinetic data. Category 3 is a clinical abuse potential study or drug like/dislike study.

Since Study 301 collected both pharmacokinetic data and drug like/dislike data, it potentially could be used as either a category 2 or category 3 study. Consistent with the FDA guidance, Emax or the mean of the maximum drug liking scores for each subject was the primary endpoint. We were looking for a reduction in the Emax for AVERSION H&A compared to Generic H&A. The AVERSION technology uses aversive ingredients designed to impart unpleasant effects when the subject crushes and snorts the tablet. These unpleasant effects were expected to be disliked, prograding an offset to the drug liking created by the effects of the opioid. In order to affect Emax, these dislike effects must occur simultaneously with or near to the time the subject is achieving their maximum drug liking effect.

In Study 301, the reduction in mean Emax was not statistically significant and only exhibited a small numeric reduction in favor of the AVERSION H&A product. This suggests that the AVERSION -- aversive ingredient impact, which occurs very rapidly upon snorting, may have been out of sync with the Emax. In our preliminary evaluation of this result, we compared the time to Emax for Generic H&A, which was 0.9 hours in Study 301, to what was observed in the comparable OXECTA study, which is the oxycodone product that contains the aversive version technology. The OXECTA data is proprietary to Pfizer's, so we can only provide publicly available data. The time to Emax for oxycodone in the OXECTA study was about 0.5 hours, notably shorter than what we observed in Study 301. We hope that further analysis of Study 301 data will give us insight as to the phenomenon with hydrocodone.

The secondary endpoints in Study 301, including both minimum drug liking and Take Drug Again assessment, both demonstrated statistical significance. The aversive ingredients' effect was observed in the Emin, the mean of the minimum drug liking scores for each subject. Theoretically, the minimum drug liking for an opioid will generally be around the neutral score or 50 since at some point during the 8-hour observation period, the drug effect will wear off. This was, in fact, what was observed with the Emin for placebo and the Generic H&A at 48.8 and 50.4, respectively.

With aversive ingredients, we have the possibility of generating a drug disliking or a score below 50. AVERSION H&A's Emin was 40.2, a statistically significant change from placebo and Generic H&A. When we looked at the overall or summary measures, their results more closely correlated to the Emin than to the Emax results. So when we asked 12 hours after dosing for the subject to rate their overall like or dislike for the drug experience, there was a statistically significant reduction in liking for AVERSION versus the generic. The generic was 71.0, while AVERSION was 52.7.

Similarly, the Take Drug Again assessment, which asks the subject to rate their likelihood of taking the drug again, was obtained for each drug 12 hours post dosing. There was a statistically significant reduction in the likelihood to take the drug again for AVERSION versus the generic. The generic was 71.0, while AVERSION was 45.1 or an indication that subjects do not want to take the drug again.

There is more data to be analyzed in the study, including the pharmacokinetic blood sample data. In summary, the results we saw for Study 301 were similar to some of the results in the OXECTA nasal snorting study. Both studies failed to achieve a statistically significant reduction in Emax, but some secondary endpoints in both studies, such as Take Drug Again, were significant, and the OXECTA data was allowed in the approved label for that product. So we may be looking at a similar label to OXECTA based on this study but with specific data to the results of the study. This, of course, will require agreement by the FDA with our conclusions from this study, and at this point, there can be no assurance that additional nasal abuse like/dislike studies will not be required. We caution that this study has differences from the OXECTA study that may impact the FDA's view of the results. We have already highlighted the difference in the time to Emax between the studies.

In addition, there are several other material deviations from the OXECTA study based on these top line results from Study 301. This list is not all encompassing. First, the Emax for Generic H&A at 75.6 in Study 301 was lower than the 93.5 observed for the oxycodone study active comparator. Some of this reduction may be explained by the dose of hydrocodone administered. The oxycodone study dose was 15 milligrams, which we estimated to be equivalent to about 22.5-milligram dose of hydrocodone. In Study 301, approximately 2/3 of the subjects received a 10-milligram dose of hydrocodone, and the balance received 20 milligrams, an overall lower exposure to the effect of opioid level. Second, 52% of the subjects in the oxycodone study could not completely insufflate the entire AVERSION dose. In Study 301, virtually all the subjects were able to snort the entire dose.

Finally, we do note that the OXECTA study did achieve a statistical reduction in Emax before the sequence effect in that study was accounted for but ultimately resulted in a final Emax that was not statistically significant.

Once the data from Study 301 have been thoroughly evaluated, we feel it is prudent to meet with the FDA to get their agreement that Study 301 is an invaluable category 2 or category 3 study eligible for submission in an NDA. We plan to defer the pharmacokinetic work for AVERSION H&A until that meeting occurs. As such, we anticipate our NDA submission timeline will shift out with more specific timeline to be available after we meet with the FDA. We will now take some questions from the analysts.

Question-and-Answer Session

Operator

[Operator Instructions] And we'll hear our first question from Bert Hazlett with Roth Capital.

Robert Cummins Hazlett - Roth Capital Partners, LLC, Research Division

In terms of your -- well, regarding results of the study, I think I had you talking about why these may not have shown this, and there were 3 reasons, basically dose, the ability to insufflate this and the -- this issue and then a more lengthened time to Emax. First of all, is that correct? Or are there any other elements in the study that you think may have contributed to it not demonstrating statistical significance?

Robert B. Jones

Right now, Bert, I think those are some of the major differences we've identified between the 2 studies. I think the major issue that we faced here was the Emax lengthening out to about an hour from the half-hour time point that was observed in the OXECTA study. We know that the aversive ingredients, that adverse impact comes on very rapidly, and it lasts for approximately half an hour or 45 minutes. So it would appear that, that's probably the most likely cause in this, but of course, we'll look at all the data further.

Robert Cummins Hazlett - Roth Capital Partners, LLC, Research Division

Is this a formulation issue where you are able to manage the components of AVERSION to be able to match that Emax in future studies potentially? Is that -- this type of a circumstance? Or is the formulation essentially locked at this point?

Robert B. Jones

Well, formulations can always be changed. This is the standard AVERSION formulation that we have used since the beginning of time, and it was always envisioned that the aversive ingredients would be a rapid release and a rapid onset. When we first started the program, it was believed that just simply providing an aversive experience would affect the primary behavior analyses, which is the Take Drug Again and the overall liking. And I think that assumption set is still holding true. What's different is over time the FDA has advised that they would like the primary endpoint to be the Emax, and that requires this matching up of the aversive ingredients to the Emax of the drug. So is it possible to change the formulation? The answer to that is always yes. You can always make modifications to a formulation. More importantly, I think we'll look at the data and see if we can't better understand what drove the Emax for the hydrocodone further out. So even though we think that the study is a fileable study and a valuable study by the agency subject to agency's concurrence, the question, I think, you're asking is can this study be redone in order to maybe strengthen the label with a statistical significant reduction in Emax. And we'll just have to evaluate the data and see what it would take to do that.

Robert Cummins Hazlett - Roth Capital Partners, LLC, Research Division

And then just in terms of interacting with the agency, could you give us a little bit with regard to your expectation in terms of timelines. I know they're not generally the most responsive here, but is this a 30-day or 60-day window in terms of interaction? And then what do you think the likely course of the interaction -- likely course may be difficult but just in terms of timing and what your expectations are in terms of the -- that timetable, how many interactions you might expect?

Robert B. Jones

Yes, I think that the -- generally speaking, we give the estimate of about 30 to -- pardon me, 60 to 90 days to get a meeting scheduled with the agency. Sometimes they happen sooner. I think the 60 to 90 would be about appropriate because, obviously, we have to finish the evaluation of all the data here. And I think, really, the questions here are pretty specific as to the agency, which is based on the results we have here and the fact that we apparently have this mismatch between the aversive effects and the Emax effects and that we don't have statistical significance on the primary endpoint, code [ph] they still consider this like they did with OXECTA that there's worthy data on the secondary endpoints to be included, be filed and included in the label. And that's what we'd be looking for.

Robert Cummins Hazlett - Roth Capital Partners, LLC, Research Division

Okay. And just on that latter point, you don't have any early signs as to how they might be thinking of that. You haven't submitted or have -- you haven't had any interaction with them at this point?

Robert B. Jones

No, we -- they've reviewed the protocol, and we had some back and forth with them on the protocol. They reviewed, as you know, the statistical analysis plan. They did make suggestions that which we incorporated into that analysis, and that was specifically the cross-over effect that was mentioned in the press release. And that's what took some time for us to program. That was kind of a new analysis for our statisticians. But our statisticians at Summit Analytical did a great job of researching that and putting that altogether. So there are differences with the OXECTA study, but we remain encouraged by the fact that OXECTA did not achieve its primary endpoint of reduction in Emax, which suggests that there's some latitude for the -- from the agency on these types of studies if the secondary endpoints are strong enough.

Robert Cummins Hazlett - Roth Capital Partners, LLC, Research Division

And then just as things stand now and then I'll hop back in the queue. So if this -- in that scenario you just described where this is a fileable potential characteristic of AVERSION or this particular opioid or combination, is this something that you would think would likely or is this something you would think would be able to be -- let's say, on the existing timeline, all other things being equal, is there more work to do based on these results beyond the pharmacokinetic study? Or, let's say, you have your meeting, the discussions with FDA move forward and this is a label characteristic that they can understand, does the timeline that you had previously described with AVERSION Vicodin then come back into force?

Robert B. Jones

Yes, but shifted out. So the, I guess, the question is if we agree with the agency that this is an invaluable study and we want to proceed forward with their review of this study, then the only work that's remaining for AVERSION H&A to get to an NDA submission would be the 3 pharmacokinetic studies. The scale-up of the manufacturing has been completed. We have the clinical supplies for those studies. So it's just a matter of regenerating those studies, the pharmacokinetic studies, which are pretty quick to execute. So I think we'd be right back on just a shifted out timeline by the time it takes basically for us to meet with the agency, get agreement and then be able to recommence the countdown to those studies.

Operator

And next we'll move to Graig Suvannavejh with MLV & Company.

Graig C. Suvannavejh - MLV & Co LLC, Research Division

I have several if I may. Could you just please provide what, on the primary endpoint, what the actual p value was that you achieved in the trial and what was the hurdle that you needed to hit?

Robert B. Jones

The hurdle to hit, Graig, and good morning, was 0.025. Now I think, typically, we talk about 0.05 as being statistically significant. That is for a 2-tailed statistical test. This happened to be a 1-tailed statistical test, so it was 0.025. And the exact p value was -- I'm going to have to up here. I don't have it off the top of my head, but it was -- while I'm looking for that Graig if you got another...

Graig C. Suvannavejh - MLV & Co LLC, Research Division

Sure, no problem. And I guess, as we try to put the results of the study into perspective, it sounds like there are some things that you can identify that may have contributed to the study not working on the primary endpoint. I guess a question I would have is what's the appetite of the company to do another nasal snorting study? And I guess, this is in the context of the cost of doing such a trial and the timelines that it took for this particular trial to get done.

Robert B. Jones

Right. So let me just complete the answer to your previous question first, Graig. The p value on the Emax Generic H&A to AVERSION H&A was 0.2. So the appetite for the company -- I mean, this really is a commercial issue. Assuming we're right and the agency allows us to move forward with the Take Drug Again assessment in the label and perhaps some of the other aversive impacts that we uncovered during this trial, we really end up, then, with a potentially approvable drug, again, with a label that perhaps looks like a bit like OXECTA's. The best label in the business right now, we feel, is the new label for OxyContin. Rerunning this study to get a significant -- statistically significant reduction in the Emax would put, I think, this drug effectively on par with, perhaps with the label for OxyContin. The question really becomes what's the value of having that improved label? Now we're going to get some insights, I think, into that a little bit, as Pfizer starts to roll out their marketing for the AVERSION oxycodone product, the OXECTA product. If our label research on the OXECTA label holds and are relatively successful with that, we might be in a position to actually run market research first to see the physicians' reaction to the difference in potential label claims, to assess whether it would be economically beneficial to run a new study. Again, these studies are fairly quick. This study, we started enrollment in February. We completed enrollment in March. The statistical analysis part really ran from the beginning of April until just now, and it's still got a ways to go because we have some more analyses to complete. But that's not a very long timeline to do, and cost wise, these are $3 million to $4 million studies. So it's not prohibitive for us if we think that there is economic value to go after the improved or stronger label.

Graig C. Suvannavejh - MLV & Co LLC, Research Division

Okay, great. And then -- and this just speaks to my own, perhaps, lack of knowledge of these types of studies. But while I think I've got a good sense and handle of the sequence effect, could you just remind me when you talk about a carry-over effect, what specifically you're referring to and how that impacted the trial results?

Robert B. Jones

Sure. So the sequence effect and carry-over effect are somewhat similar in nature. They're designed to try to uncover any biases or outside influences that might be affecting the results of the study because what we're really looking for in the statistical analysis is we're trying to evaluate the impact of the treatment or the impact of the drugs. And any biases in there could affect the data. The sequence effect is one such analysis. The carry-over effect actually was something new that the agency brought to us. And basically, what we were looking at is we were looking at the Emax scores just for Generic H&A and the AVERSION H&A. So we're really only looking at 2 drugs. And we were looking at the Emaxs for both of those at the point in time before and after they took the AVERSION H&A. So for example and this is -- I'm no statistician, so this is a rough pictorial. For Generic H&A, we would look at the mean Emaxs of the people who took the drug before they took the AVERSION H&A drug. And we would look at the mean Emaxs for the people who took it after they took the AVERSION H&A drug. So it's kind of a before-and-after picture. The assumption set here is that the -- if there's a significant change in that mean that it might be suggested that there's some bias that's creeping into the study. So for example, if you looked at the OXECTA study, if you looked at the OXECTA product, the people who took the OXECTA product before the active comparator tended to have a higher mean than the people who took OXECTA after the Generic H&A product. So the mean went down for OXECTA. For the active comparator in that study, which is a drug called Roxicodone, the mean actually went up. The people who took scored the Emax, before they took the OXECTA product scored at lower than the people after. That somewhat suggested there might be a bias in that study. And certainly, when the gap got larger in the second period, the reduction got larger, it tended to really favor the drug, and I think that's probably what the FDA looked at when they decided to discount that data. Our study was actually different. While we did see an increase in the Generic H&A mean from the before period to the after period, in the AVERSION H&A arm, we also saw an increase. So instead of declining, it actually went up from the before period to the after period. So the 5-arm study had beneficial effects. It removed the sequence effect, this carry-over effect is noted. We are evaluating it. There are some indications that what we're seeing here is actually a false positive, and there's going to be more work around that. Is it important, I think, is the real question. The importance of that to us in this study is that it's not terribly relevant because the Emin scores didn't have any bias in them and those are the data that are good. The fact that the Emax data wasn't statistically significant with or without a bias, that data really isn't useful from this study anyway. Now the FDA -- 2 studies comments overall, the FDA may not with that light, a, and b, any subsequent or future studies that we run on this product or any other AVERSION products, this may becomes, obviously, a critical design element because we would like to remove it. If it is a bias, we want to remove that bias from the study. So we're going to analyze this further. As I said, we have some early indication that this might be a false positive. We do not know at this point in time, and we'll continue to evaluate that.

Graig C. Suvannavejh - MLV & Co LLC, Research Division

Okay, great. My last question for now will be -- and this is kind of a follow-up to Bert's question on timing. In your current estimation, what do you think would be the best-case scenario in terms of potentially filing an NDA for this product given no other clinical trial data necessary?

Robert B. Jones

I think, Graig, to go back to kind of what we said with Bert, we're expecting, basically, let's say, a 1 quarter delay to get to the FDA, come out of the meeting with the FDA. If that's a go, from this point forward, we had -- we still had expected, prior to this announcement, we had expected an NDA submission in the first half of 2014. Let's just take the worst case there and say that's June of 2014, so it's approximately, I guess, 9 months from today. So timing wise, if we have an approximately a 30-day lag or pardon, a 3-month lag to meet with the agency, you might build in that 3 months plus some, but we'll have to see how it goes.

Operator

[Operator Instructions] And we'll take a follow-up question from Bert Hazlett with Roth Capital.

Robert Cummins Hazlett - Roth Capital Partners, LLC, Research Division

Just as you think about the application of the AVERSION technology to the remainder of the pipeline, as things progress or as this gets licensed. Based on the results of this study, does that have you consider any additional work for -- with regard to the characteristics of the, let's call it, the liking dynamics that you saw in the study? I mean, is there any way you could tease out when that Emax occurs ahead of time other than doing the study?

Robert B. Jones

Good question, Bert. So there's a number of ways to evaluate what you're saying. I think, first, we want to understand the hydrocodone dynamic better. The 3 things that we recognize as a difference right now between OXECTA and this study, one was acetaminophen. OXECTA didn't have acetaminophen in the formulation. This formulation has acetaminophen in it. Does that level of acetaminophen -- has that made a difference? So that's sort of difference #1 that we've looked at. Difference #2 is, is this inherently just a different absorption rate between hydrocodone and oxycodone. And we don't know that either, not a whole lot of literature on these nasal snorting studies. And then I think the third thing was the dose level. Was the dose somehow related to the rapidity at which it crossed the blood-brain barrier and started the euphoric effects. So those are kind of the 3 suspects that we have right now. We think that we will get -- we have the data, we believe, for the dose level because we had 2 different dosing arms in the study, so we will certainly parse the data in terms of the 10-milligram dosers and the 20-milligram dosers to see if there's some sort of indication there. Beyond that, if it's a difference in hydrocodone absorption through the nasal mucosa or it's the acetaminophen, I think the only way we're probably going to able to tease that out is maybe through some small pilot snorting study where we have the subjects snort a number of different preparations without the aversive ingredients just to get a read, opioid by opioid, for what the TEmax is in those -- for each of those opioids.

All right. It would appear that all of the analysts have been on the call. We do apologize to those who aren't analysts. We know that they have deadlines to try to get the research notes out, so in deference to them, we won't take any more questions. We appreciate you joining us today and look forward to updating you further on the progress with our AVERSION H&A product and our other products in our product line. Thank you very much.

Operator

And that will conclude today's call. We thank you for your participation.

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