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Furiex Pharmaceuticals (NASDAQ:FURX)

Q3 2013 Earnings Call

November 06, 2013 9:00 am ET

Executives

Sailash Patel - Vice President of Strategic Development

June S. Almenoff - President, Chief Medical Officer and Director

Marshall H. Woodworth - Chief Financial Officer, Principal Accounting Officer, Treasurer and Assistant Secretary

Fredric N. Eshelman - Founding Chairman

Paul S. Covington - Senior Vice President of Clinical Development and Operations

Analysts

Edward H. Nash - Cowen and Company, LLC, Research Division

Matthew L. Kaplan - Ladenburg Thalmann & Co. Inc., Research Division

Ritu Baral - Canaccord Genuity, Research Division

Operator

Good day, ladies and gentlemen, and welcome to the Furiex Pharmaceuticals Third Quarter 2013 Earnings Release and Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Mr. Sailash Patel, Vice President of Strategic Development. Please begin, sir.

Sailash Patel

Thank you, Kevin. Good morning. Before we begin, I would like to remind everyone that our comments today include forward-looking statements. All statements, other than statements of historical facts, are forward-looking statements, including any statements concerning revenue and financing expectations, proposed financing of existing projects, research and development and clinical development plans and timelines, regulatory approval timelines, proposed licensing or collaborative opportunities or agreements and any statement of assumptions underlying any of the foregoing. Actual results could differ materially from those projected or assumed in the forward-looking statements. Our future financial conditions and results of operations, as well as any forward-looking statements, are subject to inherent risks and uncertainties, including the risk factors described in our annual report on Form 10-K and other SEC filings, copies of which are available from our Investor desk and on our website, www.furiex.com.

I will now turn the call over to our President and Chief Medical Officer, Dr. June Almenoff.

June S. Almenoff

Thanks, Sailash. Good morning, and welcome to the call. I'll begin with an update on the status of the business and this will be followed by a financial update by Mr. Woodworth. Then, our Chairman, Fred Eshelman, will wrap up.

Our team continues to remain focused on our Phase III program for diarrhea-predominant irritable bowel syndrome. As you know, we completed a restructuring of our existing debt and also received an additional loan of $50 million from Dr. Eshelman. We believe this will give us the financial runway to progress the eluxadoline program through data [indiscernible] trial and submission of a New Drug Application to FDA.

I will now update you on recent events in the pipeline and portfolio. I'll start with eluxadoline, formally known as MuDelta. As you know, this is a novel, oral, locally active new agonist delta antagonist that's in development for treatment of diarrhea-predominant irritable bowel syndrome, or IBS-D. We believe that the dual activity on both mu and delta opiate receptors addresses both the diarrheal and pain components of this condition, without causing the constipating effects intolerance that can occur with unopposed mu agonist activity.

To recap, as you know, in mid-July, we completed enrollment of 2 Phase III placebo-controlled pivotal trials randomizing a total of 2,427 patients across the 2 studies. Both trials of the same overall design and efficacy endpoints but differ in overall duration due to the need to treat and monitor safety in a sufficient number of patients to satisfy regulatory requirement. Each study captures both the 12-week FDA endpoint, as well as a longer-term efficacy data endpoint for up to 30 weeks, the latter of which might be used to support an EU regulatory submission. We expect to release top line results for the efficacy endpoints for these studies in February 2014.

We've completed a series of Phase I ADME studies. ADME standing for absorption, distribution, metabolism and elimination studies for eluxadoline and we believe these studies should adequately support the NDA submission. Based on the results of these studies, we don't anticipate any significant changes to the target product profile. Here at Phase I, [indiscernible] impairment study. We observed that patients with impaired liver function had significantly higher levels of eluxadoline, compared to patients with normal liver function. So even though a small fraction of eluxadoline is absorbed when administered orally, the data show that patients with impaired liver function don't clear the drug as rapidly as subjects with normal livers. Based on this information, if and when eluxadoline is approved, the label may contain precautions or restrict use in patients with severe liver impairment such as patients with cirrhosis. However, this does not impact on our target patient population.

Although eluxadoline has systemic -- has limited systemic bioavailability, it's purported mechanism of action involves opiate receptor modulation. Therefore, we're required under FDA's 2010 guidance on assessment of abused potential of drugs. To assess eluxadoline's potential for abused through a variety of modality. We've completed a panel of physicochemical and temperability studies, which indicate that the IIb market formulation of eluxadoline has low potential for abuse via inter vina [ph] or smoking routes. Also, we've recently completed a human abuse liability study and will be presenting the results in December at the American College of Neuropsychopharmacology. In this study, eluxadoline tablets, which are of course, intended for oral use, will pulverize to the powder and a study subjects, who are recreational opiate users, [indiscernible] the powder via nasal snorting.

The study assessed both drug liking and disliking by these opiate users. Top line results show that one eluxadoline was not liked more than placebo and was like significantly less than oxycodone, which was our positive control. And two, eluxadoline would significantly disliked compared with both oxycodone and placebo. We're currently conducting an oral abuse study in recreational drug users because this is the intended route of administration. However, the bioavailability, as you know, is much lower with oral administration compared with nasal insulation [ph] and so we do not believe will see any signals for abuse potential with oral use.

We've also recently completed a QT study, which evaluated the effect of eluxadoline on cardiac electrical conduction and we obtained a favorable result of no increase in the QT interval of the doses tested. We continue to explore partnering and other strategic alternatives for the eluxadoline program.

Now moving to our marketed portfolio. First, alogliptin or Nesina, which is partnered with Takeda. It's a selective DPP-4 inhibitor indicated for the treatment of type 2 diabetes as a monotherapy, and also in combination with other diabetes treatments. Nesina monotherapy as well as fixed dose combination products are marketed in Japan and were recently introduced into the U.S. market. Nesina is the only DPP-4 inhibitor available as a fixed dose combination with the TZD, namely Actos. You'll hear more from Marshall about the alogliptin royalties but overall, we're pleased with the year-over-year growth of the alogliptin franchise.

We have 2 important regulatory and R&D updates to share on alogliptin. First, in September 2013, VIPIDIA, which is alogliptin monotherapy, and 2 combination products INCRESYNC, which is the alogliptin Actos combination and VIPDOMET, which is the alogliptin/metformin combination. All received regulatory approval in Europe resulting in a $10 million regulatory milestone payment to us. Also in July 2013, alogliptin was approved in China.

Secondly, in September 2013, Takeda published the results of EXAMINE study in the New England Journal of Medicine. The EXAMINE study, which compared alogliptin to standard of care, is the first cardiovascular, or CV outcomes study of type 2 diabetics who are at high risk from major adverse cardiac events, due to recent history of acute coronary syndrome. The study of approximately 5,400 patients demonstrated that alogliptin does not increase CV risk in this high-risk population, compared with placebo when added to usual therapy. The trial met its primary objective of demonstrating non-inferiority of cardiovascular risk based on a primary composite endpoint of cardiovascular death, nonfatal myocardial infarction and nonfatal stroke. Although hypoglycemia has been an issue with diabetes products both inside and outside of the DPP-4 class, the EXAMINE study demonstrated that there was no difference in hypoglycemia between alogliptin and placebo warm, which is a favorable result. Also the study showed that based on malignancy, pancreatitis hepatic enzyme elevations and in general, serious adverse events were similar across the alogliptin and placebo groups.

In summary, the EXAMINE data provides unique safety information about alogliptin and diabetics at high risk for CV morbidity. It's not available for other members of the DPP-4 class and which should be reassuring to prescribers. I'll now wrap up with an update on dapoxetine or Priligy. As you know, this is the first and only approved therapy for premature ejaculation, which is now marketed in over 25 countries X-U.S. The transition process for Priligy from Janssen to Menarini is ongoing and remains on track. We just received notice that Priligy was launched in the United Kingdom on October 28, 2013, and has triggered a $5 million milestone payment to us. We remain eligible for sales of these milestones of up to $40 million as well as tiered royalties ranging from the mid-teens to the mid-20s in percentage points.

In August 2013, the results of the large post-marketing safety study on Priligy was published in the journal, European Urology. Over 10,000 patients with premature ejaculation were enrolled in this 12-week open label study, where 6,712 patients were treated with dapoxetine and 3,316 patients were given alternative care. The study demonstrated a favorable safety profile for dapoxetine that was similar to alternative care. This new information further highlights Priligy's stable benefit risk and tolerability profile.

This concludes my update on the business. I will now turn the call over to Mr. Woodworth for the financial update.

Marshall H. Woodworth

Thank you, June. With regard to the 3 months ended September 30 2013, as it relates to revenues, revenues for the quarter were $15.6 million comprised of royalty revenue from the sale of Nesina and LIOVEL in Japan; Nesina, Oseni and Kazano in the U.S.; Priligy in multiple countries around the world and milestone revenue from the European marketing authorization approval of Nesina and combination products in Europe. The marketing approval generated a milestone payment of $10 million, which was received in early October.

Royalty income was up $2.6 million or 86% from the level recorded in Q2 of 2013 and unchanged from the level recorded in Q3 of 2012. The quarter-over-quarter royalty increased in Q3 2013 was primarily a result of attaining a higher royalty care in Japan during the quarter, combined with higher sales of Nesina and LIOVEL in Japan. The year-over-year royalty change was negatively impacted as a result of exchange rate movement of the yen against the dollar. If the dollar would have remained at the same exchange rate as Q3 2012, the recorded royalty would have been higher by approximately $1.4 million. The average exchange rate in Q3 2012 was JPY 79 to the dollar and in Q3 2013 was JPY 99 to the dollar.

Subsequent to the quarter close, we received notification of Menarini launch Priligy in the U.K. on Thursday, October 28. The launch entitles Furiex to a $5 million milestone payment, which should be received in mid-November. Regarding Nesina, royalties associated with Nesina and LIOVEL sales in Japan increased 84% when compared to the prior quarter. Our royalty rates for these products reset each April 1 beginning at Takeda's fiscal year and increase during the Takeda fiscal year if accumulative fiscal year net sales reach sufficient levels. The impact of exchange rates on yen-based royalties was negligible versus the prior quarter as the yen to dollar exchange rate was stable at JPY 99 to the dollar.

As it relates to sales of Nesina and LIOVEL, Takeda indicated on their earnings call that their fiscal first-half gross sales were up 20% over the prior year and 35% for the second quarter versus the same period in the prior year.

Regarding Priligy. During the period of Q3 2012 to Q2 of 2013, Menarini was in the process of transitioning over key countries from Janssen. Although that process continues, a major portion of the countries where the product had been marketed by Janssen are fully under the control of Menarini, who is in the process of relaunching and repositioning the product for future sales. We are optimistic that under Menarini's stewardship, we will see an increase in sales, which will translate into future royalties for Furiex.

Total R&D expense was $19.9 million for the quarter, including $402,000 in noncash stock compensation expense. R&D spend was slightly below the guidance provided on the Q2 earnings call.

SG&A expenses were $3.2 million for the quarter, including $1.1 million in noncash stock compensation expense. We expect our level of SG&A, which includes all of our public company costs, to run at a rate of approximately $3 million per quarter on an ongoing basis.

At the end of the quarter, we had total current assets, cash, accounts receivable, prepaid expenses of $50.8 million. Current liabilities, excluding current portions of long-term debt, were $21.4 million. These are comprised of accrued expenses and payables related to the development of eluxadoline. Typical Accounts Payables for Furiex carry 30-day terms.

As it relates to our recent debt agreements, on September 30, we entered into a loan agreement for $15 million with the Frederick Eshelman Trust and also restructured our existing $40 million secured loan with MidCap Financial LLC and Silicon Valley Bank. The restructured agreement with MidCap/SVB, the first payment of principal until May 15, 2014, with a flexible amortization schedule linked to Furiex's receipt of alogliptin royalties thereafter. The Eshelman Trust debt is subordinated to the MidCap/SVB loan and accrues interest at a rate of 9%. The loan has an interest only period of 12 months and thereafter, will amortize principal payments of $167,000 per month plus accrued interest until the final balloon payment to be made on maturity, which will occur 91 days following repayment of the [indiscernible] under the mid-cap loan agreement subject. However, with an outside maturity date of January 1, 2019. The MidCap/SVB loan accrues interest at a rate of 10% with interest only to be paid monthly until May 15, 2014, at which time quarterly principal payment become due. The principal payments are set as a percentage of the alogliptin royalties received by Furiex subject to minimum and maximum amounts. The outside maturity date for repayment of the loan is October 1, 2018.

I'll now provide limited forward-looking financial guidance. Our royalty income from sales of Nesina and LIOVEL in Japan, this is for Japan only. Based on Takeda's projected fiscal year gross sales as disclosed during their Q2 earnings release, which was on October 31, are of JPY 41.5 billion and using an exchange rate of JPY 100 to the dollar and historical growth to net reductions would be approximately JPY 23 million in 2013 and JPY 29 million in 2014. This calculation includes internally generated assumptions regarding gross to net reductions in relative proportions of LIOVEL sales between dosages and other assumptions. We received limited royalties from sales of Nesina, Oseni and Kazano in the U.S. in Q3, which we expect will grow as Takeda's products gain traction in the marketplace. We also expect continuing increase in royalties from sales of Priligy as the relaunch efforts of Menarini take hold. Of course, we can't control or predict exchange rates or partners quarter or annual level of sales, but if you'd like more information about the Takeda sales and future forecasts, I would refer you to Takeda's Q2, our Q3 earnings call and associated sales projections, which can be found on Takeda's website.

Our forecasted total R&D spending through to data read out on our Phase III trials is expected to run between $27 million and $30 million comprised almost entirely of Phase III study costs, manufacturing nonclinical in Phase I costs related to eluxadoline. Our forecasted R&D spend is expected to decline significantly from Q4 2013 to Q1 2014 as we complete our Phase III trials. This trend should continue into Q2 2014.

Although we have chosen not to provide guidance on revenue due to variable nature and timing of milestones and royalties, I do want to summarize information previously disclosed in our 10-Qs and 10-Ks as well as in various 8-Ks and press releases and on this call. For Nesina, we're entitled to receive continuing royalties from sales by Takeda in Japan, from sales by Takeda in the U.S. and when launched, from sales in Europe and other parts of the world. We don't make or endorse any other parties estimates but if you want, you can read the various disclosures by Takeda and a number of analysts’ projections as far as web sales from Nesina might be. As previously disclosed, our royalty rates in Japan and Europe are 4% to 8%, 7% to 12% in the U.S. and 3% to 7% China. For Priligy, per the out-licensing agreement, we were eligible for up to $10 million of launched milestones, up to $40 million in sales-based milestones and tiered royalties ranging from the mid-teens to the mid-20s in percentage terms at the completion of the marketing license transition period. The first of these launched milestones was achieved in late March and resulted in a $5 million milestone payment, which was received in April. The second launch milestone was achieved on October 28. We expect the $5 million milestone payment from this milestone to be received in mid-November.

Based on our current levels of cash, our forecasted level of future royalties and our planned level of expenditures, we expect to have sufficient capital to fund our operations for at least the next 9 months.

This concludes my remarks and I'll now turn the call over to Dr. Eshelman.

Fredric N. Eshelman

Thanks, Marshall. We remain upbeat about the future at Furiex. Despite the recent lowering of forecasts by Takeda on alogliptin products projected growth rates, these rates remain solid and analysts, those independent research analysts, expect the alogliptin franchise sales to reach $1 billion by 2016 or 2017. Menarini continue to roll out Priligy with a recent U.K. launch. They continue to put substantial marketing and sales efforts behind the product. Our excitement continues to grow around the eluxadoline with Phase III data readout now only 3 months away. We are also receiving unsolicited calls and e-mails from patients who are very pleased with their treatment responses while on the trials.

Our financial forecast now shows that we have sufficient cash to get through the NDA submission for eluxadoline. Bottom line, Furiex is a solid company with lots of potential upside. That's why I continue to invest in the company's future.

Thank you. Back to you, June.

June S. Almenoff

Thanks, Fred. I'd like to turn the call over to the operator for Q&A.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Edward Nash with Cowen and Company.

Edward H. Nash - Cowen and Company, LLC, Research Division

Kind of a pain having in whole foreign exchange thing but nothing we could do about that, right? Wanted to see maybe if you could explain a little bit, I guess it's maybe the elephant in the room is we're getting very close to a study readout now for eluxadoline and I know you can only talk so much about partnerships but obviously, given kind of where your cash is and what you're looking to burn between now and the launch, the $15 million helps but it's not as much as I think relative you need to have more cash, given that you have a 9-month runway. Can you maybe talk a little bit more? Can you give us a little bit -- some idea of what the degree, the talks are with partners on eluxadoline? Or you're seeing a lot more interest there? Is it really just people just going have to wait until the data before someone pulled the trigger and maybe if that doesn't happen, what are some other things you're thinking about with regards to financing?

Fredric N. Eshelman

Yes, let me take -- crack at that, if I might. This is Fred Eshelman. Obviously, the closer we get to data readout, borrowing some other condition on behalf of a potential licensee, it becomes, I think less and less likely that somebody would pull the trigger this close to readout even though, knock wood, we're pretty optimistic about what's going to happen. This works both ways of course, because if you wait for the data readout and we have it and it goes like we hope and expect it will, you're going to have a big valuation movement. It would make it easier for some licensee to move at that point because then they'd know, for sure what they're dealing with. So when looking at our finances of course, we're looking at the timing, we're looking at the events, we're looking at what could be a big valuation move and according to our forecast, if we have enough money to get through NDA submission, then we've got what, 4 or 5 months in between there where the results will be out. And I think that would give us a lot of flexibility not only with respect to licensing but with respect to, if we did decide we needed additional capital infusions would give us a lot more flexibility on that. So we feel pretty good about that if, as we said before, on the off chance that we are unable to make a deal around eluxadoline during that time period, then of course, we have to consider the alternatives to that possibly including taking the product forward ourselves but we have not done a whole lot of planning around that nor do we have enough information at this time to accurately quantitate what kind of resources would be necessary, if we do that. So I guess, what I'm saying to you bottom line is, we feel pretty comfortable with where we are right now and certainly for the next 9 months and on the readout and the interest and value inflection that we expect that to generate.

Edward H. Nash - Cowen and Company, LLC, Research Division

Okay. That's very helpful. And then just one more question, you could maybe talk about, we haven't heard anything and I think, I haven't -- know what the outcome is built on Tioga and obviously, that's one of the competitors there. It seems like now your competition has gotten, to the field's gotten a lot smaller now, it's just really kind of you guys now in Salix, just wanted to maybe get your thoughts on that and/or just kind of whether that's changed anything from your guy's perspective with regards to competition? Or you just really never saw them in this competition to begin with?

June S. Almenoff

Yes, we haven't heard anything formally about Tioga. So we really can't comment. We do understand that the trial had closed out but other than that, because they're a private company, I guess, they've not made any announcement. So obviously, we're looking ahead to seeing our own data in 3 months. We understand from monitoring the airwaves that we'll be seeing the Salix data in Q1 as well.

Operator

Our next question comes from Matt Kaplan with Ladenburg Thalmann.

Matthew L. Kaplan - Ladenburg Thalmann & Co. Inc., Research Division

Can you give us a little bit more of a sense in terms of kind of the rate let me start the size of Takeda Phase III is for NDA filing of potential submission in Europe as well for the product? What moving parts are there, you detailed some of the Phase I and other preclinical studies that you needed to do and have completed, can you give us another sense to that?

Fredric N. Eshelman

That just in terms of the U.S. NDA, you asked that rate limiting steps or factors. As we now have it on our schedule, the rate limiting factor is actually the CMC portion of that in terms of getting the final stability studies done, validation batches and so forth. We will have the clinical results very early in the year. So that is not as far as we know right now, a rate limiting step. So I think that we feel pretty comfortable about the calendar that we have for the submission and don't see anything certainly at this point that would preclude getting it in as advertised. As far as Europe is concerned, I don't really have a good feel for that unless, June, you want to comment on that?

June S. Almenoff

Yes, I think that -- a couple of things. First of all, just to highlight a little bit more on what Fred said, we are very much engaged in doing a lot of planning for success around Phase III and we believe that we should be able to submit a file sometime this summer, at the very beginning of Q3 maybe even end of Q2 but probably beginning at Q3. So that should give you a sense of timelines for the FDA. Right now our resource is really completely focused on the U.S. and we are collecting the information that we need for Europe. We are engaging them on endpoints that have come out of their new guidance. Just to make sure that we've got all bases covered then certainly we have -- we are engaging them on any other rate limiting matters including pediatric programs and so on. So I think, as Fred said, really the big driver for us right now is U.S. and I think that our preferred modality for Europe would probably be a European-focused partner and would really need to get the U.S. application before we start.

Matthew L. Kaplan - Ladenburg Thalmann & Co. Inc., Research Division

Fair enough. And do you think do you still think the -- that current 2 Phase III studies will suffice for a filing in Europe?

June S. Almenoff

Absolutely. Absolutely.

Matthew L. Kaplan - Ladenburg Thalmann & Co. Inc., Research Division

Right, right. And remind me, have you completed the formal QT tox study? Or is that something that you have to do?

June S. Almenoff

Yes, as I indicated, we did do a QT study and we went as high as 1 gram of material. That's 10x greater than the highest to be monthly dose and it was completely fine.

Matthew L. Kaplan - Ladenburg Thalmann & Co. Inc., Research Division

Great, great. And then a follow-up on Ed's question, with respect to, I guess, strategic plans going forward, assuming, 2 things. One, the product is -- the Phase III is successful and have you considered at all potentially launching this product on your own rather than partnering? Or I guess, could it result in the sale of the company as well?

June S. Almenoff

Yes, I'll let Fred chime in on this. But I think that, it's for us given our core focus on internal capabilities are, our preferred modality given where we are now is partnering, as Fred said, we haven't ruled out the possibility of taking it forward ourselves. But we really would need to see how the data looked and how the environment is seen with respect to partnering?

Matthew L. Kaplan - Ladenburg Thalmann & Co. Inc., Research Division

And what about potential acquisition?

June S. Almenoff

Absolutely. Everything is on the table that would create value for our shareholders.

Fredric N. Eshelman

Yes, remember we have a fiduciary duty and we believe that certainly, even now but certainly after the data read out if we goes like we expect it to go, this is a pretty interesting asset. The asset being the company and we're not -- I'm not giving you a signal of any kind right now. I'm just saying that with the base of what appears to be a steady and growing royalty and milestones stream and you layer on that, what could be an outstanding Phase III and submission-ready product, I have no doubt that it's beginning to blink on certain people's radar screens.

Matthew L. Kaplan - Ladenburg Thalmann & Co. Inc., Research Division

Okay. Just to shift gears a little bit. The Priligy, I don't really have much in my model for that. Could you help us understand maybe the potential of that product for you in terms of a royalty opportunity?

June S. Almenoff

I'm going to ask Sailash Patel to take that question.

Sailash Patel

Sure, Matt. Again, this is an untapped market so it's tough to give you a specific guidance but from a pure prevalent perspective, it's more prevalent than erectile dysfunction. Having said that, it's out in Europe where you don't have any direct to consumer advertising. So the ramp maybe a little bit slower than you would anticipate. But there are any spending of a fair amount of marketing dollars on there and trying to ramp up that market. I think 2013 will very much be a transition phase and 2014 is when you'll start seeing some decent traction. They are certainly, in the territories where they have launched, doing better than Janssen did so we anticipate that this will continue. Again it's too early to say, how -- where it might end up certainly, based on what we're seeing, I anticipate it should get north of $50 million but we'll have to just wait and see.

Matthew L. Kaplan - Ladenburg Thalmann & Co. Inc., Research Division

$50 million in revenues not $50 million in royalties?

Sailash Patel

Correct.

Matthew L. Kaplan - Ladenburg Thalmann & Co. Inc., Research Division

Very good. And Nesina, obviously, approval earlier this year in Europe, first quarter and more recently in the U.S., the European and U.S. royalties from Nesina, how should we think about those and potential ramp up of those?

June S. Almenoff

Well Takeda, as Fred has indicated, Takeda has provided guidance around the U.S. but there are a number of other analysts out there who given larger numbers for the U.S. and so it's probably worth thinking about all of that. The way I think about Nesina is that obviously, it's got a challenge because it's worth to market but they do have the marketing muscle that commitment to cardiovascular medicine, obesity, metabolic that is very much embedded in Takeda's mission. So I think that will be helpful. Also and I think it's a little bit early days. It is possible that there will be a submission and labeling. I don't know how this will flow but there could be submission and labeling around the EXAMINE study. I think any company that does a study like that would be prone to try to do that. And that may help differentiate in the marketplace. Right now, of course, there's no ability to promote or get the word out on that study. So that's a positive. Then finally, I think if you look at the prescription data out there you'll see that there's good traction of the Oseni along with the monotherapy and that of course, is a differentiated product because it's the only DPP-4 out there. Hopefully they'll be able to continue to leverage that differentiated product using the society endocrinology as well as the ADA guidelines. And actually, sorry, one thing I did not answer is that with respect to Europe, what Takeda did say on their earnings call is that, that would primarily be a 2014 type of ramp.

Matthew L. Kaplan - Ladenburg Thalmann & Co. Inc., Research Division

2014?

June S. Almenoff

Yes.

Operator

Our next question comes from Ritu Baral with Canaccord.

Ritu Baral - Canaccord Genuity, Research Division

I have some questions on the 30-week extension period that, June, you mentioned for the alogliptin trial and how or what the protocol is for the 30-week extension? What endpoints you're going to be tracking? And how that figures into the European filing strategy?

June S. Almenoff

Right. So with respect to the longer time duration, I may have Dr. Covington chime in as well, our Head of Clinical, but top line with respect to the European endpoint, we embedded within our program a capture for 26- to 30-weeks of the old guidance as European endpoint specifically global symptoms and pain. However, the European guidance -- new European draft guidance has come out recently, which is very much in line with the FDA guidance focusing on stool consistency and pain. And we are, of course, capturing all of those as well until 30 weeks. So however, we negotiate with the Europeans. We are actually quite well-positioned to provide information on either endpoint. Paul, do you want to provide more comment?

Paul S. Covington

Sure. We have 2 studies. One is a full year study and one is a 30-week study and both studies will have 3-month endpoints and 6-month endpoints. And so when you look at the big picture things we will have 3-month endpoints for both studies for the U.S. and 6-month endpoints for both studies for the European endpoints. And we have included all endpoints whether primary, secondary in both studies with a flexible protocol that allows us to use whatever we need for whichever side of the Atlantic we are dealing with.

Ritu Baral - Canaccord Genuity, Research Division

Got it. And of the secondary endpoints, what do you think the most important will be to either agency?

June S. Almenoff

That's an interesting question. Agency, patients, prescribers or payors it's a whole different thing, my initial response to that this that they're going to obviously, want to see us on the primary and they'll be interested in the key secondaries on pain alone, stool alone, trending in the right direction. There is less focus from the regulators on some of these global endpoints like the quality of life, like adequate relief, which was the legacy endpoint. But we are collecting a large number of these endpoints because they may not be critical to the regulators but they're very important to prescribers and we believe payors and patients because at the end of the day, we believe it’s how the patient is feeling, how their life is going with respect to the disability that would drive desire to use this product rather than very technical -- what exactly is your stool consistency this day -- type of endpoint. Paul, do you have further comments?

Paul S. Covington

Well, it's a great question. We just came up with something yesterday the critical path initiative of the PRO Consortium, which is developing in the process of developing a PRO for IBS. It's got many years left probably but they just had a paper released, an abstract paper, and within that document for IBS-D, the one of the things that jumps out at you is urgency. And certainly urgency for IBS-D seems to be a major player when complaints from patients as well as being one of the most bothersome symptoms. So we advise you to go look at that paper, its lead author is Molly Baird [ph] and it's the qualitative assessment of patients with irritable bowel syndrome by the PRO Consortium. So it's very interesting because we're actually analyzing urgency as one of our secondary endpoints. Okay?

Ritu Baral - Canaccord Genuity, Research Division

Yes, that's very helpful. I'll take a look at that. But, last question on that same line. Is there secondary endpoint that you think might help you most with European reimbursement, given how difficult that's gotten?

June S. Almenoff

Probably and, Paul, chime in here. We are certainly looking at IBS, there are IBS quality-of-life parameters that are being looked at and global symptom parameters as well and probably those would be the most useful, I think in Europe. Paul?

Paul S. Covington

I agree, June. No additional comments. We just don't know but Europe is a little more receptive to the quality of life in our study follows quality-of-life out for a full year. We will have the only data in IBS generic with quality-of-life being evaluated every month for the full year. So we're excited about that. We'll have to wait and see.

Ritu Baral - Canaccord Genuity, Research Division

Great. So top line data in February 2014. The DDW leg breaker deadline is mid-February, DDW would that be an appropriate venue for presentation of this data?

June S. Almenoff

We're sure trying.

Paul S. Covington

We think...

Operator

Our next question comes from Matt Kaplan with Ladenburg Thalman.

Matthew L. Kaplan - Ladenburg Thalmann & Co. Inc., Research Division

Just a quick follow-up on your Nesina royalty guidance. I'm just looking at the guidance that Takeda gave, they gave -- they broke it out in terms of Japanese guidance of JPY 41.5 billion as you said, I guess that's to the end of March next year, and then they also provided guidance for kind of full global sales of JPY 44.5 billion. I guess, can you, in terms of why you gave this guidance on Japan and not the rest of the world? Can you give us a little bit more sense of your expectation as I was asking before in terms of the U.S. and Europe? And might be the Takeda guidance?

Marshall H. Woodworth

Sure. So the emphasis on Japan is because obviously, it's the largest and the most impactful over that period of time. And we are looking closely at the U.S. ramp. As I indicated, on my portion of the conversation that we did not record anything until Q3 and we are, and I think Takeda is looking at a closer to try and understand what their ultimate ramp will be in the U.S. And as June indicated, the launch, the potential launch in Europe is not until 2014. So we're really focused on and the guidance was really focused on helping you and helping others on the call understand what it looked like and what our economics were through data readout. But we do have high expectations for the U.S. and Europe and that's what Fred was alluding to when he talked about Takeda's analysts and a $1 billion in sales in the 2016, 2017 time frame.

Matthew L. Kaplan - Ladenburg Thalmann & Co. Inc., Research Division

And any sense in terms of timing of start of ramp in Europe or Nesina? 2014 onward.

Marshall H. Woodworth

Well, I think Takeda has not said. The only thing I would -- the only data point that we have that I can share with you is that they launched in the U.S. in Q2 and we recorded that in Q3 because of some deferral accounting that is commonplace in pharmaceutical industry. So I think whatever you're looking at, it's probably the revenue showing up in terms of our royalties is probably going to show up a period of time, perhaps as much as a quarter after Takeda actually launches the product because of this deferral economics.

Operator

I'm not showing any further questions at this time. I'd like to turn the conference back over to Dr. June Almenoff, who is President and Chief Medical Officer, for closing remarks.

June S. Almenoff

Okay. Well thanks, everybody, for joining the call and for your interest in and support of Furiex. We look forward to speaking with you on our next quarter conference call. And I will now turn the call back to the operator.

Operator

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.

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