Avanir's CEO Discusses F4Q 2013 Results - Earnings Call Transcript

Dec.10.13 | About: Avanir Pharmaceuticals, (AVNR)

Avanir Pharmaceuticals, Inc. (NASDAQ:AVNR)

F4Q 2013 Results Earnings Call

December 10, 2013 4:30 PM ET

Executives

Ian Clements - Head of Investor Relations

Keith Katkin - President and CEO

Christine Ocampo - Vice President of Finance

Rohan Palekar - Chief Commercial Officer

Dr. Joao Siffert - Chief Scientific Officer

Dr. Randall Kaye - Chief Medical Officer

Greg Flesher - Chief Business Officer

Analysts

Mario Corso - Mizuho USA

Roy Buchanan - Piper Jaffray

Ritu Baral - Canaccord

Thomas Wei - Jefferies

Chris Radom - JMP Securities

Operator

Good day, ladies and gentlemen and welcome to the Q4 2013 Avanir Pharmaceuticals Earnings Conference Call. My name is Kim and I will be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the conference over to your host for today, Mr. Ian Clements, Head of Investor Relations. Please proceed.

Ian Clements

Thanks, Kim. Good afternoon everybody. I’d like to welcome you to our conference call to discuss our financial and operating results for the fiscal 2013 fourth quarter.

To discuss our results, commercial and clinical initiatives, I’m joined by several members of our leadership team. Our President and CEO, Keith Katkin will lead the call today by providing a brief strategic overview of our business. After Keith, our Vice President of Finance, Christine Ocampo will review our quarterly results. Our Chief Commercial Officer, Rohan Palekar will highlight NUEDEXTA performance followed by Dr. Joao Siffert, Chief Scientific Officer, who will provide a pipeline update. For the Q&A portion of today’s call, we’ll also be joined by Dr. Randall Kaye, our Chief Medical Officer; and Greg Flesher, our Chief Business Officer.

During the course of the conference call, we’ll be making certain forward-looking statements. These statements are subject to numerous risks and uncertainties and reflect our current expectations and judgments. Examples of these forward-looking statements includes statements relating to our expectations for NUEDEXTA sales and revenue growth including market opportunity, future expense levels, the timing and success of future development of AVP-923 for other indications, the potential approval of NUEDEXTA in new markets, the timing and success of the development of AVP-786 and AVP-825, and the potential outcome of our pending ANDA litigation.

Actual results could vary materially from the results anticipated by these statements. Investors should read the risk factors set forth in Avanir’s Form 10-K for the year ended September 30, 2013 which will be filed shortly and any subsequent reports filed with the SEC.

Additionally, during this conference call, we’ll refer to certain non-GAAP financial measures. A reconciliation to the applicable GAAP measures can be found in the earnings release that we issued early today. A copy of which is available on our website which is located at www.avanir.com.

With all that said, I would now like to turn the call over to Keith Katkin. Keith?

Keith Katkin

Thanks Ian and good afternoon everyone. By now, I’m certain that all of you have seen the two press releases that we issued after market close today. The first containing good news regarding our year end and fourth quarter results, and the second, unfortunately containing some disappointing news in regards to our PRIME Study in central neuropathic pain and multiple sclerosis patients.

Joao will spend some time talking about the details of the MS PRIME Study a little bit later in the call but suffice to say that while we are disappointed in these results, we still firmly believe in the potential of dextromethorphan to treat a number of therapeutic conditions and we look forward to continuing to advance all of our other ongoing clinical studies with AVP-923 and soon-to-be AVP-786.

Now I’d like to turn to the good news and that was our fourth quarter and year-end earnings release and that 2013 has really been a breakout year for Avanir. In addition to the robust growth of NUEDEXTA for PBA, we achieved record NUEDEXTA gross annual revenues of $91.2 million over the year representing over 100% growth on a year-over-year basis.

We also formed a co-promote partnership with Merck, who are one of the world’s largest diabetes franchise in the world, which will leverage our commercial leadership in the institutional setting. We also in-licensed an innovative investigational migraine treatment, called AVP-825. We gained European approval for NUEDEXTA, a two-dosed strength and also with the same broad label we have here in the United States.

We also significantly advanced our AVP-786 program gaining a fast development path from the FDA and identified a dose to take in the clinical studies with substantially less quinidine. Finally, we initiated a new Phase II study of AVP-923 exploring its potential application in levodopa induced dyskinesias in Parkinson’s disease.

And now with that brief introduction, I’d like to turn the call over to Christine Ocampo, to discuss our financial results. Christine?

Christine Ocampo

Thanks Keith and good afternoon everyone. In addition to the financial results summarized in the press release issued earlier this afternoon, you can find additional information, including full year information at our upcoming Form 10-K which will be filed by this week.

We reported total net revenue for the fourth fiscal quarter of 2013 of $21.7 million as compared to $13.5 million for the comparable period in fiscal 2012. This is a year-over-year growth of over 60%. Total net revenue for the fourth fiscal quarter of 2013, includes $1.2 million of Abreva revenue. I’d like to take this opportunity to state that as of the April 2014 expiry of the Abreva patent, we will no longer be recognizing revenue related to Abreva.

For the fourth fiscal quarter of 2013, we recorded record growth product sales of NUEDEXTA of $27.7 million and record net sales of NUEDEXTA of $20.2 million. For fiscal 2013, our annual growth to net discount was 22.5%.

Quarterly growth to net discount vary due to the timing of Medicare Part D coverage gap also known as the donut hole as well as delays in the government processing of mandated rebates. As a result of quarterly variability, for the fourth quarter fiscal quarter of 2013, our gross to net discount was 26.9%, compared to 21.7% in the third fiscal quarter of 2013.

Now going forward, we expect annual gross to net discount to be in the range of 24% to 27%, which includes the impact on gross to net from our most recent price increase. Wholesale inventories at NUEDEXTA, as of September 30, 2013 remained at an estimated 3 to 3.5 weeks on hand.

On November 14, 2013, we implemented a price increase of 7.8%. The wholesale acquisition cost for 60 capsules is now $645. Gross margin on the sales of NUEDEXTA for the fourth fiscal quarter of 2013 was 94.3%.

R&D expenses were $7.9 million for the fourth fiscal quarter of 2013, compared with $6.1 million for the same period in the prior year. In the fourth fiscal quarter of 2013, our R&D spend was primarily attributed to costs associated with our multiple ongoing clinical studies, medical affairs and development expenses for investigational migraine product, AVP-825. Additionally, included in R&D, we recognized a one-time charge of $20 million associated with the in-licensing of AVP-825.

SG&A expenses of $27 million for the fiscal fourth quarter of 2013 increased from $17.4 million for the corresponding period of the prior year. Sales and marketing expenses for the fourth quarter was $17.6 million as compared to $11.2 million for the corresponding period of the prior year. The increase in the fourth quarter was due to personnel costs, resulting from the recent sales force expansion as well as increased marketing and outside services costs.

Total operating expenses excluding cost of goods sold for the fourth fiscal quarter of 2013 was $35 million, compared with $23.5 million for the comparable quarter in fiscal 2012. Operating expenses exclude a one-time charge of $20 million associated with the in-licensing of AVP-825.

And for the three months ended September 30, 2013 and 2012, we recorded $1.3 million and $1.3 million respectively of stock-based compensation expense. Our cash used in operations for the fourth fiscal quarter of 2013 was $10.1 million, excluding a one-time payment in the amount of $20 million related to AVP-825.

Our net loss for the fourth fiscal quarter of 2013 was $15.4 million or $0.10 per share, compared with a net loss of $11.7 million or $0.09 per share for the same quarter in fiscal 2012. The net loss excludes a one-time payment in the amount of $20 million related to AVP-825. As of September 30, 2013, we had total cash, cash equivalents and restricted investments of $57.5 million.

Now turning to operating expense guidance for fiscal 2014. We anticipate that our operating expenses will be in the range of $140 million to $150 million, excluding cost of sales and non-cash expenses such as FAS 123 and appreciation.

In addition, please note that earlier in the year, we changed our P&L format such that cost of product sales are included in operating expenses, however, we do not include these numbers in guidance.

R&D expenses are expected to be approximately $40 million to $44 million including all development programs as well as our medical affairs organization. SG&A expenses are expected to be approximately $100 million to $106 million.

The increase in operating expenses for fiscal 2014 is primarily due to the investment in our ongoing and future R&D program as well as the full year impact of the expansion of our sales team.

Now with that summary of our financial results, I will now turn the call over to Rohan. Rohan?

Rohan Palekar

Thanks, Christine. The NUEDEXTA franchise had a strong quarter with unit demand showing robust growth, up 12% versus the previous quarter on the heels of a 27% growth in the previous quarter.

I’m particularly pleased to see this level of growth continue into the tenth quarter post launch. This was our first quarter under the new alignment with separate sales forces calling on the institutional segment and the specialty retail segment. The transition went smoothly with minimal disruption to customers and both teams are now fully deployed.

We are already starting to see the impact on the retail side, as we now have 72 full-time representatives focused on this segment. Both channels of our business, the institutional and specialty outpatient setting saw solid growth this quarter. The institutional business grew 15% versus the previous quarter, while the retail segment grew 8%. There is still significant growth opportunity as our penetration of the moderate to severe PBA population is only about 10% in nursing homes and below 1% in the specialty outpatient setting.

Initial data for the first quarter of fiscal ‘14 is solid with demand up approximately 9%. It is encouraging to see the growth, we are seeing in the retail segment, which is up approximately 11% over the corresponding period in the prior quarter as well as the growth we are seeing in new prescription start.

This growth in retail is driven by the added sales resources, targeting the segment and the likely impact of the PPA television advertising that resumed in October. Historically, we have seen acceleration in demand growth two to three quarters post the expansion. An early signal suggests that we should see a similar pattern in the upcoming quarters.

Starting October 1, our institutional sales force started detailing the JANUVIA family of products in the institutional segment pursuant to our agreement with Merck. While it is early to comment on the sales result, initial feedback from the field has been promising and consistent with our expectations.

Our representatives are receiving positive reaction from medical directors, pharmacists and the nursing staff, who see the benefits of JANUVIA for the treatment of their residence with type 2 diabetes. I’m also encouraged that the second product in the bag is given enough access to nursing homes that we had previously not penetrated.

We have built a strong foundation for NUEDEXTA with the PBA franchise, and are optimistic about the continued growth we expect to see in the coming months. To discuss some of the clinical programs that will broaden Avanir’s leadership in the CNS therapeutic area, I would turn over the call to Joao. Joao?

Dr. Joao Siffert

Well, thanks Rohan. So let me briefly review the clinical activity of AVP-923. And first, let me address the disappointing news we announced today. The PRIME, which is our Phase II clinical trial of the investigational drug AVP-923, for the treatment of central neuropathic pain in adults with multiple sclerosis, did not meet primary efficacy end point.

The treatment was well tolerated and safety was consistent with the known profile of DMQ. We’re still in the process of analyzing the data from the study which we just received a few days ago. Whereas the improvement in pain scores from baseline and to study end reached statistical significance, there was no difference between the active treatment arms in placebo.

In addition, we believe that a higher-than-expected placebo response may have negatively impacted the study results. We will continue to review the detailed data from PRIME over the coming months, and we’ll do this in conjunction with the previously generated positive data from the Phase III study in diabetic peripheral neuropathic pain to determining the next steps for the development of AVP-923 and neuropathic pain.

We have shown that dextromethorphan can be effective in neuropathic pain because we’ve seen this in the Phase III DPN study. But we need to recognize that treatment effect in central versus peripheral neuropathic pain may be different. Importantly, we do not believe the results from PRIME altar the probability of success in the clinical trials and movement disorders and other mood and behavioral disorders that we are currently conducting or plan to conduct.

With that, let me address the scatters of our other ongoing Phase II trials. If you look at the outstation phases without Alzheimer’s disease, to remind you this is a 10-week double-blind, placebo-controlled study comparing AVP-923 versus placebo. The study continues at steady enrollment rate across 35 sites in the United States. We expected date in the second half of calendar year 2014.

The safety data remains within parameters consistent with the data from AVP-923 development and also consistent for this patient population. In November at our first independent Data Safety Monitoring Board Meeting, once again the committee recommended that the study continue as planned.

On to the levodopa induced dyskinesia in Parkinson’s disease study, the first patient was enrolled in November 2013. And with the projected enrollment of 15 to 20 patients, we expect data in the second half of calendar year 2014.

Respect to the AVP-786 development program, we are well underway toward filing the IND next calendar year in order to initiate clinical studies. Our first study with AVP-786 in patients will assess the efficacy and safety in treatment resistant major depressive disorder. More to come.

Turning your attention to newly in-licensed investigational product, AVP-825. We are on track to file the NDA in the first calendar quarter of 2014. Additionally, at the American Headache Society Meeting just a few weeks ago, I was particularly pleased as many of the discussions I had with opinion leaders reinforce our belief in 825 as an important new therapy for migraine, as they all view the profile very favorably.

Over on to Keith.

Keith Katkin

Thanks, Joao. In closing, I would like to say that we kicked-off fiscal 2013, laying out on our vision to building a leading CNS specialty company. This vision required continue commercial execution, progressing our development pipeline and regulatory success, combined with strategic business development transactions that would enhance shareholder value. 12-months later, I believe we have demonstrated that we are leading CNS biopharma company.

In addition, I’m looking forward to the continued value-creating milestones that we have on the horizon within 2014.

With that summary of our business and our financial update, I would now like to open the call up for questions. Operator?

Question-and-Answer Session

Operator

(Operator Instructions) And your first question comes from the line of Mario Corso from Mizuho USA. Please proceed.

Mario Corso - Mizuho USA

Good evening. Thanks for taking my questions. First on the pain data, I feel like I’m hearing a little bit of mixed message. You used the word disappointing but I think the prior comments for the study was really designed to inform dosing for future studies and not necessarily expecting statistical significance for the study but again looking at correlation of blood levels and efficacy. And I’m wondering how you feel about that piece of it?

And it certainly sounds like there is the potential for future development here with pain. So I’m trying to reconcile some of those issues a little bit. And then secondarily, I was wondering if you could talk a little bit about gross to net a jump in the fourth quarter and it looks a little bit higher for the full year ahead than it was in the prior year? Thanks very much.

Dr. Joao Siffert

This is Joao here. I’ll first address the question regarding the pain study. So we’d miss the primary efficacy end point which indeed was looking at the dose response as you mentioned. So that’s disappointing. The issue here is as we look to the overall development program is how to fit in the MS pain data which is smaller data set and on is specific type of pain, which is central neuropathic pain into the broader neuropathic pain development which focuses are primarily on peripheral neuropathic pain specifically in treatment resistant DPN pain.

So that’s the -- that sort of the work cut out for us to look at the data in this totality as we entertain the next steps in the pain development program. We will look at the -- but the data from this study and the positive data, unequivocally positive data in the DPN Phase III trial which was well powered to technical difference and we will consult both internally and also with our key pain experts who have advised the company over the years.

Rohan Palekar

Hi. Mario, this is -- its Rohan. So breaking your question into two parts, the increase in the gross to net on this quarter, it was primarily driven because our Medicare part D expense specially the coverage gap which is known as the donut hole that increased significantly. Now in some ways, we were expecting this because as we continue to grow our Medicare business, the donut hole coverage with Pharma companies have to be able to continue to grow.

The reason you saw fluctuation quarter-to-quarter is we get billed once a quarter by CMS on a lagging period. And so it comes then in this time period because people tend to hit the donut hole in the third quarter and then typically by fourth quarter they go in to catastrophic coverage and then they start the year again, they are out of the donut hole.

So what you’ll start to see is we see quarterly variations between one quarter to the next. And then addressing the question about the growth in gross to net for fiscal ‘14, one thing I’d like to remind you is a significant part of our gross to net is really driven by wholesaler fees and mandatory rebates which we have to pay. In fact, it’s over 50%.

But the other reason you are seeing a slight increase versus our previous guidance is because of the new contracts we are signing with peers, which really helps access the increased amount of donut hole coverage which we expect as our Medicare business grows and the -- and the last one is the impact of the recent price increase we took. So that’s the reason it went up slightly for next year.

Operator

Your next question comes from the line of Charles Duncan from Piper Jaffray. Please proceed.

Roy Buchanan - Piper Jaffray

Hi guys. It’s Roy in for Charles. Thanks for taking the questions. First one is a quick one, I just wonder, Christine, if you could restate the R&D guidance for next year?

Christine Ocampo

Yeah, I’ll be happy to. So our R&D expenses are expected to be between $40 million to $44 million.

Roy Buchanan - Piper Jaffray

Okay. Great. Thanks. And then other question is I wonder if you guys could walk through the best case and worst case scenarios for the litigation when we could see the first generics and what your plans are? Thanks.

Keith Katkin

Sure. Hi Roy, it’s Keith. So in terms of best case which is the case that we fully expected to be the outcome, the judge will -- will issue a ruling from the bench and that ruling will be in favor of Avanir and allow us to continue the promotion of the NUEDEXTA and helping PBA patients through 2026. Worst case scenario would be that after the judge rules against us, in which case the drugs would be allowed to enter. So long if that really happens after the expiration of the 30-months stay which is on December 30th.

Roy Buchanan - Piper Jaffray

I assume off course you guys would appeal?

Keith Katkin

Absolutely. To the extent that we’re not successful, we would definitely appeal.

Roy Buchanan - Piper Jaffray

Okay. All right. Thank you.

Operator

Your next question comes from the line of Ritu Baral from Canaccord. Please proceed.

Ritu Baral - Canaccord

Thanks for taking the question guys. Looking back, have you seen any sort of historical difference and placebo response rates in MS pain studies versus diabetic peripheral neuropathy studies?

Dr. Joao Siffert

I’ll take the question, Ritu, Joao here. There aren’t a lot of MS pain studies, at least not lot of well-controlled trials in MS pain. There is a lot more in DPN pain studies. So -- and placebo is a factor in all pain studies affecting all of CMS therapeutic areas pretty much including epilepsy more recently. So I can’t make a sort of statement one way or another, what’s known is in MS pain is it seems to be a harder hurdle. There is no approved drugs for that in the U.S. There is some -- other than OPS perhaps that have a broad pain indication. And if you look at the history of these clinical trials a lot of good drugs have failed in MS pain.

So it’s a tough field to crack. And so we again need to put this in context with the overall neuropathic pain program and the indications that ultimately we would like to pursue in a regulatory path.

Ritu Baral - Canaccord

Got it. And what was your placebo assumption in this trial?

Dr. Joao Siffert

Sorry.

Ritu Baral - Canaccord

What was the assumption?

Dr. Joao Siffert

The assumption, it’s usually -- we look at treatment difference, right, not necessarily placebo assumption. You want all this to say that the active will be over the placebo. So pretty standard, usually a point to two points you can consider a successful trial. But even -- if you look at even other trials recently published, some times the difference between drug and placebo is like less than a point. This is in now zero to 10-point scale.

So then depending if you can -- depending if you can power the study enough, you have to power for a relatively small difference especially in the more difficult types of pain trials like this one.

Ritu Baral - Canaccord

Got it. And can you confirm that you did see separation if only numerical separation between the treatment benefit between the two groups?

Dr. Joao Siffert

Again there was no difference. I mean, we can talk about numerical variations but in the end you have to have something that is either a very clear trend or a statistically significant difference and we do not see that. There was an improvement from baseline and all treatment arms and that makes the hurdle even higher because as you introduce whatever bias came into the study assessment that these patients will have chronic pain, all of them will have chronic pain, all of them had at least moderate-to-severe pain at study entry coming to your trial after 12 weeks then they show an improvement.

So something happened that they improved. The problem is whatever influence the outcome of the pain scores influenced this across the treatment arms. So that makes it harder to tease apart what is the drug effect versus whatever else is happening in the study that is generating this kind of response.

Ritu Baral - Canaccord

Got it and per the press release, you said that the change from baseline was -- the magnitude of change from baseline and benefit from baseline in the active group was around what you expected, is that correct?

Dr. Joao Siffert

Yes, give or take is what we expected.

Ritu Baral - Canaccord

Okay. So therefore you wouldn’t think that the PK could play into it. I am just thinking about the fact that the quinidine dose and the formulations that you used in this study is different than the one used in the diabetic peripheral neuropathy trial a few years ago?

Dr. Joao Siffert

Yes. So the dose range in the DPN trial was slightly higher than this dose range but there is some overlap of this trial too in the higher dose. So that may be a factor. I think a larger factor is looking at DPN versus central pain in MS. And also the factor that sometimes you run trials even with drugs that can work in the particular indication and sometimes the specific study just doesn’t work. So that is somewhat of a nature of what we do as well.

Ritu Baral - Canaccord

Got it. And the data that you have generated as far as benefit from baseline, will that -- will that have some -- would that help you in some way in potentially designing a future trial either in DPN or any other pain indication or would you have to sort of run another study to see what the treatment benefit might be for Phase III?

Dr. Joao Siffert

No. This is all -- yes this is the part of the overall data set. Again the largest data set we have and the most powerful data set is from the DPN pain phase III trial that we published. So that’s the sort of core data set that will guide us in the next steps in the development. This is one input in to the broader data set we already have.

Ritu Baral - Canaccord

Got it. Okay. Great. Thanks for taking the questions.

Dr. Joao Siffert

Thanks Ritu.

Operator

Your next question comes from the line of Thomas Wei from Jefferies. Please proceed.

Thomas Wei - Jefferies

Thanks. I apologize I missed the very beginning of the call, but I just wanted to clarify. So you saw no dose response at all in the pain study, is it just kind of all scattered around the placebo arm?

Rohan Palekar

Yes. It was not all scattered but there was no statistical dose response -- their correlation wasn’t robust enough to reach statistical significance.

Thomas Wei - Jefferies

Okay. Can you just remind me, -- we are actually looking at the old DPN data earlier today, what -- why was that not pursued?

Keith Katkin

Yes, I can jump on that, Thomas. Thomas, it’s Keith. So originally when we had designed this program and focused on MS pain, it was a number of years ago before we had AVP-786. And at that time, we weren’t certain about what type of intellectual property we would have to be able to support a DPN pain indication that would -- give us the runway that we needed in order to fully develop it.

So, we decided to focus in on MS pain because we believe that there was a good possibility that we get orphan drug status and that we can build that into the overall development plan and time it accordingly. With the in-licensing of AVP-786 that obviously has changed our entire perspective and that’s how we spent a fair bit of time in our Investor Relations Day in October talking about we had already made up our mind that we were going to move towards -- back towards diabetic peripheral neuropathic pain because of 786.

So I think these study results just further validate that belief and that approach that we put out before. That said, we need to look at the totality of the data where we just got the study results. So we have to go through and see how it can inform the program but by no means do we think that this is the end of the pain program. We just think that we need to spend some time really going through all of the data.

Thomas Wei - Jefferies

And through the remaining three indications, when you also combine in major depressive disorder, which of those three do you think you have the strongest level of evidence from prior studies to support a positive outcome?

Keith Katkin

So, there is -- probably I'll start from the backwards from the smaller study and then levodopa-induced dyskinesia, there’s published data with the DM&Q combination albeit at a higher dose but that’s published about what 10 years ago or so neurology. So that’s clinical prospective, clinical data.

We also have a -- case series reported on patients with dyskinesia or chorea, which is the type of dyskinesia and about I think 12 patients came out of Baylor College of Medicine recently, I think it was published last year, senior author is Bill Ondo and he reported majority of the patients had clinically meaningful improvement.

Chorea from various etiologies including Huntington, Parkinson’s, somebody had brain injury, very natal brain injury. But that again reinforces the data and movement disorders, so that’s pretty clear cut. In the agitation, as we mentioned we looked at -- in the PBA trials, some PBA patients also have some irritability and agitation as comorbid neuropsychiatric manifestations.

And we looked in the Star trial, which is a pivotal trial and there are two patients improved in the agitation domain of the neuropsychiatric inventory, so that’s prospectively done although it’s a post-hoc analysis, this analysis -- the assessments were done prospectively as part of the control study and it did reached significant difference from placebo and that Avanir dose related drug trend.

And, again, this is in the dose range of PBA. So, obviously for depression, we don’t not have a clinical trial in depression, but there is -- perhaps the strongest evidence here is this pharmacological in there to be binding sites for dextromethorphan or modulate classic neurotransmitter pathways that are known to working depression including serotonin and norepinephrine.

And most recently with the data in glutamate and even on sigma-1 as augmentation type strategies for anti-depressant treatment, these make this candidate of DMQ, in this case where we use 786, a likely drug for development. And we have obviously consulted with the experts in the field and we hear pretty clear endorsement for the next logical step in the development of 786 in this indication. So we feel pretty confident that there is a strong scientific rationale to pursue those. And this rationale is not altered by the outcome of the MS pain trial in anyway that I can see.

Thomas Wei - Jefferies

Great. Thanks for taking my questions.

Keith Katkin

Thanks, Thomas.

Operator

Your next question comes from the line of Jason Butler from JMP Securities. Please proceed.

Chris Radom - JMP Securities

Hi, this is actually Chris on for Jason. Just two questions. First, do you have any update from the judge and did extra trial at all possible timing of the ruling? And then secondly just wondering whether the results of this PRIME trial impact your thinking around the patent that expires in 2016? Thanks very much.

Keith Katkin

Hey Chris, it’s Keith. Thanks for the questions. So, first, in terms of updates from the judge, no specific update from the judge. I think what we can do though, as we can look at his most recently ruling and his most recent ruling which was in regards to cadence taken about two months in order to issue that ruling. And if you look at historically, the amount of time it has taken them, it has taken them about three months. So if you follow the most recent precedent or average, you will be looking at about two to three months, I would like to put us anywhere from mid-January to mid-February.

That said, it is still quite possible we could issue the decision on or before December 30th to the extent that he doesn’t, then in the past, he has proactively issued in injunction preventing the launch of generics. And for some reason in this case, he did not then we would certainly petition the court for an injunction. So we are still feeling very good about the case. We are confident of the outcome and looking forward to the decision from the judge.

And then in regards to your second question about how PRIME may affect the 2006 patent, given we have just got this data very recently, we are still going through the data to understand what if any implications that may have on our IP position.

Chris Radom - JMP Securities

Great, thanks a lot.

Keith Katkin

Thank you.

Operator

There are no more questions at this time. I would now turn the call back to Mr. Ian Clements.

Ian Clements

Thanks very much, Kim. In closing, I’d like to thank you everyone for joining us today and your continued interest in Avanir. Just from an investor communication perspective, we will be presenting at the J.P. Morgan Annual Healthcare Conference in San Francisco in the middle of January. However, in the meantime if you do have any further questions or you would like to discuss any portion of the results from today, do please feel free to call me on 949-389-6700. Thank you.

Operator

This concludes today’s conference. Thank you for your participation. You may now disconnect. Have a great day.

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