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Chelsea Therapeutics International, Ltd. (NASDAQ:CHTP)

Q4 2009 Earnings Call

March 10, 2010 4:30 pm ET

Executives

Kathryn McNeil – Director, IR

Simon Pedder – President and CEO

Art Hewitt – Chief Scientific Officer

Nick Riehle – VP, Administration and CFO

Bill Schwieterman – Chief Medical Officer

Analysts

Liana Moussatos – Wedbush

Howard Liang – Leerink Swann

Andrew Vaino – Roth Capital

Juan Sanchez – Ladenburg Thalmann

Brian Abrahams – Oppenheimer

George Stance [ph] – Morgan Stanley

Operator

Good day, ladies and gentlemen, and welcome to the Chelsea Therapeutics fourth quarter and full-year 2009 conference call. At this time all participants are in a listen-only mode. Later we’ll conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder this conference call is being recorded. I’d now like to introduce your host for today’s conference, Kathryn McNeil, Director of Investor Relations.

Kathryn McNeil

Thank you and good afternoon and welcome to Chelsea Therapeutics fourth quarter and full-year 2009 conference call. We announced our fourth quarter and full year results this afternoon after the close of the US financial markets, and our press release can be found on our website at chelseatherapeutics.com.

Joining me from Chelsea this afternoon is Dr. Simon Pedder, President and Chief Executive Officer; Nick Riehle, Chief Financial Officer; Dr. Art Hewitt, Chief Scientific Officer; and Dr. Bill Schwieterman, Chief Medical Officer.

Before I turn the meeting over to Dr. Pedder, let me note that some of the remarks you might hear today may contain forward-looking statements about the company’s performance. Actual future results might differ materially from those projected in these forward-looking statements. Additional information concerning risks factors could cause actual results to materially differ from those in these forward-looking statements, are contained in our SEC filings and periodic reports under the Securities Exchange Act of 1934 as amended, copies of which are available on our website or maybe requested directly from the company.

With that said I’ll now turn the call over to Dr. Pedder. Simon?

Simon Pedder

Thanks, Kate, and good afternoon everyone. It’s been an eventful year at Chelsea, and I’d like to thank each of you for your continued support and participation in today’s call. Over the course of the past year, we have had several opportunities to review with you in great deal the clinical results and each of the significant developments in 2009. So, this afternoon I would like instead to highlight how the events of the past year are shaping our current activities and discuss our expectations both for the coming months as well as the year ahead.

As you are all aware we began 2009 with six active clinical trials. Two XC trials associated with our Droxidopa registration program and neurogenic orthostatic hypotension or NOH; two additional studies abroad Droxidopa development program, intradialytic hypotension and fibromyalgia respectively and two trials supporting the clinical advancements of our antifolate portfolio.

Now, just a few months into 2010, our clinical activities are no less robust as we look forward to leverage key learnings from the past year, continue to advance our core programs and work towards the commercialization of our first drug candidate. Having recently expanded our Droxidopa registration program in NOH we will have two Phase III efficacy trials ongoing in 2010. And we are well positioned to develop -- to deliver a robust data package to support an NDA filing next year.

In the next few months, we will have completed the primary efficacy assessment component from Study 303, our first long-term Droxidopa safety evaluation and anticipate that these findings will validate the durability of effect already established by the Japanese clinical and commercial experience, and provide additional data supporting the use and clinical relevance of our new primary efficacy end point the OHQ constant score.

And, in the next few weeks we will have a preliminary analysis of Study 305, a continuous 24-hour blood monitoring study that should provide greater insight into the relative effect of Droxidopa treatment on blood pressure over sustained period of time. Looking beyond NOH, we are continuing to make progress in our Phase II study of Droxidopa for the treatment of fibromyalgia, and look forward to end term analysis midyear, that should enable us to garner our first indication of treatment effect.

In our antifolate program, we are leveraging the initial proof-of-concept data stemming from our Phase II trial of CH-1504, along with a better than accepted Phase I CH-4051 studies to initiate a global Phase II trial of CH-4051 in rheumatoid arthritis.

Finally, our internal clinical programs would be complemented by several anticipated extra investigator-led trials of Droxidopa, such as the recently initiated Phase II trial in adult attention deficit hyperactivity disorder or ADHD. We have tremendous confidence both in anticipated outcome for each of the studies in this robust lineup of clinical programs as well as our ability to successfully execute each in a timely fashion, positioning Chelsea to deliver on the long anticipated promise of our rich portfolio.

At this point, I’d like to turn the call over to Art Hewitt, our Chief Scientific Officer, and ask him to provide some specific details on our clinical plans for 2010. Art?

Art Hewitt

Thank you, Simon. As Simon indicated, the clinical activity of the past year has provided a very solid foundation from which to build out our clinical programs in 2010. Beginning with our antifolate program, the results of our Phase II trial of CH-1504, which was a head-to-head comparison to a standard therapeutic dose of methotrexate provided solid validation to the scientific rationale that the non-metabolized methotrexate are not required for efficacy. Achieving this proof-of-concept was a landmark movement in our antifolate program, as this rationale, of course, was at the very core of our development, not just as CH-1504 but for our full portfolio of metabolically stable antifolate. It was therefore critical that we successfully demonstrated that CH-1504 could achieve comparable efficacy to methotrexate.

Given the robust preclinical data that we had generated and our confidence in the outcome of our Phase II trial of CH-1504, we had begun in parallel a comprehensive Phase I program for our fast follower, the L-isomer of CH-1504, which we refer to as CH-4051, a much more potent molecule than CH-1504. The data from this Phase I program, following closely on the heels of our CH-1504 Phase II study exceeded our expectations. In fact, the two week multiple ascending dose studies suggested that CH-4051 was indistinguishable from placebo with respect to safety and tolerability at doses up to 5 milligrams. This represents a dose that would be at a minimum tenfold increase over the top dose pace tested in our Phase II CH-1504 study.

Collectively the results of both antifolate studies completed in 2009 provided us with a comprehensive dataset upon which to base our upcoming Phase II trial of CH-4051. In contrast to CH-1504, we fully expect CH-4051 will demonstrate a significant treatment benefit over methotrexate. In addition to this earning control to demonstrate this benefit, we are also implementing a few specific features that should further enhance our understanding of the activity of CH-4051. First, in addition to comparing three doses ranging from 0.3 milligram to 3 milligrams of CH-4051 to methotrexate, we’ve added a fifth bond to the study that will add folate supplementation to the highest dose of CH-4051 allowing for a comparison in a CH-4051 both with and without folate to the methotrexate arm which also includes the folate supplementation.

As you know, folate supplement are prescribed in conjunction with methotrexate to reduce the risk of side effects typically associated with methotrexate treatment. We are eager to identify what if any role folic acid may play in both the efficacy and tolerability of CH-4051. The second, although, exploratory component to the study is evident in our choice of the Hybrid ACR score as the primary endpoint. This analysis will allow for a more sensitive evaluation of the efficacy than the (inaudible) ACR 20 score, which has been a problem with respect to distinguishing benefits between dosages in several trials. While the Hybrid ACR score utilizes the same components as the traditional ACR score, the Hybrid score averages the improvement across seven of the core ACR criteria rather than defaulting to the minimum criteria that define the ACR20, 50 and 70 score.

As a result, the efficacy analysis will provide a more precise descriptive comparison of the therapeutic benefit of CH-4051 compared to methotrexate. Just to be clear, we are also capturing the traditional ACR20 scores in our primary analysis in this stepped out approach that takes full advantage of both hybrid and (inaudible) ACR endpoints, in addition to being endorsed by the American College of Rheumatology, the FDA and key opinion leaders, this approach is particularly well suited to the (inaudible) the Phase II trial.

The final and perhaps the most exciting element of our study is reflected in our decision to conduct the trial in methotrexate partial responders because CH-4051 is not metabolized and because inadequate low partial therapeutic response to methotrexate is believed to be related to the variations in the metabolism and/or bioavailability of methotrexate we believe there is a compelling premise for the potential efficacy of CH-4051 in this sizable number of patients with inadequate response to methotrexate creating a unique advantage in the competitive rheumatoid arthritis market.

Of course, going in the methotrexate partial responders also allows us to conduct the study in North America where the process of enrolling methotrexate treatment in new patients would be a daunting task indeed. This 12-week trial is set to begin enrolling patients late in the second quarter and should be completed during the third quarter of next year.

As a final note, I am truly excited to announce that Arthur Kavanaugh, Professor of Medicine at the University of California, San Diego has agreed to act as the PI for our study. The addition of this world class medical research experts sure to facilitate the study conduct in many respects.

Switching gears now, we’re looking more closely at our Droxidopa programs. Our Phase II trail Droxidopa in fibromyalgia got underway in early 2009. So we are conducting the study at a limited number of centers in the UK only, as Simon mentioned this continues to progress nicely, so we have now enrolled all the patients that we will be including in our plan to interim analysis early this summer with approximately half of the patients enrolled.

As you will recall this is rather a complex exploratory study design that incorporates 12 distinct study arms comparing various doses of Droxidopa monotherapy, Droxidopa in combination with carbidopa and placebo. This format is primarily design to determine the relative therapeutic benefit of combination therapy versus monotherapy. Following the upcoming interim analysis, we are looking forward to having the necessary data to support collapsing the carbidopa monotherapy arms and any Droxidopa arms that are not showing meaningful treatment effect, so as to focus the remainder of the trial on the arms mostly likely to demonstrate a robust benefit.

In contrast to the anticipated narrowing of our fibromyalgia study, we've really stepped up and expanded our Droxidopa program in NOH in the last few months, and as a result we will have a vigorous line of clinical trials just in NOH in 2010. In response to the data coming out of Study 302 last September, we implemented a number of key changes in our registration program that should strengthen the outcome of our ongoing 301 Study and provide meaningful supportive data, thereby forming a strong basis for submitting Droxidopa in the A for approval next year.

These changes reflect three core findings from Study 302. First, while Study 302 failed to meet its predefined primary endpoint, it clearly shows a broad and compelling efficacy across the latter extensive number of secondary efficacy measures used in the study. In total, they were positive trends favoring Droxidopa on 16 of the 17 study endpoints, evaluating symptomatic and functional benefits, five of the predefined endpoints demonstrated a statistically significant improvement with Droxidopa treatment.

Detailed analysis of the data and subsequent independent sensitivity analysis strongly suggested that a composite symptomatic score would provide a more accurate measure of the therapeutic benefit of Droxidopa. Consequently, we felt that the most appropriate course of action was to incorporate these findings into Study 301 by adjusting the primary endpoint from a single item on the Orthostatic Hypotension Questionnaire or OHQ to the OHQ composite score, which incorporates average improvement on both subcomponents of the OHQ.

Fortunately, each of the individual OHQ criteria were already predefined secondary endpoints in the Study 301, so all the necessary assessment criteria for the OHQ composites score is in place. More importantly, the FDA has agreed with our assessments and has allowed us to modify Study 301 accordingly.

The second critical finding came from our subgroup analysis of Study 302 that demonstrates a very robust response in Parkinson’s disease patients who participated in the study. In fact, the results from this group using the OHQ composite were highly statistically significant in the rather modest 44 patients’ subgroup. The strength of this outcome informed our thinking when designing Study 306, our new confirmatory study in NOH.

It was clear that the most effective method for enriching our patient population in Study 306 would be to limit enrollment to only Parkinson’s disease patients with symptomatic neurogenic orthostatic hypotension. Not only will this patient colloquially enrich furthermore for robust therapeutic response, it will also provide greater consistency, reduced variability and a tighter standard deviation in the outcome since we are focused on a homogenous patient group rather than incorporating patients whose NOH stems from varying indications and we may therefore experience the affects of NOH in a slightly different way.

Finally, a review of the final data suggests that the design of 302 may have significantly contributed to the outcome specifically the open label response criteria, the withdrawal design and the duration of the study will likely not the most effective combination for demonstrating the benefit of Droxidopa in NOH. And, we have applied these learnings to the design of study 306. As a result, this study incorporates a blinded titration in which patients are randomized to act over placebo prior to initiating a dose titration. The benefit here being the patients randomized to placebo never receive drug treatment thereby completely eliminating any potential carryover effects.

Following the blinded titration, we will also be treating patients for a full eight weeks. While we believe the longer treatment period may benefit patients on Droxidopa who appear to show continued improvement over time, we’re confident that at least it will effectively minimize the placebo response as there is plenty of evidence to suggest that in general placebo patients tend to exhibit an overall regression to the mean as this Study progresses over time.

I am pleased to report that in addition to implementing these adjustments to our registration program we’ve already begun to make solid progress in advancing each of these studies. As you know, we opted to add an additional 24 patients to Study 301 and have already begun to enroll these additional patients. So far, the enrollment process is progressing ahead of schedule. We have 25 of our targeted 35 centers up and running with an additional seven waiting for final IRV approval.

As a result, we have a significant number of patients currently in screening and already have several that have completed titration and being randomized into the Study. Continue to expect that the final enrollment will be completed in the second quarter allowing for data in the third quarter of this year. Similarly, we have made substantial progress in getting Study 306 up and running having yesterday submitted our I&D to the FDA. We currently expect this study to be fully enrolled by the year end allowing for data in the second quarter of 2011.

Simon Pedder

Thanks Art. We will now have Nick take you through our financial results and expectations for the coming year. Nick?

Nick Riehle

Thanks, Simon. For the fourth quarter we had a net loss of $6 million or $0.18 per share versus a net loss of $9 million or $0.30 per share for a comparable period in 2008. You will recall that the loss of the fourth quarter 2008, included a net charge related to the valuation of auction rate securities of 0.7 million or $0.02 per share.

Our net loss for the full year ended December 31, 2009 was $25.8 million or $0.82 per share compared to a net loss of $35.1 million or $1.17 per share for the prior year. Here again, the net loss for 2008 included the recognition of impairment charges on auction rate securities with a net impact of $4.4 million, the full amount of which was effectively reversed in 2009.

Research and development expenses for the three month ended December 31, 2009 were $4 million compared to $7.2 million for the same period in 2008. For the year ended December 31, 2009 research and development expenses were $24 million compared to $27.1 million for 2008. This decrease was due primarily to lower clinical trials and manufacturing cost as several studies ongoing in 2008 were concluded or in the process of winding down by the end of 2009.

Selling, general and administrative expenses were $2 million for the three months ended December 31, 2009 compared to $1.3 million for the same period in 2008. For the 12 months ended December 31, 2009, selling, general and administrative expenses were $6.4 million compared to $5.3 million for 2008. This increase result in large part from costs associated with certain market research expenditures during the fourth quarter of 2009.

Chelsea ended the year with $22.3 million in cash and cash equivalents compared to $21.5 million at December 31, 2008. Of course, this 22.3 million balance at the end of 2009 excludes the proceeds from our recently completed registered direct offering, which after deducting relating expenses resulted in net proceeds to the company of approximately $16.8 million. Despite this recent infusion of capital, we continue to be vigilant in determining the central cogs and judiciously prioritizing our activities. The completion of this financing and the careful management of our expenses are intended to ensure that our current working capital is sufficient to see us through and beyond significant data points in 2010.

As has historically been the case, we anticipate that R&D will be our most significant expense in 2010 with direct program costs associated with our NOH registration program, running at approximately $16 million for 2010, and direct costs for our CH-4051 program at approximately 6 million. Layering in associate cost for our scientific staff, key consultants and a small amount to support Droxidopa proof-of-concept studies, total R&D expense for 2010 will be a little under 30 million, reaching a peak in the third quarter when essentially all of our trials will be active. Accordingly, we anticipate that our current resources confront our ongoing and planned development programs into the first quarter of 2011 or roughly six months beyond the release of key data from our 301 study. Simon?

Simon Pedder

Thanks, Nick. Before I open the call for questions, I’d like to briefly add to what Art and Nick just reported. During the course of the past year, Chelsea had generated a remarkable body of data. All of which supports the efficacy of our drug candidates in their target indications, and provide very sound basis for the clinical trials. We are currently conducting or plan to initiate in the coming year. However, the clinical results were only part of the story for Chelsea in 2009, in addition to completing several studies, the clinical and regulatory teams here at Chelsea demonstrated their greatest value by their adaptive response and swift integration of new information as it became available. Very few companies have been successful in negotiating a change in primary endpoint to an ongoing Phase III pivotal study.

Our success in doing so speaks directly to the quality of these studies conducted by the company and the unique expertise the team brings both to the clinical and regulatory refinements of drug development. I’m very confident that this demonstrated expertise combined with our robust dataset and the inherent value of our drug candidates will drive significant value for the company well beyond 2010.

And with that, I am happy to turn the call over for Q&A.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) And our first question comes from the Liana Moussatos from Wedbush.

Liana Moussatos – Wedbush

Thank you. Mid year, when you’re having the interim look at the fibromyalgia study, are you planning to make any kind of public announcement about it?

Simon Pedder

Well, it obviously depends on what comes out of that. I think the plan is to just to make the announcement that the plan is proceeding as planned, and part of that is to take a hard look as itself which we expect not to be contributing to any efficacy such as the carbidopa or the placebo sales. And that we will restrict itself are only showing efficacy. Obviously, if we have to make a major decision that’s material, we will announce it, but we would expect that the most appropriate announcement would be that the study is going on as planned.

Liana Moussatos – Wedbush

Thank you very much.

Operator

Our next question comes from Howard Liang from Leerink Swann.

Howard Liang – Leerink Swann

Thanks very much. So, just a question regarding your partnering strategy, Droxidopa. I think the cash is sufficient to -- for reduce of one trial data but presumably you need both trails to file I guess, what point do you think your partners will be interested in signing up a deal?

Simon Pedder

Hi, Howard. Obviously, we believed that everything that we’ve learned has gone into the change that we’ve made and which the agency is about to with 301, and then going into the design of 306. We in discussion with potential partners obviously identify what is the key data for them to make a decision.

And, obviously with 302 initially being reported with a negative use but then coming back with very strong positive outcomes in many of the secondary parameters and the identification of OHQ as a very reliable constant score which does show benefit with pharmacological intervention with Droxidopa has clearly made it 301 to be the key callus for companies to have discussion about entering into relationship with Chelsea, and clearly this is a competitive environment as we like to remind all those companies that we have those discussions with.

So, along with the 301 data, we thought the other important attribute would we have sufficient cash whereby in entering those discussions. It was a really a competitive nature based on which other companies may commit in partner as opposed to how much money Chelsea had in bank.

Howard Liang – Leerink Swann

Okay. Great. Can you remind us is there any ongoing development activities on 4051?

Simon Pedder

4051, there is no ongoing development as of right now. We are starting the Phase II Study which will be global Phase II as Arthur mentioned. It will go on in North America and other basically industrialized countries in the world, and that will be a pretty significant 250 Phase II against methotrexate and methotrexate partial responders.

Howard Liang – Leerink Swann

Okay. And then lastly, can you update us on what’s – is there any timeline regarding Mydotrin [ph], any FDA action regarding Mydotrin?

Simon Pedder

Well, at this time we probably know as much as you do, Howard. We have seen the letters, which have come out from the FDA to (inaudible) and the ANDA holders. We’ve certainly want to make sure that our program is very robust, well from a scientific and a medical viewpoint, so that the FDA can feel very comfortable about the efficacy and the safety of the Droxidopa in this patient population. And by doing that hopefully we’ll aid the agency in whatever decisions that they would make appropriately. Perhaps I’ll get Bill Schwieterman to come in and make a comment. Bill, would you like to add to that?

Bill Schwieterman

Just a little, just to say that, having been at the FDA for 10 years and understanding the relationship they have with congress and the current political environment there, I think reference to the 2007 reenactment of PDUFA and the post-marketing powers and so forth that congress gave to FDA have really, really come into play with regard to Mydotrin. Of course, we don’t have access to the information and so forth, but at least my read of those letters and the very specific nature of the trials they’re asking and just the general tenure of the whole FDA tone with those letters that were signed by Janet Woodcock, I guess the bottom-line is, it’s not a trivial exercise that they’re doing here. So, I’d just like to add that to Simon’s comments, so.

Howard Liang – Leerink Swann

Great, thanks very much.

Simon Pedder

Thank you, Howard.

Operator

Our next question comes from Andrew Vaino from Roth Capital.

Andrew Vaino – Roth Capital

Hi, thanks for taking my questions. On the 4051 study, how many patients are you expecting to enroll in that, don’t know there seems to be lot of groups, and will out a four day statistically significant result?

Simon Pedder

We are planning five arms in the trial and planning to randomize approximately 50 patients per arm. One of the real advantage is to using the Hybrid ACR as our primary endpoint, is that it is approximately doubling the power of the study over the standard traditional ACR 20 metric. So if you would make a comparison in terms of power of this study relative to a more traditional study within ACR 20 endpoint, this is close to a 500 patient study, which is we believe more than adequate to generate a statistically significant finding.

Andrew Vaino – Roth Capital

Okay. And on the 306 Study, did I hear correctly that you won't expect data for that on the sale of the second quarter of 2011?

Simon Pedder

That would be correct. We expect to complete enrollment this year but it does have an eight week double-blind components so it's going to run on into the second quarter of next year.

Andrew Vaino – Roth Capital

Okay, so, but you’ll wait till after that phase to file the NDA then?

Simon Pedder

That’s very process more than – that’s in an endpoint, I think as we collect data from our various studies, certainly including 301, we’ll make sort of ongoing assessments of what our options are.

Art Hewitt

But clearly if we include 306 in the filing, that would be the last piece of the filing.

Andrew Vaino – Roth Capital

Correct. Okay. And then finally, in terms of tangible data on why we would dwarf therapeutic 301 led to the higher placebo response. Is any tangible data to point that?

Simon Pedder

Sorry, Andy, you mentioned 301, I think you meant 302. Are you talking about drawing the line?

Andrew Vaino – Roth Capital

That’s correct.

Simon Pedder

Well there is, I think it’s specifically in using the OHQ as it was asked especially about symptoms when they ask patient to go back over the previous week and ask them how they felt. And there is issue there that patients have nearly stored norepinephrine how long does it in fact keep a responder responding. It perhaps last longer than a week go into the second week and then you would get a -- you pick that up looking at the symptoms because they ask it over the past week. Whereas when you ask the CGI in both the patient and the physician when asked, to the patient how you feel right now and to decision how you think your patient is doing, we in fact showed statistical significance with both those outcomes that don’t ask into that two-week period ask at the end of the two-week period.

And to that -- that was a sign to us that there may be some level of as a carryover effect. And we think we’ve dealt with that with the design, with 301 that has a washout, and of course we expect in 306 where patients will be titrated to either active or placebo, and then with the placebo patients attempted to kept on drug for eight weeks will get regression to the mean, we expect a lot of patients to obviously come out of that study even though they would be fully evaluated, the patient because we do as of the patient carry forward.

Andrew Vaino – Roth Capital

And indeed do you have fast track sales in this thing, right?

Simon Pedder

Correct.

Andrew Vaino – Roth Capital

Okay. Thanks.

Simon Pedder

Thanks, Andrew.

Operator

(Operator Instructions) And our next question comes from Juan Sanchez from Ladenburg.

Juan Sanchez – Ladenburg Thalmann

Good evening guys. First question is about 305; I mean what’s considered to be a positive outcome out of this trial, and what’s going to be the usefulness for the FDA having this data?

Art Hewitt

Hi, Juan, it’s Art. I am not sure whether describing 305 as having a positive outcome is necessarily quite the right way to approach it. I mean, it is essentially a safety study and what we are trying to demonstrate is that that there is no significant signal of concern when you look at blood pressures on a more scholastic basis than we have in our other 300 series studies where we are taking basically one point in time measurements of blood pressure. So we are now looking more holistically at the full 24 hour blood pressure affects of being on Droxidopa and it’s more of a safety issue and we are trying to assess whether, in particular, in the evening there are any signals, if you will, of concern.

Juan Sanchez – Ladenburg Thalmann

Thank you. And then second question about the potential your PM [ph] regulatory strategy, although non-existing trials maybe enough to satisfy future requirements obviously?

Simon Pedder

Juan, its Simon, and thanks for that question. We certainly think that 306 is going to in fact address some of the discussion we did have originally with EMEA about the Phase III design. The EMEA did actually state a preference for longer treatment duration on active versus the placebo arm of between two to three months, rather than the relatively short randomized period in Study 302, where they are only randomized for two weeks, and 301 where they are only randomized to one week. So we think that 306 among other attributes also help us meet the main criteria of the EMEA when they took a look at our Phase III program when it consisted of 301 or 302. So we think it will help aid us in our European registration.

Juan Sanchez – Ladenburg Thalmann

Okay, one last question. The new sites that you are opening, did they participate in 302, in Study 302 or this is brand new study?

Simon Pedder

Sorry could you repeat question one –

Juan Sanchez – Ladenburg Thalmann

Is there another new sites you are opening to finish enrollment on 302, 301, also participating in 302 or this our brand new site?

Simon Pedder

It's a mixture of rollover sites that performed particularly well in 302 that we have rolled over into 301 as well as a number of new sites that we have identified.

Juan Sanchez – Ladenburg Thalmann

Okay. Thank you guys and good evening.

Simon Pedder

Yeah, thank you.

Operator

Our next question comes from Brian Abrahams from Oppenheimer.

Brian Abrahams – Oppenheimer

Hi, thanks very much for taking my questions. I had couple of questions on 306, so I just want to make sure I understand the thing with the trail design. So by using a blinded titration phase, are you still able to exclude non responders as you have had in Study 302, and as you will in Study 301?

Simon Pedder

We’re going to throw that one to Bill.

Bill Schwieterman

Yeah, the goal of the original open-label titration was exactly like you stated. With the assumptions that we would be able to identify responders and non-responders by virtue of symptoms and blood pressure. What we have learned with those data since both the open-label titration and the randomized withdrawal portion is that the value of those metrics for identifying responders isn't that great or to make it just plain simple, the open-label titration probably wasn’t effective at all in enriching responders but rather in excluding patients who would have responded anyway. That's what the totality of the data show.

So given those conclusions, we adopted the 306 program where we maximized the value of dose titration during a randomized blinded portion because we think it's going to give us a lot of useful information, not only on symptoms but also on blood pressure and other aspects. So the short answer is, it's not going to really exclude anybody, who is going to respond to therapy we think.

Brian Abrahams – Oppenheimer

Okay.

Simon Pedder

Brian, it's Simon. I will add that in some ways 302 did its job because it did indemnify in Richmond population. When you look at the robustness of the benefit seen in Parkinson's disease patients, we kind of found our best respond to population, and that's why we are with the blessing of the agency recruiting 306 only in NOH patients with Parkinson's disease.

Brian Abrahams – Oppenheimer

So that makes sense. And I guess if you would include then in the non – the Parkinson's patients who are non-responders in study 302 during the titration phase, what would the results have looked like on the endpoints where those – where the Parkinson's patients looked quite good?

Simon Pedder

Let me add to that, just quickly, it’s Simon. I think instead of very robust P value we would had a very, very robust P value after that study. There is no indication that those patients that we’ve excluded would have done anything different than the patients that were included, and that's why the enrolment criteria rather open for this. We think it's going to be actually broadly therapeutic in a broad range of patient.

Brian Abrahams – Oppenheimer

So about what proportion of the Parkinson's patients in Study 302 did not – were excluded because of lack of response.

Simon Pedder

While as I remember we were excluding patients because of two outcome parameters due to not having a symptomatic benefit and not having a blood pressure benefit. Those symptomatics we obviously would have expect would respond in a 306, were obviously – it’s possible that those not having a blood pressure were kicked out due to blood pressure may not be in a similar situation. That being said, just on the recent look, very few patients with Parkinson Disease and in fact the entire population that would were titrated in 302, a very few patients didn’t have a symptomatic benefit. They mostly got excluded due to not having a blood pressure improvement which we now know doesn’t correlate to a big response population.

Brian Abrahams – Oppenheimer

Got you. That makes sense and just one last question I guess on 301 versus 302. I know you want to see issues with 302 with the potential carryover affect that may have clouded the delta between structured open and placebo, just wondering, I guess, what gives you the confidence that having a one-week washout then followed by one week of treatment would give you any less of a carryover effect than just having two weeks as it was the study 302 where patients were randomized to drug a placebo. I guess isn’t it sort of the same thing it’s kind of, you are looking at the end of a two-week period either way very rapid washout?

Simon Pedder

There is another difference here besides the one week washout and that was in 302 all the patients would have been titrated to their best dose and then whenever they identified that best dose they actually stayed on the drug for an additional week whereby in Study 301 they will undergo the titration and then as soon as they reach their best dose they will actually be washed out from then. So they don’t have that additional week of receiving the drug over a period of next seven days, and we believe that along with the washout together gives us a confidence that we expect 301 to have very robust benefits specially using OHQ competitive score as a primary.

Brian Abrahams – Oppenheimer

Okay. Thanks very much.

Simon Pedder

Thank you, Brian.

Operator

Our final question comes from George Stance [ph] from Morgan Stanley.

George Stance – Morgan Stanley

Hi, guys. I have another question. You guys mentioned in a former presentation about projected revenue, once say an Othera is launched and you have those estimates going up. Have you conned down a number like in a conservative range to a real aggressive range, where that number would be once three to five years into successful launch, where the number might fall?

Simon Pedder

No, George, we originally estimated that two to three years after launch just NOH indication in the US would be somewhere between 300 and 375. What’s added on to that now is the fact that there is possibility obviously of the only other drug that’s prescribed for this indication being removed from the market. The fact that we have a very robust effect in our largest patient population which is Parkinson’s disease of which there is million Parkinson’s patients, it’s only about 30 or 35,000 MSA patients in a couple of thousand pure unaffiliated patients. So, I mean, not all of Parkinson’s patients obviously have NOH, so that’s our biggest population. Also the fact we also plan to have a controlled release out there and then, of course, all the additional indications. We are doing some market research, we hopefully down the road will be able to considerably give out new projection of what we think our sales would be, but I can tell you this much, it will go upwards.

George Stance – Morgan Stanley

Right. Thanks so much.

Operator

Hence I’d like to turn the call back over to you for any final comments.

Simon Pedder

I’d just like to thank everybody for participating in this call and your continued interest in Chelsea. I hope everybody has a lovely evening. Thank you again.

Operator

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program, you may all disconnect. Everyone have a great day.

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Source: Chelsea Therapeutics International, Ltd. Q4 2009 Earnings Call Transcript
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