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Avanir Pharmaceuticals, Inc. (NASDAQ:AVNR)

F1Q2014 Earnings Conference Call

February 5, 2014 4:30 PM ET

Executives

Ian Clements - Head-Investor Relations

Keith A. Katkin - President and Chief Executive Officer

Christine G. Ocampo - Vice President, Finance

Rohan Palekar - Senior Vice President and Chief Commercial Officer

Joao Siffert - Senior Vice President, Research and Development and Chief Scientific Officer

Analysts

Mario V. Corso - Mizuho Securities USA, Inc.

Ritu Baral - Canaccord Adams

Charles C. Duncan - Piper Jaffray, Inc.

Shaunak Deepak - Jefferies LLC

Jason N. Butler - JMP Securities LLC

Carol Werther - Summer Street Research Partners

Gregory R. Wade - Wedbush Securities, Inc.

Operator

Good day, ladies and gentlemen and welcome to the Q1 Fiscal 2014 Avanir Pharmaceuticals Earnings Conference Call. My name is Ryan and I will be your conference operator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

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

Ian Clements

Thanks, Ryan and, good afternoon everybody. I’d like to welcome you to our conference call today to discuss our financial and operating results for the fiscal 2014 first quarter.

This week marks the third anniversary of the commercial launch of NUEDEXTA and this is an opportune time to discuss the success we have achieved during the last three years and the strong momentum heading into 2014.

To discuss these results and the initiatives, I’m joined today 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 and provide guidance. 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 Greg Flesher, our Chief Business Officer.

During the course of this 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 and 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 outcomes of on going 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 and the periodic reports filed with the Securities and Exchange Commission.

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

Keith A. Katkin

Thanks Ian, and thank you all for joining us on the call this afternoon. The first quarter of fiscal 2014 was another strong quarter for Avanir building upon the breakout year that was 2013. At the start of 2013, we laid out a vision to build Avanir into a leading CNS company, and that vision had three key pillars which we’ve made significant progress on in the first quarter of 2014.

The first pillar was having a significant and growing revenue base, and this month marks the third anniversary of the launch of NUEDEXTA, It is gratifying that the team has achieved double-digit quarter-over-quarter growth for 11 consecutive quarters, but more importantly, we are helping more and more patients that are suffering from the debilitating condition of PBA.

The second pillar was the focus on pipeline expansion, and we’ve made significant progress there as well. First, with the AVP-825 NDA filing; second, we continued to enroll our AVP-923 programs in agitation secondary to Alzheimer's disease and levodopa-induced dyskinesias in Parkinson’s patients, and we’ve also made progress with AVP-786 with an IND filing on the horizon, and having announced as our first potential indication for AVP-786, which is a treatment-resistant depression.

And the final part of our pillar was having the people and the infrastructure to achieve our vision, and we’ve continued to grow and expand the organization for our future growth. I am very pleased with the excellent progress we have made over the past quarter and achievements that the organization continues to make.

With that introduction, I'll now turn the call over to Christine to address our financial results. Christine?

Christine G. 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 in our upcoming Form 10-Q which will be filed this week.

This was a great start to the fiscal year for us. We reported total net revenue for the first fiscal quarter of 2014 of $26.7 million as compared to $16.5 million for the comparable period in fiscal 2013, a year-over-year growth of approximately 62%. Net revenues were comprised of NUEDEXTA product revenue, revenue generated from our co-promote agreement with Merck, and revenue generated from our license agreement with GSK or Abreva. As of the April 2014 expiry of the Abreva patent, we will no longer be recognizing revenue related to Abreva.

For the first fiscal quarter of 2014, we reported record gross product sales of NUEDEXTA of $31.3 million and record net sales of NUEDEXTA of $23.3 million, representing growth of 70% and 57% versus the same quarter a year ago.

During the quarter-ended December 31, 2013, our gross-to-net discount was 25.5%, compared to 26.9% in the prior quarter. Quarterly gross -to-net discount varied 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 reminder, on November 14, 2013, we took a price increase of 7.8%, making our wholesale acquisition costs $645 per month. For the full fiscal year, gross-to-net discount will be in the range of 24% to 27%.

First quarter wholesaler inventories as of December 31, 2013 were estimated to be three to four weeks. The gross margin on the sales of NUEDEXTA for the first fiscal quarter of 2014 was 94.5%. Research and development expenses were $9.5 million for the quarter ended December 31, 2013, compared with $6.6 million for the same period in the prior year.

In the first fiscal quarter of 2014, 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.

Selling, general, and administrative expenses of $25.9 million for the first fiscal quarter of 2014 increased from [$20.9] (ph) million for the corresponding period for the prior year. Sales and marketing expenses for the first quarter were $17.5 million. This increase is primarily attributed to increased personnel costs.

Total operating expenses, excluding cost of goods sold, for the first fiscal quarter of 2014 were $35.5 million compared with $26.7 million for the comparable quarter in fiscal 2013. For the three months ended December 31, 2013 and 2012, the company recorded $1.4 million and $1.4 million respectively of stock-based compensation expense.

Cash used in operations for the quarter ended December 31, 2013 was $9.8 million. Our net loss for the first quarter of fiscal 2014 was $10.9 million or $0.07 per share, compared with net loss of $12.1 million or $0.09 per share for the same quarter in fiscal 2013. As of December 31, 2013, Avanir had total cash, cash equivalents, and restricted investments in marketable securities of $46.5 million.

Now turning to operating expense guidance for fiscal 2014. We continue to expect 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 share-based compensation and depreciation. In addition, please note that although our income statement format includes cost of product sales in our operating expenses, we do not include cost of product sales in our expense 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 expense is expected to be approximately $100 million to $106 million.

And now with that summary of our financial results, I’d like to turn the call over to Rohan.

Rohan Palekar

Thanks, Christine. We had another strong quarter of growth with NUEDEXTA net sales up 15% versus the previous quarter. This represents our eleventh consecutive quarter of double-digit growth, a fact that I am proud of since it speaks to the talent of the team and importantly reflects the growth potential for NUEDEXTA.

We saw good growth in both segments of the business with the retail business showing an acceleration in growth. This was driven by the increased resources against that segment of the business, better physician targeting, and our continued direct-to-patient advertising that continues to draw patients and caregivers to engage with the company and their physicians. The retail business represents about 40% of our business. However, we have penetrated less than 1% of this market suggesting significant runway for growth remaining.

Initial data from the first four weeks of the second quarter show continued growth with prescription demand exclusive of price, up 7% versus the corresponding period in the first quarter. We expect this current quarter’s growth to be softer than observed last quarter due to health plan changes and patient moves from one Medicare plan to another often requiring a prescription reauthorization, thereby delaying patients filling their prescriptions at time. This trend is consistent with what we saw last year and observed by many prescription brands and companies. We expect growth trends to resume to historical levels once patients’ Medicare health plan transitions are completed.

Moving to the JANUVIA franchise and our co-promote partnership with Merck. While it is still early given we have only three months of data since the launch, the performance indicators are positive and I’m encouraged by what I am hearing. Medical directors and other key LTC stakeholders are receptive to the product message and clearly see the benefits of the product for many of their residents suffering from diabetes. Our institutional team is now working with the nursing staff to identify these patients as well as with the long-term care pharmacist to get residents who would benefit from improved diabetes management on the product.

Finally, having these additional products in the bag has allowed us to access homes that we were not in given the right prevalence of diabetes.

To discuss our clinical programs, I’ll turn the call over to Joao now to discuss our progress. Joao?

Joao Siffert

Well, thanks Rohan. So I will start with the migraine product, the investigational product AVP-825. As we’ve announced, the NDA was filed in January 27, 2014 and this is a major milestone for Avanir and once AVP-825 is approved it will transform Avanir into a multi-product commercial organization.

The NDA has been filed under the 505(b)(2) path and it includes data from one pivotal Phase III clinical trial for acute treatment of migraine and is also supported by data from Phase II placebo-controlled clinical trial for acute treatment of migraine and two pharmacokinetic studies, one of which compared AVP-825 PK with other sumatriptan formulations. As an upside, the Phase III study is being written up for publication and the other studies that have already been published. Overall, the submission includes safety data from 222 subjects who received AVP-825 in clinical trials and also references data from extensive clinical use of sumatriptan globally over the past 20 years.

The key features of AVP-825 are speed of onset through the very efficient delivery of a low-dose sumatriptan using a method which consists of a novel Breath Powered device that propels the sumatriptan powder deep into the nasal cavity where the absorption is most efficient and rapid.

Given the natural reflexes that closes the soft palate every time someone exhales through the mouth this delivery method helps prevent swallowing or inhalation of the medication power. The low delivered dose is also associated with a favorable tolerability profile, which is another key feature in the optimal treatment of migraine.

Now turning over to AVP-923 and starting with their agitation program. This is a 10-week double-blind, placebo-controlled 35 site study in the U.S. The study has two treatment arms, AVP-923 or placebo and includes the dose escalation from the combination of dextromethorphan/quinidine 20 milligrams, 10 milligrams up to 30 10 milligram combination. The study was designed to help reduce bias, reduce placebo effect on optimized selection of appropriate study participants. All study sites were wedded through a very careful selection process and the study conduct is closely monitored directly by Avanir.

The safety profile remain as expected and the independent Data Safety Monitoring Board has met four times, each time recommending that the study continue as planned. The enrollment continues as planned in the top line data as expected in the second half of calendar year 2014.

Moving on to the levodopa induced dyskinesia study in Parkinson’s patients, the screening and enrolling of patients continues, is well underway now across all the sites and data are expected also in the second half of calendar 2014.

The AVP-786 program which is the deuterium modified dextromethorphan combination with low dose quinidine is also moving forward. The next up is the IND for the treatment resistant major depression disorder, which is going to be a Phase IIa study. In this study like the Alzheimer's disease study has been designed to minimize the placebo effect and ensure careful enrollment of study subjects by highly qualified study sites. This study also will be comprised of only two treatment arms.

I will now turn the call back over to Keith for some closing comments. Keith?

Keith A. Katkin

Thanks Joao. With this being the third anniversary of the launch of NUEDEXTA, I think it’s a great time to reflect back upon our success over the last three years. First, we've successfully built a market in Pseudobulbar Affect. Thinking back three years ago, many people weren't certain of the market opportunity that existed in PBA and it's very gratifying to think about all of the work done by the team including the many patients that we have helped.

In addition we continue to hear just incredible success stories from these patients. And if you combine that with over $31 million in gross revenue that we reported for this last quarter, it's great to see that we have been able to grow that market towards that now and we look forward to continuing to grow that market.

Second, we successfully built out our entire commercial organization. Right now our commercial team has over 200 individuals focused on selling NUEDEXTA as well as preparing for the potential launch of AVP-825.

And third we successfully built an enviable pipeline and we built this pipeline through the pharmacology of dextromethorphan and through strategic and smart business development transactions over the past 18 months.

Looking forward to 2014 and beyond, we have a number of significant milestones that could further transform AVANIR. First, we look forward to putting the ANDA litigation behind us. We continue to remain confident and look forward to the judge's opinion. Second, we have the opportunity to continue to help patients suffering from PBA and continue to grow our NUEDEXTA revenues. And third, with the recent NDA filings for AVP-825, our investigational product for the acute treatment of migraine, we look forward to the potential approval and launch of AVP-825.

And finally, we will have data from a number of programs that should help propel our clinical development pipeline. First, the IND filing for AVP-786. Second, we will initiate the first 786 study in treatment of resistant depression. And finally, we look forward to data in the second half of the year in agitation in Alzheimer's and levodopa-induced dyskinesia in Parkinson’s patients. All in all, I am extremely excited about, where AVANIR is today and look forward to our continued success in the future.

With that, I would like to open up the call for questions. Operator?

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Mario Corso.

Mario V. Corso – Mizuho Securities USA, Inc.

Good evening. Thanks for taking my questions.

Keith A. Katkin

Sure. Hi Mario.

Mario V. Corso – Mizuho Securities USA, Inc.

Just a couple of things I wanted to ask about on the pipeline, any indication on the agitation timing now that you have seen a couple months of enrollment here. When you say second half, I mean, are you thinking more like late in the year or you are thinking more in the earlier part of that second half?

And then kind of related there, so was the expectation that you would start treatment-resistant depression before you to get the agitation data? Could you then do both and is that in your R&D budget?

Keith A. Katkin

Yes, thanks for the questions Mario. So, on the agitation timing, I think we are still looking at the second half of the year as we get closer and assuming we're able to refine our timelines, and then we will provide more color. Certainly, you can expect that when we enroll the last patient in the study, we will put out an announcement, and I am sure we will able to triangulate a little more closely, exactly when to expect data.

And then in regards to treatment resistant depression, we look at that as an independent program separate from agitation, so not related to the outcome in that study. So, the team is well underway moving things forward for treatment resistant depression, and goal is to get that study started as early as possible in the second half, recognizing that we still need to get the IND filed, we’ve got to get sites up and running in the like.

So, say stay tuned for more information on that, but certainly we will announce when the first patient is enrolled in that study. And of course the guidance that we gave at the start of the year, and reaffirm today of $140 million to $150 million includes all the studies that we are talking about.

Ian Clements

Thanks Mario. Operator is there another question.

Operator

Yes, sir and our next question comes from the line of Ritu Baral from Canaccord. Please proceed sir.

Ritu Baral – Canaccord Adams

Hi guys, thanks for taking the question. I’ve got one question and a follow-up. One, if you could elaborate on the better patient targeting that Rohan, you mentioned as far as the acceleration in the retail segment, and the follow-up is on the 786 treatment resistant depression trial. Have you talked about the doses that you will bring forward of – of [deuterated] (ph) 786, and if not if you could help us sort of frame the intensity, I guess, of the clinical activity that you think you will need in this indication?

Keith A. Katkin

Sure, I turn it over to Rohan to address the question on the targeting and then over to Joao on 786 dose selection.

Rohan Palekar

Hey Ritu, it's Rohan. So, on the better targeting, there's two elements to it. So, first is we have started profiling physicians more based on the dementia, stroke, and TBI, which is historically, if you go back two years ago, it was much more MS driven or ALF. So what we are looking for is we have changed the mix of drugs to which we look at what they prescribe, to look at more of these dementia drugs, as well as the kind of behavioral meds with their dementia patients, because we think they are more likely to have patients who have PBA visiting them, and so they’re more likely to identify patients, and that’s kind of where the emphasis has shifted. So it’s a different set of neurologists, new sites, and a different set of primary care physicians we have started going after.

Joao Siffert

Okay, so hi Ritu, it’s Joao here. We are still formulating the dose for the TRD study with 786, so obviously, this will be disclosed once we have the protocols submitted, but I believe, you had I think a follow up question, but I couldn’t quite understand.

Ritu Baral – Canaccord Adams

Basically, are you thinking that you are going to go in with a higher dose or do you think that this treatment needs more sort of chronic low dose?

Joao Siffert

Now this exactly the discussion we are having right now. We’re still formulating it. So it won't be anything extreme out of the general dose that we’ve used before, so it will be within the general ballpark of what’s been used before.

Ritu Baral – Canaccord Adams

Great, thanks for taking the questions.

Rohan Palekar

Thanks Ritu.

Operator

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

Charles C. Duncan – Piper Jaffray, Inc.

Hi guys, thanks for taking the questions, and congratulations on a good sequential growth -- top-line growth.

Keith A. Katkin

Thanks Charles.

Charles C. Duncan – Piper Jaffray, Inc.

So, first question on NUEDEXTA and then one on pipeline, just simply on NUEDEXTA, any possibilities for price increase in calendar year 2014?

Keith A. Katkin

We’re certainly, as Christine mentioned, we recently took a price increase. In terms of going forward, we don’t comment on future price increases.

Charles C. Duncan – Piper Jaffray, Inc.

Maybe to I’ll ask in a different way , Keith, really what I’m interested in is not the specifics, but the logic. What was the thought behind the price increase and what would be in the future in terms of clinical benefit, just kind of layout the logic?

Keith A. Katkin

Yeah, I think logic is certainly the price increases are a standard part of the pharmaceutical industry if you look at the CNS category, companies take an average of between 8% and 12% on an annualized basis in terms of price increases. And so, we’ve historically taken that 8% to 12% price increase. I think going forward, one thing that we have to be acutely aware of is that the Medicare specialty tier, as that had an acquisition price of $600 per month, right now taking into account on our whack of $645, and the acquisition kind of is still below $600, but we have to think very carefully about exactly how we are going to execute future price actions just given that we’re getting close to that threshold. And so, we’ll provide updates on that as we continue to move forward.

Charles C. Duncan – Piper Jaffray, Inc.

Okay and then my next question on NUEDEXTA I though you’ll be able to really answer specifically but again maybe more the logic behind it, the time to the decision on NUEDEXTA by adjusting therapy do you think there is any influences of reversal of deficiencies made in the past. And then, what’s your sense of the risk that might be inherent in a generic formulation for a combo drug including quinidine?

Keith A. Katkin

Let me, I can provide my thoughts on the first question and then I’ll let Joao comment on generics, but needless to say, we’re a branded pharmaceutical company so we always think that branded products should be prescribed in our generics. But in regards to our previous decisions affecting Stark obviously we don’t have any insight into how he would process anything, what we do know is, we believe he is an incredibly, intelligent judge. But he does a fantastic job overseeing in his courtroom and he is very depth at putting himself in the time point of when PAN’s restriction and decisions were made.

So we remain confident in and how he is going to issue his opinion and we’re looking forward to him issuing his opinion. And I’ll turn it over to Joao, if he has any specific thoughts in terms of the generics and the mix of products in the generics.

Joao Siffert

So what we believe 786 has what we think our meaningful clinical advantages of including potentially further reduction of quinidine. So we think that will be in the generic situation as I don’t think would necessarily compete with 786. Certainly the indications of pursuing are laid out here for treatments in depression, agitation and dementia as well so.

Charles C. Duncan – Piper Jaffray, Inc.

Yes, I was actually specifically asking not competition for 786 because I get that one having some advantage, but what is the generics NUEDEXTA would you see there being perceived risk perhaps by the prescribing community in terms of the levels of quinidine and then and formulation variables?

Keith A. Katkin

I think certainly that always concern with generics and generics are allowed to have bio equivalents with an 80% to 120% bio equivalents window. And so, it will, can we say exactly where exactly how the manufacture it and if they will how the exact same efficacy of NUEDEXTA that’s hard to say. There is certainly precedent examples of other products that which have gone generics have not been able to effectively create at bio equivalent product. And but until, they get on to the market which we don’t expect to be for many, many, many year we certainly don’t know the answer to that question.

Charles C. Duncan – Piper Jaffray, Inc.

My last question on the pipeline regarding treatment-resistant depression were 70-86, I'm kind of wondering if you have literature or anecdotal evidence that might be suggestive of this working in this particular indication I believe in PBA the patients were mostly mildly depressed. So I'm not sure you can use Sandoz predicted value, but what's your thoughts on why to go into treatment-resistant depression?

Keith A. Katkin

So there's a Pharmacology of dextromethorphan modify dextromethorphan as such that all multi prong receptor binding are pertinent to treatment of depression including and NDA serotonin reuptake inhibitors norepinephrine we have to take as well as sigma agonist has purported mechanisms and obviously several of those have been proven to work in depression. So the molecule itself renders as a potential antidepressants. Obviously, we have used in patients with PBA who often have comorbid other symptoms even outside of the clinical trials. They are increasing, the clinical observations have been augmenting move and these are clinical observations, but as they multiply and as we hear from more than one clinician, then this collaborates the motion this drug in fact has potential for antidepressant effect.

Charles C. Duncan – Piper Jaffray, Inc.

Okay.

Keith A. Katkin

And lastly, the MDD and especially the treatment resisting the pressure in that community that's still surfaced from a great unmet needs despite all the progress over the past couple of decades and a lot of these patients still remain untreated. So there is a compelling reason to test this drug with potential for helping these patients.

Charles C. Duncan – Piper Jaffray, Inc.

Thanks for the added color.

Ian Clements

Thanks Charles, appreciate it.

Operator

Your next question comes from Shaunak Deepak with Jefferies. Please proceed.

Shaunak Deepak – Jefferies LLC

Hi, thanks for taking my questions. And just trying to couple, first, I want to know if you have any updates on your plans for launching NUEDEXTA new?

And second on the end issue, does the failure of the PRIME trial in any way diminish the protection of the 115 patents?

Keith A. Katkin

Sure Shaunak, it’s Keith. So first in regards for European and union launch, I think our plans there are unchanged. We continue to have discussion with potential partners, but at the same time, work team is moving forward. Everything is important in order to secure reimbursement and ensure that NUEDEXTA can be paid for in Europe which is arguably one of the largest hurdles right now that are in the EU drug launches.

So we believe that assuming that we can get success with pricing and then certainly having the infrastructure of partner to be able to launch is something that is doable.

I think the second question you had was in regards to 115 patent in the prime data. I think it’s difficult for us to comment exactly how that data would we viewed by the judge. So I guess we’ll have to wait to see, when the opinion comes out, but we still are very confident in the outcome and that we look forward to the judge’s opinion.

Shaunak Deepak – Jefferies LLC

Great, thank you.

Operator

Next question comes from Jason Butler with JMP Securities.

Jason N. Butler – JMP Securities LLC

Questions, couple for Rohan; first should you give us some color around penetration in the LTC setting and what percentage of utilities you now detailed?

Rohan Palekar

Hey Jason, it’s Rohan. So when you look at the percentage of residents with PBA, moderate to PBA who are on NUEDEXTA, we had roughly about 10 any given month. Now that’s grown over time, so it’s about 10,000 patients if you look at our prescription numbers in any given month would be on NUEDEXTA.

When you look at the penetration of all the homes, of the 16,000 homes, it’s about 10,000 who we target, because there are lot of small homes which doesn’t make financial sense to go after and we are kind of I’d say about 40% to 50%. Cumulatively, we are higher, we are closer to 60% of those home suite got it and again as we have increased our resources against our segment, that number continues to go up.

If you look at any given month, as you can expect just in the numbers smaller, we might get to 25% to 30% of the homes in any given month on a regular basis.

Jason N. Butler – JMP Securities LLC

Okay, great, thanks. And then you gave some color on the calendar one, two and how things are moving so far. Can you maybe talk about whether there has been any impact by the severe weather across the country, whether that impacted either the rep’s ability to get out there or whether your attachment with the patients attendance at the [indiscernible] office?

Rohan Palekar

Yes, so there are kind of two elements which have come together this quarter. One was what I talked about the planned changes as patients have moved plans or you have to get new prior reps when a new Medicare like plan start, but there is no question, the kind of strange winter weather makes across northeast going south and the mid-part of the country has impacted us and may impact yesterday as with our manager from Indiana, we basically have shifted.

First time in Indiana Schools were closed for eight days in the month of Jan and what that translates to is, some of the reps can’t get to work, but ultimately importantly what we are doing is physicians are not getting to their place of work and/or they are canceling appointments.

In nursing home, similar situation, in nursing homes, we tend to get to see a Medical Director, Jerry Saik [ph] maybe once a month, because they visit their home. As we make that meeting in the month of January, it’s lost script. So there is no question the weather is impacting our patterns. Its start to actually quantify, but we are seeing that impact, so hopefully that will be a short-live phenomenon.

Jason N. Butler – JMP Securities LLC

Okay, great, thanks a lot for taking the questions.

Rohan Palekar

Thanks Jason

Operator

The next question comes from Carol Werther with Summer’s. Please proceed.

Carol Werther – Summer Street Research Partners

Hi, thanks for taking my question. So I just wanted to check it about what clinical trial results are you expecting over the next 12 months and how those might impact sales?

Keith A. Katkin

Sure, hi, Carol, it’s Keith. So in terms of the trial really we’ve got three that we would expect to have data from. Certainly our PRISM registry where we’re looking at PBA patients that are secondary to Alzheimer’s, the stroke and the TBI. So we expect that data on that some time this year. And then in addition obviously agitation certainly in Alzheimer’s will be in the second half of this calendar year. And then also Levodopa Induced Dyskinesia’s in Parkinson's patients in the second half of the calendar year.

I think in terms of relative effect on sales you know certainly the agitation and LID study are not on label sale. So we would not be able to do anything with that particular data. Certainly the PRISM data is on-label and it is designed as an on-label Phase 4 study. So depending on that data certainly I would like to incorporate that into some of our sales and marketing material and use that to further educate the physician audience, but that’s certainly a team is looking forward to the CMS data and incorporating as quickly as they can and to address all the marketing materials.

Carol Werther – Summer Street Research Partners

And if you don't mind a follow-up, just about any competition in the area and how new drugs will falls into that situation?

Keith A. Katkin

Which area in particular are you referring to, Carol, any particular indications or PBA?

Carol Werther – Summer Street Research Partners

Oh no, more Alzheimer’s dementia that’s what I was thinking about?

Keith A. Katkin

Sure, I think certainly there is a huge market with a huge unmet medical need out there. And so to the extent other companies have success in that area then we would just view that as a positive for all of the patients suffering from agitation secondary to Alzheimer’s disease. But certainly we have a lot of confidence in our program and are looking forward to seeing with the NNR program, but there is no doubt in our mind that the opportunity there can certainly be substantial for multiple products, and I don’t know Rohan, if you would like to add anything.

Rohan Palekar

Yeah, I think fair number of companies have tried and have unsuccessfully tried to get into the agitation space in dementia. There is very limited trials currently ongoing which may [indiscernible] minute, but I go back to Keith’s point, meaning it’s a large market, we have a unique differentiated product with a unique pharmacology, which is way different from everything else in the pipeline. And I think that could be the key differentiator for us.

Carol Werther – Summer Street Research Partners

Thank you very much.

Keith A. Katkin

Thanks Carol.

Operator

And your next question comes from Greg Wade with Wedbush. Please proceed sir.

Gregory R. Wade – Wedbush Securities, Inc.

Hi, good afternoon. Thanks for taking my questions as well. Well, I am wondering if you just might give us bit of an update on the most recent DTC efforts that have been undertaken by the company. And what we might see or your plans are for this marketing for 2014? Thanks.

Keith A. Katkin

Hi, Greg. So we initiated DTC efforts last year based on the pilot we sell, we sell pretty good results. So starting October of this past year, October 13, we went back on the air with direct response TV advertising. And so you might recollect that chart previously, so direct response TV advertising is a very cost effective way to get to our audience, because you get differential rates from the network. We add that through December and again we saw a pretty incredible response and we’re continuing to air that campaign through January and will continue it for the next two months.

Just to give you a sense, again in the month of September we had about 3000 people contact us, whether through our website or on a 800 number through that first cycle of the campaign was started in October-December, we had well over 200,000 visitors I am going to say, because some were patients, some were caregivers, actually contact us and a lot of them have signed up for our database and that’s really important because once you sign up for our database they kind of qualify to see whether they could have potential TV assumptions and now we regularly engage with them, send them marketing materials, send them information and PBA, send them things, questions they can ask their doctors. So we remain very enthusiastic about this program. It’s generating a lot of buzz for PBA and a lot of communication directly with our patients.

Gregory R. Wade – Wedbush Securities, Inc.

Are you able to translate your quarterly activities that you have seen with growth from the retail segment? And thanks for taking my questions.

Keith A. Katkin

Sure, so I think obviously from this campaign it’s really early because you want to reach out again multiple times. When they see the ad, it’s not the next morning they are going to go to a doctor. What we have done is with the first campaign we run early last year. We did some market research subsequently where we reached us, see a lot of these patients are caregivers. And two things I can say is one we saw is the materials landed really well and they were incredibly good. But their intention to talk to their physician was higher than 50%, when most of these people received these materials. We subsequently talked to many of them to find out how many actually got the prescription and again the numbers suggest a positive return and that’s the basis on which we have continued our investment here.

Gregory R. Wade – Wedbush Securities, Inc.

Thanks.

Operator

Ladies and gentlemen that concludes today’s question-and-answer session. I would now like to turn your conference over to your host for today, Dr. Ian Clements for closing remarks. Please proceed Sir.

Ian Clements

Thanks Ryan. In closing I like to thank all of you for joining us today and your continued interest in Avanir. We look forward to providing updates on the progress that we’re making in the upcoming conference and then any future calls. In the meantime if you have any questions please do call investor relations of the company, 949-389-6737. Thank you so much.

Operator

Ladies and gentlemen, that concludes today conference. Thank you for your participation, you may now disconnect. Have a good day.

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