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Acura Pharmaceuticals, Inc. (NASDAQ:ACUR)

Q4 2013 Earnings Conference Call

March 4, 2013 8:30 AM ET

Executives

Robert B. Jones – President and Chief Executive Officer

Peter A. Clemens – Senior Vice President and Chief Financial Officer

Analysts

Graig C. Suvannavejh – MLV & Company.

Bert C. Hazlett – Roth Capital Partners LLC

Thomas Marks – Bankers & Investors Company, Inc.

Operator

Good morning, ladies and gentlemen, and welcome to the Acura Pharmaceuticals, Inc. 2013 Financial Results Conference Call. Today’s conference is being recorded. I would now like to turn the meeting over to Mr. Peter Clemens, Senior Vice President and CFO. Please go ahead sir.

Peter A. Clemens

Thank you, and good morning everybody and thank you for joining us for our call. As you know we filed our 10-K yesterday, and I encourage you after the call that if you haven’t done so done so already. Go ahead and look at that you can find that on our website for a more complete description of our activities and the functions of the Company.

So, but before I begin I would like to remind you that any discussions takes during this conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements reflect management's current view of future events and operations, including but not limited to, statements pertaining to the company's expectations regarding OXECTA, which is licensed to Pfizer, expectations regarding NEXAFED and line expansions of the NEXAFED franchise, the Company's product development pipeline, the commercial potential of the Company's products and plans to maximize this potential, future product sales and financial results and the Company's strategy for long-term growth. Forward-looking statements involve certain significant risks and uncertainties, and actual results may differ materially.

Given these uncertainties, you should not place undue reliance on these forward-looking statements. Certain factors that may cause actual results to differ materially from the forward-looking statements are discussed in the Company's press release issued yesterday evening and in the Risk Factors section and other sections of the Company's Form 10-K for the year ended December 31, 2013 as filed with the SEC.

I'll now turn the call over to Bob Jones, our CEO, for a general corporate update. Bob.

Robert B. Jones

Thanks, Pete and good morning, everyone. We’ll start with our AVERSION opioid franchise, as we previously indicated Pfizer received FDA’s advice on their proposed OXECTA promotional materials in April 2013. They initiated non-branded promotion in the third quarter of 2013 and as expected initiated OXECTA branded promotion late in the fourth quarter of 2013.

The branded promotion expanded Pfizer’s commercialization of OXECTA to targeted healthcare providers, but on a small scale due to the intervening holidays. Pfizer was to recommence these communications in 2014, Pfizer’s promotional activities to-date have not included the use of sales representatives nor do we anticipate their use in the future, as anticipated the sales of OXECTA in 2013 were minimal due to the late initiation of the promotional efforts by Pfizer.

As Pfizer continues to assess the impact of their promotional activities, we and Pfizer continue to have strategic discussions to explore the appropriate commercialization plan for OXECTA. In August, we announced the results of Study AP-ADF-301 the nasal abuse liability clinical study of our Aversion Hydrocodone with Acetaminophen product, we met with a FDA on December 5 of 2013 to discuss among other things, the results of that study and it’s applicability for submission in a new drug application.

On February 7 of this year, the FDA advised us that their deliberations of that study are ongoing, we continue to work with the FDA to facilitate their review. Separately we have commenced the remaining clinical studies, studies 302, 303, and 304 for our Aversion Hydrocodone Acetaminophen product. These are the pharmacokinetics studies requested by the FDA to support safety and efficacy, we expect the results from these studies to be available in the third quarter of this year.

While there can be no assurance, we remain hopeful that the FDA will determine Study 301 adequately demonstrates the nasal abuse deterrent benefits of Aversion technology in a Hydrocodone Acetaminophen formulation. And we continue to evaluate possible partnering of our AVERSION development products.

Now we’ll turn to our NEXAFED franchise, NEXAFED is our methamphetamine resistant, non-prescription nasal decongestant containing pseudoephedrine. We launched NEXAFED in December 2012 with the marketing program directed to pharmacists. Pharmacists we felt were uniquely positioned to recommend the benefits of NEXAFED to the consumer, due to Federal Law requiring that all pseudoephedrine products be placed behind the pharmacy counter.

Our market research indicates that a fraction of consumers are even a aware of pseudoephedrine methamphetamine problem, while most pharmacist appreciate the benefits of our product to their stores and their communities. Our initial distribution was predominantly to independent pharmacies, independent pharmacies often could make faster stocking decisions and the pharmacist plays a more active role in the stocking decisions.

Distribution of NEXAFED advanced in the fourth quarter of 2013, we’re stocking now in approximately 8,300 stores nationally that’s about 12% of the estimated 65,000 pharmacy outlets. These distribution gains were principally the result of Rite Aid ordering NEXAFED for their 46,00 pharmacies. We also saw a continued distribution gains within the crover [ph] chain as well as with independent pharmacies.

We understand Rite Aid now exclusively stocks meth-resistant 30 milligram pseudoephedrine products in the West Virginia stores. We are also working with Rite Aid as they are preparing educational materials for their pharmacists to we believe make meth-resistant products the standard of care for all of their pharmacies. Rite Aid’s initial stocking orders substantially boosted our gross sales of NEXAFED at the year end. However, the full impact Rite Aid on NEXAFED sales will be determined by their pharmacist recommendations to consumers.

Excluding Rite Aid, approximately 46% of the pharmacies stocking NEXAFED have reordered the product. A measure we used to determine the pharmacists level of NEXAFED recommendations. As you can see it is not a matter of getting NEXAFED on the pharmacy shelf, we must educate the pharmacies on the benefits of NEXAFED and get them to incorporate the product into their pharmacy practice, including product recommendations.

Some pharmacies have done this by stocking only NEXAFED as their 30 milligram pseudoephedrine products, others by recommending NEXAFED first and we continue to advance the distribution of NEXAFED by educating pharmacists on the importance of making a difference by recommending NEXAFED to their consumers. We are also tracking a resurgence of state level legislation directed at meth abuse and the regulation of pseudoephedrine.

West Virginia appears to be at the forefront of this new movement with several bills under consideration. One such bill has passed their Senate requires all pseudoephedrine products to be dispensed pursuant to a prescription, but allows the West Virginia Board of Pharmacy to exempt products that it determines are meth-resistant from this prescription requirement.

It remains uncertain whether this or any of these bills will ultimately be enacted into law or if adopted that NEXAFED will be determined to be exempt from the prescription requirement. However, it does demonstrate the impacts that meth-resistant products are having in the market and their ability to be considered to as part of public policy. We believe as NEXAFED continues to gain market acceptance, public and media attention on the disparity between meth-resistant products and those with no same cords will be highlighted.

And this will bring further pressure on pharmacies and consumers to adopt meth-resistant products as the new standard of care. In support of our growing NEXAFED franchise, we are advancing our first line expansion into commercial manufacturing scale up with the expectation to launch this product late in 2014.

I’ll now turn the call back over to Pete Clemens, who will review our fourth quarter and 2013 fiscal year financial results. Pete.

Peter A. Clemens

Thanks Bob. We’ve reported net loss of $3.4 million for the fourth quarter of 2013 compared to a net loss of $3 million from same period in 2012. And for the year we’ve reported net loss of $13.9 million compared to a net loss of $9.7 million in 2012. We’ve recognized revenues of $123 in 2013 comprised of royalties of $10,000 paid to us from Pfizer on their sales of Oxecta, and $113,000 sale of NEXAFED. Pfizer’s royalties were inline with our expectations. As we discussed in prior conference calls, we stated that we expected royalties to be minimal given the nature of Pfizer sales efforts and the fact that such efforts were started late, late, late in the year.

Regarding sales of NEXAFED, we actually shifted $402,000 during the year much of that in the fourth quarter, but for accounting purposes recognized only $113,000 as we established some reserved for potential product returns. On advertise, while we have received no recurrence to-date, NEXAFED is still in the launch phase at certain of our pharmacy customers, and until such time as we have more accurate historical data on sales and returns, we deemed it appropriate to provide a reserve for potential returns.

Research and development expenses in 2013 increased approximately $1.2 million over the prior year as we conducted clinical trials associate with our Aversion Hydrocodone with Acetaminophen product, most notably Study 301 referenced by Bob earlier and worked on a second generation IMPEDE formulation. SG&A expenses in 2013 increased approximately $2.9 million over the prior year, $1.7 million of this was expense incurred litigating with four companies who filed Paragraph IV, ANDA filings on OXECTA, seeking to either invalidate certain of our patent or obtain equivalent labeling without providing equivalent clinical evidence. We have settled with two of the four companies and it is our expectation to settle with remaining two companies on comparable terms. We do not expect to incur such litigations expenses beyond the first or second quarter of 2014.

The remaining increase in SG&A was primarily from additional marketing expense incurred in support of NEXAFED, at December 31, 2013 the company had cash, cash equivalence and marketable securities totaling $26.1 million, during the year, the company raised capital of $3.2 million from the sale of common stock in the open market and securing a $10 million term debt finance. We may continue to sell a limited amount of common stocks in 2014 to raise capital to fund our ongoing product development activities.

Now, operator we’ll open up the call for questions.

Question-and-Answer Session

Operator

Thank you (Operator Instructions) we will go first Graig Suvannavejh at MLV & Company.

Graig C. Suvannavejh – MLV & Co.

Good morning gentlemen, thank you for taking my questions, congrats on the quarter. Just a few questions if I may. First Peter I just wanted to just review the change in the revenue recognition for NEXAFED and just if you could just nailing that in the first – the last couple of quarters you had not established a reserve and so I’m just wondering what triggered that change and how you are approaching this?

Peter A. Clemens

Thanks Graig for the question and for joining the call. Actually, we did have a small reserve in prior quarters, but it was so de-minimus that really didn’t want discussion with the advent of sales that occurred with the stocking order from right in the fourth quarter gave greater promise to the issue. This is pretty standard practice, what our customers have basically when we sell to them, they have a right to – we offer them a choice basically that can take a discount off the invoice and have no return opportunities or they can not take the discount and have the ability to return product.

I would even appreciate this is a brand new product for these customers and we are anxious to – we think it will have great success once it gets in to the pharmacy, we’ve spent a lot of time talking to the pharmacists, so they know it. So we are more than happy to let them return the product, they just come back, but its just really kind of a standard practice, it’s not abnormal under GAAP practices at all, its entirely consistent with what we think others are doing in the space.

So, but I do want to emphasize we have not had actually any returns to-date, but you never know when we want to be conservative in this regard as we start off, but I would expect as the quarter’s go along here in 2014 we’ll get a lot of real history and we’ll see those pharmacies reordering product, when they do that that tells us obviously that they’re probably not going to be sending product back. So that’s an important metric for us to review on that front. You will see it moderate then as the quarters go along here in 2014.

Graig C. Suvannavejh – MLV & Co.

Okay and that looks like from your comments that stocking by Rite Aid was a significant piece in that – in the evolution of how that product is doing and I’m just trying to think on a go forward basis, how would you think that we should be modeling NEXAFED on a go forward basis and whether there is a good run rate that we should assume?

Robert B. Jones

Well…

Peter A. Clemens

Okay Bob, you can go ahead.

Robert B. Jones

Yes, Graig, good morning.

Graig C. Suvannavejh – MLV & Co.

Good morning.

Robert B. Jones

You know I think we look at pharmacies and then look at the number of boxes we might expect the pharmacy could move and every pharmacy is obviously different. So if you look at the Fruth Pharmacy for example, they are exclusively stocking NEXAFED as their only 30 milligram PSE product. So in terms of PSE product movement whatever sale they make is our product, as appose to other pharmacies where it might be on a recommendation basis in which case a pharmacy – a pharmacist makes some recommendation in a portion of the time the consumer will expect our product and in some portion of the time they may insist on getting either the store brand or the Sudafed [ph] brand.

And then lastly, we have pharmacies that stock obviously in the customers or the pharmacists don’t seem to be recommending and obviously those are good upside potential for us, the products there we just need to get the pharmacists engaged. So I think on the Rite Aid, we are looking at 4600 pharmacies nationwide. The expectation is, is that overtime here we will get – their corporate will be sending out educational materials to their pharmacists and as we get their pharmacists engaged, we will get them at various participation levels and that will range everywhere I believe from the whole store sales to partial store sales and some stores may not participate for that we know. So I think it’s the same model we’ve been laying out here to-date, which is we get pharmacists, it gets backing in pharmacies and then we get the pharmacists engaged and they get a portion of the sale thereafter.

Peter A. Clemens

And I would just add, we have the ability Graig to go and see what is moving at particular pharmacies. So its not really – it doesn’t do us any good to get products on the shelf, and just haven’t sit there. So our ability to now go in and see movement at individual pharmacies, tells us where we have to go to provide greater contact with the pharmacy, the pharmacy at the corporate level or the pharmacies at the regional level to move those products. So that’s our effort there.

Graig C. Suvannavejh – MLV & Co.

Okay, and just two more, if I could and then I’ll jump back in the queue. Just going back to Study 301 and your discussions with FDA. Do you have the final minutes of that meeting that you have had in December and if so is there anything there that you think could be helpful in giving us a sense of when you might think that the FDA will be able to actually get back to you on their deliberations.

Robert B. Jones

Right, yes. We feel the same way Graig, because an important piece of information for us, I think we are very pleased that we went to the FDA with this, I mean the fact that its taking them a while to discern our results and interpret our results I think speaks to the really how new the science is around abuse liability studies and the appropriate interpretation of those. So to take that study to the agency, it obviously hasn’t been an easy decision for them to make.

The February 7 date that we referenced that we did here from the FDA, those in fact were the final meeting minutes from that meeting where within those minutes they advised us that their discussions were ongoing. There wasn’t anything in there I could say that gave us any expectation as to timing as to when we would hear from them, they did say that we would hear from them and they did acknowledge their open commitment to get back to us and they said they will get back to us in an advise letter in the future.

Graig C. Suvannavejh – MLV & Co.

Okay, thanks you, I’ll jump back in the queue.

Operator

(Operator Instructions) We will go next to Bert Hazlett at Roth Capital.

Bert C. Hazlett – Roth Capital Partners LLC

Hello.

Peter A. Clemens

Hey, Bret.

Bert C. Hazlett – Roth Capital Partners LLC

Yes, I’m sorry. I have a quick question my apologizes to you.

Robert B. Jones

Bert I think we lost you.

Bert C. Hazlett – Roth Capital Partners LLC

Oh can you still hear me? I’m sorry

Robert B. Jones

Yeah, go ahead.

Peter A. Clemens

Yeah it sounds like that go ahead.

Bert C. Hazlett – Roth Capital Partners LLC

My apologies. So my first question is on Pfizer, are you satisfied with the current level of promotional efforts behind OXECTA and if you not satisfied, what can you do about it? And I have another question or two, thanks.

Peter A. Clemens

Sure, are we satisfied with Pfizer, I think the short answer is they are not living up to what we had anticipated when we initially did the deal with King Pharmaceuticals. Keep in your mind that the original deal that we had with the AVERSION opioid and OXECTA with King. King was very motivated behind our product, we believe based on all our discussions with King, that King would have put the sales representation behind the promotional efforts, when this product and the whole agreement and transition bill were to Pfizer, Pfizer had a much different set of priorities, they have a much different approach to marketing OXECTA, it does not include sales representation and because of that obviously that’s not – we think more could be done with it.

So we monitor that situation Bert, as I said we sit down with them regularly to discuss strategy on it. We continue to discuss appropriate strategy on it, relative to will that product ever come back to us or can we get it back. Part of that is in Pfizer’s hands, what’s in our hands is what we are allowed to do under the agreement that we had with them and then unfortunately just holds them to standard call it commercially reasonable efforts. So we monitor their efforts, relative to what we think is commercially reasonable and at the point in time that we think it becomes unreasonable then we’ll have further discussions with Pfizer.

Bert C. Hazlett – Roth Capital Partners LLC

Okay and no reps still is considered commercially reasonable for this product at this point?

Robert B. Jones

That’s something that we continually review Bert and we won’t comment on how we view in the legal context of the agreement.

Bert C. Hazlett – Roth Capital Partners LLC

Okay, I’ll move on. Thank you for the color through. Congratulations on the NEXAFED progress, it looks like you are making some meaningful headway there with account penetration. Can you talk about maybe broader plans, I know you don’t want to tip your hand to potential competition that might be out there, but could you talk about your bit more broader plans with regard to line extensions and when we might see something along those lines?

Robert B. Jones

Sure, so we did mention we are in commercial scale up for the first line extension, we expect that product to be available commercially later this year. So I would say third quarter, fourth quarter second half sometime this year, we’ll be looking for our first line extension that will be another immediate release OTC Monograph product. So it’s not a prior FDA approval, so we will bring that products straight to market.

And then the high net as we’ve pointed out, we have worked on and continue to work on other line extensions, and I think what’s most important to us is that we are advancing sustained release technologies in the abuse deterrent space for pseudoephedrine products and that will be a critical piece to the NEXAFED franchise expansion, basically for the reason that the biggest products in the pseudoephedrine category tend to have sustained release mechanisms in there. So that’s going to be products like Sudafed 12 Hour Zyrtec-D, Claritin-D and Allegra-D. So those are the big sellers and we’re actively working there and we hope to have some information to share on those products later this year.

Bert C. Hazlett – Roth Capital Partners LLC

Thank you for that. And then just back to the FDA and your discussion about your clinical results, any sense in terms of the timing, you are trying to give the detail with regard to the minutes, but any detail with regard to timing of any response. I mean these are interesting results, the FDA could go a number of different ways with them, but just in terms of timing for their reply back to you, any color there at all in terms of the content alone?

Robert B. Jones

Now I mean specific to Study 301, the short answer is no. We were very hopeful just to give you a sense of process, the FDA scheduled the meeting for December the 5, they request that your briefing package, so this is all of the data that was in Study 301, we submitted approximately a month in advance that gives them a month to review the results and answer our questions. We did have as we previously indicated a very good meeting with the FDA, it was very collegial, we talked about a number of issues within Study 301 and the results within 301. At that point the FDA requested that they take more time to review that data. We felt since they had had 30 days already with the data and they generally look at 30 days in advanced of getting – to get the big meeting materials at another 30 days probably would have been appropriate.

Obviously we were wrong in our thinking there, and like I said the FDA came to us with their minutes on February the 7. And they really had given us no indication and I think as to when we might hear back from them. So I think it really comes down to that there is some compiling information in that study that the FDA is certainly taking a good close look at, it is obviously confounding in the fact that we did not achieve the statistical significance on the primary endpoint, and I’m sure that’s going into their deliberations as well.

So at this point, we don’t have them on any sort of statutory clock, there is no specific timeframe on they need to get back to us that’s why we proactively started the rest of the development program. We’re feeling that we need to keep moving the program forward and if the FDA comes back to us with a favorable response between now and whenever it comes in, we’ll be that much further advanced to getting the NDA submitted. If they reply is unfavorable then obviously our critical path timeline will be to run another study and get the information that the FDA is looking for.

Bert C. Hazlett – Roth Capital Partners LLC

And I guess just one other strategic question on that franchises. Is the plan still to have discussions with potential partners for that franchise, or is there contemplation of different strategies?

Robert B. Jones

At this juncture we’ve always maintained that partnering they opioids is the right thing to and that’s principally from the standpoint of the fact at opioids are prescribed so broadly and by so many physician specialties. If I remember correctly, I think Pfizer was targeting somewhere in the neighborhood of 65,000 prescriptions with their promotional efforts – physicians for their promotional efforts, which represents only about 40% of the immediate-release opioid prescription.

So you can see the breadth of the physician base here and I think that it would be appropriate from our thinking right now that an established company with established sales force in the appropriate specialties would be the optimal place to consider home for our AVERSION opioids, but of course every strategy is always evaluated and booked at here.

Bert C. Hazlett – Roth Capital Partners LLC

Thanks for the color. Thank you.

Operator

And we will move next to Graig Wood a private investor.

Unidentified Analyst

Good morning.

Peter A. Clemens

Good morning Greg.

Robert B. Jones

Morning to you Greg.

Unidentified Analyst

Hi, just a quick question, I know that advertising, I mean I’m thinking about NEXAFED right now that advertising is prohibitive from a cost standpoint and education is a pivotal for the success of your product. Has there been any interest in public relations or activities in pushing for public relations. For instance I mean that’s as maybe shooting for the moon, but if you watch Fox News and Bill O'Reilly, he is constantly talking about drug abuse and the problems and I just – I think that some media outlets current or broadcast might warm up to a story that pushes the benefits to society of this product and what you have said about the individual pharmacists and what West Virginia is doing, and there seems like a lot there that some news or PR effort might be addressed.

Robert B. Jones

Great question Greg and I appreciate that and the short answer to that is we are already doing it. We have a public relations firm that specializes in healthcare has been engaged since the launch of this program and this product back in December and they continue to be very active in the marketplace on our behalf and on NEXAFED’s behalf. I think if you go and look particularly recently in the Charleston because that in the state of West Virginia, I think you will see a lot of pieces written about meth and specifically about NEXAFED. So the pieces are out there, I apologize we haven’t caught the attention of Bill O’Reilly and Fox News yet, but hopefully we will get there.

Unidentified Analyst

Okay, great thank you.

Operator

And we will go back to Graig Suvannavejh at MLV & Company.

Graig C. Suvannavejh – MLV & Co.

Yes, I just had a question with regards to the current patent challenge, I think it was back in October that you settled with Par and Impax and I that lefts Ranbaxy and Sandoz left as the other two and just given that we are now in February. I’m just wondering if you had any sense or if you could provide us any sense of a timing and when you might expect to find a resolution to the existing litigation with those other two patent challengers. And then maybe as a follow-up on the IP maybe could you provide us an update just, the latest update regarding your current intellectual property state? Thanks.

Robert B. Jones

Sure, yes we’ve settled Par and Impax and I just think that’s a pretty good indication that our strategy, our interest here is in settling these suits for those on the phone this is a reminder the Par settlement and Par is the first filer, so they are in the driver seat, they have a license to our patent starting in January of 2022 to start marketing their product. Impax does not per say have a license to our patents, they are limited like I guess they do have a license they are limited to their current formulation.

So we look to settle the Ranbaxy and Sandoz suits and I can’t really comment specifically on where those stands that we are hoping to get resolution on those sooner rather than later. With regard to our intellectual property, so let’s start with AVERSION, the AVERSION opioid we just got our fifth patent issued not too long ago, I believe that’s back in January that patent will be listed with the Orange Book shortly, Pfizer is working on that.

So we have five patents – issued patents now related to our AVERSION platform and that of course is all the opioids, so it’s not specific to just OXECTA, it’s pretty much any opioid and those patents expire anywhere between I believe that’s November 2023 through March of 2025. And then on the IMPEDE side of the ledger, all of the patents for

IMPEDE are currently in process and had not issued yet.

Graig C. Suvannavejh – MLV & Co.

Okay. Thank you very much.

Operator

And at this time we have no further questions, actually I’m sorry. We do have one more question. We’ll go to Tom Marks at Bankers & Investors.

Thomas Marks – Bankers & Investors Company, Inc.

Hi, Pete and Bob.

Peter A. Clemens

Hi, Tom.

Thomas Marks – Bankers & Investors Company, Inc.

With regards to OXECTA, what is a commercially reasonable effort, it appears to me that I had a great advices, give a minute. And if for some reason you could get it back, I got to believe there is tremendous interest from companies that really are involved in selling opioids. So, could you give me your definition and there is a time we got a pull the plug, because patents are expiring.

Robert B. Jones

Yes, Tom, we agree with your last, there is a time to pull the plug. There is no data about it, not giving Pfizer a grade at this point, we’ve entered into an unfortunate position, we’ve entered into a challenging space. The unfortunate position was one we moved from King to Pfizer and Pfizer just did not share the enthusiasm clearly that King had. The unfortunate piece of the space is that we got into an area of promoting opioid products with abuse deterrents that historically has gotten some companies into a lot of trouble. And Pfizer decided to take a very deliberate effort to the marketplace and that deliberate effort meant to get FDA clearance on their promotional materials before they would actually promote the product.

So that took us to April 2013, the thinking at the company was its hard to claim that somebody was not doing commercially reasonable efforts, when they are waiting for an FDA response. Now that they have the FDA response, I think things have changed, Pfizer made their decision to take the product to the marketplace, and if they’ve taken it to the marketplace now, their just getting started, at some level we need to evaluate that and we are evaluating it very closely.

Commercially reasonable efforts is a bit and it would be [indiscernible] holder, but I think we and even Pfizer ultimately believes that they need to perform, they need to be doing something with the asset or the asset needs to placed somewhere that where it can be more productive. And that is certainly something that is evaluated on a continuing basis above us and Pfizer and at our board level, and we’ll keep evaluating that, I think we have to let the current Pfizer marketing initiatives play out, and I won’t say that its going to play out for a long period of time, but I think we have to let it play out before we can make any sort of reasonable assertions.

Thomas Marks – Bankers & Investors Company, Inc.

And we expect of NEXAFED to get into door with the some other major pharmacies, and was there any plans to partner NEXAFED with any major Pharmaceutical company?

Robert B. Jones

So two questions there, do we expect to expand into more chains and the answer to that is yes that’s we work on a daily basis. 2013, we were very pleased, we actually started to getting chain interest activity earlier than we had anticipated and the first chain was back in March, so about a year ago with Kerr Drug out of North Carolina and ultimately we moved into kind of big time if you will into Fruth Pharmacies in West Virginia and I would say that the Fruth Pharmacies really started kind of the next phase of the revolution here if you will.

They were the ones and we know some independents that had pulled off pseudoephedrine products off their shelves in favor of NEXAFED, Fruth not only did it in their small chain, but they made a deal out of it. And I think that has prompted a lot of media attention and legislative attention that you are seeing today in West Virginia. That ultimately I think all of those efforts ultimately peak the interest of Rite Aid and Rite Aid came to us I believe its last October, November and said that they wanted to make a big move.

So in the span of the year, we’ve moved fairly substantially into independents, we moved into small chains, we got our first large chain, Rite Aid being the fourth largest in supply store count in the country and our intention is to keep correlating those efforts and make sure that everybody in the country adopts meth-resistant products as their standard of care.

Thomas Marks – Bankers & Investors Company, Inc.

Okay. That’s all from me.

Peter A. Clemens

All right. Thanks, Tom.

Operator

And at this – go ahead sir.

Peter A. Clemens

Yes it doesn’t seem like anybody else has questions. So why don’t we wrap up and I appreciate everybody on the call today and we keep moving the business forward. I think some interesting things are really going to happen here in the span of the balance of the first quarter here and the second quarter, hopefully we’ll hear back from the FDA on Study 301, we’ll continue to make strides on NEXAFED, some of this legislation that’s pending on pseudoephedrine products may play out and we’ll certainly see what the next steps for OXECTA. So, thank you everyone and so long.

Operator

And that does conclude end today’s conference. Again, thank you for your participation.

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