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Raptor Pharmaceutical Corp. (NASDAQ:RPTP)

Q4 2013 Earnings Conference Call

March 13, 2014 04:30 PM ET

Executives

Georgia Erbez - CFO

Dr. Chris Starr - CEO

Julie Smith - COO

Analyst

Ritu Baral - Canaccord Genuity

Paul Matthias - Leerink Swann & Company

Liisa Bayko - JMP Securities

Bill Tanner - FBR Capital Markets & Co

Boris Peaker - Oppenheimer

Operator

Good afternoon, everyone, and welcome to the Raptor Pharmaceutical's Fourth Quarter and Full Year 2013 Financial Results Conference Call. At this time, all participants are in a listen only mode. Following management’s prepared remarks we will hold a brief question-and-answer session. As a reminder, this conference is being recorded today, March 13, 2014.

I would now like to turn the conference call over to Ms. Georgia Erbez, Chief Financial Officer. Please go ahead.

Georgia Erbez

Thank you operator and welcome to today’s conference call to discuss Raptor’s fourth quarter and full year 2013 financial results and an update on our business. Before we start, let me remind you that today’s call will include forward looking statements based on our current expectations. Such statements represent our judgment as of today and may involve risks and uncertainties. Please refer to our filings with the SEC which are available from the SEC or our website for information concerning the risk factors that could affect the company.

Joining me on today’s call are members of our management team, including; Dr. Chris Starr, Chief Executive Officer; and Julie Anne Smith, Chief Operating Officer. Earlier today Raptor issued a press release announcing our financial results for the fourth quarter and full year 2013 which has been posted on our website at www.raptorpharma.com, 10-K for the year ended December 31, 2013 will be filed with the SEC on March 17th. A replay of this call will be available for the next two weeks on the Investor Relations section of our website. Today’s presentation will begin with an introduction and overview of recent highlights by Chris following by a discussion of where we are with the PROCYSBI launch in the U.S. and Europe I will then go over the details of our financial results. After management’s prepared remarks we will open the call to Q&A.

With that I will now turn the call over to Chris Starr.

Chris Starr

Thank you, Georgia. Thank you all for joining us today. 2013 was a remarkable year for progress for Raptor. In April, Raptor received FDA approval for our first product PROCYSBI for the management of nephropathic cystinosis in adults and children ages six years and older. The product became commercially available to patients in the U.S. at the end of June. And then in September the European Commission approved PROCYSBI for the treatment of nephropathic cystinosis in the European Union. PROCYSBI has been granted orphan status in both the U.S. and the EU. While our near term focus will remain on the U.S. business, we have been actively building our EU commercial team and Julie will update you on our progress in Europe later on the call.

Today, we will provide you with an update on our programs and financial results for the fourth quarter and the year ended 2013, which includes the first six months of the PROCYSBI U.S. launch. We remain extremely pleased with patient and physician response and how the launch is proceeding. Julie will provide additional detail on our 2013 performance and Georgia will provide additional insights on our 2014 expectations, when she discusses guidance later on the call.

Recently, we are very excited to report top line results from the double-blind placebo control phase of our trial for RP103 and Huntington’s disease. The primary endpoint of the study is the change from base line in Total Motor Score in RP103 versus placebo. Total Motor Score is the motor component of the unified Huntington’s disease rating scale which was developed by the Huntington’s study group and has been widely used to assess drug performance in Huntington’s disease clinical trials. Huntington’s disease is characterized by slowing progressing motor and cognitive deterioration. The natural history studies have shown that Huntington’s patients experience a consistent three point deterioration in Total Motor Score per year.

Total Motor Score is generally accepted as the most sensitive measure of overall disease progression. The Total Motor Score is calculated as the sum of over 15 different clinical tests measuring gross and small motor function many of which are effort based tests like hand manipulation, ocular control, gait and balance. Measurement of chorea associated with Huntington’s is also one of the 15 individual tests included in the composite Total Motor Score. The Total Motor Score from the 96 patients at 18 months showed RP103 treated patients experienced a clinically significant 2.19 or 32% slower deterioration in Total Motor Score compared to those patients receiving placebo.

Studies have shown that tetrabenazine which is used to treat chorea symptoms of Huntington’s may interfere with the patient’s ability to perform many of the individual tests required to calculate the Total Motor Score about a third of the patients in the study were taking tetrabenazine therefore we also analyze that Total Motor Score including only 66 patients that were not on tetrabenazine which were 34 under RP103 and 32 under placebo. In this analysis, RP103 treated patients experienced a statistically and clinically significant 3.94 or 58% slower deterioration in gross and small motor function as measured on the Total Motor Score compared to those patients receiving placebo generating a significant P-value of 0.03.

To our knowledge RP103 is the only drug tested in Huntington’s which has achieved this level of significance in slowing disease progression as measured by Total Motor Score. RP103 treated patients experienced less deterioration across all Total Motor Score individual tests. This data along with secondary behavioral cognitive and functional measures are being prepared for publication by the clinical investigators as we speak. We continue to make great progress with RP103 and other indications as well. We achieved full enrollment in our Phase II B pediatric NAFLD trial in January and expect completion of the study early next year with data available in the first-half of 2015.

Last December, we announced, we have filed an IND to study RP103 as a treatment for Leigh Syndrome which is a severe neurological disorder caused by generic defects of mitochondrial our nuclear DNA affecting respiratory chain function that typically results in death within the first decade of life. Currently, there is no approved therapy to treat this disease. We expect to begin enrolling patients in this trial early in the second quarter.

At this point I would like to turn the call over to Julie to provide more detail on the PROCYSBI launch and operations

Julie Smith

Thanks Chris. The U.S. commercial launch for PROCYSBI is progressing well and we are pleased with the strong product uptake we experienced in 2013, and the moment at which we enter 2014. Total PROCYSBI net sales for 2013 we are $16.9 million with $10.2 million achieved within the fourth quarter. As of the end of December 2013, 236 prescriptions were written for new patients and 165 patients were on drug. A total of 533 PROCYSBI shipments were sent to patients through the end of the fourth quarter, including both new and resale prescriptions.

Over half of the known and diagnosed U.S. patients received the PROCYSBI prescription by the end of 2013, an excellent uptick during the first six months of launch. To put this in context this represents over 90% of the number of patients to receive the Cystagon prescription in the 12-month period before our launch. As we discussed with you on prior calls we successfully drove early demand prior to and during the initial launch. We said before that we expect this initial demand to normalize over time and in fact we are seeing stabilization in the rate of new prescriptions.

Early in the launch most prescriptions came from pediatric nephropathic cystinosis patients. In 2014, our strategic focus will turn to the older cystinosis patients, some who have fallen of therapy due to treatment fatigue, loss to follow-up post-transplant, or have been lost the follow-up during the transition to adult nephrologist. Our field teams now routinely canvas these adult nephrologist as well as transplant surgeons. The effort continues to result in the identification of new patients, not previously known to us.

Reimbursement has been very good and consistent with the payor behavior as expected during the initial six-month of the PROCYSBI launch. During the first three months of launch, insurance claim to approximately 2 months to adjudicate. This process continues to improve with the average claims in adjudication now taking just less than one month. Our RaptorCares Program continues to actively help patients navigate insurance process and maximize their existing benefits.

During 2013, approximately half of patients with prescriptions written were covered by commercial insurance, a third were covered by Medicaid and the remainder were either Medicare, other government or uninsured. Approximately 75% of commercial new prescription claims and 66% of government claims wire reimbursed and shipped in 2013. The remainders of new prescriptions are in process.

We expect the rate of government shipments to improve with our mandatory Medicaid compensate of January 2014. Note, the U.S. government reimbursement is subject to statutory 23.1% rebate. We are pleased with the broad reimbursement coverage secured for PROCYSBI early in the launch. The number of patients receiving free drug remains in the low single digit.

Or key focus for the entire commercial and medical organization supporting PROCYSBI prescribers to ensure the patients remain appropriate therapy. In the fourth quarter, patient compliance to therapy was very good, at over 80% as defined by standard compliance metrics. Since many patients are still in the early stage of PROCYSBI therapy, is some patients are still titrating to the optimal dose. And important aspect of finding the right dose and ensuring continuous sustained depletion is monitoring white blood cells cystine levels periodically.

As part of our RaptorCares Program we ensure access to all patients for white blood cells cystine testing and have established an external fund that will help defray the cost of laboratory services for patients without coverage or ability to pay. Our field personnel’s directly support local laboratories in performing white blood cells cystine test to help ensure physicians have the data they need to identify and monitor each patient’s appropriate dose. Through the end of the fourth quarter, approximately 32% of 128 prescribing physicians order the diagnostic test directly to RaptorCares.

The U.S. market was our focus through the end of 2013 and will remain so at 2014. The momentum is now building towards our launch in Europe. To best utilize our resources we have planned to stage launch in Europe beginning this year with the establishment and full staffing of our European headquarters in the Netherlands and our German affiliate office. As is common in Europe, the product will be introduced on a country by country basis. Each country’s price will be listed in public databases at the time of launch in that country. We anticipate launching in Germany early in the second quarter of this year, as the European market is divided into unique country markets we anticipate conservative revenue for PROCYSBI in Europe in 2014. We also anticipate filing our registration with Health Canada maybe year 2014 and we’re preparing operations for potential individual patient sales in specific international countries. On the manufacturing front, we have sufficient supply to support our anticipated US and worldwide commercial demand as well as our clinical program.

With that, I will now turn the call back to Georgia for discussion of our financial results.

Georgia Erbez

Thank, Julie. For the three months ended December 31, 2013, Raptor recognized $10.2 million in PROCYSBI net product sales with $16.9 million in net revenue booked for 2013. As a reminder Raptor recognizes revenue once the product has been shift by our specialty pharmacy partner to the patient. Our cost of sales for the year was $1.7 million. Research and development expense for the fourth quarter of 2013 were $7.8 million and $29.2 million for the year. The increase in the current year over prior periods was primarily due to the higher external cost for clinical studies, lab services and higher staffing expenses to support ongoing regulatory requirements and our new clinical and nonclinical research program.

Selling, general and administrative expenses increased to $12.4 million for the fourth quarter of 2013 and were $37.9 million for the year. The increase in the current year over prior periods was primarily due to additional sales and marketing costs for the launch and ongoing commercialization of PROCYSBI in the U.S., the establishment of commercial infrastructure and initial commercial activities associated with the introduction of PROCYSBI in the EU, staffing expenses and non-cash stock option expense.

Interest expense for the fourth quarter of 2013 was $2.7 million and $6.8 million for the year. The increase in interest expense in the current year over the prior periods was due to the $50 million debt facility the company entered into with HealthCare Royalty Partners in December 2012.

Net loss for the fourth quarter 2013 was $12.1 million, or $0.20 per share. For the year ended December 31, 2013, the net loss was $69.4 million, or $1.20 per share. On a non-GAAP adjusted basis, which excludes non-cash common stock warrant and stock-based compensation expenses, the net loss for the fourth quarter was $11.7 million or $0.19 per share. For the fiscal year, the adjusted net loss was $51.6 million, or $0.89 per share. Raptor provides non-GAAP financial measures, which it believes can enhance an overall understanding of its financial performance when considered together with GAAP figures. Please refer to today’s financial results press release for full discussion on this subject.

Cash and cash equivalents as of December 31, 2013 were $83.1 million compared to $58.4 million at the end of 2012. Cash and cash equivalents at the end of 2013 included approximately $23.7 million of net proceeds from the second tranche of financing under Raptor's loan agreement with HealthCare Royalty Partners, $38.8 million in net proceeds under our aftermarket common stock sales agreement, and $8.7 million in net proceeds from warrant exercises, and $2.1 million in net proceeds from stock option exercises, all received during the year ended December 31, 2013. Less than 400,000 warrants currently remain outstanding.

At this time, I would like to discuss guidance for 2014. One of our goals in 2013 was to establish a strong run rate for PROCYSBI going into 2014. We achieved that goal with 165 patients on PROCYSBI at the end of 2013, which surpassed our initial guidance of 125 patients and our revised guidance of 160 patients which resulted in net revenue of $10.2 million in the fourth quarter. As we continue to our growth as a commercial stage company, we will focus guidance on our financial performance starting with revenue.

We anticipate net sales for PROCYSBI in the range of $55 million to $65 million for 2014. We expect our cash operating expenses to be in range of $80 million to $90 million in 2014. The Company’s cash and cash equivalents are expected to be sufficient to fund operations at least for the first half of 2015 based on our current assumptions.

With that, I will hand the call back to Chris.

Chris Starr

Thanks, Georgia and thanks Julie for providing a thorough update on our operations. With a successful U.S. launch supported by continued patient acceptance of PROCYSBI in the U.S. depending launch in Europe and the positive results from our RP103 trial in Huntington’s disease I’m very excited about our Raptor’s prospect for accelerated growth in the future. We are pleased to see the PROCYSBI launch performing above our expectations. We are also very excited with the mounting evidence that RP103 could indeed be useful as a potential therapy and additional clinical indications beyond cystinosis including CNS and metabolic diseases.

With that, we look forward to taking your questions. Operator, may we have the first question please?

Question-and-Answer Session

Operator

And at this time, we will begin the question-and-answer session. (Operator Instruction) Our first question comes from Ritu Baral from Canaccord Genuity; please go ahead with your question.

Ritu Baral - Canaccord Genuity

Thanks for taking the question. My first question is for Julie, towards your comments about expanding the market, going after the patients that have dropped off of therapy. Do you have any range of patient number that you think would fall into this category? And as you sort of approach commercialization, which of those doctor types, whether it is adult nephrologists or transplant care physicians, do you think would be useful to go after first? Would have the most ROIs so to speak?

Julie Smith

Great question Ritu. I think that, it’s really each patient follows an individual journey. Most of the pediatric nephropathic cystinosis patients eventually transition to an adult nephrologist, and sometimes they go via a transplant surgeon first. If their renal failure occurred earlier in the disease progression then there is one last transition for them to make. So what we’re learning is we’re utilizing all of the resources in the nephrology offices. In many places, the pediatric and adult nephrology practices are grouped together in a cluster and there are nephrology nurses there are very helpful. They almost act as case managers. And we literally canvas the office and follow-up on patients that they may have created in the past, and then try to understand where those patients have ended up.

Ritu Baral - Canaccord Genuity

Got it, and as far as range of potential patients out there in the US?

Julie Smith

We have not yet seen data that would lead us to expand our estimates of the overall cystinosis market size. And what I would say is we are continuing to find new patients that were not previously known to us. We are continuing to find new physicians, that we did not know our following cystinosis patients. The majority of those patients are not and have not been on cystine depleting therapy for some time, often years.

Ritu Baral - Canaccord Genuity

Got it, and as far as the guidance that you given, is Europe in that guidance? The European patient numbers?

Julie Smith

Yes. They are.

Ritu Baral - Canaccord Genuity

Okay, you’re just expecting very-very few over the course of 2014.

Julie Smith

Yes, we have very conservative view on revenue coming out of Europe for 2014. It is a different process in the U.S., and as of now we are building infrastructure, we’re planning on launching on at the schedule we have laid out. But it is a different process in obtaining reimbursement than it is in the U.S. And our view right now, we need to be conservative and how we view revenue coming out of Europe for the year.

Ritu Baral - Canaccord Genuity

Got it. And last question, of the jump that we have seen in SG&A this quarter, how much of that is start-up in Europe, versus an increase of what you are doing in the US? How would you split that delta?

Julie Smith

I’m sorry, for the quarter or for…

Ritu Baral - Canaccord Genuity

I’m sorry, for the quarter.

Julie Smith

Okay so, expenses for the quarter also include the non-cash option expense and that is the biggest component of the increase for this year. But we have been building out organization in Europe and in the U.S. to support ongoing efforts here and in preparation for the launch.

Ritu Baral - Canaccord Genuity

Got it. I will hop back in the queue. Thanks for taking the questions.

Operator

And our next question comes from Paul Matthias from Leerink; please go ahead with your question.

Paul Matthias - Leerink Swann & Company

My first question is on your operating expense guidance for 2014. I’m just wondering what the basic assumptions are for R&D and SG&A underlying that guidance? I know you’re expanding SG&A in Europe, and if your guidance assumes that you’ll be spending more money on developing PROCYSBI in Huntington after meeting with regulators? Thanks.

Julie Smith

Sure, the guidance that we are giving for the year is to support our cystinosis franchise primarily. And it does include the build out in Europe. We have made quite a bit of progress putting in that infrastructure. We have a little bit more to go to fully launch the product this year. And as of now, since we don’t have feedback yet from regulators in the U.S. we don’t have any guidance from them as to what would be required to move the product forward in terms of clinical trials.

Paul Matthias - Leerink Swann & Company

Okay. Thanks. That's helpful. And can you also -- can you give us a little more background on the logic of studying PROCYSBI in Leigh syndrome and kind of mechanistically how it can work and help those patients, relative to what we see with PROCYSBI in cystinosis?

Chris Starr

I can do that, I mean if you want to have a more extensive conversation we probably should then on the phone separately, but you know one of the things that’s becoming clear with sustaining, and really all of our programs. It’s ability to increase glutathione levels, stabilize redox potentials in the cell and as it turns out in various organelles and really kind of scavenge reactive oxidative species which are generally, which generated a high levels in the mitochondria Leigh syndrome based on kind of the inefficiency of electron transport chain. So, you really can’t approach any of these mitochondrial diseases of which Leigh is one by any kind of direct therapy targeting any particular protein because there’s just a large number of mutations that cause this disorder, so what we are looking at is using cysteamine as kind of a larger umbrella molecule that will really fundamentally begin to stabilize some of these oxidative reactions that get kind of out of control. So, there is some overlap to be honest with you, I think between what we are seeing in the Huntington's project and what we will be seeing in Leigh's because really there are many diseases where oxidative imbalance is really a result of the disease and many studies have shown that if you can bring that back into balance at least at some level, you can really improve the outcome of these diseases. So, that’s about what it is, we can have a more detailed discussion if you like little later.

Paul Matthias - Leerink Swann & Company

Okay. That sounds great. Thanks, that’s helpful. And I just had one more question on the PROCYSBI launch in the U.S. and what you have been seeing with regards to pricing. If I remember correctly, at first it seemed like you were actually getting a price that was better than your longer term price guidance and that no one or no payors had yet, the last time I asked, has taken advantage of your capitation program. I am just wondering what you saw in the fourth quarter with regards to pricing, since this drug is weight-based and how you expect that to either stay the same or change over the course of 2014. Thanks.

Julie Smith

We had several favorable trends in 2013 which related to dose age and payor type and that caused us to realize a bit of upside on an annualized price basis. But now we are really seeing all of those trends normalize as we expected that they would and we also have the just as another reminder we have the inclusion now of the Medicaid segment with the mandatory rebate. We have very good in consistent reimbursement of our product at this price that’s we are continue to be very pleased by that. We have, as a reminder, we pay down the co-pay for patients now to $25 purpose for prescription and what we are seeing across all payor types is good acceptance and very low focus on the cystinosis category.

Operator

And our next question comes from Liisa Bayko from JMP Securities.

Liisa Bayko - JMP Securities

Hi, thanks for taking my question. Just to follow up on that, could you maybe give us a little color on how to think of your gross to net adjustments for next year?

Julie Smith

So, two things, the gross to net includes government rebates, distributor fees and returns in co-payor system. And the average per patient price that we have given includes those discounts, so we have tried to take that variability out of the equation for you.

Liisa Bayko - JMP Securities

Okay, great. And when you talked about, I think Julie mentioned that important component is dosing to cystine levels, white blood cells cystine levels. Can you maybe talk about does that directionally imply that we could be seeing a dose increase or reduction going forward?

Julie Smith

I think that what we are seeing is very slight trend downwards and as a reminder what we saw in the initial label from FDA was a recommendation for a one-to-one percent or one-to-one dose conversion from immediate release cysteamine. And the reason why that’s important is our label also recommends taking PROCYSBI without food or with only a small percent, small amount of specific kinds of food and then that result is, if you have a 100% of your former dose and you take PROCYSBI fasted, patients may be exposed to as much as 35% or 40% more drug. And so what we are seeing is simply a normalization of that dosing level over time slightly downwards.

Liisa Bayko - JMP Securities

Okay. That makes a lot of sense. And then in your OpEx guidance, this is a question for Georgia, have you assumed any additional trials in Huntington's disease in that guidance for next year?

Georgia Erbez

No, we have not, not beyond supporting the trial that is ongoing.

Liisa Bayko - JMP Securities

Okay. And one more quick one if I may. I would just like to ask about compliance. What sort of compliance levels are you seeing and what does it, sort of now that you have been on the market a little bit longer, is there some sort of normalization?

Georgia Erbez

Yes, I think that we, it’s still very early day to talk about actual compliance rate. We have less than 10% discontinuations in 2013 which we are very pleased with. I should mention that several of those patients have restarted therapy, so I think that as with any new therapy there is some volatility as patients adjusted the drug the dose gets titrated to the correct dose and we’re going to continue to see some volatility in the discontinuation rate overtime.

Operator

Our next question comes from Bill Tanner from FBR Capital Markets. Please go ahead with your question.

Bill Tanner - FBR Capital Markets & Co

I have got several. Julie, just back on the -- you had mentioned 80% in compliance rate, is that right in your remarks?

Julie Smith

Yeah.

Bill Tanner - FBR Capital Markets & Co.

And that is -- that is -- I mean, that is not drop out, that is a patient is taking the drug 80% of the time that they are supposed to be?

Julie Smith

That’s 80% of the patients on average have a medication possession ratio, a compliant medication possession ratio. And we go further to look at compliance as those that have received the refill in the last 35 days and that’s what the 80% refers to.

Bill Tanner - FBR Capital Markets & Co.

Okay. So then, do you know how that compares with Cystagon?

Julie Smith

The reference I would really rely on literature to answer your question and there is one paper that actually studied it showing a compliance rate of 23 point something percent. So what that means is 76% of those patients who not compliant.

Bill Tanner - FBR Capital Markets & Co.

Okay. So then, that 80%, I mean, do you -- hopefully it gets better? Or do you -- or it is obviously a lot better than [Cystagon], which is probably unsurprising, right? It is one of the reasons your drug is likely better, but does that -- is that a number that you think could get materially better?

Julie Smith

For chronic oral therapy for patients that literally after taking this medicine for their life, you typically see compliance rates much lower than 80%. We’re pleased with the 80% we’re not going to rest, we will always support patients and physician and as evidenced by the fact that several of those patients restarted therapy. So it’s possible but as I said we’re going to see -- continue to see some volatility in that number until we get to more of a mature part of our product uptick curve.

Chris Starr

We’re not going to be satisfied with 80%, I mean we have a number of programs here that are designed to help patients get over some of the initial hurdles, some of them out and so it’s an important part of the way we see kind of our role in this community is to really give patients the support they need, when they are having difficulty, when they are not understanding things, I mean these patients have a very difficult time often with their disease and any drug. So I think it’s important for us philosophically too is that we will continue to do whatever we can as Julie mentioned to keep patients on therapy. So we’re not going to overlook the 20%, let’s put it that way.

Bill Tanner - FBR Capital Markets & Co.

And then, one of your ultra-orphan industry peers, I guess, has brought out a metric patient elected non-starts. So I am curious with your drug, either maybe it is more apparent, if it is a pediatric. Is there -- what’s the experience then been and you got a prescription rate and you get to reimbursement, you have a high conversion rate I am assuming to initiating therapy?

Julie Smith

Bill we’re still, to look at a very early in the days of the launch and the reason I say that is as of the end of 2013 we haven’t yet had the mandatory Medicaid coverage. And so we had some patients that are still waiting to get their first prescription and our first prescription are shipped and that’s largely because of a very long delay with those Medicaid payors in specific states. So we expect that now with that mandatory coverage we’ll be able to knock down the list of patients that, they are not really non-starts, and it’s more of that we’re just awaiting their initial reimbursement at dedication.

Bill Tanner - FBR Capital Markets & Co.

And then, maybe the final question. Julie did mention that most of the prescriptions have been pediatric. And looking at the label, I think it reminded me, or correct me if I am wrong, but it looks like PROCYSBI is actually not weight-based. It is dosed on am area base, but irrespective, I guess, there would be a different -- there wouldn't be a necessarily a one-to-one difference. But then, is it reasonable to contemplate that the prescriptions being written going forward, are going to have a higher dollar value per Rx, if it is in fact that you are beginning to treat sort of the more mature patients?

Julie Smith

I think that certainly their body mass will be larger. But we have some patients that are 10, 12 and they are taking 3 grams a day. It really does matters, it’s a very specific doses are very specific matter; it turns out when you are dealing with cystinosis. And the correlation with dose to particularly bodyweight is not -- but there is some possibility there for upside, but I wouldn’t go and increase the value of the adult patients by 30%.

Chris Starr

Yes. The [indiscernible] of these diseases -- I mean, this is not unusual for these kinds of diseases. But you can have two patients of the same weight, they content very, very different amounts of drug to control their white blood cells cystine levels and control the disease. So, I think you can probably make a general assumption that large of the patient the more drug but it’s not always that way. So, it’s not something that you can really make a firm and fast rule on.

Operator

And our next question comes from Boris Peaker from Oppenheimer. Please go ahead with your question.

Boris Peaker - Oppenheimer

Good afternoon. I just wanted to ask some questions about Europe. Specifically, in your pricing negotiation with the European countries, I am just curious in terms of, how do you think the Europeans are going to look at PROCYSBI versus cheaper Cystagon? And what are the kind of metrics to get comfort around the price point that you think you may be able to get there?

Julie Anne

You know, we are going to launch initially in markets with less -- which have traditionally exerted less downward pricing pressure. That’s the first thing I would say and therefore we also have not had any pricing negotiations, we haven’t entered into any pricing negotiations and the first countries will be those that have free pricing or something like free pricing. We have -- in the conversations that we have had with payers in Europe and I wouldn’t call them negotiations we’ve certainly had discussions with them, what I will say is that when we take them to the story and focus on the clinical added value that PROCYSBI offers these patients and which medical compliance or adherence to therapy is so incredibly important they get it and they immediately understand the clinical added value of this product.

Are there some countries where it’s going to be a tougher discussion? Absolutely, but we’re very hopeful based on everything that we’re learning.

Boris Peaker - Oppenheimer

In which of countries that you plan to launch first?

Julie Anne

As we’ve referred to we’ve talked about Germany being our first country in the launch sequence.

Boris Peaker - Oppenheimer

Got it. And I am just curious also, in terms of Europe, we have heard some discussion of compounding done here and there in pharmacies across Europe. Have you looked into that closely, and if you -- if yes, I mean, what have you found?

Julie Anne

We have not heard of any compound pharmacies making cysteamine bitartrate. What we have heard of is pharmacies in Germany for instance taking Cystagon and providing their own pharmacy-brewed enteric coat to try to protect the patients from some of the gastrointestinal effects of that product. And in Germany the pharmacist are allowed to charge almost a 90% markup on that product. And you can understand and I think that in a conversation with a local German sick fund, it would be a relatively easy conversation to ask why they would pay for a drug that’s spend post manufacture modified and maybe a less controlled setting which still has all of the issues of the original product versus a product that provides the clinical added value that we have proven.

Boris Peaker - Oppenheimer

Okay, I see. But do you have a sense of approximately what fraction -- let's say if you started in Germany, what fraction of German pharmacists may do their own kind of delayed release concoction?

Julie Anne

As you can imagine it’s not a delayed release that’s be perfectly clear. But they are reluctant to talk about it because of the efficiency rule in Germany. So, I think there is almost no way that you can get an accurate count.

Boris Peaker - Oppenheimer

Okay. And so, when German pharmacist charge this 90% markup, that is somewhat fraction of that is the patient responsible? Or do they pass that on directly to the government healthcare system?

Julie Anne

That’s passed on to the SHI so that gets paid to the healthcare system through one of the sick funds regional or local sick funds.

Boris Peaker - Oppenheimer

Got it. Okay. So there has got to be some way I guess, to keep track of how many actually do it. I don't know just how easy it would be to get that data.

Julie Anne

You know, I’d be interested if you are able to find it and we’ve been looking and asking a lot of pharmacist that very question. It’s actually a self-protection for them to not provide that information.

Boris Peaker - Oppenheimer

Okay. Got it. Yes, it is not easy to find. I agree with you. Well, all right, thanks for taking my questions.

Julie Anne

Thanks.

Operator

(Operator Instructions) We do have a follow up question from Liisa Bayko from JMP. Please go ahead with your question.

Liisa Bayko - JMP Securities

Hello there. I know it is early days, but I wanted see if you have gotten any preliminary feedback on your Huntington's disease data at this juncture? Thanks.

Chris Starr

Well, right now it’s kind of in the investigator clinical conversation and I think that feedback we’re getting is that that there is a lot of enthusiasm for what the data is be able to show so far. You know, as you know at least that we have an agreement with the French collaborators our people that we were working with and they are kind of publish the data and we don’t want to do anything that’s going to potentially could limit their ability to publish it. So, we’re not talking anything more than just a data that we’ve been kind of discussing over the last couple of weeks. But, its filtering through the system at this point, I mean there is number of investigative meetings planned for some of the Huntington's disease conferences. I don’t have any dates in terms of presentation for you. All I can tell you is that the manuscript is being prepared, it’s going to be submitted here hopefully this month, early next month and we’re anticipating getting that out certainly by summer for sure.

So, we’re pushing this forward, I mean this is -- there is a big unmet need in this disease. And as I just stated in our remarks I mean this is a pretty impressive set of data just based on kind of what we’re able to see so far. And so, I think in general, I know you’ve had a call with one of the Huntington's disease folks. I think there is definitely a lot of interest. Then again, this is one molecule that has been really been able to show some fairly significant results in this disease. So, we’re definitely not taking this very seriously moving forward on itself. And we’ll be updating you definitely as much as we can going forward in terms of when you’d expect to see data and what presentation and meetings when they would presentations and what not.

Liisa Bayko - JMP Securities

Thanks.

Operator

And ladies and gentlemen, we have reached the end of today’s allotted time for today’s question and answer session. I’d like to turn the comments back over to you Dr. Starr for any concluding remarks.

Christopher Starr

No. Thank you. So, actually I’ve lost my concluding remarks. 2013 has been exciting and productive time for all of us here at Raptor. With additional growth of proceeds PROCYSBI we anticipated in the U.S., commercialization getting underway in the EU this year and potential for additional clinical indications to pursue with our RP103, we believe Raptor is well positioned for sustainable growth in the future. If you have any further questions, any additional information, clarification in terms of the implementation we’ve provided, Please, feel free to contact me or Georgia and with that I wish you a please eating.

Operator

Ladies and gentlemen, that does conclude today’s conference call. Thank for attending. You may now disconnect your telephone lines.

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