XenoPort's (XNPT) CEO Ronald Barrett on Q1 2014 Results - Earnings Call Transcript

| About: XenoPort, Inc. (XNPT)

XenoPort, Inc. (NASDAQ:XNPT)

Q1 2014 Earnings Conference Call

May 08, 2014 05:00 PM ET


Jackie Cossmon – Director of Investor Relations

Ronald W. Barrett – Chief Executive Officer

Richard Kim – Chief Medical Officer and SVP-Clinical Development and Medical Affairs

Vincent J. Angotti – Chief Operating Officer & Executive Vice President

William G. Harris – Senior Vice President of Finance and Chief Financial Officer


Michael Yee – RBC Capital Markets

Brian Abrahams – Wells Fargo

Dave Friedman – Morgan Stanley


Good afternoon. My name is Jennifer, and I will be your conference operator today. At this time, I’d like to welcome everyone to the XenoPort First Quarter Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. And I’d like to turn the conference over to Jackie Cossmon. Ma’am, you may begin?

Jackie Cossmon

Thank you, Jennifer. Good afternoon, and thank you for joining us on the call. Here with me today are Ron Barrett, our Chief Executive Officer; Richard Kim, our Chief Medical Officer; Vince Angotti, our Chief Operating Officer and Bill Harris, our Chief Financial Officer.

Before we begin our discussion of today’s news, I would like to note that the information to be discussed on this conference call and webcast, including answers to questions asked during this call, will include forward-looking statements that involve risks and uncertainties, including all statements related to our current and future XP23829 clinical results development programs, plans and future clinical trials and the timing thereof, regulatory actions and submissions and the timing thereof, the future sales of and all commercialization and promotional plans and opportunities for HORIZANT and the timing thereof, potential patent coverage, financial guidance, and the therapeutic and commercial potential of XenoPort’s products and product candidates.

XenoPort can give no assurance with respect to these statements and we assume no obligation to update them. For detailed information about the risks and uncertainties that could cause actual results to differ materially from those on slide five or anticipated in these forward-looking statements, please refer to the risk factors section of our most recent annual and quarterly report filings, including our discussion of inherent risks of commercialization, clinical trials and regulatory matters.

In addition, we will be discussing HORIZANT, and as such, we encourage you to review the HORIZANT package insert, which includes important safety information that can be found on the FDA website.

Before I turn the call over to Ron, I’d would like to briefly discuss our upcoming Annual Meeting. As you may know, Clinton Relational Opportunity Master Fund which reportedly holds approximately 1.6% of XenoPort’s common stock is seeking to replace three member’s of XenoPort’s Board with three of its own nominees and is also proposing to present ten additional stockholder proposals at the meeting. XenoPort’s Board of Directors believes that Clinton’s nominees add no experience or expertise that is not already represented on XenoPort’s Board or that is specifically relevant XenoPort.

In addition, the Board is concerned that if Clinton’s nominees are elected, they may pursue plan, including immediately discontinuing the commercialization of HORIZANT, which would be contrary to the interest of all XenoPort’s stockholders.

Additional details regarding this matter as well as the Board’s recommendation that stockholders vote for all of XenoPort’s nominees on the white proxy cards and the Board’s recommendations with respect to the other proposals proposed to be voted on at the meeting can be found in our definitive proxy statement filed with the SEC.

We will not be commenting further on the Clinton proposals or our annual meeting and ask that you please keep your questions at the end of the call focused on our Q1 financial results.

At this time, I’ll turn the call over to Ron.

Ronald W. Barrett

Thank you, Jackie. Good afternoon, and thank you all for joining us today. I’d like to spend a few moments talking about the highlights for then quarter, and then Richard will provide an update on development plans for our novel fumarate, fumarate molecule, XP23829, which we’ll refer to as 829. Then Vince will discuss HORIZANT’s recent performance, and Bill will provide financial highlights for the quarter.

We continue to focus on executing our business strategy to efficiently build value in HORIZANT, and to advance the development of 829. In the first quarter, we made steady progress on both of these assets.

Vince will review the results in more detail, but HORIZANT prescriptions continue to growth in a nice trajectory with the current sales run rate that substantially exceeds that achieved by the forward or marketer of the product.

We continue to receive positive feedback from physicians using the product. Last week, we presented at AAN and APF meetings, the result of new analysis of data that included efficacy and analysis in important sub-populations of patients, the duration of efficacy throughout the full day and head-to-head data comparing certain side effects for HORIZANT was another product in the same drug class.

Finally, a new U.S. patent covering the approved uses of HORIZANT was issued by the U.S. Patent and Trademark Office in April. XenoPort now has five Orange Book-listed U.S. patents providing protection of HORIZANT into 2026.

With a demonstrated response to our promotional efforts, encouraging prescription growth trajectory, and a long patent life, we continue to explore a spectrum of business strategy to meet our objective of maximizing the value of HORIZANT to our stockholders. We believe that HORIZANT has the potential to become an important mechanism to help fund future development of 829.

Richard will discuss the rationale and plans for next steps into our 829 program, but I’m pleased to report that we remain on track to initiate a Phase 2 trial of psoriasis patients by mid year. We conducted a pre-IND meeting with the FDA division of Dermatology and Dental Products in Q1, in which we solicited feedback or an overall plan and specifically on the design of Phase 2 trial. We recently filed the IND for this division and has been doing the prep work with our CRO to get ready to start enrollment in the Phase 2 trial.

Assuming clearance of the IND, we intend to start to study by mid-year. Based on historical enrollment rates for similar study, we expect it will take 12 months to 14 months from trial initiation to obtain top line results. We believe, we have a leadership position in the intellectual property of produrgs of MMF.

Since the beginning of the year five additional patent applications were published. As you know, the composition of matter patent covering 829 has been issued and currently runs until 2029, and we would expect additional patents around extension. We intend to aggressively pursue the prosecution of our current portfolio of 16 patent applications that we have filed in a major pharmaceutical market.

The completion of an equity financing in the first quarter of 2014 was an important accomplishment. We anticipate that our strengthen in balance sheet will fund company through 2015, allowing the completion of the Phase 2 trial in psoriasis and the creation of additional value in HORIZANT.

And with that, I’ll turn the call over to Richard.

Richard Kim

Thanks, Ron. As you all know, 829 is a fumarate class molecule that is a novel and patented chemical composition. It is a pro-drug of monomethyl fumarate of MMF. 829 shares this MMF pro-drug property with dimethyl fumarate or DMF. Also known as Tecfidera.

At AAN last week, we presented results of Phase 1 data with 829, in which healthy subjects for dose were off to 12 days with 829 Tecfidera or placebo. The data shows that 829 provided the expected total exposure of MMF in the plasma, and that the PK profile of formulation one limits Tecfidera, while formulation two provided a more expanded duration of exposure.

We also observed selective pharmacodynamic effects on blood levels cells and eosinohils that are consistent with what it’s know for the fumaric class. We were particularly excited to see these effects even with our once per day dosing of formulation two.

Importantly the mean lymphocyte counts in blood after 829 treatment were within normal limits, again consistent with what is known of Tecfidera and no other blood cell types were affected by 829.

Having completed Phase 1 development late last year, we sought to identify the most efficient potential path to Phase 3 in either for psoriasis and/or Ms. With respect to relaxing forms of MS Tecfidera has been shown to be safe effective.

In addition, you may recall the Phase 2 and Phase 3 studies into psoriasis were conducted with BG 12 using the same range of doses as tested in MS prior to the finishing of MS studies like define and confirm.

The standard course of MS development would be to conduct a six-months MRI Phase 2 study. These studies are costly and time consuming to complete. The course of psoriasis development has also become fairly uniform over the past decade.

Phase 2 studies in psoriasis are shorter in duration than MS study and are done using the same clinical endpoint called PASI score as is used in Phase 3. These studies can usually be enrolled two to three times faster than an MS Phase 2 MRI study.

So given that the same range of doses of Tecfidera were efficacious in both psoriasis and MS, we believe that going into Phase 2 development in psoriasis should allow us to get to Phase 3, in either psoriasis and/or MS more efficiently than going first into a Phase 2 study in MS.

Assuming FDA clears our IND with Division of Dermatology and Dental Products, we expect to commence the Phase 2 study in psoriasis by mid-year, with a top line data readout some 12 to 14 months thereafter.

The Phase 2 study design is comparable to most other typical Phase 2 studies in psoriasis.

In short, it is designed to be a 12-week study examining three dosing regimens of 829 versus placebo. The planned study will utilize our extended release formulation of 829 which we previously refer to as formulation 2.

The planned study will evaluate once a day and twice a day administrations of 829 at doses that produce daily MMF exposures, similar to and lower than the approved dose of Tecfidera.

The primary end points will be percent reduction from base line in the PASI score. We believe that the planned Phase 2 may help us better understand the efficacy, safety, tolerability and dose response for 829 in psoriasis and that the results of the planned study could be utilized in planning for a potential Phase 3 trial in either psoriasis of MS. While there’s a planned Phase 2 psoriasis study is ongoing, we intend to conduct standard long-term toxicology studies so that Phase 3 studies could be initiated following Phase 2 completion potentially with minimal delay.

Based on our recent interactions with psoriasis experts at the American Academy of Dermatology Congress, we believe that there is an unmet medical need for a safe well-tolerated and effective oral medication in psoriasis.

Not everyone in the dermatology community is comfortable with the widespread adoption of biologic with a full spectrum of moderate to severe plaque psoriasis despite their high degree of efficacy. At the same time, they realized that patients are getting sub-optimal treatment with topical treatments and existing orals like methotrexate and cyclosporine each have their own safety concerns.

So psoriasis experts confirm to us that there potentially is a substantial opportunity in the space that’s between the tropicals and injected biologics. We believe that 829 may potentially be positioned to address the medical needs in this space.

With that as a summary of our progress on 829, I like to turn very briefly to HORIZANT and simply note that we attended both AAN and the APS meetings last week. The excitement and interest in HORIZANT were notable and I’m very encouraged by the thoughtful discussions I had with clinical practitioners. I believe that there is a growing understanding of the benefits that HORIZANT may provide to patients.

With that, I’ll turn the call over to Vince.

Vincent J. Angotti

Thank you, Richard. 1Q14 represents only our third full quarter of HORIZANT commercialization as we began our promotional efforts on June 1, 2013. And as a remainder, our targeted promotion offers continue to be focused on a small segment of physician specialists who represent less than 10% of the RLS prescriptions nationally.

And when we revaluate the effectiveness of our near-term promotional efforts using a number of measures and believe that there continues to be a good or be a still early indication that we are seeing positive results from those efforts.

In particular, we look not only prescriptions, but also prescribed pill count. We applied these measures because HORIZANT is two indications with different label dosing from most primarily less one 600 milligram tablet a day and for postherpetic neuralgia, twp 600 milligram tablets per day.

The nationwide total HORIZANT prescriptions and prescribed pill count for the first quarter ended March 31 of 2014 increased 11% and 14% respectively over the fourth quarter of 2013, and this was particularly promising as we observe the decline in quarter-over-quarter total prescription trends of several of the branded competitors in both RLS and PHM.

And compared to the first quarter in 2013, when our previous partner was commercializing HORIZANT, prescriptions and prescribed pill count have increased 12% and 24% respectively. Again, now this was national data. So specifically, in the territories where XenoPort is promoting HORIZANT, total prescriptions and prescribed pill for the first quarter ended march 31 of 2014 increased by 17% and 20% respectively over the fourth quarter 2013 versus essentially no growth in non-promoted territories. Therefore, all the national growth is being driven by XenoPort’s promotion in these selected geographies.

And when we compare total prescriptions and total prescribed pills in territories where XenoPort is promoting HORIZANT for the first quarter ended March 31, 2014 versus the first quarter ended March 31, 2013; we see an increase of 48% and 64% respectively, versus the significant decline in the non-promoted areas.

As a result of our continuous evaluation of HORIZANT’s value in the market with respect to the brand competition both RLS and PHN, we again adjusted our lack price late in the first quarter. So at a current lack price for the week ending April 25, our rolling four week average for dispensed tabs equated to approximately 65,000 tablets or $455,000 in demand gross sales.

With our focused promotional reach, the HORIZANT business remains highly concentrated, about 80% of the first quarter 2014 total up prescriptions coming from approximately 19,130 physicians.

And with that said, for the first quarter ended March 31, 2014 we’ve approximately 1,043 first time HORIZANT prescriber. Now a separate indicator of positive response to the HORIZANT promotion is the up tick of postherpetic neuralgia, this indication was never been launched prior to XenoPort promotion.

And as a result of PHN launch, we’ve seen a contribution by same specialty physicians for HORIZANT for the 16% in the first quarter of 2014 versus less than 2% in first quarter of 2013, which is prior to the XenoPort launch. And again, because postherpetic neuralgia has indicated a 600 milligrams BID or two tablets a day versus RLS at 600 milligrams 2D, we monitor the tablets for prescriptions as a potential indicator of up tick in the first quarter of 2014 versus the first quarter of 2013, which to me the size of the average prescription increased by almost 11%.

And while we’re pleased with these early indicators of HORIZANT's acceptance, we're also cognizant of the fact that the general awareness of HORIZANT is low in consumer and managed markets environments that we’re not currently reaching.

So specifically for the consumer, as we mentioned in January, this year and October of 2013, we initiated our digital direct-to-consumer or DTC program that’s focused on moderate to severe primary restless leg syndrome or RLS, information seekers who are located within the geographies where XenoPort is promoting HORIZANT.

Due to this highly targeted crossed effective campaign we generated about $1.5 million websites in the six months ending March of 2014; of which 85% these business are unique, not repeat. We believe additional spots indicate that the need for information about RLS remains if there’s a continued interest in HORIZANT.

We continue to monitor the impact of this initiative moving forward and are well placed in disease awareness and education. And in the fourth quarter of 2013, we also began our engagement in selected managed-care plans, insured lives of high penetration in our territories. The feedback that we received again illustrates that there was a very little awareness of HORIZANT and its profile amongst those healthcare providers. So with that said, in general, summary of our managed care access is as follows.

During the first quarter of 2014, the method of payment for HORIZANT prescriptions was approximately 68% from commercially insured patients and approximately 22% for Medicare Part D patients. The remaining HORIZANT prescriptions were from cash, Medicaid and other forms of reimbursement.

Nationally, about 57% of commercially insured patients have unrestricted access to HORIZANT, with approximately 72% of HORIZANT prescriptions written for commercially insured patients being successfully filled in the first quarter. About 30% of Medicare Part D covered patients have unrestricted access to HORIZANT with approximately 63% of HORIZANT prescriptions written for Medicare Part D patients being successfully filled in the first quarter. And we will continue to work with select pairs to potentially span more restricted access for HORIZANT were appropriate in particular with the Medicare Part D crowd.

So our objective for 2014 remains. To grow HORIZANT sales through our continued targeted promotional efforts, adjust unrestricted and managed care access, in particular in the Part D segment, and manage our costs to increase the value of the assets.

Our execution of this plan is allowed us to realize prescription growth for several of our competitors prescriptions declined in the fourth quarter of 2013 for the first quarter 2014. We will continue to closely monitor our progress towards these objectives.

So with that, I will turn the call over to Bill.

William G. Harris

Thanks, Vince. I’ll spend a few minutes reviewing our financial results for the first quarter of 2014, and we’ll then take your questions.

Total revenues for the quarter were $3.4 million compared to $0.5 million for the same period in 2013. The increase in revenues for the first quarter of 2014 was principally due to the HORIZANT net product sales which totaled $3 million for the quarter compared to $1.2 million for the same period in 2013 as reported by our prior marketing partners.

Research and development expenses decreased in the first quarter of 2014 to $4.7 million compared to $13.4 million for the same period in 2013, primarily due to decreased net costs for arbaclofen placarbil, and to a lesser extent, decreased net costs for our 829 development activities and decreased personnel costs.

Selling, general and administrative expenses were $18.8 million for the first quarter of 2014, compared to $10.7 million for the same period in 2013. This increase was principally due to costs related to the commercialization and promotion of HORIZANT, specifically increased professional fees, marketing costs, and personnel costs.

Net loss for the first quarter of 2014 was $20.5 million compared to a net loss of $23.5 million for the same period in 2013. Basic and diluted net loss per share were $0.36 for the first quarter of 2014 compared to basic and diluted net loss per share of $0.50 in the same period in 2013.

Finally, at March 31, 2014 we had cash and cash equivalents and short-term investments of $122.5 million which included net proceeds of approximately $77.4 million from our follow-on public offering in the first quarter. Adjusting for these net proceeds our cash usage was approximately $13.6 million for the quarter which reflected our ongoing efforts to manage our business more efficiently and continued the trend of sequentially reduced quarterly cash usage since the first quarter of 2013.

However, with the expected – we expect that our quarterly burn rate will begin to increase as we initiate and conduct the Phase 2 psoriasis product. With that, we will open the call to questions. Operator?

Question-and-Answer Session


(Operator Instructions) And our first question comes from the line of Michael Yee with RBC Capital Markets.

Michael Yee – RBC Capital Markets

Hi, hey guys, thanks. Two questions, one on majestically with regards to your IND what is to happen to get that cleared and get underway and then as we think about when that data finishes in year from now, what’s up at the animal talks do you had how far I would you have to support base degree in psoriasis and/or MS?

Ronald W. Barrett

Sure. Thank you, Michael for the question. So the first on the IND, we recently filed the IND and we don’t expect there to be any issue and where clear in 30 days. So you won’t hear from us really until we initiate the enrollment in the study which we expect by mid-year.

So, it’s a standard 30 day review and we don’t hear anything you good to go. With regard to the long-term talks, since last fall we’ve had meeting with neurology products division as well as the dermatology division, we had a pretty IND meeting in the first quarter with the term division, which we outlined all of our plans for the preclinical program to support long-term studies.

We have agreement on that and we planned to start those studies in the early in the third quarter of this year.

We will have completed those studies and had the – have the study report in the midst of next year time. So we will have sufficient preclinical tax coverage at that time to conduct a study of any duration going forward that would include psoriasis study that would have initial 12 or 16 weeks randomized phase of the study with a long term extension or in MS study that might go one or two years.

So while sufficient tox coverage to do that let’s say in the third quarter of next year which is when we are expecting to get the Phase 2 results for the psoriasis study.

Michael Yee – RBC Capital Markets

Okay, okay. And then last question is there are couple of competitors out there that all of data in psoriasis as relate to orals obviously and of the fumarate (indiscernible) where based no your early data, I know it’s hard to compare, but where do you think your profile would get in versus those drugs and is there any way to extrapolate versus Tecfidera or (indiscernible) are you think you might come out

Ronald W. Barrett

Yeah. So we are going to be very interested to see whether (indiscernible) get when they get approved, how they do if you look at the efficacy for (indiscernible) certainly the historical Fumaderm and Tecfidera data would suggest that there is an opportunity that we may see higher level of efficacy as measured by the past due 75 score.

So sensitivity that as you know as test of two doses and has little higher efficacy for the rheumatoid arthritis indication, they were only approved that the lower 5 milligram dose and so we'll have to see whether that will be approved dose or whether they get the – I believe its the higher doses of 10 milligram dose that they studied under psoriasis.

Both of those components were effective and generally say, you they have different safety, tolerability profiles we know that Fumaderm has a long history of safe use we don’t expect the profile at least as good as Fumaderm and Tecfidera in terms of adverse events and tolerability. We are hoping that given the unique attributes of 829 we have actually may see some improvements in certain side effects but that that remains to be seen.

So I would say that the combination of both efficacy that we might expect based on the historical work of this world class and the tolerability profile they put us in a very good position as we’ve – as Richard indicated as we’ve spoken to experts they still believe there is a unmet medical need that can be address by orals and the profile that we might expect for 829 was very attractive.

Michael Yee – RBC Capital Markets

Okay. Just one follow-up, I promise last question. With regards to your tolerability which you mentioned there is doctors using Tecfidera have different experiences with tolerability specifically diarrhea. Do you still believe that you could show some advantage there and this obviously I will play on psoriasis right? So where do you feel you lay along that line for differentiation we expect on that end point.

Ronald W. Barrett

So I can tell you what we know and obviously one of the objectives of this psoriasis study we get a lot more information, but we know is it preclinical study 829 does not have the same propensity to cause irritation of the lining of the stomach in particular we’ve shown some of that data in posters in the past, while that will translate into benefit that is unknown. From our Phase 1 study I think the – we only have 12 subjects per cohort and it’s just not enough data to really know what was stand with regard to GI. So we are hoping to have an advantage there, but I can’t say that we have the data to support that yet.

Michael Yee – RBC Capital Markets

Okay. Thank you. Got it.


And your next question is from the line of Brian Abrahams with Wells Fargo.

Brian Abrahams – Wells Fargo

Hey, thanks for taking my questions. With respect to the Phase 2 psoriasis study. Can you talk a little bit about lymphocytes and eosinophils monitoring level of comfort regulators and physicians have with the design in the monitoring and do you learn anything about the potential correlation between lymphocytes changes and efficacy in psoriasis that might translate to whether 829 could look better or less good than Tecfidera and the MS indication. And then I had a follow up. Thanks.

Ronald W. Barrett

Sure. Let Richard address that question. Richard?

Richard Kim

So many of you came by the posters that we presented at AAN. So far our Phase 1 data the lymphocytes reductions that we seen at the 12 days of dosing its fairly consistent with Tecfidera there within normal limits.

However, we are limited by both the sample size and the duration of the Phase 1 data. These are healthy volunteers who got exposed to 12 days. So, what we are hoping to do is when we finish the Phase 2 program about 12 to 14 months after we initiated the Phase 2 trail we will have a better understanding over the full time course of lymphocytes reductions.

And I am going to address the correlation of lymphocytes reduction and efficacy, many people that we talk to and the literature both of course that lymphocytes reduction or modulation is probably the best surrogate marker of efficacy. In the psoriasis literature in particular it is reasonably well established that lymphocytes reduction thus correlate with efficacy in particular this is strong with the methotrexate historical data.

And I think many of you are aware that lymphocytes reduction of course is believed to be the mechanism for many of the drugs that are both approved and in development. Tecfidera is one example (indiscernible) is another example, other drugs that are in development in the S1 T1 class whether it would be (indiscernible) component of both of them are known to reduce lymphocytes and that is how many of us believe these drugs fundamentally work in autoimmune diseases like psoriasis in MS.

Ronald W. Barrett

So to get your question about what are we doing in monitoring with those standard blood cell monitoring we have visits in our study, I think for the first six weeks every two weeks.

Brian Abrahams – Wells Fargo


Ronald W. Barrett

And then

Richard Kim

Every four, but every two as needed, pretending on what degree of lymphocytes reduction they reach and (indiscernible) we does not receive any negative feedback about lymphocytes monitoring and when we have the pre IND meeting so we are very encouraged that we have the appropriate face guards in place, for us to initiate Phase 2 trials in soriasis midyear.

Brian Abrahams – Wells Fargo

Thanks. Just a quick follow-up on HORIZANT may be for Ron and also Vince. Can you talk about the potential to expand the marketing efforts here and capitalize on some of the momentum just given how rep sensitive and promotion sensitive this market seems, trying to get a sense of your appetite for additional investments here and what goes into long term spectrum of opportunities you may pursue. Thanks.

Ronald W. Barrett

Yeah, this is Ron. I will start and then Vince can follow-up. So when we got the product back, I think it was a reasonable question in peoples mind, not ours but peoples minds. Our former partner couldn’t do much with the product. Was it a function of the drug or was it function of the promotional effort of the partner. We obviously thought that the drug had potential.

I think since we started the program in last June, the promotion last June has confirmed what we believe where we put promotional, we deliver the right messages in the right way to the right people we get response. So we are in active discussions with our board about where to go from here and there is a – as I mentioned in the early comments, those are spectrum potential opportunities here and we will be examining all of them in terms of how do we drive more value in HORIZANT. Now maybe Vince you can speak to the efforts that we have ongoing is really small efforts. And we are leasing that with expansion which is the…

Vincent J. Angotti

Yeah, let me to further elaborate what the peak sales depends on the market penetration you’re going to invest in and I won’t speak any peak sales guidance on this market or speculative investment. It is estimated that there is 5 million softwares in U.S. We also estimate that in ‘13, I’d reiterate that about 6.3 million total prescriptions for growing up slightly rates more than 4% a year.

Now with that said, our territories again – our geographies when they cast about 55% of the RLS prescriptions and as we mentioned in the script, the customers we call on specifically is in the geographies, conservatively account for less than 10% of the business.

So while immediately we plan to remain primarily a specialty focused organization, we do feel that there is another at least 20 to 30 specialty walkable territories that go to same productivity and potential that we already cover. So there is clearly a significant gap in our reach versus the potential of this market right now.

Brian Abrahams – Wells Fargo

Got it. Thanks very much guys.

Ronald W. Barrett

Thank you, Brian.


And your next question is from the line of Dave Friedman with Morgan Stanley.

Dave Friedman – Morgan Stanley

Hi, thanks for taking the question. I had one or two actually. The first was whether you’d be willing to describe your views on the Tecfidera IP as it relates to 829 and preempt to operate broadly acknowledging that it sends the EBIT they have other patents as well.

And then just a question maybe for Vince is, if you describe some of the competitive dynamics that you are seeing for HORIZANT versus (indiscernible) and how that has or hasn’t changed at all over to fund have the drug under your marketing.

Ronald W. Barrett

Thanks, David. So the IP question is obviously at the Plus One. The patent portfolio of Biogen which regard to Tecfidera has been well studied and discussed in the investment community.

I will say that 829 is a novel chemical composition that we don’t see that we would have any freedom to operate issue. In psoriasis by any means and in MS we think that the IP – the strongest IP held by Biogen is restricted to the use of DMF for the treatment of MF and then there is also some of the claims related to the particular formulation. So we are not DMF and we are not the formulation of these microencapsulated formulation. So we believe that we would have freedom to operate.

I mentioned in the comments that as you know we have had this program going for four or five years, now that time for us. We have build up our own intellectual property portfolio and that is consistent not only composition claims but also method claims related to reducing GI tolerability, improving flushing and so on that we think will potentially will be valuable as we move forward in this phase. So I’ll turn it over to Vince for the question that is regard to the competitive landscape.

Vincent J. Angotti

Yes. I thought it was specifically relevant to gullies, so I won’t comment on any head-to-head messaging as it relates to gullies. But I can comment on is that, we have founder is imperative to the messaging on HORIZANT is that mechanism of action in our drug is designed to overcome absorption issues associated with and that’s really the base of the foundation.

So the messaging with either a postherpetic neuralgia, potential position or restless leg syndrome potential treatment position. I remind you that we are the only approved (indiscernible). We are recommended by various different scientific bodies as it relates to the use of certain patients life without particular disease state.

Now, competitively gullies have got four to five times the amount of (indiscernible) that we do based on what we referred to the reports. So on that too we have a much larger reach than we have nationally but we feel we can clearly compete with them within the geographies where we got presence.

As it relates to managed care, we feel that we are relatively on par with them even though we relaunched the product for about 9 months, 10 months. And when I say on par with them, I say leads to access as it relates either commercial or part D unrestricted access lines. So I hope that also a little bit.

Dave Friedman – Morgan Stanley

So thank you.

Vincent J. Angotti

You’re welcome.


(Operator Instructions) And your next question comes from the line of Christopher Marai with Wedbush Morgan.

Unidentified Analyst

Hi, David here in for Christopher. I wanted to talk about your pipeline here. Given the recent data in (indiscernible) narcolepsy, how are you thinking about these assets and are you doing – are your academic collaborations doing any work that might enhance the attractiveness of them? Thank you.

Ronald W. Barrett

So that publication I think it was yesterday did catch my attention with regard to the potential of (indiscernible) for the treatment of narcolepsy. Obviously that was an animal model study really elegant animal model study but I think we might be seeing what (indiscernible) would be or even AP would be useful in that indication.

With regard to AP, which as you all know, unfortunately missed the primary endpoint in the specificity trial last year and then 279, we believe these product categories are still viable to have long patent for life last in them. Obviously we are focusing our resources currently on advancing 829 and the commercialization of HORIZANT. We are actively engaged in discussions about how to potentially advance 279 or 280 and I think until you have a deal waiting to announce just saying that you're talking to people is about all we could say.

Unidentified Analyst

I think that’s helpful.

Ronald W. Barrett

You’re welcome.


And we have no further questions in queue at this time and I’d like to turn the call back over to our presenters.

Ronald W. Barrett

Thank you for participating in the call today and we will be participating in the Jefferies conference in June and hope to see some of you there. If you have any further questions, please don’t hesitate to contact Jackie at 408-616-7220. Thanks again and have a great day.


Thank you. This does conclude today’s conference call and you may now disconnect.

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