Pozen CEO Discusses Q3 2010 Results - Earnings Call Transcript

| About: Pozen, Inc. (POZN)

Pozen, Inc. (NASDAQ:POZN)

Q3 2010 Earnings Call

October 28, 2010 11:00 am ET


Stephanie Bonestell - IR

John Plachetka - Chairman, President and CEO

Liz Cermak - EVP and COO

Bill Hodges - SVP Finance & Administration and CFO


Jonathan Aschoff - Brean Murray

Michael Tong - Wells Fargo

Ian Anderson - Cowen & Company

Eun Yang - Jefferies & Company

Jason Napodano - Zacks Investment Research


Greetings and welcome to the POZEN Incorporated Third Quarter 2010 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder this conference is being recorded.

It is now my pleasure to introduce your host, Stephanie Bonestell, Investor Relations. Thank you Ms. Bonestell. You may begin.

Stephanie Bonestell

Thank you, Rob and good morning. On behalf of POZEN, I would like to welcome everyone to today's third quarter conference call. By now, you should have received a copy of the company's press release. If you do not have it, you can access it on the homepage of our website at www.pozen.com where you can also access the replay of this conference call.

Before we begin, I need to remind you that various remarks that we may make about future expectations, plans and prospects for the company, constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.

Such statements include, any observations that we may make about the expected timing and amounts of royalty payments from GlaxoSmithKline and AstraZeneca and other revenue expected from our collaboration partners. The prospects for approval or timing of approval of any of our drug candidates or the way in which the FDA may consider our new drug applications or particular trial results, future trial plans and the likelihood of results of any of any future trials, and our potential commercialization plans for our product candidates.

The adequacy of financial resources to accomplish our goals or future revenues are based on our current expectations and are subject to a number of risks and uncertainties, including our inability to know with certainty what standards the FDA will use to evaluate drug candidates and how that may change or evolve over time; how the FDA evaluates data; what the results of future trials may be, whether those trials will cost much more than we have estimated they will cost, or than they have historically cost; how the FDA weighs risks of drugs, including risks of drugs that have been in use for many years.

The decisions of our collaboration partners; our dependence on our collaboration partners for the sales and marketing of our products once approved, including our dependence on GlaxoSmithKline for the sales and marketing of Treximet; and our dependence on AstraZeneca for the sales and marketing of VIMOVO, and whether our resources will be depleted by events other than clinical trials and efforts to obtain regulatory approval, such as the expenses relating to the lawsuits we have filed against generic companies seeking to market generic versions of Treximet prior to the expiration of our patent.

Additional factors that affect our forward-looking statements are discussed in our most recent quarterly report on Form 10-Q, which is on file with the SEC. In addition, these forward-looking statements represent only the company's expectations as of today. While the company may elect to update these forward-looking statements, it specifically disclaims any obligation to do so. Any forward-looking statements should not be relied upon as representing the company's estimates or views as of any date subsequent to today.

So now with us today from management, we have Dr. John Plachetka, Chairman, President and Chief Executive Officer; Bill Hodges, Chief Financial Officer, Senior Vice President of Finance and Administration; and Liz Cermak, Executive Vice President and Chief Commercial Officer. At this point, I'd like to turn the call over to Dr. Plachetka.

John Plachetka

Thank you, Stephanie and good morning everyone. As usual I am pleased to be joined this morning by Liz Cermak and Bill Hodges.

I am going to start with the highlights of our performance since we last spoke leaving Liz and Bill to turn on the details for you, then also make some specific comments on the various products in our pipeline and our broad expectations for the future. First I want to talk about my experience with the Treximet patent trial in the Eastern District of Texas which was held earlier this month. I am very pleased with the case put forward about a company and its attorneys and are very proud of everyone on the POZEN team. There were no surprises from the other side and I remain confident that our patents are valid.

With that said and since there are never any guarantees when it comes to litigation, it's now up to Judge Davis to make his determination and he indicated to us that he expects every decision by the end of the year. While we continue to make progress on many other fronts from the third quarter of 2010, POZEN reported revenue of 4.3 million resulting from royalties on sales of Treximet of $3.9 million and $400,000 royalty from sales of VIMOVO which is now officially launched in the Unites States.

Now one of the most important recent developments actually came just as through the close of the quarter and specifically that's the VIMOVO receiving positive agreement for approval in 23 countries across European Union which occurred earlier this month.

Now AZ in the EU member states will now pursue pricing and reimbursement approvals at a national level, so we're very pleased with the continuing progress we are seeing here with AZ. We continue to be pleased with the quality of the global team that AstraZeneca has put in place to launch this brand and the plan they are using to do so and our thanks to them for all these efforts on our behalf and of course on their own behalf.

I am sure I don't need to remind anyone but POZEN stands to earn a $25 million milestone when VIMOVO receives pricing and reimbursement approval in its first major EU country as they find in our agreement.

POZEN's unique approach has once again been proven with our success in gaining first cycle FDA in positive agreement for EU approval of VIMOVO which is something that very few other small pharmaceutical companies have been able to accomplish. Now with that, let me turn it over to Liz Cermak who is going to provide you a commercial update.

Liz Cermak

Thanks John and good morning everyone. We are pleased with what both Treximet and now VIMOVO will provide the POZEN. Because of the solid foundation provided by the two approved products and our current business model, we have what few small pharma growth companies have. And that's tens of million of dollars of anticipated cash flow from approved products.

We can use these cash flows to invest in the development and commercialization of our PA portfolio beginning with PA32540. Most of you already know that we see our PA portfolio as I am locking the full power of aspirin or as Bayer, inventor has called it, the wonder drug.

50 million American viewed aspirin regularly for cardiovascular disease prevention. Despite this, 20% of people unload those aspirin are at risk for serious GI complications. 25% discontinue or reduce their use of aspirin due to GI side effects and low-dose aspirin discontinuation leads to three times increased risk as a potentially fatal cardiovascular event.

To meet the needs of the millions of the people in the US and potentially the needs of more than $100 million globally who could benefit from aspirin therapy, POZEN is applying to prove the science of integrated therapies to develop a family of products that's designed to significantly reduce the GI toxicity issues associated with daily aspirin therapy.

We are using POZEN's patented technology as already proven VIMOVO to coordinate the release of immediate relief PPI or omeprazole PPI and a pH-sensitive release of the aspirin. Our first product candidate in the PA portfolio, PA32540 consists of 325 mg of enteric-coated aspirin and 40 mg of immediate-release esomeprazole and has the potential to expand the use of aspirin so that a secondary prevention of cardiovascular disease in patients at risk for aspirin-induced ulcers. We are pleased with the receptivity of this product and qualitative market research with payers, physicians and patients. We are in the progress of conducting our quantitative market research and we'll have an update for you in our upcoming calls.

But the big question we're being asked is, how will POZEN successfully go to market with PA32450? Let me say a few things about that. The current pharma commercial model is clearly not the way we will do it. Doctors don't want to see reps every now and then, expensive TV network consumer advertising is well, expensive and no longer delivering the ROI that it did. And payers have become the most important customer in the healthcare food chain.

That's left big pharma with some key challenges. Their primary commercial tools have lost major value and efficiency, so they are not only stuck with large unproductive R&D infrastructure, but find they can't shed reps fast enough to adjust to the changing times. The products remain highly prized and overvalued in the eyes of payer resulting in either no reimbursement, reimbursement at the highest co-pay tier or substantial rebate so that the next payer price allows them to get covered on the coveted tier two without somebody like prior authorization and step at it.

The good news though is that at the same time, digital communications had exploded, not only for you and me, but for the industry. Both physicians and consumers have embraced this new ability to get quality information, connect with their and peers and fellow patients and overall be better decision makers, all of this 24/7.

This doesn't mean that there is no need for reps to call on physicians in person. But it does mean that those reps need to deliver what the physicians wants. In the new world this in-person interaction looks much more like a clinical exchange of information and discussion versus the delivery of food and samples. Samples and patient information can be accessed in other ways just like we order things online and by phone. You can begin to see how this model is evolving to something much more real time, digitally based with the rep component in sheer numbers becoming much relevant. So the key elements of POZN's commercial model are the following. First of all we'll build over products with real value to customers. That means our integrated aspirin therapies that are designed to meet the real unmet needs of reducing GI toxicity with daily aspirin.

Then since we want payers to reimburse our products and patients to be able to afford their co-pays, we plan to price our product much more affordably than in the big pharma model, around $1 a day. And yes without the R&D and sale force infrastructure we can make profitable.

Second, we will leverage our proven in source model. This means having a small core of internal POZEN commercial talent, managing best-in-class commercial partners to achieve our objectives. This gives us the flexibility we need without sacrificing the quality of what we provide.

And third edge digital communication technology, the core driver of our new commercial model. This means that we will engage with physicians when, where and how they want and with patients in a way that educates and powers and helps them connect with patients like themselves. And if you think about it, this transformation is not so different from what we all experienced as consumers of technology over the last five to eight years. I mean who would imagine that (inaudible) and Medscape would be the top two free medical apps on iTunes; that Facebook and Twitter which didn't even exist a few years ago would be the way that most people find friends, family and now patients like themselves and gather all kinds of information.

Who knows what we will three years from now and PA32540 is ready for market but what we do know, is that we will be there. The industry has already begun to see the value of these communications. They are conducting test in lines with many applications and we will learn from all of this. In addition to bringing the kind of innovation and creativity that POZEN has brought to its pipeline to the work of delivering this pipeline to the marketplace.

So I am plan to share more details of our strategy in upcoming calls and I really look forward to leading these exciting times for POZEN and hope that you'll stay with us as the transformation unfolds.

With that, I will turn the call back over to Dr. Plachetka.

John Plachetka

Thanks Liz and I am so glad Liz is here and I hope you all have listened to what she said over the last few minutes. On these calls we tend to focus on the numbers and not on the message of what we're doing and what Louis just talked about if you on a replay mode, I want to you go back and listen to it again because its really, really a key element of our commercial strategy going forward.

Now I've mentioned in our prior calls that our clinical development program for PA32540 is well on the way. In the fourth quarter of 2009 we began enrolling patients in two Phase III pivotal trials under an SPA, similar to our VIMOVO trials and design and involving over a 100 clinical trials sites and one long term safety trial. The long safety study was fully enrolled earlier this year and we recently passed a half way enrollment point on our two pivotal studies. So we're still on target to complete enrolment for the second part of 2011.

Now as you've noted in our remarks, Liz is making great progress with the company's strategic roadmap for pre-commercialization and commercialization activities and we are as excited as everyone about the possibilities ahead of us. So we are talking more about that on our next call when we speak to the full year numbers.

You may also have heard there is an FDA advisor meeting on November 4 to review the adequacy of endoscopically documented gastric ulcers, there is an outcome measure to evaluate drugs intended to prevent GI complications of NSAIDs. Now as a result of this meeting, it's possible it could have an effect on our PA development program. The FDA postponed our requested meeting of the PA65020 development program and so after they have had this meeting. So we're meeting with them in December. Therefore we're not planning to start any 65020 study this year but we do have an SPA32540 program as you recall and will be watching closely at the meeting and see if there are any changes being considered by the FDA that might affect us.

So now let me turn the call over to Bill Hodges who is going to walk you through the third quarter numbers.

Bill Hodges

Thank you, John. Financially our 2010 third quarter performance was in line with our expectations. We have reported revenue of $4.3 million compared to $14.3 million in the third quarter of 2009 and a net loss of $8.6 million or $0.29 per share on a diluted basis, compared to net income of $6.7 million or $0.22 per share loss on a diluted basis for the third quarter of 2009.

If you recall last year's third quarter included a $10 million milestone payment for the new drug application filing for VIMOVO.

Our operating expenses for the 2010 third quarter totaled $13 million compared to $7.7 million for a comparable period in 2009. The higher operating expenses are up for this year's third quarter were primarily due to cost associated with our PA32540 Phase III studies, Treximet patent litigation expenses and pre-commercialization calls for PA32540.

Revenue in the first nine months of 2010 totaled $39.5 million versus $28 million in the 2009 similar period. The revenue increase is mainly due to receipt of $10 million more in milestone payments from AstraZeneca in 2010 versus 2009 and the increase in the Treximet royalty rate to 18% starting in 2010.

Our total operating expenses for nine months of 2010 are hard due to patent litigation costs coming in at $35 million compared to $29.5 million for the same period in 2009. For the nine month period ended September 30th 2010 we reported net income of $4.6 million or $0.15 per diluted share compared to a net loss of $1.1 million or $0.4 per share per diluted share for 2009 nine months period.

At September 30, 2010 our balance sheet is a solid with $44.6 million in cash and short term investments and $4.5 million in accounts receivable from GlaxoSmithKline AstraZeneca. If you are following POZEN for some time you know that we are careful stewards of our cash and we will end the year in a similar strong cash position. We currently anticipate our cash balance December 30th 2010 to be in the range of 38 million to $40 million.

As a result of a delay in the requested meeting with the FDA to discuss 65020 program until December, we have reduced our earlier outlook of expected development expenses. We also expect our IV litigation costs to approximately $8.5 million this year up from our previous estimate of $7 million. We previously provided an estimate of the 2010 net loss of $3 to $5 million and now based on these changes we expect a slightly smaller loss of $2 million to $4 million.

We wanted to point out that we believe it is possible that we could achieve the $25 million milestone for EU pricing and reimbursement approval of VIMOVO in 2010, if local approvals progressed at a reasonable pace from the early October recommendation. If that milestone is earned, our year end earnings guidance would be revised to a net income of $21 million to $23 million and if the cash milestone we received in 2010 also the company's year-end cash projection would be revised to $63 to $65 million. So, that concludes our financial results for the third quarter of 2010, so let me turn the call back over to Dr. Plachetka.

John Plachetka

Thanks, Bill. I really appreciate the financial update for everybody. Operator we can open up the line now for some question.

Question-and-Answer Session


Thank you. We will now be conducting a question-and-answer session. (Operator Instructions). Thank you, our first question is from the line of Jonathan Aschoff of Brean Murray. Please proceed with your question.

Jonathan Aschoff - Brean Murray

I was wondering if you might be able to provide any more color on the November 4 meeting. Who is invited, what the focus might be? It's sort of relevant, maybe irreverent?

John Plachetka

The November 4th meeting was announced as early in October and the three companies that were invited to present include Viron Therapeutics, AstraZeneca, and Takeda. Some of you who are listening may remember that during the SPA process for PA32540, we were asked a similar questions before the SPA was put forward and that was about a year ago or two years ago I guess it was then.

The issue was apparently settled for VIMOVO because VIMOVO is proved and I think there is a couple of interesting things that are in play here and I don't know what the FDA's preposition is meeting and what they state and looking at the people who were brought in, who were going to be speaking about this and the type of meeting and the timing of it, I think its important to point out a couple of things.

One is that VIMOVO is improved on the market, that we include an immediate release PPI which is known to ulcers dramatically as evidence by our VIMOVO data. Having said that, the class of agents by which you heal ulcers or prevent ulcers probably does make a difference in the outcome and I am speaking specifically of bleeding outcomes.

From a literature review situation, one can find the examples where a proton pump inhibitors not only will prevent ulcers but also prevent major bleeds and obviously then morbidity and mortality. It's much more difficult to make that same claim with H2 blockers or other methods of reducing ulcers. For instance in the case of Cox-2 inhibitors although the ulcers were reduced, the two outcome trials that were conducted in the development stage for those Cox-2 did actually fail to show a reduction in morbidity and mortality secondary to GI events.

So my assessment as a scientist is that it makes a difference, the mechanism by which you prevent the damage due to NSAID. And I think that's what the agency is actually going to be focusing on as they go through this, looking at the mix of companies that are there.

So that's my interpretation, obviously we will be taking a listen to this. I do know that one of the companies that is presenting or has been asked to present includes a product that is composed of an H2 blocker for which to my knowledge outcome studies have never shown a positive effect relative to NSAID-induced ulcers.

So, I adapted an interesting backdrop but we'll just have to wait and see. In the meantime we're extremely pleased that VIMOVO is now approved I guess in 23 countries, that this mechanism of action and the data that we presented to all the countries including the United States Food and Drug Administration was well regarded if the product that's approved. And early indications are that AZ is doing exactly as we had expected they are going to do which is focus on the new way of introducing products into the commercial environment and again I would urge those of you who are going to share what we say today to go back and listen to Liz's comments again, its only going to take you five minutes or so. Because what she is saying is the way that the future of pharma needs to go in my opinion. So if you have the time and if you are going to share this anybody else, please read that again.


Thank you. Our next question is from the line of Michael Tong of Wells Fargo. Please proceed with your question.

Michael Tong - Wells Fargo

Good morning. John, just a follow up on Jonathan's question. From where you sit, your perspective, what is the risk to you as far as the Ad Comm meeting is relative to the 32540 program knowing that you have got the SPA? But what's the risk that the FDA comes to a different conclusion at the end of that meeting? And then the second question for Bill. With the Treximet trial completed or awaiting the decision and the push out in the start of the 650 Phase III, is it fair to think G&A and R&D, going sequentially, declining into fourth quarter versus third quarter?

John Plachetka

Let me deal with the first question and Bill take a note on that because I am going to talk for a while. I think that again the literature does teach us a lot as we look at the view of a scientist, then I think the FDA Advisory Panel is composed of scientists. They are GI docs; they are not just the FDA reviewers but this is an outside group of physicians coming together to discuss the data. The can't help but be familiar with the data from the COGENT was published in the New England Journal of Medicine less than a month ago.

The data in the COGENT trial which was conducted over the last few years, not only showed that it was safe to give a proton pump inhibitor and Plavix together in that trial with aspirin, but a dramatic reduction in outcome such as bleeding and hospitalization. And so the back drop is that PPR instead of having no information or having information it says it doesn't work, the reality is as predicted from the NSAID data, PPI therapy with aspirin does have a positive outcome and therefore there is a strong linkage in our opinion between the prevention of ulcers and the prevention of outcome. Now I would not be able to say there is no chance that is going to have an effect on the PA program and we are listening. But based on the size that's available, I think the clinicians are going to give a fair hearing to what's out there.

Now had we put H2 blocker in our 325 program instead of a PPI, we would be devoid of any outcome data that would be meaningful and therefore I would be perhaps a bit more concerned going forward. But all of this is just speculation, those of you listening should understand that we have risk factors in our public information for a reason and you need to review those.

Drug development is not easy. There is always unpredictable nature of things to come. But I feel good about the signs upon which we base the 325 for a development program and all we can do is work for it based on best sides available. So bill you want to answer the financial question?

Bill Hodges

Michael with regards to G&A clearly those costs are going to come down but there will still be some patent litigation cost in the fourth quarter because the trial took place in the fourth quarter. But we're looking for a pretty good decrease there as those trial costs are coming down.

With regards to R&D you should still look for that increase slightly over the third quarter because we continue to enroll as John, said we completed the halfway enrolment recently. So we're continuing to enroll patients in that study and those costs will continue to go up slightly as get more and more patients in the study.


Our next question is from the line of Ian Anderson of Cowen & Company. Please proceed with your question.

Ian Anderson - Cowen & Company

First as a follow-up on Michael's question, so it sounds like you are looking to leverage the outcomes data from the COGENT trial, but if the FDA were to require an outcome study for either of the PA programs, do you have any sense of what that study might look like in terms of number of patients and duration?

John Plachetka

In general terms we have considered an outcomes trial because we think that's some of the things that managed care can be interested in its future and so we are in the early stages of taking a look at that. In general terms, outcomes trials are expensive, they take a longer period of time but they are not like impossible to do. For instance the COGENT trial was an outcomes trial. I think it took a few years, now unfortunately for that company they ran out of money but they were privately-held company and I understand there were some other issues involved in how funding could go forward with that.

But it could be somewhere in $50 million to $80 million range depending on the number of patients to get involved in that trial. It could be depending on the end point and the population you choose between 4,000 and 8,000 patients. But the interesting thing about an outcomes trial Ian is I know you understand this, is that the use of the technology involved is actually fairly unsophisticated because you are counting outcomes as number of people who go to hospital, who actually die or who have some other very easily recorded event. Bob temporarily used to call it an outcomes trail based on counting easy things.

And so you are not spending $3,000 for an endoscopy four times over the course of the trail as we are currently doing in the Phase III program, but you are studying more patients, but the cost per patient goes down. So we don't want to get the car ahead of the horse here, we are going to see what happens here, I suspect that its unlikely that we are going to be doing an outcome's trail I'll point everybody to the risk factors again going forward.

Ian Anderson - Cowen & Company

And associated with that, has the FDA actually scheduled with you a pre-Phase III meeting for 65020?

John Plachetka

Yes they have and we will be meeting with them in December

Ian Anderson - Cowen & Company

Okay. And then the last question, just on the AstraZeneca pipeline fill for VIMOVO. You mentioned that they are going about this launch in a little different way. Is this going to be kind of a staggered fill or what we saw in Q3 is what we get and it's going to be kind of the typical rollout? Got to work through that pipeline before we see additional revenues.

Liz Cermak

Yes, I think it's a little different than the traditional model of fully stocking all pharmacies and so given that they have had this rollout that has been what I will say is kind of softer as they are getting their managed care formulary status lined up you have probably seen even over the summer there is VIMOVO.com and awareness that has built and so people who are coming soon have heard about it. I think they have chose and its best to ask them, but they have chosen to stock where they think they need it and essentially now that have deployed their estimate fourth quarter. That pharmacies will start to call up and order and re-order. So again, ask them, but I wouldn't envision their being an enormous stocking but they will be ordering by pharmacies as the demand starts to filter through there.

Ian Anderson - Cowen & Company


John Plachetka

Ian, let me also add to that that I think AZ is doing a tremendous job here. I think that they have experienced over the last few years but other product launches they are learning, they are I think on the cutting edge of using the new technology. I think that they are very efficient. We can trace this to when we see other people doing in the industry and what happened five years ago. I would say that as you look at new product launches from this perspective going forward, you are going to see more adoption cost saving measures. So just-in-time delivery of medicines, that's going to be the way it is, you are not going to have a lot of dead money sitting in inventory on wholesale shelves.

I am a VIMOVO taker. I went to the pharmacy, the pharmacy said you know what, you're going to get this in 24 hours and it was coming from a wholesaler, that's fine. Most people would have conditions like I do, but yes I will get it tomorrow, that's not a problem with me. And so it saves money off the shelf for my local pharmacy and their distribution center and I don't know how far back it's going to go, but this is the way of the world. People are trying to ring efficiencies out now the distribution pipeline and this is one of the ways to do it.


Our next question is from the line Eun Yang with Jefferies & Company. Please proceed with your question.

Eun Yang - Jefferies & Company

Thank you. So a question to Bill. For modeling purposes do you think we should put $25 million milestone payment from AstraZeneca in the fourth quarter this year or do you think it's going to be more likely in the first quarter next year?

Bill Hodges

So there is a possibility we'll get it this year and I would just say watch this space, we'll let you know if we hear but our guidance all along has been, we thought it would come early next year but based upon the October recommendation for approval, we think there is a possibility to come this year and we just wanted to give everybody heads up.

Eun Yang - Jefferies & Company

Okay, thanks. And the second question is on Treximet. Based on the current annual sales run rate from Glaxo and assuming that it's kind of a trending up slowly from there, do you expect any sales-related milestones in the next couple of years?

John Plachetka

No, I think we are going to give any next year for sure. Lets see what happens after the trial result comes in because the trial result is an interesting result for both GSK and for us. I mean we have been very confident in our intellectual property all along and I think GSK was as well. But there was that overhang out there. With that cleared up, they are going to have six or seven more years of a patent protected product.

Now I know they have some very nice products in their portfolio and they have got some nice pipeline products coming through, but the reality is Treximet is 60% better than Imitrex which means that it's very likely to be superior if people give it a try relative to any modern therapy trip there and that they are taking. I think that and re-energize the sales force that they can, they get things little bit more stabilized over there in terms of how they go about their commercial field operations.

Could result in some future growth for Treximet but we are just going to have to wait and see how it all shapes up.


(Operator Instructions). Our next question is from the line of Jason Napodano of Zacks Investment Research. Please proceed with your question.

Jason Napodano - Zacks Investment Research

Just on the status of the 25 million milestone for a major market approval in Europe, can you give us a sense of what market is the most advanced of those big five European markets?

John Plachetka

Well I am not able to do that because the negotiations in the hands of AV. So sorry, I can't give you that information because we don't know.

Jason Napodano - Zacks Investment Research

Okay. Well, let me turn it back to PA then. In the past you guys have kind of made comments that you need to maybe do some trials to get out there and remind doctors and remind patients of the power of aspirin. Do you have anything planned in the next couple of months or 2011 to show some efficacy endpoints with aspirin, either in pain or anti-inflammation? Again, just to kind of get out there and remind physicians that aspirin is around, it's been around, and what it can do.

John Plachetka

Well we do have some additional work out there and we will undertake some on our own, but just within the last two weeks, another article was published demonstrating lower risk colorectal cancer in people who use aspirin on a chronic basis. There was another article within the last month demonstrating increased survival by over 30% of people who had colorectal cancer were treated and had taken aspirin going forward. So it's almost happening around us but almost everyone of these articles whether its for cancer or cardiovascular disease or stroke, generally has a tag line at the end that says, were it not for the gastrointestinal toxicity of aspirin, we could find much more lively applicable.

And so what we're trying to do as Liz mentioned is unleash the power of aspirin for all these potential uses that physicians want to employ. We obviously have to get it on the market for a very specific indication, and we intend to do that and we we're going to be looking at the cardiovascular situation at first and then we're going to move on to the pain situation. But there is not any way that we are going to stop the flow of information on the other uses of aspirin. I don't know, Liz, do you want to make a few more comments?

Liz Cermak

Yes, the other thing that I would say specific to secondary prevention of cardiovascular disease, there is a very high awareness among physicians, cardiologist, PCPs, IMs and neurologists on the use of that product for secondary prevention in addition to a higher awareness in use among patients. So, we are pretty excited about this fact. There is also a pretty high awareness about the GI toxicity of aspirin which is exactly what we're trying to improve with PA32540.

John Plachetka

Jason, just let me finish up by saying that there is also a recognition and a trend as we see in our market research for a movement to increase the dose of aspirin away from the 81 as the dose is going to work in everyone. There is a goodly number of patients to take 325. I think its almost 40% now. And whereas the daily aspirin a day is what a lot of people are recommended to take, if you go and sit in the emergency room and you interview people who come in with a stroke or you come in with a heart attack, they are already taking anyone, and it didn't work. And so there is a need here for a more effective therapy and it might be that the dose of aspirin is too low in patients, its clearly been demonstrated in the diabetic patient population if they do not respond the same way in terms of platelet aggregation through 81 and 325 and those people, 325 provides a much more pronounced inhibition of platelet aggregation, which is what you are trying to you. You look into cardiovascular disease patient population, almost a third of these people have diabetes as a concomitant morbidity. So there is a huge opportunity here. We are going to be taking about that, but so as the medical community is going to be talking about that at the same time.

Jason Napodano - Zacks Investment Research

Got you, that is good stuff. Just a quick question for Bill. I saw AstraZeneca release VIMOVO sales of 5 million and your royalty was 400,000. Is that just a rounding thing?

Bill Hodges

Yes just rounding 4.6 million was their sales and I just had to round one of them and one of them up for us to make it come to our total revenues. We'll get $460,000 in royalty.

Jason Napodano - Zacks Investment Research

And would you have the Treximet exact figure?

Bill Hodges

Treximet 21.6 million was the sales for the quarter.


Dr. Plachetka, there are no further questions at this time, I will like to turn the floor back over to you for closing comments

John Plachetka

Okay well, thanks to everybody. I mean we are very pleased with where we are, good quarter. We have a very good pipeline. We are blazing a trial here on the new commercial model and I do will let you know that we are going to be at the Piper Jaffrey Health Care conference November 30th through December 1st which is at the New York Palace Hotel and we're going to be going around and introducing Liz Cermak to shareholders, potential shareholders in various locations. So if you have an interest, obviously try and book some time with us or call Stephanie or call Bill or call me and we'll see if we can set something up. So thanks for listening today. I really appreciate it and we will talk to you next time.


This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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