Avanir Pharmaceuticals' (AVNR) CEO Keith Katkin on Q3 2014 Results - Earnings Call Transcript

Aug. 5.14 | About: Avanir Pharmaceuticals, (AVNR)

Avanir Pharmaceuticals (NASDAQ:AVNR)

Q3 2014 Earnings Conference Call

August 5, 2014 4:30 PM ET

Executives

Ian Clements – Head of IR

Keith Katkin – President and CEO

Christine Ocampo – Vice President of Finance

Rohan Palekar – Chief Commercial Officer

Joao Siffert – Chief Medical Officer

Analysts

Jason Butler – JMP Securities

Mario Corso – Mizuho Securities USA

Shaunak Deepak – Jefferies

Roy Buchanan – Piper Jaffray

Joon Lee – Cowen and Company

Operator

Good day, ladies and gentlemen and welcome to the Third Quarter 2014 Avanir Pharmaceuticals Earnings Conference Call. My name is Tehesha and I’ll be your operator for today. At this time, all participants are in listen-only mode. Later, we will facilitate a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

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

Ian Clements

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

To discuss our results, commercial and clinical initiatives, I’m joined today by several members of our leadership team. Our President and CEO, Keith Katkin, our Vice President of Finance, Christine Ocampo, our Chief Commercial Officer, Rohan Palekar and Dr. Joao Siffert, Chief Medical Officer.

During the course of this conference call, we’ll be making certain forward-looking statements. These statements are subject to numerous risks and uncertainties and reflect our current expectations and judgments.

Examples of these forward-looking statements include statements relating to our expectations for NUEDEXTA sales and revenue growth including market opportunity, future expense levels, the timing and success of future development of AVP-923 for other indications, the potential approval of NUEDEXTA in new markets, the timing and success of the development of AVP-786 and AVP-825.

Actual results could vary materially from the results anticipated by these statements. Investors should read the risk factors set forth in Avanir’s Form 10-K for the year ended September 30, 2013 and periodic reports filed with the Securities and Exchange Commission.

Before handing over to Keith, I’d like to remind everybody that we will be presenting two-healthcare conferences in August. On Tuesday, August the 13th, we will be in attendance at the Wedbush Healthcare Conference and on Wednesday August the 14th, we’ll be presenting at the Canaccord Genuity Growth Conference.

With that said, I’ll turn the call over to Keith. Keith?

Keith Katkin

Thanks Ian, and my thanks to each you for joining us on the call today. Third fiscal quarter was a great quarter across all aspects of our business. First with the end of victory, we now have 12 years of exclusivity for NUEDEXTA and look forward to investing in the NUEDEXTA business on a going-forward basis.

Second, with continued growth in the NUEDEXTA PBA franchise and now with over $25 million in net NUEDEXTA revenues, we are in annual net revenue run rate of over $100 million.

Third, we completed enrollment in the Phase II Agitation study, an important study with a high unmet medical need. Fourth, we announced positive PRISM II interim results, demonstrating NUEDEXTA’s ability to benefit patients suffering from Alzheimer's with PBA.

And finally, we announced positive COMPASS data. I am immensely proud of what the Avanir team has already achieved, but more importantly I am incredibly excited about the plans we have to deliver even more through the end of this year and beyond.

With the clarity provided by our recent patent litigation victory, we are now executing on our plan to adopt a more aggressive stance to ensure the continued growth of NUEDEXTA and solidify Avanir’s position as a leading CNS company.

We are actively making investment in our commercial infrastructure and plan R&D investments that will position us to further drive innovation and more effectively commercialize medicines for people with high unmet medical needs.

The strategy further underscores our commitment to creating long-term value for patients, customers and shareholders. I’ll now turn the call over to Christine to address our financial results. Christine?

Christine Ocampo

Thanks, Keith and good afternoon everyone. In addition to the financial results summarized in the press release issued earlier this afternoon, you can find additional information including full year information in our upcoming Form 10-Q, which we expect to file this week.

We reported total net revenue for the third fiscal quarter of 2014 of $28.6 million, as compared to $19.8 million for the comparable period in fiscal 2013, a year-over-year growth of approximately 45%.

Net revenues were comprised of NUEDEXTA product revenue, revenue generated from our co-promote agreement with Merck, revenue generated from our license agreement with GSK for Abreva, and revenue generated from our research grant with the Michael J. Fox Foundation.

As of the April 2014 expiry of the Abreva patent, we will no longer be recognizing revenue related to Abreva and hence this will be the last quarter where Abreva revenue will be recognized.

For the third fiscal quarter of 2014 we recorded record net product sales of NUEDEXTA of $26.5 million.

Third quarter wholesale inventories as of June 30, 2014 were estimated to be approximately 3.5 to 4 weeks. Gross margin on the sales of NUEDEXTA for the third fiscal quarter of 2014 was 94.4%. Research and development expenses were $12.3 million for the quarter ended June 30, 2014, compared with $6.1 million for the same period in the prior year.

In the third fiscal quarter of 2014, the increase in our R&D spend was primarily attributed to costs associated with our multiple ongoing clinical studies, medical affairs, and regulatory and manufacturing expenses related to AVP-825 including a $2.5 million milestone paid to OptiNose that have been achieved pursuant to the license agreement.

SG&A expenses of $26.5 million for the fiscal third quarter of 2014 increased from $23 million for the corresponding period of the prior year. Sales and marketing expenses for the third quarter were $19 million as compared to $16 million for the corresponding period of the prior year. The increase was primarily attributable to increased personnel costs, marketing expenses and general corporate cost.

Total operating expenses, excluding cost of goods sold, for the quarter were $39 million compared to a $29.1 million for the comparable quarter in fiscal 2013. For the three months ended June 30, 2014 and 2013, the company recorded $1.6 million and $1.3 million respectively of stock-based compensation expense.

Cash used in operations for the quarter ended June 30, 2014 was $16.1 million. In this quarter, cash used in operations was primarily used to fund our operations and was also impacted by changes in working capital and one-time milestones. Our net loss for the third quarter of fiscal 2014 was $12.7 million or $0.08 per share, compared with a net loss of $11.4 million or $0.08 per share for the same quarter in fiscal 2013.

As of June 30, 2014, Avanir had total cash, cash equivalents, and restricted investments of $87.6 million.

Now turning to our operating expense guidance. With one quarter left in our fiscal year, we are updating our fiscal 2014 operating expense guidance from $140 million to $150 million to a range of $140 million to $145 million, excluding cost of sales and non-cash expenses such as FAS 123 and depreciation.

In addition, please note that although our P&L format includes cost of product sales and our operating expenses, we do not include cost of product sales in our operating expense guidance.

R&D expenses are expected to be approximately $40 million to $42 million, including all development programs as well as our medical affairs organization. And SG&A expenses are expected to be approximately $100 million to $103 million.

And with this summary of our financial results, I will turn the call over to Rohan. Rohan?

Rohan Palekar

Thanks, Christine. The NUEDEXTA franchise continues to grow entering its fourth year since launch, with revenues up approximately 40% versus the same quarter a year ago. We also saw acceleration of growth versus the last quarter with NUEDEXTA revenues up quarter-on-quarter by 9% and new prescriptions, a leading indicator of our business, up double-digits.

This growth was in line with our expectation and we believe growth will accelerate in the coming quarters as we address some of the key challenges we faced during the first half of the calendar year.

We are already seeing some of these positive indicators with July prescriptions up versus the corresponding period in the prior quarter. In fact, the last eight weeks represent eight of the nine highest weeks in the history of the brand as measured by weekly prescriptions dispensed.

I remain optimistic about the future as key indicators including new patient starts, number of physicians writing NUEDEXTA prescriptions, and the number of institutions treating PDA patients with NUEDEXTA continues to grow. I am particularly pleased with the growth we saw in the retail segment with business up 14% versus the prior quarter and up 42% versus the prior year.

This growth can be attributed to the efforts of a dedicated retail team and increased focus on retail frequency against high – on physicians. Our performance in the instructional segment was flat versus the prior quarter. While this was expected and nevertheless disappointed.

There were a few challenges we had to overcome including over 15% vacancies in the field early in the quarter and continued challenges from managed care peers impacting these physicians and patients.

Specifically, we had the three largest Medicare Part D plans plays prior authorization restrictions in NUEDEXTA effective Jan 1. This resulted in our Tier-2 unrestricted coverage dropping from 58% to 34%.

Moving forward, we expect the long-term care segment of our franchise to the tune of historic growth trajectory due to the following reasons. First, we have filled all the vacancies and are currently down to historic levels for open sales territories. Second, we have obtained wins with three new Part D plans this past quarter and now approximately 40% of life have unrestricted Tier-2 coverage.

In addition, we are in active discussions with the three big plans to change the prior authorization restrictions.

Finally, we are in the midst of completing our sales force expansion that would double our footprint and coverage in the institutional segment. On the retail side, we expect to continue to see the business grow as physicians get more familiar with NUEDEXTA and identifying PBA patients as a result of greater frequencies from our representatives and continued direct-to-patient programs.

In June of this year, we hired 80 additional long-term care sales representatives bringing the size of the team to 160 representatives. We are currently in the process of training all the new hires and expect all of them to be in the field by early September.

This expansion will expand the reach of our long-term care team and allow us to call on homes that were previously not reached by the existing team. We anticipate that by the end of fiscal 2015, our reach would have increased from 33% to 65% allowing us to reap significantly more potential patients with PBA.

Within the complexity of the institutional business, we expect the representatives to be fully productive and start seeing the extensive business impact during the first calendar quarter of 2015. We have also started recruiting for our retail team expansion this past month. We expect to hire an additional 70 representatives to join the current team of 71 representatives starting October 2014.

Given the low penetration we have in the retail segment, and the high promotional sensitivity of the business, we expect this expansion to continue to build on the strong momentum we are seeing in the retail segment with the deployment of additional resources.

There are many prospective physicians who we are unable to cover with a high frequency given the limited resources and large geographies the current representatives have. This expansion will address these challenges. Again, we expect these additional hires to be fully productive within six months post hire.

Turning to AVP-825, the team is moving forward rapidly on all marketing sales and medical affairs plans in anticipation of approval in late November 2014.

We have had a chance to engage with many of the top opinion leaders in the migraine field over the past few months at key congresses such as the American Headache Society, and the feedback has been consistently positive. They see AVP-825 as a unique product that addresses key unmet needs for their patients.

While there have been several new delivery systems and different formulation of sumatriptan launched in recent years, they view AVP-825 as different, given that it potentially offers rapid relief with a lower dose of medication resulting in a good tolerability profile.

This profile we believe addresses some of the deficiencies of current treatment options. The experts are also very impressed with the results of the recently released positive data from the COMPASS study comparing AVP-825 head-to-head with oral sumatriptan, the most commonly prescribed migraine treatment. We are encouraged with the feedback and we feel it supports our peak year sales estimate of between $150 million to $200 million.

I will now turn it over to Joao to discuss our clinical programs. Joao?

Joao Siffert

Thanks Rohan. So first, I’d like to discuss the PRISM II interim results which is the open-label study assessing NUEDEXTA for PBA secondary to stroke, dementia and TBI

We enrolled the last patient with TBI and dementia on April 23, with a total of 134 patients. And the early data were presented at the Alzheimer’s Association International Conference just in this past couple of months in July actually.

A baseline that patients – the dementia cohort had a CNS LS score of 20.2 and had a median of 29 PBA episodes per week. At the end of the study period, the CNS LS had improved to 12.8 and this was highly statistically significant compared with baseline and the median number of PBA episodes decreased to only 5 per week.

At the end of the study, there were consistent improvements observed in other effectiveness measures including the patient global impression of change often reported by the caregiver, as well as the clinician global impression of change.

The NUEDEXTA, the safety and tolerability was consistent to what’s in our approved label. The initial data in PRISM II is consistent with benefits we saw in the pivotal Phase III trial in PBA and provides further evidence that NUEDEXTA offers relief from the debilitating conditions regardless of the underlying neurological ideology.

PRISM II continues to enroll patients with PBA secondary to stroke and traumatic brain injury which are two important causes of PBA. We look forward to reporting full data from the Alzheimer’s cohort in the coming months.

Now, turning on to the pipeline, and first we’ll begin with the agitation in Alzheimer’s disease Phase II program, As we’ve announced before the enrollment is now complete with 220 patients, and as a reminder, this is a 10-week double-blind placebo-controlled study with 35 sites in the United States.

The study has two treatment arms, placebo or AVP 93 and in this arm it includes also dose escalation from the lower dose 2010, up to the higher dose of 3010. The study was powered 90% to show a 2.5 difference versus placebo in the primary endpoint which is MPI agitation aggression domain.

This is the – the 2.5 differences in change from baseline. Although a difference of 2.5 points was used to power the study, we believe that our lower difference is also likely to be clinically meaningful and would be a potential breakthrough in this area. If the efficacy signal is clear in consistent across key endpoints, even a lower treatment difference could support a Phase III development program.

Our definition of success will be the ability to proceed with a Phase III study or study in agreement with the FDA. So if we look at the baseline characteristics now that the enrollment is complete including the baseline score in the agitation aggression sub-domain of the neuro-psychiatric inventory, we feel that these patients enrolled in this study are the correct patients, as we’ve set out to select.

The MPI agitation aggression domain score is about 7 in the low 7 scores and this is consistent with other recently completed trials. We believe that the study is well conducted such that this will allow us to see if AVP-923 has a treatment effect on agitation for Alzheimer’s patients who are suffering from this condition.

Additionally, we are pleased that we’ve had low dropout rates of less than 12% now that the study is complete and also, a generally favorable review of the safety profile across five data safety monitoring board meetings that we had throughout this study conduct. And they also know that during the study period.

Switching on now to the AVP-786 program in major depressive disorder. First, we announced the acceptance of the IND for the adjunctive treatment of major depressive disorder by the division of psychiatric products of the FDA. This represents an endorsement by a second division in the FDA for an expeditive path for AVP-786 development.

We will be able to reference the extensive data generated during AVP-923 development programs and we believe that our non-clinical studies required for an NDA filing are now complete.

We also anticipate the first patient will be enrolled in September. The adjunctive therapy anti-depressants for treatment of MDD study like the Alzheimer’s disease study is being designed to minimize placebo effect in short careful enrollment of study subject by highly qualified study sites.

Patient selection will be bettered by the investigators and also by the independent experts to ensure only patients enrolled. The study will have two treatment arms and will compare AVP-786 with escalation with placebo over a 10 week period using standard endpoints for depression trial.

Now turning on to the AVP-825 migraine program. We had announced that the NDA was filed on January 27 and accepted in March of 2014. Our PDUFA date is November 26, 2014. This is a major milestone for Avanir and once AVP-825 is approved, we will transform Avanir into a multi-product commercial organization.

We also recently announced positive results for COMPASS, comparative effect in study between AVP-825 and sumatriptan 100 mg tablets for the acute treatment of migraine. This is crossover, multiple attack study, where patients received AVP-825 and a placebo tablet and then crossed over to receive sumatriptan 100 mg tablet and lactose powder delivered though an identical device.

The COMPASS study met the primary endpoint for the same or pain intensity difference of 30 minutes post dose showing the migraine sufferers achieved great pain relief within 30 minutes of treatment with only 22 mg of the investigational product AVP-825 compared with 100mg of sumatriptan tablet. This was highly statistically significant.

In addition, AVP-825 treated migraine sufferers achieved pain freedom in a greater proportion of migraine attacks at 15, 30, 45, 60 and 90 minutes post dose compared with those treated with sumatriptan 10 tablet and this is also statistically significant at all the endpoints.

With that summary of R&D activities, I’ll now turn it back to Keith, for some closing comments. Keith?

Keith Katkin

Thanks, Joao. In summary, I’d like to reiterate that our focus will be solidify our position as a leading CNS company by, first ensuring the continued growth of NUEDEXTA, investing heavily in NUEDEXTA in order to maximize revenue potential given our 12 year runway.

Second, continued investment in the rich pharmacology of our dextromethorphan franchise, focusing on conditions of high unmet need and large revenue opportunities with multiple value creating milestones coming in the coming months.

Third, we will aggressively explore, continue to aggressively explore in-licensing and transformational acquisition opportunities to leverage our infrastructure. And finally, we’ll continue to build upon our record of meeting or exceeding our commercial and clinical targets.

The outlook for our future is bright and we are focused on strategies that will lead to solid long-term enterprise growth. From now through the end of the calendar year, we’ll have continued growth in our NUEDEXTA business. We’ll have full PRISM II Alzheimer’s in PBA dataset available later this year.

We’ll have the Phase II proof-of-concept data read out in agitation and levodopa-induced dyskinesia study in Parkinson patients. We’ll have the first patient in, in our first AVP-786 study in adjunctive therapy for major depressive disorder and finally, we’ll have the AVP-825 PDUFA date followed by the launch of AVP-825 in the first half of calendar 2015. With that summary of the milestones and catalysts, I’d now like to open up the call for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question will come from the line of Jason Butler from JMP Securities. Please proceed.

Jason Butler – JMP Securities

Hi, guys. Thanks for taking the questions and congrats on the quarter. Just a first question on the sales force expansion and specifically in the institutional setting, I know you said that the reps are expected to be fully productive in calendar first quarter of 2015, but do you think that in the calendar fourth quarter of 2014 you will be able to make any assessment of whether that investment has been successful and whether there is any evidence of promotional sensitivity in the market?

Rohan Palekar

Hi Jason, we absolutely will take a look in the fourth calendar quarter to see how promotionally sensitive the reps have been. The reason it takes about six months is just given the complexity of the long-term care setting and the multiple stake holders you got to call on before you start seeing the benefits; I am not fully optimistic that they are going to get to all those stakeholders by like, say October or November. But it is something we are going to keep monitoring every quarter to see whether we are making improvement and really driving incremental reach within institutional.

Jason Butler – JMP Securities

Okay, great and then just a question on the Agitation study, can you give us anymore color what you would view to be a clinically meaningful – if not statistically significant improvement in the NPI agitation and aggression domain and then you also said that you would looking for consistency of response, can you talk about the components of the secondary endpoints that you would be looking for specifically?

Joao Siffert

Sure, Joao here, thanks for your question. So, the NPI difference of even a one point – sort of the expert clinicians believe, is still clinically meaningful. So obviously the higher the difference the more clear the effect is.

So, let’s assume even you saw like a relatively low difference and we would look to see if there is also a consistent improvement in the clinician global impression of change which also another key secondary endpoint. We’ll look at also the caregiver – both the caregiver report for the NPI strain as well as the caregiver’s strain index.

So, all these will be reflective of the actual clinical improvement of the patients, so it was both an appraisal of the specific endpoints as well as an overall clinical appraisals improvement. So and success essentially be defined by having enough data to support the notion that this drug does improve the agitative symptoms and of course we will then meet with the FDA to chart the next steps for developments into Phase III.

Jason Butler – JMP Securities

Great, and then just lastly from me, you said the dropout rate was low, I think you said 12% was that in line with what you had predicted or when you design the trial and also is the variability obviously is still blinded, but is the variability around the primary endpoint in line with how what you expected when you powered the study?

Joao Siffert

Yes, so, first the dropout is a little bit lower than we had anticipated and then of course considering the patient population the elderly and somewhat frail, this is actually a quite low dropout rate. So we are pleased with that and patients went through the study safely. To the question regarding the variability of endpoints, I think this is also consistent with our predictions in the way we’ve powered the study.

Jason Butler – JMP Securities

Okay, great. Thanks for taking the questions.

Joao Siffert

Thanks, Jason.

Operator

The next question comes from the line of Mario Corso from Mizuho USA. Please proceed.

Mario Corso – Mizuho Securities USA

Good evening. Thanks for taking my questions. A couple of things on the pipeline. So, on the agitation study, given the baseline data you talked about, so with an NPI score of 7, if we assume placebo does about 1 point benefit like it did in your PBA studies, then the 2.5 you’ve got a – adjusted you’ve got to do 3.5% – which is about a 50% change in the score. I’m just wondering how that compares to what you saw in terms of percent and baseline in the secondary data from the PBA studies?

And then, my second question, in terms of the migraine PDUFA date, have you had or has OptiNose had or is there a schedule yet a pre-approval inspection. And I am wondering how you feel about the CMC aspect of the NDA since the drug device combos can be difficult in that regard? Thanks very much.

Joao Siffert

It’s Joao here. So the first question is regarding the sort of explore projective improvement in NPI, obviously the data are blinded so we can’t make any projections right now. But we believe that these general estimates are consistent with what we saw in a very small subset in the PBA trial.

So, I think it’s still generally consistent, but obviously there is somewhat of a distant comparison even though those data are supportive of the agitation trial. On to the AVP-825 migraine drug the interactions with agency have been as expected. So, that’s basically all I can tell. There is – otherwise, things are progressing as we have set out to do towards the approval.

Operator

Your next question will come from the line of Shaunak Deepak from Jefferies. Please proceed.

Shaunak Deepak – Jefferies

Hi, thanks for taking my question. I just want to check in on your plans for the retail sales force. Are you still trying to expand beyond the 100, 141 reps upon AVP-825 approval?

Rohan Palekar

Hi, Shaunak, yes, our current plan is to expand beyond the 140 reps when get 825 approval, what that will allow us to do is, to really get to the bulk of writers who write for triptans and a large percentage of triptan writers fit within primary care and within pain specialists who we typically would not call on for NUEDEXTA and as a result we do plan to do that expansion post approval.

Shaunak Deepak – Jefferies

Great, and then just a housekeeping question. Have you been observing any changes in trends in the gross to net adjustments for NUEDEXTA?

Keith Katkin

Yes, so, obviously we are not reporting on gross to net anymore; gross to net is, right now mostly tied to any price increases that we take or any new contracts that we enter. And so, I think it’s reasonable to assume that that has been fairly consistent with guidance that we gave for this year. But again, we want to move people away from focus on the growth and focus on the net revenue that we are delivering to the bottom-line.

Shaunak Deepak – Jefferies

Great, Thank you.

Keith Katkin

Thanks for the question.

Operator

Your next question will come from the line of Charles Duncan from Piper Jaffray. Please proceed.

Roy Buchanan – Piper Jaffray

Hi, guys it’s Roy in for Charles. Thanks for taking the questions. First of all, I think you probably answered for Mario, but the consistency in the baseline NPI, was that with your prior studies or with prior other studies and if so what were those other studies based with other drugs?

Joao Siffert

The consistency with other published studies selecting the – generally speaking the same type of patient population with agitation now, Alzheimer’s disease.

Roy Buchanan – Piper Jaffray

Okay, thank you and can you guys give us any sense of when we might expect data from the depression Phase II?

Joao Siffert

Yes, this is too early. We had just haven’t even enrolled the first patient.

Roy Buchanan – Piper Jaffray

Okay.

Joao Siffert

Enrollment rate will be consistent with other trials that recently completed.

Roy Buchanan – Piper Jaffray

Okay, and do you guys have any new thoughts on neuropathic pain?

Keith Katkin

Yes we are continuing to conduct a review of all of our neuropathic pain that’s including the diabetic neuropathic pain studies as well as the central neuropathic pain in multiple sclerosis and patient studies and so as we are continuing to assess that, we’ll obviously also look to the outcomes of our upcoming trials obviously in agitation in Alzheimer’s levodopa-induced dyskinesia in Parkinson patients.

And so once we have a full picture of all of the studies then I think we will be able to put that neuropathic pain data in context as it relates to future investments in our dextromethorphan franchise where we think we have the greatest probability of technical and regulatory success and ultimately create the greatest value in the long-term.

Roy Buchanan – Piper Jaffray

Okay. Thank you

Keith Katkin

Thanks, Roy.

Operator

Your next question will come from the line of Joon Lee from Cowen and Company. Please proceed.

Joon Lee – Cowen and Company

Hi, guys. Thanks for taking my question and congrats on the litigation wins.

Keith Katkin

Thanks, Joon.

Joon Lee – Cowen and Company

Yes, just a question on NUEDEXTA sales, you guys segmented out to LTC versus retail, but any data on whether what the sales is like based on the underlying costs such as Alzheimer’s and ALS, stroke or TBI? Are there differences in uptick based on the underlying disorders?

Joao Siffert

Hi, Joon. So, we don’t have specific breakdown by the underlying disorders. What I can tell you where we have seen, because we do those studies more on an annual basis to do an ATU but what we have seen is – a lot of our growth is coming in Alzheimer’s, stroke and TBI predominantly in the long-term care setting.

It’s the former two Alzheimer’s and stroke are where a lot of those patients with TBI, so this is TBI and Alzheimer’s and stroke and in the retail setting, we are seeing those two conditions that also PBA associated with TBI as one of the interesting ones.

Joon Lee – Cowen and Company

Great, and just one more question. Can you do any sort of comparison between your OptiNose device versus other nasal formulations? How do they compare in terms of speed of reduction in symptoms and efficacy?

Joao Siffert

We – so, as you know we have not conducted a head-to-head trial against another nasal spray formulation. The device in the delivery relative to the different – the conventional nasal sprays that delivered aerosol liquid and it’s delivered by pressuring the aerosol into the nostril.

Whereas this device works differently in the sense that it’s press powered so it triggers a reflects seal of the nasal cavity and expands the passages into deep areas of nasal cavity and also is delivering powder instead of liquid.

So these are main differentiating points. I think it’s important to keep in mind that as we launch, we believe that the nasal market and the injectable market are the low hanging fruit. But certainly with our most recent data, we think we’ll be very well positioned versus the oral market where which is the largest portion of the market.

And where we think that we can really provide incremental value to patients with a very fast onset on action, low side-effect profile and really fill a need that’s currently out there in the marketplace that no product is fulfilling.

Joon Lee – Cowen and Company

Thank you.

Joao Siffert

Thank you.

Operator

Ladies and gentlemen, that would conclude the Q&A portion of the call. I would like to turn the conference back over to Dr. Clements for any closing remarks.

Ian Clements

Thanks very much and thanks everybody for joining us today and your continued support and interest in Avanir. We look forward to providing updates on the progress that we’re making next week and also on future earnings conference calls. And if you do have any questions regarding the results that we disclosed today, please do call my line in the investor relations department, 949-389-6737. Thanks very much again.

Operator

Ladies and gentlemen, that would conclude today’s conference. Thank you for your participation. You may now disconnect. Have a great day.

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Avanir Pharmaceuticals (NASDAQ:AVNR): FQ3 EPS of -$0.08 misses by $0.03. Revenue of $28.6M (+44.7% Y/Y) misses by $0.86M.