Acorda Therapeutics' (ACOR) CEO Ron Cohen on Q1 2016 Results - Earnings Call Transcript

| About: Acorda Therapeutics, (ACOR)

Acorda Therapeutics Inc (NASDAQ:ACOR)

Q1 2016 Earnings Conference Call

April 28, 2016, 8:30 AM ET

Executives

Felicia Vonella - Executive Director of Investor Relations

Ron Cohen - President and Chief Executive Officer

Mike Rogers - Chief Financial Officer

Analysts

Jeffrey Lin - Leerink Partners

Mark Schoenebaum - Evercore ISI

Phil Nadeau - Cowen and Company

Michael Yee - RBC Capital Markets

Tom Shrader - Stifel

Thomas Trimarchi - Goldman Sachs

Laura Chico - Raymond James

Operator

Welcome to the Acorda Therapeutics First Quarter Update. At this time, all participants are in a listen-only mode. There will be a question-and-answer session to follow. Please be advised that this call is being taped at the Company’s request.

Now, I would like to introduce your host for today’s call, Felicia Vonella, Executive Director of Investor Relations at Acorda. Please go ahead.

Felicia Vonella

Good morning everyone. Before we begin, let me remind you that this presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts regarding management’s expectations, beliefs, goals, plans or prospects should be considered forward-looking. These statements are subject to risks and uncertainties that could cause actual results to differ materially. For more information on these and other risks, please refer to our filings with the SEC. With me today are Dr. Ron Cohen, our CEO and our - and Mike Rogers, our CFO, excuse me.

I will now pass the call over to Ron.

Ron Cohen

Good morning everyone. Thanks, Felicia. So, we will dive right in with AMPYRA revenues. AMPYRA revenues for the first quarter of 2016 were $109.6 million, that was up 19% from the first quarter of 2015 and it also represents the 12th consecutive quarter of double-digit year-over-year growth for AMPYRA, which we launched in 2010.

AMPYRA results continue to be strong with terrific performance from our commercial teams ensuring that patients and their healthcare providers are educated about AMPYRA. We are defending our patents vigorously regarding the ANDA litigation, we had a Markman hearing in March and we are preparing for the trial which is scheduled for September.

We also won a Federal Circuit Appeal allowing our patent litigation against Mylan to continue in Delaware District Court. This is an important ruling in our favor and our in-house legal and external counsel teams did a superb job to ensure that outcome.

Mylan has petitioned the Federal Circuit for a re-hearing en banc that is with the full court. On the IPR front, the PTAB instituted four IPRs that were filed by a hedge fund and we are preparing to litigate the case with a decision due by March of 2017.

Moving to our late-stage pipeline. Following the close of the Biotie deal, we’ll be in a strong position of having four late-stage clinical programs, CVT-301 and Tozadenant for Parkinson’s disease, PLUMIAZ for seizure clusters and dalfampridine for post-stroke walking difficulty. All of these are targeting substantial clinical needs.

We expect data from PLUMIAZ later this year and the last patient out of the CVT-301 study or efficacy study by the end of the year. If successful, we plan to file NDAs for both in 2017. We project that these two therapies alone could generate combined peak sales of over $700 million.

Earlier this month, data from the CVT-301 Phase IIb clinical trial were selected for the American Academy of Neurology invited science session and that showcases cutting-edge research. These data were also published in the peer reviewed journal movement disorders.

The data show that people with Parkinson’s disease experiencing off-period who were treated with CVT-301 and significantly greater improvements in motor functions than those treated with placebo.

With regard to our tender offer for the shares of Biotie, we’ve exceeded the 90% minimum for the tendered shares. We expect to close the deal fully in the second half of 2016 at which point, we will provide more color around the TOZ and SYN120 programs.

Moving to dalfampridine for post-stroke walking difficulty, we have exceeded the 50% target enrollment in the Phase III BID trial and we’ve made the decision to stop that trial and analyze the data. We’ve previously discussed that this would be a potential alternative to the interim utility analysis and we made the decision based on the progress with the QD formulation of Dalfampridine.

We expect to have data by the fourth quarter of this year. If the multi-dose PK and scale of manufacturing work on the QD formulation are positive, we would plan to move forward with two concurrent pivotal Phase III trials in mid-2017.

This is a snapshot of the combined pipeline with the closing of the Biotie deal. Post that transaction, we’ll have a robust, very well-balanced pipeline of eight clinical stage products, four in Phase III, two in Phase II and two in Phase I.

In the first quarter of 2016, we also completed the Phase I study of CVT-427 for the acute treatment of migraine. That was actually a PK study in the healthy normal or normal volunteers. This is an inhaled zolmitriptan in development for release of migraine. It’s using the same ARCUS technology as our CVT-301 program. There were no dose-limiting toxicities and the PK profile met our specifications.

Any of you who has migraines or those people with migraines knows how intensely painful they are when people get them. They want relief as soon as possible. The Triptans are the gold standard of therapy, but currently they require an injection to achieve the most rapid plasma levels and therefore rapid effect.

We believe that CVT-427 if successfully developed, would address a significant need and we are now planning the next stages of the clinical program. We are also continuing to enroll our second Phase I study of the Remyelinating Antibody rHIgM22 in people with multiple sclerosis who are experiencing an acute relapse.

In addition to assessing safety and tolerability during a relapse, the study includes exploratory efficacy measures such as timed walk, magnetization transfer ratio imaging of the lesion mylenation and various biomarkers.

And with that, I will turn the mike over to Mike Rogers for the finances.

Mike Rogers

Okay, thanks, Ron. Good morning, everyone. I want to take a couple of minutes to walk you through some of the financial highlights of the quarter. AMPYRA net revenue for the first quarter of 2016 was $109.6 million a 19% increase over the $92.4 million we recorded for the same quarter in 2015.

As Ron noted, this is the 12th consecutive quarter of double-digit growth versus the prior year for AMPYRA. Overall revenue from Zanaflex for the first quarter of 2016 was $1.2 million, including our own sales, as well as product sales to Actavis and royalties received on Actavis sales of generic tizanidine.

FAMPYRA royalty revenue from sales outside of the United States was $2.5 million for the first quarter 2016.

Moving to the expense side, research and development expense for the quarter was $44.6 million including $2.1 million in share-based compensation and that’s up from $30.6 million including $1.8 million in share-based compensation in last year’s first quarter.

The increase in expense was primarily attributable to development costs from our late-stage clinical pipeline specifically CVT-301, PLUMIAZ and dalfampridine.

SG&A expense for the quarter excluding $7.2 million in transaction costs incurred in Q1 related to the Biotie acquisition was $51.8 million including $6 million in share-based compensation, up from $48.8 million including $5.3 million in share-based compensation in last year’s first quarter.

On the tax line, for the first quarter of 2016, our effective tax rate was 95% which translates to a tax benefit of $9.7 million for the quarter. However, cash taxes paid for the first quarter of 2016 were $200,000. There are a number of factors that can cause significant differences between the effective tax rate shown in our financials and our actual cash tax position.

As of year-end 2015, we had available federal NOL carry-forwards of approximately $195 million and for this reason, we do not currently pay substantial U.S. federal income taxes. We adjust for non-cash taxes in our non-GAAP presentation.

Turning to the balance sheet, I’d like to note a few items. Our financial position remains strong. On March 31, our cash and cash equivalents balance was approximately $431.4 million and this figure includes the net proceeds of the $75 million private placement of equity that we completed in January of this year.

Also in January, we signed a commitment letter with J.P. Morgan for an asset-based credit facility of up to $60 million. We are in the final stages of negotiating the loan documents and we expect to complete that documentation in the near-term.

The asset-based facility will be a line of credit based on our receivables inventory and machinery and equipment that we can draw on at our discretion subject to customary conditions.

Finally, in addition to the financings that I just described, Biotie had cash on hand of approximately $90 million on December 31, 2015. In April, the company paid approximately $352.4 million for equity interest in Biotie representing approximately 93.8% of all shares in vote in Biotie on a fully diluted basis as defined in our combination agreement. And after we purchased or redeem the remaining equity interest, we believe that our cash position will remain sufficient to fund our operating plan.

Finally, an update on guidance. Now that we’ve completed the initial closing of the Biotie acquisition, we expect to be able to confirm our operating model for Biotie and we will update guidance on R&D and SG&A costs by the time of the closing.

I’ll now turn the call back over to Ron.

Ron Cohen

Thanks, Mike. So, in closing, our priorities for 2016 are, first, advancing our pipeline, also continuing to grow AMPYRA, bringing it to appropriate patients who can benefit from it, as well as vigorously defending our intellectual property, closing the Biotie deal in the second half of this year and continuing to look for ways to build value by identifying assets that leverage our competencies in the CNS space, specifically, we are continuing to look for in-market products that can leverage the capabilities of our commercial organization.

I’ll now pass the call over to the operator and open the mike for your questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Paul Matteis, from Leerink Partners. Your line is now open.

Jeffrey Lin

Hi, this is Jeffrey Lin on for Paul Matteis. Thank you for taking my questions. I actually have two. So, could you probably give us a little bit of color around the Phase III program for dalfampridine for the – say it right dalfampridine. What was the two Phase III concurrent trials look like? What kind of patients would you recruit in and what’s the expected cost? And I’ll ask my follow-up, second question after this.

Ron Cohen

Yes, Jeffrey, it’s premature to speculate on what the design of the Phase III could be. We have to look at the data first, because that’s going to determine a lot of the answers to your question in terms of the size, in terms of primary outcome, in terms of what kind of groups we are going to go after and so on.

So, we really can’t comment except that broadly and maybe obviously, this would be again, people post-stroke at least six months, post-stroke who have walking difficulties. But beyond that, there is really no way to say, even as basic as the doses, right. So, in the current study, we’ve been studying two different dose groups versus placebo, 7.5 milligrams BID and 10 milligrams BID.

Just as an example, we could look at the data and decide, well, you know what, we don’t need to do two groups next time and we only need to do one. So there are number of questions like that that will be clarified once we see the data and then we can come out and have a more detailed discussion with you.

Jeffrey Lin

Okay. And then, in terms of the – I believe you said the – you mentioned that the interim data would be released fourth quarter of this year. If the stroke data does not show any benefit, would you consider repurposing the QD formulation for multiple sclerosis?

Ron Cohen

Again, I don’t want to speculate on that right now.

Jeffrey Lin

Okay.

Ron Cohen

As of now, we are focusing it on the stroke program.

Jeffrey Lin

Okay. Thank you very much.

Mike Rogers

Thanks, Jeff.

Operator

And our next question comes from Mark Schoenebaum from Evercore ISI. Your line is now open.

Mark Schoenebaum

Hey, Ron, how are you? I have a couple questions, most important one in my inboxes is flooded. There is a picture of you on Facebook totally bald.

Ron Cohen

Yes.

Mark Schoenebaum

And just wondering if that’s an accurate picture, which if so, it would mark a big change in the industry.

Ron Cohen

Well, as you know, Mark, we don’t speculate on tonsorial matters publicly. I will say that, I will say that that my inbox is getting pretty flooded itself and what I now realize is that, I am about to have step competition on the right if you will from the likes of Jeremy 11.

Mark Schoenebaum

I was just going to say, I think you have Jeremy 11 envy.

Ron Cohen

Yes, well, who now wants his moment in the sun in the very shiny reflective sun, if you know what I mean. So, what is your next question?

Mark Schoenebaum

Okay, thanks, Ron. I appreciate it. Hey, I was just wondering, you in addition to being CEO or a major biotech company, I know you were involved in bio, your very instant policy and you really go to spokesperson, probably at least in the biotech side for a lot of these issues and obviously the pretty biggest issue that’s caused a lot of the sell-off in biotech has been this question about the sustainability of drug pricing especially, specialty drugs.

I love to hear you riff on that, either from a quota – with your quota hat on or with your bio hat on. And then, specifically on a quota, can you remind us what exactly the endpoint is in the post-stroke trial please? I know it’s a responder analysis, but what exactly is it if you reveal and if you have and I just missed them. Sorry, and then finally, the Selincro royalty is still going to monetize them and if so, what is the timeline? Thanks a lot, Ron.

Ron Cohen

All right, thanks, Mark. Let me – maybe I’ll answer those in reverse order, because I think that’s simpler. So, on Selincro, we are – it’s early days, right, we haven’t completely closed the deal yet. Although, it’s going to close, because we are over the 90% threshold. So we are in this a little bit of a limbo state where we are limited in what we can discuss since technically on some levels we don’t own the company yet.

So, we – as we said in the beginning, we would be very interested in exploring ways of getting the most value out of all the assets obviously, but in terms of Selincro, it’s not in our sweet spot. That’s something that if we can monetize, we would be interested in exploring that. So, maybe I’ll leave it at that. On the outcome for stroke, it is based on – the primary outcome is based on the two minute walk and there is a 20% threshold on that.

So it’s essentially a percent of people in each cohort who achieve a 20% or greater improvement in the two minute walk distance. And I don’t remember if that’s – if we are translating that at the speed or just keeping it as distance. I’ll have to check on that.

Mark Schoenebaum

Okay, thanks. Next one.

Ron Cohen

Okay, and then, sure, and then, on the broader question, yes, I mean, obviously, we don’t have time on a call like this to really go into it. I will say that…

Mark Schoenebaum

I’ve got all morning locked off.

Ron Cohen

Call me. So, I will say, you are correct, bio and pharma are deeply engaged now in, number one, combating a lot of the misinformation that is circulating out there in the media and elsewhere about our industry, about the value of our drugs and so on.

At the same time, I think it’s fair to say that, we are in an era where increasingly and perhaps fairly society is demanding that we as drug developers demonstrate not only the efficacy and safety of our products, but the value of our products and that’s going – in my view, that’s going to be a long process, because a lot of the metrics for demonstrating that are nascent or even non-existent depending on what condition you are looking at, what drug class you are looking at, what patient group you are looking and so forth.

So, all of that has to be developed. Our message out there by the way is, is fundamentally that this is not a drug industry problem per se. This is a healthcare system problem and therefore to come up with solutions that makes sense for everybody and don’t stifle innovation in the mean time, which everyone knows we need for disease like Alzheimer’s and all the cancers and everything else that’s afflicting people.

That in order to do that, you need all the stakeholders to come to the table in good faith and hammer out how this is all going to be done and that means the payer community, the drug community, the hospitals, the healthcare professionals, government entities and so forth. So we are in the early days of engineering all that, because right now the key job is to lower the volume on the finger-pointing that’s going on.

Now having said that, if you’ve been sort of cone down on what does that mean for us as an industry, I think it does mean that any of us who is out there innovating and developing new drug needs to think through very carefully from the get go, from the time you just are getting into your clinical program, Phase I, Phase II, how are you going to bake in demonstration of the value of your product as another metric, right, in addition to safety and efficacy, which is what we all been brought up living on, right.

This is how you get our drugs approved to market, the value proposition is a serious one, I don’t believe it’s going to go away, I think it’s actually going to intensify. I don’t think it’s doom and gloom. I don’t think that it’s – that we are going to have serious problems getting paid for innovation in this country.

But the flip side is, we are going to have responsibility for demonstrating why we deserve to get paid for it. And I think it’s actually not a hard story to tell. We, as an industry haven’t done a very good job of telling it and we are getting better. We are going to have to get even better.

Mark Schoenebaum

Okay, thanks. Thanks for indulging me Ron. I appreciate and also congrats on great operational quarter. Take care.

Ron Cohen

Thanks.

Operator

And our next question comes from Phil Nadeau from Cowen and Company. Your line is now open.

Phil Nadeau

Good morning. Thanks for taking my question. First a question on AMPYRA sales trends. It does seem like AMPYRA was h it by the normal seasonality we’ve seen in prior years. Just curious whether you could give us some quantification of the various factors in that seasonality, for example, was there destocking or was it just the typical insurance disruptions?

Ron Cohen

Yes, it’s same as always. We didn’t see anything new here, Phil. It came in pretty much exactly as we expected and you could see, nevertheless, it was a 19% quarter – first quarter over first quarter growth from last year. So, we think primarily these things are driven some by inventory stocking, although we have gotten better at – in our agreements with the pharmacies, we’ve gotten better about controlling that.

There is still some. There is no question about that. And then, primarily it’s the shifts in insurance coverage that you see at the end of the year and that then bleed into the first quarter where there is disruption, because people have switched plans and there are different requirements for the drugs and sometimes there is an interruption and it takes a few months to get everyone back on track in their plan. So that – we are seeing the same thing we’ve seen before.

Phil Nadeau

So for Q2 would it be safe to then begin growing off of kind of the Q4 2015 run rate, there is no residual inventory issues or anything else that should impact Q2?

Ron Cohen

Yes, I mean, I think you are safe working off of Q2 of 2015, because the seasonality seems to go quarter-by-quarter in a reasonably reliable way.

Phil Nadeau

Got it. Okay, that’s helpful. And then, second just on the AMPYRA lawsuits, you mentioned that the Mylan trial was – is staying in Delaware. Just maybe give us some information as to why that’s important, what advantage is there to in Delaware?

Ron Cohen

Well, you know what, I can’t comment too much on it because these are legal issues and I just want to be careful that I am not inadvertently stepping somewhere I shouldn’t on the legal front. Fundamentally, for the patent holder, if we can litigate in one jurisdiction, that just makes it more straightforward, right, because if you’ve got six or eight or ten or however many ANDA filers you are litigating against, having to prosecute in multiple jurisdictions is, it’s a negative, right, it’s much more costly.

You are dealing with different judges, different jurisdictions. So it way overcomplicates the burden on the patent holder in order to prosecute or defend one’s intellectual property. So having them all in one place is a benefit, just from a logistical point of view. The case, as I understand it has national ramifications because it goes to bigger issues than just the quota and our dalfampridine litigation.

It goes into jurisdictional issues across the board for the entire industry anytime, there is an ANDA litigation and actually even I am told, even beyond the industry with respect to jurisdictional concerns. So, I believe that the legal community is expecting that this could go up as high as possible in the legal system because of the importance of the issues.

Phil Nadeau

Okay, that’s helpful. And then, one last question on CVT-301. It sounds like the – you are still on track to file in the first quarter of 2017, can you give us some sense of the milestones in data releases from here to there? Will we get just one data release around the completion of the Phase III trials or you really cited the data?

Ron Cohen

I don’t know yet, Phil. All we are saying now is that we are projecting last patient out of CVT-301 by the end of the year and as we get closer, we’ll get more clarity, I think on all that. And in terms of the data that will be released and how we are going to do it.

Phil Nadeau

Okay, that’s helpful. Thanks for taking my questions.

Operator

And our next question comes from Michael Yee from RBC Capital Markets. Your line is now open.

Michael Yee

Hey, Ron, good morning.

Ron Cohen

Hey Mike.

Michael Yee

Two-part question. Hey, with regards to business development, you’ve been doing a lot of that over the past two years and it’s been great you’ve been never finalized from AMPYRA. So, I wanted to understand obviously I know you are finishing up with Biotie, but from a balance sheet capacity aspect, can you just or at least speak to whether you are pretty much good and done with any sort of any future BD for a while?

You are pretty set given the balance sheet – where the balance sheet is. And then secondly, related to that, I mean, I know that there is a lot of IP questions over the near and longer-term and we’ll figure that all out and if that goes your way, that’s great. It’s pretty self-explanatory.

And if it doesn’t go your way, what is the earliest that a generic could launch if the 2026 patents, sorry, are there other patents there around if those get on hold, are there protection things? Can you remind us where those other ones are? Thanks.

Ron Cohen

Okay, thanks, Mike. So, first of all, on the diversification and the business development, thank you for noticing. It’s been a quite deliberate strategy over the last couple of years to ensure that we had a diversified portfolio regardless of what happens on the AMPYRA front. And I will emphasize that we are absolutely putting a lot of resources into defending the IP on AMPYRA.

But in terms of the balance sheet, and where we go from here, I think it’s safe to say that we are not emphasizing more late-stage development opportunities right now. Hopefully, that will come a time for that again, but right now, that’s sort of two perspectives. One and maybe the most important is, we are full up for our size organization because it’s not enough to just bring these assets in you have to service them, right.

You have to be able to develop them efficiently and effectively and we are at capacity for doing that. We would have to grow a fair amount again in order to accept more of those late-stage opportunities and we might do – we will not get some early-stage for the pipeline, but the late-stage I think for now it’s safe to say we are not looking and unless we were going to swap something we are really not looking.

Now, as I said earlier, we would still be very interested in commercial stage assets, because we do have until we get approvals on some of the late-stage pipeline that we have now, we do have extra capacity in the sales force and in particular…

Michael Yee

But do you have balance sheet capacity, Ron, your balance sheet capacity?

Ron Cohen

Well, so, the point is that, for a late-stage development deal in addition to not having the internal capacity, I think, we would be stretched on the balance sheet front. But for a commercial stage asset, there is much more flexibility in how, as you know, in how you can finance that, because now you a cash flow generating asset.

So that’s something that we feel we still could do, because we have a number of different options available that would not be available for, lets say a development-stage deal. All right. Does that answer your question, Mike?

Michael Yee

All right. So, - yes, so you think you could bring commercial stuff to further diversify, we need to discuss offline.

Ron Cohen

Yes, if we can find it, it is challenging to find commercial-stage assets. But we are looking and in particular and then, for anyone who is listening on the call who might have one, particularly for neurology assets or even certain specialty pharma assets, it would be interesting. Now, with respect to the IP, we have – to remind everyone, we actually have five patents in the orange book that cover dalfampridine or AMPYRA in MS.

One of them expires in mid-2018, that one is part of the ANDA litigation. It is not currently part of the IPR litigation. The other four patents expire variously between 2025 and 2027, those are both in court and in the ANDA litigation. So, you got a lot of mixing and matching here, but maybe to simplify it, if the court does not – if the court upholds the 2018 patent.

Even if the IPR did not uphold those other four patents, then we would still have protection until mid-2018 also, we would appeal the IPR decision and that appeal would take probably a year or maybe a little more. So, either way, you are winding up somewhere around mid-2018.

To get to anything earlier, you’d have to assume, not only that the IPR invalidated all the patents, but that the court invalidated the 2018 patent and that everyone – or the people wanted the launch at risk while we were appealing the decision. So, that just gives you a sense of the level of probability or not.

And then of course, if any of the four IPR patents if any of the key claims is upheld in the IPR and in court, then we would still have runway into somewhere between 2025, 2027.

Michael Yee

Got it. Thank you.

Operator

And our next question comes from Tom Shrader from Stifel. Your line is now open.

Tom Shrader

Hi, good morning. It’s Tom Shrader.

Ron Cohen

Hey, Tom.

Tom Shrader

How are you? I had a question on dalfampridine for stroke. We have a six month cut-off on the after-stroke. Do you expect the cut-off on the other side, how long adult it could have had a stroke? And I guess, along those lines, I am curious, AMPYRA for MS, how deep into the disease? Is it active? Do you have indications that people use it in secondary progressive MS?

Ron Cohen

Oh, yes. Absolutely, in fact, the label allows for that, because it does not…

Tom Shrader

Right.

Ron Cohen

Specify any specific type of MS. Our data showed that because in our clinical trials, we had people with primary progressive, secondary progressive, progressive relapsing and of course relapsing remitting. In fact, I think it’s the only drug that’s indicated for any type of MS at least currently.

So, and in the marketplace, we certainly have indications that people are using it in that way. So there is some people who don’t qualify for disease modifying drug, but they can still get help from AMPYRA, right. So, on stroke, there is no upper limit on the time after stroke. I think in the clinical trials, we have an upper limit on age and I forget if it’s 75 or 80.

I forget what the age cut-off is or as a matter of fact, I don’t even remember if we kept the age cut-off for the Phase III. We had it in the Phase II. But bottom-line is, there is a six – it needs to be at least six months, because you want to make sure that you are not confusing the outcome based on natural healing that occurs in the first six months after a stroke. But then beyond that, the deficits that they have, they are going to have permanently and there is no upper limit on that.

Tom Shrader

All right, perfect. That’s going to reassuring. And if I could ask a question on the pieces of the current cash position, so you are reporting 430 in March. You paid out 350 in April. You could have another 40 for Biotie, is that correct? And then you got 90 in cash and you have a 60 facility that’s only for manufacturing. Is that the current picture?

Ron Cohen

Okay, let me go through that one more time, right. So, you got that correct that, at 431 at year-end, right, we paid 352 for almost 94%. So that would lead to 94%, 40, it depends on the exchange rate at the time although we are largely hedged there. Then you add in – you have to make an assumption if you want to get to today about Biotie’s burn rate, but you can look at their financials. But they had around $90 million in cash as of year-end. Right, and then, we have the $60 million credit facility that will be safe enough.

Tom Shrader

I am sorry, that credit facility is earmarked for manufacturing only or is that anything?

Ron Cohen

No, it’s receivables inventory, machinery and equipment form a borrowing base.

Tom Shrader

Okay.

Ron Cohen

Against which we can draw. So, it’s up to $60 million, the borrowing base will be determined when we finalize it, but it’s not the $60 million is not chosen randomly. That’s obviously in the range of what we are talking about here.

Tom Shrader

All right, perfect. Thank you very much.

Ron Cohen

Sure.

Operator

And our next question comes from Salveen Richter from Goldman Sachs. Your line is now open.

Thomas Trimarchi

Hi, this is Tom on for Salveen. Thanks for taking my call or question.

Ron Cohen

Hi, Tom.

Thomas Trimarchi

So I just had a question on AMPYRA and stroke. So you mentioned that you are going to stop the Phase III and analyze the data, but can you confirm whether you actually plan to share the results with us or not? And if so, would that be press release or medical meeting and what’s the timeline for that?

Ron Cohen

So, well, for sometime, we have been discussing with people. And I think it’s the better part of the year. We’ve been discussing publicly the alternative ways we would go about the analysis. One option was an interim – blinded interim analysis for futility and the other option we had discussed is what we in fact are doing now which is to just stop an unblind and get all the data and use that to inform two parallel Phase IIIs that would be better designed, because they’d be based on more information and also using the QD formulation which was a key.

And given that we now think, we are encouraged by what we are seeing with our QD formulation, we’ve made the decision to go ahead and unblind. In terms of what we would share, that I don’t have an answer for you yet. There are various reasons why it may make sense to give very top-line and not get into much detail.

So, and that’s for the good of the program, not because we don’t want to tell you stuff. But for various reasons, it may make sense to give people the sense of what we saw and obviously, if it’s positive then we are moving forward, we will tell people in what way we are moving forward. What the design of the Phase III trial that’s going to be and so forth.

So, hopefully, you will be able to infer a lot from that. I don’t know how much detail we would go into and again, there are very good reasons why you would not want us to for the good of the product.

Thomas Trimarchi

Okay, okay, is there any scenario where we wouldn’t get any data or you just kind of say we’ve analyzed it or going forward with the QD?

Ron Cohen

We will certainly do our best to give as good as sense as possible of what the top-line results were that enable us to go forward. Hopefully, if they do in fact enable us to go forward of what it was about them that enables us to go forward.

Thomas Trimarchi

Okay, and then, I think you mentioned the timeline for that will be Q4. Am I correct there?

Ron Cohen

Yes.

Thomas Trimarchi

Okay, and then, just one last follow-up if I can, on the QD is that still due for third quarter and are we going to actually see data or is it going to be kind of go or no go as we saw earlier this quarter?

Ron Cohen

You know what, I don’t recall where we talked about third quarter for the QD. So, I’d need to check on that. So I don’t want to tell you the wrong thing. We – that the next steps that are in process now are to get a multi-dose and I am being told, yes, that’s what we’ve said.

So, is that right? All right. So, that we are doing a multi-dose PK study. In other words, a steady state PK study to confirm what we saw on the single-dose PK and we are doing a – we are working on scaling up and making sure we can scale up. So, as far as I know, the steady state PK should be available in the third quarter, yes. And in terms of scale up, I need to check on that and see what the team’s current projections are on that.

Thomas Trimarchi

Okay, great. Thanks again.

Operator

And our next question comes from Chris Raymond from Raymond James. Your line is now open.

Laura Chico

Hey good morning guys. This Laura Chico in for Chris Raymond today. Thanks for taking the questions. I guess, just following up on the last bunch of questions on the Phase III post-stroke deficits, Ron, I know you guys have given a lot of discussion on the various options here unblinded versus blinded futility analysis and you did mentioned the QD progress as one factor here. But I am just curious were there other factors that influence your decision to go this route or maybe if you could elaborate on a little bit what those were?

Ron Cohen

I would say, it’s primarily based on the encouragement we have with the QD, because all along, we’ve been aiming it at the QD and the more we’ve looked at it and the more we’ve looked it where is the balance between let’s say speed and accuracy, is you want to make sure it’s as accurate as possible and that we have best chance of success not only in the clinical trial results.

But in the commercial part that hopefully comes afterwards with approval. So when we took all of those factors into account, it was not a difficult decision. It was very straightforward.

Laura Chico

Okay. And then, I guess, one quick separate follow-up. There was some study data out of AAN on the rebuild study looking at Clemastine Remyelination. Just curious if you had any thoughts on learnings from that trial or read throughs potentially to the rHIgM22 program?

Ron Cohen

Well, the most encouraging thing to me was the validation of the anti-LINGO information that we got, which is that, if you have something that looks like it remyelinates an animal model and then you apply it, at the very least, you can say you are getting now a reproducible effect in human beings at least in terms of conduction velocity in the eye, in the optic nerve.

And that’s important, right, it doesn’t tell you nearly everything you want to know, but in terms of proof-of-concept that you are translating at least some of what you saw in the animals into a measurable improvement in a neurological metric in humans, I find that quite encouraging, just as proof-of-concept for the entire class of Remyelinating therapy, whether it’s clemastine or anti-LINGO or rHIgM22.

Now beyond that, it’s really difficult to draw any conclusions because we still have the issues of determining, are we going to get to clinically meaningful human outcomes. So, having improved conduction tells you that you’ve got a biomarker that is indicating some level of Remyelination that’s fabulous.

Now, the next step and maybe the harder step is to say well, can we now do trials where we can show patient benefit based on that kind of Remyelination and so that remains an open question. The degree of conduction improvement that was seen with Clemastine, again, you have to be very careful because it’s two different studies and different criteria and maybe different patient characteristics, but it was – it appeared to be smaller than what was seen for anti-LINGO.

And again, you have to be very careful about drawing any conclusions about that, I think the take home is qualitative that you saw it at all, right. Now it’s going to be a question of dose responsiveness.

Can you get the doses of Clemastine up to a point where you are seeing more of an effect and then for all of us, whether it’s anti-LINGO, rHIgM22, Clemastine, all of us, the next stage is it going to be show, do we see clinically meaningful outcomes and the next datapoint in that regard, I think is likely to come from the anti-LINGO study that I guess, data are due in the next several months.

Laura Chico

Thank you very much. Very helpful.

Operator

At this time, I am showing no further questions. I would like to turn the call back over to Mr. Ron Cohen, CEO for closing remarks.

Ron Cohen

Well, thank you much everyone for joining us. It was a good quarter and we are eager to report again in another quarter. So we’ll see you all then.

Operator

Ladies and gentlemen, thank you for your participation in today’s conference. This concludes the program. You may all disconnect. Everyone have a great day.

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