Insys Therapeutics' (INSY) CEO John Kapoor on Q1 2016 Results - Earnings Call Transcript

| About: Insys Therapeutics, (INSY)

Insys Therapeutics, Inc. (NASDAQ:INSY)

Q1 2016 Earnings Conference Call

April 28, 2016 10:00 AM ET


Ilanit Allen - Investor Relations

John Kapoor - Chairman, President and Chief Executive Officer

Darryl Baker - Chief Financial Officer

Santosh Vetticaden - Chief Medical Officer


Randall Stanicky - RBC Capital Markets

David Amsellem - Piper Jaffray & Co.

Rohit Vanjani - Oppenheimer & Co.


Good day, ladies and gentlemen and welcome to the First Quarter 2016 Insys Therapeutics Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to introduce your host for today’s conference Ms. Ilanit Allen, Investor Relations for Insys Therapeutics. Ma’am you may begin.

Ilanit Allen

Thank you, [Shannel]. Good morning, and welcome to the Insys Therapeutics’ first quarter 2016 earnings call. This is Ilanit Allen of In-Site Communications Investor Relations for Insys. With me on today's call are Insys’ Chairman of the Board, President and Chief Executive Officer, Dr. John N. Kapoor; Chief Financial Officer, Darryl S. Baker; and Chief Medical Officer, Dr. Santosh Vetticaden.

This morning, the Company issued a press release detailing financial results for the first quarter ended March 31, 2016. This can be accessed through the Investor Relations section of the Insys website at, and you can also access the webcast of this call from there.

Before we get started, I would like to remind everyone that all statements made on today's conference call that express a belief, expectation, projection, forecast, anticipation or intent regarding future events and the Company's future performance are considered forward-looking statements as defined by the Private Securities Litigation Reform Act. These forward-looking statements are based on information available to Insys’ management as of today and involve risks and uncertainties, including those noted in this morning's press release and Insys’ filings with the SEC.

Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those projected in the forward-looking statements. Insys specifically disclaims any intent or obligation to update these forward-looking statements except as required by law.

A telephone replay of the call will be available shortly after completion for one week. You'll find the dial-in information in today's press release. The archived webcast will be available for one-year on the Company's website

For the benefit of those who may be listening to the replay or archived webcast, this call is held and recorded on April 28, 2016. Since then, Insys may have made announcements related to the topics discussed, so please reference the Company's most recent press releases and SEC filings.

And with that, I'll turn the call over to Insys' Chairman, CEO and President, Dr. John Kapoor.

John Kapoor

Thank you and good morning everyone. I am pleased to be with you all today to discuss our first quarter 2016 results and address the recent developments impacting our Company. Let me begin by highlighting our four key priorities for 2016. One, stabilize and change the trajectory of Subsys sales; two successfully launch Syndros; three advance our new product pipeline development; and four continue to cooperate with and effectively resolve the government investigation into our sales and marketing practice.

I want to emphasize we are highly focused on these four objectives for this year of this Company. As part of our efforts to stabilize our Subsys business, we have realigned our territories to focus on certain targeted healthcare professionals or HCPs, which was accomplished with the assistance of ZS Associates. We believe this alignment also addresses certain territory adjustments that needed to occur in connection with our anticipated Syndros launch.

Our efforts to stabilize Subsys focus on HCPs who are current writers of Subsys as well as TIRF REMS enrolled prescribers who are not currently prescribing Subsys. We have also identified oncologists who are writing long-acting opioids to include on our call lists. We believe that these long-acting opioid oncologists have patients who go through breakthrough cancer pain. We continue to be optimistic about first stabilizing Subsys scripts and then growing them with this realignment.

With regards to Syndros, our dronabinol oral solution, we expect that it will soon be the second commercial product in our portfolio. As I mentioned earlier, our recent realignment measures also contemplated the launch of Syndros. For example, our sales realignment will address the current Marinol writers that make up 80% of the Marinol market.

Our initial strategy is to focus on the current Marinol writers. And we believe that as a result of this realignment, our current sales force can handle the detailing of both Subsys and Syndros. In March, the FDA extended the PDUFA date for Syndros from April 1, 2016 to July 1, 2016. The FDA’s extension was in response to Insys’s decision to voluntarily submit information related to the scheduling of Syndros under the Controlled Substances Act.

Even though we continue to have discussion with the FDA, we are preparing to launch Syndros as Schedule II. We expect that the recent changes in scheduling of certain other drugs from Schedule III to Schedule II will help Syndros acceptance by most HCPs and we anticipate achieving relaunch with Schedule II designation.

We continue to work closely with the FDA to resolve any remaining issues relating to obtaining approval by the extended PDUFA date of July 1, 2016. We remain focused on our new product pipelines by developing significant financial and personnel resources to these activities.

On the R&D front, our R&D team which has been expanded to more than 100 employees and currently includes more than 30 employees with either a Ph.D. or M.D. is working hard to advance the multi-stage products in our extensive and promising pipeline. We believe, we are making important clinical progress with our sublingual spray platform and this will remain a key focus for us throughout 2016.

Our Phase III trial for our buprenorphine product candidate for acute pain is ongoing and we believe that we are on target to file NDA before the year end. We believe that our continuing effort around our pipeline is one way our Company has demonstrated it’s commitment to improving the comfort and quality of patient lives as we seek to develop promising therapies for unmet or underserved patient needs.

For example, we have made substantial progress in defining our sublingual naloxone spray and will be conducting additional study this year to support an NDA filing in 2017. Naloxone is an opioid antagonist used to reserve the opioid dependence. We believe that the delivery of naloxone in our sublingual spray platform has promising possibility to benefit patients. I hope our investors can see that we remain committed to advancing our R&D pipeline programs.

In connection with the government investigation in our sales and marketing practices, we continue to cooperate with the various federal and state agencies involved in this ongoing investigation that began in the fall of [2013] and we look forward to a satisfactory resolution.

With that, I like to turn the call over to Darryl Baker, our Chief Financial Officer to review our first quarter financial results. Darryl?

Darryl Baker

Thanks, John. Despite recent challenges, Insys remains profitable with a strong debt free balance sheet. We reported total net revenue of $62 million for the first quarter of 2016, which was a decrease of 12% from the $70.8 million in the year ago quarter. We generated free cash flow of approximately $12 million in the first quarter of 2016.

Consistent with our preannouncement comments in February, we expect Subsys prescription trends to be impacted throughout 2016. Revenues related to Subsys declined more than expected in the first quarter signifying a decrease in demand as well as a reduction in wholesale inventory levels.

We believe that the heightened publicity surrounding the national opioid epidemic has resulted in sensitivity by some healthcare providers to prescribe opioids. This sensitivity has affected the entire TIRF class. We are continuing to assess and evaluate our script trends as well as the TIRF class as a whole. Based on script volume trends over the past several weeks, we believe the Subsys prescription decline is close to stabilizing. At current prescription levels, we expect to remain profitable and to continue to fund our R&D efforts.

GAAP net income for the first quarter of 2016 was $2.4 million or $0.03 per diluted share compared to net income of $8 million or $0.11 per diluted share for the first quarter of 2015. Non-GAAP adjusted net income per diluted share for the first quarter of 2016 was $0.11 compared to $0.31 per diluted share for the first quarter of 2015. Gross margin was 92.5% for the first quarter of 2016 compared with 91% for the comparable period in 2015.

Sales and marketing expenses totaled $19.8 million during the first quarter of 2016 compared to $20.9 million for the first quarter of 2015. As a percentage of revenue, sales and marketing expense was 32% during the first quarter of 2016 compared to 30% for the first quarter of 2015.

In the first quarter of 2016, R&D expense increased to $20.5 million up from $10.6 million for the first quarter of 2015. The rise reflects continued investment in our pipeline products including Syndros. We are very excited about our pipeline and believe our commitment to R&D spend which we expect will exceed $75 million will result in significant value creation for shareholders and will help patients with many unmet needs.

General and administrative expenses were $14.7 million for the first quarter of 2016 compared to $13.2 million for the first quarter of 2015. Operating margin for the first quarter of 2016 was 3.7% compared to 16.4% for the first quarter of 2015. We continue to generate positive cash flow with cash, cash equivalents and short and long-term investments of $200 million as of March 31, 2016. Since the implementation of our stock repurchase plan in November of 2015, we have expended approximately $30 million to repurchase approximately 1.2 million shares of Insys common stock.

Thank you. And now I am going to turn the call over to Dr. Santosh Vetticaden, our Chief Medical Officer. Santosh?

Santosh Vetticaden

Thanks, Darryl. Before I review our pipeline, I want to highlight an important legal decision with respect to our fentanyl sublingual spray formulation patents which protect the value of Subsys technology. In March, the Patent Trial and Appeal Board of the United States Patent and Trademark Office declined to institute inter partes review of three of U.S. patents that cover the fentanyl sublingual spray formulation of Subsys. This decision by the PTAB is a testament to the unique and pioneering efforts by Insys to bring this innovative therapy to patients to manage their underlying breakthrough cancer pain.

In addition, Insys was recently granted one additional U.S. patent 9,241,935 covering the Subsys formulation, further strengthening the Subsys patent in state. We remain committed to the defense and vigorous enforcement of our intellectual property with the goals of creating long-term shareholder value and focusing on the unmet or undeserved needs of patients.

As we continue to focus on the lifecycle of Subsys. We believe, Subsys offers multiple long-term opportunities. We have satisfactorily completed our dose ranging study for Subsys in opioid 90 patients, and we planned to publish the results of these studies in due course. These studies have provided insights with regards to dose selection for our lifecycle management studies.

With respect to the letter, we have requested input from the FDA for protocols for use a Subsys in control situations such as in the emergency room, burn treatment, bone marrow biopsy, and postoperative setting and will initiate the studies subsequent to receiving FDA feedback. We believe that the data will be available sometime in 2017.

Within our pipeline we are developing multiple products that are in various stages of R&D process. All of our products and development focus on areas where we believe there is an unmet or undeserved medical patient need. The majority of our pipeline products employing either our proprietary sublingual spray technology platform or leverage our expertise and capabilities in the pharmaceutical cannabinoid space where we are the leader in domestic production, research and development.

Our most advanced candidate is Syndros. As Dr. Kapoor mentioned we voluntarily submitted information related to the scheduling of Syndros under the Controlled Substances Act. None of this additional information involved any new clinical data, upon receipt the FDA determined that this information constituted a major amendment to this new drug application and exercised its option to extend the PDUFA date to July 1, to provide the FDA time to complete its review. We are confident that Syndros will be an important commercial product in our portfolio and a significant long-term opportunity for Insys.

As you know we are also in the process of advancing multiple molecules to leverage our sublingual spray platform to target supportive care and other large markets where rapid onset and patient convenience are keys. These include buprenorphine, buprenorphine-naloxone combination and naloxone in clinical development and multiple other sprays in varying stages of earlier developments such as ondansetron, rizatriptan, sildenafil.

We're evaluating the potential of our buprenorphine sublingual spray candidate to treat acute pain and in the case of chronic pain in both opioid naïve and opioid tolerant patients. Our pivotal Phase III trial for the acute pain indication is currently half we enrolled and we remain on track to submit an NDA in the fourth quarter of 2016.

We're also expecting FDA feedback on our program for buprenorphine for the chronic pain indication in the near-term. Initial trials of our buprenorphine with naloxone sublingual spray for opioid dependence have been completed. Feedback from the FDA will guide our subsequent development and target completion of the program in 2017.

Our naloxone sublingual spray candidate has received Fast Track designation for the treatment of known or suspected opioid overdose. Our proprietary formulation if approved by the FDA offers a novel delivery mechanism that allows naloxone to enter the bloodstream in less than five minutes potentially reducing overdose fatalities.

We believe our product will meet the criteria for attaining blood levels needed for effectiveness and matching or exceeding the levels achieved by the intramuscular formulation. We anticipate filing the naloxone NDA in early 2017. We continue to invest significant time and resources in our sublingual spray platform.

As our R&D formulation team continues to develop sprays like naloxone, we obtain more data and intelligence that we believe will assist us in the development of sublingual spray products for other molecules that faster onset and improved by availability. We continue to explore multiple additional molecules as we deepen our pipeline and bring more advanced candidates closer to commercialization. We look forward to updating you on additional product candidates in due course.

Now turning to our Pharmaceutical cannabinoid franchise; our team is committed to the development and commercialization of synthetic pharmaceutical cannabinoids. We believe that our cannabidiol program is one of the most promising in existence today. Insys has more than seven years of research and development experience in the pharmaceutical cannabinoid space.

Manufacturing for our CBD program takes place at our FDA inspected and DEA approved facility located in Round Rock, Texas. We believe that we enjoy two important advantages related to the commercialization of cannabinoids. First, we believe we are the only U.S. Company with the capacity to produce pharmaceutical cannabinoids in scalable quantities to support future demand of commercialization.

And second, based on available data, we can pharmaceutically produce CBD chemically identical to the CBD extracted from cannabis and our CBD is produced in a controlled environment and is 99.5% pure.

CBD has a significant market potential for the treatment of several forms of pediatric epilepsy and our CBD program has received three orphan designations from the FDA for the treatment of Dravet syndrome, Lennox-Gastaut syndrome, and infantile spasms. We remain committed to the clinical focus for our CBD formulation.

Our Phase II PK study will be completed this quarter and we plan to meet with the FDA in the near future. Even though we are behind in our program, we believe our formulation differences offer advantages and our synthetic pharmaceutical CBD can be produced at a significantly lower cost.

In February, we announced the enrollment of our first patient in our Phase II study in infantile spasms. If successful, our CBD product could provide an important treatment option for what is considered a catastrophic childhood epilepsy and offer certain infants and children the potential to attain seizure control and achieve an improved level of development. Enrollment for this study is currently ongoing.

Our CBD program also has orphan drug designations for three other indications glioma, glioblastoma multiforme, and pediatric schizophrenia. In addition, our team continues to identify additional areas of unmet medical needs, which merit investigation with CBD as a potential treatment solution for these conditions.

Our inhalation development program in both THC and CBD continues to progress well, and we plan to meet with the FDA for a pre-IND meeting for the inhaled THC in early 2017.

With that, I will turn the call back over to Dr. Kapoor for his closing remarks. Dr. Kapoor?

John Kapoor

Thank you, Santosh. Despite some challenges in Q1, it is important to remember that Insys has a strong balance sheet and maintains a solid foundation for a continued and long-term growth. While Subsys revenues declines were greater than expected for the quarter, we believe that the script rate is now currently stabilizing and we have a solid plan to support this business going forward.

With respect to Syndros, we continue to prepare to bring the product to market and maintain our high expectations for its success. In the meantime, we are working closely with FDA and are continuing to develop our sales and marketing strategy to ensure a successful launch. We look forward to realizing the many potential opportunities for continued growth and long-term value for Insys shareholders.

Thank you for interest and support. We would now like to open up the line for questions. Please remember that the purpose of today's call is to discuss our quarterly results. Thank you. Operator?

Question-and-Answer Session


Thank you. [Operator Instructions] And our first question comes from the line of Randall Stanicky of RBC Capital Markets. Your line is now open. Please go ahead.

Randall Stanicky

Great. Thanks guys. I have a couple on the quarter, but first John, I just want to go back to your prepared comments around the government investigation and that being a goal for 2016. Just to clarify is the cooperation a goal or is a potential settlement – be a goal? And then I have a couple of quarterly questions.

John Kapoor

Obviously, our goal is to reach the settlement, when we say our goal that is the settlement goal and as we say we continue to cooperate and we feel we are making progress.

Randall Stanicky

Okay. That’s great. And Darryl, can I just ask a question on Subsys. How do we think about the run rate going forward? If we take the $62 million you reported this quarter and adjust that for the inventory, we get closer to $70 million. Is that the right way to think about the run rate going forward?

Darryl Baker

Yes. That’s right, Randall.

Randall Stanicky

Okay. And then the other question on Subsys. You guys talked about prescriber I guess challenges in terms of the broader opioid space. How do you think about that versus the reimbursement pressure that we've been hearing? Is it more on the prescriber side or do you think that there is reimbursement pressures that are going to continue?

John Kapoor

Well, I think on the reimbursement side the insurance companies always take opportunity of a development like this to tighten up and I think that began early part of this year, and we think it’s probably reaching the end of it. Whatever was going to happen has already happened in the last three months from a reimbursement perspective and from a prescriber standpoint the publicity surrounding opioids, the CDC issuing guidelines, a lot of the communities I mean our investigation into the communities many doctors legitimate practices, get raided by DEA inspectors or what have you and it creates a lot of sensitivity among the writers of opioids.

So I think that’s what we meant when we said sensitivity among HCPs to write opioids and how long that will last? We don't know, but we see that it's probably at the tail end of it, again it started last couple of months and it's now towards the tail end. And that shows up in our step stabilization of our Subsys scripts.

Randall Stanicky

Okay, great. Thanks for the color guys.


Thank you. And our next question comes from the line of David Amsellem of Piper Jaffray. Your line is now open. Please go ahead.

David Amsellem

Thanks, just a couple. So first, can you talk about how we should think about the growth in that on Subsys going forward and also how that played out in 1Q versus is your expectation. And the reason I’m asking that part of the question is that you talked about OptumRx and the absence of the contract and how it would potentially narrow the growth in that. So maybe help us understand at least in terms of discount allowances in rebates, what happened and how we should think about it going forward.

And then secondly, just wanted to go back to your comments on prescriber fatigue. I would argue that earlier in the quarter fairly January and February that wasn't something that necessarily residing and I think you sounded more sanguine about prescriber patterns. So can you talk about what changed during the quarter and I guess why you didn't call it out sooner? Thanks.

Darryl Baker

First, David with respect to the gross to net, we did see some slight improvement in gross to net in Q1 relative to where we had been in 2015 primarily as a result of Optum no longer having to pay those rebates. However, given was indicated earlier the kind of the more challenging payer environment overall on a broad basis. We expect there to be more patient discounting as we move forward.

And so as of right now, our expectation is that our gross to net levels for 2016 should approximate those in 2015. So in other words, the tailwind of no longer paying rebates Optum has been counterbalanced by these broader reimbursement headwinds that we're facing.

With respect to physician fatigue, David, we've been actually – from our perspective they have been very forthright about that throughout the quarter and then essentially every conversation that we've had, we've definitely highlighted the issue surrounding opioids, the broader concerns in the community in particular with respect to the turf class. So I mean I think that's just a reality of the environment that we're operating in.

John Kapoor

If I may add, I think as the quarter began, as you know a lot of insurance companies are taking a look at pre-offs and things were happening so rapidly that we just couldn't put our finger on what was going on. So before we come back to you and say something, we were looking at it carefully although IMS data was indicating a drop in the scripts.

But you know for us to make statements to you and really tell you what we think might be happening we just wanted to make very sure that we knew. So that might have caused some delay on our side to give you some indication. So as soon as we became very sure what was happening and that led us to do our preannouncement, which we have never done before. So but we just want to be upfront and be sure what we tell you.

David Amsellem

If I may - the weakness - just to be clear the weakness also a function of changes in sales force or promotional practices beyond just the realignment that you talked about in your scripted remarks?

John Kapoor

I don't think there was much impact from any promotional changes we have made many changes in our SOPs and going way back you know to be in compliance. So I won’t say there were any significant changes I think the changes that we observed in declining scripts primarily came from the publicity and you know the New Year that began where insurance companies start looking at each category of reimbursement and so on and so forth.

So that's more of an impact rather than any changes in our marketing or sales practices, which were corrected way back last year. So we’re in compliant and did make any changes in our sales and marketing.

David Amsellem

Thank you.


Thank you. [Operator Instructions] Our next question comes from the line of Rohit Vanjani of Oppenheimer. Your line is now open. Please go ahead.

Rohit Vanjani

Hi, thanks for - good morning. Thanks for taking the questions. I just want to be clear on the Subsys footprint. Is the REMS data showing stabilization for Subsys in the last couple of weeks in April?

John Kapoor


Rohit Vanjani

Okay. And in the past you sometimes mentioned your expectations for Subsys quarter-over-quarter X that inventory impact or you still anticipating Subsys revenue growth in 2Q?

John Kapoor

I think as I mentioned our objective is to stabilize - the first objective was to stabilize the current scripts and we believe that we're almost there. And the next phase of our effort will be to turn the trajectory. And I think in Q2 some of the realignment that we have implemented and some of the efforts we are making, the results will come in the second half of this year, which we’ll keep you informed. But in the second Q our effort is to stabilize the scripts.

Rohit Vanjani

Okay. And then when you pre-announced the Subsys revenue a couple weeks back I think you said you didn't want to cut spending with the advancement of the pipeline and then you're facing a Syndros launch. I just want to confirm that still how you are thinking about things - OpEx right now?

John Kapoor

That’s right. As Darryl mentioned you know at our current - I mean we reported $62 million, but you know there was a inventory adjustment at the wholesaler level. And so at $62 million we are profitable. So if you just make that adjustment of the wholesalers and put the sales level at $69 million, $70 million – the profitability will, if anything increase. And this is in light of – we’re continuing all our efforts in R&D and Syndros marketing plans, we don't want to touch anything. We are committed to the future of the Company.

And I urge you guys to look at this Company not just on a current basis; we did $70 million even if we do $70 million in the second quarter. We believe that's a significant product, annualize that $280 million. As Dr. Santosh pointed out we're investing very heavily into our Subsys effort with completing our opioid naïve studies which cost us between $5 million and $10 million you know it's a investment in Subsys product.

It's a very good product, we not only have the Subsys product in the market but without getting it to detail we continue to do R&D and Subsys itself and we’ll tell as we progress you know as we mentioned. I think we are making breakthrough results in our sublingual research, where we've been able to penetrate through the sublingual mucosa at a much faster rate.

And the last one is an example where we have to get the naloxone into the bloodstream in less than five minutes, which we were able to accomplish by technologies that are not know and we will be filing patents and what have you. So we're making a lot of progress in our R&D. We are going to continue spend money, as Darryl mentioned $75 million on a run rate of less than $300 million. You can figure that out. There is not a spec pharma company out there that is spending that kind of R&D effort.

We believe that is important. We believe that it's important for the future of the Company and creating a lot of shareholder value. So we're not going to touch anything on R&D. Our effort in Syndros, we believe Syndros is a very good product even though it might be designated Schedule II, we have done lot of market research on Schedule II and we believe that we will be successful in Syndros product.

Rohit Vanjani

Thanks for that, John. I think the last one for me is I think before you said you're preparing for a Schedule II launch for Syndros before I think you are giving peak sales estimates between $200 million and $300 million for Syndros. How does the Schedule II designation impact those numbers?

John Kapoor

Well, we have looked at – the hydrocodone was redesignated from the Schedule III to Schedule II. We have looked at the impact on Schedule on hydrocodone sales for example in the last three months. And there is about a 20% impact on the revenue, so we believe that if there is going to be any adjustment it might be in that 20% to 25% range. However, it's a very special product, it's not a – and we're going to market through our sales force, so we continue to be very optimistic.

Rohit Vanjani

Great. Thanks for taking the question.


Thank you. And our next question comes from the line of [indiscernible]. Your line is now open. Please go ahead.

Unidentified Analyst

Thanks for taking the question. Just wanted to follow-up on a couple of statements that were made with regard to the R&D pipeline. I think Santosh had indicated that the enrollment for the buprenorphine acute pain trial was 50% low. Does that mean that we can expect you guys to announce the results of the trial in the third quarter?

Santosh Vetticaden

Yes, we are not committing to when those results will be announced. I think what we can say and what we have said is that we are on target to file an NDA by the end of the year. So as you can imagine that means we will have the results in hand and we will move to the FDA to enable that filing.

Unidentified Analyst

Sure. But I guess part of that is just the public communication of those results and I'm just curious is it something that from a scheduling standpoint you guys would be able to prepare the NDA in three months or you think it'll take you four to five months. And that's part of the reason why and I’m curious if you're confident about filing the NDA by the end of the year why wouldn’t be confident about disclosing when you had announced the results?

Santosh Vetticaden

Yes, based on how we are doing today, we target completing the study in the third quarter and then pulling together all the information needed towards engaging with the FDA and then filling the NDA.

Unidentified Analyst

Terrific. And then just with regards to buprenorphine/naloxone program there was actually pretty significant development on a competitor's R&D program for oral buprenorphine that failed once again. So it seems that disadvantage of rapid administration not having to deal with somewhere between five and 20 minutes for these types of products to dissolve in the mouse.

It seems like there could be a real advantage here to buprenorphine/naloxone and yet. It looks like there may have been a split in the timeline? Can you walk us through when you talk about completing development in 2017? What does that exactly mean? Does that mean that you're competing PK study or does that mean you're doing an actual in treatments efficacy study?

John Kapoor

Are you talking about bup-naloxone or naloxone?

Unidentified Analyst

Well, bup-naloxone, I know the naloxone [indiscernible] just talking about the bup-naloxone.

John Kapoor

Okay, so bup-naloxone as I mentioned in our prepared statements, we’ve completed the initial trials and we have submitted those to the FDA, we are seeking feedback from them as to the additional studies that maybe needed to complete those package. As soon as we have that guidance, we will execute on those which is why we are targeting completing those in 2017. The package will not include at this moment as we foresee it efficacy studies, but certainly some safety data will need to be generated. And that is already in our planning.

Unidentified Analyst


John Kapoor

I think in terms of bup-naloxone formulation, we have been able to develop a formulation that does penetrate in time and delivers the right amount of bup and has naloxone in it. It's a matter of whether we are – we will be able to just do a bioequivalence study or we may have to do some additional clinical work. We believe our formulation is bioequivalent to the RLD, but we had – we just need that final clarification from FDA before we proceed further.

And right now it takes some time up to 90 days to get that information back from FDA. So we did summit our data and questions to FDA, and we are waiting for their final response, which is anticipated hopefully in the next couple of weeks. And we will be able to give you more update on that as we move forward.

Unidentified Analyst

Okay. Thanks and then last question on the CBD side, opportunities I know at the Analyst Day folks hosted one of the comments that was made specifically by KOL was that there is so many subsets of epilepsy that simply trying to say epilepsy so broad, it's too broad and I think the number that was thrown out was sort of more than 40. You've talked about specifically three subsets within various types of epilepsy. Are there others that would not be blocked by orphan designations that you think or would consider exploring in Phase II or Phase III trials?

John Kapoor

Absolutely, I think that's correct. I mean when we look at our epilepsy especially were childhood epilepsy. There are number of epilepsies, various types of epilepsies I'd say. The one that have got the most attention or of course [indiscernible] and as you know we embarked on infantile spasms. So we continue to look at all of the other epilepsies and we are in varying stages of assessing which ones to embark on. But certainly we have – we intend to embark on additional areas of pediatric epilepsy and we hope to inform you of those in due course.

Unidentified Analyst

Okay. Terrific. Thanks so much for taking the questions.


Thank you. And I'm showing no further questions at this time. I’d now like to turn the call over to Dr. John Kapoor for closing remarks.

John Kapoor

Well, I want to thank everybody for taking their time and listening to our Q1 results. And I look forward to conference call in the second quarter results. Have a good day. Thank you.


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

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