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Chelsea Therapeutics International, Ltd. (NASDAQ:CHTP)

Q4 2011 Earnings Call

March 6, 2012 4:30 pm ET

Executives

Kate McNeil - Director, IR

Simon Pedder - President and CEO

Nick Riehle - CFO

Art Hewitt - CSO

Bill Schwieterman - CMO

Keith Schmidt - VP, Marketing and Sales

Analysts

Robyn Karnauskas - Deutsche Bank

Liana Moussatos - Wedbush Securities

Alan Carr - Needham & Company

Jonathan Eckard - Leerink Swann

Juan Sanchez - Ladenburg

Operator

Good day, and welcome to the Chelsea Therapeutics International fourth quarter conference call. (Operator Instructions) I would now like to introduce the host for today's conference, Ms. Kate McNeil, Director of Investor Relations.

Kate McNeil

Good afternoon and welcome to Chelsea Therapeutics fourth quarter and full year 2011 conference call. We announced our fourth quarter full year 2011 results this afternoon after the close of the U.S. financial markets and our press release can be found on our website at www.chelseatherapeutics.com.

Joining me from Chelsea Therapeutics is Dr. Simon Pedder, President and Chief Executive Officer; Mr. Nick Riehle, Chief Financial Officer; Dr. Art Hewitt, Chief Scientific Officer; Dr. Bill Schwieterman, Chief Medical Officer; and Mr. Keith Schmidt, Vice President of Marketing and Sales.

Before I turn the meeting over to Dr. Pedder, let me note that some of the remarks you'll hear today may contain forward-looking statements about the company's performance. Actual future results might differ materially from those projected in these forward-looking statements.

Additional information concerning factors that could cause actual results to materially differ from those in these forward-looking statements are contained in our SEC filings and periodic reports under Securities and Exchange Act of 1934 as amended, copies of which are available on our website or may be requested from the company directly.

With that said, I'll now turn the call over to Dr. Simon Pedder.

Simon Pedder

Good afternoon, everyone. Thank you for taking the time to join us for our call this afternoon. We have clearly had an eventful start 2012 and with that we have had the opportunity to update you already on many of the recent developments. And certainly have had prior occasion to speak to each of significant developments of 2011.

Therefore, it is our intention to keep our prepared remarks for this call relatively brief and highlight for you our current expectations, not only for the next few months, which I know most of you already keenly attuned to, but also for the remainder of the year, as we look forward to several significant milestones throughout the course of 2012.

It is easy to get caught up and focused on the events related to our recent advisory committee meeting and anticipated PDUFA date later this month. However, in looking back in 2011, we see substantial achievements that extend well beyond the completion of our NORTHERA registration program and filing of our NDA for symptomatic neurogenic orthostatic hypotension, also known as Neurogenic OH or NOH.

Over the course of the past year, we unblinded data from our interim analysis of our NORTHERA 306, in which we saw a rather large reduction of falls among patients with symptomatic Neurogenic OH, associated with Parkinson's Disease that were treated with NORTHERA.

This led to some significant changes in the study, ultimately accumulating and restructuring of the trial with an eye towards using this data to potentially submit a supplemental NDA, seeking to expand the NORTHERA label to include the reduction of falls in patients with symptomatic Neurogenic OH associated with Parkinson Disease.

Shortly after our interim analysis of 306, this data was accepted as late-breaking presentation at the 15th Movement Disorder Society, International Congress in Toronto. This is really the preeminent event in the movement disorder world. And we were tremendously pleased by the excitement generated not only by our 306 data, but also with separate presentation of data specifically analyzed in the safety and efficacy of NORTHERA in patients with multiple systems atrophy.

During the course of the past year, we also had the opportunity to report data from two studies of droxidopa unrelated to Neurogenic OH. First, we were pleased to report some very promising data from Dr. Adler's investigator initiated study of droxidopa in adult attention deficit hyperactivity disorder or ADHD.

Though small, this exploratory study showed that droxidopa dramatically improved patients' mean score on the adult ADHD investigator symptom rating scale, the magnitude of the clinical effect and the rapid response to treatment, coupled with the safety tolerability of droxidopa observed in the study, established a compelling proof-of-concept that we believe wants additional study.

This data was filed late in year by topline results from our Phase II trial of droxidopa in patients with fibromyalgia. Fibromyalgia, as most of you are aware, is a complex disorder, characterized by widespread pain and stiffness throughout the body, accompanied by severe fatigue, insomnia and mood symptoms.

Data from our study indicated a therapeutic benefit associated with droxidopa as measured by the Short Form McGill Pain Questionnaire, Visual Analog Scale and the Fibromyalgia Index Questionnaire. In considering the outcomes of both of these studies as well as our prior successful Phase II study in intradialytic hypotension, it is clear that there exist several meaningful therapeutic areas to explore with droxidopa.

We also continue to work with investigators on additional exploratory Phase II trials and look forward to identifying the next step for the development of droxidopa after an approval for the treatment of symptomatic Neurogenic OH. Exploring these options is now more compelling opportunity, given the expansion of our intellectual property portfolio for droxidopa in 2011.

Most significantly of course, being with the notice of allowance for U.S. patent covering a novel, controlled release formulation of droxidopa that will enable once-daily dosing. Upon issuance, this patent will provide protection throughout at least 2026 and we continue to explore opportunities to extend this further.

In parallel with our droxidopa programs, we have also made substantial progress in our Phase II trial of CH-4051 in rheumatoid arthritis. In addition to completing enrollment of this study last quarter, we also had the opportunity to conduct a thorough unblended interim analysis of the two lower dosages which indicated both the dose response and comparable efficacy to methotrexate at the 1 mg dose, giving us good reason to look forward to the results from both 3 mg dose groups with the expectation of seeing increased potency compared to both methotrexate and the previously evaluated 0.3 mg and 1 mg dosages of CH-4051.

Now, before we get into our clinical and operational expectations for the 2012, I will ask Nick to provide a review of our financial results for 2011 and the most recent quarter. Nick?

Nick Riehle

Thanks, Simon. Chelsea reported a net loss for the quarter ended December 31 of $12.5 million or $0.20 per share versus a net loss of $12.4 million or $0.25 per share for the same period of 2010. For the full year, we reported a net loss of $50.5 million or $0.84 per share compared to a net loss of $37.3 million or $0.91 per share for 2010.

Research and development expenses for the fourth quarter were $7.7 million, which was down from $10.2 million in the fourth quarter of 2010. This reflects a significant decrease in clinical and related drug development costs as our NORTHERA registration programs wind down, but is offset by higher costs for advisory committee meeting preparations, Medical Science Liaison support and the $750,000 milestone payment on acceptance of the NDA in November.

For the full year, R&D expenses were $37.3 million versus $30.9 million for 2010. This year-over-year increase primarily reflects costs associated with the anticipated registration of NORTHERA and related pre-launch expenses, including those related to the manufacturing of commercial drug product, the NORTHERA QTc study, the preparation and filing of our NORTHERA NDA, our milestone payment and the launch of our team at Medical Science Liaison.

Selling, general and administrative expenses were $4.8 million for the three months ended December 31, reflecting an increase from the $2.3 million reported for the same period in 2010. The increase is primarily related to market research and other preparations in anticipation of our planned 2012 launch of NORTHERA as well as compensation expenses for marketing and associated staff working on these launch preparations. This is consistent with what we see across the full year with SG&A totaling $13.3 million compared to $6.6 million for 2010.

Similar to our performance throughout 2011, these fourth quarter expenses reflect the continuing effort by the Chelsea team to constrain spending as much as possible without jeopardizing our launch capabilities. As a result, we ended 2011 with $45.6 million in cash, cash equivalents and short-term investments. This compares to $47.6 million at December 31, 2010. If we add the $22.1 million of net proceeds from our January financing, the pro forma equivalent cash for yearend 2011 would be just under $68 million.

Looking ahead and assuming the launch of NORTHERA in the second quarter, we anticipate 2012 R&D expenses in the $33 million to $36 million, including medical affairs and pre-launch costs for commercial operations. SG&A expenses will ramp significantly at launch with 2012 spending anticipated in the range of $46 million to $52 million. Of course, we will continue to manage this carefully depending on the status of R&D approval.

As we are now approaching the end of our first quarter, we can anticipate that the balance of March 31 cash and cash equivalents at over $50 million. This is again somewhat better than our original forecast and reflects our ongoing commitments to aggressively manage our expenses leading up to an FDA decision, while ensuring that we are prepared for the timely launch following an approval.

Along with our anticipated revenues and a moderate working capital line of credit, we continue to estimate that our existing liquidity will fund the company's current development programs, launch initiatives and operating deficits into the first quarter of 2013.

Simon?

Simon Pedder

Thanks, Nick. Turning our attention to the remainder of 2012, I will ask Bill to start this off by providing you with a review of our regulatory status for our NORTHERA NDA before turning the call over to Keith for a quick update on our commercialization efforts. Finally, before opening up the call for Q&A, we will have Art provide you with a brief update on our expectations for the remainder of our clinical programs in 2012. Bill?

Bill Schwieterman

Thank you, Simon. The first quarter of 2012 was a combination of many months of dedicated effort and is truly a landmark quarter for Chelsea. Almost immediately after FDA's acceptance of our NORTHERA NDA, we initiated comprehensive preparations for our meeting with the cardiovascular and renal drugs advisory committee meeting in February. This involved a critical review of all the data included in our NDA and reflected an appreciation for the need to clearly identify the key factors that distinguish treatment requirements for neurogenic orthostatic hypotension, some other forms of our orthostatic hypotension, translate the significant unmet medical need that exist in treating the symptoms of neurogenic orthostatic hypotension.

Articulate the clinical benefits of NORTHERA. And to do all these things in a manner that would resonate with the committee comprised primarily of cardiologist that may or may not have had experience treating patients with ortho-neurological diseases like multiple system atrophy and pure autonomic failure.

Our efforts intensified following, we see that the agencies grieving documents in our first real indication of their preliminary risk benefit analysis. As we announced at the time, the key issues that were identified in this review included an assessment of clinical end points in Neurogenic OH and particularly dizziness as it relates to the more global orthostatic hypotension questionnaire.

It brings sensitivity to the derogative treatment effect and deterioration of placebo-controlled safety data and quick critical review of our safety data and this involves additional safety data reported by the Japanese prior to and subsequent to the drugs approval in Japan.

Based on the summary and the results of our own detailed data analysis, we presented the advisory committee with a comprehensive review of our clinical data highlighting the consistency observed in each of our trials and across multiple clinically meaningful endpoints.

Particular emphasis was placed on demonstrating not just the mean improvement by study on but more strikingly the responder analysis showing statistically significant improvements over placebo as there are response levels from mild and moderate effect to profound improvement.

Doing so helped to elucidate that while there maybe significant placebo response in patient reported outcomes. And in the NOH in particular, it is readily apparent that treatment with NORTHERA is conferring dramatic therapeutic benefit in a meaningful number of patients.

We were also well equipped to present the thorough review of all available safety data including the results of an independent review of adverse events and serious adverse events reported in our clinical program as well as an independent review of the incident in neuroleptic malignant syndrome reported in the Japanese first approval from covigilance program.

A critical piece of this safety analysis was conveying the gravity of the primary diagnosis as well as the frequency and severity of health complications experienced by this patient population particularly MSA patients, absent any therapeutic intervention.

Of course, we are most grateful to the many patients, care givers and clinicians who attended the meeting and who are best able to distinctly capture what is most needed from a therapeutic for a neurogenic OH.

The limitations to current treatment options and the profound and lasting effect NORTHERA has had on their lives. We are thankful to all for their support and we're inspired by each. Of course, the advisor committee is just part of the process with our priority, we view status we are now faced with a short window, then we'll have to see plans to complete this review.

As you all know, they have a target action data March of 28th, and while we covered substantial ground during the advisor committee meeting and ultimately we're successful in convincing the panel to recommend approval there are always additional items to be discussed, questions to be answered and labeling matters to be addressed.

While we will be working diligently over these last remaining weeks to answer any outstanding questions they may have as they move forward with their review.

We remain as committed as ever to our belief and the safety of NORTHERA, in the treatment of neurogenic OH and look forward to meeting with FDA and doing everything within our power to win this much needed drug to the U.S. market as soon as possible.

With that said, I will now turn the call over to our Keith, who bring up the speed and where the commercial team stands as we head toward FDA action on the 28th.

Keith Schmidt

Thanks, Bill. As we are now drawing very near our PDUFA date, we are beginning to see the culmination of this past year's efforts come together fast and furiously. Our goal at the outset was to get as far along as possible and prudent in planning our sales operation and sales force integration so that we are ready and able to act swiftly on approval.

While the addition of dedicated Chelsea sales reps will not take place until NORTHERA is approved, we have made substantial progress toward ensuring that a team can be put in place and in the field in a manner that is not only timely but ultimately effective.

To this end, we initiated clinical market research efforts in 2011 that have assisted us in identifying both regional key opinion leaders and current high prescribers in this space. We've hound our understanding at the market and now that we believe we have a comprehensive understanding of who is treating these NOH patients, how they are currently treating them and what influence is their treatment behavior.

Collectively, this information has influenced our decision regarding the number of reps to bring on board with a vision of territories and help thus to ensure that each rep is going after the right positions during courage swift adoption of NORTHERA right out of the gate.

In parallel to our market research and sales force planning we've also made substantial progress towards establishing the necessary infrastructure associated with putting a new sales force together primarily to equip the team with things necessary like a customer relationship management tool and information technology capabilities. All the knitty gritty things they need to do their job. And I realize this isn't the glamorous side of commercialization, but the devil is in the details and the more planning we can do on this front, the greater the likelihood will be that routine logistical items won't trip us out.

Earlier this year, we brought on 10 regional business directors. This team has been invaluable. And helping us not only to transition some of our strategic operations planning into practice, but they have been heavily involved with the screening, interviewing and identification of future sales reps for Chelsea.

As we have previously discussed, our plan is to extend offers to approximately 85 reps, contingent upon NORTHERA's approval. This process is well underway and we anticipate having full teams lined up in the next few weeks.

A big part of our efforts as you can imagine has also been finding the support that will empower the sales reps to do what they do best which is to sell. We have been working hard over the last several months to test and refine our core messaging, create the necessary sales aid and increased awareness amongst our target market physicians.

Simon mentioned at the start of the call, the success we had at the Movement Disorder meeting last year, while we anticipate this year's meeting to be an even bigger event for Chelsea. In addition to the robust lineup of abstract submissions prepared by Bill's team, we plan to have a strong corporate and brand presence with a number of planned events ready to engage physicians' infirmary introduce NORTHERA to this audience.

Assuming things goes planned later this month, all these efforts leave us feeling well-prepared for a target launch date in June. Despite the progress we have made, there remains much work still to be done. However, the majority of which is subject to approval of NORTHERA and will take place in the weeks following that approval.

Key to our next steps will be labeling discussions with the agency. And once those discussions are completed and we know just exactly what we have to work with, we can begin to lock-in the final pieces to this puzzle, including final details of our launch strategy, final pricing and in turn our forecast. At that time, we look forward to providing a more detailed analysis of the commercial expectations for 2012.

In the meantime, I'll turn the call of over to Art and let him take it from here.

Art Hewitt

Thanks, Keith. Following the successful conclusion of both, the ADHD and fibromyalgia studies last year, along with the majority of the safety studies related to our Neurogenic OH program, we currently have two ongoing clinical efficacy studies that we anticipate completing in 2012.

First of will be the results from our Phase II study of CH-4051, in patients that have demonstrated an insufficient patient response to methotrexate treatment. As Simon highlighted, during the fourth quarter we have reported the unblinded results of our interim analysis of this study, reflecting full enrollment in the two lower dose groups of CH-4051 and partial enrollment of our methotrexate control arm. This study is a dose-ranging trial intended to establish both an effective therapeutic dose of CH-4051 as well as to compare that efficacy to methotrexate.

As previously reported, the interim data showed us three key findings that we feel board well for the anticipated results of the high-dose arms in the study. First, an indication of a dose response in the CH-4051 arms; second, the 1 mg dose achieved a therapeutic benefit on par with methotrexate; finally, evidence of safety and tolerability profile that was superior to methotrexate.

We were clearly pleased to see that, not only did the 1 mg dose of CH-4051 demonstrate similar efficacy to methotrexate, but we also saw a robust response to the lowest dose of 0.3 mg. Based on these data, we hope to see increased potency at the 3 mg dose level.

Further, using both the results of our Phase I studies as well as the data generated by this study today, we don't expect to see a significant change in the safety for tolerability profile at the 3 mg dose level. This study is now fully enrolled and we are expecting the last patient to complete their last visit in the next several weeks. This puts us on track to report topline results from the study in June.

Our other ongoing study is the NORTHERA study 306B, which is evaluating the effect of NORTHERA treatment on the frequency of falls in patients who have Neurogenic OH associated with Parkinson's Disease.

Based on the outcomes in 306A, in which we saw a 60% reduction in the frequency of falls associated with NORTHERA treatment and the anecdotal evidence we continue to hear from patients and physicians that participated in studies 301, 302 and the long-term extension programs, we are eagerly looking forward to the outcome of this trial. Study 306B is intended to enroll 160 patients. And based on current enrollment, we are anticipating completion of the trial and availability of topline results late in the third quarter of 2012.

Simon?

Simon Pedder

As I hope is apparent by today's discussion, we have been working diligently over the past year to bring our first drug candidate to the market here in the U.S. While doing so, we have worked to maintain an active, robust development program in hopes of broadening our pipeline and commercial product candidates.

In the coming weeks and months, we plan to continue our efforts to achieve both of these goals and believe that have we not only the right drug candidates in the portfolio, but perhaps more importantly the right team of experienced and dedicated employees who have proven themselves more than capable of overcoming unexpected challenges.

With that said, I would now like to turn the call over to the operator so we can take any additional questions you may have.

Question-and-Answer Session

Operator

We have a question from the line of Robyn Karnauskas with Deutsche Bank.

Robyn Karnauskas - Deutsche Bank

I'm just wondering in your market research how we think about what will it take to get doctors to try NORTHERA versus midodrine if you are a heavy user. Midodrine, obviously it's the only drug on the market. But what might incentify those doctors to try a new drug? And do you think they would initially try it in all their patients or it'll be a gradual experimentation of the drug and uptick over time?

Simon Pedder

Let me turn it over to Keith, but the obvious answer is a lot of these patients who have severe orthostatic hypotension have really tried everything already. They've already tried midodrine. They've tried Florinef. They've tried a lot of experimental compounds that don't have this indication in the attempt to try to establish some type of benefit in this patient population. And I think that gets backed up by the market survey. I'm going to hand it over to Keith to respond.

Keith Schmidt

The market research showed us that physicians are more than willing to try a product like NORTHERA given its profile in terms of efficacy and safety and tolerability in this frail and elderly population. The reality is that most patients can't take the therapeutic dose of midodrine that the physicians would like to get them on because of alpha-agonist adverse events.

Certainly the label talks about supine hypotension and physicians are concerned about that, but the real issue turns out to be the tolerability of the dizziness, the painful urination that patients have with products like midodrine, the tingling, the needle sensation in the scalp. They simply can't get patients on high enough doses to get therapeutic equivalence that they would ever see with NORTHERA. And so they realize that. They've been holding the dose back.

So we see patients and physicians willing to try the product and we're hoping to get it to them soon enough. Did I answer your question or was there another aspect that you were looking for?

Robyn Karnauskas - Deutsche Bank

That's helpful. Just trying to get a better sense as to where the initial uptick might occur, any differences between MSA patients and Parkinson's patients? Any areas where there maybe more price sensitivity within the market for NOH?

Simon Pedder

I don't think this is a price sensitive market per se. We don't see any evidence of that. Certainly patients are desperate to get to a quality of life where they can, in the MSA for example, get out of their wheel chairs long enough to go take a shower or stand up to make a meal. That can be the reason that patients can live alone and not have to have a caregiver.

So as we look at patients coming into the marketplace, we're hopeful that there will be a quick titration to the dose effect and let the product do what it's done in the clinical trial, because patients are very happy with it and the physicians that have kept patients on it now somewhere up to two years tell us that they're really happy with it. So we're hoping that to be the case when we market it.

Robyn Karnauskas - Deutsche Bank

Another question on the 306B study. How much insight do you have as far as the kind of patients that are enrolling in that study and are you checking to see that there are more sicker patients or at least a good chunk of sicker patients who might be following more often as the trial enrolls?

Simon Pedder

It's the same population that we enrolled in 306A. It's Parkinson's disease patients. It's patients with Parkinson's who obviously already have orthostatic hypotension. We don't have a restriction about following them to enter screening to see how many falls will they have. But what we've learned from 306A is these patients tend to fall a lot. By the definition that we have, we have a situation where there was hundreds of falls in study 306A. We expect that there will be hundreds and hundreds of falls in 306B. It's just whether or not we can duplicate the finding of the 60% reduction in 306A.

Robyn Karnauskas - Deutsche Bank

And lastly, data for the RA product in June, have you decided whether you're going to wait to release that data in front of a medical meeting or how much information are we going to get?

Simon Pedder

You'll get the topline data. We are trying to keep some data for obviously the lead investigator to present at a scientific meeting. So it's still obviously of great interest. But we will provide topline data.

Operator

And our next question is from the line of Liana Moussatos with Wedbush Securities

Liana Moussatos - Wedbush Securities

I am in here labeling discussions with the FDA. Do you still have the same four underlying disease areas or any discussion about maybe Parkinson's not being included this first time or another indication, anything along those lines?

Simon Pedder

We've got no implications of any discussions that would change us from our existing recommended indications.

Operator

And our next question is from the line of Alan Carr with Needham & Company.

Alan Carr - Needham & Company

Wondering if you can clarify some of your assumptions around financial guidance? Can you remind me I guess where you stand right now in terms of infrastructure and also what sort of assumptions you have around post-approval trials for NORTHERA?

Simon Pedder

In terms of infrastructure?

Alan Carr - Needham & Company

Yes. I am wondering what the delta might be before and after approval in terms of infrastructure spend and then also if you guys included what your plans are around factoring for post-approval trials. Would that be included in this financial guidance?

Nick Riehle

Let me answer the latter. We do have the money in there based on what we've committed to date for the FDA, which is primarily renal impairment. Obviously, what things work out with in terms of what else might happen and the timing for those trials would get to be determined of course. But there are certain amounts in there to get those processes started after approval. Exactly what you mean by infrastructure specifically? Are you looking for cash run rate?

Alan Carr - Needham & Company

Do you have the entire, I guess, commercial infrastructure in place except for the 85 sales reps? Is that only thing that's remaining?

Nick Riehle

We have put most of that in place or going in place. But a lot of the SG&A spending in the guidance provided relate to amounts over and above that. So it would be in the launch of advertising, and promotion and of course the big piece would be the field sales rep. So there is still dials that we are turning with that and we are certainly comfortable with our ability to turn those dials spending on the timing for approval.

Alan Carr - Needham & Company

I am wondering if you guys have any new thoughts or a different perspective on the results of the advisory committee meeting unless you've had a few weeks to reflect on it.

Simon Pedder

No. I mean obviously we were delighted with the outcome. We still like to wonder how that outcome would have been if there had been, say, nine neurologists and one cardiologist. But obviously there were a number of cardiologists who did have some experience with the disease and placed their opinion that this medication was urgently needed. And we appreciated that.

Alan Carr - Needham & Company

In 306B, is that for the third quarter or were there any unexpected changes in enrollment right there?

Simon Pedder

No, it's still expected in the third quarter.

Operator

And our next question is from the line of Jonathan Eckard with Leerink Swann.

Jonathan Eckard - Leerink Swann

On 306B, could you tell us are there any pre-specified sub-analysis by any particular stratification factors that you have in that?

Simon Pedder

No, there aren't.

Jonathan Eckard - Leerink Swann

Also with regards to the next doses of the 4051, based on your analysis now of the first two cohorts and maybe your understanding of the PK based on earlier trails, what can you point to that gives you the confidence about both the safety and the efficacy? Is there any current trends you saw when looking back up to there?

Simon Pedder

I will give you a specific response and then I'll turn it over to Bill to have to give his expert thoughts. We saw in ACR20s go from approximately 37 with the 0.3 up to about 53 with the 1. So if we continue that line, obviously we get up to ACR20s in this tough-to-treat population that we get pretty excited about.

The incidence of side effect in 0.3 and the 1 was somewhere in the 40 percentage. We didn't get details. We don't know about severity, but we know roughly in the 40 percentage of patients had some type of adverse event and it was somewhere in the 60s with methotrexate. So it seemed relatively flat from the side effect profile, again not knowing the severity.

So if we continue that trend, we think we will have a drug that will create a lot of interest.

Bill Schwieterman

Jon, I guess the only thing I'd add to that is we specifically designed the study to look for a dose response. We cover a lot of dose range from 0.3 all the way up to 3. What we are doing now is we are tripling the dose from the 1 up to the 3 and seeing the kind of efficacy and safety we saw at the lower two doses and just knowing that this is a potent molecule as for evidence from the animal studies and in vitro studies and seeing we're on the ascending part of that curve up. We're pretty excited about that high dose coming in. It really has to do with our trial design and using a big spread of those doses coupled with the data that Simon talked about.

Jonathan Eckard - Leerink Swann

And then the last two questions around met rein. So based on your research what is the average time or length of treatment duration for a patient of midodrine in the marketplace, how can we last on the drug.

Keith Schmidt

The answer is it all depends, certainly with the disorder or orthostatic hypotension, the patients if it's neurogenic in nature, their chronically put on midodrine but it's not that they take it every day or take it the way its directed, as that was when I was answering Robin's question, we see a lot of discontinuation and restarts of midodrine where patients might take it for our month or two and then stop.

In fact, when we look overall, see like a 51% continuation rate with midodrine people come off and on all the time, when you try to average it out over a year. And that's just an indication of the fact it's a tough drug for elderly and frail patients to be on chronically with the adverse events that they get and the supine hypotension that it causes.

So I know you guys are all probably trying to model what's happening with midodrine and thinking that might be a good surrogate for what that would with NORTHERA but I can tell you in our hands, as we look at market research we see a much better probability for patients to stay on NORTHERA and take it as prescribed on a daily basis.

Right now it positions in an order to preclude supine hypotension. We'll tell patients to take it only if you're going to stand up today, if you're be busy. In some cases, they tell patients don't even the third dose because they might go to bed early and they're trying to ward off supine hypotension.

So the prescription data on midodrine is muddy but as we talked with physicians in our clinic, in our market research efforts and we've talked to hundreds of them, now. We have a pretty good feel for how they're managing the adverse events and it's with patients being told to kind of take it as needed, that sort of thing.

And we don't anticipate that would the case with NORTHERA because we don't have the adverse events that would keep the patients from being compliant.

Jonathan Eckard - Leerink Swann

And then I'm not sure, if something you know but midodrine is used for quite a few things, other than NOH. Are you aware what percentage of midodrine sales or prescripts are for setting it outside of NOH. And do any of those settings, are they associated with other forms of hypotension?

Simon Pedder

I don't know that I can answer the second part of your question as well as you'd like. We know that it's used in some cases, post-surgically at to bring patients out of anesthesia, to increase their blood pressure they'll use it in a one-off situation like that. And there is a bunch of other things that are off labeled that the product is used for.

The first part of your question, I can answer because we've done quite a bit of work on that. We believe as we've looked at the marketplace, there are about 130,000 to 140,000 patients on midodrine today. And as we've matched those patients up against ICD-9 codes that are related to hypotension or syncope, we believe about 80,000 of those patients are taking the product for NOH. So you can do the math there, between 130,000 and 140,000 and 80,000 of them being for NOH.

Jonathan Eckard - Leerink Swann

That's a quite a big number that are not for NOH and that wouldn't account for just like a one-time surgery. Are there any other big ones that you know of?

Simon Pedder

No, it's all over the board. When we look at the marketplace there were like two and three percentages here and there. I can't think of anything that specific.

Operator

And our final question is from the line of Juan Sanchez with Ladenburg.

Juan Sanchez - Ladenburg

First question is, how do you define a flow in Study 306B?

Art Hewitt

It has a definition in our electronic data capture unit that basically says an uncontrolled movement from a higher to a lower level. I mean it's not very attractive in a sense in terms of a definition but that's essentially the way we define a fall.

Bill Schwieterman

And that's the way that it's been defined by the groups especially in Parkinson disease which have came up with that definition probably about 15 years ago.

Art Hewitt

It actually dates back all the way 1980 conference, it's in well established.

Juan Sanchez - Ladenburg

So what's the logic behind that definition?

Simon Pedder

I'll just say for any clinical trial you have to standardized what that patient experiences and through a consensus conference, it happens with all the end points you use in most trials whether it's the ACR and so forth. This was the definition that they felt was the most meaningful. I mean to address the definition where they fall to the ground and have an injury would be too strict and to have something where they weren't uncontrolled would be too loose. So this is the definition that came up with. I don't know, if you have any more insights into that.

Keith Schmidt

Not particularly, but I mean I would add that if someone falls and lands on their bed that should still count as a fall and not be discounted just because they didn't actually encountered the ground so that's sort of the purpose in the somewhat vague in sense of that definition.

Bill Schwieterman

I would add, Juan, that when we looked at falls in 306A, we also look at what were the repercussions of those falls. And what we found is that the patients on droxidopa not only had a 60% reduction falls but had 50% reductions in injuries associated with the fall.

Juan Sanchez - Ladenburg

And one last question, Do you have to submit additional data to the FDA following the advisory meeting or you haven't?

Simon Pedder

It's a continual process. So they ask us about certain things we didn't response. We've given them a little bit more but nothing in a specific area, and not a specific area of concern.

Operator

Thank you. This concludes the Q&A portion of today's conference call. At this time, I'd like to turn the call over to Dr. Simon Pedder, President and Chief Executive Officer for closing comments.

Simon Pedder

Well, I just like to close by thanking all of you for your interest and support in Chelsea. And we certainly look forward to keeping you updated during this exciting year. Good night and take care.

Operator

Ladies and gentlemen, thank you for participation in today's conference call. This does conclude the program. And you may now disconnect. Thank you and have a wonderful day.

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