Manhattan Pharma: The Wall Street Analyst Forum Presentation Transcript

Manhattan Pharma (MHA)

The Wall Street Analyst Forum

November 28, 2007 9:10 am ET

Executives

Gerry Scott - President, The Wall Street Analyst Forum

Douglas Abel - President and CEO

Presentation

Gerry Scott

Good morning, ladies and gentlemen. In our attempt to adhere to the public schedule I would like to go ahead and introduce the next company in today's program. As most or some of you know, investors actually attend today's meetings three different ways. The first way is, those that physically attend here in New York. And we'll continue to do that, you know we have physical conferences, but leveraging new media technologies, we have two other mechanisms we use for that. Investors attend through two different news media channels. The first is traditional webcasting where an investor can hear the presentation live, view the Power Point presentation live, but also have access to retrieving the webcast for 30 days following the live event.

And the second immediate tool that we use is, we have a transcript of the presentation including the Q&A session, word for word, produced and is web searchable on Yahoo Finance, Google Finance, AOL Finance just a few hours after the conference. We are pleased we are being the first sponsor financial conferences to do that, and the theory being that not all investors want to stick around for 40 minutes for a webcast, in fact most don’t. So they can go through a transcript in seven or eight minutes, including the Q&A session of a analyst meeting the same day it took place, and that has value and it has even more value if you can find it on Yahoo Finance as a easily web searchable event, just a few hours after the conference. So we are the first analyst conference to do that, so you can find that in three to six hours from now on Yahoo Finance, and [for no cost] seekingalpha.com that the investors probably know [better than the company] is doing that for us.

The next company in this [point of] program is Manhattan Pharmaceuticals., the very pharmaceutical company that acquires and develops novel, high-value drug candidates primarily for the treatment of dermatologic and immunologic disorders, with a pipeline consisting of four clinical-stage product candidates. Manhattan Pharmaceuticals is developing potential therapeutics for large, underserved patient populations seeking superior treatments for conditions including psoriasis, atopic dermatitis, I think I got that right, eczema, head lice, and mastocytosis.

So for further introduction, I would like to introduce Douglas Abel, President and CEO.

Douglas Abel

Thank you, Gerry and I unfortunately don’t have a live demonstration to share with you, although statistically and most audiences have someone with either atopic dermatitis or psoriasis is pretty rare at our age that we have head lice infestations, although and if we have a child of the right age we might bring it into the house. So, I will do what I can, Gerry, to get -- to adhere to the time schedule going forward. As with all public companies, we begin with the Safe Harbor statement. Should you choose to invest in Manhattan, we certainly hope folks do and we'll discuss the exciting progress we're making with our pipeline. Please take advantage of the opportunity to review all of our public documents and understand all of the appropriate risks and specific risks associated with Manhattan Pharmaceuticals as with any specialty pharma company.

Now we begin with the highlights, the overview of Manhattan Pharmaceuticals and who are we today. As Gerry introduced us, we are a specialty pharma company focused clearly in dermatology and some immunology disorders that have dermatology symptoms. We have in place a strong management team with the experience to develop, license and commercialize our drug candidates in the most effective and appropriate way for our shareholders and for our corporation.

As we stand today, we have four clinical stage product candidates that we are actively pursuing. And with those four candidates, multiple near-term milestones that we hope would generate significant value for us going forward.

Now our leadership team, my background is about 23 years now of industry experience, the vast, vast majority of that in healthcare and biotechnology. I started my career in this space at Allergan Pharmaceuticals where I spent about 12.5 years to 13 years. My last role there, being in charge of the Marketing & Development of some specific indications for BOTOX. I was part of the original BOTOX team for it orthoneurologic conditions and then came back into the team, responsible for the cosmetic and hyperhidrosis indications.

After moving on from Allergan, I spent 4.5 years at Biogen Idec, where I led the Dermatology Business Unit and moving from Biogen to Tarpan Therapeutics in order to start a company built around the psoriasis project, we'll talk about today. We merged Tarpan into Manhattan about 2.5 years, almost 3 years ago and I am, have been the CEO of Manhattan Pharmaceuticals since that time.

Our Chief Medical Officer, Alan Harris brings to us 24 years of industry experience plus seven as a practicing physician from some of the biggest names in the space. Obviously, he brings a great deal of background in understanding the most effective and appropriate development path for our compounds having been at Pfizer, Schering-Plough, Novartis. He has the right kind of background in order to help us as we develop our projects moving forward.

Our Chief Financial Officer, Mike McGuinness, 30 years in industry. Of those 30 years, I think most appropriate the last 18 has been as a CFO. His last position prior to joining Manhattan at Vyteris, a publicly-traded drug delivery company; prior to that, at a private biotech company EpiGenesis; and then, on your side of the street, the investor side of street, as a CFO for BlueStone Capital Partners.

Now that background across those spaces clearly positions Mike to help us as we deal with the evolving Sarb-Ox and public requirements as a public-listed company, also though, through those experiences, a lot of background in licensing and structuring those agreements and transactions, as well as on the financing side.

So, as you can see, we have a very senior management team in place for our company in our lifecycle. Now developmentally, we're very excited about the pipeline that we have to work on as a management team. A topical PTH (1-34) in development for psoriasis, and we are now in the process of enrolling and dosing patients in our Phase 2a trial under our corporate IND. That study is ongoing. We'll talk a little more about that as we go forward.

We are excited about the second product candidate listed Hedrin. We're developing this as a medical device. While appropriately, since we have not had the official dialogue with the agency at this point, it’s labeled as pre-IDE or basically an investigational device in the United States.

I will note that this product is on the market now across Western Europe, both Continental and the U.K., and it's generating in that market segment about $45 million in annual sales. That sales number is prior to launch in Germany, which launched in the September timeframe.

This is not a product that we generate revenue from outside the US, we in-license North American rights. However, this is a product that's quite successful in those European markets. I will talk about why we are so excited, as we go through some more detail.

Altoderm is a topical formulation of cromolyn sodium in development for pruritus, itch, and atopic dermatitis, and specifically the itch associated with atopic dermatitis. We've announced that we've submitted the IND request. We do have a pre-IND meeting scheduled with the agency for January. However, this product is the subject of two Phase IIIs out of Europe. I'll talk about that data going forward as well.

Finally, in our hybrid space of dermatology, immunology is an oral formulation of cromolyn sodium in development for initially an orphan condition mastocytosis. This is an excess presence of mast cells. With the oral, you're primarily treating this problem in the gut, which has associated GI problems, but there is a cutaneous or skin manifestation of the disease as well.

Again, while pre-IND in the US, we do see this as a 505(b)2 path as there is an oral formulation of cromolyn and a liquid formulation on the market today. We believe we'll have some convenient advantages and potentially some efficacy advantages over that formulation as well.

Now, going into a little more detail, our topical formulation of parathyroid hormone 1-34, as I mentioned, in development for psoriasis. Now, psoriasis is a disease symptomatically of excess skin cells. The skin is revved up. It's turning over way too rapidly. A normal skin cell lifecycle is about 28 days. In psoriasis, you have approximately a 7-day lifecycle from both at the base layer to slopping off on the outside of the skin.

That revved-up lifecycle means you've got too many keratinocytes or skin cells and they are moving too rapidly through the skin structure and therefore don't have a chance to develop normally. So, you have poorly differentiated, poorly developed skin cells that are building up in too thick an environment and that you get the characteristic thick scaly plaque associated with psoriasis. You also get the redness, the erythema, because obviously that accelerated lifecycle requires a lot of blood flow, energy, etcetera.

Now, in a vast majority of patients, this condition is treated topically. Of the 4.5 million Americans estimated to suffer from psoriasis, the vast majority, only two-thirds are mild to moderate, even though one-third that are severe that are candidates for the biologic therapies that have been making a lot of noise over the last several years, often use topical products in combination with those biologic approaches.

So, we see a topical product as having the opportunity to open the full 4.5 million Americans suffering from the condition.

The available therapies today are limited by tachyphylaxis or loss of effect over time. Toxicity especially at high doses limited efficacy or irritation. Obviously, the skin of these individuals is quite irritated.

Now, PTH (1-34), the active ingredient we are working on, is familiar to the FDA. This is the active ingredient in an improved injectable product that's used for the treatment of severe osteoporosis. This is a Lilly drug called Forteo. While we don’t have a relationship with Lilly, I simply point this out as there is a wealth of toxicology, pharmacology work out there. There is also familiarity in approval of the agency of this active ingredient for another indication.

We hold worldwide rights for PTH (1-34) and see the market in the United States currently at $400 million to $500 million, although that is dominated by generic steroids, so there is a lot more prescriptions in that space than the $400 million to $500 million market would normally imply. The rest of the world market is quite similar in size to the United States.

Now, the current lead product in the space in the United States of vitamin D3 analog, Dovonex, our last IMS data we looked at was at a run rate of about $150 million year in the United States. So, we see topical PTH (1-34) as having that kind of potential, as it's a new novel approach that has some potential advantages over the currently available therapies.

And those advantages really begin with the data set. Now visually, as you can see here in the pictures, you see relatively severe disease at baseline, with almost complete clearance in this individual at eight weeks of treatment, I will point out that lot of psoriasis studies run 12 weeks, as that gives the skin more time to normalize and gives that 28-days cycle a chance to kick in the last four weeks of therapy. In this case we see dramatic improvement at only eight weeks, and maintenance through the end of the open label trial, which ran out for up to a year, in number of patients.

Now, as we look beyond the single photo, looking at the population statistics, these 15 patients were conducted in a split-body fashion, so we actually get 15 active, 15 placebo or a total line of 30 statistically. We look across all the aspects of the disease, the scaling and the flakes that are seen on the top of this psoriatic plaque, erythema or redness induration or plaque thickness. You see statistically significant improvement favoring PTH (1-34) over its vehicle in all three aspects of the disease. In the global improvement score, which most closely approximates with what the FDA uses, they use physician’s global assessment as the primary endpoint. In pivotal trials, we see a 67% improvement highly statically significant.

Now, this is a single center trial, so we do in those kinds of trials look at the vehicle or the placebo group performance, in order to understand, whether we have some potential challenges with the study. What we see in this case is that the placebo group is doing exactly what we would anticipate. Approximately 20% overall improvement from using a nice hydrating lotion base or the vast majority of that coming in scaling where you would anticipate seeing them.

Now, as we look again, a little deeper in the data, as I mentioned that greater than 67% global improvement, 60% of the target lesions demonstrate complete clearance. A histology was done, tissue biopsies looking at the skin architecture that demonstrates changes, meaningful changes in the skin structure that support the clinical improvement we see, both visually and in the assessments. And finally, the product is well tolerated with no allergic reactions or significant irritation in this trial. And this study was published in the British Journal of Dermatology back in 2003.

Now, as I mentioned, we have now advanced our formulation of PTH (1-34). That's been enhanced from what was used in that of initial physician IND conducted trial into a Phase 2a study design. This is a safety and preliminary efficacy study. It is multi-center in nature. We have four clinical trials sites. It is randomized, double-blind, vehicle-controlled, parallel group study, so a real study design. We will be looking at 54 subjects, treated for eight weeks, divided into three groups, two dose levels of PTH (1-34) compared to the vehicle base.

So, this study, as I mentioned has been initiated, enrollment and dosing is ongoing. It’s being conducted under an open corporate IND, that we opened early in the fall, late summer, early fall with the FDA, with a lot of work we have done on our new gel formulation in order to open that corporate IND. We did all the underlying toxicology work using the preferred models, and feel quite excited about the progress we've made, with both developing the formulation and now re-advancing PTH (1-34) into the clinic.

As we look forward to the next steps, our goal is to complete enrollment. We are exerting all possible energy into completing enrollment as rapidly as possible, and then completing the study and look ahead to data. Hopefully in the first half of next year, it's our current time line. And we are, as I mentioned, are quite excited about the progress we are making developmentally now, dosing patients with this formulation.

The second part that I'd like to touch on is Hedrin, a product in development in the United States for head lice, but one that is on the market as a medical device in Western Europe, and as a pharmaceutical in the United Kingdom. Now, that medical device approach is the strategy that we'll be pursuing in the United States, based on the external and physical mechanism of action of this product.

It is a novel, odorless, non-insecticide treatment. That compared to what's available in the U.S. market today, all of which are based on common insecticides. And we believe that simple promise of offering a parent the option of treating a child without basically bathing the child's head in insecticide, is a wonderful and compelling message for the parents. And it has successfully been adopted outside the United States.

So, the physical mechanism of action, killing the lice by external asphyxiation, and affecting the water and liquid balance within the lice itself, rather then CNS toxicity, which is the route of kill for the insecticide products that are on the market currently. By using this physical method, non-insecticide approach, also avoids insecticide resistance. As marketed in the rest of the world, there is no combing associated with this product. But the unique formulation, however, it's based on ingredients that are used extensively in cosmetics and toiletries with a long safety history. We have a patent pending in the U.S. and have North American rights to Hedrin for the treatment of head lice infestations.

Now on the market need, this has been a quite market, because it's been a market that has been, as I mentioned, an old established market dominated by insecticide. However, today we have 6 million to 12 million Americans infested, primarily pre-school, and elementary age children, and spreading to the families. There is some evidence of growing prevalence in nursing homes, and other environments, where we have people in close proximity. This is not limited to any specific socioeconomic level. We know of lice outbreaks in some prestigious private schools around the country. My daughter's school had a minor outbreak in her field hockey team. And so, this is not something that is limited to any specific area, but we're seeing it really across the country.

In Europe, this product, as it stands, Hedrin did $45.6 million sales in Western Europe after 12 months holding at 21 share, as I mentioned all of these numbers are prior to the German launch.

Hedrin's first market country in launch was the United Kingdom. In the United Kingdom, Hedrin has $11 million in sales, when you look at the entire lice market including products that are available in the grocery store where Hedrin is not currently available, it’s limited to pharmacy distribution, and so it has a 23% share, number one position in the market.

Product is market leader in Denmark with a 49 share and France with a 21 share in less time post-launch than in the United Kingdom, so you see a very, very successful launch. Now, that launch is based on two things, the success for that launch.

Number one, as I mentioned, just the promise one can offer a patient or a patient's family of treatment of the head lice infestation without exposure to an insecticide with potential CNS toxicity.

However, there is more to this product than just that promise of a non- insecticide approach, and that really begins with the data. We had a press release early this morning on this data that was published recently in the Public Library of Science, a British Publication a head-to-head trial of Hedrin compared to malathion, one of the commonly used insecticide-based products.

We see here a 70% efficacy, [when looking] to attempt to treat. This is the whole population versus 33% from malathion, and the formulation that is less odorous, easier to apply, easier to washout and leaves the hair feeling softer after it's been dried and washed at the following morning.

97% of the treated subjects in Hedrin and their families indicated they will use Hedrin again, versus only 31% versus this formulation of malathion.

Now, as we look beyond this data and look into those that completed the study per-protocol, we see even more dramatic improvement in the Hedrin group in a greater spread statistically, so in this randomized controlled trial conducted in the United Kingdom of 73 patients, as I imagine now published in a peer review journal. We see superiority over one of the commonly used insecticides.

Now the first published data on Hedrin looked at phenothrin, which is a similar compound to permethrin which is commonly used in the United States. Phenothrin is the version of the same molecule commonly used in Europe, especially the United Kingdom. Here we see clinically equivalence to that commonly insecticide with a favorable safety and certainly irritation profile. So, what we have now is a very unique product with a very unique promise.

Clinical efficacy in some cases is superior to other insecticide approaches or to insecticide approaches, without needing to treat the child with an insecticide based product. And it's that combination of science in a winning marketing promise that really has led to the European success and we think set the stage for dramatic United States success going forward. So, as we look at Hedrin overall, superior efficacy compared to the, widely used insecticide treatment.

A mechanism of action that avoids insecticide resistance, which is driving the reduced efficacy of a number of the insecticide approaches in a less irritating formulation no transdermal absorption, does have an effect both on the lice insect itself, as well as on lice eggs. While it doesn’t probably penetrate into those eggs, it does have a hatching inhibition effect, probably by the way it coats the eggs, very similar to the way it’s coating the lice itself.

It also offers a clear treatment alternative for those who have safety concerns about insecticides, which we think is a message that plays well across the world and across the United States, with no need for laborious combing. The quote here is from a UK bulletin that's used in the formulary process, the reimbursement process over there where it seems reasonable to regard Hedrin as the first alternative to malathion, permethrin and phenothrin the currently available insecticide approaches.

So, we see a product with dramatic success outside the United States with roughly equivalent market potential here in the United States. We are looking to develop this product as a medical device following the path that’s been developed in Western Europe with the exception of the UK and have materials available, should we need to do a clinical trial in order to embark on that quite rapidly. Our steps are to get the initial device dialogue in front of the FDA and we are working to get that done this year.

We would then submit a pre-meeting package, assuming a meeting is requested on the FDA side, obtain their agreement, that this in fact is a device development path and whether we are looking at the 510-K or PMA route. We would guide conservatively to one US clinical trial, although I will note at this point we have a 253 patient trial that’s conducted fully in GCP compliance. We also have the additional 73-patient trial recently published and we are evaluating the GCP compliance of that trial but it was done under full Ethics Committee review and with a protocol that was acceptable to the UK agency.

So, we are very excited about the amount of data we have, we are very excited about the market potential, very excited about the market opportunity and finally very excited about the success the product has seen outside the US. We don’t believe that this product has been widely understood in the US market as the decline of exciting advance this is and the opportunity it has.

Just to point out that in Europe the launch of Hedrin and one other non-insecticide product did result in a change in the market dynamics. We had a market that was drying up, going away, declining, and is now growing at a 21% rate over the last 18 to 24 months. So, we have the opportunity to not only capture market share, but to grow our market with a novel promise to the parents of these children.

Our third product, Altoderm is a topical formulation of Cromolyn Sodium in development for pruritus or itch associated with atopic dermatitis. Now, Cromolyn Sodium has been widely used by physicians for over 35 years now, initially as an inhaled agent, primarily used in asthma and often in pediatric asthma. It's also been used in a nasal spray for nasal allergies, NasalCrom, as well as in ophthalmic eye drop for ophthalmic allergies, Opticrom. So again, very longstanding safety history with this molecule, and we believe in the current environment that taking a product with this kind of safety background into the agency is a nice leg up.

In addition, the market for atopic dermatitis continues to evolve, and what's remaining today is a significant and large opportunity for topical foundation therapies. There was a significant advance five or so years ago with the advent of topical immunomodulators or calcineurin inhibitors. Similar mechanism of action to cyclosporine.

Those products dominated this market for a number of years, grew it to $400 million or $500 million segment in the United States. When they received black box warnings from the FDA, a large part of that market went away overnight, because imagine a parent treating a young child, and this is primarily a pediatric condition, having a product with a black box warnings for potential cancer risk.

Now, many of the scientists would tell you that that risk is overblown; however, that is the way the product is labeled, and we saw a dramatic marked effect of that change in labeling. So, we believe that a safe product offering a foundation therapy has a very significant market opportunity.

There are two studies that our Thornton & Ross has conducted, both Phase III trials, EUR-01 that's completed and published and EUR-02 that's ongoing. And we have North American rights to this product.

Now, the market need of about 15,000 Americans. US spend all in of about a $1 billion a year, and that’s an NIH number. About 20% of infants and young children experience symptoms of atopic dermatitis, with about 60% of those continuing to experience symptoms till adulthood. But, we see the core market of being in that children, the pediatric population.

Now the data set, this study EUR-01, was published and available to us as we in-licensed Altoderm and really generated our excitement and our belief that this could offer significant opportunity for foundational therapy in the treatment of this condition. SCORAD is a global scoring system used in Europe. It is validated.

This is published in the British Journal of Dermatology. And what we see over a 12-week blinded study, is statistically significant and clinically significant improvement in the disease in an environment where topical steroids, which were the mainstay for many patients, were allowed to be continued. And we see a reduced use in those steroids during the course of this study.

So what we're seeing is disease improvement, while a highly effective therapy is being withdrawn from these patients. A very compelling message and exactly what we'd be looking for our foundation therapy.

Now, we look deeper the real hallmark of atopic dermatitis is the itch. It's the itch that often leads to sleep loss. If you imagine a young child not sleeping well in a household, you know the disruption that that can spread across the family.

Certainly in my household, when a child is up late at night or uncomfortable and unhappy, that leads to my wife being uncomfortable and unhappy and that quickly spreads through our household. And at least in our situation, she is the primary caregiver with the children. But when I'm there, obviously it becomes a family-wide problem for us.

So, this is really the key, and you'll often see children with a very severe disease literally sleeping with the socks taped to their hands. So they can't excoriate or scratch these lesions. Now, what we see, as we look into the data, and this is a post-talk analysis that we conducted internally looking at the data from the trial, we see a 57% reduction in pruritus or itch in these patients.

Now, as we look across two studies, now 291 patients in both studies conducted in a blinded fashion across the two, we have a very nice safety profile, product safe and well-tolerated. As we look at the first dataset from the first trial, we saw a 36% improvement in disease as measured SCORAD, a 57% improvement in pruritus and a 34% reduction in topical steroids.

Now, but the second study was a little bit confounding, due to study design and allowance really of any common treatment and medication during the blind portion of the study. The efficacy data does not discriminate between the active and the placebo. Both do quite well. However, we do not support the data on the safety and the trend toward pruritus improvement in the blinded portion.

Now, as we continue to look forward into the data from the patients that were initially treated with vehicle in the first 12 weeks that are now in the open label extension, we continue to see dramatic improvement in those patients. It looks as though they were stabilized on the vehicle base, a nice emollient base. Many of these patients came in on no other therapy. And now when you add the active, the cromolyn sodium in the mix, we see significant disease improvement in those patients.

So, as we look across the two studies, we see support for continuing look at pruritus. We have the statistically significant efficacy from the first trial, and there is very interesting step in efficacy in the second trial when we look at the open-label extension.

Now, as we stand here today, we have requested a pre-IND meeting with the agency to discuss our development path with Altoderm. That meeting is now established for January of 2008. The patent was issued on the formulation by the USPTO this year, and we have material available and ready to go from Thornton & Ross, as obviously, they are continuing to conduct the ongoing trial for this material being made routinely.

Our next steps in preparation for that meeting are to submit the pre-IND package that goes in 30 days in advance of the meeting. We're wrapping our package up now. At the meeting, our goal is to obtain agreement that this is in fact a Phase II program looking at the indications of pruritus and atopic dermatitis, and potentially other itch associated conditions. There is a very large market for a variety of itchy skin conditions, if you will. We think based on the mechanism of action, and the history of cromolyn sodium, and where it has seen the most efficacy, that pruritus is the right place to focus in order to generate a statistically significant data. And more importantly inward access of very, very large market opportunity, potentially beyond just atopic dermatitis.

Final product is in oral formulation of cromolyn sodium, that’s in development initially for mastocytosis in orphan condition as I mentioned, and then beyond that into other gastrointestinal disorder. So, it’s a cromolyn sodium oral tablet. What's available in the market today is a liquid in little ampoules that must be broken and consumed in a beverage, right before meals. So, we see this clearly as more convenient, to simply to take a tab on an advance of the meal. And there is some potential based on some open label name patient experience in the U.K. But there may be broad efficacy beyond just mastocytosis into other GI disorders, including food allergy, irritable bowel syndrome and some other functional disorders of the GI track.

We do have North American rights to this product, as I mentioned, mastocytosis is an orphan condition, it’s a rare, but serious disorder, about a small group here. But as we look at the potential downstream indications beyond mastocytosis, we have over 2.5 million Americans suffering from food allergies. And again, we’re working with a very safe compound that the agency has seen in a number of formulations over the years. And based on a data set, we are now from a competing product that is also a cromolyn sodium, it's approved in the U.K. and Europe for food allergies. So, we have a robust foundation to continue to advance this tablet formulation.

With that product, we are working with our European partner, again Thornton & Ross in this case, in order to finalize the manufacturing process to be done fully GMP compliant, in order to have tablets to advance forward in the clinical studies.

Now, as we look at the pipeline and where we stand developmentally, in topical PTH (1-34) our near term goal is to complete enrollment of that phase 2a and then look for data next year.

With Altoderm, the regulatory discussions with the U.S. FDA to confirm Phase 2 trial and requirements beyond that trial are scheduled for January of 2008.

With Hedrin, we expect to open that dialogue with the agency, as we get to the end of this year. Obviously we are almost at the end of this year, so you can interpret this as we are moving quite rapidly to get that dialogue started before the end of the calendar year, and with the hope that early next year we have clarification on the direction here as a medical device, and confirmed confirmation of what if any clinical work is necessary in order to pursue approval for Hedrin. We see this as potentially moving quite rapidly through that device development pathway.

With Altolyn we hope to open that dialogue also with the agency in the fourth quarter of this year. Clearly, our focus is on the first three products at this point, as they are much near to market or much near to significant milestones, and also initially target much larger product opportunities.

So, we are focused on making sure that the PTH trial is on track and that we get the Altoderm and Hedrin regulatory guidance as early as possible in 2008.

So, that wraps up the Manhattan story. Clearly we are excited by the products we now have in the pipeline. We are excited about the market opportunities, those provide to us. We see ourselves as a focused company, clearly targeting a number of important dermatologic conditions. With projects that are based on a very interesting foundation of known active ingredients, with in all cases human data available. We believe that puts us in a great position of having already crossed a number of those safety and preliminary efficacy milestones.

So, thank you for joining us this morning. I know we have at least one question as I saw a hand. (inaudible)

Question-and-Answer Session

Unidentified Audience Member

(Question inaudible)

Douglas Abel

So, we are talking about atopic dermatitis, I believe, or eczema. It's believed to be an underlying autoimmune condition. But you often see in children, what you begin with is dry, itchy patches of skin or plaques as they are know. They are not typically as thick and scaly as a psoriasis plaque would be, where you get that raised induration and that hyper-proliferation response, but more of a red. It can be dry and a little flaky patch, significant itch. Now, from there, as the disease worsens you have people who do get psoriaform or psoriasis like plaques, but that’s usually end-stage of the disease, when they have had it for a long time. But as I said, manifested red, flaky, scaly, dry-skin-looking, with usually a significant itchy component. There are some underlying autoimmune conditions going on, because you do see rapped immune response in the skin of these pediatric children.

Unidentified Audience Member

But if you do nothing, does it eventually go, or what?

Douglas Abel

The question is if you do nothing in atopic dermatitis does it eventually go away? About 60% of the individuals who suffer in childhood carry some symptoms into adult life. Now they're often not as severe as what they had as a child, and it’s easier to work with an adult. Though if you scratch, you get a excoriation, which leads to worsening of the disease's condition, so it’s a lot easier to manage in the adult population, than in a child who really doesn’t understand what's going on around him, and he is dealing with this, and the parent dealing with this. And for people with this disease, the skin can become so irritable that even taking a bath can be a problem for some of these children. And atopic dermatitis is part of this so called triad of atopic dermatitis, asthma and allergy, and you often see children with some manifestation of all three. But the bigger market opportunity for us is in that pediatric population, of 12 and under, five and under, being a very dramatic segment, but there are some adults who do suffer.

Unidentified Audience Member

What's the reason why these diseases attack children, rather than adults?

Douglas Abel

The question is the underlying rational or reasoning for why atopic dermatitis is more prevalent in children than adults. And I don't have a good answer for that, if I did, maybe I could solve the disease and we'd have a whole new business opportunity downstream. But it really is a problem in children. We often see asthma and allergy being more predominant in the child. It becomes more manageable as they age, be old, kind of grow out of some of those conditions. But we are seeing a number of people carrying this condition forward in time.

Unidentified Audience Member

Is it typically around your body joints and what is the current treatment for it [and historically]?

Douglas Abel

The question is, that is the condition typically associated with around joints and what has been the historic treatment approaches. There is no predominant body location and often not associated with joints but just areas of broad skin. So it's unlike some of the other conditions, some of the underlying rheumatology conditions where you see inflammation affecting the joints. That because of the vast amount of inflammatory activity is transmitted in to the skin, so around rheumatoid arthritis joint for example, you often experience redness, heat, inflammation. Now this is not that kind of condition where you don't have the joint involvement with atopic dermatitis, psoriasis is a different story.

Historically, the original treatments were things like wet wrapping where you would put a child in a bath get their skin literally to prune, wrinkle, slather them with emollients or Eucerin, a lotion like that, and literally wrap them in wet bandages that are also soaked in the emollients in order to really hydrate the skin. Obviously that's not an easy procedure. It can be dramatically effective for an individual with bad disease. But because of the problems associated with really logistically delivering that kind of therapy, topical steroids became the main stay of treatment, really knocked [an inflammatory] response down.

I'll tell you right now that for a heart patient. The patient who walks in the door that is bright red is itchy, is massively uncomfortable. The topical steroids are going to be the initial thing you apply in order to rapidly quell that inflammatory response.

A well-known product like ours, like Altoderm is then the step-in, in addition to that steroid therapy allow the steroids to be withdrawn and hopefully maintain normal skin and gain some additional improvement.

As I also mentioned four, five, six years ago, there was a tremendous amount of excitement in this space as two topical immunomodulators were developed that offered the ability to treat the underlying immune situation in the skin itself.

In some cases these can offer dramatic benefit. One, the products are little more effective than the other. However, there is an irritation balance there as well, but they really kind of took over the steroid markets, both physicians and patients are concerned about long-term use of topical steroids.

Those products have really build a lot of market momentum, over $400 million in sales on their peak run rate, however when they did get black box warnings, that market was cut virtually in half or more overnight.

So, as we look at the market opportunity, how the product -- a market that had a big advance that to some level was lost due to a labeling change and created some real concern in parents and certain physicians about using those products.

And now as I mentioned, scientifically that concern may be overblown versus the reality, but it had a tremendous market effect. So, we see the market really as primed and waiting for a replacement product, something that can truly offer the safety that a molecule like Cromolyn can offer with some therapeutic benefit.

We believe based on the data, we have currently that we have the opportunity to provide that to these patients.

No head lice questions. Usually someone who has got a kid in a school somewhere with an outbreak, but I guess not today. We’re through that early school reentry period. Well, thank you again for your attention, your questions. I appreciate it, we will move on to the breakout room from here. And thank you, Gerry, I think we are on time. Great, thank you.

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