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Executives

Ian Clements - Senior Director, IR

Keith Katkin - President and CEO

Rohan Palekar - SVP and CCO

Christine Ocampo - VP, Finance

Joao Siffert - SVP, Research and Development

Randall Kaye - SVP, Medical Affairs and Chief Medical Officer

Analysts

Roy - JMP Securities

Ritu Baral - Canaccord Adams

Greg Wade - Wedbush Pac Grow Life Sciences

Thomas Wei - Jefferies

George Zavoico - MLV and Company

Avanir Pharmaceuticals, Inc. (AVNR) F2Q2012 Earnings Conference Call May 8, 2012 9:00 AM ET

Operator

Good day ladies and gentlemen and welcome to the Second Quarter 2012 Avanir Pharmaceuticals Earnings Conference Call. My name is Pam and I will be your operator for today. At this time all participants are in listen-only mode, later we will conduct a question-and-answer session. (Operator Instructions) As a reminder this conference is being recorded for replay purposes.

I’d now like to turn the conference over to Mr. Ian Clements, Senior Director of Investor Relations. Please proceed.

Ian Clements

Thanks Pam. Good morning everybody. I’d like to welcome you to our conference call to discuss our financial and operating results for the fiscal 2012 second quarter.

To discuss our results I’m joined by Keith Katkin, our President and Chief Executive Officer, who will provide a strategic overview of our business and fiscal 2012 second quarter performance; Christine Ocampo, our Vice President of Finance who will provide additional details on our financial performance during the quarter; Rohan Palekar, our Chief Commercial Officer; and Joao Siffert, Senior Vice President, Research and Development, who will provide an R&D update. For the Q&A portion of today’s call we will also be joined by Dr. Randall Kaye, our Chief Medical Officer.

During the course of this conference call we will be making certain forward-looking statements, these statements are subject to numerous risks and uncertainties and reflect our current expectations and judgments. Examples of this forward-looking statements includes statements relating to our expectations for NUEDEXTA sales and revenue growth, future expense levels, the timing and success of future development of AVP-923 for other indications and the potential approval of NUEDEXTA in new markets.

Actual results could vary materially from the results anticipated by these statements. Investors should read the risk factors set forth in Avanir’s Form 10-K for the year ended September 30, 2011 and periodic reports filed with Securities and Exchange Commission.

For the investor communications perspective we will be presenting an overview of the company at three meetings this month. Later today we will present the Deutsche Bank Healthcare Conference in Boston. Next we will present at the JMP Securities Conference in San Francisco and also the Bank of America/Merrill Lynch Healthcare Conference in Las Vegas, Nevada. A webcast of these presentations will be accessible through the Investor Relations section of our website.

With that said I’d now like to turn the call over to Keith Katkin. Keith?

Keith Katkin

Thank you, Ian and good morning everyone. The second fiscal quarter was another strong quarter for Avanir. We continue to see strong growth in NUEDEXTA sales and prescriptions, we secured additional low cost capital through a $30 million debt instrument and we made substantial progress on our clinical and regulatory initiatives.

I will start with NUEDEXTA sales and prescriptions. As you many of you saw in our press release this morning, starting in this quarter we have changed the accounting methodology for recognizing NUEDEXTA revenues. Going forward we record revenues based upon actual shipments to wholesalers. Previously we had used IMS prescription data to record our revenues. Our growth sales to wholesalers during the second quarter grew approximately 42% over the first quarter of fiscal 2012.

Turning to the prescription trends. Quarter-over-quarter total prescriptions increased by approximately 36% to 19,823. Over the same period new prescriptions grew by approximately 28% to 9,658. Since these are IMS prescription numbers they do not reflect the 7.9% price increase we took in December of last year.

In addition, we are seeing robust prescription growth early in our third fiscal quarter, which started April 1, 2012. Total prescriptions and new prescriptions for the first three weeks of April are up over 42% versus the same period in January. This strong star to the quarter further strengthens our belief in the long-term potential of NUEDEXTA for the treatment of pseudobulbar affect.

Turning to our strategic investments in the commercial business. One of the areas we are excited about is the opportunity in the institutional setting. Back in the fall of 2011 we initiated a sale pilot in this segment with 32 sales representatives. The results from this pilot were definitive, just six months into this pilot over 50% of NUEDEXTA prescriptions are now coming from the institutional segment with the positive results from this pilot we have further refined our sales force mix between retail and institutional accounts and as a result we are increasing our institutional sales team by approximately 30%. This expansion should be completed in early June.

Turning to other aspects of our business, we continue to make good progress on key financial and research and development objectives. On the financial front, we were very pleased this morning to announce our $30 million debt financing on advantageous terms. With this financing in place we expect that the need for any future significantly diluted financing should be eliminated and any future equity financings would be opportunistic in nature.

Turning to R&D, Joao will update you on the progress we continue to make exploring the broader potential of the first dual sigma-1 agonist and NMDA receptor antagonist in the areas of neuropathic pain and Alzheimer’s disease.

Finally, I’d like to introduce Rohan Palekar, our new Chief Commercial Officer. Rohan’s extensive background in healthcare sales and marketing, new product planning and strategic analysis as well as a leadership capabilities will be pivotal to the continued commercial success of Avanir. With that introduction, I will now ask Rohan to say a few words. Rohan?

Rohan Palekar

Thanks Keith and hello everybody. I’m thrilled to be joining Avanir at such an exciting time. NUEDEXTA represents a significant opportunity for the company and most importantly for patients’, the care givers and loved ones.

NUEDEXTA is a highly differentiated product, in addition to being the first and only FDA approved therapy for PBA, the results both from clinical trials and what we are seeing in the field are extremely encouraging. NUEDEXTA works fast and it's safe and effective in treating PBA.

Our conviction in NUEDEXTA’s prospects is influenced not only by the feedback we received from physicians to tell us of the success they are having with their patients but also the increased in physician adoption we are observing.

Analyzing the company’s commercial activity, I’m very pleased with the progress that team has made in both the retail and institutional segments. The retail segment of our business grew approximately 17% over the previous quarter. In addition, the institutional segment grew approximately 57% over the previous quarter. This growth has been driven by physicians getting more comfortable using NUEDEXTA and seeing the benefit in their patients.

Results of market research among our physician base, as well as continuing robust prescriptions growth projected the prevalence of PBA is high and there is significant under diagnosis and under treatment of PBA. Research has also shown that patients with PBA are currently under the care of a wide range of physician specialties.

Over the coming months, we plan initiate additional new pilots following a similar model to the pilot we successfully undertook in the institutional setting to address the opportunity with these difference audiences. I look forward to updating you on the NUEDEXTA progress in the coming quarters.

I will now hand the call over to Christine to address our financial results. Christine?

Christine Ocampo

Thanks Rohan and good morning everyone. My comments today will cover our financial results for the second quarter of fiscal 2012. Please refer to the financial results included in the press release for the first six months results. In addition to the financial results summarized in the press release issued earlier, you can find additional information in our upcoming Form 10-Q. All figures yesterday are approximate.

Now addressing the second quarter. We reported total net revenues for the three months ended March 31, 2012 of 10 million as compared to 1.4 million for the comparable period in fiscal 2011. As expected and in accordance with U.S. Generally Accepted Accounting Principles, we have revised our revenue recognition methodology to record sales of NUEDEXTA when units are sold to our wholesale distributors rather than when units are dispensed through patient prescriptions. Thus for the second quarter we recorded growth product sales of NUEDEXTA of 11.2 million, net sales of NUEDEXTA were 9.1 million, of this 1.7 million was recognized as net revenue from deferred revenue. Excluding the deferred revenue, growth and net product sales to wholesaler distributor in the second fiscal quarter of 2012 were 9.2 million and 7.4 million, respectively.

During the quarter ended March 31, 2012, our growth to net discount increased to 18.3% compared to 12.7% in the prior quarter an overall quarter-to-quarter increase of 5.6%. The increase is largely attributed to three main factors, overall growth of NUEDEXTA in contracted managed care account, which resulted in improved access per patient also an increase in the Medicaid rebate as a result of the December 2011 price increase; and increased utilization by managed Medicaid patient; and finally an increase in the use of commercial co-pay card and point of sale discounts for patients under Medicare Part D during the past quarter.

Now going forward, we expect growth to net that it continue to increase to approximately 20% by fiscal year-end which excludes the impact of any future price increases. Regarding our inventory levels, second quarter wholesaler inventories were maintained at approximately two weeks. For the second quarter of fiscal 2012, cost of sales was 534,000 and gross profit was 8.6 million expressed as a percentage of net product sales, our gross margin was 95%.

Research and Development expenses were 6.4 million for the quarter ended March 31, 2012 compared with 2.5 million for the same period in the prior year. In the second fiscal quarter of 2012, our R&D spend was primarily attributed to non-clinical post marketing requirements, medical affairs, EMA regulatory expenses, and the cost associated with the startup of the prime study. Additionally, cost associated with the in-licensing of (inaudible) dextromethorphan from Concert Pharmaceuticals were also recorded in this expense line.

Selling, general and administrative expenses for fiscal 2012 second quarter were 20.2 million compared to 13.3 million for the corresponding period in the prior year. The increase was primarily due to an increase in expenses related to the commercialization activities for NUEDEXTA.

Total operating expenses for the quarter were 26.6 million compared with 15.8 million for the comparable quarter in 2011. For the three months ended March 31, 2012 and 2011, the company recorded 1.2 million and 951,000, respectively, for stock-based compensation expense. The cash used in operations for the quarter ended March 31, 2012 was 13 million.

Our net loss for the second quarter of fiscal 2012 was 17 million or $0.13 per share compared with a net loss of 14.5 million or $0.12 per share for the same quarter in 2011. As of March 31, 2012, we had total cash, cash equivalent and restricted investments in marketable securities of69 million.

Looking forward for the remainder of the year, we expect our operating expenses to be in the higher end of the previous range of 85 to 92 million. So, therefore, we will be between 90 and 92 million breaking total operating expense down. R&D expenses will be in the range of 23 to 24 million including our medical affairs organization, and SG&A expenses will be in the range of 67 to 68 million.

Regarding NUEDEXTA revenue we continue to evaluate the appropriate time to provide guidance. This morning we also announced the signing of an agreement with Oxford Finance for a term debt deal of 30 million which further strengthens our cash position. Although, our operating plan did not have us requiring any capital, the addition of this growth capital at a low cost increases our working capital and should eliminate the need for any future significantly dilutive financing, making any future equity financing opportunistic in nature.

So with that summary of our financial results, I’d like to turn the call over to Joao. Joao?

Joao Siffert

Thanks Christine. And as a reminder NUEDEXTA is the first and only FDA approved NMDA receptor antagonist and sigma-1 receptor agonist indicator for PBA. (Inaudible) of these receptors NUEDEXTA is believed to dually modulate glutamate and other (inaudible) chemical pathways in the brain. Glutamate is important for learning a memory, regulation of pain and is implicated in a number of other neurologic and psychiatric diseases.

Due to NUEDEXTA unique methodism of actions there are number of interesting potential follow-on applications for this innovative therapy. So taking a look at our current development activities in some potential follow-on indications.

So, first the prime study which is now underway in the U.S. and abroad is testing the safety and efficacy of three-dose levels of AVP-923 for the treatment of central neuropathic pain and patients with multiple-sclerosis.

We currently have approximately 40 study sites in the U.S. activated and recently started to activate sites in Europe and South America. Our current estimate on timeline is that we should announce preliminary data in the second half of calendar 2013.

Second, we continue to work alongside key dimensional experts to develop a study in patients with Alzheimer’s disease and behavioral disturbances. We are anticipating the following of our IND for the study by the end of the second quarter of 2012. This will be a proof of concept study in the further assessing the safety of AVP-923 in this patient population and exploring the effect of AVP-923 in agitation and other behavioral disturbances associated with Alzheimer’s disease. The study will assess two doses of AVP-923.

DMQ 20/10 which is NUEDEXTA dose currently approved for PBA and DMQ 30/10 versus placebo. We plan in enrolling up to 200 patients in the Phase 2 study. In terms of timelines, we anticipate the enrolling the first patient in the third quarter, and estimate we should announce preliminary data in late calendar 2013 or early calendar 2014.

With no approved treatments for agitation and (inaudible) and increased safety concerns related to the use of anti-psychotics in this patient population. This is a scenario of tremendous unmet medical need and we are excited to initiate a clinical search program later this year.

During the quarter we also announced the licensing agreement for worldwide rights to develop and commercialize deuterium-modified dextromethorphan or DDM. We believe deuterated dextromethorphan provide therapeutically effective levels of dextromethorphan potentially without the need for an enzyme inhibitor such as quinidine. As part of our portfolio strategy, we intend to explore the utility of DDM in neurologic and psychiatric disorders were dual NMDA antagonist and sigma-1 agonist maybe beneficial.

With respect to our clinical plans for deuterated DM, we are planning to conduct human trials later this calendar year. The purpose of these studies will be to better characterize the pharmacokinetic profile of DDM. We anticipate being able to share data from these studies early in 2013.

Turning now to medical affairs activities and building on Rohan’s earlier comments on physician adoption. We believe the excitement and enthusiasm of the physician communities further evidenced by the increasing number of mentions of NUEDEXTA getting at major medical meeting. For example, [in our] presentation of the American Neuropsychiatric Association, ANPA meeting as well as podium discussion of both the American Association for Geriatric Psychiatry, AAGP, and the American Academy of Neurology, AAN meetings demonstrate the importance of the identification and management of patients with PBA is actually resonating.

With regard to the PRISM registry, we have been making excellent progress of both side activation and patient enrollment and we anticipate presenting preliminary data at the upcoming Consortium of Multiple Sclerosis Centers Meeting in May. Thus far the preliminary findings from the registry are extremely encouraging.

Finally, as a reminder we filed the NUEDEXTA marketing authorization application for PBA in October of 2011. In March, we received the day 128 questions from the agency and we are now in the process of responding to the questions and look forward to continuing the review process with the EMA. Based on the EMA MAA process, we expect we could have (inaudible) recommendations by the first calendar quarter of 2013, so the European Commission decision to follow approximately 3 months later.

So, with that update in clinical research and medical affairs activities, I’ll hand it back over to Keith. Keith?

Keith Katkin

Thanks Joao. I’m very pleased with the foundation and progress we have made over the last 15 months since launching NUEDEXTA. We have made significant progress on both the commercial and clinical fronts. During the remainder of this year, our focus will continue to be first building the NUEDEXTA market in PBA and growing sales; second, further advancing NUEDEXTA or AVP-923 in the new clinical opportunities; third, advancing the European regulatory process for NUEDEXTA and PBA; and finally, actively managing our cash position and expenses.

With that summary of our business and financial update, I’d now like to open the call up for questions. Operator?

Question-and-Answer Session

Operator

(Operator Instructions) And your first question comes from the line of Charles Duncan with JMP Securities. Please proceed.

Roy - JMP Securities

This is Roy in for Charles. Looks like if I draw straight line through scrips were kind of over the lines in the past five weeks, could you guys say that we maybe passing inflection point in scrips and if so what you think would explain that inflection point?

Keith Katkin

I can start with the few comments Roy and then I will turn it over to Rohan to add any color that he would like. I think if you look at the last five weeks, certainly we have seen five straight weeks of continued growth with the exception of this week that just reported on Monday. And I think as Rohan alluded to in his comments, certainly we are seeing very robust growth in the institutional setting, but also within the retail setting. So, it seems that all aspects of the business we are seeing very nice growth. So, with recent inflection point, I think it's too early to tell, but I’m confident and the team’s ability to continue to really take advantage of opportunities within both the retail side of the business and the institutional side of the business, and that is focused on continuing to grow the business and exceeding expectations. I’ll turn it over to Rohan if he has anything he would like to add.

Rohan Palekar

So, I think Keith you captured the key points. The one thing I’d say in the retail setting what is encouraging is we are seeing growth across the different specialties, i.e., neurologist as well as psychiatric as well as other specialties.

Roy - JMP Securities

And as far as revenue recognition going forward, what would you say maybe make the most sense brining a scrip curve backed by the two week warehouse inventory or the recognition of the deferred was about 20% say in this quarter, should we ramp our revenues up by 20% what you guys think make the most sense. Thank you.

Keith Katkin

So, this obviously a one-time event that really as you mentioned new accounts for the inventory in the channel. So, I don’t think you should expect that you will continue to see this on a going forward basis from deferred revenue perspective. If you look at IMS prescription numbers, they did do a very nice job capturing the underlying revenues in the business. So, no, I don’t think you should build in significant increases in inventory on a going forward basis.

Operator

And your next question comes from the line of Ritu Baral with Canaccord. Please proceed.

Ritu Baral - Canaccord Adams

Now that you upside the sale force and changed the mix, do you have the number of prescriptions you need or the prescription run rate needed to cover the cost of sales going forward. And are you considering any other pilot programs whether it's in the institutional setting or potentially for the retail setting as well.

Keith Katkin

Thanks for the question. Again I’ll start with the answer and then it over to Rohan. So, in terms of the sales force increase and covering cost, yes, we have been paying for our sales force for quite some time. If you look at the most recent IMS data and you annualize that, we are running around the $46 million gross revenue run rate. So, with revenue run rate like that we are not only covering the cost of the sale force but we are covering the cost of good majority of the entire commercial teams. So, sales, marketing, managed care, commercial operations and the like. So, certainly we have seen a very high ROI on the additional representatives particularly the long-term care representatives.

Ritu Baral - Canaccord Adams

So, would you say that of the overall marketing cost, I’m sorry that’s sort of I was referring to, are we 80% covered, 90% covered?

Keith Katkin

So, I think it's best to look at it as we have got the whole SG&A portion. So, you can as look as the $46 million gross number as a percentage of the total SG&A, I don’t recall off the top of my head, but you can do that math, fewer percentage of SG&A has been covered.

Ritu Baral - Canaccord Adams

The second question was on the pilots.

Keith Katkin

Yes, so in terms of pilots we have a very innovative sales force that’s constantly looking at different business opportunities, to give you a sense. One of the pilots are looking at is focus more on primary care physicians and some of them representatives have identified very good targets within the primary care market that have become very significant prescribers and NUEDEXTA advocates. So, as we see these pockets of success throughout the nation, we continue to explore taking advantage of those opportunities and we think given the size of this market that opportunities will continue to present themselves. Rohan if you want to add any color to that?

Rohan Palekar

No, I think Keith you captured it. What I’d say, I think what we have learned is that a lot of the patients with the underlying neurological conditions are seeing in a primary care setting and that’s why we are kind of exploring that, but in addition we also continue to look at opportunities, how to broaden our reach in different segments within the institutional segment.

Ritu Baral - Canaccord Adams

Can you elaborate on that last part different segments?

Rohan Palekar

So, currently clearly there is the nursing home segment, there is interestingly the entire segment around assisted living. So, there could other opportunities and as Keith said our sales force continues to identify opportunistically is there places where patients with PBA might exist.

Ritu Baral - Canaccord Adams

And as far as the 120 day questions that you guys received from Europe, anything there that you can comment on that was unexpected and has it changed your view of the timeline for your approval at all?

Keith Katkin

Let me start by answering that Ritu and then I’ll turn it over to Joao to add comments. I’d say nothing is unexpected from the EMA, it's quite similar actually to discussions that we were having with the FDA during NUEDEXTA’s approval process here in the State. So, new issues have emerged with the EMA beyond the FDA. I will say our focus right now as we are thinking about commercialization is really looking at just the economy with over in the EU in general and the implications on pricing with obviously the economic conditions where they are at. Let me turn it over to Joao to add any additional color that you would like.

Joao Siffert

There is not really much color. I think we will go on by the plan and as we have said at the prepare statement the timelines are such that we expect we could have CHMP recommendation by the first calendar quarter of 2013 and that’s all those the general timelines which are pre-specified in the usually review amount of time. So, it's just a question of going through the process of answering the question. There is nothing unexpected which is reassuring.

Ritu Baral - Canaccord Adams

Keith going back to what you said, is the European economic situation and potential pricing pressure, is that affecting the talks that you are having now with the review in Europe. I mean is it going to affect sort of the patient population in new label that you are going after.

Keith Katkin

No, those discussions happen after CHMP approval, an as you go into an individual country-by-country discussions. So, we are just obviously as we are moving the regulatory process along we are also advancing our preparation on commercial front, pricing being a critical component of that. And in our early research and early discussions we have certainly flagged this and I think it's something that’s happening all across the industry and certainly [not] something specific to Avanir, but you can look at any of the recent product approvals in Europe. So, we are aware of it, and we are working on it and as part of that we are working on bolstering our (inaudible) I’m using data here from the States to help further substantiate pricing in Europe. With that Ritu you should probably allow the next person in the queue ask couple of questions.

Operator

And the next question comes from the line of Greg Wade with Wedbush. Please proceed.

Greg Wade - Wedbush Pac Grow Life Sciences

Keith when you look at prescriber level data both in the retail and institutional setting and look along the timeline that physicians have been prescribing the product. Can you give us some sense as to what these seeing acceleration as people had more experience with NUEDEXTA. Thanks.

Keith Katkin

I think it's important to break that question down into the retail side of the business and the institutional side of the business. On the retail side, I think there is a couple of buckets of physicians, one bucket are the people that start slowly, try NUEDEXTA on just a few patients and then after seeing the benefits of NUEDEXTA start to ramp up quickly. However, there is another segment of docs which put on just a couple of patients each month, as they are identifying new PBA patients. And then switching to the institutional side actually, what we were seeing there is very encouraging, what we are seeing we don’t really have physician level but we do have account level data within long-term care. And if you look at the account level data what we do see is that on each subsequent reorder the number of bottles being ordered by the institutions are increasing on a month-over-month basis. So, we think that speaks very well to the benefits that physicians and the institutions are seeing as they treat more and more patients with NUEDEXTA.

Greg Wade - Wedbush Pac Grow Life Sciences

A quick follow-up. Can you give us a breakdown of what we believe institutional versus retail demand was with the next was here in the second quarter. And what you expected to be by the end of the year. Thanks.

Keith Katkin

Sure. I don’t have the second quarter numbers available, and perhaps Christine or Rohan can break those numbers. I can’t tell you that for the last reported week, we saw institutional business at 57% of the total prescriptions and then the remainder being split up primarily retail and then very small portion on mail order. And if Rohan if you are seeing if you had the chance to real-time call up the queue for the last quarter’s split between retail and institution?

Rohan Palekar

I believe the second quarter on a total prescriptions was 53% institutional.

Keith Katkin

Okay. We will get back to you and confirm the exact number Greg, but clearly we can see and particularly given Rohan’s comment about the growth that we have seen is in long-term care. We expect that long-term care will continue to increase as a percentage and also given the increasing of the long-term the institutional sales force by approximately 30% than you would expect that the percentage of the business coming from the institutional side to continue to increase throughout the remainder of the year.

Operator

And your next question comes from the line of Thomas Wei with Jefferies. Please proceed.

Thomas Wei - Jefferies

Just wanted to make sure that I understood with the changes that are happening in this sales force, by the end of June, what will be the total number of NUEDEXTA reps and how is that going to breakdown between institutional and retail and what numbers does it look like right now?

Keith Katkin

So, essentially it will be happening is on the retail side of the business, we will be going from approximately 76 representatives down to 71 representatives. And then on the institutional side of the business we will be going from 32 sales representatives to 42 sales representatives. So in total we will have approximately 113 sales representatives for NUEDEXTA and PBA.

Thomas Wei - Jefferies

So, it's really not that much of an increase, it's really shifting around of sales people.

Keith Katkin

Exactly. And in terms of my comments and Rohan’s comments certainly we think there is a tremendous opportunity within retail but you can’t ignore the growth that we have seen within the long-term care, within the institutional segment of the business. So, we are just optimizing the alignment between retail and the institutional side of the business.

Thomas Wei - Jefferies

And what is the trigger for you to consider a significant expansion if at all in the sales effort behind NUEDEXTA, is there (inaudible) level of prescriptions or maybe a different way to ask is, if you look that your success in institutional what do you think is the optimal number in sales reps that you would have to target the whole scope of institutional usage?

Keith Katkin

Yes, it's a good question, Thomas. So, first in terms of I guess our overall philosophy it's one really a P&L management, so I think if you look back overtime, we really had that resources follow the results. So, as we have demonstrated success in a particular area, then we have put additional resources towards it. So, that’s really consistent with our overall philosophy of managing the P&L very closely and certainly I think the debt that we announced this morning will help us opportunistically take advantage of other potential opportunities within the business.

I terms of your question about optimal institutional sales force sizing, we are still working on determining that, what we have seen from other companies that typically had a sales force size about 55 to 70 that they have used that to fully cover the institutional market. That said, NUEDEXTA is a little bit different than some of the other products they have been supporting. So, we are currently determining that but we think that we expect 55 to 70 is the appropriate number.

Thomas Wei - Jefferies

And just possibly any new insights or details that you can share on metrics like compliance and persistence?

Keith Katkin

Yes, as we have discussed over the last few calls, it's very different to get a read especially with more and more of our business coming from the institutional side, as they are multiple writers of prescriptions on the institutional side of the business. One metric that we have been looking at is the percentage of our accounts that our reordering and we are above 80% on the reorder side within institutional accounts. So, while we can’t say that’s on an actual patient compliance rate, if they are best proxy within the institutional side of the business.

Operator

And your next question comes from the line of George Zavoico with MLV and Company. Please proceed.

George Zavoico - MLV and Company

I have a question about the poster you guys presented, that was presented at AAN, was very interesting and with respect to the proportion of patients with various disorders that not only expressed (inaudible) but also those its life changing and life altering. Could just speak little bit about these findings and whether they were in line with your estimates, whether they perhaps guided to a slightly larger markets then you maybe first appreciate it, and how you might be able to use these numbers to educate physicians both retail and institutions to increase the (inaudible) market share.

Keith Katkin

Let me start by answering and then I will turn it over to Randall to provide additional clarity. I think in terms of the prevalence numbers that you are seeing within that poster, that’s consistent with all of the research that we have done on PBA over the last five to seven years. So, we are very encouraged that our internal market research is lining up with surveys that are done externally as well. And then we will announce the outcome of the PRISM registry data as well at the upcoming CMSC Meeting later in the year. So, I think if from a prevalence perspective, the percentage is really confirmed our conviction in the market size and the market opportunity, but let me turn it over to Randall for additional commentary.

Randall Kaye

I think interestingly looking at this is that from the physician standpoint, in a area where we believe there is a high unmet medical needs, but physicians have a low index suspicion to look for the condition. In the sense that cover is relatively low, however, when you look for it, when you do it in consolidated databases and you look at it rigorously like was done if the abstract presentation for ANN, the prevalence of PBA is consistent with everything that we have been learning about it. As Keith said, over the last 6 or 7 years, and if prevalent across a large number of underlying neurologic condition such as ALS at MS traumatic brain injury and stroke.

One of the interesting surprises to search engines from this data is not only do they touch upon prevalence but the data also talks through and helped us understand a little bit more of the burden that these patients and certain instances the caregivers have as they try to live with PBA. So, we learned a little bit more about that, I think that’s your highlighting from the ANN presentation and Keith gets to the (inaudible) with regards to upcoming CMSC Meeting end of May in San Diego. We will be presenting some additional data from what we have learned from our PRISM registry and the prevalence of PBA again across a number of underlying conditions.

George Zavoico - MLV and Company

One question about financing vehicle that you just announced, given the obligations to use fraction of it or is it totally at your discretion to use it?

Keith Katkin

It's a terms debt instrument, so it's our discretion on however we choose to use the $30 million.

Operator

Almost no further questions in queue I’d like to turn the call back over to Mr. Ian Clements for closing remarks.

Ian Clements

Thanks very much. Encouraging I’d like to thank everyone for joining us today and continued interest in Avanir. We look forward to providing updates on the progress we are making at the upcoming conferences and on future calls. If you do have any follow-up questions or further questions, you would like to discuss with me or any portion of today’s results, please feel free to call me. Thank you.

Operator

Ladies and gentlemen thank you for your participation in today’s conference, this concludes the presentation, you may now disconnect and have a great day.

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