Brian Hayden - Chief Financial Officer
Philip Yachmetz - Chief Business Officer
Paul Hamelin - Head of Commercial Operations
Dr. Zeb Horowitz - Chief Medical Officer
Dr. Robert Lamm - Head of Quality & Regulatory Affairs
Christopher Clement - President and Chief Executive Officer
Leland Gershell - Cowen & Company
Katherine Xu - Credit Suisse
Leah Hartman - CRT Capital
Michelle Ha - Ferris, Baker Watts
Carol Werther - Summer Street Research
Savient Pharmaceuticals, Inc. (SVNT) Q4 2007 Earnings Call March 12, 2008 10:00 AM ET
Good morning and welcome to the Savient Pharmaceuticals Fourth Quarter 2007 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will hold a Q&A session (Operator Instructions). As a reminder, this conference is being recorded today March 12, 2008
I'd now like to turn the conference over to Mr. Brian Hayden. Please go ahead, sir.
Brian Hayden - Chief Financial Officer
Good morning and thank you for participating in today’s fourth quarter and year end 2007 financial results conference call. We issued a press release late yesterday providing financial results and highlights for the fourth quarter and for the year ended December 31, 2007. This press release is available on our website at www.savient.com.
Before we begin, I would like to read our Safe Harbor statement. Comments made by management during this conference call will contain forward-looking statements that involve risks and uncertainties regarding the operations and future results of Savient Pharmaceuticals.
Particularly, we need to stress that when we discuss the information regarding the results from our development program for Puricase, which was still being further analyzed with the possibility of obtaining regulatory approval for our products in the United States and outside of the United States, (no inference) of the overall success of the development program nor guarantee of approval can be implied as these matters are subject to a number of risks and uncertainties.
We encourage you to review the company’s past and future filings with the Securities and Exchange Commission including without limitation the Company’s Quarterly Reports on Form 10-Q and our Annual Report on Form 10-K, which identify important factors that may cause actual results or events to differ materially from those described in the forward-looking statement.
Furthermore, the content of this conference call contains time sensitive information that is accurate only as of the date of the live broadcast, March 12, 2008. We undertake no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.
Joining us on the call this morning, our other members of our senior management team including Philip Yachmetz, our Chief Business Officer; Paul Hamelin, our Head of Commercial Operations; Dr. Zeb Horowitz, our Chief Medical Officer; and Dr. Robert Lamm, our Head of Quality & Regulatory Affairs.
I would like to now turn the call over to Chris Clement, our President and Chief Executive Officer.
Christopher Clement - President and Chief Executive Officer
Thank you, Brian. Good morning everyone and thank you for joining us today. For today's call, I will provide a summary of our accomplishments in 2007. Brian will then take to you through our financial results for the fourth quarter and year end 2007 and I will ask Paul to provide a summary of our commercial plans for 2008 and then we will finish up with the question-and-answer.
2007 was the year of significant progress and achievement at Savient. Our progress was largely defined by the advance of our Phase III program for Puricase or pegloticase as fighting drug candidate for treatment-failure gout patient.
In March 2007, we completed enrollment into our two replicate Phase III trials, which were conducted under the auspices of an FDA approved Special Protocol Assessments or SPA and we completed the patient portion of these trials in October of 2007.
Mid December 2007, we announced the positive top-line clinical results. I am pleased that we achieved all key milestones in 2007 on schedule. I would like to thank all of my colleagues here at Savient for their hard work and dedication and maintaining this program on schedule.
Let me summarize fewer Phase III clinical results. Pegloticase dose either every two weeks or ones monthly each achieves statistical significance, but the primary efficacy end point of normalizing throughout the uric acid to less than 6 milligrams per deciliter. Pegloticase also achieved statistical significance in the pre-specified pooled analysis for the elimination of gout tophi for the every two week treatment arm. Monthly treatment arm did not achieve statistical significance, but did demonstrate a positive trend for tophi reduction. I'd like to point out that many of our patients had multiple tophi on their hand, feet, elbows or knees causing deformity of the joints and disabling the patients. This strong showing of elimination and reduction of gout tophi appears to provide a view and immediate benefit for the patient.
Pegloticase also achieved statistical significance in the pre-specified pooled analysis for the treatment effect on the number of swollen and sensitive joints, as well as improvements in patient reported outcome, specifically the components of the quality of life instruments related to pain and physical functioning for our Form-36 and the Health Assessment Questionnaire-Disability index.
The patient scores addressed by these instruments have shown that the improvement associated with pegloticase treatment was both statistically significant clinically meaningful to the patient. This is the first demonstration of robust patient reported outcomes in the gout trail and is consistent with the emerging efficacy and safety profile of a very favorable benefit to risk ratio.
These impressive Phase III results represents the first time a drug candidate for gout has demonstrated clinical improvement in as little as six months of treatment. Pegloticase was generally well tolerated during the studies, but has seen with other infused biologic products infusion reactions were observed.
As previously reported infusion reactions were generally mild or moderate in intensity and in the overwhelming majority of cases did not prevent the completion of dosing or cause patient discontinuation. Only 10% of patients withdrew due to an infusion reaction. Character infusion reactions for approved biologics and rheumatic diseases pegloticase infusion reactions were relatively short duration and more benign in outcome.
So in summary we are very pleased with emerging efficacy and safety profiles for pegloticase and believe it represents a highly favorable therapeutic benefit to risk ratio for this very sick and disabled often treatment failure gout population.
Our analysis for the full data set for Phase III is continuing. We anticipate completion of this data analysis in the May, June timeframe for inclusion in our BLA submission, which we anticipate will occur before the end of June. We will not have new data to report until the remainders of our Phase III analysis are completed including the analysis of the immunology data, which will be incorporated into the BLA submission.
We previously reported that there were no spikes in IGE and or neutralizing antibody. I'd like to reiterate that while potentially useful in helping to explain the clinical results the remaining immunology data cannot change the clinical results that we have already reported.
Our open-label extension protocol continues with robust participation from our Phase III patients. We had previously announced high enrollments in the open-label extension. Of the Phase III patients, who elected to participate in the open-label extension study 95% elected to receive pegloticase, at the time of enrollment instead of entering the observation arm. While some patients have switched from pegloticase to observation others have discontinued for a variety of reasons.
However, over 80% of our patients are continuing to receive drugs in the open-label extension. Between participation in the Phase III trails and the open-label extension we have a substantial number of patients who have been exposed to pegloticase for more than 12 months and this data will be included in the BLA and 120 day safety update.
As previously mentioned we intend to provide an update on the open-label extension when our analysis is completed some time over the next few months. While much of the focus in 2007 was on the clinical development of pegloticase, in parallel we also made significant progress in our CMC for Chemistry, Manufacturing Controlled Activity.
In conjunction with our primary third party contract manufacturer we have successfully completed the validation of the manufacturing processes for our Active Pharmaceutical Ingredient or API with the successful completion of three consecutive and consistent manufacturing validation batches. We felt this is backup supply for our API by entering into an agreement with Diosynth Biotechnology to serve as the secondary source of Pegloticase API’s product for global supply and distribution. As a complete technology transferred Diosynth validate the manufacturing processes of that facility and expect to have commercial product of valuable by mid 2010.
We also entered into an agreement with Enzon a biopharmaceutical company and contract manufacturer to handle the fill and finish of pegloticase here in United States. Enzon has also successfully evaluated the fill and finished processes for the bio products of their facility and have filled and finished bio clinical product for using the label with open label extension study.
Our focus in 2008 has been to prepare for the BLA filing with the FDA by the end of June, and we intend to also seek a priority review by FDA. This means assuming that we have granted a priority review and FDA appears to the established action date, the FDA could act on our application by year end or early in 2009. We also plan to file our Marketing Authorization Application or MAA in the EU by the year end. In addition we are also increasing our attention to commercial planning activities and anticipation of product launch early 2009.
With this point, let me turn the call back over to Brain for the financial update after which Paul Hamelin, our Head of Commercial Operations will discuss our plans for the remainder of 2008 or in preparation for a launch of pegloticase in 2009.
Brian Hayden - Chief Financial Officer
Thanks Chris. Let’s review the operating results for the fourth quarter of 2007 that we reported in last night’s press release. Since, I will only be discussion highlights from our financial results, I will refer to you to our Form 10-K for more specifics and details. We plan to file our Form 10-K on Friday of this week.
The net loss for the fourth quarter was $16.6 million or $0.31 per share, compared with the net loss of $8.8 million or $0.17 per share for the fourth quarter of 2006. In general and consistent with what we have reported for the prior three quarters in 2007, the increase in the loss Q4, 2007 versus Q4, 2006 resulted from a reduction in revenues due to the generic competition for Oxandrin and an increase in total expense that completed the development work of pegloticase.
Looking more closely at the details, total revenues for the fourth quarter were $1.9 million, a reduction of $6.3 million from the same period in 2006. As we reported in our third quarter earnings conference calls for 2007, in late 2006 and throughout 2007 we experienced generic competition for Oxandrin.
We previously indicated that we expected our revenues to decline significantly in 2007 from 2006 levels due to the generic competition even though we launched our own generic product through our distribution partners Watson Pharmaceutical.
In the fourth quarter of 2007 Oxandrin and oxandrolone sales were $1.8 million, down $6.4 million from Q4, 2006. The rate of decline in revenue has been less than we had forecasted, but still has been significant in relation to the 2006 levels. Sales were approximately $700,000 lower than the Q3 2007 quarter, indicating a continual downward trend in sales from both products. We are anticipating for 2008 that sales will flatten out quarter-over-quarter.
Cost of goods sold for the quarter was $900,000 compared to COGS of $4.9 million for Q4 2006. This short decline is due to lower sales of Oxandrin. As we anticipate we continue to increase our research and development expenses in the fourth quarter of 2007, due to pegloticase critical and manufacturing activities as we consider our Phase III clinical trails in early October, experience the strong enrollment in the pegloticase open label extension trail, began analyzing the data from the Phase III trails of preparation of our BLA and completed various aspects of our analytical and manufacturing work.
R&D expenses were $14.7 million in the fourth quarter of 2007 up from $8.5 million in Q4, 2006. Additionally, R&D expenses increased quarter-over-quarter by $2.6 million, which included the payment of the manufacturing reservations fee for bulk drug supplier in order to secure manufacturing capacity in the future as we plan for the launch of pegloticase. The 2008 is certainly success we are planning for modest increase at R&D expenses year-over-year.
Selling general and administrative expenses were $9.8 million in the fourth quarter of 2007, an increase of $1.9 million from Q4 2006. The increase was primarily due to higher stock based compensation expenses including performance based stock awards in which the performance objective are either achieved or its determined to be achievable in Q4, thus requiring the amortization of the related expense.
We ended the fourth quarter with a $142.4 million in cash and short-term investments and $10.8 million in total from the Q3, 2007 levels and lower by $37 million in total from the year end 2006 balances. We had expected our 2007 burn to be approximately $50 million in 2007.
We can see on our balance sheet that the cash and cash equivalence declined by $52.4 million in 2007. However, our short-term investments increased by $15.5 million in 2007. Position of our cash at December 31, 2007, was invested in the Bank of America’s Colombia’s strategic cash portfolio. This is represented by $16.2 million of restricted short-term investments and $1.8 million of restricted long-term investments included within the other assets category on our balance sheet.
The Colombia’s strategic cash portfolio was closed in December and fund is in the process of liquidating their assets. We redeemed the portion of our investment in December 2007 and year-to-date 2008, we have redeemed approximately 39% of our investments. We anticipate based on the information from Bank of America, that we will redeem approximately 90% of our original $20 million investment by July 2008. The remaining $1.8 million of restricted long-term investment will be redeemed in 2009. While remaining portions of our investments will maintain a highly liquid money market fund and treasury funds at the end of 2007.
We would expect our cash burn rate to escalate in 2008 from the $37 million we spent in 2007, as we continue to support the development of pegloticase and most importantly as we prepare for the launch of pegloticase including the hiring of the sales organization to lead this effort.
Let me now touch on some of the year to date highlights with explanation are fairly consistent with the activities for the fourth quarter. The net loss for the year was $48.7 million or $0.93 per share compared with net income in 2006 with $60.3 million or a $1.03 per share. You recall in 2006, we sold our UK subsidiary, which is reported as income from discontinued operation representing $61.8 million and significantly contributing to the 2006 net income.
Revenues were $40 million down $33.5 million from 2006 due to the generic competition for Oxandrin as previously discussed. R&D expenses were higher by $29.5 million due to the significant clinical manufacturing work on pegloticase in 2007.
SG&A expenses were lower by $3.5 million due to the reduction in Oxandrin marketing cost, the elimination of the Oxandrin sales force and reduction in the financial consulting activities. Partially offsetting these lower costs which are $3.9 million increase in stock based compensation expense including performance based stock awards where performance objectives were achieved or determined to be achievable.
Our year end balance sheet contains an $8.6 million receivable for recoverable income taxes as we will use our 2007 net losses to partially offset the income we had in 2006 from the sale of our UK subsidiary.
This concludes the financial piece of the conference call and I would like to now turn the call answer the call over to Paul.
Paul Hamelin - Head of Commercial Operations
Thanks Brain and good morning everyone. Commercial team is very excited here at Savient. Over the past year we have established internal operational plans for a launch in the US and to prepare the European market for a similar launch in the future by a partner.
With the impressive clinical results reported in late December and the additional positive results reported on February 4th, we begun the implementation phase of our US launch plan.
I would like to provide you today with the brief overview of our planned commercial strategy and initiative. These plans are based on the filing of the BLA by mid year and assuming priority review by the FDA will need to launch in the first half of 2009.
Obviously if the regulatory time line of a priority review does not become a reality, we will pace our implementation of our launch plans accordingly to match the expected regulatory approval timeline.
First, we plan to expand our commercial organization with a strong focus on building our sales team. In building our sales infrastructure we plan the higher ahead of sales in approximately six district sales leaders in late summer to help prepare for the recruiting, training, and the on-boarding process of the sales force. We also plan to hire approximately 60 experienced specialty pharmaceutical sales reps which we will anticipate will occur late in the fourth quarter.
We will continue to expand our managed health care team over the next several months. Today our objectives are focused in several critical areas such as preparation for the market access and pricing our reimbursement both at the private peer level and at the public markets, specifically CMS. As pegloticase would be a Medicare Part B benefit, we plan to have all these people hired and integrated by August. We are also dramatically increasing our presence in medical education efforts at several new key congress meetings starting this Spring. We will attend for the first time the Infusion Nurses Society Meeting in May and we will exhibit at the renal transplant meeting in June. And we’ll finish the year exhibiting at our first American Society of Hospital Pharmacy meeting.
In between those, we will continue to expand our efforts at the two largest rheumatology global meetings first at Yuan in June, while we have an exhibit booth for the first time and then at the American College of Rheumatology in October, where we will first release Phase III data through abstracts and educational forums to build awareness among top leaders in these critical prescriber groups.
Focusing for a moment on pricing and reimbursement work which has been going on for months. This work has been the preliminary stage 1 work and realty it was intended for us to understand the peers concerns, policies, and processes for biologic drugs at both the private and public level.
It would have been premature for us to have conducted large detailed quantitative pricing research in the US or Europe without our Phase III data.
Now with the preliminary clinical data in hand, we began the next level of deeper pricing research with peers, outlining pricing levels which are deemed to be good value that we can be supportive by the pegloticase's strong clinical profile. This effort is going to take many months of work to correctly understand the appropriate value proposition for the product. We do not expect to announce the pricing decision after the label is approved by the FDA.
We continue to have excellent discussions with potential partners who are interested in pegloticase. The strong level of interest being expressed is a reflection of the quality of the product and the opportunity which we believe will result in the Savient management team being able to complete the transactions that will provide our shareholders with maximal value. Our timing and efforts are on track for second half of 2008 partnership.
Let me now turn the call back over to Chris.
Christopher Clement - President and Chief Executive Officer.
Thank you Paul. 2008 is again a year of execution and our focus is to achieve the key milestone of BLA and MAA filing. As you heard from Paul, our commercial plans will start to take shape as we entered the second half of the year and look toward the product approval and launch. We are also looking to the American College of Rheumatology Annual meeting later this year in October as the forum to showcase our Phase III result we will submit an number of abstracts and post this for presentation at the meeting, all the important aspects of our safety and efficacy data. I will refer to keeping you on rest of progress as we move through this exciting year.
I would like to now open the lines for QA.
(Operator Instructions). Your first question will come from the line of Leland Gershell with Cowen & Company.
Good morning. Thanks for the update and for taking my questions. I was wondering, first question you had mentioned previously the intention to conduct re-treatment trail of tier case, just one of you can get an update on your plans and timelines there?
Right, this is Zeb, Leland. Yeah it is still our intention to do so. We have sent a protocol and appropriate documents out to the field. We are looking at foresight that participated in the early development as well as Phase III up to, but probably not more than 20 patients. We expect to have all the patients started probably by May and they are only intending as required under FDA (RIG) to submit safety data during the 120 days safety update. So that all the patients would have finished about 4 or 5 or 6 doses in every 2 week schedule by the time of 120 days safety update. So that is still planned and we expect that to go pretty well.
Okay. So we expect to see re-treatment data then in the second half?
No. I wouldn’t expect you to see re-treatment data. We will take a cut of data for the FDA, but until that study is finished, we have a locked database, et cetera. I wouldn’t be expecting to report that public. And then that would probably be reported in scientific abstracts the next year.
Okay. And one more question if I may, in the open label extensions. Could you give us break down of the patients who have been in the ones every two verus once every four week cohort?
Yeah, I can tell you how they originally enrolled the changing numbers, because they – how we did allow switching originally the patients enrolled pretty evenly about 62 to 68 in the Q4 and Q2 arm. I think that’s approximately right. And I think actually that’s not that was current enrollment as of the end of September. I don’t have the exact numbers as they enrolled over the course of the study, but it was about I think 80 versus 60 in the Q2 and Q4. And I think only two people originally enrolled in the observation arm something like that.
Okay. Thanks for taking the questions. I will jump back in the queue.
Your next question will come from the line of Katherine Xu with Credit Suisse.
Hi Kat, Good morning.
Hi, just wondering in the open label extension, there are few patients that switched to observation and dropped out and or dropped out. I am just curious, could you provide us with some color on those patients.
Well, we've said that originally two people enrolled in the observation arm. I think out of the 150 plus patients who enrolled in the study about 9 have switched over. We actually encourage patient to stop taking the drug. I will be very happy if more patients stop taking the drug, so we could follow them in a drug free period and see if they benefit or maintain. But until this data is locked down and analyzed there is not much more I can say about it Katherine.
And with the re-treatment study, could you elaborate a little bit more on the design of the study?
Just a little bit. We are not calling it re-treatment, because the patients were never really treated the first time. The patients from our Phase I IV study would have received only one dose of drug and perhaps at a very low-dose as low as 0.5 mg. So they never really had treatment they only had exposure. And in Phase II of course the longest the patients was treatment with 3 months, so we don’t consider that a full treatment period either. This is in line with what the FDA asked us at the end of Phase II meeting, as we previously said in various of forums, at the end of Phase II meeting the agency asked us to make the drug available specifically about Phase III patients, more patients who completed the Phase III study and wanted to stay with the drug, because there is no other treatment available to them. And I agreed to that only on under controlled environment that is in the context of the protocol rather than as compassionate use. But we've had numerous request from patients and physicians who participated in Phase I and Phase II study to make the drug available to them as well, because these patients have no treatment. So we agreed to do that in the context of the protocol, which would allow at the same time, us to gather some information about how the patients do after a multi-year drug free period.
So, essentially we are asking with collected information on who is available, what centers are available. And as I said we think there might be as many as 15 to 20 such patients. All of them were used the Q2 dosing arm and we will allow them to get the drug for about six months. Potentially as longer, if our drug is not yet on the market and we will collect primarily safety data, but we'll measuring uric acid and seeing how they do in terms of efficacy. But this will not be part of the integrated efficacy or degraded safety summary after the BLA.
Okay, great. One last question, the ACR doesn’t really have a guideline for gout treatment. So just curious, could you provide with some update on your potential recent discussions with the organization about establishing a guideline. I mean I know that the (organizations) have been trying to pull the guidelines for a while?
We would just comment a bit about it. The ACR does have guidelines committees and one would expect sometime in the future those committees will meet and update guidelines for gout management. But it has been a number of years since the ACR has taken that step. And we know from over in Europe, ULR has recently updated their treatment guidelines, this was about a year ago. But again one would suspect it in the future as more and more products become available specifically, hopefully pegloticase, they don’t take the opportunity to update those guidelines again.
I would like also to comment, Xu, this is Zeb again. We have been working closely with the (Omorack Group), the outcome measures in rheumatology group, which is not so much involved in treatment guidelines as declining response criteria for use in the drug studies or other intervention studies, trying to validate these measures. So we know how to tell if the drug is actually working. We first started working with Omorack Group back in 2004, they who suggested to us including accounts of tender and swollen joints and including HAQ-DI the Disability Index and short Form-36 in our studies. We continued to have conversation with them and as we present various scientific forms going forward, we will be working with Omorack Group and there is the opportunity of actually validating some of these measures that we have used, using the data from the two replicate studies. And I think ultimately the Omorack Group response criteria were gout as these rollout over the next couple of years will be worked into some of the treatment guidelines, which will be based on evidence based medicine coming out of randomized controlled trials, so the two were running in parallel.
Great, thank you.
Your next question will come from the line of Leah Hartman with CRT Capital.
Good morning everyone. Thanks for taking my call and congratulation on really terrific year of transformation. A few housekeeping items for Brian and the G&A, CapEx and stock based compensation numbers for the year?
The stock based compensation for the year was $8.7 million, $4 million of that was in the fourth quarter. G&A for the year was $22.5 million, and CapEx was fairly significant, I do not know.
Lesser than half a million dollar or so?
900, okay. And with respect to the cash burn Brian, you did not mention the phrase, but I am not sure that I heard a number, is there any guidance at this point in time?
We haven’t put out any specific guidance, but I will try to guide you a little bit that with early activities that are planned for this year; it’s obviously going to be more than what we had burned through in 2007. And keep in mind that 2007 we spent $37 million, we had planned to spend about $50 million or so.
Clearly everywhere we were surprised to (inaudible) of the list capacity and nice to see. Could you walk me through the timing on this income tax receivable?
We are going to file our income tax return as quickly as possible. And I would hope that that would be done by April, May timeframe, sometime in the second quarter. And then the refund would come, however long it takes to process that probably in Q3 or so.
And now turning to pipeline behind the chronic gout indication, Zeb you stated in the past, that you may look to study Puricase and other indications. Can you give us an idea there will be any activity beginning this year?
Actually, not this year. Although, as we discussed previously we are doing a juvenile tox study, actually two small juvenile tox studies to get ready to do tumor lysis, first we have to make sure that there are no tox issues and I would be extremely surprised if there were any, because our tox program is so clean. But that put us in a position to initiate the tumor lysis study in children about a year from now if we wish to do that. Aside from that there are other areas of interest, but we don’t have plans right now to do those. Of course, if we get an approval in early `09 and we have a partner in place, we want to coordinate with a European partner doing some development work in Europe and some in the United States and that opens up the opportunity to do work more quickly, because obviously they shared cost and shared effort. But we are not working on those plants right now.
Okay. And then, I am not sure whether Chris wants to take this or Paul, but with respect to the partnering discussion merely you’ve made it, repeatedly stated you would seek a partner for Europe and Paul outlined timing of hiring district sales leaders and specialty pharma reps. Have your discussion taking it on the past of having in it partner in the US, and that decision whether or not you really would step up in higher 60 sales persons. So I guess my question is, is it still on the table that you would consider a global partner, is it only European and you are committed to marking this in the US by yourself?
Leah this is Chris. Let me put up by telling you that this drug is going to be used primarily by rheumatologist.
That’s how we came up with a number of 60 sales reps, because only the 2800 or so are rheumatologist and it’s a sub-set of those, that are really going to use this product. So, to adequately cover the rheumatology community, we think that’s well within our capabilities and our financial where we thought to do that. So we really see taking the initiative ourselves to exploit the US opportunity, also bear in mind that a lot of key leader in gout have been investigators in our Phase III program. So we have also established extremely good relationship with these key thought leaders. Having said that, we are not going to close the possibility that will allow us to fully exploit the asset, so as we get into partnership discussions and if there are ways to capitalize US market with the partner we get it different ways, but we are certainly open to those kinds of discussions, but as we analyze the data at this point we believe that we’re in a strong position to capitalize on this.
I appreciate that color on that, thank you. And I think that, my final question is you do have your pre-BLA meeting set in April, are you planning to make any public commentary after that meeting/
Yeah, okay. The meeting is set for April 17th and just to set the context to that, we do believe that meeting will go smoothly, we are prepared for that meeting at this point in time, and assuming that all does go well, I mean, April meeting that will allow us to maintain our projected filing data of the BLA in the June timeframe. So, assuming that all goes well with the meeting, I don’t believe that we will putout any kind of announcement on that, I think it will business as usual to – that we are moving forward to meeting that June timeline for the BLA, and should there be any material or significant issue that arises from that FDA meeting that would cause delay or some other issue relative to our filing then obviously we would make that announcement. But at this point in time everything is moving ahead on schedule, on track and we expect a positive meeting with the FDA.
That’s terrific and good luck over the coming quarter.
And our next question will come from the line of Michelle Ha with Ferris, Baker Watts.
Good morning, really quick question to Brian. Could you breakdown the FAS expenses for the quarter between R&D and FDA?
I sure can try if I have that. We’re with sales and marketing for Q4 14.3 million, and G&A was 6.8 million. That’s all..
Sales was 3 million?
Sales and marketing was 3 million and G&A was $6.8 million.
And for R&D?
R&D was 14.7.
It’s all for the quarter?
For the quarter, yeah.
I know you’re providing guidance for SG&A for `08?
You know, we haven’t provided specific guidance Michelle, but as we think of it, I wouldn’t expect that G&A would fluctuate significantly from where we ended the year for 2007. Obviously, the biggest increase is going to come through our sales and marketing organization and we have a couple of different plants in place right now depending upon the timing of anticipated approval of the drug. So that’s kind of a very variable number, but Paul alluded to the fact that we’ll be hiring significant structure, and then later in the year we’ll be looking to hire a 60% sales force.
But you are not expecting it to fluctuate much between `08 and `07?
Yeah, the sales and marketing fees, yeah, we would expect that would be our growth area for 2008.
I am sorry, my initial question was for the combined SG&A number, that seems to be the way that you’ve been reporting at. So, I guess the sales and marketing and what kind of increases will you expect to have…
We haven’t talked specifically about; we haven’t given any specific guidance.
With regard to what the detailed increases are, what I am trying to point out obviously is that, the selling and marketing side with all the activities that are alluded to, that’s going to be the growth piece for this year. And on the general and administrative side, we wouldn’t expect that to increase very significantly. Obviously, there is going to be some components as similar to what we had in 2007. We have performance based stock grants that have a tendency to mature based on performance objectives in the fourth quarter of the year. So we have similar situations to that in 2008. But most of growth from an SG&A standpoint, most of the growth is going to place on the F-side of that equation.
Fair enough. Thank you.
Your next question will come from the line Carol Werther with Summer Street Research.
Could you just describe how many patients you've had on drug now out on 12 months?
I don't have specific numbers for you but I will give you a ballpark. And part of the issue is we have of course, you got to remember how the open-label was designed. When a patient completed Phase III, they had the choice of going to Q2 open-label Q4 or observation. And they did not know nor the investigator knew, what we knew what treatment arm they were on in the quarter trail.
So when patients made that decision some switched from Q2 to Q4. Some switched from Q4 to Q2, some stayed on the same treatment. And of course we had placebo patient's switching. Six months into the open-label extension we allowed patients to switch again. And for many of them this occurred while we were still blinded as to the quarter trail. And I do not have a full analysis yet of the open-label extension.
So I can't give you precise numbers, but I would say that we probably got maybe at least 30 to 50 patients who had a full year of exposure at the time that we're including in the BLA. And by the time we filed for the 120 safety update, it probably could be as many as 75 or more patients who've had 12 months of continuos exposure to uricase. But take those numbers with a grain of salt because there is a lot switching back and forth and we don't have that data fully analyzed.
Okay, great. Thank you.
And then in the past you've talked about having an advisory panel meeting. Do you still think you might need one or might have one because of a new product for new indication?
Right. Well, of course that’s entirely up to the FDA and they'll just tell us what they are going to do. We think that there are a number of reasons there might be an advisory panel. You're right it’s a new drug, its attained end points that have never been attained before in the setting of gout. Right now old drugs that have never been approved in gout or are currently under consideration, under review have only been approved on basis uric acid control.
We are the first company that has built in clinical outcomes and attained clinical outcomes. But the agency has some new data to chew on with new methods. And I think they may be very interested in using the opportunity of a advisory panel to consider clinical outcomes beyond a surrogate endpoint that is uric acid. And actually as we all know uric acid has never been validated as a surrogate marker for anything. It’s a biological marker, the bio-chemical marker.
So just on that basis the agency maybe interested in holding an advisory panel and it is their stated policy where new classes of drugs have an advisory panel lay in. On the other side the agency is, say themselves that they are understaffed and under resourced. I think our data is so robust in terms of efficacy that you don't need, and the risk benefit ratio is so favorable in this orphan population that I don't think the agency needs validation of an advisory panel. Yet we still may have one. We would obviously prepare for it.
I think the key point is…
We'll be ready.
Yeah, we will be ready and we are preparing for that as part and parcel of our plan going forward.
Okay. And on the partnership are you looking just to partner Europe or would it be sort of rest of world type partnership?
We are looking at partnerships. Let's call it outside ex-US or ex-North America. So one of the major markets is obviously the EU, that’s where we will make our next filing. After the BLA we'll be in the EU. So we are focusing on that initially, but there are or other large market in Latin America, one of the other Asian authorities in our countries as well. So we are looking for partners in most areas as well. One of things that we are looking for partner is not to fragment the drug, so we are not looking to have 10 or 15 partners all over the world. We are looking for and being very specific and looking for those kinds of organization and companies as they have world recall and capabilities after being able to handle successful launch and marketing of the drug on key market, that's why the US.
Okay great. And my last question has to do with manufacturing and how much capacity do you have and with this second plant when would that come online?
We have used our facility in Israel that has done all of our clinical results. They provided all of our clinical supplies, the naval provide our initial launch quantity. So we modeled this which way and we believe that facility will have sufficient capacity to supply the market. The company that we have used as secondary supplier calls a Diosynth, the transfer technology is currently underway and we expect that will be online in mid 2010. And at that point in time, if you look at the projected time line, we would have the product launched in the US would be getting approved in Europe. So the secondary supplier would be in place after being able to meet any demand at that point and future demand. And this company by the way also has the ability to expand a fairly significantly, should that need arise. So we don't really see the need to go beyond secondary supplier to handle whatever the ultimate demand of the product will be. I will ask my colleague Philip Yachmetz to comment further.
Well I think, Chris provide a very good summary, this is Philip Yachmetz. At current with BTG and Diosynth, the easiest way to look is that we believe based on a number of different forecast, we had more than adequate supply to meet the demand in the market. And as Chris said, a key part is that the we anticipate Diosynth to be approved through supplemental BLA by the middle part of 2010. And it's is not a hard core requirement that happened by that point in time, because even with the BTG capacity, we have more than adequate forecast of supply.
Great. Thank you. Good luck with your filing.
And there are no further questions at this time. You may proceed with your presentation or any closing remark.
Thank you. We are very excited about the projects and our goals for pegloticase for 2007 and look forward to successfully completing the regulatory process in 2008 and in 2009. I believe that pegloticase, if approved will further avoid and care for treatment failure gout patient that is long overdue and provide a therapeutic solution for patient's who suffers from the painful and potentially crippling disease. There are currently no alternative therapeutic options for the management at this condition other than symptomatic relief.
On behalf of myself and prior to senior management team and our Board of Director, I would like to thank our employee and stockholders for their dedication and support in 2007. We look forward to report a continued progress to our achievement of our major objectives in 2008.
Ladies and gentlemen, that does conclude your conference call for today. We thank you for your participation and ask that you please disconnect your line.
Copyright policy: All transcripts on this site are copyright Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.
THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.
If you have any additional questions about our online transcripts, please contact us at: email@example.com, Thank you.
Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.
If you have any additional questions about our online transcripts, please contact us at: firstname.lastname@example.org. Thank you!