Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message| ()  

Executives

Tierney Saccavino - VP, Corporate Communications

Ron Cohen - President, CEO

Dave Lawrence - CFO

Analysts

Joel Sendek - Lazard Capital Markets

Matt Roden - JPMorgan

David Amsellem - Friedman, Billings, Ramsey

Ram Selvaraju - Rodman & Renshaw

Philip Nadeau - Cowen and Company

Caroline Stewart - Piper Jaffray

Acorda Therapeutics Inc. (ACOR) Q1 2008 Earnings Call May 5, 2008 8:00 AM ET

Operator

Thank you for holding and welcome to the Acorda Therapeutics First Quarter 2008 Financial Results Conference Call. At this time all participants are in a listen-only mode. There will be a question-and-answer session to follow. Please be advised that this call is being taped at the company's request.

Now I'd like to introduce your host for today’s call, Tierney Saccavino, Vice President, Corporate Communications at Acorda Therapeutics. Please go ahead.

Tierney Saccavino

Good morning everyone and welcome. With me today are Dr. Ron Cohen, our President and Chief Executive Officer; and David Lawrence, our Chief Financial Officer.

Before we begin, let me remind you that this presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially, including the risk of unfavorable results for future studies of Fampridine-SR, delays in obtaining or failure to obtain FDA approval of Fampridine-SR, Acorda Therapeutics' ability to successfully market and sell Zanaflex Capsules, competition, failure to protect its intellectual property or to defend against the intellectual property claims of others, the ability to obtain additional financing to support Acorda Therapeutics' operations and unfavorable results from its preclinical programs.

These and other risks are described in greater detail in Acorda Therapeutics' filings with the Securities and Exchange Commission. Acorda Therapeutics may not actually achieve the goals or plans described in its forward-looking statements, and investors should not place undue reliance on these statements. Acorda Therapeutics disclaims any intent or obligation to update any forward-looking statements as a result of developments occurring after the date of this presentation.

I will now turn the call over to our CEO, Ron Cohen.

Ron Cohen

Thanks, Tierney. Good morning everyone. This morning we reported first quarter 2008 financial results. During the quarter we made solid progress on the key initiatives that will drive the quarter’s growth. The agenda for the call is presented on this slide. I will provide an update on these initiatives, and then I’ll turn the call over to Dave who’ll provide you with the financial summary. We’ll then open the call for your questions.

In January, we were pleased to announce the successful results of our Thorough QT Study. This is a human cardiac study required for all new chemical entities seeking approval from the FDA. Fampridine-SR, at both the therapeutic and super therapeutic doses was found to be no different from placebo. We are now awaiting data from our second Phase III trial of Fampridine-SR in MS, which we expect to be available in the second half of the current quarter, Q2 2008.

As we previously announced, we expect by the end of this year to determine the quarters strategy regarding Fampridine-SR’s commercial development in Europe. As part of this process, we have submitted materials requesting meetings with key EU member states to help inform how we will proceed in Europe.

In the first quarter, we also acquired assets from Neurorecovery, Inc. This acquisition will enable us to explore additional therapeutic indications for Fampridine-SR in peripheral neuropathies, as well as provide access to pre-clinical compounds that may have utility in nervous system disorders. We also made good progress in preparing the modules that will be needed for our NDA filing, which we are targeting for the first quarter of 2009, pending the data from our second Phase III study.

With respect to our pre-launch programs, one of our key pre-launch goals is to substantially raise awareness of and appreciation for the impact that walking disability has on the lives of people with MS, among both healthcare providers and consumers.

In March, we published a Harris poll on mobility issues at MS. This was in collaboration with National MS Society. This poll highlighted the significant impact that mobility issues have on quality of life, safety and financial and emotional health among many people living with MS. A key finding in the poll was that 64% of the responders reported trouble walking, inability to walk or loosing balance at least twice a weak.

This year Acorda is a national sponsor of the National MS Society's 'Walk MS Program'. The program we've developed for these walks is called 'I Walk Because'. This program gives a voice to the MS community, allowing to them articulate why and for whom they participate in these walks.

As part of our sponsorship, Acorda has a boot presence at 10 of the largest walks around the country and we allow walkers to record videos, which were then posted on the website www.iwalkbecause.org. I was part of the team that staffed the boot at our opening walk at Dallas and I found it to be one of the most moving experiences I have had at Acorda.

I encourage you to take a look at the testimonials recorded on the website, I believe you will find that it provides a deeply personal sense of the impact that MS has on people's lives, and of the commitment of the MS community to developing new therapies for this dreadful disease.

We also unveiled our MS walking awareness program for healthcare providers, at the American Academy of Neurology's annual meeting this year. This program allows MS professionals to experience a simulation of how walking disability affects real world situations, such as crossing a busy street of a traffic light. These efforts will continue at major medical meetings throughout the year.

Moving to Zanaflex, our Zanaflex business continued to perform well this quarter generating a combined $12.7 in gross sales for the Capsules and tablets. We expect to see continued sales growth in 2008, though at a more moderate pace, as the franchise matures. We also expect our Zanaflex commercial operations to be net cash flow positive this year.

We are extremely pleased with the value that Zanaflex business has brought to Acorda. It’s allowed us to develop an outstanding sales and marketing operation, which in turn its position Acorda to launch Fampridine-SR in the US, if it is approved as well as other products that maybe approved in the future.

We also made great progress in advancing our preclinical pipeline toward R&D stage. Our two lead candidates GGF2 in the neuregulin program and rhIgM22 in our remyelinating antibodies program are in the process of cGMP manufacturing scale-up. We are targeting IND filings in late 2009 for both programs.

In April we hosted an analyst and investor briefing to provide updates on these two programs, two key opinion leading physician scientist were featured, Dr. Moses Rodriguez of the Mayo Clinic presented data on the remyelinating antibodies and preclinical MS models and Dr. Douglas Vaughan, Chairman of Cardiology at Vanderbilt University presented data on the neuregulins and preclinical cardiac models. Dr. Rodriguez also was selected to present a plenary address on the antibodies at the Frontiers of Clinical Neuroscience session at the annual meeting of American Academy of neurology.

A webcast of our briefing is available on our website www.acorda.com. I encourage you to review it for a more detailed look at these very exciting programs, which we are driving toward the clinic.

I will now turn the call over to Dave, who will give you a financial summary for the quarter.

Dave Lawrence

Thanks, Ron. In our press release this morning we outlined our first quarter financial results for 2008. I will now review some of the financial information in more detail.

The company reported a net loss of $16.4 million for the quarter ended March 31, 2008, or $0.54 per diluted common share compared to a net loss of $7.5 million, or $0.32 per diluted common share for the same quarter in 2007. After adjusting the financial statements for the non-cash impact of the NRI acquisition, the adjusted non-GAAP net loss is $13.7 million or $0.45 per diluted common share.

Total operating expenses for the quarter ended March 31, 2008 were $24.9 million, including a $2.7 million non-cash charge for the acquisition of certain assets from Neurorecovery. Research and development expenses were $9.6 million, which includes $2.7 million for NRI, clinical trial costs related to our Fampridine-SR trial, NDA preparation costs and development of two of our preclinical pipeline products.

Sales, general and administrative expenses for the quarter ended March 31, 2008 were $15.3 million and included expenses related to Zanaflex promotional activities and Fampridine-SR pre-launch activities. As of March 31, 2008 Acorda held cash equivalents and short-term investments of $160.3 million. We expect this to be sufficient to fund the company’s operations in to the third quarter of 2009 based on our current projected revenue and spending levels.

Expenses are expected to increase and are weighted to the second half of 2008 and into 2009 pending the results of the second Fampridine-SR Phase 3 trial.

I will now turn the call back to Ron.

Ron Cohen

Thanks, Dave. At this time, we will open up the call for your questions. Operator?

Question-and-Answer Session

Operator

(Operator Instructions). Your first question comes from the line of Joel Sendek from Lazard Capital Markets. Please proceed.

Joel Sendek - Lazard Capital Markets

Hi, thanks. Two questions. The first is, on the run rate for the spend, it seems like, you said in the press release, you have cash to last into the third quarter of 2009. That would contemplate almost a doubling of the current run rate. I'm wondering if I was reading that right, or if you were just conservative with that projection.

Dave Lawrence

Well, yeah. Hi, Joel, it's Dave. It's our projection based on our revenue and spending levels that we have forecasted. Again, it includes the pre-launch activities for Fampridine, doubling the sales force, pre-commercial manufacturing, NDA preparation costs, as well as our preclinical program advancements.

Joel Sendek - Lazard Capital Markets

And to get a sense of the timing, when precisely would the sales force doubling occur?

Ron Cohen

We haven't determined that precisely, but we're going to work that so we get enough lead time to put them in the field, have them trained, have them already having staked out their territory, visited their target practices a number of times prior to an anticipated date for an NDA approval. Obviously there's a fair amount of projection involved in that, but I would not expect it at a minimum before the end of this year and possibly in to next year.

Joel Sendek - Lazard Capital Markets

Okay and then just a quick question on what you said about the regulatory strategy for EU. Is partnering still an option you are considering in --

Ron Cohen

Yes, it is. We are considering partnering as a way to go in Europe. We have, as I mentioned we have now submitted a formal request for meetings with various member state regulatory bodies in the EU. And we hope in having those meetings to get a better sense of the regulatory pathway in timelines and that will help us formulate the rest of the strategy in terms of how we commercialize in Europe.

Joel Sendek - Lazard Capital Markets

Okay, great. Thank you.

Operator

Your next question comes from the line of Geoff Meacham from JPMorgan, please proceed.

Matt Roden - JPMorgan

Yeah hi, it's Matt Roden in for Geoff today. Thanks for taking the questions. First one is to follow-up on Joel's question on the European opportunity. Do you have any prior assumptions about what will be required from a regulatory standpoint in Europe or is that something that you just have wait until you talk to the authorities about?

Ron Cohen

We're going to have to wait, Matt.

Is there any draft guidance or anything available that you could that could guide your assumptions there?

Ron Cohen

There are some draft guidance's we actually don't think they are particularly relevant to Fampridine-SR. So that's another reason we need to wait to actually have the meetings.

Matt Roden - JPMorgan

I got you, and then just a follow-up here. You've said in filings and so forth that the seizure rate in Fampridine treated patients in long-term extension studies has remained low comparable to that seen in placebo patients in other Phase III MS trials. Just wondering if you can update us if there is anything that you are seeing in those long-term extension studies? Thanks.

Ron Cohen

Matt you recited it absolutely accurately. So I really don't have anything to add to that. There is no update on that.

Matt Roden - JPMorgan

Okay. Thanks.

Operator

Your next question comes from the line of David Amsellem from Friedman, Billings, Ramsey. Please proceed.

David Amsellem - Friedman, Billings, Ramsey

Hi, thanks for taking my questions. I just have one quick one. Are you planning to present the detailed Phase III results at Actions this fall?

Ron Cohen

That's still to be determined David. We certainly are going to look for the next available large MS related meeting to present, as you know it depends on deadlines whether people accept late breakers and so on, but we are certainly going to look to present at the next available large MS meeting or neurology meeting that's relevant.

David Amsellem - Friedman, Billings, Ramsey

Okay, and that's all I have thanks.

Operator

Your next question comes from the line Ram Selvaraju from Rodman & Renshaw. Please proceed.

Ram Selvaraju - Rodman & Renshaw

Hi, thanks very much for taking my question. I just wondered if you could comment on any discussions that you've had vis-à-vis the EU regarding potential pricing for Fampridine-SR?

Ron Cohen

We've not had any of those discussions yet, Ram.

Ram Selvaraju - Rodman & Renshaw

Okay. Thank you.

Operator

(Operator Instructions). Your next question comes from the line Philip Nadeau from Cowen and Company. Please proceed.

Philip Nadeau - Cowen and Company

Good morning and thanks for taking my question. First is on the Phase III data release. When you do release the data, are you going to release only results from the Phase III trial, or will you provide any sort of an update on the long-term extension experience as well?

Ron Cohen

My expectations Phil, would be that it would be a release on the Phase III data. Historically that's what we have done if you look at the last Phase III press releases and templates. We will focus on the top line data from the Phase III trial.

Philip Nadeau - Cowen and Company

Okay and I am sure you are aware of the speculation that's in the market about what is or is not the safety experience in the extension in the Phase III trial. Can you tell us about how SAEs are typically handled in this study? Do letters need to be sent to investigators upon any SAE, or is that not the case through due instances of SAEs not really need to be disseminated through the community until after the study is over?

Ron Cohen

I am going to let Andy Blight our Chief Scientific Officer respond.

Andy Blight

Yes, SAEs that are deemed to be reportable immediately to the FDA, which are essentially judged to be related and unexpected are disseminated to the investigator community through an email blast. So those are widely disseminated, anything that is considered to be expected is certainly recorded and is submitted. But it is not routinely distributed to the investigator community, as seizure is something that has been identified.

In an initial agreement with the FDA that every instance of seizure is deemed to be reportable as an IND safety report and it is communicated to the investigators through an email blast within a few days of that occurrence.

Ron Cohen

Yeah Phil, I will add that agreement that Andy just mentioned with the FDA, what that means is that any report of seizure, regardless of whether it normally would have been recorded as an SAE or not is automatically reported as an SAE in this context. So, if anything, we are more sensitive to recording seizures in that category of SAE than otherwise would be the case.

Philip Nadeau - Cowen and Company

Okay. That's really helpful. Thank you. And two questions on the P&L, just to make sure my model is correct. The interest incoming, it looks like you only recorded an interest expense this quarter. Is that because interest rates went down substantially, or is there something else that happened in that line item?

Dave Lawrence

Yeah. It's a combination -- so the way the full capital schedule amortizes interest, you’ve got heavier interest earlier in the schedule each year, and additionally, our interest income, we've taken a more conservative approach on our portfolio, our investment portfolio. So, interest income has come down based on the conservative investments we're making.

Philip Nadeau - Cowen and Company

Okay. And you aren't caught in any auction rate securities or anything like that.

Dave Lawrence

We have no auction rate securities. We've got no asset-backed securities. We've got very conservative investment portfolio.

Philip Nadeau - Cowen and Company

Okay. And last, on the cost of goods, it looks like it was running about 26% this quarter. Is that a fair rate going COGS forward?

Dave Lawrence

The COGS include -- in the first quarter, we hit the last of the $5 million milestone payments to LAN, and those amount were amortized over the patent life. So that's probably a good percentage to use, at least through 2008.

Philip Nadeau - Cowen and Company

Okay. Perfect. That's very helpful. Thank you.

Operator

Your next question comes from the line of Caroline Stewart from Piper Jaffray. Please proceed.

Caroline Stewart - Piper Jaffray

Good morning. Most of my questions have been answered. So, just a follow-up. In some European countries, compounded formulation of Fampridine is available, and others it’s not in. I think you can import from other countries, although it is supposedly quite difficult. How does this affect, the partnering talks, and also even though you wouldn't necessarily be commercializing there, what happens to the compound in formulation? I assume that is still available.

Ron Cohen

Hi, Caroline. We don't really see much of a distinction between compounding activity in Europe and the compounding here. What we found, at least in our initial discussions with key opinion leader neurologists in Europe, is that their posture toward the compounding sounds very much like what we hear here in the US, which is they believe it is helpful for some of their patients. That's why they do it. They're well aware that it's compounded and that, therefore, they don't have a label. They are uncertain as to potency, stability, manufacturing, purity and so forth, and that they indicate at least that they would not use those formulations if there were an approved labeled formulation available.

Caroline Stewart - Piper Jaffray

Okay. Thank you.

Operator

At this time, I would now like to turn the call back over to Ron for closing remarks.

Ron Cohen

Thank you, operator. This concludes our conference call this morning. Thank you all for joining us.

Operator

Ladies and gentlemen, thank you for your participation in today's call. This concludes the call and you may now disconnect. Have a wonderful day.

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.

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: transcripts@seekingalpha.com. Thank you!

Source: Acorda Therapeutics Inc. Q1 2008 Earnings Call Transcript
This Transcript
All Transcripts