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Executives

Dr. John Plachetka - Chairman, President & Chief Executive Officer

Bill Hodges - Chief Financial Officer, Senior Vice President of Finance & Administration

Liz Cermak - Executive Vice President & Chief Commercial Officer

Stephanie Bonestell - Investor Relations

Analysts

Michael Tong - Wells Fargo Securities

Ken Trbovich - C.K. Cooper

Bert Hazlett - ROTH Capital Partners

Eun Yang - Jefferies & Co.

Jason Napodano - Zacks Equity

POZEN Inc. (POZN) Q2 2012 Earnings Call August 1, 2012 11:00 AM ET

Operator

Greetings and welcome to POZEN’s second quarter 2012 earnings conference call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions).

It is now my pleasure to introduce your host, Stephanie Bonestell with Investor Relations. Thank you. Ms. Bonestell, you may begin.

Stephanie Bonestell

Thank you Melissa and good morning everyone. On behalf of POZEN I would like to welcome you to today’s second quarter results conference call. By now you should have received a copy of the company’s press release. If you do not have it, you can access it on the homepage of our website at www.pozen.com, where you can also access a replay of this conference call.

Before we begin, I need to remind you that various remarks that we may make about future expectations, plans and prospects for the company, constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.

Such statements include any forecasts or assumptions about potential size or market opportunity, any observations that we may make about the expected timing and amounts of royalty payments from AstraZeneca and other revenue expected from our collaboration partners; the prospects for approval or timing of approval of any of our drug candidates or the way in which the FDA may consider our new drug applications or any particular clinical trial results; results relating to any pending litigation, future clinical trial plans and the likelihood of results of any future trial and our potential commercialization plans, including potential sales and revenue forecasts for our product candidates.

The adequacy of financial resources to accomplish our goals for future revenues are based on our current expectations and are subject to a number of risks and uncertainties, including our inability to know with certainty what standards the FDA will use to evaluate drug candidates and how that may change or evolve over time; how the FDA evaluates data; what the results of future trials may be, whether those trials will cost much more than we had estimated that they will cost or than they have historically cost; how the FDA weighs risks of drugs, including risks of drugs that have been in use for many years.

The decisions of our collaboration partners; our dependence on our collaboration partners for the sales and marketing of our products once approved, including our dependence on AstraZeneca for the sales and marketing of VIMOVO, and whether our resources will be depleted by events other than clinical trials and efforts to obtain regulatory approval, such as the expenses relating to the lawsuits we have filed against generic companies seeking to market generic versions of Treximet and/or VIMOVO prior to the expiration of our patent.

Additional factors that affect our forward-looking statements are discussed in our most recent quarterly report on Form 10-Q. In addition, these forward-looking statements represent only the company’s expectations as of today August 1, 2012. While the company may elect to update these forward-looking statements, it specifically disclaims any obligation to do so. Any forward-looking statement should not be relied upon as representing the company's estimates or views as of any date subsequent to today.

With us today from management we have Dr. John Plachetka, Chairman, President and Chief Executive Officer; Bill Hodges, Chief Financial Officer, Senior Vice President of Finance and Administration; and Liz Cermak, Executive Vice President and Chief Commercial Officer.

At this point, I would like to turn the call over to Dr. Plachetka.

John Plachetka

Thanks Stephanie, good morning to everybody and thanks for listening in today. Let me start by providing an updated on the recent interactions we’ve had with the FDA with respect to the PA32540 and the PA8140 program.

As we indicated in June we asked FDA for and we had a teleconference to talk about the results of the 115-bioequivalence study and our NDA submission in general. My team and I feel that the call was quite productive. Still we want a written conformation on several of the issues we discussed with the FDA, because we, along with potential partners and investors, would like the maximum possible clarity about the regulatory path forward.

Both the FDA and our management team agreed during the call that the best mechanism to achieve this goal would be a Type A meeting. This pathway would allow POZEN to make a formal presentation of information and would provide the FDA with sufficient time to evaluate our data and request and formulate their response. And so we submitted our request for a Type A meeting along with our briefing package and I’m pleased to report that this request has been granted and that our type A meeting is on the calendar for late August.

Now I would like to update everyone on our European regulatory efforts. As you may remember, POZEN recently sought advise from the Medicines Evaluation Board in the Netherlands, a potential European reference country with respect to gaining approval for two strengths of PA, PA32540 and PA10040.

Since we already have the higher dose packages from the U.S. studies, we wanted guidance, especially on the lower dose. And the good news is that Phase III endoscopic trials would not be required, instead demonstrating an adequate pharmacodynamic effect as determined by intragastric pH measurements will suffice for demonstration of efficacy.

So POZEN has already demonstrated that the 40 milligrams of the immediate release of omeprazole in our product provides sufficient gastric acid in addition and we believe that we will meet this new requirement.

We’ve also been advised that we would need to conduct a bioequivalent study using ASA, aspirin as the analyte and we plan to go back to the EU regulators after we settle the bioequivalence issue here in the United States and asked them to revisit their recommendation.

So all in all we feel this has been a very positive development for us. It not only saves us money, but very likely moves up the time to market in the EU by a couple of years, since we will not have to conduct Phase III study.

So here in the United States and abroad, lots of activity and in our opinion real progress on the PA development front. And with respect to partnership discussions, we will have no comments at this time, other than to say that the outcome of the FDA Type A meeting should be of interest to all of our potential partners as well, and the greater clarity we hope to get and a shorter EU regulatory timeframe.

But before I turn the call over to Liz and Bill for comments, I’d like to highlight the worldwide sales split for VIMOVO and as we predicted some time ago, the rest of the world sales of VIMOVO has this past quarter over taken the United States sales. The 31% increase in the rest of the world sales during the second quarter was robust growth and very welcome we have additional launches expected in the second half of 2012 and on into 2013.

We expect the rest of the world sales will continue to move upward and as we mentioned in the press release this morning, only 30 of the 78 countries, far fewer than half, were trying to launch VIMOVO and have done so as of the last quarter. So as I said before, we believe that the U.S. sales alone, as reflected in IMS data, do not paint a true worldwide picture for VIMOVO and its value presence.

Now we continue to monitor both, the U.S. and the rest of the world, the quarterly sales trends, but especially they are after world sales, since we believe that more than 50% of total sales will come from outside the United States, as happened in the past quarter.

Now, let me turn the call over to Bill Hodges and then to Liz Cermak.

Bill Hodges

Thank you John. In the second quarter of 2012 we recorded total revenue of $1.8 million versus $4.6 million in 2011. Total second quarter net sales of VIMOVO as defined under our agreement were $16.6 million, which generated $1.3 million in royalty for POZEN. VIMOVO net sales grew 159.4% from the second quarter of 2011 and 4.4% from the prior quarter. And Liz will provide some more color on VIMOVO sales shortly.

We also reported $0.5 million of licensing revenue resulting from a payment we received from Desitin for the MT 400 EU licensing deal. Second quarter revenue in 2011 included $4 million for Treximet royalty and $0.6 million of VIMOVO royalty and the decrease in revenue versus the prior year is the result of the monetization of the Treximet royalty string the fourth quarter of 2011.

Our operating expenses were $6.9 million for the second quarter of 2012, a decrease substantially from the $11 million for the same period in 2011, primarily as a result of decreased cost associated with the PA 32540 development program, since we completed the pivotal studies in the first quarter. Our net loss for the quarter was $5.1 million or $0.17 loss per share compared to a loss of $6.4 million or $0.21 loss per share in the second quarter of 2011.

Turning to the half-year results, year-to-date revenue was $3.1 million compared to $9 million for the first six months of 2011. The decrease in revenue is primarily attributable to the prior year monetization of the Treximet royalty stream.

Operating expenses were $16.7 million for the first six months of 2012, down $4.6 million from the first half of 2011. The decrease also resulted from the lower development spending on PA32540 in 2012. The year-to-date loss is $13.5 million or $0.45 loss per share compared to a prior year loss of $12.1 million or $0.40 loss per share for the first six months of 2011.

At June 30, 2012 our balance sheet remained strong at $95.3 million in cash and short-term investments, compared to $100.8 million as of March 31, 2012. We have an accounts receivable balance of $1.3 million for royalty from VIMOVO. In light of our continuing discussions with FDA regarding the NDA for PA32540 and PA8140, we are assessing what additional development activities if any may be required. Therefore we continue to assess our outlook for the year and we plan to update investors when we have the clarity.

That concludes our financial results for the second quarter of 2012, so I’ll now turn the call over to Liz for a brief update on VIMOVO and PA.

Liz Cermak

Thank you Bill. First, let me say a few words about VIMOVO and then about our progress on commercial preparations for PA. So as Dr. Plachetka said, sales outside the U.S. for VIMOVO continued to advance with launch countries growing their market share and more key countries gearing up for launch in the second half of this year and the first half of next.

AstraZeneca continues to reinforce to us that they remain committed to the brand globally and are working towards making it a success. As a result of this and performance so far, we expect that VIMOVO growth in the rest of the world will continue.

As for the U.S., as mentioned earlier this year, AstraZeneca implemented a more focused and dedicated sales model for VIMOVO in order to drive better growth. As with any change in the strategy, there is a sales force disruption that always causes slowdowns and even declines in share, sometimes for many months while its being implemented.

We warned that this would happen and appears that prescription declines in the last few quarters reflected this location. However, our assets have begun flatten out over the last few months, indicating potentially a stabilization, which AstraZeneca expects will be the beginning of a growth trend in the second half of the year. So we are optimistic and look forward to reporting an increase in sales quarter-over-quarter in our third quarter call.

As for PA, in parallel with all the clinical and the regulatory activities, we’ve continued to advance the foundation of commercial preparations for the product. To continue to support their value to partners and to facilitate a smooth transition when a partnership secured.

We’ve submitted a brand name to the FDA and conducting additional market research to better understand our customer segments and the PA opportunity and we’ve begun to go public with our clinical data results. We anticipate presenting our pivotal stage three data in the fall at a relevant and major medical meeting and look forward to sharing that news with you when it happens.

That’s it for now. Let me turn the call back over to Dr. Plachetka.

John Plachetka

Thanks Liz. So that concludes our prepared remarks for today, and operator, you can open up the line for questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Our first question comes from the line of Michael Tong with Wells Fargo Securities. Please proceed with you question.

Michael Tong - Wells Fargo Securities

Hi, good morning. A couple of questions here for John. One, in terms of contingency planning, I mean what’s the worst-case scenario as far as the PA32540 is concerned as you meet with the FDA. If they still do not agree with you, what’s the back up plan; how long might it take and how much does it cost?

And then secondly, as I look at OUS opportunity for the PA program, this requirement or lack of requirement for a Phase III study accelerate the program or do you still have to wait for clarity on the bioequivalence issue in the U.S. before you can proceed. Thanks.

Dr. John Plachetka

Let me deal with the second one first, because the bioequivalence issue is going to get sorted out at the Type A meeting. We made a lot of progress in the teleconference and we’re pretty confident that there is no need to do any additional studies. We had given people some guidance the last time we heard from the agency, but the worst case is we would have to do another study and so I think we estimated $1 million and it would take a couple of months to get that done.

After our teleconference, we put that aside. We think we’ve made enough progress and another study is not going to be necessary. So we are pretty optimistic going into this Type A meeting, that all of the preliminary work that we did and the information put in place, the one reviewed by the agency is going to give them enough comfort we hope to establish the bridge. Having said that, it’s always subject to all the same risk factors as before, but what has changed after that teleconference is we’ve actually sit down from the preparation to do a second study. So take that for what it is.

That said, that really doesn’t impact too much on the rest of the world. With respect to the 81 and their request to do an ASA bipolar, it’s kind of the same thing. People understand at these regulatory agencies that the flavored effect of asking to do the ASA and although people have generated more sensitive assays, that they presume it makes it easier to conduct bioequivalence studies using ASA.

To analyze the reality is, its still pretty darn hard to do and our position is that, if you put in place in our playbook study as we’ve done, the salicylic acid bioequivalence data, which by the way the European group hasn’t seen and some other information. But there is really no need to do the ASA, especially for the 81. So I think all in all it’s going to turn out fine. We are outdoing an ASA as an analyzed study for the 81 in the EMEA territories.

Now the 32540 back up plan, obviously we could go forward with different studies perhaps, but right now we think that the odds are in our favor, but we are not going to have to do that. So we still have that stuff there. We just halted the preparations going forward.

Michael, did that give you what the answers you needed.

Operator

I’m sorry. Thank you. Our next question comes from the line of Ken Trbovich with C.K. Cooper. Please proceed with your question.

Ken Trbovich - C.K. Cooper

Hey John, I appreciate you taking the question. Just to clarify, I just want to make sure I understand the response to Michael’s question earlier. You made the comment that you don’t think you’ll have to do sort of a repeat of study 115. Is that saying that the analysis of the 115 study has changed or is it simply acknowledging that the agency understands your point about the antiplatelet effect. In other words, the drug might be in the body systemically and measurable for a few minutes, but the antiplatelet effect is measured over days and they are recognizing that issue and that the analysis of study 115 hasn’t changed.

Dr. John Plachetka

Well, I’m not going to speak for them before we get the Type A response, but I will say that we’ve said in the past that there are lot of factors here that give us confidence that we have a bioequivalent dosage form and just the things that you talked about will present us to the agency, not only in the briefing package, but its during the call that we had with the, which included the equal antiplatelet effect to the reference list of products.

The demonstration several times, that that salicylic acid as an analyte provides unequivocal proof to the bioequivalent and that we have that as our initial agreement when we started the program. And then of course the fact is that salicylic acid as the analyte only comes from ASA and its difficult to imagine a circumstance where you would not be bioequivalent for the major metabolite and if you were a further parent advised sources.

So all those factors come into play and 115 was submitted as a preliminary data set for their initial feedback, without any of the surrounding information that you and I are just talking about. The Type A meeting request now provides all of the surrounding information, albeit in summary form, but it’s still that and I think that just as any time we’ve had a chance to talk to people in depth and give them the same information, scientists come our way understanding the concept of equivalence here.

Ken Trbovich - C.K. Cooper

Okay. And just for a point of clarification, in the press release there was a comment made about the possibility that you would be able to fill the NDA on the 325 in the fourth quarter. Could you clarify what that means as it relates to the lower dose. Does that mean that you’ve settled on filing a complete package including both does or does that mean that a filing on the 8140 would potential come in at a latter time.

Dr. John Plachetka

Yes, part of the Type A meeting request is to talk about that plan, but I think that we’ve said in past that the request for the lower dose, which happened in the second quarter from the agency was a little bit of a surprise. We had some preliminary work done with the 81 and we are moving forward with a submission that includes both dose and it includes appropriate indications for both doses. So this is actually an expansion of the market opportunity and Liz can talk to that if you want.

But we said in the past that two thirds of the business is the 81 strength and one third of the business is 325. When we put both strengths into the market place, our market research indicates that this is a dramatic change in the opportunity from a commercial perspective and we think that the agency’s concern which they previous expressed to us that people would switch off to the 81 just to get the gastro protection, will be dealt with by providing a lower does which also provides the gastric protection.

So the rational is very clear to have both strengths. It leaves the choice up to the physician and it is a common sense fix to address the concerns that they had and that’s what we are planning to do in the NDA. And the NDA submission is possible this year and it will include what we believe is appropriate CMC data for the lower dose strength for this to be filed to the NDA and then for them to make the valuations of the CMC data during the course of the review.

Ken Trbovich - C.K. Cooper

Okay and so you mentioned the CMC, does the plan for the 81 also include the ASA BE study for the 8140?

Dr. John Plachetka

I’m going to address that after our Type A meeting, because that was one of the other questions we had in there, our plan to deal with the 81 requirement for our bridge to the reference product.

Ken Trbovich - C.K. Cooper

Okay and then I’m going to switch to the EU and I’ll get back in the queue. On the EU side, I know you mentioned the high does studies in the U.S., but there are obviously different between what we used as standard doses here, used in Europe. I think if I remember right in Europe it is 103 and 300. Are they going to want bioequivalence on both and are those things you would fund yourselves or wait for a partner to help fund.

Dr. John Plachetka

Well, they are relatively inexpensive studies, so we would have no problems conducting those going forward. But I think the great news here is a common sense approach that was offered to us by the regulators. They said we clearly see that adding asset in addition in your delivery systems produces fewer ulcers and they also understood that the mobile data that we had put in place. And so when our team went over, it was really not a surprise for these regulators that our dosage form was going to be effective.

We have seen the preliminary top line on your 325. If it works at 325, it’s going to work for the lower does, whether it’s 81 or 100 and they just like in the United States need us to establish a bridge. It’s not a 505 B2, but it’s basically the same sort of concept. And you are right about the doses over there. It is a 100-milligram, it’s the most commonly prescribed dose in your Europe and many of the parts of the world and so that’s where we are planning to go with that.

But importantly this shaves years off the development timeline and this entire program is going to probably less than a $4 million or $5 million investment over and above what we’ve done so far. So we are pretty excited about that interaction with that regulatory body and the advantages that it puts in play for us and our potential partners.

Ken Trbovich - C.K. Cooper

Okay, thank you.

Dr. John Plachetka

Sure.

Operator

Thank you. Our next question comes from the line of Bert Hazlett with ROTH Capital Partners. Please proceed with your question.

Bert Hazlett - ROTH Capital Partners

Thanks for taking the question or two, I appreciate it. I appreciate the color on the additional interaction of what you were discussing, John, the platelet aggregation effects and that’s good color and I’m glad to hear about the receptiveness. I want to pick a little bit more at why the EU is also focusing on ASA and not SA as well. Just anymore color there.

Dr. John Plachetka

Well, this is not a big issue. This was a written response. It was I think a typical type of a response. People know that the platelet inhibition effect is due to the ASA. This is what people often ask for I think.

What they don’t fully appreciate is that when you go to a sustained release dosage form or a delayed release dosage form, the plasma levels shrink dramatically and they become unpredictable in their time of peak, and so alternate ways to demonstrate bioequivalence for delayed released product it’s not unusual. And I think they just have never seen a product like this go forward. The typical requirement for demonstrating equivalents of generic drugs is not an in vivo study, it’s actually just a dissolution evaluation, which is an in vitro trough.

So as it happened in the United States and I think also outside the United States, they’ve actually never see an application before for a delayed release aspirin product that was going to require and in vivo study. And I don’t think that they understand quite clearly what the limitations are. But once we point them out, it’s a great scientist-to-scientist discussion and I think we’ll end up in a very good position once we have a chance to go back to them.

Bert Hazlett - ROTH Capital Partners

And we’ve spoken about this before as well, but doesn’t it all come back to a secondary prevention indication as well.

Dr. John Plachetka

Sure.

Bert Hazlett - ROTH Capital Partners

I mean is that argument resonating at the end of the day?

Dr. John Plachetka

Well, you might have to restate that Bert, because I’m not sure what argument…

Bert Hazlett - ROTH Capital Partners

I’m sorry.

Dr. John Plachetka

Your saying if the platelet effect is important in secondary prevention, yes, that absolutely resonates.

Bert Hazlett - ROTH Capital Partners

Yes, in secondary prevention the platelet effect is achieved on a long-term basis rather than kind of acute use, which it appears by my read to be a separate indication.

Dr. John Plachetka

Yes, that’s absolutely true. And if you look through the literature, you will find a pretty good disconnect between the aspirin systemic blood level data and the platelet effect. We are aware of published data with very low doses of aspirin, in which no detectable systemic aspirin is found in the blood and yet you get a complete inhibition of the platelet aggregation effect in response to arachidonic acids.

So when scientists and regulatory body see that kind of information, which they never would have seen before, because it just doesn’t come up, they start to understand, you know what, this requirement is not as important as perhaps we thought and it’s very comforting that the platelet effect is equal to the reference product and I think that’s ultimately what’s going to carry today.

Bert Hazlett - ROTH Capital Partners

Okay, I appreciate it. Just two other quick ones. First of all, should we be reading anything into the Netherlands as being your reference state? Is there any advantage or disadvantage to achieving that?

Dr. John Plachetka

We think so. If I’m not mistaken, they were our reference state for VIMOVO and they did a really good job, because VIMOVO is now proved in over 50 countries on their recommendation. And you know it’s – the other thing is that this gives us another way for a potential partner to then go and seek approval all around the world.

Liz has got experience in some of the South American markets and you might want to comment Liz. It’s not just an FDA approval letter that could be used to gain approval in a lot of other countries. Talk about what an approval letter from the EMEA would mean and how that could fulfill approval in all the other emerging countries.

Elizabeth Cermak

Yes, it’s essentially the same as any western country and so with the most popular dose in the rest of the world being that same 100 that’s popular in Europe, that gives you the ability to be able to file from there. So it opens up really most of the rest of market to you, which is substantial opportunity, because just like in the U.S., aspirin is ubiquitous and it’s used for secondary prevention. So we think it’s a pretty exciting opportunity.

Dr. John Plachetka

Yes, I was extremely pleased. I can’t over state the importance of not having a new Phase III, both in terms of cost and time.

Bert Hazlett - ROTH Capital Partners

Well, just on that note on cost, one more quick one on the R&D spend, it was lower than what I had anticipated and again, given your position right now regarding the potential for a lack of an additional study, any further comments on R&D spend, maybe from Bill for the remainder of the year. Is roughly $3 million something we should be looking at?

Bill Hodges

Well, we expect it to remain low, except for the NDA filings which would show up in R&D and that’s if we made a fourth quarter filing. I think we just got worried. It’s about a $2 million filing fee, so that’s the wild card in it.

Bert Hazlett - ROTH Capital Partners

I appreciate it. Thank you.

Operator

Thank you. Our next question comes from the line of Eun Yang with Jefferies. Please proceed with your question.

Eun Yang - Jefferies & Co.

Thanks. John, if I heard you correctly, you said that the FDA meeting is scheduled late August.

Dr. John Plachetka

Yes

Eun Yang - Jefferies & Co.

So do you have final conclusion right after the meeting or does the FDA require more time to draw their conclusion after the meeting discussion?

Dr. John Plachetka

No, I think the teleconference we had in July gave us a very good understating of where we need to be, and both parties understand that. One of the things that I expressed during the phone call with the agency was our need as a small company for clarity and they understood that.

I can’t say enough how grateful I am to this particular division, to their cooperativeness, not only in taking that call in July, but also in scheduling this Type A meeting and working very closely with us to give us the type of and to give you and the investors the type of clarity that we need going forward.

As Bill said, we got a $2 million filing fee hanging out here. If we are not confident that we are going to have the right bridge and all the data necessary to get that bridge in the NDA, it would be kind of silly for us to go spend that money and have that thing kicked back to us, so they understood that.

They understand $2 million filing fee is a big nut for a small company like ours, which is why I was so pleased that they give us a very quick turnaround time on this Type A meeting and I just couldn’t be more complimentary. I know that there is some companies that have difficulties.

It often times appears, because we have to put in risk factors and kind of give you the worst case scenario sometimes when we describe our interactions with them, that they are being difficult. But I would say in the circumstances we’ve had with them, they’ve been very understanding of the need going forward for clarity and we are pretty confident that they got it and we are going to have a good outcome after our Type A meeting. But we’ll wait and see what happens.

Eun Yang - Jefferies & Co.

All right. So you said cardio renal division at the FDA.

Dr. John Plachetka

No. This IND is actually in the home of the GI division; cardio renal is consulting.

Eun Yang - Jefferies & Co.

Okay. And then a question on VIMOVO, how much milestone they are related to sales in AstraZeneca?

Dr. John Plachetka

Well, we don’t have any milestone coming up in the foreseeable future.

Eun Yang - Jefferies & Co.

But there must be some fee [ph] related milestone, potential milestones from the partner, correct?

Dr. John Plachetka

Yes, there are some in the out years.

Eun Yang - Jefferies & Co.

Okay, so it sounded like the first milestone, say the related milestone maybe kind of far off, is that correct?

Dr. John Plachetka

Yes, I would say that’s probably true.

Eun Yang - Jefferies & Co.

Okay, thanks.

Operator

Thank you. Our next question comes from the line of Jason Napodano with Zacks. Please proceed with your question.

Jason Napodano - Zacks Equity

Hi guys, just a couple of quick questions. With respect to the opportunity for PA outside the U.S., do you see that in a similar kind of dynamic to VIMOVO, in a sense that maybe the opportunity outside the U.S. is greater than inside the U.S..

Dr. John Plachetka

Well, VIMOVO is an interesting situation, because the marketing strategy appears to us as outsiders to be very different. Not based on anything AstraZeneca has told us, but just from what we understand from the public information.

Pricing is very different. Nexium is involved in a lot of the countries outside the United States where VIMOVO is being marketed. Whereas here in the United Sates, Nexium is in the last year or two it’s had life and although there is a very clear 5% or 10% of patients who take NSAID and take a PPI to offset some of those NSAID side effects, it does not appear that that is a target group of patients that AstraZenecac has been targeting here in the United States.

Now about United States that may in fact be a part of the group that they are targeting, we see some pretty substantial growth numbers in the individual countries, making one suspect that there is something unique about what’s going on in those markets. And so whether its strategy or for price or whatever, but the reality is they are the same drugs and the competition is pretty much the same in those areas. So, I don’t know Liz, you may want to add some comments on that.

Elizabeth Cermak

No, when I think it relates to PA though, we think, we’ve been looking at some external data and doing some of our forecasting, we think its probably pretty evenly split between what the U.S. would contribute and what we’ll contribute globally.

Dr. John Plachetka

Based on a different pricing strategy.

Elizabeth Cermak

Yes, based on a different pricing strategy, we’ve been pretty public about our strategy being about a $1 a day, about what the two generic components cost and we had that same strategy, we are forecasting the rest of the world. So it’s pretty much the same. It really just has to do with the size of the population and as I said before, aspirin is very well used for secondary prevention all around the world.

Jason Napodano - Zacks Equity

Got you, that’s helpful. Following the Type A meeting, do you expect to provide an update either via press release or conference call or do you think that you would have to wait for minutes from that meeting. Give us a sense of kind of what the next update from the company would be.

Dr. John Plachetka

Yes, I would prefer to wait for the minutes, because almost every one of you is going to say you have it in writing, so I would prefer to have some minutes.

Jason Napodano - Zacks Equity

Okay and then just with respect to VIMOVO, its interesting to watch each quarter as the number of filings and approvals and launches grow. Can you give us a sense of the 58 approvals in 30 countries launched. What are some countries or some key countries in your mind that have been approved, but yet AstraZeneca has not yet launched.

Dr. John Plachetka

You know I don’t think we can give you that, because AstraZeneca provides information to us in confidence. But if you contact them, they will probably not give it to you either, but you could try.

Jason Napodano - Zacks Equity

Okay, all right. I appreciate it you guys. Thank you.

Dr. John Plachetka

Sure.

Operator

Thank you. (Operator Instructions) Our next question comes from the line of Ken Trbovich as a follow up with C.K. Cooper. Please proceed with your question.

Ken Trbovich - C.K. Cooper

I may not get anywhere with this question either, given that response, but I’ll ask on the half chance that maybe Liz can give us some antidotal commentary. Liz, could you give us a sense as to your comfort about the rest of the world sales and how much of that has actually been driven by launches as opposed to re-use – new prescription that get filled and re-filled. Because I think that’s part of the challenge we are having when we look at these countries growing, the number of countries growing, its very difficult for us to get a sense for whether a 10th of the business is coming from stocking or 50% of the business is coming from stocking on the rest of the world.

Elizabeth Cermak

Yes, no, that’s a great question and I will tell you what I know and what I can say, is that the fist half of the year had in it as you know from the numbers, the fourth quarter of last year, a few more launches in it. But I have to say that they weren’t necessarily the major countries. There was a lot of major ones launched last year and there is still more to come as I already said.

So we think this is organic growth. We have seen some of the market share numbers and the growth in those counters that were launched last year and we think a lot of the business for the first half of the year is coming from that. So we are very comfortable and confident that it’s on a growth trajectory and its not just filling the pipe.

Ken Trbovich - C.K. Cooper & Company

Okay, and then you mentioned a brand name, is it one amongst a list of 10 others submitted to the agency that you are referring to with regard to PA.

Elizabeth Cermak

The 32540. The way it works is you submit your preferred one and you can or cannot submit a backup. And so that it’s not a list of 10 really. You have to tell them exactly what you want and why you want it. So we are hopping to here sometime within the next couple of months and then we can be public about what that is.

Ken Trbovich - C.K. Cooper & Company

Got it and then from the standpoint of the actual commercial plans and things of that nature, does that branding from your perspective, do you wait for a response before you start looking at branding and packaging from a logo perspective. Is that part of what you’ve already developed as a commercial team.

Elizabeth Cermak

Yes, we have already done that and so if we don’t have the actually name as part of it. We are marking up the packaging anyway as if we already have all those things. We will get the name we will put it in, if not we will put in it under review, but all of that work has been done.

Ken Trbovich - C.K. Cooper & Company

Okay and should we think of this as a name that would be similar to VIMOVO. Would it necessarily mean anything or can we think of this as a name that might have some value in what it does, like cardio card or something of that nature.

Elizabeth Cermak

Well, I prefer to wait until we actually have the name approved by the FDA, because we did it on different themes.

Ken Trbovich - C.K. Cooper & Company

No, I understand. Its one of those, when we hear names of drugs we often times we have to have somebody tell us how to pronounce it, because phonetically you can’t figure it out either.

Elizabeth Cermak

Yes, we are happy with this name by the way, so hopefully this would be the one that will get approved and it will make sense to you when you hear it.

Ken Trbovich - C.K. Cooper & Company

Okay and...

Dr. John Plachetka

We were going to try a name called frozen saves your life, but it was just to be a little to long.

Ken Trbovich - C.K. Cooper & Company

Yes, I could imagine, that would be a little lengthy. And then just sort of finally question, I know John you mentioned that the studies in Europe obviously its very encouraging, that the cost of those studies are fairly reasonable. But it sounds like even at $4 million to $5 million its still an investment that would need to be made in order to maximize the opportunity. Does that put your all in development cost on the PA program in total, all the doses, all the markets, somewhere in that sort of $60 million, $65 million range when everything’s said and done.

Dr. John Plachetka

No, I don’t think I can answer that question today. We can get back to you on that. But I don’t know, there is different ways to do the accounting, you have your direct cost, you have your indirect cost put on top of your grants, you have CMC, so I’m not sure that we could break it out right today. But if you want we can try and get back to you. But I think then we’d have to get a disclosure to everybody.

Ken Trbovich - C.K. Cooper & Company

No, no, no that’s fine. I’ve just been trying to track the disclosures that are in the Q and K and I think the last one I saw was somewhere around the $55 million range and I think that’s direct cost, but I may be wrong.

Dr. John Plachetka

Yes, that’s correct, its direct cost and you would add this on top of it and we got a filing fee that would go in there. So there is may be $6 million left or depending on what studies you have. But you are right in the ballpark on what it would be.

Ken Trbovich - C.K. Cooper & Company

Okay, thanks again. I appreciate it.

Dr. John Plachetka

Okay.

Operator

Thank you. Dr. Plachetka, there are no further questions at this time. I’d like to turn the floor back over to you for closing comments.

John Plachetka

Well thanks. We had a nice Q&A and I appreciate that. I remind everybody of the risk factors inherent in small drug companies. Please read them in our filings, in an upcoming filling. Be aware that this is a risky endeavor, being in the drug development business.

But having said that, I thank you for tuning in today and we are going to be at a conference to start of the fall season. September 5 and 6 will be at the Stifel Nicolaus Healthcare Conference, which is going to be in Boston at the Four Seasons and there may be a couple of other ones later in the year that we’ll attend. So hopefully we will some of you there and we may be out on the road in September, October as well, as we usually get around we see our investor base during that time and some potential new investors.

So, thanks for listening in today. Everybody have a good day.

Operator

Thank you. This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.

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