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Elan Corporation (NYSE:ELN)

Q3 2012 Earnings Call

October 24, 2012 08:30 AM ET

Executives

David Marshall - VP, IR

Kelly Martin - CEO

Nigel Clerkin - EVP & CFO

Analysts

Jack Gorman - Davy Stockbrokers

Corey Davis - Jefferies & Co.

Michael Yee - RBC Capital Markets

Marshall Urist - Morgan Stanley

Eric Schmidt - Cowen and Co.

Vincent Meunier - Exane BNP

Operator

Welcome to the Elan Corporation Q3, 2012 financial results conference call. (Operator Instructions). I would now like to turn the conference over to David Marshall, Vice President, Investor Relations, Elan Pharmaceutical Corp. Please go ahead sir.

David Marshall

Thank you Jina. Good morning and good afternoon everyone. Welcome to Elan’s third quarter, 2012 financial results call. If you have not reviewed our press release please go to our website at www.elan.com where you will find it. On today’s call will be CEO, Kelly Martin; and CFO, Nigel Clerkin.

Before we begin I would like to review Elan's Safe Harbor Statement. Today's call will contain forward-looking statements about Elan's financial condition, results of operations, business and research prospects. These forward-looking statements involve substantial risks and uncertainties that could cause actual results to differ materially from those described or projected. A list of these risks and uncertainties are included in our third quarter 2012 financial results press release, and in our 2011 Annual Report on Form 20-F and our forms 6-K filed with or furnished to the Securities and Exchange Commission.

Elan assumes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, today's conference call and webcast will include non-GAAP financial measures such as adjusted EBITDA. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in today's press release.

Now, I would like to turn the call over to Kelly Martin.

Kelly Martin

Thanks David. Good morning, afternoon to everybody. Thank you for joining us today and on behalf of our Chairman, Bob Ingram and myself we will present our third quarter results and I will also add some other comments. The third quarter was a busy one for Elan. A number of things occurred which both directly and indirectly impacted us and our business and our decisions. First and foremost in July Johnson and Johnson and Pfizer announced the results of the bapineuzumab/AIP 302 and 301 trials that’s was both carriers and non-carriers. Subsequently they have presented data and the investigators have presented data at two medical meetings, the third and important medical meeting is next week at the CTAD meeting in France.

Second thing that occurred in the third quarter was we announced a spin-off of our long term high quality research and discovery activity into a separate entity called Neotope that will be the CEO of that entity will be Dale Schenk who is the Chief Scientific Officer of Elan PLC and has 20 plus years’ experience at a Senior Executive level from a science point of view. Joining Dale will be Ted Yednock who is our Head of Research, Jane Kenny and several other extremely high quality capable scientists.

We as Elan PLC will provide initial capital of somewhere between a $120 million and a $130 million to the entity. We announced in August that our goal would be to close that transaction by the end of the year and to-date that remains on track and that remains our target. The third thing we did and Nigel Clerkin and we will talk about it in a bit more in some detail in his comments, we have refinanced our outstanding bonds, Nigel and team did a great job in September and in that transaction and again you will hear more from Nigel but we refinanced 250 basis points from a coupon point of view, cheaper than we had done several years ago. This allows us tremendous flexibly and capital to utilize in a variety of different ways going forward. The fourth thing we did was we also announced that Hans Peter Hasler would become the Chief Operating Officer of Elan. Hans Peter had previously have been President of Biogen Idec. He was in charge of global marketing in particularly for neurology at (inaudible).

He has 30 plus years’ experience in the pharmaceutical biotech business and all globally based and so Hans Peter has moved from our Board of Directors to joining myself and my other colleagues on the executive management team.

Some other comments broadly for TYSABRI and again you will hear bit more from Nigel and we had a bunch of things in our announcements for the quarter and you will hear more also from Biogen Idec tomorrow on their results call but year-over-year patient growth was up 13%. We continue with the SPMS trial from a life cycle point of view. And we and Biogen continue to explore, talk about and plan for other potential life cycle indications, all of which look quite interesting, quite large and quite important potentially for the future of these assets. The growth and the utilization of the assay continues and the growth globally and the demand for TYSABRI particularly with patients who are declining in one way shape or form remains on track and I will also remind people that for Elan roughly every 10,000 patients there is a $100 million of operating earnings and we continue to believe that this asset will grow double digits for the foreseeable future.

D5 small molecule that we own, we announced that we started bipolar trial during the course of the summer. We are also in discussions with regulators quite actively on other potential utilizations of D5. Those utilizations would be symptomatic indications. The trial should we go forward would be rather short, they will not be enormous, large, multi-year, multi-100s and 100s of patient trails but we are working quite constructively with regulators on the usage of D5 for at least one other indication if not two and over the course of the fourth quarter of this year and the first and second quarter of 2013 we are making some business and portfolio decisions about whether to move that asset forward and other indications and if so what indication and what are the parameters of the trial.

Lastly before I turn it to Nigel some comments on the overall landscape as we see it. We believe the MS market will continue to grow and by 2016 the denominator of patients be close to a million patients, we believe that TYSABRI will continue to play a very important part of that overall growth, that particularly for GC negative patients particularly for GC negative patients who are declining. The AD space from a demand point of view is never-ending as far as demand, very complicated as far as therapeutic advancements as we have all seen, our participation and AD will be both direct and indirect as it relates to therapies, symptoms and business constructs as an example Neotope will be doing ongoing work in the AD space and as we will be a reasonably significant shareholder in Neotope our participation in parts of the AD advancements scientifically will be indirect.

The same holds true for Parkinson’s, the same holds true for other therapeutic indications that the demand is high, the risk is also high. We will again endeavor to participate or participate in ways that reduce risk from an Elan shareholder point of view.

We are also interested in neuropsychiatric indications that are parts of these neurodegenerative diseases, MS, AD, PD and others. We believe there is some symptomatic opportunities there. Again with trials that are less risky, less costly and shorter in duration. We also believe that there are multiple orphan diseases in the neurospace which the patient demand is acute, the therapeutic options are zero and that we have opportunities to properly invest and leverage our scientific knowledge and our clinical knowledge and perhaps participate in those areas as well.

So all and all the third quarter for us was an extremely busy one between July, August and September. We have repositioned the company, we are spending off the research activity and giving its own opportunity to succeed and move forward. We have added to the management team, we have reduced our cost of capital as it relates to our credit restructuring that we did in September and we continue to work very closely with our partner Biogen to position TYSABRI for a long term and strong growth. With that I will turn the call over to Nigel and he will walk you through a number of the particulars and then as David say both Nigel and myself are happy to taker questions at the end of the call.

Nigel Clerkin

Thanks Kelly and good morning and good afternoon everyone. Before I review the quarter in more details, I will start with some overview comments on our recent performance and on guidance. We demonstrated continued finance to progress in the third quarter with revenues increasing by 10% over Q3 last year and adjusted EBITDA growing by 38%. We moved quickly following the very disappointing bumpy data through our decision to (inaudible) our discovery science efforts and shut down our site San Francisco facility.

The implementation process is already well underway and we remain on track to complete these actions over the next few months. We also made further progress in strengthening our capital structure, refinancing our at a much lower coupon and with an extended maturity days of 2019.

Following these actions we are in excellent financial shape for the future. Given our strong performance year-to-date we are reaffirming our full year guidance of adjusted EBITDA greater than $200 million. This also reflects our expectations that the TYSABRI, Italy price dispute is unlikely to be resolved this year as well as the reclassification of Neotope to discontinued operations as a result of the spin-off decisions.

In light of these two items under progress to-date with the business restructuring we now expect full year revenues of approximately $1.2 billion and full year operating expenses to be in the range of $380 million to $400 million. Done from the previous range of $420 million to $440 million.

Looking ahead to 2013 guidelines for the financial profile of the new Elan were provided with the announcement of the Neotope spin-off last August. That guidance reflected the estimated impact of the planned restructuring on our future financial profile as well as the current bipolar indication being pursued for ELAN D5.

As Kelly mentioned based on recent discussions as regulators, additional investments in further indications for this assets are currently being evaluated. We also continue to work through our budget process for next year in the normal course, as in the past we will provide comprehensive financial guidance for 2013 when we report our full year 2012 results early next year.

Turning back to the quarter, the strong revenue on adjusted EBITDA improvements were driven by TYSABRI, were patient numbers grew by 13% over Q3 last year with 71,100 patients on therapy at the end of September. Compared to 53,200 at the end of September last year. We saw a continued good growth in the quarter with 2100 patients outage compared to 1900 in Q3 last year.

While we expect to continue to see variability in this quarterly metric. We remain convinced of TYSABRI’s potential to grow substantially in the years ahead. Given it's compelling efficacy on benefit risk profile in particular amongst GC negative population. Our conviction is further enhanced by TYSABRI’s robust intellectual property position. Primary U.S. and European patents run through 20-20 and are augmented by additional coverage stretching beyond that.

This (inaudible) IP state provides the confidence for investing with Biogen in founding the potential usage of the asset including the SPF trials currently underway. While the number of patients on TYSABRI has grown by 13% since Q3 last year and Elan’s reported revenues increased by 10%, the end market sales in the third quarter this year have only increased by 3% over Q3 last year. As with the second quarter this difference between patient and revenue growth is largely a function of the differing revenue performances in the U.S. and the rest of the world.

In the US, end market sales increased by 17% to $230.5 million driven by a 12% increase in patients on a 10% increase in units sold as well as the impact of price increases. Our rest of world patient numbers increased by 13% since Q3 last year, the in market sales fell by 11% to $173.3 million in Q3 this year compared to $195.5 million in Q3 last year.

This mainly reflects three factors. A $14 million revenue deferral in Italy in Q3 this year, foreign currency movements and in particular, the 12% decline in the dollar euro exchange rate over this period as well as inventory movements. Compared to Q2, US in market sales increased by 9% reflecting the 3% increase in patient numbers and increased pricing.

In the rest of the world, Q3 in market sales were 6% lower than Q2 despite a 3% increase in patient numbers, mainly reflecting a 4% decrease in unit sales. Our gross margin sales from 46.7% of total revenue in Q3 last year to 45.7% in Q3 this year. This is as a consequence of the change in mix between US and rest of world reported revenues and also because of the cost of providing the JCV anti-body assay to patients in the commercial setting.

Our total operating expenses, that's R&D and SG&A combined, fell by $8.3 million or 9% over Q3 last year. Our reported operating expenses no longer includes Neotope expenses for either the current quarter or prior periods following its reclassification to discontinued operations.

Our adjusted EBITDA increased by 38% to $67.6 from $49.1 million Q3 last year reflecting the 10% revenue growth on the 9% reduction in operating expenses.

We recorded other charges of $111.3 million in the third quarter mainly related to the business restructuring aligned during the quarter. We expect to incur $60 to $80 million of further charges as the restructuring completes in the months ahead.

Our net interest expenses declined by almost half to $15 million from $28.7 million in Q3 last year as a result of the large debt pay down in Q4 last year.

We recorded a net loss on equity net investments of $145.8 million in the third quarter. This mainly relates to our 49.9% shareholding in Johnson AI and includes the write-off of the carrying value of our shareholder in Johnson AI following the Bapi data as well as our share of Johnson AI’s results for the quarter.

In early October, we provided a $28 million cash contribution to Johnson AI bringing the total year-to-date to $77 million and leaving our remaining contractual commitment of $123 million. We do not expect to provide any further phones (ph) this year. It is too early to provide detailed guidance on the likely range of funding next year, but we would expect Johnson AI’s expenses next year to be significantly lower than the current (inaudible).

Finally, as I mentioned earlier, we recently refinanced our debt at a much lower coupon and with an extended maturity days of 2019. As a result, we expect our annual interest expense to reduce by about one-third from approximately $60 million to approximately $40 million.

With our low debt to EBITDA ratio, our long maturity profile, our strong cash and invested balances and our future cash flow generation potential, we are very comfortable with our financial position and are excited by our growth prospects for the years ahead.

And now I'll turn the call back to David.

David Marshall

Thank you Nigel. Operator, we are now ready to begin the Q&A session.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). And our first question comes from Jack Gorman of Davy Stockbrokers. Please go ahead sir.

Jack Gorman - Davy Stockbrokers

Firstly D5 Kelly and Nigel, I appreciate that you haven't got for your guidance for 2013 in place today. But can you give us a little bit more clarification on the scale of the R&D investment that will be required to pursue and those other possible options that you’re considering within the D5 portfolio and indeed in that context, would you still be comfortable and cash and equivalence would be increasing in 2013 compared to 2012. That's my question one.

And my second question just relates to the quarters specifically. Through the announcements you make reference to a reduction in spending on TYSABRI R&D during Q3. Just wondering what was behind that and whether we should use that as a run rate as we go into the end of the year and into next year. Thank you.

Kelly Martin

So Jack, I'll give you some overview of D5. There is two further indications that we are looking at and in discussions currently with the regulators. One of the indications would be an orphan indication which would be of significant medical and patient value but from a cost and execution point of view, we’re talking about rather small trials, rather quick trials and somewhat de minimis in terms of overall expenses but expenses nonetheless. And the second indication is a bigger indication but again the trials should we go forward would be much, much shorter in duration, much smaller as far as number of patients and much quicker from start to finish, vis-à-vis, what we had looked at D5 before which was mild to moderate or mild AD from a disease modification point of view, those trials are obviously enormous in terms of time, patience and cost. So without getting into the specifics, but on a relative basis, one of the indications would be very small cost wise and the other would be slightly bigger but wouldn’t approach in any way, shape or form a large AD trials as far as cost and time and patience. And when we have further clarity ourselves and when we finalize discussions with the regulators, we would fully explain to the market should we go ahead, what the trial is and what it’s designed to do.

Nigel Clerkin

And Jack maybe I'll just add in terms of that too, certainly we would expect to, are fully could be continuing to cash generating next year and meaningful so and in relation to your other question on TYSABRI R&D, yes it was a little bit lower in Q3 as well as the commercial spend relative to earlier in the year and obviously you will have some core de-fluctuation in spend. We've given a revised full year guidance for spends, so I think you can back into that roughly where spend they go in the fourth quarter and we’re already in terms with that. So I wouldn’t necessarily take it, it already might be slightly lower than their own risk.

Operator

Thank you. And our next question comes from the line of Corey Davis of Jefferies & Co. Please go ahead sir.

Corey Davis - Jefferies & Co.

Maybe just a follow on from that last point that you just made Nigel. So, thinking about both R&D and SG&A for Q4 as well as into next year, and I guess what you were saying is R&D may not be this low on a quarterly basis going forward, but when can you confirm, I didn’t put words in your mouth and number two, on SG&A if this is lower that it’s going to go or as a long continuing ops has been restructuring, could that go even lower?

Nigel Clerkin

Corey look again, when you look at the revised guidance we've given for the full year, that would suggest a slight uptick in spend in the fourth quarter relative to the third quarter, that's (inaudible) that was making. And clearly we will continue to focus on SG&A and both parts of that, in commercial, we will make investment decisions that would make sense with Biogen Idec, more than the context that TYSABRI as a brand, as we said, for quite some time has a relatively fixed infrastructure need against us. And on G&A, we will absolutely continue to focus on large clearly part of the restructuring efforts we’re doing is on as well. And then, on R&D as Kelly mentioned, you know Corey, there are decisions to be made around D5 as we had in to next year. And so again, we will obviously give full guidance for next year and with our Q4 results as we normally do.

Corey Davis - Jefferies & Co.

Next question on the net patient adds which were obviously below where they were in Q2, how much of that you think is just due to it being the summer months or should we be less optimistic going forward that those net patient add numbers can meaningfully accelerate from the numbers that we saw this quarter.

Nigel Clerkin

Yes Corey look again, we are pretty pleased with the number, 2,100 patients, that's higher than the equivalent quarter last year and slightly lower than Q2, but only slightly. We’ve always said that you’ll see variability and some ups and downs in the quarterly run rate and that will likely continue to be the case. You never get a straight line and they can really. But longer term, when you step back and you think about, as Kelly mentioned, where the overall MS patient population will continue to go through over time and then when you think about the proportion of patients who are JC negatives, we think they are somewhere around a 400,000 JC negative patient population by the time you get a few years out from now and clearly, we will believe that TYSABRI given the benefit risk profile, in particular for JC negative patients, should have a meaningful share of that patient growth. So, longer term, we have really continued even and now the potential for TYSABRI to grow as strongly. But you will continue to see some ups and downs in the quarterly average. That's just part of life.

Corey Davis - Jefferies & Co.

Last question, at some point does it make sense to try and set up your own sales force to also promote TYSABRI if it seems like Biogen becomes more distracted with all its other projects?

Kelly Martin

Look, we work very closely and very well with Biogen. I mean if you think about the MS business, Biogen by far, by multiple standard deviations, is in the lead with regard to MS globally. They do an excellent job around the world positioning the combined therapeutics of their projects plus our shared products with patients. We have a lot of open dialogue with them to make sure that TYSABRI which is a shared asset is positioned properly and strongly as Nigel said particularly with JC negative patients who are failing. So, I don't think it makes sense strategically for us to setup a separate sales force at a long. I do think it makes sense for Biogen in the long to have a separate sales force under the direction of Biogen so we can ensure the proper focus on this shared asset and Biogen agrees with that and Biogen operates that way. So, I don't think it makes sense for us parallel to setup a sales force within a one that just does TYSABRI with the current partnership that we have with Biogen.

Operator

Thank you. And our next question comes from Michael Yee of RBC Capital Markets. Please go ahead.

Michael Yee - RBC Capital Markets

First question was thinking strategically, you mentioned the words selectively evaluating, its value creating sort of opportunities, I think you saw selectively. So, can you just put a little bit more color around that? How do you think about commercial accretion versus R&D assets which you spent a lot of time doing pipeline stuff over the past couple of years? How should we think about that? And then the second question was, can you repeat the OUS volume vial shipped or volume for TYSABRI quarter-over-quarter. What was the sequential growth in volume? Thanks.

Nigel Clerkin

And Michael, yes, so the quarterly shift in units was, it was about 4% relative to Q2 and about 7% growth relative to Q3 last year. That's rest of world.

Michael Yee - RBC Capital Markets

And why do you think it actually declined sequentially even though they were patient adds such as inventory or what do you think?

Nigel Clerkin

Yes, we think it’s predominately inventory movements Mike, I mean you will always have some, it will never be exactly perfect that the patient growth grows at exactly the same pace as unit growth. Fundamentally what matters more in the long term clearly is the patient growth and that's where we focus our time. So you will have some quarters like you (inaudible) inventory growth, where units’ growth obstruct patient growth in any of the other quarters that could ask couple of words, was the other way around. Longer term what matters is what the underlying patient trend.

Kelly Martin

And the other question Michael it’s Kelly is, the way we think of things prospectively is we’re going to generate a lot of cash, how we’re going to spend that cash is going to be important. Part of that cash we would be investing in our own current business assets, part of it would be in some way shape or form over time providing some of that cash back to shareholders and part of that cash would be looking for as I said, selectively looking outside of the long for different assets. The way we think of different assets are cross a wide spectrum.

When we think about pipeline, we think a lot of this company about risk and the downside as I think people know, we try to do things where we don't take enormous amounts of risk. We try to take out the risk, the signs for clinical risk. There are late stage clinical assets that are interesting, that we believe from a scientific insight have reasonable chances of succeed, so sort of the shots on goal look interesting, the risk reward looks interesting, therefore the optionality looks quite interesting. There’s several of those in the world that we have been tracking for some time. Some of those are also tied under companies to existing commercial capability, we have historically been in commercial, we’re not afraid to be in commercial, but if we were, it would be very specific, very targeted, either therapeutically or geographically.

So there is a lot of dislocation out there in the marketplace and if we’re very thoughtful and judicious on how we spend our cash across those three buckets, I think you’ll find that we’ll be reasonably active in the coming year to two across different types of assets that all have a risk reward profile that's positive to shareholders.

Operator

Thank you. And our next question comes from Marshall Urist, Morgan Stanley. Please go ahead.

Marshall Urist - Morgan Stanley

So, first one, just wanted to be clear on your comments about 005 and next year. So are those would be additional indication be a sort of incremental to the spending level that you guys talked about when you sort of guided to the 400 million or talk about 400 million in the EBITDA or over 400 million EBITDA next year?

Kelly Martin

Yes.

Marshall Urist - Morgan Stanley

You also referenced in the release this morning a sort of lower TYSABRI SG&A spending in the US. Can you give us a sense of what was driving that and how that spend is going to trend from here?

Nigel Clerkin

Marshall again, as I said earlier, you will always have some variability quarter to quarter in terms of spend levels. But it depends on things like marketing spend and exactly when programs occur and so on. So, I think again, we’ve given revised guidance for the OpEx for the year as a whole. We’re very comfortable with that guidance and I would suggest a modest uptick in spending in Q4 rather to Q3 as I mentioned before.

Marshall Urist - Morgan Stanley

And just one last one from me which is, can you give us an update on where from a JCV assay perspective in the US, kind of where we are right now in terms of, what you’re seeing longer term discontinuation rates? Are you seeing any, you’re seeing that start to fall at all as you yet, that's JCV negative patient mix changes. And what are we seeing in terms of second line and sort of earlier lines of therapy kind of shares gains in JCV negative patients. Thanks.

Nigel Clerkin

Sure Marshal, yes, we’re very happy with how the JCV assay off take is going. We’re seeing good demand for the assay. In terms of your specific questions on discontinuations, it’s been fairly stable over the last two quarters and when you look at the trends of patients as they get tested, not surprisingly, almost every JC negative patients using to stay on therapy, but the majority of JC positive patients are also staying on therapy which again is a testament to cause of TYSABRI and the difference that it makes to patients. So we’re very encouraged and we think that it is starting to lead your ships in the mix of patients and more new patients are now JC negative patients rather than JC positive patients. But we are continuing to attract JC positive patients as well. So, we’re very pleased with how the assay is being taken up and obviously there is more work we and Biogen need to do to continue to get the message out there around the utility of us and the efficacy profile of TYSABRI and the benefit of us. But again, we’re encouraged.

Operator

Thank you. Our next question comes from Eric Schmidt of Cowen and Co. Please go ahead.

Eric Schmidt - Cowen and Co.

Just on the TYSABRI patient numbers, can you talk about the latest restatement, what drove that and your confidence in these newer estimates?

Nigel Clerkin

Sorry Eric, I am not sure what you’re referring to specifically?

Eric Schmidt - Cowen and Co.

I think the release said that the historical TYSABRI patient numbers have been restated. I assume that's another restatement or is it just a restatement that we had previously?

Nigel Clerkin

Well as you know, there is less accurate information frankly in rest of world relative to US because we don't have a touch form process outside of the US. So inevitably there is a bit more estimation involved in the patient numbers that we provide there with Biogen quarter to quarter. So as we get better information from the affiliates in rest of the world, Biogen and ourselves do periodically update those numbers, so there is nothing particularly in that area that reflects today's information

Eric Schmidt - Cowen and Co.

So it was only the ex-US numbers that have been restated?

Nigel Clerkin

Yes, that's right.

Eric Schmidt - Cowen and Co.

Okay and then when might we hear next from either Elan or Biogen on newer indications for TYSABRI?

Nigel Clerkin

Well Kelly referred to that earlier that we are looking at other indications and obviously we’re already underway with that STMS Phase III study and there are other indications being evaluated and we’d expect to make some decisions on those over the next several months in essence but it is something that we’re working on with Biogen together.

Kelly Martin

Yes, I think one of them Eric in particular has been an enormous amount of work I would think in the coming couple of months. Biogen and ourselves have been in position to outline a path forward for at least one other indication that we both feel extremely excited about.

Eric Schmidt - Cowen and Co.

And this would be outside the realm of MS?

Kelly Martin

Yes.

Operator

Thank you. (Operator Instructions). And our next question comes from Vincent Meunier of Exane BNP. Please go ahead.

Vincent Meunier - Exane BNP

The first one is with regards to TYSABRI in Italy. We understand that now we no more expect resolution of the disputes by the end of the year, but do you have a timing for mid-long term? Do you for instance its possible for 2013 and also, is the quantification of the impact the same as what you already said. The second is, on M&A. Can you please tell us what is your strategy now considering that Neotope is exiting the (inaudible) of the company and what would you like to buy, approved drugs, Bapi (ph) compounds, CNS drugs, multiple (inaudible). An insight would be of really of interest. And last question, what is for you to key message from the (inaudible) conference especially considering the results on BG-12 and (inaudible). Thank you.

Kelly Martin

We’re not going to comment on our M&A thoughts on a quarterly earnings call. Obviously we tried that one, we’d be pretty active. Looking at things across the value chain as we always have been. We think there is interesting opportunities for us to add to our business and we also think there is some interesting opportunities to add to our value proposition. Our value proposition is defined as a clinical assets that the optionality and risk reward look attractive in timeline, cost and upside should the asset move forward. Geographic commercial existing opportunities that maybe somewhat fragmented or disjointed from a larger company or specific buildup for a smaller company. But as far as our thoughts on what we’re looking at, we’re certainly not going to comment on that. In ECTRIMS, overall there was several dozen posters or discussion around TYSABRI. It would be impossible to go through all of them. I think some of the more powerful ones would include for JC negative patients, the impact of TYSABRI. Not only on clinical results and output but also cognitive results and output all of which seem positive and continues to fuel and support and reinforce the fact that TYSABRI as a clinical and therapeutic choice to certain patients, particularly JC negative patients, would offer extremely beneficial short intermediate and long term benefit. Any other questions Vincent?

Nigel Clerkin

Firstly in terms of the quantification, basically its yes, broadly similar to what it was in prior quarters. That's actually later in the release, so you can see the numbers there and typically, and in relation to when it will get settled, it’s obviously difficult for us to predict exactly when that would be. (Inaudible) are working as hard as they can to get to resolution. Well its unlikely to be this year we think. Well like I said, it was next year, we would certainly hope so. We’ll obviously they will continue to work through that process with the Italian and Nordics (ph).

Operator

There are no further questions at this time sir. I'll turn the call back over to you for any closing remarks.

David Marshall

Thank you operator and thank you everyone for joining us today in our quarterly conference call. A webcast of the call will be available on our website for 90 days. Thank you.

Operator

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect all lines.

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