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Executives

Tierney Saccavino - Senior Vice President of Corporate Communications

Ron Cohen - Founder, Chief Executive Officer, President and Director

David Lawrence - Chief Financial Officer and Principal Accounting Officer

Jane Wasman - General Counsel, Corporate Secretary and President of International

Analysts

Michael J. Yee - RBC Capital Markets, LLC, Research Division

Salim Syed - ISI Group Inc., Research Division

Joel D. Sendek - Stifel, Nicolaus & Co., Inc., Research Division

Michael E. Ulz - JP Morgan Chase & Co, Research Division

David Amsellem - Piper Jaffray Companies, Research Division

Raghuram Selvaraju - Aegis Capital Corporation, Research Division

Irene Lau - Leerink Swann LLC, Research Division

Philip Nadeau - Cowen and Company, LLC, Research Division

William Tanner - Lazard Capital Markets LLC, Research Division

Christopher J. Raymond - Robert W. Baird & Co. Incorporated, Research Division

Acorda Therapeutics (ACOR) Q3 2012 Earnings Call October 31, 2012 8:30 AM ET

Operator

Welcome to the Acorda Therapeutics Third Quarter 2012 Financial Results Conference Call. [Operator Instructions] Please be advised that this call is being taped at the company's request. Now I would like to introduce your host for today's call Tierney Saccavino, Senior Vice President of Corporate Communications at Acorda Therapeutics. Please go ahead.

Tierney Saccavino

Good morning, everyone, and welcome. Before I begin, let me tell you that we're having a little bit of a technical difficulty with the slides, so I won't be presenting slides today and we'll be sending them out later on. And also with me today are Dr. Ron Cohen, our President and Chief Executive Officer; and Dave Lawrence, our Chief Financial Officer. So let me remind you that this presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts regarding management's expectations, beliefs, goals, plans or prospects should be considered forward-looking.

These statements are subject to risks and uncertainties that could cause actual results to differ materially including our ability to successfully market and sell AMPYRA in the U.S.; third-party payers, including governmental agencies may not reimburse for the use of AMPYRA at acceptable rates or at all, and may impose restrictive prior authorization requirements that limit or block prescriptions; the risk of unfavorable results from future studies of AMPYRA or from our other research and development programs including any acquired or in-license programs; the occurrence of adverse safety events with our products; delays in obtaining or failure to obtain regulatory approval or to successfully market FAMPYRA outside the United States and our dependence on our collaboration partner, Biogen Idec, in connection therewith; competition, including the impact of generic competition on ZANAFLEX CAPSULES revenues; failure to protect our intellectual property or to defend against the intellectual property claims of others or to obtain third-party intellectual property licenses needed for the commercialization of our products; failure to comply with regulatory requirements that could result in adverse action by regulatory agency; and the ability to obtain additional financing to support our operations. 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. Forward-looking statements are made in this presentation are made only as of the date hereof, and 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.

A housekeeping note for Q&A, we're going to ask that everybody limit themselves to 1 question and 1 follow-up.

And I'll now turn the call over to our CEO, Ron Cohen.

Ron Cohen

Thanks Jenny, good morning, everyone. Hopefully, you are all digging yourselves out of the recent Sandy disaster, and everyone is safe and warm. Also, apologies, again, for the lack of slides. Apparently, there are some technical issues at Thompsons, but if we can't get those rectified, as Tierney said, we will send the slides out. On today's call, I'll provide comments on AMPYRA's third quarter performance and then review our revenue from ZANAFLEX and our ex-U.S. partnership with Biogen. I'll also provide an overview of our progress and upcoming milestones for our product development programs. And Dave will then provide the financials for the quarter after which we will open up the call for your questions.

Starting with AMPYRA. We were pleased with AMPYRA's performance in the third quarter, with net sales of $69.8 million. That's an approximate 5% increase over Q2 and a 28% increase over Q3 of 2011. We continued to make good progress with managed care. Last month, Medco revised their assessments to make them more clinically appropriate for AMPYRA, so that a 3 month follow-up visit is no longer required. Overall, approximately 75% of covered lives in the U.S. continue to have open access or limited prior authorizations and even for the 25% with stricter PAs, we're finding that the vast, vast majority of patients are able to get access to the drug. We recently renewed Tier 2 access with the 3 largest healthcare plans in the country, including Aetna, CIGNA and UnitedHealthcare.

I'm told that the slides are now up, so if you want to turn to your screens, hopefully, you'll be able to access them.

Turning to our additional sources of revenue, combined third quarter net revenue from our ZANAFLEX franchise was $3.8 million. This included net revenue from ZANAFLEX CAPSULES and tablets of $1.9 million, revenue from Watson's authorized generic capsules of $1.4 million and $500,000 in sales of generic capsules to Watson.

We received $1.5 million in royalties from Biogen based on net sales of FAMPYRA in markets outside the U.S. with sales in Germany comprising the majority of the overseas sales. FAMPYRA is now available for commercial sale in more than 15 countries. As noted last quarter, FAMPYRA revenues in Germany are being recorded at a reduced rate until final pricing has been established. Last week, during their earnings announcement, Biogen stated that they expect pricing to be finalized in Germany in Q1 of 2013.

Biogen has planned launches in the remaining EU markets and is planning regulatory submissions in additional markets.

Next, I'll provide an update on the status of our product development programs. We believe we have one of the most interesting pipelines in the neurology space. We have 5 programs including AMPYRA itself that are in clinical testing or expected to be shortly. Our approach is characterized by disciplined investment, in which each program is structured to produce clear, go-no-go signals, so that our resources can be directed to the areas that are most likely to be successful.

As we announced in August, the postmarketing commitment trial for AMPYRA exploring a 5-milligram dose, showed that this lower dose did not demonstrate efficacy. We are in the process of preparing the full study report for submission to the FDA. We've completed the first part of the AMPYRA cerebral palsy proof of concept study. This first phase of the study comprised 10 adults with cerebral palsy, each of whom received a single dose of AMPYRA to assess safety.

No safety issues were detected and we have begun to enroll the second part of the study, which is a 20-person crossover design that will look at both safety and efficacy.

In this phase, participants will receive twice daily dosing of AMPYRA for a week. We expect to announce results of this part of the study by mid-2013.

The AMPYRA proof of concept study in post-stroke deficits began enrolling in the second quarter. The study will enroll 66 participants and we expect to announce results in Q2 of 2013. We are also working with our external partners on a once daily formulation of AMPYRA and we expect to begin human pharmacokinetic testing shortly.

Moving to our other pipeline products. The pre-NDA preparations for the diazepam nasal spray are continuing at Neuronex. Acorda can elect to close the deal to acquire Neuronex within 45 days after receipt of pre-NDA meeting minutes from the FDA. We continue to be excited about this product and its potential to address a substantial unmet need in people with epilepsy.

We have submitted the Phase II clinical trial protocol to the FDA for AC105 in acute spinal cord injury, and we're continuing preparations to initiate that trial. Enrollment in the GGF2 Phase I clinical study in heart failure has been completed. This was a dose-escalating trial designed to test the maximum tolerated single-dose with follow-ups planned at 1 week, 3 months and 6 months. We will have the 3 month data analyzed by the end of the year, which we plan to present in a peer review setting and we'll also discuss the results with FDA before proceeding to a multiple dose study.

We submitted an Investigational New Drug application, or IND, to the FDA for our remyelinating antibody, rHIgM22. We received questions from the agency and expect to submit all responses by the end of the year.

Now I'll turn the call over to Dave for a review of the financials following which, I'll come back with a closing summary and then we'll open the call for your questions. Dave?

David Lawrence

Thanks, Ron. For the third quarter ended September 30, 2012, the company reported non-GAAP net income of $15.2 million or $0.38 per diluted EPS, compared to non-GAAP net income of $16.2 million or $0.40 per diluted EPS for the same quarter in 2011.

Total revenue this quarter was $77.4 million compared to $93 million in the third quarter of 2011.

Total revenue in the third quarter of 2011 included $25 million in milestone revenue received from Biogen Idec for the conditional approval from the European commission for FAMPYRA.

Total operating expenses including $5.6 million in share-based compensation expense for the quarter ended September 30, 2012 were $67.1 million compared to $72.4 million for the same quarter in 2011. Total operating expenses in the third quarter of 2011 included $15.5 million in accounting adjustments related to ZANAFLEX CAPSULES and $5.1 million in share-based compensation expense.

We've updated our R&D expense guidance for the full year 2012, downward to approximately $45 million as a result of changes in timing of several R&D programs. This guidance excludes share-based compensation and future expenditures related to the potential acquisition of Neuronex and its diazepam nasal spray product. We continue to improve on our strong financial position with cash and investments increasing to $318.7 million, an increase of $15.7 million over the second quarter of 2012.

I'll now turn the call back over to Ron.

Ron Cohen

Thanks, Dave. So in summary, AMPYRA continues to grow in its current indication and we have ongoing clinical trials studying the use of AMPYRA in adult cerebral palsy and post-stroke deficits. Both of which we expect to read out in 2013. We believe our pipeline is one of the most interesting in the neurology space. We continue to be excited about the diazepam nasal spray opportunity as it approaches the NDA stage, and we also have 3 additional innovative products, GGF2, AC105 and rHIgM2, which are either in clinical development or expected to be in the clinic shortly. On the business development front, we continue to evaluate commercial and near-commercial opportunities in neurology that could be accretive in the near-term, and we're also remaining alert for earlier stage programs in the neurology space that offer true therapeutic breakthroughs.

With that, we'll open up the call for your questions. Operator?

Question-and-Answer Session

Operator

[Operator Instructions] And your first question comes from Michael Yee of RBC Capital Markets.

Michael J. Yee - RBC Capital Markets, LLC, Research Division

My first question is on the 5-milligram, 10-milligram study. I know you're finalizing the report. Has there been any discussion or conversations with FDA at all? Was there any response? What do you ultimately expect them to say? And then my follow-up is on the pipeline. You're talking about cerebral palsy and post-stroke studies and this data is coming in 2013. Can you better explain what your hurdle is to move into Phase III? I mean, I understand the primary endpoint is Timed 25-Foot Walk, I think, for one of the studies so, I mean, that's going to be pretty hard to tease out as the same sort of statistically significant differences. So what are you exactly looking for in these studies to move forward?

Ron Cohen

Okay. With respect to the 5-milligram, just by way of reminder, we -- just as a matter of course, we never discuss interactions with the FDA or conversations until we have something material, usually in writing from the agency. So what we've said is that we're still preparing the final study report for the FDA and we remain confident that the 5-milligram dose did not show efficacy in that study. And that's really all we can say at this time. We have -- based on the post-market commitment, we have a deadline of March in which to submit the final study report. With respect to the CP and stroke, we've designed those with multiple outcome measures based on our extensive experience already in measuring functions successfully in neurological conditions, such as MS and spinal cord injury. We are looking in these proof-of-concept studies, not necessarily for statistical significance -- that would not be reasonable, although, obviously, it would not be rejected by us if it happened. But what we're looking for is clear signals that the drug is having a meaningful, clinical impact in some measure that makes sense, whether it's an upper extremity functional measure, a lower extremity functional measure, a global walking measure. But something where we can point to it and say -- we and the clinicians, the expert clinicians can point to it and say that is a clinically meaningful improvement in these patients and we see it more in the drug group than we see it in placebo group. And then once we have that, if we have the luxury of more than 1 outcome measure that meets that criteria, we'll talk with the FDA about how we want to design the trial and what we want to be a primary outcome and what kind of label we would be seeking. So it's going to be a process based on the results that we see.

Michael J. Yee - RBC Capital Markets, LLC, Research Division

So we should be looking more trends in the secondary endpoints, not like the Timed 25-Foot Walk?

Ron Cohen

Not necessarily. I mean, we do have a Timed 25-Foot Walk along with other measures. So I guess maybe the other way to put it is, going into any study, we can not know for a new indication what is going to be the most interesting. So that's why we're doing the study. So you have to wait and see what the data are. If the Timed 25-Foot Walk looks really good, there's nothing that stops us from going ahead and using that outcome again. In fact, in many ways, that would be ideal because we have a template for it. So it might be the Timed 25-Foot Walk, it might be something else. Obviously, it needs to be something that's meaningful to the patient and to the clinicians.

Operator

Your next question comes from Mark Schoenebaum from ISI.

Salim Syed - ISI Group Inc., Research Division

This is Salim in for Mark. I guess, on the data side, Ron, why was the guidance changed from early 2013 to second quarter 2013 for the stroke data? And then on the CP front, why aren't you presenting the detailed data? And then on the R&D, can you just give us some thoughts on how to think about going forward given that the guidance was changed for 2012.

Ron Cohen

What was that last piece?

Salim Syed - ISI Group Inc., Research Division

On R&D, guidance was changed, revised downward for 2012 because of the several R&D programs.

Ron Cohen

Yes. Actually, nothing has really changed on timing for the CP. In the past, when we said early 2013, we meant to convey first half. And so we're actually coning that down more now and saying -- what did we say Q?

Tierney Saccavino

Second quarter.

Ron Cohen

Second quarter. Yes, second quarter. So that really hasn't changed. And then you had another question on stroke?

Salim Syed - ISI Group Inc., Research Division

No, that was the stroke. On the CP, I take it you aren't presenting the detailed data for the first part.

Ron Cohen

Oh yes, that was it. Sorry. So, yes -- no, it's a safety study as we've said all along. So it's 10 patients who received 1 dose of drug. And the reason we were cautious there is that cerebral palsy does have -- people with cerebral palsy as a population, do have an elevated seizure risk so we wanted to be extra cautious before going into the actual efficacy part of the trial. So we gave a single dose to 10 patients. Obviously, when you have that small a group in a single dose, you don't expect to see efficacy data, which is what we've said all along because you wound up -- what we wind up having is a lot of noisy data. What we're doing now, because the safety looked very good, is we've moved into the proof of concept efficacy side, which involves 2 doses a day just the way it does for the MS drug, so 10-milligrams twice a day. They'll receive that for a week and then we'll be comparing efficacy measures of walking, motor function, upper extremity function, after a week of drug versus baseline. And there's also a crossover design component to it. So we'll be comparing patients to their own performance on placebo and they'll crossover -- some of them will drug first, wash out, then get placebo. Some of them will get placebo first, washout and then get drug. So even with 20 subjects in the trial, we expect we'll have a fair amount of statistical power to see differences if those differences are there.

Salim Syed - ISI Group Inc., Research Division

Okay, so you're not going to present the safety data though, right, on the first 10 patients?

Ron Cohen

No, I mean, there's really nothing to present other than to say we didn't see any safety signals.

Salim Syed - ISI Group Inc., Research Division

Or efficacy?

Ron Cohen

I think I just went through a whole explanation that this is a safety part of the trial and there's really nothing that we expected to say about efficacy at this which we've been consistent about saying all along. So on R&D expenses, that's a timing issue. There were certain programs, particularly clinical programs, that just were deferred or delayed. Some of that was related to just simple things like the time it took to get meetings at FDA to talk about them. It looked to us like, for whatever reason, FDA was getting jammed up, at least in our division the second half of the year, so it was taking longer than usual to get certain meetings. But overall, it's really a timing issue and that's what led to the decline in the expenses.

Salim Syed - ISI Group Inc., Research Division

Will that shift over to 2013, I guess, is the question?

Ron Cohen

We're not giving guidance yet for 2013, but it's a fair assumption that those expenses or most of them will be deferred.

Operator

The next question comes from Joel Sendek from Stiefel.

Joel D. Sendek - Stifel, Nicolaus & Co., Inc., Research Division

My question has to do with reimbursements. So certainly in the prepared remarks it seems as though the reimbursement on the AMPYRA is at worst, stable and at best, getting better. Can you just confirm that and if you have any evidence you can give us as to how the situation might be improving on the reimbursement front or any trends in that direction? Looking at past calls it seems like there's been a 75-25 split between restrictive and nonrestrictive prior authorizations, if you can give us any sense about that?

Ron Cohen

Yes, so we don't expect dramatic shifts in that. That distribution of 75-25 approximately, that became established last year early in '11 and it's been stable ever since. And that really reflects the distribution of different types of plans that are out there and the approaches that they take to specialty pharmacy medicines. So we don't expect that to change substantially. Now having said that, we still are seeing improvements along the line. So it's not a black or white. There are real nuances here in terms of access. The first thing and the most important thing to understand is even for the 25%, almost all of those people get the drug. It's rare that someone actually can't get the drug. It requires more work on the part of the physician, the prescriber, the practice, the nurse, the administrators, and the office, just to get through the PA regimen. So that's something that we've worked on, on the other end, which is we've sent reimbursement specialists into the field to work with the practices to help them streamline their own processes, understand the reimbursement environment for their practice better for AMPYRA, so that it's easier for them to get through those PAs. And that's been very successful. We get very good feedback from the practices about that effort. We also have a bank of people on the telephone, sort of at our national AMPYRA hub. And all they do is they're assigned to various practices and they're there at a moment's notice to call and help with any prior auth issues, or looking for data, or providing the practices with help, or providing our reimbursement specialists in the field with help. So it's a 1, 2 program and that's been very successful for us. So that's the first thing, again, is that the 25% doesn't mean they don't get drug. It just means it's more time-consuming and challenging, but they still get drug. The second thing is, we have been making inroads so we have been able to push some plans back on their prior auths. This quarter, we have a very nice improvement in Medco. Now Medco -- we always considered Medco to be part of the 75% because the PAs themselves were not particularly restrictive, but one thing they were doing was requiring a reauthorization 3 months after the initial prescription, which is a bit challenging because you have to get the patient to come back in and do another piece of paper work. So they've now removed that requirement and they covered 20 million lives. So that actually is very helpful, just in terms of reducing some of the hassle factor out there.

We've had some other wins, if you will, in terms of persuading some of the plans to roll back some of their requirements. We didn't talk about them on the call, but they're there in the background. And then just to give a sense of the overall milieu, the fact that we were able to renew Tier 2 status with the 3 largest plans in the country -- Aetna, UnitedHealthcare, CIGNA -- tells you that overall, we're in a very good position with managed-care right now and that over time, it's actually getting better as opposed to being stable and certainly not worse.

Joel D. Sendek - Stifel, Nicolaus & Co., Inc., Research Division

These renewals on a Tier 2, is that on annual basis?

Ron Cohen

It varies by the plan. So it's at least an annual basis. It's no less than 1 year.

Operator

Your next question comes from the line of Geoff Meacham from JP Morgan.

Michael E. Ulz - JP Morgan Chase & Co, Research Division

This is Mike in for Jeff. If I could just follow up on the reimbursement question, are there more payers that are up for renewal of access this year? And is there any risk that some of those might drop a tier?

Ron Cohen

That's very hard to say off-the-cuff. The 3 biggest ones are the ones that we care the most about. The others you get into much -- on a one-by-one basis, they're much less impactful. So I don't know the answer as to what's renewing or not. I think the risks are low that we're going to have any substantive drop in tier status, and in fact, quite the opposite. As you see, we're having very good success at maintaining good tier coverage where it counts in the larger national plans and also in -- as I indicated earlier, in rolling back some of the more challenging PAs even among some regional plans.

Michael E. Ulz - JP Morgan Chase & Co, Research Division

Got it. And then maybe if I could ask a follow up on the cerebral palsy study and the post-stroke studies. Assuming those proof-of-concepts are positive, is there any chance you guys might be considering a QD dose?

Ron Cohen

Yes. So one of the strategies under consideration is that, hopefully, the QD work continues as it is and we're able to finalize and get a good formulation before or around the time that we also hopefully have positive data in CP, or post-stroke or both. And then at the time that we're prepared to go into registration trials, we actually can use the QD formulation, which opens up, we think, additional IP opportunities, potentially.

Operator

Your next question comes from the line of David Amsellem from Piper Jaffray.

David Amsellem - Piper Jaffray Companies, Research Division

Just a couple of questions. First, what are your thoughts on possible uses of cash? Is it still primarily for asset acquisition? And are you still prioritizing commercial stage, or near-commercial stage, neuro-focused assets and what your thoughts are on possible share buybacks? That's number one. And second, switching gears to cerebral palsy, to the extent that you've had dialogue with the FDA, can you try to tease out what endpoints the agency has indicated to you as being the most clinically important?

Ron Cohen

Sure, David. So with regards to the balance sheet, we're constantly alert to our cash on the balance sheet. We like the fact that we have flexibility now represented and contingency planning represented on the balance sheet. We are looking for additional commercial or near-commercial stage products. The ideal kind of opportunity is the Neuronex type of opportunity. Obviously, where the upfront is relatively modest, the deals tend to be back weighted, but we have near-term commercial opportunities that could have considerable upside. So that's the sort of deal we're emphasizing. That doesn't mean were closed off to other structures and deals and other types of deal. It really depends opportunistically on what we come across and where we think the ROI is going to be and what the value proposition of the deal will be. So that's what we're emphasizing on the business development front. It's not that we wouldn't bring in a bigger product. We absolutely would if it made sense. If what we were paying made sense relative to what we thought the opportunity was for shareholders. It also doesn't mean that we wouldn't bring in a somewhat earlier stage, still hopefully, clinical stage, but a somewhat earlier-stage product if we thought it was very high potential and breakthrough.

The Board continues to review on a regular basis, the balance sheet among all the other aspects of the company, and what makes the most sense in terms of how we're deploying that capital. Whether in the future we might talk about or might decide that share buybacks make sense or some other way of returning capital, that's something that's always under discussion -- or regularly, I should say, under discussion of the Board. And at such time as we make a decision of that kind, obviously, we'll let everybody know.

With respect to CP, this is one where we think it's more akin to what we did with MS and walking, where we will look at the data with the experts in the field, make a determination as to what makes the most sense. Obviously, assuming that we get a good positive signal on an outcome measure, an efficacy outcome measure, we will make a determination as to what makes sense clinically in terms of being meaningful, and then we'll go to FDA with the experts

[Audio Gap]

The -- we could have -- we should have done a better job early on. What we did was we enrolled one center to start, I think, we got overconfident in that we enrolled one center. That center turned out not to have the patient population that we thought they had and it took us several months to realize that we weren't getting the enrollment that we thought we had signed up for there. So once that happens, it then takes several months to identify the other centers, get them online, get through the IRBs and set them up. So we lost quite a bit of time there. Once we got the other sites up and running, it went pretty smoothly.

David Amsellem - Piper Jaffray Companies, Research Division

Okay, that's fair enough. If you don't mind, if I can sneak another one in here on the pipeline. So the rHIgM2 antibody, just curious, at the R&D day, I think you guys were talking about a delay that was pending the availability of an assay. And now it looks like FDA is requesting additional data. Can you give a little more color? Is it related to that assay or is there some other issue with FDA.

Ron Cohen

No, I don't think is related to assay. The team did a great job, actually, plowing through that and figuring it out. So that was a bit of an R&D tour de force to figure that one out and they did it.

The questions are -- let me put it this way. The questions are such that the team believes that we will be able to answer them adequately by the end of the year. So we don't see any showstoppers here. Obviously, we'll have to wait and see how the FDA responds to our responses.

Operator

Our next question comes from the line of Ram Selvaraju from Aegis Capital.

Raghuram Selvaraju - Aegis Capital Corporation, Research Division

So very quickly, just wanted to ask what your qualitative impressions were following the recent MS conference in Europe at ECTRIMS: whether you got feedback from people who you knew who were over there, or whether you had people on the ground over there; from physicians, in particular, regarding their impressions of AMPYRA at this juncture and what they're prescribing behavior looks to be likely to be trending towards; if they really do feel that AMPYRA provides a cost-effective option; what their usage rates are likely to be in the progressive MS-patient population? If you could just give us your thoughts there. And then with respect to the QD formulation, could you give us an idea of what this means going forward with respect to the already approved indication and whether there is any possibility, at all, of getting a QD formulation approved through an abbreviated pathway like the 505(b)(2) route?

Ron Cohen

Okay. Well, with respect to ECTRIMS, I actually don't have any firsthand response to give you because I, unfortunately had to miss it this year for the first time due to a conflict with another conference. So I'd don't have that information. Anecdotally what we're hearing, particularly from our friends at Biogen Idec, is that there is a great deal of enthusiasm for the drug, that the uptake has exceeded their original expectations overall so that the physicians are quite enthusiastic in Germany and elsewhere for the drug. As you know, we have hit some headwinds in Germany with the IQWiG process and in terms of the amount of reimbursements and Biogen is currently negotiating with the German authorities for a final price. I think they have guided that they expect that to go on for a few more months and hopefully, by first quarter of '13, we'll have a price on that. But in terms of the actual enthusiasm, if anything, the uptake curves on a per capita basis exceeded what we had seen in the U.S. So we think that's all to the good.

With respect to the QD formulation, hard for me to speculate on the 505(b)(2) now. I can tell you that the QD has factored into our strategic planning for quite some time. And as you heard earlier, in particular, we would be very interested if we have another indication -- another disease indication, such as post-stroke and/or CP, we'd be very interested in getting the QD into development, so that, that becomes the approved formulation. We see a variety of advantages in doing that.

The QD, if we were to just get it on the market on its own as, let's say, a replacement or alternative to the BID, we obviously would need some kind of bridging studies for the BID, but I can't speculate beyond that now.

Raghuram Selvaraju - Aegis Capital Corporation, Research Division

Okay, and then finally with respect to AC105, I think you indicated that the Phase II trial protocol has been submitted. Can you give us an idea on the timeline for the FDA's response to that protocol or how long it would take for you to respond?

Ron Cohen

Yes, and wish I could. I would love to be able to predict the FDA timeline. As I said earlier in the call, it has been our impression that of late, things are taking a little bit longer in terms of getting meetings scheduled and so on. That may just be a temporal issue. They could have been jammed up, I'd be purely speculating. But overall, we don't expect it to take an undue amount of time. Hopefully, they'll get back to us in a reasonable amount of time, but I can't speculate specifically how long that's likely to take.

Operator

Our next question comes from Marko Kozul from Leerink.

Irene Lau - Leerink Swann LLC, Research Division

This is Irene in for Marko. For AMPYRA and post-stroke deficit patients, what do you perceive to be meaningful on the Timed 25-Foot Walk test? Would it be a 10% to 20% improvement? And can you provide us with more color on why is there a slight delay on data reporting?

Ron Cohen

I didn't quite catch that question. You said something about the Timed 25-Foot Walk being meaningful In which study are you referring to?

Irene Lau - Leerink Swann LLC, Research Division

The post-stroke deficit patient study.

Ron Cohen

Okay, so just maybe adding a little color to what I said earlier, the -- we're looking at several different outcome measures in the post-stroke study not just -- we are looking at the Timed 25-Foot Walk. We're looking at other measures of walking, other measures of lower extremity of function, other measures of upper extremity functions, certain global measures. If you focus just on the Timed 25-Foot Walk, in general, it is felt that around a 20% -- 15% to 20% improvement in Timed 25-Foot Walk on average is considered to be clinically meaningful, but that's a simplistic way of expressing it. There are more things that we would need to look at in terms of the data as a whole to come up with the value proposition. What is it we think the drug is doing for these patients on the whole? It could be upper extremity and walking. It could be Timed 25-Foot Walk and the global measure of walking together. So it's not really possible to isolate 1 outcome measure and say that's what's going to be meaningful in this study. We're looking at a whole host of them and, obviously, in the ideal universe, they would all be effective, they would all be meaningful. But even if 1 solid one is meaningful, such as the Timed Walk, that would be great. So we're just going to have to wait and see what the data will look like in that regard.

The second part of your question, I'm not sure I understood, if you would like to repeat it.

Irene Lau - Leerink Swann LLC, Research Division

So I think you previously mentioned that the data reporting will be around end of this year. I was just wondering why is there such a delay?

Ron Cohen

Which data reporting are you talking about?

Irene Lau - Leerink Swann LLC, Research Division

The post-stroke deficit patient trial?

Ron Cohen

Yes, no I don't believe we ever said that the reporting on that would be at the end of the year. We always expected that to be in 2013 and it will be in Q2 of 2013.

Irene Lau - Leerink Swann LLC, Research Division

Right. Just one last question. Do you have any update on the University of Miami investigative sponsor trial for Parkinson's Disease optic neuritis?

Ron Cohen

No.

Operator

Your next question comes from Phil Nadeau of Cohen.

Philip Nadeau - Cowen and Company, LLC, Research Division

Two quick questions. First on the First Step Program, could you give us an update on where that is now located, what proportion of centers have access to it and what proportion of new patient starts use it? And then second, just briefly on inventory, was there any meaningful change in wholesale or inventory levels during the quarter?

Ron Cohen

I'm sorry, what was the last piece there, Phil?

Philip Nadeau - Cowen and Company, LLC, Research Division

Just on inventories, was there a change in wholesale or inventory levels of AMPYRA during the quarter?

Ron Cohen

Right. So First Step, it continues to be quite successful for us with a very nice ROI. We've actually looked at it using matched controls of prescribers who haven't used it, who are very similar demographic criteria to the ones who have used it and you do see a significant bump for the physicians who are using First Step. Not only -- interesting enough, not only in their use of First Step, but in their use of regular prescriptions as well. So it seems that there's something about prescribing it through First Step that also reminds them about the drug and encourages them to prescribe overall.

Virtually all the physicians in the, let's say, the top 5 deciles or so, have been exposed to First Step by now. So we have thousands of prescribers who have access to First Step. The other thing we did differently this year beginning the beginning of the year was to make vouchers for First Step available to the consumer through digital means, at physicians offices, at speaker programs, at MS Walks, so, really, across the board and in our advertising, magazine advertising. And that clearly has helped where patients are able to come in and ask the physician for their free 2 month drug trial. At this point, somewhere -- depending on what month you look at it, somewhere between 40% and 50% of all new prescriptions are First Step. So it's really taken hold and, as I said, the ROI on it is quite substantial. Was there -- oh, there was the inventory. As I said earlier, inventory is about 2 weeks across the board. And the only thing to keep in mind, as I always remind people, is that we have 13 specialty pharmacies plus the VA, plus Kaiser out there ordering from us, and we check every quarter. In fact, we check every week many times. And it's always about 2 weeks. We haven't seen any notable shifts in that. But bear in mind that 2 weeks could be plus or minus a couple of days here and there, depending on the specialty pharmacy. We don't have insight into that, so in the very short-term there could always be a shift of 1 million or 2, let say, that we just can't account for. In the longer-term, it should all even out because as long as the overall average is about 2 weeks, it should even out. And right now, it's still at about 2 weeks.

Operator

Your next question comes from the line of Bill Tanner from Lazard.

William Tanner - Lazard Capital Markets LLC, Research Division

Just back on the Medco, the reauthorization change. I'm just curious with respect to them, specifically, the sense of the prevalence of the denial of reauthorization in any kind of conversion on appeal? And then just what's the dynamic with other plans? Here just really trying to get a sense as to how much these changes could move the needle.

Ron Cohen

Bill, could you, maybe rephrase the question? I'm not quite sure I know what you're going for.

William Tanner - Lazard Capital Markets LLC, Research Division

Okay. So I'm just trying to get a sense of, is the change at Medco where the reauthorization is no longer required -- I mean would you view that as something that's going to change utilization and, if so, if you have a sense as to how much? So I'm trying to just understand, had there been -- has the denial of the reauthorization been relatively prevalent?

Ron Cohen

So as I said earlier, denials have been rare across the board. So it's rare even for the non-Medco, even for the hard PA plans, that 25% of covered lives that we talked about having harder PAs. And a harder PA would be something like, well, you have to do a Timed 25-Foot Walk and then 3 months later, you have to do another one and it has to be x percent faster in order to get reauthorized and so on. That's what we consider a hard PA. But even in those cases, the physicians have figured out how to get their patients on drug. So absolute denials are rare.

What you are looking at, though, is less quantifiable, but it's more qualitative. It has to do with the hassle factor, and it's very hard to quantify what that does to you overall because, what we can say is, if the prescriber writes a prescription, the patient almost always gets it regardless, right? We have all these mechanisms in place and we help them do it and so on. What we can not quantify is how many times the hassle factor actually prevents physicians from writing to begin with, right? Because you can't prove a negative. So to the extent that there's a cumulative affect at certain practices where if too many of their prescriptions are challenging and require going the extra mile and doing more things, after a while, there's a subtle reluctance on the part of the practice to set themselves up for more of the same. And so they forget, they don't prescribe and so on. So something like this Medco thing could be very significant in terms of removing not a hard PA, but a significant hassle factor. Because every time you have to reauthorize 3 months after you write the first prescription, when usually you're not bringing the patient in until 6 or 12 months later, that's a hassle. It's not -- you can get through it, but it's a hassle. But if you've got 10 of those, it's a big hassle. Now you're going to have none of those for any of your Medco patients. That's really good. That improves the overall milieu for us out there and it really expands our universe of being able to work within a regime that is just less constrictive, less challenging, less of a hassle. So can't quantify it, but we can say it's a good thing and we would expect over time that, that's going to help us.

William Tanner - Lazard Capital Markets LLC, Research Division

And presumably then, this was affected by some activity on Acorda's part that you could replicate with other payers then if...

Ron Cohen

Well, I certainly hope so. We have a great managed markets team. It's been absolutely terrific. They have terrific relationships with the payers across the country, and we are constantly revisiting them, bringing them in with data. They bring me in, actually. They bring our Chief Medical Officer, they bring our Chief Scientific Officer. They'll bring me in personally when they think it's important enough to change an opinion or provide data in a way that they haven't seen before, and that has been bearing fruit as you see with the Medco change.

Operator

Your next question comes from the line of Mark Schoenebaum from ISI.

Salim Syed - ISI Group Inc., Research Division

I just had 2 quick follow ups. On the gross to net discount for AMPYRA, I know it hasn't been talked about in a while. Can you just give us -- I know you probably can't state specific numbers, but an idea or some sort trend, is it increasing? Is it flat? And then just also on the stroke, can you just confirm that there's been -- I guess, like the change in the guidance you said was because you're honing in, it's getting close to the day, but there has been -- it's not because of some sort of safety issue seen in the trial, maybe it's more of enrollment, I guess?

Ron Cohen

Okay, say that thing about stroke again?

Salim Syed - ISI Group Inc., Research Division

I guess, the guidance changed from early 2013 to Q2 2013. You mentioned earlier that...

Ron Cohen

Yes, let me handle that one first because I think I just -- I think I already dealt with that. When we were saying early, we meant the first half of 2013 and probably our bad if it gave people the impression it was going to be January 2. But we never expected it to be -- I should say, we always expected it to be somewhere in the first half of 2013. Enrollment has been going well. There's absolutely nothing to write home about here and as far as we're concerned, it's all on track. So let's put it that way.

In terms of gross to net, Dave?

David Lawrence

Yes, Mark (sic) [Sayim]. It's -- over the year, it's relatively flat to a slight decrease. It's just the way some of the DNA comes in. Donut hole for example, is more heavily weighted to the first 2 quarters of the year.

Operator

Your final question comes from Chris Raymond from Baird.

Christopher J. Raymond - Robert W. Baird & Co. Incorporated, Research Division

Just a strategic question. In just noticing, you recently had an organizational change with a new President of International set up. I think you guys describe it as primarily driving the Biogen Idec relationship, but also to look for in-licensing opportunities outside of the U.S. Can you maybe talk about the rationale there? Much of your infrastructure, I believe, is in the U.S. What's the thinking there?

Ron Cohen

Yes, well, our President of International is sitting here with me. Jane, you can say hello.

Jane Wasman

Hey, Chris.

Ron Cohen

So this is -- I think you should not -- nobody should read anything imminent into it. It is a signal of what we've always intended, which is to be open to opportunity, not just in the U.S. We have a number of products that are coming through the pipeline now in which we do have rights, ex-US, so we need to be thinking about that. We are looking for additional commercial stage products and if we can get products that have rights, ex-U.S. as well as in the U.S., that's all to the good particularly if they are -- if the target market is small enough. In other words, an orphan-type market, where we can get a foothold, let's say, in Europe, and ex-U.S. without undue amounts of investment, but preparing ourselves for growth in the future. So it's really preparing the company to take advantage of opportunities as they come along. Both in our business development and in our product development.

And meanwhile, it also requires managing the Biogen Idec relationship for FAMPYRA, which Jane is also doing.

Operator

That's all the questions. I would like to turn the call over to Dr. Cohen for closing remarks.

Ron Cohen

Well, thanks, everybody, I appreciate your being on the call. And this concludes the call. Have a great day.

Operator

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.

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