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POZEN, Inc. (NASDAQ:POZN)

Q3 2012 Earnings Call

November 8, 2012 11:00 AM ET

Executives

Stephanie Bonestell – IR

Bill Hodges – SVP and CFO

John Fort – Chief Medical Officer

Liz Cermak – EVP and Chief Commercial Officer

Analysts

Michael Tong – Wells Fargo

Bert Hazlett – ROTH Capital Partners

Ken Trbovich – CK Cooper

Jason Napodano – Zacks Investment Research

Operator

Greetings and welcome to POZEN’s Third Quarter 2012 Earnings Conference Call. (Operator Instructions) A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

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, Rob, and good morning. On behalf of POZEN, I would like to welcome you to today’s third 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 have 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, November 8, 2012. While the company may elect to update these forward-looking statements, it specifically disclaims any obligation to do so. Any forward-looking statements 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 Fort, Chief Medical Officer; Bill Hodges, Chief Financial Officer, Senior Vice President of Finance and Administration; and Liz Cermak, Executive Vice President and Chief Commercial Officer. Dr. Plachetka is under the weather today and will not be with us.

So I will turn the call over to Bill.

Bill Hodges

Thank you, Stephanie. Good morning and thanks for listening today. Dr. Fort, Liz and I will divide up the presentation this morning with Dr. Ford providing the clinical and regulatory update, I will providing the financial update and then Liz will be providing our partnering update and an update on VIMOVO. We will take questions at the end.

With that, I will turn the call over to Dr. Fort.

John Fort

Thank you, Bill. As we announced earlier this week and in our press release this morning, both Phase 3 studies achieved their individual primary endpoints as patients on PA32540 experienced fewer gastric ulcers compared to those taking enteric-coated aspirin 325 mg alone. In addition, the combined data from the two studies demonstrated that patients on PA32540 compared to those on enteric-coated aspirin were able to stay on therapy longer as a result of fewer discontinuations resulting from prespecified GI adverse events. For more details, both the AHA and ACG posters are available on our website.

Overall, the results of the Phase 3 clinical trials demonstrated the superior GI profile of PA32540 compared to enteric-coated aspirin 325 mg. When these results were presented at AHA earlier this week, cardiologists were impressed with the data and the prospect of having a therapeutic option for their secondary cardiovascular patients at risk for gastric ulcers.

But what has really captured the attention of the cardiologists was the improved tolerability of PA compared to aspirin. Adherence to aspirin can be sub-optimal in part due to GI tolerability issues, such as dyspepsia related to chronic aspirin use. Patients who don’t take their aspirin for whatever reasons are at a greater risk for a cardiovascular event, such as heart attack, myocardial infarction or stroke. As Dr. Plachetka has frequently reminded everyone on these calls, medicines don’t work if patients don’t take them, and aspirin is no exception. With PA, more patients should be able to stay on their aspirin therapy and therefore continue to receive the known cardiovascular benefit of aspirin.

We have had additional activities from a regulatory point of view. First, and for the U.S., we’re pleased with the results of the Type-A meeting we held with the FDA in August. Since we’ve already held an investor call to discuss the specifics of that meeting, I’m not going to go into further detail today.

Second, we’re happy that we will now be submitting the NDAs for both a higher and a lower-dose version of PA. If approved, it will allow us to provide a solution for a much larger portion of the secondary-prevention cardiovascular patients at risk for gastric ulcers.

Finally, we expect to have the relative bioavailability data from the clinical pharmacology study comparing PA8140 tablets to the reference-listed enteric-coated 81 mg aspirin product before the end of the year. If all goes well with that trial, we will be targeting the PA NDA submission in the first half of next year. Again, the right limiting step for this submission, assuming positive results from the remaining pharmacology study, we’ll be putting together the CMC data and product stability information for the lower dose since we believe we have completed all the work required for PA32540 dose.

In addition to the U.S. activities, we are planning for PA outside of Europe – outside of the U.S., I mean. We have communicated in the past that we have reached agreement on the regulatory path for Europe, which would include a PA140 formulation. You will recall that the clinical development path is now much shorter and less expensive than initially envisioned. We plan on completing the necessary Phase 1 clinical studies for Europe in 2013 and we will begin planning in 2013 for a potential regulatory submission for Europe, the time line to be worked out in the first half of 2013.

In summary, we have made considerable progress on both the regulatory and data fronts in recent months. I will now turn the call over to Bill for the financial update.

Bill Hodges

Thank you, John. In the third quarter of 2012, we recorded total revenue of $0.9 million versus $4.9 million in 2011. The decrease in revenue is the result of the prior-year monetization of the Treximet royalty stream.

Total third quarter net sales of VIMOVO as defined under our agreement were $13.4 million, which generated $0.9 million of royalty to POZEN. VIMOVO’s net sales grew 38% from the third quarter of 2011 but declined 19.2% from the prior quarter.

While there was a small increase in global gross sales quarter-to-quarter, there were some adjustments between gross and net in U.S. that resulted in an overall reported net sales decline. Third quarter revenue in 2011 included a $4.1 million royalty on Treximet sales and $0.8 million of royalty from VIMOVO sales.

Operating expenses of $6.7 million for the third quarter of 2012 decreased substantially from $12 million in the same period in 2011, primarily as a result of decreased costs associated with the PA32540 development program since we completed the pivotal studies in the first quarter.

Our net loss for the quarter was $5.7 million or $0.19 loss per share compared to a loss $7.1 million or $0.24 loss per share in the third quarter of 2011.

Turning to nine months results. Year-to-date revenue was $4 million compared to $14 million in the first nine months of 2011. The decrease in revenue is primarily attributed to the prior year monetization of the Treximet royalty stream partially offset by $1.8 million increase in the VIMOVO royalty and $0.5 million licensing fees we received from Desitin.

Operating expenses were $23.4 million in the first nine months of 2012, down $9.8 million from the nine months of 2011. The decrease mainly resulted from lower development spending on PA32540 in 2012 but also included lower SG&A spending. The year-to-date loss is $19.2 million or $0.64 loss per share compared to a prior year loss of the same $19.2 million and $0.64 loss per share for the first nine months of 2011.

At September 30, 2012, our balance sheet remained strong with $92.3 million in cash and short-term investments compared to $95.3 million at the end of June 30, 2012. As we look to the end of 2012, we continue to estimate that our cash and short-term investments will exceed the $85 million estimate we previously provided.

So that concludes our financial results for the third quarter of 2012, so I’ll turn the call over to Liz Cermak for an update.

Liz Cermak

Thank you, Bill. I’ll give an update on our PA partnering progress then I’ll say a few words about AstraZeneca and VIMOVO.

But first, let me echo Dr. Fort’s comments about the receptivity of our Phase 3 results with cardiologists at the AHA meeting this week. The positive reactions parallel what we have seen with physicians in our extensive market research and we think bodes well for PA’s marketplace potential.

On the PA partnering front, we continue to be very pleased with our progress. The complex FDA discussions over the summer not only slowed the NDA process, but slowed our licensing process as well, as you might expect. The good news is that we’re moving ahead with filing both doses, an aspect of PA, which has been positively received by potential partners and provides for a larger financial opportunity than original envisioned with only PA32540. We expect to close the deal in 2013 and look forward to sharing the details with you when the time comes.

On VIMOVO, we are pleased to report that VIMOVO has now been filed in 80 countries, approved in 60 and launched in 40. Unfortunately, the U.S. results continue to disappoint. Early this year, AstraZeneca moved the promotion of VIMOVO into a contract sales organization for focus around the VIMOVO opportunity. While the original decline in VIMOVO Rxs in the U.S. has flattened out since that changed, we have not yet seen this transition translate into a growth trajectory. However, AstraZeneca is adding additional non-personal promotional efforts in the fourth quarter and we look forward to seeing the results of the sales effort in broader non-personal promotion.

As for rest of world, while a number of countries have launched, several of the large territories have only recently come online, with several more to do so after the first few – the next few quarters. So our expectation is that growth in rest of world will continue as launch countries expand market share and new countries launched.

So that is the end of our prepared remarks. So operator, we can now open the line for some questions.

Question-and-Answer Session

Operator

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

Michael Tong – Wells Fargo

Hi. Good morning, just a couple of questions, maybe the first one for Liz. You talked a little bit about VIMOVO in the U.S. so my question is, clearly the promotional activity has gone through several iterations at AZ and really not seeing a lot of movement as far as the growth is concerned. So from your perspective, what’s – is it really the product? Or is it just the promotional program? And what kind of recourse do you have on that front? And then as a follow-up to that, based on what you’ve learned with the VIMOVO out-licensing, what type of provisions, what type of licensing deals are you looking for with PA32540? Thanks?

Liz Cermak

Okay. Great. It’s a great question. So for U.S., it’s true that AstraZeneca has gone through some changes since the actual launch of VIMOVO. I have to say that the expectation that they have around focusing this in a concentrated effort of about 250 sales representatives that are predominantly selling VIMOVO and predominantly to those physicians who have been receptive to writing VIMOVO in the past really could bode for some increase in the growth in the U.S. As you know and everybody knows, that there’s disruption in the sales force that happens whenever you make that change and it take some time for things to settle out.

So we’re happy that there’s been some stabilization of it and we expect that there’ll be some increase next year. The positive aspect of VIMOVO continues to be shown with patients and physicians. So it’s not an issue. As we’ve talked about before, there’s some parts of the strategy that we’ve not necessarily agreed with and we shared with them our points of view on it. But our hope is that, with focusing this on the physicians that are highly receptive to VIMOVO and driving that through other non-personal angles, that we’ll see some growth in 2013.

In terms of the learnings for licensing, I think we’ve said before that we’re looking for a partner that’s really going to see PA as an important addition to their portfolio and to their bag. And so, we think it’s important that the partners have the capabilities that we’re looking for to be able to drive the business up. We’re also interested in performance. And so to the extent that we can include some stronger language and stronger performance-related aspects of a contract, we would love to be able to do that, so we can see PA really take advantage of the opportunity that we think that it has.

Operator

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

Bert Hazlett – ROTH Capital Partners

Thanks. Just have one or two. I guess, first of all, Bill, could you just describe some of the adjustments – the gross to net adjustments? I know that may be minor in the grand scheme of things, but could you just describe of what’s transpired there? And then I have a couple of other on PA.

Bill Hodges

Yeah. The adjustments – the biggest one related to managed markets, so again they estimate each quarter what they think are the discounts and rebates that they’ll give back to managed markets and that you don’t always get it right. And so, what we saw was a big adjustment this quarter that clearly related to prior periods. The other – there was an adjustment in the returns good reserve, and again when you sell, you try to estimate what will come back in the future and those things work out over time, so it was some truing up that we saw there that adversely affected the gross to net.

Bert Hazlett – ROTH Capital Partners

Okay. Thank you for the color. In terms of PA, maybe Liz, if you could elaborate a little bit on this. You talked about the inclusion of the 81 mg slowing the regulatory process a little bit, as we’ve known. You’ve also talked about it initially maybe slowing the licensing discussions, but now change it maybe for the better. Can you talk a little bit more about how the 81 mg has influenced the dynamic? Any more color you can provide there would be very helpful?

Liz Cermak

Yeah, certainly. Given that the 81 mg dose represents about two-thirds of the aspirin cardio-protection market and the 325 mg being one-third, first of all, it’s just a larger opportunity that physicians have. They have choices, which they like to have, and so, now they have choices with PA32540 and PA8140 in the marketplace. And so, that when you forecast it out has the larger market potential that partners have been pretty happy with. So, as you said, it’s been positive on all fronts. It’s taken a little bit more time, but we absolutely believe that it’ll be worth it.

Bert Hazlett – ROTH Capital Partners

Okay. And then I just want to make sure I heard things correctly, popped on the call a little bit late. But in terms of the pharmacologic study for the 81 mg, have there been any changes in the study design compared to the 325 mg that went on before?

John Fort

Yeah. This is John. We made some slight changes. Obviously, every time we do a clinical study, you learn from it and we made some modifications to this clinical pharmacology study with PA8140 that we also discussed with the FDA. So, we believe we have an improved design, and as I’ve mentioned earlier, we’re looking forward to having the results by end of the year.

Bert Hazlett – ROTH Capital Partners

Okay. Thank you very much for the color.

Operator

Thank you. Our next question is from the line of Ken Trbovich with C.K. Cooper. Please proceed with your question.

Ken Trbovich – CK Cooper

Thanks for taking the question. I guess I’m looking for some insight into the sort of developments on the international front, maybe you’ve mentioned this at the start of the call and I missed it. But, can you give us some insight into what you anticipate doing for the 100 mg and 300 mg doses over in Europe? And what those costs might look like now that you’ve had more time to consider that prospect?

John Fort

So, this is John. I mentioned during the call that we have had a number of conversations with regulatory authorities in Europe and we’ve reached agreement on a path forward for PA, including a new formulation, PA140. In addition to the studies and the data that we already have developed for PA, we envision doing additional clinical pharmacology studies for Europe to – one would be a bioavailability study comparing PA140 to a marketed 100 mg tablet in Europe. That is one of the studies that we would need to do, the Phase 1 study in normal, healthy volunteers.

In addition to that, we will do another clin pharm study looking at or comparing the effects of PA on gastric pH and compare that also to the effects of Prilosec that’s marketed in Europe. Again that’s a normal, healthy volunteer study. I don’t have with me today the actual cost of each of those studies, but these are small pharmacology studies that are clearly not at the same magnitude of expense as a Phase 3 study would be. So we believe that we will be able to move forward with a filing in Europe with considerably less expense in time than we originally envisioned for this product.

Ken Trbovich – CK Cooper

But are those – is the plan to do those in the first half, and be ready to file by the end of the year? Or is there something that would prevent you from doing that scaling – again scaling up and providing a CMC section, maybe slows that process because of the different dose?

Bill Hodges

With respect to the CMC, again probably the right limiting step there, so the studies can be done in the first half, and then it’s really getting the CMC data, and then taking the NDA, and I guess converting that to a filing for Europe. So, it’s not a lot of cost anywhere around, it’s just finding the time and putting everything together. So it will follow right on. After we file the NDA, we’ll immediately kick into gear to getting the European submission ready and with the right limiting steps, likely to be the CMC data.

Ken Trbovich – CK Cooper

Okay. And if I heard you correctly then, it sounds like your intention would not be to do a 300 mg dose, but to simply go forward with the 325 mg, even though that’s not a dose doctors in Europe are as accustomed to writing?

John Fort

Right. I think that’s probably the step that we will take. We have reached agreement with the PA140. We can file the PA32540 as well and even though, as you said, that may not be a commonly prescribed dose in Europe, that is most likely what we will file with.

Ken Trbovich – CK Cooper

Okay. And then, Bill, kind of, I know obviously you guys have given some commentary as it relates to the fact that you expect the cash balance to exceed the $85 million that you’ve previously guided to. But could you give us some sense early on? I know you’re saying these costs of these studies aren’t going to be high, but I don’t want to jump to conclusions about, how much different the burn rate might be next year versus this year? Can you give us even just broad guidance around what you guys think is reasonable as an outlook for cash burn going into 2013, knowing you’ve got some very relatively inexpensive BE studies, but you still have filing fees and things of that nature that you would also incur?

Bill Hodges

Well, we’re currently working on our budget for next year now. So let us come back on the call at the end of the year, and give you an estimate for next year.

Ken Trbovich – CK Cooper

Okay. And then a follow up question on the data that’s been presented thus far from the Phase 3 studies. Part of me wanted to sort of sit down and try to run a pharmacoeconomic model and figure out what the benefits might be across a broader patient population for a longer period of time. Can you give us an idea of how that process might work for you folks in terms of doing those types of pharmacoeconomic studies and whether or not it’s needed at this point for positioning the product?

Liz Cermak

Yeah, Ken, I can answer that question. I mean, as we’ve talked a lot about our affordable pricing strategy for PA and we’ve gotten a lot of positive receptivity really just based on that, amongst payors in market research. You know at $1 a day at Tier 2, the patient co-pay essentially covers the cost of the drug and so it makes the cost neutral for payers. So, as a result, payers have said, you know what, keep it simple and they’ve indicated that they really don’t need, nor do they expect the pharmacoeconomic model or studies in support of PA. In fact, they’ve added that they don’t believe them anyway, but a lot of companies go ahead and do them to support their premium pricing.

So we think, while we think though that the affordable pricing premise of PA has a pretty compelling value proposition all by itself, we have moved ahead and are developing a model that, and it’s a model as opposed to outcomes trials, based on the data that we’ve generated with PA as well as data that’s published in the literature that focuses not only on the actual benefits that the product has, but also on the benefits that are derived from improved adherence to aspirin therapy in the cardiovascular population.

So, this model is proprietary, and as you know, we’re in partnership discussions, so it would be a competitive advantage to a partner, so we can’t disclose any more about it at this time. But, we see this being valuable in a couple of settings, included integrated delivery systems in the U.S. and even as a foundation for the ex-U.S. pricing and reimbursement if that opportunity presents itself.

Ken Trbovich – CK Cooper

Okay. Terrific. Thank you.

Bill Hodges

Yes.

Operator

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

Jason Napodano – Zacks Investment Research

I’m looking at the statistical analysis from the AHA poster and I’m wondering if any of those safety aspects – or specifically I’m focusing on things like MACE. Did any of that hit statistical significance?

John Fort

This is John. No, we looked at obviously the number of MACE events between the two groups and given that both groups received aspirin, we didn’t really expect to see any difference in them and there are no statistical difference with them. Aspirin did what it was supposed to do, reduced cardiovascular events, or limit the number of cardiovascular events in this population.

Jason Napodano – Zacks Investment Research

Okay. Can you help me understand, in the safety analysis, I understand that it consisted of all randomized patients that received at least one dose of medication, but in looking at things like MI or stroke or MACE, how are those patients followed, following discontinuation? Meaning, like if a patient discontinued enteric-coated aspirin, and then had a MACE, is that accounted for in the data that you presented to AHA?

John Fort

Yes. That would be accounted. So, patients were followed – obviously once they were randomized, they were followed regardless of treatment. If they develop an event that require them to discontinue study drug, they did so and those individuals are included in the analysis that was presented at AHA.

Jason Napodano – Zacks Investment Research

Okay. So then if – I guess kind of what I’m getting at here is if the discontinuation rates for enteric-coated ASA are significantly higher, then the discontinuation rates for PA, and we know that aspirin reduces things like MACE and MI and stroke. If patients are on PA long at some point of separation on things like MACE or MI and stroke, just to the fact that patients are, like Dr. Plachetka said, they’re taking their drug?

John Fort

Yeah, the answer is yes. I would expect with a longer duration and also with more subjects. These two trials, as you could see the event rate was actually relatively low, approximately 2%. So, we didn’t really expect, given the approximately 1,000 patients that were enrolled in to two Phase 3 studies and the event rate that we saw we were able to see now a statistical difference. But you’re right. Long-term as these patients continue to drop off of their regular aspirin due to upper GI side effects, they’re going to have more events compared to patients on PA who can continue their aspirin therapy.

Jason Napodano – Zacks Investment Research

Okay. But that kind of outcome study, is that something that you guys would eventually like to do? I mean, is it being discussed with partners? Or is that too expensive and I’m looking too far ahead?

John Fort

I think you’re looking too far ahead. I think we would have said something that we can obviously look at, and to think about as we now complete the NDA, we will see what additional information, what additional clinical trials might be of use and obviously discuss with a partner.

Jason Napodano – Zacks Investment Research

Okay. Let me ask a question on VIMOVO. I’m somewhat baffled by VIMOVO. I’m looking back at the second quarter press release that you guys put out on August 1, and it says that VIMOVO had launched in 30 countries back then. The press release this morning says the number is up to 40 countries. And if you look at the sales, I mean, even specifically internationally, they’re flat to maybe even flat to down. So, clearly, AstraZeneca is launching the drug outside of the U.S., I mean 10 countries within the past three months, but it doesn’t look like they’re gaining much traction. So, can you help me understand whether or not if these new launches are just in countries that really don’t seem to be generating meaningful sales or are we losing sales in existing countries and picking up sales in new countries as the product launches?

Liz Cermak

Well, it is kind of a combination, and there are a lot of countries out there and not a lot of them are large and contributing. And as I said, some of the bigger ones that did come on between the 30 countries and 40 countries came on pretty late in the game. So, it didn’t generate a lot of sales. As you can imagine over the launch cycle, there are things that happen, and puts and takes and stuff like that, just like with any launch.

So you see some that are sort of slowing a little bit, some are continuing to go, and then some are continuing to launch. So, I think, it’s too early to tell. We are pretty optimistic on the receptivity in rest of world and the fact that so many countries are launching and some more bigger ones are yet to launch, or have yet to grow market share. So, I think, we’re going to watch this for the next couple of quarters. So we remain optimistic about its receptivity.

Jason Napodano – Zacks Investment Research

Okay. And then, just as far as trying to figure out some timelines here, give me a sense of when you started the stability data on PA81, I assume you need 12 months of stability there?

John Fort

I don’t have that information with me. But we have already split the PA8140 on the stability and we are looking at probably filing with you three months or six months of stability data. We don’t believe that we will need 12 months of stability data, and primarily because we already have substantial amount of stability data with PA32540. We know the product characteristics and the stability of the products and we think we can make a strong argument with the information that we will have during the first half of next year to file the NDA.

Jason Napodano – Zacks Investment Research

Okay.

Bill Hodges

And then, we’ll supplement it as the additional data comes in. So...

Jason Napodano – Zacks Investment Research

Got you. Okay, guys. Thank you.

Bill Hodges

Yeah.

Operator

Thank you. (Operator Instructions) Our next question is a follow-up from the line of Bert Hazlett of ROTH Capital Partners.

Bert Hazlett – ROTH Capital Partners

Hi. Maybe you just answered it. I only caught part of the answer. But could you describe again the filing strategy within the U.S. with 32540 and the 8140? I have written down here that the application will be supplemented with the 8140 information. Please correct that if it’s incorrect and my apologies for not getting it right the first time if that’s the case.

John Fort

No problem. The plan is to file the NDA for both doses, PA32540 and PA8140 in the first half of next year. I think what you may have heard Bill mention is we will file in 2013 first half with the stability data that we have with 8140, which we believe will be sufficient for the filing. And then that information will be supplemented during the NDA review with additional stability data on 8140.

Bert Hazlett – ROTH Capital Partners

Okay. So it will go together? The initial filing will have both and that is expected in the first half of 2013?

John Fort

Absolutely. Yes.

Bert Hazlett – ROTH Capital Partners

Okay. Thank you.

Operator

Our next question is from the line of Ken Trbovich with C.K. Cooper. Please state your question.

Ken Trbovich – CK Cooper

Hey, John, just to clarify on this idea of supplementing with additional data from stability. It’s my understanding that the FDA will often times agree to supplement being submitted so that it will not trigger delays in the reviews. Is that your plan here is that you would expect to get prior agreement that they would accept the supplements without causing delays in the review of the NDA itself?

John Fort

We’ve already discussed with the agency the amount of stability data that we have with 325 and 8140 and we believe that we will have a strong case in our NDA to file with the stability that we have. We have not specifically asked a question about how much stability data that would be required to file, but we believe, having looked at all the stability that we have, that we’ll make a compelling and strong case with regard to the CMC for both PA32540 and PA8140 to file with really no risk or little risk of any issues with the agency. And as we said, we will continue to supplement that information during the NDA review.

Ken Trbovich – CK Cooper

Okay. And then, just anecdotally, could you – and this one, I guess, is probably more directed towards Liz. Does the agreement that Pfizer entered into with AstraZeneca on Nexium increase your hopes and expectations for partnership decreasing or keeping the same?

Liz Cermak

I mean, today that hasn’t had any impact. And as you know, there’s lots of stuff that’s OTC and Nexium will still be the next one. So I think we’re actually raising the awareness of PPIs is always helpful and will be particularly helpful for PA being Rx.

Ken Trbovich – CK Cooper

Yeah. And again, I guess, that’s part of the thought process that I’m trying to understand. When we start thinking of PA so oftentimes, on the capital market side, we get hung up on the IP and the length of the IP. But clearly the idea that these products have a life OTC suggests that PA has value, especially international in the OTC market. Is there a way that you can capture that?

Liz Cermak

Yeah. I mean, there’s no question that that could be an application in the future that a partner would choose to take. There’s no doubt about it, we’ve been asked that a lot of times. But we start with the Rx path particularly in the U.S., you need to build that safety of the products and it could potentially go over-the-counter, and as you said, it could be over-the-counter in other places. So, absolutely.

Ken Trbovich – CK Cooper

Okay. Thank you.

Operator

Thank you. Mr. Hodges, there are no further questions at this time. I would like to turn the floor back over to you for closing comments.

Bill Hodges

Okay. Thank you, operator. With regard to upcoming conferences, we’ll be at the Piper Jaffray Healthcare Conference which is in New York, at the Palace Hotel, on November 27 and 28, and we’ll hope to see some of you there. And just want to thank everybody for joining the call today and wish you a good day. That concludes.

Operator

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

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