Sucampo Pharmaceuticals, Inc.Q2 2009 Earnings Call Transcript

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Sucampo Pharmaceuticals, Inc. (NASDAQ:SCMP) Q2 2009 Earnings Call August 6, 2009 5:00 PM ET


Kate de Santis - VP, IR

Ryuji Ueno - Co-founder, Chairman, CEO and CSO

Stan Miele - SVP, Sales & Marketing

Jan Smilek - VP, Finance and CFO


Gary Nachman - Leerink Swann

Scott Hirsch - Credit Suisse

Ian Sanderson - Cowen and Company

Jim Molloy - Caris & Company


Good day ladies and gentlemen, and welcome to the Second Quarter 2009 Sucampo Pharmaceuticals Earnings Call. My name is Jeremy, and I’ll be your coordinator for today. Please note that this conference is being recorded.

If you object to being recorded, please disconnect at this time. At this time all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of the conference.

(Operator Instructions). I would now like to turn the presentation over to your host for today's call, Ms. Kate de Santis, Vice President of Investor Relations. You may proceed, ma'am.

Kate de Santis

Thank you very much Jeremy and good afternoon everyone. With me on today's call are Dr. Ryuji Ueno, Sucampo's Co-founder, Chairman and Chief Executive and Scientific Officer; Stan Miele, Senior Vice President of Sales and Marketing and Jan Smilek, Vice President of Finance and Chief Financial Officer. Other members of Sucampo's management team are here as well, and will be available to answer your questions during the Q&A portion of this call.

We announced our second quarter 2009 financial results this afternoon, just after the close of the US financial markets, and our press release can be found on our website at in the for investors section.

The format of today's call is as follows. Dr. Ueno will begin with an overview of the quarter and recent highlights, including the release of top-line data for Amitiza and OBD. The release of top line data for cobiprostone for the prevention of NSAID-induced gastrointestinal injuries.

The initiation of Phase III studies of Amitiza for chronic idiopathic constipation in Japan, and the acquisition of US and Canadian rights to Rescula from R-Tech Ueno. Stan will follow with an update on our current Amitiza trends and Sucampo's commercial activities. Jan will then conclude our prepared remarks with a summary of our financial results for the second quarter.

Before we begin, please note that various remarks that management makes on this conference call about Sucampo's future expectations, plans and prospects, constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.

Forward-looking statements may be identified by the words, project, believe, anticipate, plan, expect, estimates, intent, should, would, could, will, may or other similar expressions. These statements involve risks and uncertainties and we encourage listeners to review them, as they are found in the company's filings with the Securities and Exchange Commission. These filings can be accessed through the for investors page of Sucampo's website at

In addition, any forward-looking statement is representing the company's views as of today, August 6, 2009. These statements should not be relied upon as representing the company's view as of any subsequent date. While Sucampo might elect to update forward-looking statements at some point in the future, the company specifically disclaims any obligation to do so.

I will now turn the call over to Dr. Ueno. Dr. Ueno?

Ryuji Ueno

Thank you, Kate. Good afternoon, everyone. Before, we discuss the financial results for the quarter and current commercial activities I want to review the second quarter, which included several major announcements. First, I want to discuss the recently announced top line results from the two Phase III trials of lubiprostone for the treatment of opioid-induced bowel dysfunction or OBD in subjects with chronic non-cancer pain.

A total of 875 OBD subjects at 187 sites in the U.S. and Canada were randomized into two-12 week double-blind, placebo-controlled Phase III trials and received one 24-mcg gel capsule of lubiprostone twice a day for 12 weeks. Subjects in the trial were administered different opioid pain medications including morphine, methadone, oxycontin and fentanyl.

Inclusion criteria required subjects to be on opioid medications for non-cancer related pain for at least 30 days prior to screening and continue to use that medication during the trial period, and also required that patients have fewer than three spontaneous bowel movements or SBM per week during the two-week screening period before randomization into the treatment portion of the trial.

In study OBD0631, the primary end point of a statistically significant change from baseline in the frequency of SBMs at Week eight of treatment was met when lubiprostone was compared to placebo. Additionally, statistical significance was achieved for eight of the 12 secondary endpoints, including key symptoms associated with OBD.

Unfortunately, the other study OBD0632 did not achieve statistical significance for the same primary endpoint. Statistically significant improvements with lubiprostone were achieved for two of the secondary endpoint and positive trends were observed in four of the other secondary endpoints. Subjects treated with lubiprostone showed a statistically significant increase in the frequency of SBMs at Week eight from their baseline, from 1.42 to 4.54 SBMs in the 631 trials and from 1.60 to 4.10 SBMs in the 632 trial.

While we are still in the process of analyzing the data, we have identified two key observations. First, there was a high rate of response in the placebo arm of the 632 trial. Approximately, 58% of subjects treated with placebo in the 632 trial experienced more than 3 SBMs per week during each week of the trial.

Second, in both trials, a course of sub population analysis showed that subjects on methadone treatment who are randomized to receive lubiprostone, showed a lower SBM response when compared to lubiprostone patients treated with other opioid medications.

Additionally, in the 631 and 632 trials, methadone subjects treated with lubiprostone did not show improvement in OBD symptomatic endpoint while lubiprostone subjects treated with other opioids showed statistically significant improvement in both studies in abdominal discomfort, pain, constipation severity, stool consistency and straining over the placebo.

In terms of safety, the overall adverse event rate for the combined trials were around the same between treatment and placebo groups at 54.9% for the lubiprostone and 51.6% for placebo. The most common adverse events were nausea, 15% for the lubiprostone versus 7.5% for placebo. And diarrhea, 8.5% for lubiprostone versus 3.7% for placebo. There are no treatment-related serious adverse events or hospitalization.

I want to take advantage of this opportunity to say that patients' safety is always our first concern. I'm especially pleased with Amitizia's safety profile demonstrated in the two trials. Amitiza is a treatment with an established safety and efficacy profile based on each studies used for the first approval in 2006 for chronic idiopathic constipation, and in 2008 for irritable bowel syndrome with constipation and subsequent use.

Given the results in the two studies, we are continuing further analysis of the data. However, we believe these results suggest that lubiprostone may have the potential to treat the symptoms of OBD, a specific indication for which there is currently no approved drug.

We will continue the ongoing, fully-enrolled, long-term one year, open-label safety study of lubiprostone in OBD subjects. In this study, a total of 445 patients are receiving one 24-microgram gel cap of lubiprostone twice a day. In this follow-on study concludes successfully, these data are anticipated to be submitted to FDA in 2010.

We also recently reported top line results from our Phase II clinical trial cobiprostone for the prevention of gastric ulcers and other gastrointestinal injuries in patients treated with non-steroidal antiinflammatory drugs or NSAID.

A total of 124 patients with osteoarthritis and/or rheumatoid arthritis at 12 sites in the U.S. were enrolled in this 12-week, double-blinded, randomized, dose-ranging and placebo-controlled Phase II trial. All patients in the trial received 500 mg of naproxen twice a day. There are four treatment cohorts, one cohort received the placebo while the other three cohorts received 18 mcg of cobiprostone either once, twice or three times a day or daily total of 18, 36 or 54 microgram.

A top line analysis of data from the trial indicated that patients receiving cobiprostone experienced a lower overall incidence of ulcers. At Week 12, patients receiving the 54 microgram dose experienced a 50% reduction in the overall incidence of gastric ulcer when compared to patients taking placebo. Cobiprostone patients also experienced an overall statistically significant reduction in the number of gastric erosions through the treatment period of 12 weeks compared to placebo patients.

The retention rates of patients taking naproxen with cobiprostone at Week 12 were statistically significant when compared to patients taking naproxen with placebo. The rate increase in a dose-dependent manner, the retention rate for 12 weeks was 40% for placebo, the retention rate for cobiprostone increase dose dependently by 47%, 52% and 77% from low to high doses. The median number of days treated with naproxen was 55 days for patients taking placebo. This compares 60, 82 and 83 days for cobiprostone from low to high dose respectively.

The data shows that cobiprostone was well tolerated in patients receiving NSAID therapy. The drug related gastrointestinal adverse event rates were 66.7% for placebo, versus 60%, 67.7% for cobiprostone from low to high doses. Withdrawal rates from the trial due to an adverse events were highest in the placebo group with a withdrawal rate of 21.9%, the rates for cobiprostone was 13.3, 16.1, and 16.1% for the low to high dosages.

We are pleased with these results as they reinforce our belief that cobiprostone may have the potential to offer patients a new treatment strategy for the prevention of gastrointestinal injuries associated with NSAID therapy.

We are currently working with our investigators to determine the next step in clinical development and also intended to initiate contact with potential commercialization partners to understand the possible commercial alternative, if cobiprostone succeeds in further clinical development.

During the quarter, we also announced that Sucampo Pharma Ltd are wholly owned subsidiary based in Japan has initiated enrollment and completed the randomization of the first patient into the pivotal Phase III efficacy trials of lubiprostone for chronic idiopathic constipation, CIC in Japan.

As a result, Sucampo has received a milestone payment in the amount of $7.5 million from our Alliance partner Abbott, in recognition of this achievement.

This one pivotal Phase III double-blinded placebo-controlled clinical trial is designed to evaluate the efficacy and safety of lubiprostone in Japanese patients with CIC over a 28-day treatment period.

We also announced that we have initiated enrollment and initial dosing of Japanese CLC patients for up to 48 weeks of treatment in an open label phase III safety trial of lubiprostone. This is an open-label, multi-center trial in which patients will receive 124 lubiprostone capsules twice a day. This trial seek to enroll 200 patients. The efficacy parameters being measured in the long-term safety trials include the frequency of changes in SBMs at every week.

Finally, before I turn the call over to Stan, I will also review the licensing agreement with R-Tech Ueno, RTU, which was announced on April 23. As we discussed the transaction during last quarter's call, I'll just provide a brief overview on today's call.

Under the terms of the agreement Sucampo has succeeded the NDA holder position from RTU in the United States and holds the exclusive rights to commercialize Rescula in the U.S. and in Canada, for the treatment of glaucoma and ocular hypertension.

We also have the right of first refusal to commercialize Rescula in the United States and Canada for any additional indications for which RTU developed for Rescula. RTU will be exclusively responsible for supply of Rescula to Sucampo for the U.S. and Canada.

We made an upfront payment to RTU of $3 million and are responsible for up to $5.5 million in additional milestone payments based on the achievement of specified development and commercialization goals. Sucampo will be responsible for the development, regulatory, and commercialization activities and expenses for Rescula in the United States and Canada.

Rescula received its first marketing approval in Japan in 1994 for the treatment of glaucoma and ocular hypertension. In 2000, Rescula was approved by the Food and Drug Administration, FDA for the treatment of open-angle glaucoma and ocular hypertension. Rescula is not currently being marketed in the U.S. or Canada. We continue to plan to re-launch it for these indications in the United States in 2010.

Given Rescula's mechanism for action and observe clinical effect, we also believe that Rescula could potentially be effective in the treatment of other ocular diseases, most notably as a potential treatment for dry age-related macular degeneration or dry AMD.

More than 8 million people in the United States currently have age-related macular degeneration, a disease which causes damage to the retina resulting in a loss of vision. AMD is a leading cause of blindness in adult in the United States. The prevalence of AMD in the U.S. is expected to increase by more than 50%, to approximately 12 million by 2020.

More than 85% of all people with intermediate and advanced AMD have the dry form. Currently no drugs have been approved by regulatory authorities for the treatment of dry AMD. We are currently designing a development program for Rescula, our Phase II clinical trial for dry AMD.

In summary, we believe Rescula will become an important and integral part of our product portfolio. We believe that there are sales synergies between the Rescula and the Amitiza markets segment within the elderly population we now serve. And as such this is a very nice fit for our sales team.

Both Rescula and Amitiza are created from prostone technology, whose therapeutic potential I discovered in the 1980s, which is also the basis for Sucampo’s clinical and present clinical pipeline compounds. We look forward to re-launching Rescula for its currently approved indications and to developing it as a potential treatment for dry AMD.

Now I will turn the call over to Stan to review our commercial activities during the second quarter. Stan?

Stan Miele

Thank you Dr. Ueno, and good evening everyone. I'll start with a brief review of the overall constipation prescription market, followed by some recent trends for Amitiza. Lastly, I will provide an overview of sales in the institutional and Long-Term Care segments targeted by the Sucampo's sales force.

As stated in the last earnings call, despite a previously unstable environment for the prescription constipation IBSC markets and the economy in general, we remain encouraged by overall prescription trends of the entire constipation IBSC market. It is certainly our objective to work with Takeda to assure Amitiza achieves its fair share of that growing market. Amitiza is the only FDA-approved drug for either of our current indications of chronic idiopathic constipation and irritable bowel syndrome with constipation in adult women.

Our partner Takeda is responsible for sales activity in the retail segments. Total retail prescriptions for Amitiza in the second quarter 2009 as reported by IMS, was appropriately 279,000 prescriptions. This represents a 5.8% growth over the same period last year and a modest 1.5% total prescription increase over the first quarter of 2009.

Net sales, as reported by Takeda, were approximately $49.5 million for the second quarter of 2009 compared to about $49.7 million in the first quarter of 2009. As you may be aware, there was also a price increase of 5.5% of Amitiza effective on the 4th of May 2009. We carefully evaluate the timing and amount of price increases with our partner Takeda. At this point we are focused on growing the overall number of prescriptions as this will ultimately determine the success of Amitiza moving forward.

Our own Sucampo sales force, which targets institutional and long-term care facilities and key opinion leaders within academic medical centers, continues to perform inline with our internal expectations. Sales within the Sucampo's segments are not reflected in the IMS retail prescription data, but are reported in IMS's drug distribution data for hospital, Department of Defense and Long-Term Care segments. Sales in Sucampo's covered segments are included in the total Amitiza dollar sales, reported by Takeda.

IMS reported sales from Sucampo's segments grew by roughly 26.9% over the second quarter in 2008 and by 4.6% over the first quarter of 2009. Sucampo is focused on maximizing sales within our segments and evaluating ways to improve sales within the retail arena.

As AMITIZA 8 microgram and 24 microgram have no upper age restriction and a favorable adverse event profile, we continue to believe the product is well suited for broader use not only in the long-term care market but in all of the segments both companies target.

Internationally, we continue to plan on having a significant presence at the Gastro 2009 Conference in United Kingdom in November. This is one of the major international congresses representing a wide array of gastroenterology specialist throughout Europe. We will be supporting a major continuing medical education Satellite Symposium evening event, as well as presenting four approved posters.

The poster titled can be fond on our website on the event calendar page. We believe our presence at this meeting will be invaluable as part of a pre-launch effort within certain European markets. We continue to expect to hear initial responses from the European authorities to our marketing applications by the end of 2009.

In February, when we announced our agreement with Abbott Japan, we also disclosed that we were engaged in discussions with Abbott regarding the license and commercialization of Amitiza for the emerging markets. We continue to have discussion with Abbott and other potential partners for these additional territories.

Plans are also underway for the commercialization of Rescula in 2010. We have to increase our infrastructure appropriately to ensure that we will be ready for a re-launch for the indications of glaucoma and ocular hypertension. Sucampo was actively engaged in all aspects of commercialization from strategic marketing to third party logistics. We will be ready for a re-launch sometime in 2010. We remain confident that we can parley some of our experience within the segments we now cover for the benefit of Rescula.

I will now turn the call over to Jan, to review the financial results for the quarter.

Jan Smilek

Thank you, Stan and good afternoon everyone. As we announced in our press release, for the second quarter of 2009, Sucampo reported a net loss of $0.2 million or $0.1 per share compared to a net income of $29.9 million or $0.70 per share in the second quarter of 2008.

On a pre-tax basis, we recorded earnings for the second quarter of 2009 of $0.6 million compared to $44.4 million in the prior-year period. I believe it is important to point out that our prior year results reflect a $50 million milestone payment related to the approval of Amitiza in the United States for irritable bowel syndrome with constipation that we received and recognized in the second quarter of 2008.

Let me now summarize the key line elements of our income statement for the quarter. Our product royalty revenue during the second quarter of 2009 decreased to $8.9 million from $10.9 million in the second quarter of 2008. As we discussed with you a year ago, the product royalty revenue for the second quarter 2008 included 1.9 million in revenue recognized from the initial stockings of Amitiza 8 microgram following it's initial approval for IBSC. It also included about $0.7 million in shipments delayed by Takeda at the end of the first quarter of 2008.

As Stan mentioned, the net sales for the second quarter of 2009 as reported by Takeda were approximately $49.5 million compared to about $49.7 million in the first quarter of 2009.

Our R&D revenue for the first quarter of 2009 decreased to $7.4 million from $55.4 million from the prior-year period, primarily due to the previously mentioned $50 million milestone payment. In the second quarter of 2009, R&D revenue consisted of $3.8 million recognized primarily with respect to the OBD trials for Amitiza in the United States that are funded mainly by Takeda, and of $3.6 million recognized under the agreement with Abbott for lubiprostone in Japan.

Research and development expenses decreased to $9.6 million in the second quarter of 2009 from $12.9 million in the comparable quarter of 2008. This decrease was driven primarily by lower expenses on the recently completed U.S. clinical trials of Amitiza and cobiprostone, offset by increased expenses from clinical trials of both lubiprostone and SPI-017 in Japan.

General and administrative expenses during the second quarter of 2009 were $2.9 million compared to $3.6 million during the prior year quarter, primarily due to a decrease in salaries, benefits and related costs relating from cost containment initiatives implemented at the beginning of 2009. The decrease was partially offset by expenses incurred in preparation for a performance audit under the contract with Takeda.

Selling and marketing expenses also decreased during the second quarter of 2009 to $2.2 million from $2.9 million during the second quarter of 2008, primarily resulting from streamlined sales and marketing operations.

As far as our three geographical segments are concerned, their financial results were substantially in line with our expectations and they continue to reflect the varying stages of their development and activities.

Sucampo Pharma Americas, whose primary focus is currently US operations, recorded income before taxes of $2 million. Sucampo Pharma Asia represented by our subsidiary in Japan reported pre-tax loss of $0.8 million, which reflect significant R&D activities and expenses incurred in Phase III clinical program of Amitiza for chronic idiopathic constipation in Japan. Also in Phase 1 development of SPL-017 for peripheral arterial disease as well as pre-clinical activities for our adult compounds.

As Dr. Ueno mentioned earlier, our Japanese subsidiary received a $7.5 million milestone payment under our agreement with Abbott Japan upon the imitation of the clinical Phase III trial of Amitiza or chronic idiopathic constipation in Japan during the quarter. We will recognize this payment to get over the $10 million upfront payment that we received during the first quarter of 2009 and other milestones that we may receive during the Amitiza development in Japan over the development period using the percentage of completion method.

Finally, Sucampo Pharma Europe recorded a pre-tax loss of $0.8 million as we continue to invest in the European regulatory approval process for Amitiza and related pre-commercialization activities.

Our tax provision for the first quarter of 2009 mainly pertains to taxable income generated by our US operations. Our effective tax rate for 2009 is expected to be in the mid-to-high 30s in respect to the US results from operations, while it will be zero in regards to the international operations.

We anticipate to fully utilize our cumulative net operating losses in Japan this year and continue to provide full valuation allowances against any international deferred tax assets.

Let me finish by highlighting our strong financial and liquidity position. Sucampo continues to have no debt and our cash, cash equivalent and investments totaled $131.5 million at June 30, 2009 as compared with $121.5 million at the end of 2008. The increase is primarily attributable to the milestone payment received from Abbott that were offset by our 3 million upfront payment to RTU for Rescula rights and also due to changes in our working capital and cash used in our operations.

I will now turn the call over to Dr. Ueno for closing remarks. Dr. Ueno?

Ryuji Ueno

Thank you, Jan. To conclude, I want to highlight Sucampo's continued progress and anticipated key events for the remainder of 2009. Despite the difficult economic environment, Sucampo continues to demonstrate substantial progress in a number of areas.

We are using our strong balance sheet together with our good cash position to continue to invest in research and development of new prostone molecules and our international operations. In my earlier comments, I highlighted a number of significant events that occurred during the second quarter and recently. We continue to have ongoing discussions with potential partners for Amitiza and remain focused on the build-out of our international infrastructure.

While we announced several key milestones recently, we have several additional events upcoming, including: One, receiving initial response to our marketing applications for Amitiza in European countries during 2009. Two, we are also continuing the Phase I trial of the IV formulation of SPI-017 in Japan into 2010. Three, we are very pleased that we will participate in GASTRO in London. All four of our abstracts were accepted. For participation in the investment conferences is full as listed on our website.

I'd like to conclude my comments by reiterating that Sucampo's financial position remains strong. Our portfolio of commercial products has expanded and our R&D pipeline is advancing as anticipated. Before I conclude the call, I would also like to thank the Tech Council of Maryland for naming us the 2009 Biotechnology Firm of the Year in May.

That ends our prepared comments for this afternoon, and we will now be happy to answer your questions. Operator, will you please review the procedure to ask questions.

Question-and-Answer Session


(Operator Instructions). Our first question will be from the line of Gary Nachman from Leerink Swann. You may proceed.

Gary Nachman - Leerink Swann

What's the status of the audit of Takeda, how long is this going to go on for and is there anything meaningful Amitiza so far? Do they have the same number of reps on Amitiza or has that changed at all?

Stan Miele

This is Stan. So I’ll answer that in two parts. The easy part is as it relates to the number of reps that has not changed, that’s the same as it was at our last earnings call. As it relates to the audit, the most recent update is we have hired independent consultants and we are currently having ongoing discussions with Takeda on the actual scope of the audit. So at this point in time, it is inappropriate for me to comment any further, but that’s where we are as it relates to the audit at this point in time.

Gary Nachman - Leerink Swann

Just for follow-up. Is there a termination clause in the agreement that would allow you I guess to get out of it and look for another partner if does need come to that?

Stan Miele

Yes. I think at this point in time, I think it's inappropriate for us to comment on that.


Your next question will be from the line of Scott Hirsch with Credit Suisse. You may proceed.

Scott Hirsch - Credit Suisse

With respect to the OBD study, are you prepared to like to know that the placebo response was caused by the methadone involvement or is it just co-relative at this point?

Stan Miele

I was checking the R&D. At this point, we’re still exploring the reason why the placebo event was so high in the 632 study. The results we have regarding methadone show that patient who are on lubiprostone had a lower response rate if they were on methadone. At this point, we don’t know if the methadone is related to the high placebo response rate.

Scott Hirsch - Credit Suisse

You’re still looking into trying to figure that out?

Stan Miele

Yes. We are still doing further analysis.

Scott Hirsch - Credit Suisse

So we could still see that you guys pursue the OBD indication going forward?

Stan Miele

That’s correct.

Scott Hirsch - Credit Suisse

Then, is there any detailed timeline on the EU filing decisions? I know you said by year-end, but is there any more granularity to that?

Stan Miele

The applications were submitted as you recall back in 2008 and we're still in the process of waiting for responses from the EU countries.

Scott Hirsch - Credit Suisse

Then, for Ueno, what should we expect in terms of research and development revenue going forward? We added a good run rate here. I know there was a few milestones from Takeda and from Abbott. So, what's the right run rate for research and development revenue?

Stan Miele

The R&D is probably going to be generally in line with what we expect to be line in with the second quarter numbers for rest of the year.


Your next question will be from the line of Ian Sanderson with Cowen and Company. You may proceed.

Ian Sanderson - Cowen and Company

On the lubiprostone OBD trial, do you have any update on the timing of your meeting with the FDA to review the data and whether that is fileable?

Stan Miele

At this point, we do not have an update on that. We are still meeting with our partner Takeda and our investigators to determine the course of action once we finish the analysis of the data. So at this point, we do not have a meeting time scheduled with FDA.

Ian Sanderson - Cowen and Company

Then, you talked a little bit about the Rescula launch, do you plan to put together an ophthalmology sales infrastructure to get Rescula out there?

Stan Miele

Well, we are currently looking and analyzing several different areas as it relates to the re-launch of Rescula. Initially, we are looking at all departmental areas from an infrastructure and capabilities perspective. So what's important is that we are looking at the manufacturing, logistics, customer service, distribution, legal, many different aspects that we need to ensure are in place.

From a sales perspective, we are continuing to model this as we go through our market research and will determine based on the segments that we cover and specifically how we want to launch this, what will be optimal. So I'm not prepared to say specifically yet, whether or not we will be adding to our existing sales infrastructure, that's still to be determined once we do more market research.

Ian Sanderson - Cowen and Company

[Technical Difficulty].


Your next question will be from the line of Jim Molloy. You may proceed.

Jim Molloy - Caris & Company

Just a quick follow-up on the OBD trial. Given the p-values out and what those are, when will you give us full data set and give us some p-values. Obviously, I'm assuming perhaps incorrectly that the failed trial was pretty close if you get (inaudible) significant. Is that correct?

Stan Miele

At this point, we are still analyzing the data and we are not releasing the p-values, but you are correct that when the two studies are combined, we have statistical significance in the primary endpoint.

Jim Molloy - Caris & Company

Just a follow-up. Any thoughts on when you maybe done analyzing the data and get this thing out there?

Stan Miele

I would assume that we will probably have the data analyzed in time to submit to FDA in 2010.

Jim Molloy - Caris & Company

Any update on the cobiprostone partnership talks?

Ryuji Ueno

This is Ryuji Ueno speaking. About cobiprostone, we haven’t yet started the partnering discussion. We are just thinking of start discussion with the potential partners. Cobiprostone trial, this is a kind of a concept study and we are pleased that this end phase study has gone well, but cobiprostone has a verity of other indications. So, we’re now analyzing this data carefully and we are now trying to set the direction for the future trials.


Ladies and gentlemen, your next question is a follow-up from the line of Gary Nachman. You may proceed.

Gary Nachman - Leerink Swann

Just a couple more of Rescula. First, why was that product still come to market, never it was for a long time. It’s been around for a long time. So is there IP on it. How do you think it's going to compete with the new glaucoma trial?

Stan Miele

Well, this for clarification, it was not pulled from the market. There were back in early 2000 and in the 2003 timeframe, in the merger between Ciba and Novartis. It basically do not fit the profile from their perspective in terms of significant future investment. So it was re-acquired by R-Tech Ueno and went back to Japan at that point in time.

So I don’t want to tip my hand too much, as it relates to specifically what our thoughts are from a re-launch perspective. We understand that’s an extremely competitive and crowded market, but we have some plans where we’re really analyzing the specific benefits of the drug within certain segmented patient populations. So we feel that when we mirror that with some of the sales effort we have with Amitiza. We think that there is going to be some solid synergies and we also just as a follow-up, we do have fairly solid IP on this product as well.

Gary Nachman - Leerink Swann

From the research point, if I can add, is Rescula has a new mechanism of action from other existing therapeutic agent. As you know that, (inaudible) FP are receptor agonists, but the Rescula risk is a BK channel opener, which is entirely different, and it doesn't add directly onto such a smooth muscle. So the BK channel activators usually have a good type of protective effect. So we are expecting such a protective effect of Rescula together with increased blood flow in the back of the eye to re-launch the product in the future, this is from a research point.


Ladies and gentlemen, your final question is a follow-up from the line of Ian Anderson. Go ahead.

Ian Sanderson - Cowen and Company

Actually a follow up on Rescula, Dr. Ueno are you implying that there may be some neuroprotective benefits from Rescula, and if so, does the trial need to be run to bear that out? Secondly, on Amitiza in the EU. You mentioned at the close of your prepared remarks that you are focused on the build out of the international infrastructure. Is that to say that you may go ahead and launch Amitiza in the EU markets yourself? I know in some of the markets, you are thinking about that, but might you go more broadly.

Ryuji Ueno

The first question about Rescula, your speculation is in line with our direction because of (inaudible) that is a BK channel activator. So the neuroprotective is expected from a research point. That’s the reason why we are thinking of doing additional trial targeting dry AMD in the future. About launch of Amitiza in UK, we haven’t yet find out decision whether we would go directly by our sales force in UK or align with other partner, yet, but at least the UK is one of the important markets. So we are thinking seriously about what to do for the launch of Amitiza in Europe.


With no further questions at this time, I'd like to turn the call back Dr. Ueno for his closing remarks.

Ryuji Ueno

Thank you very much for joining us this afternoon. We hope you will enjoy the rest of your summer and we hope to see you this fall. Thank you very much.


Thank you for your participation in today's conference. Ladies and gentlemen, this does conclude the presentation and you may now disconnect. Have yourselves a wonderful day.

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