QLT CEO Discusses Q1 2011 Results - Earnings Call Transcript

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QLT Inc. (QLTI) Q1 2011 Earnings Call May 5, 2011 8:30 AM ET

Executives

Karen Peterson – Investor Relations Specialist

Robert Butchofsky – President and CEO

Cameron Nelson – Vice President, Finance and Chief Financial Officer

Analysts

Steve Yoo – Leerink Swann & Company

Jeffrey Cohen – C.K. Cooper & Co.

Doug Miehm – RBC Capital Markets

Scott Henry – ROTH Capital Partners

Operator

Hello. This is the Chorus Call Conference Operator. Welcome to the QLT Inc. First Quarter 2011 Conference Call. As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. (Operator Instructions)

At this time, I would like to turn the conference over to Karen Peterson, Investor Relations Specialist. Please go ahead.

Karen Peterson

Good morning, everyone. And welcome to QLT’s first quarter 2011 earnings conference call. If you have not yet received a copy of our press release, you can find it by visiting our website at www.qltinc.com. The conference call is being webcast live and will be available on our website for the next 30 days.

Presenting today is Bob Butchofsky, our President and CEO; and Cameron Nelson, our Chief Financial Officer. Before I turn the call over to Bob, I’d like to take a few moments to go over the Safe Harbor statement.

I need to remind you that certain statements in this conference call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and constitute forward-looking information within the meaning of Canadian Securities Laws.

Forward-looking statements include but are not limited to, statements relating to our clinical development plans and objectives, timing to commence studies, complete enrollment and receive results, sales and other financial guidance, potential benefits, targets and commercial success of our products and technologies and other statements, which contain language such as believe, goal, future, will, project, expects and outlook, and similar expressions.

Forward-looking statements are based on estimates and assumptions made by QLT in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors that QLT believes are appropriate in the circumstances.

Forward-looking statements are predictions only, which involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from a conclusion, forecast or projection in such statements. Any such risks and uncertainties are taken into account as part of our assumptions underlying these forward-looking statements, including but not limited to, our future operating results are uncertain and likely to fluctuate, currency fluctuations may impact financial results, the risks that future sales of Visudyne or Eligard may be less than expected due to market demand, competition, pricing, reimbursement and other factors.

Uncertainties related to timing, enrollment, cost and success of R&D and commercialization of products, and other future unknown liabilities and other factors including those described in the risks factors section of QLT’s annual report on Form 10-K and quarterly reports on Form 10-Q and in other filings within the U.S. and Canadian Securities regulatory authorities.

These factors should be considered carefully and you should not place undue reliance on QLT’s forward-looking statements. QLT has no intention and undertakes no obligation to update such information to reflect later events or developments except as required by law.

This presentation includes a discussion of non-GAAP financial measures as defined by applicable securities laws. The most directly comparable GAAP financial measures and information reconciling these non-GAAP finance measures to QLT’s financial results prepared in accordance with GAAP have been included in the earnings press release issued today and posted on our website.

And, with that, I’ll turn the call over to Bob.

Robert Butchofsky

[Audio Gap] Joining us on our second call of the week. I want to jump right in and start the call by following up on the day that we presented this week at ARVO for QLT091001 for LCA, or Leber Congenital Amaurosis. I thought Rob Koenekoop did an excellent job of highlighting the data generated on the first 12 subjects with LCA in his formal presentation, his poster session and also during the Investor call we held on Tuesday afternoon.

However, I just wanted to start our today by highlighting what, I believe, are the main take away points in discussing, some of what, I believe, are the next steps in our overall development program. It's important for all of you to keep in mind that LCA’s considered by most experts in the field to be a devastating disease with the most severe form of both retinal degeneration and vision loss. There are no treatments currently proved and LCA strikes children soon after birth.

Now that we are increasing our experience and follow-up with QLT091, the side effect profiles of this molecule continues to appear tolerable with mildly elevated triglycerides and declining HDL levels largely returning to normal soon after dosing though more data is needed, obviously. Also given the continued long-term duration of effect that we are seeing, we are going to continue to focus our ongoing patient enrollment on the 40-milligrams per meter squared dosing regiment.

In terms of efficacy, we have two patients who experienced profound and durable increases in visual acuity and we define that as three to six lines or 15 to 30 letters of vision. In addition, our older patient, and by that I mean 38 years old, who was off chart with only hand/motion vision detected at baseline, was able to read on chart following treatment, and this level of vision improvement for a low-vision patient is also the equivalent of a three to six-line vision improvement. So one quarter, 25% of our treatment population had a profound visual acuity impact.

Four patients in the trial had a positive shift in ICD-9 disease category. Specifically, one patient shifted status from blind to profound low vision, one patient shifted from profound low vision to severe low vision, one patient shifted from severe low vision to moderate low vision, and most importantly, one patient shifted two scales, from severe low vision near normal. To put this last patient in more perspective, the near normal category is the minimum requirement to obtain a driver's license in most states. So that is a profound level of vision improvement and vision shift was demonstrated in one third of our patient population.

Now I want to turn now to visual field results. The interpretation of our results was helped immensely by the work of Dr. DeAngelis at John Hopkins University, who is a recognized expert in this field. Even in this very small group of patients, recall that only 11 subjects out of the 12 had visual fields, one subject, patient three, who had off-chart hand/ motion VA at baseline, also had no detectable visual field at baseline. Thus, we only had 11 patients who were analyzable. And of these 11, we eliminated four patients in a conservative analysis because those four patients didn't have the same vision examiner at their baseline and follow-up visits.

So we were able to achieve statistically significant improvements in visual field from a data set that only included seven patients, with the improvement and visual field ranging from an increase of 21% to an increase of over 200%. No subject lost visual field during the course of follow-up, which again, is quite an achievement itself given the devastating rate of vision deterioration in this disease.

One of the outcomes that I most excited about is one of the most difficult to prove or to show in a data chart, but the patient reported quality of life benefits from treatment are extremely exciting. The most notable anecdote that I like to use is the patients who refuse to walk with their cane following treatment. Of which there were two in our trial. I don't believe that is a placebo effect. Clearly, if you can ambulate or walk normally without bumping into objects it highlights the importance of the improvements in visual field that I just discussed, since visual field is highly core correlated with peripheral vision.

Now coming back to quality of life, there is also numerous examples of the impact that treatment had made on these children's lives. From their ability to walk normally and avoid obstructions, to better grooming and self-care, ability to see better in the classroom and read better, and in also in what their parents report. Children are more self-confident, better able to take care of themselves, can walk down stairs even in low-light conditions, et cetera.

So we are very pleased with the results generated thus far. And let's turn to next steps, and let me list some of the key next steps and highlight some of the remaining challenges as well. First, the highest priority is to complete the ongoing enrollment of the trial with two additional LCA subjects remaining to be treated, and in the RP, or Retinitis Pigmentosa cohort, where we have 12 subjects remaining to be treated

Our goal is to complete enrollment in all 28 patients by year-end. We're recruiting additional sites in Europe and anticipate that one or two sites will help contribute to the RP trial enrollment in the second half of this year. We will also continue to generate and analyze secondary data from the LCA cohort, with particular emphasis on OCT, or Optical Coherence Tomography data. This data is the diagnostic test that looks at retinal thickness and may provide information as to overall retinal health. And we're getting a third-party expert to perform some specialized analysis of the data on our behalf.

Next big milestone as we're preparing the U.S. IND and associated site preparation activities for a US filing which we expect which we expect to complete in the second half of the year. One of the more interesting questions that remain to be answered surrounds the long duration of treatment effect that we are seeing. We need to gain a scientific understanding of this effect and that will be an ongoing point of reference for our development program. Likewise, we will need to determine appropriate dosing frequency, but our expectation is this dose will be pulsed periodically, rather than administered on a daily basis.

However, we will continue to rise our thinking based on data generated from the ongoing clinical evaluations. Now that we've generated positive data, we can now pursue a rigorous dialog with regulatory agencies that determine what the next trial should encompass.

Visual acuity and visual field are separate and distinct measures and we believe that some combination of VA, visual field and quality of life measurements are appropriate end points to focus on in the next trial. We also understand the need to have at least some control with a possible placebo run-in and potential crossover to active treatment for patients initiated on initial placebo therapy. Rather than speculate now on what the timing and study design of the pivotal trial will be, I will just say that we're going to do everything possible to get a clear regulatory strategy in place by year-end. We've already begun discussions with regulatory agents in Europe and expect to commence discussions with the FDA in the near-term.

So in summary, the primary focus is ongoing data collection and follow-up on the existing patients, and the secondary focus is the discussions with regulatory authorities and developing a clear path forward by the end of the year. And as always, we'll continue to update you every quarter on our ongoing progress.

Now I want to turn briefly to our punctal plug trial with latanoprost in glaucoma. We announced today a simplification of our trial which is ongoing. We essentially eliminated the placebo run-in period of four weeks, which was in addition to the four to six-week washout period for patients who are previously on prostaglandin therapy.

We essentially took this step because the feedback from physicians conducting the study was at the total time off of drug, active drug, was creating problems with the trial, since patients were essentially receiving no treatment for up to ten weeks. As a result, we expect the number of patient dropouts to be significantly reduced given the simplified study design and this change will enable us to hit our projected completion timing of Q2, Q3, although it looks more likely the data won't be available until the third quarter.

Recall that this trial is the first study to look at double plugging, and that is placing plugs in both the lower puncta as well as the upper puncta. And as we had expected going into the study, we are seeing lower rates of plug retention, anecdotally, from the plugs placed in the upper puncta. The question this trial will answer for us is does double punctal plug placement with latanoprost lead to a 5-millimeter reduction or greater in interocular pressure.

None of the study design changes we've implemented impact our ability to answer that question directly. I look forward to getting this data out to you this summer and discussing next steps for this platform technology. There's a growing and widespread acceptance highlighted by the large number of drug delivery papers and posters at ARVO this week that we need to have more efficient methods to deliver drugs to the eye. We continue to believe the punctual plugs offer a very elegant and non-invasive way to deliver drugs to the tear film or anterior surface of the eye.

Finally, I want to turn briefly to Visudyne sales for the quarter. Overall, our U.S. sales volume was lighter than we'd expected at the start of the year. I would expect that as the year progresses, we should start seeing the impact of the greater number of physician calls that we are making from the new hires we recently got into the field. Sales in the first quarter were 65 vials per day, which is what we averaged in the third quarter last year.

Continuing on AMD, this week was also a very big week for the AMD market with the announcement of the cat trial comparing they sent us with Avastin. Our read is these data should not have a material impact on Visudyne. The PRN regimen used in the trial was very rigorous, requiring monthly doctor visits with diagnostic testing, and in particular OCT, done each month. And this is clearly not how most patients on a PRN regimen are followed outside of clinical trials today.

Again there were several positive posters highlighting the reduction and treatment burden associated with using Visudyne as part of the anti-VEGF treatment cycle. And we will continue to promote Visudyne for patients who show persistent activity after anti-VEGF therapy. There's growing excitement among some retina specialists about the potential for the VEGF Trap to be approved later this year. And if that molecule is approved, we don't anticipate it will change our positioning of Visudyne since we still expect that Visudyne will remain a second line therapy to anti-VEGF agents whether they be Lucentis, Avastin or the VEGF Trap.

The last point I want to make on Visudyne is to emphasize that the tragedy in Japan did not affect our Q1 results in that country. The Japanese market is a top ten market worldwide for Visudyne sales, and we were very pleased that Novartis generated results in-line with our budget.

Last point I want to make before turning the call over to Cam, is just to emphasize our balance sheet with currently $206 million in cash and $122 million in contingent consideration from the Eligard royalty stream on a balance sheet that contains no debt.

Cam will walk you through the other financial highlights of the quarter. Cam?

Cameron Nelson

Thanks, Bob. We're pleased once again in the first quarter to have generated positive adjusted EBITDA and we also continue to return cash to shareholders through our buyback program.

So today I'm going to very briefly highlight some of the financial highlights from the first quarter of 2011, starting as usual with Visudyne sales. Worldwide sales in Q1 2011 were $21.8 million, up 2.4% from the quarter of 2010. The regional split for Visudyne sales was U.S. $5.2 million, Europe $6.9 million, and rest of world $9.6 million.

Compared to the prior year, Q1 sales in the U.S. were up 3.9%, however, U.S. sales in Q1 2010 included a significant decrease in distributor inventories that reduced the reported sales number in that quarter by around $1 million. Whereas in the current year quarter, there was only a slight inventory reduction. So without this impact, U.S. sales would have declined by approximately 15% year-over-year, which is in line with the unit sales which dropped to 65 vials per day as Bob mentioned, in the first quarter of 2011, down from 75 vials per day in the first quarter of last year.

Still comparing to the 2010 first quarter, Visudyne sales outside the U.S. increased by approximately $0.3 million or 2%, but would have been down by close to 2% without a favorable foreign exchange impact. So in total if you eliminate the impact of distributor inventory changes in the U.S. and the benefit of foreign exchange rates on rest of world sales, year-over-year worldwide sales would have been down about 5%, compared to the 2% growth recorded.

Looking now at the sequential change. So versus the fourth quarter of 2010, worldwide sales in Q1 were down $2.7 or 11%. In the U.S., Visudyne sales declined by 11.6%, as end user sales of 65 vials per day in the first quarter were down from 73 vials per day in Q4 2010 and flat from the third quarter of last year. Outside the U.S., sales declined sequentially by $2 million or 10.9%, as European sales were up approximately 2.2% from the prior quarter, but this was outweighed by declines in other rest of world territories.

Now turning to the financial statements. In the first quarter net product revenue of $5.6 million included the $5.2 million of U.S. Visudyne sales, plus about $0.4 million for reimbursement from Novartis of rest of world royalties and other expenses.

Royalty revenue which represents the 20% royalty that we earned on Novartis' sales of Visudyne outside of the U.S. was up slightly to $3.3 million in line with the increase in sales outside the U.S.

As a reminder, revenue is high in Q1 2010 because it included approximately $5 million of previously deferred revenue for inventory shipped to and paid for by Novartis prior to 2010. This one-time item resulted from the amendment of our Visudyne agreement with Novartis, which again, took effect in the first quarter of 2010.

We didn't have any product shipments to Novartis in the first quarter, but we are making a shipment in the second quarter. And as reminder, this adds about $2 million to our revenue and cost of sales in the period of shipment.

R&D expense was $9.7 million for the quarter, just below the $10 million to $12 million R&D guidance range previously communicated for each of the first two quarters of 2011. Of note in the first quarter of 2011, our Retinoid and punctal plug programs each accounted for an equal portion of our R&D spend.

SG&A expense for the quarter was $7.1 million, up $2.2 million from the prior year, primarily due to one-time separation costs related to the departure of the CMO, higher Visudyne U.S. sales and marketing costs and pre launch activities to establish a payer program for the Retinoid product.

Investment and other income for the quarter included a $2.3 million increase in the fair value of our contingent consideration asset. Because this asset represents the estimated present value of the expected remaining payments due to us from the sale of QLT USA, there is less discounting on all remaining expected payments. And this means that their present value goes up. So this increase in value due to less discounting, leads to an increase in their fair value of our contingent consideration every quarter until the full amount is collected.

In Q1, this impact due to the passage of time would have produced a gain of about $2.7 million. But the reported gain of $2.3 million in Q1 also reflected the negative impact of a one-percentage point increase in the discount rate used to determine the present value which was basically offset by an increase in the underlying Eligard sales forecast.

On the balance sheet, the contingent consideration asset was reported at $121.7 million, which was split into a current portion and a long-term portion. This amount represents the estimated present value of the $143.4 million of payments, but as of March 31, 2011, we were expecting to be paid from Eligard royalties over the next three to five years.

On income taxes, we reported a $1.7 million income tax provision in the quarter compared to a $5.2 million recovery in the first quarter of 2010. The tax recovery reported in the prior year period was due to the accounting for income taxes associated with the amended Visudyne agreement, which resulted in a $5.6 million credit to the income tax provision in Q1 2010 when the agreement took effect. Going forward in 2011, we still expect the full-year tax provision to be in the $2 million to $4 million range.

In the first quarter, we paid about $800,000 of cash income taxes, but we do not expect there to be any more material payments for the rest of the year. The press release includes a schedule reconciling GAAP to non-GAAP earnings. For the first quarter the non-GAAP loss per share was close to breakeven coming in at just less than $0.005. In addition to the standard adjustments we make each period for contingent consideration and stock-based compensation, in Q1 2011 we also removed the separation costs related to the departure of the former CMO.

In wrapping up, we had adjusted EBITDA plus contingent consideration during the first quarter $1.2 million. Our total cash and cash equivalence balance at March 31, was just under $206 million down from $209.5 million at the end of 2010, primarily due to cash used to buyback our stock.

During the quarter we repurchased just over 0.5 million shares at an average price of $6.84 for cost of approximately $8.6 million. This brought cumulative purchases under this current normal course issuer bid program to approximately 556,000 shares.

As reminder, the share buyback program was approved late last year and it allows to us repurchase up to 3.6 million shares through December 15, 2011. And finally, capital expenditures for the quarter were approximately $1.2 million.

And with that, I'll turn it back to Bob.

Robert Butchofsky

All right. Thanks a lot, Cam. Brock, if you wouldn't mind? Can you open up the call for questions, please?

Question-and-Answer Session

Operator

Yes, thank you, sir. (Operator Instructions) The first question today comes from Steve Yoo of Leerink Swann. Please go ahead.

Steve Yoo – Leerink Swann & Company

Thanks for taking my questions. I have a couple questions. The first one was on the Visudyne sales force. Are they fully ramped up yet and making sales calls, or where are they in the process right now?

Robert Butchofsky

Hi, Steve. We got the team was trained in, I guess late February, early March timeframe, and started making calls kind of in the second half of the month. So as they get they get up to speed and we start to see additional calls being made, I think we'll start to see positive impact from that in the second half.

Steve Yoo – Leerink Swann & Company

Okay. And as far as the RP enrollment update. You said there are two patients enrolled so far, so you need to enroll 12 more, right?

Robert Butchofsky

That’s correct.

Steve Yoo – Leerink Swann & Company

Do you plan on releasing interim results for the RP trial like you did for the LCA trial?

Robert Butchofsky

I think we won't do that, Steve. I think what we will do is probably just focus on getting enrollment completed, and then sharing the full data set. And as I've mentioned in our prepared comments, we expect to complete enrollment by the end of the year.

Steve Yoo – Leerink Swann & Company

Okay. And just one last question along those lines. After you've shown the impressive data at ARVO, did you have patients or doctors come up to you and want to participate in the RP program?

Robert Butchofsky

That's a great question, Steve, and we, and we actually had a reception Tuesday night. Unfortunately I had to fly back to Vancouver, but I heard from people that were there that there was a lot of excitement about our data. There were about 35 physicians who focus primarily on inherited retinal diseases. And there were definitely some interest from that group of participants in getting involved in the study, either directly, or helping us to analyze data. So I would say there was a high-level of excitement following the presentation that day.

Steve Yoo – Leerink Swann & Company

Great. Well, thank you for taking my questions.

Robert Butchofsky

Thanks, Steve.

Operator

The next question comes from Jeffrey Cohen of C.K. Cooper. Please go ahead.

Jeffrey Cohen – C.K. Cooper & Co.

Hi. Thanks for taking my questions, in advance. Firstly, you talked about the statistical significance of the visual field data from the seven subjects in the LCA trial. Did you discuss the acuity data at all?

Robert Butchofsky

We didn't expect to see significance, Jeff, because of the low number of patients in the study. So the fact that we got it actually with the visual field data was a very, very pleasant surprise for us, especially since in our conservative look at the data, we eliminated four of the patients from that analysis. So we were very pleased to see statistically significant data in the field portion of the data.

Jeffrey Cohen – C.K. Cooper & Co.

Okay. Could you discuss a little bit the dosing pulse to periodically comment as far as administration in the trial?

Robert Butchofsky

Sure. I think what we've done so far, just to be clear, is the only dosing we've done is one week of dosing, so seven days of once daily oral medication. And because we're seeing such a prolonged duration of treatment benefit now Dr. Koenekoop has followed some patients up to 15 months, and we're still not seeing a complete loss of effect. In fact, most of the patients are holding pretty steady through that time period. So we feel that we don't need to administer this medication on a daily basis. That it's something that could potentially be dosed every six months, every nine months, something like that, depending on how patients respond. And because of that, we also think it will be much easier to manage the potential side effect profile from this, since especially in younger patients, we're not too concerned with the mild elevations we're seeing in triglycerides levels, nor the mild reduction in HDL levels we're seeing thus far in the trail.

Jeffrey Cohen – C.K. Cooper & Co.

Okay. Cam, could you briefly review again the contingency of the discount rate used and was it $122.7 million current, and what was the total payment, $143.4 million?

Cameron Nelson

Yes, that's right, Jeff. And the discount rate is up to 10% now, it went from 9% to 10%.

Jeffrey Cohen – C.K. Cooper & Co.

Up to 10% now. Okay. And could you discuss any shares purchased in Q2?

Cameron Nelson

No, we don't discuss that. I mean, but I can tell you that we've been blacked out since April 1 through today anyway.

Jeffrey Cohen – C.K. Cooper & Co.

Okay. You’re normal – normal blackout...

Cameron Nelson

Okay.

Robert Butchofsky

Yeah. That’s a good point Jeff. We closed the window at the end of each quarter and then it remains closed through earnings. And then it will only open if we don't have any other material news.

Jeffrey Cohen – C.K. Cooper & Co.

Okay. Could you talk about the – you did no shipping to Novartis this quarter. So the cost of goods at $1.3 million is entirely related to the $5.2 million in U.S. sales for Visudyne?

Cameron Nelson

Yeah, that’s right.

Jeffrey Cohen – C.K. Cooper & Co.

Okay. Got it. And so the cost of the sales force this quarter going forward, can we get any insight?

Cameron Nelson

We haven't broken that out quarterly. We did give the guidance for the year that it was going to be $10 million to $11 million. Given that we're ramping up, it's in line with that full-year guidance for the quarter.

Jeffrey Cohen – C.K. Cooper & Co.

Okay. Perfect. Thanks very much.

Robert Butchofsky

Thanks, Jeff.

Operator

The next question come from Doug Miehm of RBC Capital Markets. Please go ahead.

Doug Miehm – RBC Capital Markets

Yes, thanks. Bob, can you talk about whether the decision saw any relationship between the benefits seen in the LCA trial? And perhaps length of time of disease or age or anything like that?

Robert Butchofsky

Well, it's really tough to do that, Doug. But it looks more like the sweet spot, if you will, for this molecule is probably younger patients. Two of the patients that really had an outstanding visual acuity response where I think one was eight, I think one was 10 or 12. So I think younger patients that have – in terms of this disease, kind of moderate vision loss, are probably the patients who, at least at this point, would seem to have the best chance of response. But remember we're taking basically all comers with very low levels of vision, and a few patients have had pretty good levels of vision. So we're really trying to get an understanding for the disease, and that's one reason why we’re continuing to expand enrollment and add a couple more patients, so that we can potentially highlight the patients that get the greatest benefit for the next study.

Doug Miehm – RBC Capital Markets

Okay. And based on what you're seeing in the LCA trial, are there any implications for the type of patients that might do best in the RP trial? Because I'm trying to get a sense – given these data which are pretty important and then even after the first three from last year, I'm surprised that it's taking that long to recruit RP patients when you're talking about a larger population?

Robert Butchofsky

Well, part of the issue in terms of recruitment isn't the number of patients available. Its getting – because of the rigorous testing involved, Rob only has the capacity to do one patient at a time in his clinic, because the level of testing involves about 40 to 50 visual tests. And I've gone through a whole day treatment with the patient, and it takes a full day to go through the battery of testing. So it's really more of a capacity issue which is why it's very important we get some other centers up and running. And as I mentioned, I expect that we'll get at least one or two other centers up in the second half of this year to help with the patient burden.

Doug Miehm – RBC Capital Markets

Okay. That makes a heck of a lot of sense now. With respect to the side effect profile, it does appear somewhat benign, but perhaps you could talk about what you think some of the side effect safety work you're going to have to do is going to be?

Robert Butchofsky

Well, we've done a safety study in normal adults and that was around 20 or 25 subjects. By the time we complete this study, we'll have pretty decent long-term follow-up in up to 28 subjects. So we're continuing to safety profile around this. We haven't seen anything unexpected or that we didn't see in the first three subjects that we are now reporting based on the total of 12, so the safety profile still looks pretty benign. We definitely want to keep an eye on that, and something that we'll continue to focus on through our development pathway.

Doug Miehm – RBC Capital Markets

Excellent. Okay. Thanks very much. Great results again.

Robert Butchofsky

Thank you.

Operator

The next question comes from Scott Henry of ROTH Capital. Please go ahead.

Scott Henry – ROTH Capital Partners

Thank you, and I apologize if any of this has been addressed. I'm juggling multiple calls over here. But, Bob, my first question is on the 091001 product. Let's say you fully enroll through the end of this year. The data continues to be strong. Is there any possibility to go right into a pivotal trial, given that this is an unmet clinical need with limited patients?

Robert Butchofsky

I don't want to set that expectation, Scott. I think we should go forward thinking that we're going to need to run a pivotal study. But the bottom line is, we're going to have dialog with the regulatory agencies. We've already initiated that in Europe. We've had some discussion with them. We are having an upcoming meeting scheduled with the FDA. And we should have a clear regulatory strategy in place by the end of the year. But I think the overall – sorry.

Scott Henry – ROTH Capital Partners

I guess I was going to say. My comment was that after this trial, then just moving directly into a pivotal, not using this trial as a pivotal. Is that a realistic target?

Robert Butchofsky

Yeah, I do think that – I think it’s going to be very difficult to do dose ranging, given the limited number of patients with this disease. So I do think part of our negotiations with the regulatory agencies, is that we move toward what I would hope would be a pivotal study. And if you want to call it a Phase 2/3 or whatever you want to call it, I think it would be a registration trial, and I think that would be the expectation for 2012.

Scott Henry – ROTH Capital Partners

Okay. Great. I just wanted to get clarity on that. Additionally, I mean any thought with the Visudyne sales force of – I know you've kind of always talked about adding products to their bag. Any thoughts to the timeline on that? Is that still a reasonable target or a focus?

Robert Butchofsky

Yeah, it's certainly something that we would like to do, Scott. If we had an opportunity that we felt was a good return on investment, we would bring in additional products today. So we are actively looking, and we've evaluated a couple different opportunities. Obviously we haven't done anything yet, but that would certainly be of high interest to us if we could find the right opportunity.

Scott Henry – ROTH Capital Partners

Okay. And I guess the final question, with regards to the changes to the plug trial protocol, just want to get your thoughts. I mean where you still comfortable you're able to make a go, no-go decision on that program? And I mean it looks like almost you feel like you have enough patients in the active control arm already. I just want to get a sense of why those changes, and how that may impact future decisions?

Robert Butchofsky

Yeah, we really just did it so we could hit our timing, Scott. So the issue was we were starting to see some patients drop out because they were on a prolonged period of placebo run-in and weren't receiving active treatment. So it really doesn’t – the changes to the study design really don't have any impact in our ability to make decisions. What it does is it will enable us to make those decisions in the same timeframe that we committed to at the beginning of the year.

Scott Henry – ROTH Capital Partners

Okay. Well, thank you for taking the questions.

Robert Butchofsky

You bet. Thanks, Scott.

Operator

There are no further questions at this time.

Robert Butchofsky

All right. We'll thank all of you for joining us on the call this week. Upcoming milestones are the plug data which will be coming out over summer time. And we then we'll give you enrollment updates for both the LCA and RP segments of the QLT091 study at our next earnings call in July. Thanks again, everyone.

Operator

Ladies and gentlemen, the conference has now concluded. You may disconnect your telephones. Thank you for joining and have a pleasant day.

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