Acorda Therapeutics, Inc.
Q3 2016 Earnings Call Transcript

Published: 27 Oct 2016

[Operator:]

Welcome to the Acorda Therapeutics Third Quarter Update. At this time, all participants are in a listen-only mode. There will be a question-and-answer session to follow. Please be advised that this call is being taped at the company’s request. Now, I would like to introduce your host for today’s call, Felicia Vonella, Executive Director of Investor Relations at Acorda. Please go ahead.

[Felicia Vonella:]

Good morning everyone. Before we begin, let me remind you that this presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts regarding management’s expectations, beliefs, goals, plans or prospects should be considered forward-looking. These statements are subject to risks and uncertainties that could cause actual results to differ materially. For more information on these and other risks, please refer to our filings with the Securities and Exchange Commission. With me today are Ron Cohen, our President and Chief Executive Officer; and Dave Lawrence Acorda’s Chief, Business Operations and Business – and Principal Accounting Officer. I will now turn over the call to Ron.

[Ron Cohen:]

Thanks, Felicia. Good morning everybody. AMPYRA revenues for the third quarter of 2016 were $128.8 million, up 10% from the third quarter of 2015. That represents the 14th consecutive quarter of double-digit, year-over-year growth for AMPYRA, which was launched in 2010. AMPYRA results continue to be strong with outstanding performance by our commercial and medical teams. We are reiterating our 2016 AMPYRA guidance of $475 million to $485 million. AMPYRA’s continued growth is fueling investment in our pipeline including our late-stage program, CVT-301 and tozadenant in Parkinson’s disease and Dalfampridine in Post-Stroke Walking Difficulties or PSWD, as well as earlier stage programs which includes CVT-427 for acute Migraine. On the IP front, we are defending our patents vigorously. We plan to submit our post-trial answering brief tomorrow as part of the ANDA or the ANDA litigation with the four remaining generic filers. Our legal team is pleased with the case that we presented and our post-trial brief will speak to address the questions the judge posed at the end of the trial. There is no prescribed timeline for the judge’s ruling. We expect a decision from the PTAB on the pending IPR petition in March of 2017. Moving to our late-stage program. We expect the last patient out of the 301 Phase 3 efficacy study by the end of this year and we will announce top-line data in the first quarter of 2017. We also expect to announce results then from our 12 month safety studies 005, which is a 12 month open-label study evaluating the safety of CVT-301 against non-interventional standard of care. This study is primarily assessing pulmonary functions and the key measures include FEV1 and DLCO which is the carbon monoxide diffusion. We had our pre-NDA meeting with the FDA and we are awaiting the minutes from that meeting following which we will confirm the timing of the NDA submission. And by the end of this year, we will also expect to announce results from our dalfampridine trial in PSWD, as well as results from a multi-dose PK study for our once-daily or QD formulation. If the data for both are positive, we plan to move forward with the Phase 3 program in the second half of 2017 contingent on our discussions with the FDA and the outcomes of our IP litigation. On September 30th, Acorda set a security for the payment of the redemption price of a final 3% of the outstanding Biotie shares and we received titles of all the remaining shares. We now own 100% of Biotie. There are a few remaining procedural issues that we’ll need to take place as mandated by the Finnish Authorities and we expect the purchase to be completed in the first quarter of 2017. The tozadenant Phase 3 study is currently enrolling. Biotie expects that the study will be clinically complete by the end of 2017. The Toz if approved it would be in the first new class of drug for Parkinson’s disease in more than 20 years. I’ll now turn the call over to Dave.

[David Lawrence:]

Thanks, Ron and good morning everyone. I’ll now review some of the financial highlights during the third quarter. AMPYRA net revenue for the third quarter of 2016 was $128.8 million a 10% increase over the $117 million we recorded for the same quarter in 2015. For year-to-date, AMPYRA net revenue grew 15% to $361 million from $315 million for the same period in 2015. FAMPYRA royalty revenue from sales outside of the US was $2.6 million for the third quarter of 2016. Royalty revenue for ZANAFLEX authorized generic was $1.1 million and royalty revenue related to sales of Selincro were $1.1 million in the third quarter of 2016. As a reminder, Selincro was acquired in the Biotie transaction. Moving to expense, research and development expense for the third quarter were $54.8 million, including $2.9 million in share-based compensation, up from $43.4 million including $2.3 million in share-based compensation for the same quarter in 2015. The increase in R&D expenses in the third quarter of 2016 distributable to R&D expenses for Biotie and increased investment in our late-stage development program. Sales, general and administrative expenses for the quarter ended June 30, 2016 were $54.4 million, including $7.1 million of share-based compensation, compared to $51.1 million, including $6.7 million of share-based compensation for the same quarter in 2015. This year’s third quarter SG&A expenses exclude transaction expenses related to the Biotie acquisition which is shown separately on the press release income statement, but includes Biotie expenses for Biotie. For the third quarter of 2016, we recorded a net tax provision of $3 million. However, cash taxes for the third quarter were $1 million. There are number of factors that can cause significant differences between the effective tax rate doing our financials and our actual cash tax position. As a reminder, we had federal NOL carry-forwards of approximately $195 million at the end of 2015, which are available to offset future taxable income. For this reason, we do not pay substantial US Federal income taxes. I will conclude with a brief note on our balance sheet. Our cash position remains strong. At September 30, 2016, our cash and cash equivalents balance was approximately $127.9 million. I’ll now turn the call back over to Ron.

[Ron Cohen:]

Thanks, Dave. In closing, over the next 12 months, we expect multiple, potentially transformative clinical and corporate milestones. AMPYRA continues to grow well and we are defending our intellectual property vigorously. We had contingencies to address the rains of potential outcomes, the AMPYRA patent – and importantly irrespective of the outcomes we believe we will be able to fund the quarter’s operations through approval and launch of CVT-301. By the end of this year, we intend to – we plan to announce top-line findings from our post-stroke study and QD formulations PK study and in the first quarter of 2017, data from our Phase 3 CVT-301 efficacy and safety trial. The Toz Phase 3 study continues to enroll and if successful it could represent another important relatively near-term product opportunity. And we are also enthusiastic about advancing the clinical program for CVT-427, which has the possibility to be a valuable new product for the treatment of migraine. And with that, operator, we will take questions.

[Operator:]

Thank you. [Operator Instructions] Our first question is from Phil Nadeau with Cowen and Company. You may begin.

[Phil Nadeau:]

Good morning. Thanks for taking my questions. Congratulations on the progress. Ron, just to follow-up to some of the prepared remarks. First on the District Court case. I know you said this most of the time for the judge to make a decision. But can you remind us of some of the other milestones regards to the IP, specifically when does orphan drug expire? And when does the 30 month stay expire? And then, second on the post-stroke trial, what should we be thinking on how much data you really set the end of this year?

[Ron Cohen:]

Okay, thanks, Phil. So, on t he IP, we are going to file the post trial brief tomorrow. There is no set time for the judge. So it really depends on the judge’s timetable to render a verdict. If the verdict is positive, obviously that’s great. If it’s not, then we would appeal. An appeal that varies I am told that they take approximately a year. With respect to the – with respect to the IPR, there is a presentation before the PTAB on December 9th which I believe is open to public and then, a verdict would be rendered by the PTAB in March of 2017 and once again, if that were to away, that’s great. If it doesn’t, we would appeal and that would go for approximately a year. The date of the orphan expiration is in January of 2017. I believe it’s geared to the approval date which was January 22nd. So it’s somewhere around then. And on the 30 month stay, I believe that somewhere in mid-2017. Now with regards to post-stroke, we expect to release top-line data. So we will give you some of the key data primarily the two minute walk outcome.

[Phil Nadeau:]

Okay, it seems like in your prepared remarks, there are more contingencies on the conditions to moving to the subsequent trial in today’s prepared remarks versus prior quarters. Has your thinking changed on the hurdle to moving forward into that next trial? It seems like you are looking for more.

[Ron Cohen:]

Yes, so as we looked at it, a study that’s did more deeply, there is two – well, so the one – what I would say is standard one, is that obviously we have to talk to the FDA and come to agreement on the design of the Phase 3 trials and so forth. So, that’s going to be contingent on the data that comes out of the trial and then or the set of FDA. So that’s standard procedure. With respect to the IP which is the other thing we mentioned, in the event that there is a generic BID AMPYRA on the market, our commercial group believes that it would be challenging to have the QD formulation and introduce that for stroke. So that’s something that we would have to take into account if we were to lose the exclusivity prematurely on the AMPYRA’s patents. So, that’s what we are signaling. It would be challenging. It’s something we are studying and continuing to study, but it’s something we wanted to make people aware of.

[Phil Nadeau:]

Fair enough. Thanks for taking my questions.

[Operator:]

Thank you. Our next question is from Salveen Richter with Goldman Sachs. You may begin. Salveen, your line is open. Please check your mute button.

[Salveen Richter:]

Sorry. Thanks for taking my question. So just with regard to CVT-301, could you just comment on what top-line data we’ll see beyond the primary endpoint of UPEPRS improvement and whether we will see safety as well as kind of secondary endpoints around responder rates and off-time along with – and then on the Biotie pipeline, maybe just an update and progress on timeline for some of the earlier assets like SYN120 and BTT 1023 and if you do decide to go forward with AMPYRA in post-stroke walking difficulties, what are the possible designs for pivotal stage one or two programs going forward? Thank you.

[Ron Cohen:]

Well, that’s a lot, Salveen. Okay, so, with respect to the top-line data, I don’t – I can’t give you word in first every piece of data that we will provide. The key adds to measuring that study is two minute walk. We will provide that as we have said in the past there are good reasons for not getting into excessive details on – getting on excessive details on the data from that study. Recall, that this is not a completed study. This was originally designed as a Phase 3 study for using the BID formulation. For various reasons, we have chosen to unblind the study before completion of the trial. So, it is not a valid study in the sense that we don’t have the – we are not going to have a completed study the way it normally would. So, we will be presenting top-line data enough to give people to sense of whether this trial works or justifies moving on to Phase 3 or not. With respect to 301, here again, I can’t give you word in first, what we are going to be presenting. We will present top-line data and I expect it would be within the norms that we normally do and that others in the industry normally do with respect to both the safety and the efficacy data in the study. Remember, we also are going to be having data from the actual 005 safety trial and the key outcomes there are the pulmonary function test, the FEG 1 and the carbon monoxide diffusion DLCO and we will be presenting those data as well. With respect to the – I think you asked about the Biotie program.

[Salveen Richter:]

Yes.

[Ron Cohen:]

SYN120, I don’t have those timelines for you off the top of my head. That study is being supported by the microplate blood foundation it’s ongoing and I don’t have a timeline for you on that. Likewise, with BTT, the BTT program is not one that is in our neurological sweet spot it’s being looked at for Primary Sclerosing Cholangitis right now and the primary outcome is – it’s an exploratory outcome, but it’s out thought level. We think it’s a very interesting molecule and if it potentially has very interesting applications, it is not likely, but we will keep that solo and then we will very likely look to partner that asset. Obviously, we are going to wait and see what the out thoughts data looks like and we should have that at least an interim look within the next several months. But that’s all I can say about those programs.

[Salveen Richter:]

All right, thank you.

[Operator:]

Thank you. Our next question comes from Tom Shrader with Stifel. You may begin.

[Tom Shrader:]

Hi, good morning. Thanks for taking the questions. I had a question on CVT-301. I guess there is some question about first thing in the morning use of the drug and can you remind us, I think you have a trial going on, is that required for approval? Will those data be kind of at the same time as everything else? Can you just talk about that aspect of the drug?

[Ron Cohen:]

Yes, thanks, Tom. You are talking about the early morning offs? Is that right?

[Tom Shrader:]

That’s right.

[Ron Cohen:]

Yes, so we are doing a small early morning off study. It’s really a safety study just to make sure that where it may take the inhaled L-Dopa after having gone all night without having taken their Symmetrel or whatever L-Dopa formulation they are taking. Just to make sure that we’ve checked the safety box on that and that when we submit the NDA we can submit safety data. So there is not hopefully, if it’s hopefully a benign study that there is no signal there that the FDA would have any concerns about and then try to put some in the label with respect to early morning offs. It’s not an efficacy study. That is something that we may or may not do – use to later. As we have pointed out in the past, the - by far the major concerns for patients AMPYRA physicians of Parkinson’s is not the early morning offs. Those are regimented. In other words, patients expect those. They know when they are going to have – they bake into their day-to-day routine. So that, when they get up, they immediately take their medication and they are good to go and they get dressed and then by then the medication is taking effect. What bothers people is the unpredictable off-periods that occur during the day and that’s obviously what we are aiming for in the clinical trials.

[Tom Shrader:]

Okay, perfect. And then, so the hope is that the label just doesn’t mention when the off is.

[Ron Cohen:]

Right, we just don’t want – we don’t want the label to raise any concerns or potential concerns that, well, it hasn’t been studied enough and might there be a safety can signal and so on. So, we are just looking at the safety so that we can include that in the data package.

[Tom Shrader:]

Okay, and then one question, I am not sure you will answer. But do your lawyers say there is very little or there is no reason to expect both cases to wrap up at once? I know sometimes to try to harmonious but in this case the arguments are almost completely different. So do you have any guidance there?

[Ron Cohen:]

As far as I know, you are talking about the IPR versus the ANDA court case?

[Tom Shrader:]

That’s right.

[Ron Cohen:]

Yes, as far as I know, these are completely independent procedures. They have nothing to do with one another. So they operate on their own times. To the extent that anything happens at the same time, it’s coincidental.

[Tom Shrader:]

Okay, great. Thanks a lot.

[Operator:]

Thank you. Our next question comes from John Scotti with Evercore ISI. You may begin.

[Mike DiFiore:]

Hi guys. This is Mike DiFiore in for John Scotti and congrats on a good quarter. Two questions, one, with regard to CVT-301 and the expected reimbursement environment, I know you said you were in conversations with payers but I was wondering if you could provide any more color on what those conversations may have entailed with the possible likelihood of payers step editing 301 after trying injectable Ampakine might be? And I do have a follow-up after that.

[Ron Cohen:]

Yes, Mike, I don’t think I have any specific way I can answer that question. It’s way early in the process. We are engaging with payers and we will continue to do so. I’ll point out that we have a huge store of experience in working with payers particularly on symptomatic neurological therapies through our entire AMPYRA experience and if you follow that through that, you know that our team did phenomenal work in managing through what initially were very difficult push backs by managed care and then getting to a very good place across the board. So, I have a lot of confidence in them that we are going to be doing a very similar work here. The key issue we think actually is just educating managed care about off periods and the essential nature of the need that these patients have for an acceptable therapy. I’ll also point out, you mentioned Ampakine. Ampakine is a very small product. I think last time I looked, it was something like $20 million a year and this is after years and years and years on the market and there is a very good reason for that. It’s an injectable. It has extremely serious and widespread side-effects such as major nausea and vomiting in a huge number of people who take it. So even though, it is an active agent for off-periods. It has not been used widely because patients simply can’t tolerate all of the side-effects and the injectable nature of it. So, that would not be a good model and in fact, we think that’s a very straightforward case to be making to managed care.

[Mike DiFiore:]

Gotcha. Now, thank you so much. It’s very helpful. And just my follow-up question is with regards to AMPYRA. Were there any inventory issues or changes to the number of shipping days that that impacted sales in 3Q and could you possibly comment on AMPYRA’s scrip trends going into Q4?

[Ron Cohen:]

I am sorry. Could you…

[Mike DiFiore:]

I am sorry.

[Ron Cohen:]

Just please ask again.

[Mike DiFiore:]

I was wondering, with regarding AMPYRA sales in the third quarter, if there was any inventory issues or changes to the number of shipping days that may have impacted the quarter end. If you could provide any color if – on scrip trends going into Q4 for AMPYRA?

[Ron Cohen:]

There are no inventory issues at all, Mike. We continue to have our usual approximately two weeks in the channel and our TRX is so far as expected in our guidance is what we gave which is that we are reiterating guidance and I think it’s fair to say that we are comfortable more toward the top of the range that we’ve given which by the way is consistent with what I believe the Street consensus is.

[Mike DiFiore:]

Okay. Thank you very much, Ron. Appreciated.

[Operator:]

Thank you. Our next question comes from Paul Matteis with Leerink. You may begin.

[Paul Matteis:]

Hey, good morning. Thanks a lot for taking my questions. I have two. The first one is, I am curious why if you could talk a little bit about the safety monitoring that’s going on in the CVT-301 study. It sounds like the label study is single arm, I would imagine during the [Indiscernible]. So, from what information on the long-term safety on the product have you been able to clean thus far?

[Ron Cohen:]

Yes, so, it’s actually not a single arm. There is an observational cohort with standard of care for comparison. So we are actually comparing in real-time to people who are not taking the inhaled therapy and doing pulmonary function test in everyone and that was necessary because people with Parkinson’s have issues with muscular churn, expanding their chest. So, they are not going to behave necessarily the way healthy volunteers would with pulmonary functions have. So we are comparing it in an ongoing way. All I can tell you in terms of the ongoing monitoring is that there is a Data Safety Monitoring Board or DSMB. They regularly are monitoring the study and to-date they have allowed us to continue moving the study forward.

[Paul Matteis:]

Okay, got it. Thank you. And then, Ron, I am wondering how you think about SG&A infrastructure over the long-term in these various scenarios and I guess specifically in this scenario, where the court cases don’t go your way and as you alluded to you decide not to pursuit through. Can you just – can you effectively move all your MS reps on to CVT-301? Do you need more reps to sell CVT-301? I am kind of wondering what the SG&A looks like in that scenario where you transition from an MS fitness to a Parkinson’s business without stroke?

[Ron Cohen:]

So you are talking about, if we don’t keep the AMPYRA franchise, or if we do?

[Paul Matteis:]

Yes, it’s if you don’t.

[Ron Cohen:]

If we don’t. Okay, so it would be approximately the same sales force numbers as we currently have for AMPYRA. So we would not expect a significant change to SG&A or certainly not increased for the sales force.

[Paul Matteis:]

Okay. And then maybe one more, Ron, have you guys thought at all anymore about looking at the QD formulation in MS? I mean, it seems like it’s you could probably do some quick PK work and get that approved. There will be some much quicker path in stroke. So I am wondering if that’s in all in your contingency plan. Thanks a lot.

[Ron Cohen:]

Yes. We have not guided to that. Our teams are continuing to assess that and obviously once we have our QD data out we will be looking at it even more deeply. So I’ll just reserve comment on that for now.

[Paul Matteis:]

Okay. Fair enough. Thanks a lot.

[Operator:]

Thank you. Our next question comes from Michael Yee with RBC Capital Markets. You may begin.

[Andrew Tsai:]

Hi, good morning. This is Andrew Tsai on for Michael Yee. I just wanted to confirm – scenario, I just wanted to make sure that, if the IPR is not cleared March 2017, that you probably won’t advance the post-stroke program? And if that’s the case, would that imply that your 2017 R&D numbers could potentially go down year-over-year? Thanks.

[Ron Cohen:]

You say, when you say the IPR doesn’t clear, you mean that we don’t win?

[Andrew Tsai:]

That’s correct.

[Ron Cohen:]

Okay. All right. So, first of all, just to make sure everyone understands, if the IPR is not favorable to us, we will appeal it. So there is another year or so after that during which we’ll appeal it. And what we said is that, with respect to post-stroke, we do believe that it would be challenging to commercialize the QD in the presence of a generic sized AMPYRA market. That’s all where we can say at this point, we wanted to signal that it would be challenging, but we are continuing to assess that and once we have the data from the post-stroke trial and the QD formulation, we will be able to dive into that more completely, particularly with the efficacy data that we have from the post-stroke trial. So, that’s all we can say right now.

[Andrew Tsai:]

Okay, thank you.

[Operator:]

Thank you. I am showing no further questions at this time. I would like to turn the call back over to Ron Cohen for closing remarks.

[Ron Cohen:]

Okay. Thank you very much operator and thank you all for joining us. We will see you next time. Have a good week.

[Operator:]

Ladies and gentlemen, this concludes today’s conference. Thank you for your participation and have a wonderful day.