Avanir Pharmaceuticals' CEO Discusses F2Q2012 Results - Earnings Call Transcript

Avanir Pharmaceuticals, Inc. (AVNR)

F2Q2012 Earnings Conference Call

May 08, 2012, 09:00 a.m. ET


Ian Clements - Senior Director, IR

Keith Katkin - President and CEO

Rohan Palekar - SVP and CCO

Christine Ocampo - VP, Finance

Joao Siffert - SVP, Research and Development

Randall Kaye - SVP, Medical Affairs and Chief Medical Officer


Roy - JMP Securities

Ritu Baral - Canaccord Adams

Greg Wade - Wedbush Pac Grow Life Sciences

Thomas Wei - Jefferies

George Zavoico - MLV and Company



Good day ladies and gentlemen and welcome to the Second Quarter 2012 Avanir Pharmaceuticals Earnings Conference Call. My name is Pam and I will be your operator for today. At this time all participants are in listen-only mode, later we will conduct a question-and-answer session. (Operator Instructions) As a reminder this conference is being recorded for replay purposes.

I’d now like to turn the conference over to Mr. Ian Clements, Senior Director of Investor Relations. Please proceed.

Ian Clements

Thanks Pam. Good morning everybody. I’d like to welcome you to our conference call to discuss our financial and operating results for the fiscal 2012 second quarter.

To discuss our results I’m joined by Keith Katkin, our President and Chief Executive Officer, who will provide a strategic overview of our business and fiscal 2012 second quarter performance; Christine Ocampo, our Vice President of Finance who will provide additional details on our financial performance during the quarter; Rohan Palekar, our Chief Commercial Officer; and Joao Siffert, Senior Vice President, Research and Development, who will provide an R&D update. For the Q&A portion of today’s call we will also be joined by Dr. Randall Kaye, our Chief Medical Officer.

During the course of this conference call we will be making certain forward-looking statements, these statements are subject to numerous risks and uncertainties and reflect our current expectations and judgments. Examples of this forward-looking statements includes statements relating to our expectations for NUEDEXTA sales and revenue growth, future expense levels, the timing and success of future development of AVP-923 for other indications and the potential approval of NUEDEXTA in new markets.

Actual results could vary materially from the results anticipated by these statements. Investors should read the risk factors set forth in Avanir’s Form 10-K for the year ended September 30, 2011 and periodic reports filed with Securities and Exchange Commission.

For the investor communications perspective we will be presenting an overview of the company at three meetings this month. Later today we will present the Deutsche Bank Healthcare Conference in Boston. Next we will present at the JMP Securities Conference in San Francisco and also the Bank of America/Merrill Lynch Healthcare Conference in Las Vegas, Nevada. A webcast of these presentations will be accessible through the Investor Relations section of our website.

With that said I’d now like to turn the call over to Keith Katkin. Keith?

Keith Katkin

Thank you, Ian and good morning everyone. The second fiscal quarter was another strong quarter for Avanir. We continue to see strong growth in NUEDEXTA sales and prescriptions, we secured additional low cost capital through a $30 million debt instrument and we made substantial progress on our clinical and regulatory initiatives.

I will start with NUEDEXTA sales and prescriptions. As you many of you saw in our press release this morning, starting in this quarter we have changed the accounting methodology for recognizing NUEDEXTA revenues. Going forward we record revenues based upon actual shipments to wholesalers. Previously we had used IMS prescription data to record our revenues. Our growth sales to wholesalers during the second quarter grew approximately 42% over the first quarter of fiscal 2012.

Turning to the prescription trends. Quarter-over-quarter total prescriptions increased by approximately 36% to 19,823. Over the same period new prescriptions grew by approximately 28% to 9,658. Since these are IMS prescription numbers they do not reflect the 7.9% price increase we took in December of last year.

In addition, we are seeing robust prescription growth early in our third fiscal quarter, which started April 1, 2012. Total prescriptions and new prescriptions for the first three weeks of April are up over 42% versus the same period in January. This strong star to the quarter further strengthens our belief in the long-term potential of NUEDEXTA for the treatment of pseudobulbar affect.

Turning to our strategic investments in the commercial business. One of the areas we are excited about is the opportunity in the institutional setting. Back in the fall of 2011 we initiated a sale pilot in this segment with 32 sales representatives. The results from this pilot were definitive, just six months into this pilot over 50% of NUEDEXTA prescriptions are now coming from the institutional segment with the positive results from this pilot we have further refined our sales force mix between retail and institutional accounts and as a result we are increasing our institutional sales team by approximately 30%. This expansion should be completed in early June.

Turning to other aspects of our business, we continue to make good progress on key financial and research and development objectives. On the financial front, we were very pleased this morning to announce our $30 million debt financing on advantageous terms. With this financing in place we expect that the need for any future significantly diluted financing should be eliminated and any future equity financings would be opportunistic in nature.

Turning to R&D, Joao will update you on the progress we continue to make exploring the broader potential of the first dual sigma-1 agonist and NMDA receptor antagonist in the areas of neuropathic pain and Alzheimer’s disease.

Read the rest of this transcript for free on seekingalpha.com