Medivation, Inc. Q4 2008 Earnings Call Transcript
March 16, 2009 | about: MDVN
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Medivation, Inc. (MDVN)
Q4 2008 Earnings Call Transcript
March 16, 2009 4:30 pm ET
Executives
Nicole Forterrero [ph] – IR
David Hung – President & CEO
Patrick Machado – SVP & CFO
Lynn Seely – Chief Medical Officer
Rohan Palekar – Chief Commercial Officer
Analysts
Kim Lee [ph] – Wedbush Morgan
Michael Yee – RBC Capital Markets
Corey Davis – Natixis
Bill Tanner – Leerink Swann
Raghuram Selvaraju – Hapoalim Securities
Elemer Piros – Rodman & Renshaw
Raymond Myers – Emerging Growth Equities
Presentation
Operator
Good day, everyone and welcome to the Medivation fourth quarter and year end 2008 financial results conference call. This call is being recorded. At the end of the company’s prepared remarks we will open the call for questions and we will provide specific instructions at that point.
I now would like to turn the call over to Nicole Forterrero [ph]. Please go ahead, ma’am.
Nicole Forterrero
Thank you, and welcome to Medivation’s fourth quarter 2008 financial results conference call. On the call today from Medivation are Dr. David Hung, President and CEO, Patrick Machado, Chief Financial Officer, Dr. Lynn Seely, Chief Medical Officer, and Rohan Palekar, Chief Commercial Officer.
We issued a press release earlier today, a copy of which can be found at www.medivation.com in the news section.
Before we begin I’d like to remind you that various remarks that we make on this call contain forward-looking statements including statements regarding the timing of, initiation of clinical studies, filing of an NDA for Dimebon, seeking approvals or commence a Phase 3 trial of MDV3100, the presentation of data with respect to Dimebon and MDV3100 and the receipt of milestone payments as well the expanded future expected financial results which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.
Any statements contained in this call that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause Medivation’s actual results to differ significantly from those projected including without limitation to risks related to progress, timing and results and Medivation’s clinical trial, difficulties or delays in obtaining regulatory approval, enrolment of patients in Medivation’s clinical trials, partnering of Medivation’s product candidates, manufacturing of Medivation product candidates, competition with Medivation’s product candidates should they receive marketing approval, the adequacy of Medivation’s financial resources, unanticipated expenditures or liabilities, intellectual property matters and other risks detailed in Medivation’s filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2008, filed today with the SEC.
You are cautioned not to place undue reliance on the forward-looking statements but speak only as of the date of this call. Medivation disclaims any obligation or undertaking to update or revise any forward-looking statements contained in this conference call.
With that I will turn the call over to Dr. David Hung, President and CEO of Medivation.
David Hung
Thank you all for joining us today. I apologize if there is a bit of an echo on my speaker phone, but I’m calling in from an international number and I will try to do my best to speak as clearly as possible and defer as many answers or questions as possible to my U.S. based colleagues.
We had a very successful 2008 and are looking forward to an equally exciting 2009. I will begin the call with a corporate overview of our accomplishments in the fourth quarter last year as well as new progress so far this year. Pat will then provide an overview of guidance for 2009. I will conclude with a summary of progress to date and important upcoming milestones for the company.
Let’s begin with Dimebon, our lead investigational drug candidate for the treatment of neurodegenerative diseases. We and our partner Pfizer continue to make excellent progress as we work closely together to initiate new trials in both Alzheimer’s and Huntington’s diseases which I may refer to as AD and HD respectively.
In Alzheimer’s we put together a comprehensive Phase 3 development program which will allow us to pursue a broad label for Dimebon that includes treatments of all patients with Alzheimer’s disease, those mild, moderate and severe disease.
This comprehensive program is comprised of five pivotal studies which include the already completed pivotal trial that was published in the Lancet in 2008 and the connection study which is slated to finish enrolment this year. Next month, we will initiate the Concert Study; a 12 month placebo controlled the Phase 3 safety and efficacy study of Dimebon in patients already treated with Donepezil, also known as Aricept. In addition, two moderate to severe studies will also start this year.
As we have previously guided if we use all five of these studies to register for drug approval our NDA or application for marketing approval should be filed in 2011. However, we and Pfizer have recently initiated an additional new Phase 3 safety study to provide us with the added potential flexibility to file earlier than previously guided using just the Lancet trial, the Connection trial and the safety study.
Let me go into more detail on the status of each of these trials. Enrolment in connection are confirmatory in Phase 3 trial in mild to moderate Alzheimer’s patients continues to be on track. We have 66 clinical trial sites open both in the U.S. and ex U.S. and we remain on target to complete enrolment in this study in 2009.
We are also on track to begin enrolment in April in CONCERT, a Phase 3 safety and efficacy study. CONCERT is an international multicenter randomized placebo controlled double blind 12 month study evaluating Dimebon in approximately 1,000 patients with mild to moderate AD. We are currently taking to Donepezil or Aricept.
The co-primary objectives of the study are to evaluate the efficacy of Dimebon compared with placebo on, number one, the Alzheimer’s disease of asset scale, (inaudible) as the primary measure of memory in cognition and two, the Alzheimer’s disease cooperative study, activities of daily living skill or the ADCS-ADL as a measure of function.
As I mentioned we also recently initiated a placebo controlled Phase 3 safety study of 750 Alzheimer’s disease patients on a variety of background anti-dementia drugs. The purpose of this study is to generate a sufficient safety database required by the regulatory authorities to give us and (inaudible) the option to accelerate the filing for approval of Dimebon to treat Alzheimer’s patients. The results of the connection trial confirm those of our Lancet trial. This new safety study could provide us with the ability for an earlier than previously guided filing of our initial marketing application should we and Pfizer elect to pursue that option.
To round out our Phase 3 program we also plan to initiate two additional Phase 3 studies that will evaluate Dimebon in a total of approximately 1,100 patients with moderate to severe Alzheimer’s disease. These trials are on schedule to start this year.
Prior to our collaboration with Pfizer our resources allowed us to pursue labeling claims for Dimebon used as a monotherapy to treat mild to moderate AD based on six month data. We will continue to aggressively pursue this option.
In addition the comprehensive set of trials we are pursuing with Pfizer allows us to further expand Dimebon commercial opportunities through achievement of broader and more differentiated labeling claims including claims supporting the full spectrum of mild, moderate and severe AD. The safety and efficacy of Dimebon when used in combination with Aricept the current gold standard AD medicine and Dimebon safety and efficacy when used for a full year of treatment.
In addition we and Pfizer are actively exploring the potential of our planned studies to support a claim of delay and disability in Europe which would further differentiate Dimebon from all the currently approved AD drugs.
I am also trying to report that we have made significant advances in our Huntington’s disease program. We completed our end of Phase 2 meeting at which the FDA informed us that we could begin our pivotal Phase 3 HD trial using the MMSE as the primary cognitive end point. Dimebon has previously demonstrated benefit on the MMSE in both AD and HD patients.
The co-primary end point will be the civic plus. This development plan gives us another opportunity to bring this drug to market. We also are currently in discussion with European regulators and our Phase 3 study of Dimebon in patients with clinical disease is expected to begin this year.
At last week of 9th International Conference on Alzheimer’s and Parkinson’s disease that’s held in Prague, also known as ADPD we presented data from our Phase 2 trial of Dimebon in patients with Huntington’s. This three month trial that validate naïve patients with mild to moderate disease. These data showed Dimebon to be well tolerated and to significantly improve cognition as measured by the MMSE.
Notably new data were presented at ADPD in a subgroup of patients with clear and cognitive impairment. Our Huntington’s trial included some patients who were not cognitively impaired. We exclude those patients, the treatment effect of Dimebon increased more than 1.5 times to an absent improvement quite similar to what we observed in our Lancet study in Alzheimer’s patients in which non-impaired patients were also excluded.
Based on this finding we will only enroll patients in our Huntington’s trial with clear and cognitive impairment. We believe that this will decrease the risk of our trial by increasing the effect signs of Dimebon in Huntington’s patients.
Aside from our clinical programs we also continue to build upon our body of data supporting Dimebon’s unique mechanism of action. Throughout 2008 and into this year we have presented new data at various medical conferences that provide additional evidence that Dimebon potentially stabilize and improves mitochondrial function in a way that prevents neuron death and dysfunction. (inaudible) appears to be the same from currently available Alzheimer’s disease medication.
At the recent ADPD conference call we presented new research from the Karolinska Institute which for the first time quantified the impact of Dimebon on mitochondrial function. Increased mitochondrial function occurred at extremely low concentration. Pycomolitiv low minimal [ph] concentration indicating very high placebo [ph] effects in mitochondrial.
Importantly we showed for the first time potent [ph] mitochondrial responses in not only stress cells but also normal neuron. We are pleased with the progress we have made in the Dimebon program and continue to work diligent with Pfizer to bring Dimebon to market as soon as possible for patients with Alzheimer’s and Huntington’s disease made access to a drug that has the potential to improve health and their care diverse lower these terrible debilitating illnesses.
I would now like to turn to MDV3100, a novel androgen receptor antagonist which recently completed enrolment in a Phase 1-2 clinical trial for the treatment of Castration-Resistant Prostate Cancer, of course, CRPC, also known as Hormone Refractory Prostate Cancer.
The open label of U.S. Phase 1-2 study enrolled a total of 140 men with prostate cancer who had failed scatter hormonal therapy and many of who failed both hormonal and chemotherapies. Dosage between 30 milligrams and 600 milligrams per day have been evaluated. Patients are continuing on the study as they are followed until they experience an intolerable adverse event or until their disease progresses.
At last month ASCO Genitourinary Cancer Symposium, we presented new positive efficacy and safety data from this trial. Data represented for all 114 patients who have had been followed for 12 weeks or longer in both the chemo naive and post chemotherapy groups. Data from both groups demonstrated that MDV3100 consistently resulted in encouraging anti-tumor activity across those levels on all end points at weak 12 including PSA response rate, radiographic finding, circling tumor cell cancer, CTC and time on treatment.
A substantial percentage of patients in both chemo naive and post chemotherapy groups had greater than or equal to 50% PSA reduction as well as radiographic control. Almost all patients with favorable CTC count of less than five of base line remained favorable at weak 12. This amounted to 89% of chemotherapy naive patients and 100% of post chemotherapy patients.
Importantly, a significant number of patients with unfavorable CTC count of five are higher were converted to favorable at weak 12. This amounted to 73% of chemotherapy naive patients and 40% of post chemotherapy patients. This CTC conversion rate is encouraged in light of a study published in the October 2008 issue of Clinical Cancer Research in which post treatment conversion of unfavorable to favorable CTC count was associated with a 15 month survival benefit in CRPC patients. Thus far the meeting time on treatment in the MDV3100 trial for chemotherapy naive patients and post chemotherapy patients is 276 days and 145 days respectively.
New safety data were also presented which included all 140 patients enrolled in the trial. These data showed MDV3100 to be generally well tolerated at dose up to and including 240 milligrams per day with fatigue the most frequently reported adverse event. Two patients at doses greater than 240 a day were reported to have a witness seizure and one patient had an event which may have been a seizure although the event was not witnessed.
We continue to be encouraged by the MDV3100 data and believe that these results present an excellent benefit risk profile. We remain on track to seek FDA approval to begin a pivotal Phase 3 registration study in CRPC patients in 2009.
In summary we are pleased with our recent progress and remain focus on rapidly developing our novel product candidates as we believe that they have the potential to effectively treat serious diseases.
I will now turn the call over to Pat who will review the financial results for the quarter and year end.
Patrick Machado
Thanks, David, and good afternoon, everyone. Today, we released our financial results for the fourth quarter and year ended December 31, 2008. I will review some of the highlights and refer you to the press release issued earlier today for the full details.
Revenue for the fourth quarter and full year of 2008 was 12.6 million, consisting of partial recognition of the nonrefundable upfront payment of 225 million, fee from Pfizer in October 2008. The upfront payment was recorded as deferred revenue upon receipt and is being recognized on a straight line basis over the estimated performance period of our obligation under the collaboration agreement with Pfizer, which we presently expect to complete in the first quarter of 2012.
For the 12 months ended December 31, 2008, total operating expenses were 76.8 million, compared to total operating expenses of 33.8 million for the same period in 2007. These figures include non-cash stock-based compensation expense of 8.5 million in the year ended December 31, 2008 compared with 5.9 million for the same period in 2007.
Beginning October 21st 2008 Pfizer became responsible for 60% of all Dimebon related development and commercialization costs in the U.S. and 100% of such costs outside the U.S. The parties will make quarterly true up payments as necessary to ensure that each bears its applicable share of costs.
For the fourth quarter of 2008, the true up payment payable to Medivation was $3.5 million. Medivation presents these costs sharing true up patients in the applicable expense line of its statement of operations.
Medivation reported the net loss for the quarter ended December 31, 2008 of 7.9 million or $0.26 per share, compared with a net loss of 9.6 million or $0.34 per share for the same period in 2007.
For the 12 months ended December 31st 2008, the net loss was 62.5 million or $2.12 per share compared with a net loss of 31.7 million or $1.14 per share for the same period in 2007. Cash, cash equivalents and short term investments at December 31, 2008 totaled 221.4 million compared with 43.3 million at December 31, 2007.
Turning now to guidance for 2009, we expect 2009 revenue from our collaboration with Pfizer to be approximately $65 million, representing partial recognition of our $225 million upfront payment received.
We do not expect to recognize any Dimebon related milestone payments in 2009. We expect the total operating expenses for 2009 net of cost sharing payments from Pfizer will be between $130 million and $140 million, which includes non-cash stock-based compensation expense of approximately $10 million.
With that I will turn the call back over to David.
David Hung
Thanks, Pat. As you’ve heard we’ve accomplished a lot over the past several months. In fact in a little more than four years Medivation has positioned itself to be in Phase 3 testing in all three of its development programs with a total of investments of only about $120 million.
Given these very turbulent financial times we hope that our track record has and will continue to inspire investor confidence in our company. As we have done these last four years we continue to be focused on growing the company, hitting our milestones and retaining our financial strength.
We are pleased with the significant value that we’ve been able to create for our shareholders and markets that are currently at 12 year level. We hope to sustain this growth with the expansion of existing programs and the development of new programs and partnerships well into the future.
With Dimebon we’ve demonstrated perhaps the stronger Alzheimer’s data yet seen with any compound which is evaluated by the publication, The Lancet, we have conducted the first well-controlled data shell and improvement and combination in Huntington’s patients, we secured acceptance from the FDA to allow our first Dimebon trial to serve as one of two registrational trials in Alzheimer, we have just completed the successful end of Phase 2 meeting with FDA and proceedings in a pivotal Phase 3 Huntington’s trial utilizing the primary combination end point against which we demonstrated significant activity in our Phase 3 trial.
We have executed a world class partnership with Dimebon in both Alzheimer’s and Huntington’s diseases. Finally we’ve showed creativity with MDV3100 which is now also headed for Phase 3 and represents another potential partnership opportunity.
We are one of the few well-capitalized companies in the bulk of industry and we have not wavered from our vision to bring help to seriously ill patients and their families and to return most value to our shareholders. We have steady news both ahead and we expect to achieve all of the filing milestones in 2009.
First, complete enrollment in the Phase 3 connection study in Alzheimer’s patients. Second, begin enrollment in the Phase 3 Concert trial evaluating Dimebon in combination with Aricept. Third, begin two Phase 3 studies of Dimebon in moderate to severe Alzheimer’s patients in order to broaden and further differentiate Dimebon’s potential neighborhood and maximize the commercial potential.
Four, initiate our Phase 3 study in Huntington’s disease. Five, seek FDA approval to enter into a Phase 3 registration study of MDV3100 in CRPC patients. And six, support new data on our programs at the upcoming medical conferences. With that we would be happy to answer your questions. Operator, please poll for questions.
Question-and-Answer Session
Operator
(Operator instructions). We will go first to Kim Lee [ph] with Wedbush Morgan.
Kim Lee – Wedbush Morgan
Good afternoon. Thanks for taking my questions. I have a couple of questions here. The first is what are the trial designs for the two additional Phase 3 Dimebon trials in moderate to severe patients?
David Hung
Lynn?
Lynn Seely
Sure. Thanks, Kim. We are planning two trials. One of them will have 500 patients; the other will have 600 patients. One will be looking at patients on already taking memantine and the other will be looking at patients taking Donepezil.
Kim Lee – Wedbush Morgan
Okay, great. And this is – so this is already background therapy it’s Dimebon plus or versus placebo they all have background therapy.
Lynn Seely
That’s correct.
Kim Lee – Wedbush Morgan
Okay. And now will these two trials also be part of your registration trial if you decide to register early for or apply for early marketing approval in 2011?
Lynn Seely
So we along with Pfizer are putting ourselves in position to be able to file in an earlier to file strategy if we choose to do so with a connection study and the already completed Lancet study along with the safety study that we just described. These moderate to severe studies will be part of the full file package that we discussed to be filed in 2011.
Kim Lee – Wedbush Morgan
Okay, great. And on financial modeling question here. Will the $65 million in revenue from Pfizer, from the Pfizer collaboration be recognized directly as licensing revenue on the top line?
Patrick Machado
It will be recognized as collaboration revenue, Kim, on the top line?
Kim Lee – Wedbush Morgan
Okay. Thanks a lot.
Operator
We will go next to Michael Yee with RBC Capital Markets.
Michael Yee – RBC Capital Markets
Hi, great, thanks. Dave, a couple of questions David. In regards to the 750 patient study that safety study you’re talking about, is this a six month, is a one year study? What are the primary and secondary end points and are they stratified by the background drug in regards to thepharided [ph] background anti-dementia drugs?
Lynn Seely
This has a two cohort design; the first cohort of patients will be followed for six months. The second cohort of patients will be followed for three months again in order to allow us to complete the study in an expeditious fashion. These patients will be allowed a variety of background treatments and it is purely a safety and tolerability study in terms of end point.
Michael Yee – RBC Capital Markets
Okay, so if you were to – how are you thinking about enrollment timing and data timing? I assume this would be available then for read outs in 2010 and you would therefore be able to file in 2010 if needed?
Lynn Seely
I think that again we haven’t said precisely when this will be done but the purpose of this trial is to allow for filing as early as possible.
Michael Yee – RBC Capital Markets
Okay. And then in regards to the expenses I assume that this is a reflection of your 40% share of your obligations. But does that include starting enrollment for MDV3100 as well? Is that some of the assumptions in this expense structure?
Patrick Machado
Yes, Mike, that’s correct.
Michael Yee – RBC Capital Markets
Okay, and then also in regards to the reimbursement back from Pfizer, the true up, is that just netted against your R&D and SG&A so you never actually reported broken out, it’s just netted?
Patrick Machado
It will be broken out as a disclosure in the footnote but for on the face of the financials it will be presented net in the applicable expense line.
Michael Yee – RBC Capital Markets
Okay. Thank you.
Operator
(Operator instructions). We will go next to Corey Davis with Natixis.
Corey Davis – Natixis
Thanks very much. The trigger points for what will dictate whether you file the NDA early or not is there certain pre-agreed upon threshold or circumstances between you and Pfizer that says if the data from connection is X then we go ahead and file or is it still up in the air and you’ll make the decision after you get the results?
Lynn Seely
Certainly we have had discussions and are in agreement with our partners but this will be a decision that we made at the time when we see the data.
Corey Davis – Natixis
Okay. And I might have missed this in all the different studies being presented but what are the minimum number of patients you will meet on Dimebon for six months and a year and which study specifically gets you the one year numbers?
Lynn Seely
The ICH. standard requirements are to have 100 patients treated for one year with Dimebon. We already have met that requirement. There is a requirement for 1500 patients treated with the drug at the time of filing and that’s what we believe we will be able to meet with a large number of Phase 1 studies we’ve done with lancet study, the connection study and the safety study.
Corey Davis – Natixis
Great. Thank you.
Operator
And we will go next to Bill Tanner with Leerink Swann.
Bill Tanner – Leerink Swann
Thanks. David, just on the potential for there to be an accelerated filing just kind of curious how you guys think about relative to the data that would be available on a filing on the lancet study and the connection study and the safety study? I mean, you would basically have essentially six months worth of data or six months exposure, is that correct? Just thinking about how you guys sort of think about the ability to get, the ability to get some pricing that going to be at a premium to the existing therapies, just curious your thoughts on that?
David Hung
Lynn, do you want to answer that?
Lynn Seely
Sure. I think that the data we have presented already to-date from the lancet trial show quite robust findings across end points and which is clearly different from what the currently marketed drugs have. And that if these findings are confirmed and the connection study we feel that that would be a differentiated product. In addition, of course, in the lancet publication there are the 12 month data. So I think that if the data are robust then we would consider that something that we would consider. And then after that we are having a quite robust program to ensure that we maximize what we believe to be tremendous potential of this drug.
Bill Tanner – Leerink Swann
Just some follow-up on that then. So the conversations that Medivation had or Pfizer has had potentially with payers or at least the impression is that data from the lancet study would sway people’s perception that this is actually a disease modifying that the 18 month data from that set of patients from the lancet study would be adequate, is that thinking?
Lynn Seely
I’m not sure I quite understood your question. Could you restate that?
Bill Tanner – Leerink Swann
Well, I mean, you are going to have six months worth of data from the connection study and then you got potentially 18 month data from the lancet study so the presumption I guess is that that lancet study would sway payers to thinking that the drug actually has potentially a disease modifying effect or certainly a long lasting effect and you got data from albeit a fairly small trial.
Lynn Seely
I think at this point in time the trials that we have designed, the six month trials that we have designed and which we will be taking for approval are designed to gain a symptomatic claim. We are with this announcement describe in a 12 month trial that will help us establish again the longer term effect.
David Hung
Bill, we do believe that data we have completed in the lancet hopefully that we were producing connection already show a number of attributes that are fairly unique, number one. As you know from the lancet study we improved all five out of five end points so we had quiet broad effects that included the AL ADS Com [ph] civic plus, the ADC and ADL, MMSE and the MPI. If you also look at the sign and durability of those effects we think that they’re also find to attract. So we think that our lancet study and the phase, the connection trial which we help to replicate the result show a profile of that drug that’s quite favorable again with an excellent safety profile as well.
Bill Tanner – Leerink Swann
Right. So then the contemplation would not be to get the symptomatic claim and price it at ex and then supplement, file an SNDA with other 12 months data and then hope that you could actually raise the price.
David Hung
I think it’s a better way to discuss things like that. I think we are going to wait for our connection results and will make a decision based on what we see with connection at that point.
Bill Tanner – Leerink Swann
Okay. Thanks.
Operator
We’ll go next to Raghuram Selvaraju with Hapoalim Securities.
Raghuram Selvaraju – Hapoalim Securities
Yes, can you hear me?
David Hung
Yes.
Raghuram Selvaraju – Hapoalim Securities
Okay. A couple of things on the clinical development first. With respect to the moderate to severe Alzheimer’s trial, could you just clarify with the patients who are going to be on memantine or on Dimebon they are not going to be on both together they are going to be on one or the other?
Lynn Seely
That’s correct.
Raghuram Selvaraju – Hapoalim Securities
Okay, and have you clarified the term of these studies and what the primary and secondary end points are going to be?
Lynn Seely
So at this point we just discussed they will be a six month study.
Raghuram Selvaraju – Hapoalim Securities
With respect to what we have seen previously with I guess the only therapies that are approved to treat moderate to severe Alzheimer’s disease do you believe that a six months statistical significant impact would be sufficient for Dimebon to be considered an effective therapy in this patient population.
Lynn Seely
We do. We have designed what we believe is a program that will gain approval for the moderate to severe indication in the U.S. and Europe.
David Hung
Ron, you probably know Dimebon was approved also based on six months, seven months data, right.
Raghuram Selvaraju – Hapoalim Securities
Okay.
Rohan Palekar
Ron, its Rohan. I think we got to look at the totality of the program because the concept trial will also be looking at moderate patients going out 12 months.
Raghuram Selvaraju – Hapoalim Securities
Have you clarified an MMSE scoring range for the moderate to severe study?
Lynn Seely
We are still in discussions about that.
Raghuram Selvaraju – Hapoalim Securities
Okay. And then with respect to the Huntington’s program you mentioned that discussions with the European regulators were ongoing and you had some comments about that. So I was wondering if there has been any indication yet from those discussions as to whether it would be necessary to launch a European trial or if they would be willing to accept a single Phase 3 trial in order to get Dimebon approved for Huntington’s disease in Europe as well?
Lynn Seely
This trial will be performed both in North America as well as in Europe.
Raghuram Selvaraju – Hapoalim Securities
Okay. So I guess we will see what they have to say once the results are out, right?
Lynn Seely
Yes.
Raghuram Selvaraju – Hapoalim Securities
Okay. And then just a couple of quick financial questions if I may. What were the weighted average shares outstanding at the end of the fourth quarter?
Patrick Machado
The outstanding shares, Ron, were just over 30 million. The weighted average outstanding for the year was about 29.5.
Raghuram Selvaraju – Hapoalim Securities
Okay, and then with respect to the projected operating expenses, you guided between 130 million and 140 million for 2009. Is that correct?
Patrick Machado
Correct.
Raghuram Selvaraju – Hapoalim Securities
And does that – that does not include the collaboration revenue; it just includes the reimbursement from Pfizer for ongoing expenses, right?
Patrick Machado
That is correct.
Raghuram Selvaraju – Hapoalim Securities
Okay. That’s it. Thank you very much.
Operator
And we will go next to Boris Peaker with Rodman & Renshaw.
Elemer Piros – Rodman & Renshaw
Hi, this is Elemer Piros; can you hear me, please?
David Hung
Yes.
Elemer Piros – Rodman & Renshaw
David, I don’t know if you discussed this in the past but what are your plans vis-à-vis MDV3100? Do you plan to partner it before initiating Phase 3 trials or do you think you could take it all the way to the end?
David Hung
Rohan, do you want to answer that?
Rohan Palekar
Sure, I think we had quite a successful experience thus far with partnering in our Dimebon program. That certainly something that we’re open to with respect to 3100. However, the figures that we guided for ‘09 are based on the conservative assumption that the project remains unpartnered. If we are able to strike a deal with someone on terms that we consider to be attractive we will be quite open to that.
Elemer Piros – Rodman & Renshaw
Okay. Okay. Thank you. And in the connection study, would you please remind us how many patients do you plan to have altogether? And just in rough terms how many we have actually enrolled?
Lynn Seely
So we are planning to enroll 525 patients total and we have stated that we will complete enrollment in 2009 and we are certainly on track to accomplish that.
Elemer Piros – Rodman & Renshaw
Okay. And at the end what percent of those total five hundred some odd would come from the U.S. Lynn, just approximate what is your goal, 10%, 20%?
Lynn Seely
So U.S. enrollment has gone quite well and there will be a substantial percentage from the U.S. At this point obviously I can’t say what percent. What we have been required from the FDA is that we have a significant percentage of sites in the U.S. and that certainly we have already achieved.
Elemer Piros – Rodman & Renshaw
Okay.
David Hung
Half of our sites already are in the U.S.
Elemer Piros – Rodman & Renshaw
Half? Okay. Thank you very much.
Operator
(Operator instructions). We’ll go next to Raymond Myers with Emerging Growth Equities.
Raymond Myers – Emerging Growth Equities
Yes, thank you, good afternoon. First wanted to ask you about your recruitment capabilities. It’s taken almost a year to enroll the first study and now that you are starting some additional studies. One might wonder whether there might be some overlap of the existing studies. How are you going to work with that recruitment?
Lynn Seely
As you might expect with our partner we have a global reach and this is a large world with a lot of Alzheimer’s disease patients so we don’t anticipate being able to enroll these studies without competing against ourselves, if you will. And I would say, Ray, certainly, there is no question that the hardest study to enroll is the one that we’re enrolling now because it’s not on any background of anti-dementia drugs, other trials will accept patients who are currently being treated and they are stable on their background treatment. So we anticipate that they will represent lower rather than higher hurdle.
Raymond Myers – Emerging Growth Equities
To that point that the follow on studies are actually easier to enroll, might there be a conflict if you are enrolling a difficult to enroll study simultaneously with a study that has a much lower bar for enrollment?
Lynn Seely
Needless to say we’ve taken that into consideration and have geographically distributed our sites such that we won’t compete against ourselves.
Raymond Myers – Emerging Growth Equities
Okay, that makes sense. One alternative hypothesis would be that you are very nearly complete with the enrollment of the first study.
Lynn Seely
We are certainly on track to complete enrollment of the study in 2009.
Raymond Myers – Emerging Growth Equities
Okay. Won’t put words in your mouth but that was my hypothesis. Let’s see. The 750 patient safety study, why are you starting enrollment of that prior to having any data from the first connection study? Or do you have some indication from the connection study that would suggest that it may be favorable and therefore it’s worthwhile investing early ahead of the full study data?
Lynn Seely
I think our focus is essentially on getting this drug to patients as quickly as possible and the ICH guidelines are that 1,500 patients are required to file and we want to make sure that we are in a position to file at the soonest possible time.
Raymond Myers – Emerging Growth Equities
And does that 750 patient study serve any purpose if you were to decide to continue with all the other three or four additional studies or would it be superfluous at that point?
Lynn Seely
Clearly, the true benefit of that study is to support an earlier than anticipated filing.
Raymond Myers – Emerging Growth Equities
At this stage before you have the complete data, certainly don’t even have complete enrollment of the first study, but before you have any complete data, do you have – is there any indication at all that you would have that, that study is favorable and therefore support spending the money on a study that would have no use if you didn’t decide to go forward sooner?
Lynn Seely
Ray, that trial as you know is blinded and we certainly don’t speculate on ongoing trials.
Raymond Myers – Emerging Growth Equities
Okay. Just trying. Well, good luck with everything, it sounds very promising.
Lynn Seely
Thank you.
Operator
We will now take a follow up from Boris Peaker with Rodman and Renshaw.
Elemer Piros – Rodman & Renshaw
This is Elemer Piros. Pat, would you please help us just to get a little better breakdown between R&D and SG&A, of the 130 to 140, roughly what proportion of that would be spent on R&D, please?
Patrick Machado
I guess, I would get on a very, very roughly probably two-thirds R&D, one-third SG&A.
Elemer Piros – Rodman & Renshaw
Thank you so much. That’s all what I need.
Operator
And at this time we have no further questions from the phone line. So I would like to turn the call back over to Dr. David Hung for any additional or closing remarks.
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