Élan AGM Webcast Transcript - May 26, 2005 Q & A
Q & A
Q: (Unknown speaker) I’m (??) shareholder, I would like to know what are the prospects of this new drug coming back on the market or is there a future for it in the (?)
A: (Kelly Martin) The Tysabri drug…the way to assess it in our view, the best advice I can give you or any shareholder is to look at the facts...the facts. The facts are that this drug from an efficacy point of view…its ability to stop the progression of MS is so very powerful and so much more efficacious than any other drug, that that’s one set of facts that sort of stands alone that you need to understand. And the second set of facts is that the MS population, which we know of is roughly half a million patients, we presume it’s another half a million patients around the world that are either undiagnosed or untreated. The MS population continues to deteriorate, which is why it is called a degenerative disease. Current therapy only slows the degeneration down. Tysabri, for a large amount of patients actually stops the progression. So in our discussions with the FDA that we have had, and in our discussions with the FDA that we will have, those are the two pieces of critical information that we discuss. This is what the drug does, and this is what the patients need. The fact that we had two or three very specific highly unusual events with patients was something that we took very seriously, Biogen, Élan, and the FDA. And it was something we needed to know more about before we rolled it out to many, many more patients. So, it’s a long answer to your question, which is one that I appreciate. It is our view that given those two facts, what the drug does, and what the patients need, that we are very confident that there is a pathway back from where it is to the patients after we finish our process of discussing it with the FDA.
Q: (Unknown speaker) (Totally inaudible question)
A: (Kelly Martin) It’s … let me repeat… the question is… “Did we discover what the problem was initially”
A: (cont’d) (Kelly Martin) It’s a very complicated set of situations. There were three specific patients. Each of the patients was very different medically. Number one. Number two, each patient had a very different history medically. There are some common attributes to each patient. For instance they were all immune suppressed patients. It may never be possible to determine scientifically with only three patients exactly what happened. And that is not our goal, and that is not what the FDA has requested from us. What the FDA has requested from us is: “Let’s analyze the patients that we had in drug…3000 patients, and let’s work together to figure out what we can tell the medical community and the patient community from a risk and benefit point of view”. So we may never have a pure scientific argument of exactly what happened. There are multiple theses of what has happened. But I think as some of our board members and senior members of management here who are world class scientists, I think what they would say is that we don’t have enough data to ultimately prove currently what exactly happened.
Q: (Unknown speaker) (Partially inaudible question)…three thousand people still on that drug?
A: (Kelly Martin) Uh, no. When we… In February after many hours of discussion with the FDA, which were very serious, difficult questions and comments that we had. Our view, our collective view was that what we needed to do was temporarily take the drug out of the marketplace both commercially, and the trials. So as of the end of February none of those patients are on drug.
Q (Same person) So, it’s not being tested at all at the moment on patients…
A: (Kelly Martin) It is not currently in any patients. The patients who were on it have been tested thoroughly through this review process. That’s correct.
Q: (Unknown speaker) (Inaudible question)
A: (Kelly Martin) The question is: “Are we manufacturing the drug?”
Biogen is in charge of manufacturing the drug. They have been for the last several months. They will for the next few months, and then again during the summer months as we have more discussions with the FDA we and they will adjust what we need to do from a manufacturing point of view.
Q: (Unknown speaker) (Inaudible question)
A: (Kelly Martin) …Why are we manufacturing?
It is our view, uh, and Biogen’s view that Tysabri will ultimately be back in the marketplace with patients. The uptake of Tysabri for MS was extraordinary. The reason it was extraordinary is what the MS patients suffer from. It is our view, that with the efficacy of Tysabri, with the proper risk analysis, which we owe the patient community and we owe the medical community, that the demand for Tysabri in MS will be very significant…despite this pause. So what we don’t want to have is a reintroduction of the drug without the drug being available from a production side.
Q: (Unknown speaker) Mr. Martin, can you tell me if there has been, apart from the two patients which caused the temporary suspension of the testing if from the analysis of those 3,000 patients if there has been any further cases of patients who have got this disease that caused the suspension? That is the first question.
The second question is, you said that six weeks ago you started the testing of the Alzheimer’s drug. When will we be getting more information on the efficacy and the results of this testing?
A: (Kelly Martin) Thank you. I will answer the first question. I’m going to let Dr. Lars Ekman, who runs research and development answer the Alzheimer’s question. I think as long as he’s here we might as well hear from him. To be clear the patient issues we had with Tysabri were three patients, not two. The first two patients were in the MS combination trial, Avonex and Tysabri. The third patient was a patient who unfortunately had passed away about two years ago, who was in the Crohn’s trial. And we went back, on advice, our thinking, FDA thinking, we went back and looked at anything through the trials. And this particular patient, was again, as I had mentioned, before, a…the third patient was an incredibly complicated medical situation. Um… we, having started the, having announced to the market that we had these two patients, and then the third patient… The reason we announced the third patient was because the patient was in the Crohn’s trial, which we thought was different, and materially of interest to the shareholders. Since that point in time we haven’t commented on the review process. The reason we haven’t commented is we want to finish the review process. And the way we’re doing the review process at Biogen and Élan is that there’s only a few people at each company who are actually doing the reviews. So I, I actually don’t know currently what the whole review process is. Um… when it’s finished, which we anticipate by the end of June into mid-July we have all the data, then the executive teams from both companies will sit down and go through all the data, and then be prepared to talk to the…talk to the FDA. What if I have mentioned before is that three patients that we had the difficulty with or who had difficulties were all immunosuppressed patients. One of the things biologically that occurs is if you stop taking this drug your immune system will most likely rebalance unless you are taking other immunosuppressants. So many people have speculated that if you haven’t seen anything and you stop taking the drug, the chances of seeing something farther down the road go less and less and less. What we don’t want to do is comment on one patient after another because that information is really not relevant until we can tell you the shareholders and the marketplace, this is the whole bolus of patients and this is what we see. And we should be able to do that by the middle of the summer. Let me introduce Dr. Ekman who can talk to you about the Phase II Alzheimer’s program.
A: (Dr. Lars Ekman) We have two Phase II programs in Alzheimer’s Disease. We will, by the end of ’06, have a good understanding of what the drug does, to cognition, memory function, quality of life, and we will also understand if indeed we can reduce the amount of so-called beta-amyloid in the brain, which is the hallmark of the disease. Exactly when we’ll make the announcement is not defined. That will be defined together with our partner, Wyeth, and the FDA at the time. Thanks.
Q: (Unknown speaker) Thank you, Chairman. At a previous conference call, your CFO, Shane, forecast, that without Tysabri, you would be reaching break even going into 2006. I’d like to ask, “Is that still the case?”, and I’d also like to ask within that forecast, “Is Prialt achieving the revenue that he anticipated?” Thank you.
A: (Shane Cooke) We announced at our First Quarter results at the end of April that our target for the year for the business excluding any revenues or costs from Tysabri, were that we would break even on an EBIDA basis, that would be before interest costs and amortization by the end of this year. And we are still on target for that and yes we are on target with our Prialt revenues to meet that target for 2005.
Q: (Unknown speaker) May I ask in relation to the review of the 3,000 patients… It’s my understanding that they’re in about a hundred different centers. That would make somewhere about ten, maybe more per center for review. In relation to the length of time that it’s taking for the review, seems to be quite a long time for the actual analysis. And also you happened to mention that there are few people from each company involved. I would have thought that perhaps there would have been more than that in that it’s a serious issue, and the speed of getting it back on the market.
A: (Kelly Martin) The 3,000 patients let me describe…roughly 50% of those patients are in the US, and approximately are outside the US. Uh…the reviews require reading of MRIs, so in the case of MS patients, that’s very easy, goes very quickly because all the MS patients already have MRIs. In the case of Crohn’s patients and Rheumatoid Arthritis patients, they don’t necessarily have MRIs, and probably don’t have MRIs. So with the Crohn’s and Rheumatoid Arthritis patients, some of the review process actually had to start way back in what would be the more basic pieces of it first. That’s one piece of the puzzle. The second piece of the puzzle is just, uh...the logistics. You correctly point out that it is multiple sites. So the reading of MRIs, which is done locally, then done centrally-actually have to be read by the local neurologists or hospital, and then they are sent to central readers and they are categorized and then read. Then you have physical exams to follow up. Then you have new MRIs. So, there are five or six things to do times 3,000 patients in multiple locations. The MS part of it, from a review, a neurological review has obviously gone much quicker because that’s what they do. They see neurologists and a have a lot of this on file. The neurologists can do these things. If you go to a GI doctor, if you happen to have Crohn’s, the GI doctor doesn’t know how to read an MRI, so the GI doctor… We’ve had to take the GI doctors and link them up with neurologists. Um...So I would say we are going as fast as we can. We are as motivated, certainly Biogen and Élan and the FDA are as motivated to sit down with all of the data as soon as possible. Um…and uh, that’s currently what we’re doing. What we’ve said is it would take us a few months to complete the data, the data gathering, and the data analysis, and we’re completely on track to completing that as quickly as possible.
Q: (Unknown speaker) Excuse me. Can you tell me if Biogen-Idec narrowed production or are they still on full scale production? And the second one, can you tell me the position is with the European Medical Authority with the application for Tysabri? Is it derailed? In my mind it would seem to be in limbo until this, uh, trials has restarted.
A: (Kelly Martin) Uh… Thank you for the question. The, the… Biogen-Idec is not producing at full scale right now. Um… uh… We spent… Shane Cooke and Lars Ekman and Paul Breen and Allison Hulme, who is accountable for Tysabri… we spent much of the fall, through the winter, into the early part of this year working with Biogen to make sure the production capability. uh… was big enough for what we thought the demand would be. Um…one of the solutions to that is a manufacturing process called the “high titer” process. So, what Biogen has done is they are continuing to produce Tysabri with the current process that was in place in a part of their plant in North Carolina. And with another part of their plant, they’ve actually put this different process in place. So we have actually used this pause and they have used this pause to change the engineering processes around the manufacturing of Tysabri, which, when Tysabri comes back to the market, is going to be exactly what we need from a productivity point of view.
[**It sounded like someone asked specifically at this point about Oceanside]
(Kelly Martin) Oceanside is not manufacturing yet. Oceanside was going through the regulatory time line to get a final approval from the FDA so it could produce, and it’s still… still on that time line. And I’m sorry, your second question was?
Q: (Unknown speaker-same one) The application for Tysabri in Europe where is it--in limbo until tests are analyzed?
A: (Kelly Martin) I’ll… is it OK… I’ll have Dr. Ekman… What… I’ll preface his comments with, just to remind the shareholders that in the US there was accelerated approval. Europe’s process didn’t have an accelerated approval, so they were on a two-year approval. So the time frames were actually slightly different. But I’ll let Dr. Ekman comment further.
A: (Dr. Lars Ekman) For MS in Europe the European Authority permitted us to file with one year data, which was exceptional. As Kelly mentioned, there is no process, not for Tysabri or for any other drug to get accelerated approval. To some extent, that is now working to our advantage, because now the European Authority can look at the PML cases and the totality of the safety data, which is very good, and the efficacy data, and do a balanced review. We do think that the PML situation will delay the process a number of months, but it’s otherwise on speed. With regards to Crohn’s Disease, we did file last fall. That process is on track, the Europeans will obviously be updated when we finish our last trial, but that is not mandatory for the process in Europe.
Q: (Unknown speaker) (Inaudible question addressed to Dr. Ekman at this point)
A: (Dr. Lars Ekman, cont’d) The question was, “What about the reduction of amyloid?”
I said that in the Phase II study, we are applying a unique new technology to measure beta-amyloid in the brain, in humans, using PET scanning. So you can actually [inaudible question asking what that meant] …Positron Emission Tomography… to measure and quantify the amount of beta-amyloid plaque. It’s unique, it’s the first time it’s ever been done. That will give us a feeling if it is indeed possible to extract the amyloid out of the brains.
Q: (Unknown speaker) From your comments a few minutes ago about building up the production capability in the United States, that it’s continuing, seems to suggest that you are very confident that there will be a very strong demand for Tysabri, and that it’ll probably be as strong as what you’d initially planned. My question is, “Do you still see the demand for Tysabri being as confident, or as large a volume as you had anticipated back in the fall and winter of last year before Christmas?
A: (Kelly Martin) The demand for Tysabri for MS is ultimately going to be driven by what the MS patients would like and what their doctors would like. We… the MS patient population is an extraordinarily well-educated and aggressive group of patients with regard to steering therapy. We estimate that 70-75% of the therapeutic choices in MS are made, really, by the patients. Um… uh… in round numbers we had gotten approval and launched Tysabri for MS at the end of November and by the middle of February we had about 5,000 patients on the drug. In addition to that there is something in the US called a “Start Form”, and a “Start Form” needs to be filled out by patients and doctors. It really gets the reimbursement alignment to occur. Um… and we had a significant multiple of the 5,000 patients who had filled out “Start Forms”. So, what that told us was that the drug… uh…there’s a high unmet medical need, and the drug was clearly a drug of choice by those patients. What we obviously can’t predict, is given this temporary pause, what is that going to do to patient behavior? We think part of it’s going to be how the FDA, Élan and Biogen come back to the market with the drug, and say this is, these are the perceived risks or the risks around the drug in combination, perhaps with other drugs, but here’s the benefit. And, and, Mr. or Miss Patient, you need to think this through with your doctor. Um… you know, my view is that there is still an enormous unmet for MS. Um… there are roughly a hundred thousand patients who are not on any therapy at all because current therapy is either ineffective, or the side effects are too severe. So those hundred thousand patients as a start have no current choices. Um… I think the slope of the curve may be a little different. People will be more cautious. I think it would be too early to predict where the apex of that curve might get to. But from everything that we have seen and heard and talked to the neurologists, and all the correspondence from patients that we continue to get, I would say that there is still an extremely high interest in the drug, and,… and the doctors in particular want to have the option to use the drug as part of their, as part of their practice.
Q: (Unknown speaker) (Inaudible question)
A: (Kelly Martin) I’m sorry…. Where’d we get the name?
We had the name “Antegren” obviously for the longest of times, um, and uh, in this complex world of safety and regulators, one of the things that the regulators, believe it or not, have to look out for, are names that are similar, as far as drugs. And “Antegren” was close to one or two other drugs, so they forced us sort of at the last of the process, to, uh, change the name from “Antegren”, and there was a process to find the other name which was…I must admit I am not completely familiar with how we got to “Tysabri”, but it’s some derivative of a French, some French derivative of a name. I am not exactly sure where it came from. It took us several weeks to figure out how to say it.
Q: (Unknown speaker) (Inaudible question)
A: ( Kelly Martin) What’s that? Laughs.
A: (Kyran McLachlan?) It’s hard for everybody, eh?
Q: (Unknown speaker) Uh, hello. Could I ask you have you an idea how many people were using the drug before the unfortunate deaths of the three patients?
A: (Kelly Martin) There were 5,000 patients that were MS patients on the drug, and there was another 3000 patients that who were in trials for either MS or Crohn’s or Rheumatoid Arthritis. So at the time of the temporary pause there were 8,000 patients on the drug.
Q: (Unknown speaker, same person) I just wonder did Elan and the FDA overreact to the unfortunate deaths of the three people? Surely, apart from the deaths, did any research, was any research carried out to find out if the people who were on the drugs had actually improved their condition by using the drugs, and if so, was it a little bit over the top to stop using the drug altogether, agreed that three deaths are, are devastating. But if the greater good was to be got by allowing very controlled use of the drugs, if the people using them were improving in health, surely that could have been carried out without actually stopping the use of the drugs altogether.
Just one more thing, it has nothing to do with what I’ve been saying…could I suggest that perhaps 10 o’clock in the morning is a little bit early for holding an AGM and you might look at the prospect of making it possibly 11 o’clock or so in the future. However, I would like an answer to my previous question.
A: (Kelly Martin) The question on uh…the thought process about temporarily pulling the drug off the market is something that we obviously spent an enormous amount of time on at the time. Um… we are in a… for what we knew at the time, which I think is an important statement, what we knew at the time, what we knew is we had two cases, of a, by all accounts was an exceptionally rare, rare, uh, disease. As a matter of fact, when we/I first spoke to the folks at Biogen about PML, the first thing I said was, “What is PML?” Uh…uh…so I think that’s one important piece of the equation. If these adverse events were…because we had anticipated that we would have adverse events, and Dr. Ekman would talk over and over again about opportunistic infections, and if you alter the immune system you are likely to get infections. So as an example, if this had been five urinary tract infections, it would have been of a different class of issue. But the fact that we had two cases of PML I think put ourselves and Biogen and the FDA in an extremely uh… difficult position, um… in that the odds of PML being contracted by people is very, very, very rare. So to have two cases in relative short period of time, clearly indicated that there was something happening, uh, presumably something happening, that we needed to know more about. And I would say uh…secondarily we knew because we could see the demand for the drug, we knew where the drug was going to be very shortly. So as we projected out, say three more months, if we had…if we had not pulled the drug off, and we had three more months worth of marketing we may have had another twenty-five or thirty thousand patients on the drug and we still weren’t quite sure what exactly happened with these two patients. And at the end of the day, this is an industry, this is a business, and the FDA is in the business of patients’ lives, and if you are in a situation where with what you knew at the time you’re not exactly sure why this happened, um, as painful as the decision was short term, it was a decision that we thought was the most prudent we could make before the drug accelerated out from a marketing point of view. Take a pause, understand it more, get more world class scientists involved to work through it and then come back to the marketplace with more complete information. It was a very, very, um uh, difficult decision. At the end of the day it was our view that it was the right decision because at the end of the day we are accountable for uh, bringing innovative therapies to patients but bringing them in a way that they and their doctors can understand the safety aspects of things. And because these were two PML cases, uh…we collectively thought the most prudent thing to do was to take a pause. At the same time the most prudent thing to do going back is that this drug we know will help many, many patients. So as quickly as we can reintroduce this drug with the FDA is what we will do.
(Kyran McLachlan) I’d like to try and conclude the meeting because we have to start a board meeting quite soon so maybe there’s one more question and then we’ll close the meeting….
Q: (Unknown speaker) Kelly, can I just ask has Elan got any tablet in Phase III for severe depression short term for the Elan investor?
A: (Kelly Martin) I’m sorry, could you repeat….
Q: (Unknown speaker, same person) I was wondering if Elan had any tablet in Phase III that was actually for the Elan investor targeting the Elan investor for severe depression? It’s just an Irish joke…
A: (Kyran McLachlan) Thank you… We’ll take one more question… over there, one more question.
Q: (Unknown speaker) How do you explain that several senior people in Biogen were able to dispose of large quantities of shares in Élan immediately prior to the withdrawal of the drug? Was there a suggestion that they might be in possession of sensitive information and therefore be accused of insider trading?
A: (Kyran McLachlan) Well, I think as has been publicly announced, there is an SEC inquiry into the share dealings by the senior executives of Biogen and I really wouldn’t like to comment on it beyond this.
(Kyran McLachlan) Sorry, I’ll take one more question then we have to finish up. Sorry.
Q: (Unknown speaker) Thank you, a few more questions, and as a prelude, you must be the most photographed board I’ve ever… because my own eyes are bothered by the flashes, I hope all the photographs have been taken that are necessary. Three quick questions, if and when Tysabri comes back to market, I gather from general reading that the drug is going to be more expensive for people to use and to purchase than previously expected. Do you expect that this will continue to be a problem for the sale of Tysabri? Secondly, given the difficulties Élan has faced, are you satisfied that the company has enough staff in research and development to advance Tysabri and the Alzheimer’s medications, or are you largely dependent on Biogen or Wyeth for this research? And finally, very roughly, both now and for example in a three or five year time frame, what percentage of the business, Élan’s business, is Tysabri, the drug technology that you’re talking about and that you’re optimistic about, and that other section of the business. And thank you.
A: (Kelly Martin) Thank you. Um, let me, your first question was Tysabri, around the price of Tysabri. The price of Tysabri upon reintroduction won’t change. When we originally priced Tysabri, we priced it given the efficacy of the drug, and Tysabri is a drug that ultimately may be used in multiple indications. So we priced it in a way that we thought was reasonable, and rational, and would be reimbursable to the largest amount of people, uh, globally. Um, and you won’t see us change that price upon reintroduction. And all of feedback that we got from the reimbursement community in the US was very favorable. So the ability for patients to have access to the drug and have it reimbursed through their payers was very much there and is something we’re very conscious of.
Your second question was about research staff. Dr. Ekman would be delighted to have your support on more resources in research and development. Um, we have uh, we have ample resources currently in research and development for Tysabri, we have ample resources for discovery research. What I mentioned in some of my remarks is that in addition to our own resources, Dr. Ekman and the R and D teams are looking at ways to leverage resources globally that we would have associations with. Research is a time-intensive practice, it’s a people intensive practice, and uh…particularly in the last few years, particularly in the last year or two, the intersection of applied mathematics and computing power with biologists is actually beginning to speed up research. So I think that you may see us invest more in research, but it’s not necessarily with heads internally at all points. And I hope that that answers the question.
And your last question, with regard to dependence on Biogen in R and D, just to repeat, Élan invented Tysabri as a spin off from its Alzheimer’s program. And the way we work with Biogen is we split up by indication who will take the lead. They took the lead on MS, and we take it for Crohn’s and Rheumatoid Arthritis. We share resources where we can, um, uh, but there isn’t an overdependence on them to us or us to them for any of the indications. It’s a fairly, fairly well-shared process.
And last but not least, the breakdown… maybe I’d ask our CFO to go through the breakdown of the company from a broad revenue point of view, but what I’ll also say is that Tysabri currently has no revenue, and it’s all cost and investment…um, which is not insignificant. And the reason we continue to do that is because we truly believe in both the drug and its future applications. But maybe…
A: (Shane Cooke) The business today excluding Tysabri will generate revenues this year somewhere north of 500 million dollars, and the drug technology business will account for probably about one half of that. And that business is going to grow this year by about 35 per cent and we expect it to continue to grow at a double digit rate. So, if you look three to five years out, and it will depend on Tysabri, and what the demand for Tysabri is in the various scenarios, and also it will depend on how quickly we can work through our development programs on Alzheimer’s.
(Kyran McLachlan) There will be opportunities. The senior management group will be available here afterwards and if somebody wants to come up and ask questions, they will be available to talk to you. So, I’d like to conclude the meeting now. Thank you all for attending, and thank you for your support. Thank you.