posted on: August 07, 2008 | about stocks: JAV    

Javelin Pharmaceuticals Inc (JAV)

Q2 2008 Earnings Call

August 7, 2008 4:05 pm ET

Executives

Rick Pierce - VP of IR

Martin Driscoll - CEO

Steve Tulipano - CFO

Analysts

Edmund Kim - JPMorgan

Gary Nachman - Leerink Swann

Elemer Piros - Rodman & Renshaw

Ram Selvaraju - Rodman & Renshaw

Juan Sanchez - Ladenburg Thalmann

Steven Raphael - Merrill Lynch

Presentation

Operator

Good day, everyone, and welcome to the Javelin Pharmaceuticals second quarter 2008 conference call. Today's call is being reordered. At this time, I would like to turn the conference over to Mr. Rick Pierce, Vice President of Investor Relations. Please go ahead, sir.

Rick Pierce

Thank you, Terri, and good afternoon, everyone. I have with us Mr. Martin Driscoll, CEO of Javelin Pharmaceuticals and Steve Tulipano, our Chief Finical Officer. Before Marty and Steve begin, I will review our Safe Harbor statements.

Certain statements made in the course of this presentation may be forward-looking and involve a number of risks and uncertainties. These forward-looking statements include statements about the following: our product development efforts; anticipated operating losses and capital; anticipated regulatory filing dates and clinical trail initiation dates; our estimates regarding our capital requirements on each of our fillings; our estimates for Q2 revenues and profitability; our selection and licensing of product candidates; our ability to attract partners with acceptable development, regulatory and commercialization expertise; the benefits to be derived from corporate collaborations, license agreements and other collaborative efforts, including those relating to the development and commercialization of our product candidates and sources of revenue and anticipated revenues, including contributions from corporate collaborations, license agreements and other collaborative efforts for the development and commercialization of our product candidates and the continued viability and duration of those agreements and efforts.

The matters discussed in our forward-looking statements are subject to known and unknown risks, uncertainties, and other factors which may cause our actual results, performance or achievements, or industry results to be materially different from the results, performance, or achievements expressed or implied by our forward-looking statements.

Now I would like to thank you all for joining us today. Steve Tulipano, our CFO will comment on Javelin's financial results, and then Marty Driscoll our CEO will make comments on the quarter before we open up the phones for questions from analysts and institutional investors.

Now I would like to introduce Steve Tulipano, CFO, who will provide Javelin's financial results for the second quarter 2008. Steve?

Steve Tulipano

Thanks, Rick. I would like to take a few brief moments to review Javelin's results for the second quarter. At the end of the quarter, we had approximately $44.6 million in cash and marketable securities. Javelin's working capital was $38.8 million and the company used $18.4 million to fund operations for the first six months of 2008.

Inventory of Dyloject increased to approximately $1.8 million. Total current liabilities were $8.3 million at the end of the period. As you know, the company does not have any long-term liabilities or debt.

For the second quarter, our net loss was $9.1 million, or $0.16 per share, on weighted average shares of 55.1 million. For the year-to-date period, our loss was $18.8 million, or $0.36 per share, on 51.9 million weighted average shares. Products revenues were approximately $180,000 for the quarter and $245,000 in the year-to-date period. There were no revenues in 2007.

We reported last quarter, which was the first quarter of the launch in the UK, that the sales forces was focused on the formulary process, and that much of the revenue being generated at that time was by the private hospital.

In the second quarter of the launch, we had seen a majority of the share of revenue coming from the NHS hospitals. That is a very good sign. That has occurred even though our sales and marketing team has remained focus on the complementary objective of generating specialist advocacy, obtaining formulary reviews and approvals for the NHS hospitals.

Cost of products sold was about $129,000 for the quarter and 179,000 for the year-to-date period. Obviously, our cost of goods sold is much higher than what we expected to be on a long-term basis and it will continue to be somewhat volatile over the short term, as we move product through our supply chain.

However, that cost will moderate over the long term as we expect to achieve economies of scale through our new manufacturer, Baxter Pharmaceutical. The cost of goods for Dyloject produced by Baxter could be more than 40% lower than the current manufactured product. The inclusion of Baxter manufacturing material will take some time, as we draw down on our existing inventory and also on our committed purchases related to our current manufacturer of Dyloject.

In terms of operating expenses, Javelin had total operating expenses of approximately $9.5 million for the quarter, compared to $7.7 million in the prior year. This included $4.5 million related to research and development, as compared to $4.6 million for the same period in 2007. R&D expenses decreased by $149,000 over the year ago period, as a result of the timing and mix of certain clinical trial activities.

SG&A expenses were at $4.8 million in the current quarter, as opposed to $3 million last year. The increase is largely due to sales, promotional, market research, and market educational costs primarily related to the UK launch effort.

For the six-month period Javelin's operating expenses were $19.7 million, compared to $13.8 million in the prior year period. R&D expenses year-to-date were $10.2 million, compared to $8 million for same period last year, an increase of $2.2 million. That increase was largely a result of costs related to the manufacturing scale-up and validation of Baxter as a supplier of Dyloject.

SG&A expenses were $9.2 million year-to-date 2008, an increase of $3.4 million from $5.8 million for the six months of 2007. Again, the increase year-over-year is largely due to our launch-related activities, particularly the sales force expense. Stock-based compensation expense included in operating expenses for the quarter was $881,000 and $1.7 million for the six-month period in the current year.

Let me now turn the discussion over to Marty Driscoll, Javelin's CEO

Martin Driscoll

Thank you, Steve. Good afternoon, everyone. Thank you for joining this afternoon on our call. As you know, it is been five months since I joined Javelin as a CEO. On my first quarterly call shortly after I was appointed as CEO, I voiced my attention for Javelin to become a more shareholder focus company, and stated that I was evaluating all aspects of our business to rapidly institute changes to create greater sustainable value for our shareholders.

During these busy five months, I have instituted significant changes in our key business areas, clinical, regulatory, manufacturing, business development and commercial, which I believe will have a positive impact on our business and foster near-term value creation for our shareholders.

Today, you will hear about some of these positive changes in strategy, tactics and accountability. Many of these changes may not yet be reflected in the share price at this time, I see a day in a not too distant future when the value of these changes should become apparent to our shareholders. As this is my style, let's get right to the facts.

The UK launch of Dyloject, while it is still the early days of the Dyloject launch, just six months into the launch of the product in the UK, we like the early fundamental trends that are developing, which bode well for potential future revenue growth, and it has increased the partnership interested in the product.

Specifically, during the second quarter, we achieved more than a tripling of key United Kingdom National Healthcare System, or NHS hospitals, and private hospital formulary approvals, compared to the first quarter, Dyloject's initial launch quarter.

Let me remind you, our intense focus continues to be on achieving formulary approvals in the most influential and highest volume UK institutions. We referred to these hospitals as our gold accounts. We have 190 gold accounts that we are focused on. These represent 80% of the potential for injectable NSAIDs used in the UK.

At the end of the first quarter, 10 weeks into our effort, we reported to you that we had 8 gold, and 1 silver institutional formulary approval. A silver account is a less priority account. These accounts added Dyloject to their hospital formularies. At the end of the second quarter, at the end of June of course, we succeeded in gaining approval on 28 gold accounts and 10 silver institutions.

Just since the end of that second quarter, the last five weeks, we have added another 10 approvals, 8 gold institutions and 2 silvers. So today, we have approval on the hospital, on the formulary in 56 hospitals in the UK. Today, we are waiting for decisions on another 11. Therefore, our company has already achieved formulary approval on 25% of the targeted accounts that we are focused upon.

Importantly, Dyloject has been accepted on over 19% of the formularies that we had presented the product to. This is a very high acceptance rate for any hospital product. I can assure that from my years of experience in this marketplace. I believe this underscores the clinical differentiation and value proposition that we are presenting to these institutions and the physicians.

Pull-through by our gold account institutions is peaking up. During the first quartet, as Steve said, we saw higher sales to private hospitals, where the anesthesiologists have an opportunity to use the product immediately and gain insights and trial with the product. Now, in the second quarter, as the formulary approvals begin to come on-stream, we have been able to see a greater contribution to sales from the NHS institutions, coupled with these private institutions.

As a result of this progress seen during the quarter, I continue to be comfortable with the long-term analysts' estimates for Dyloject's performance in the UK. However, I like to look at market as you begin to introduce products and in my years of launching products into markets, I have always searched for suitable proxies to comparatively measure a product's performance and estimate future market acceptance. I want to look at a product with the similar label to Dyloject in the UK. A suitable proxy in my mind is Pfizer's Dynastat, the brand name for a Cox-2 injectable product called parecoxib.

I am pleased to tell you that based on our examination of the IMS prescription unit and sales data for the similar periods of launch, Dyloject just after six months of its launch has sold twice the number of units that Dynastat sold in the first six month upon which it was approved and marketed in the UK.

I am very encouraged by these results and they have contributed in helping us to generate an even greater interest for Dyloject from a partnering perspective since this last call we had with you.

Industry players, who know well the European theatre, particularly the UK pharmaceutical market, are impressed with our early results and this has benefited our partnership discussion. As many of you aware, my predecessors have planned to file for registration of Dyloject in Germany, here in 2008 with approval expected by the end of the year.

As those of you who may follow the British regulatory authorities, the MHRA, they recently requested a class label update for all NSAIDs. The timing on this labeling update, in tandem with the recent completion of our European manufacturing agreement with Baxter, allowed me to make a positive change to our European regulatory and market energy strategy.

The positive change that I am making to our regulatory strategy for Europe should accelerate Dyloject's near-term value and has enhanced partnership interest in the outfit throughout Europe. Our European manufacturing agreement with Baxter Healthcare affords Javelin the potential for significantly improved gross margins. The cost of goods difference between the Baxter-produced material and our current manufactured product will be greater than 40%.

In addition to that, that provides us with far greater manufacturing capacity. The change, in terms of a regulatory strategy that I am making, is that instead of filing in one European market on a sequential basis and then another, we are going to file in multiple European markets at the same time early next year.

We will be accelerating the filing in multiple countries to an earlier point along with the major European markets. This harmonized filing strategy will commence by first adding Baxter to our MHRA dossier, followed by the simultaneous regulatory filings for multiple countries across the European theater.

We are now able to do that with the class labeling update, but, first, we must file for the manufacturing variation for the approval of Baxter's material, which will come later this year. This new strategy would potentially allow Javelin and marketing partner to achieve greater uptake of Dyloject faster than if we proceeded to file in one country followed by another country and so forth.

I believe this increase is the near-term potential and value of Dyloject in Europe ahead of consummating a partnership by having a more improved gross margin product on the market, sooner in multiple marketplaces. This is just one example of how we have a new environment here where we want to think like shareholders and look to accelerate the near-term value of Javelin and its product portfolio.

In summary, while there is still much to accomplish, I remain pleased with our early commercial results for Dyloject in UK and I am looking to expand our base of prescribers and repeat customers over the coming months, while positioning the product for earlier rapid pan-European growth later in 2009.

In the clinical area, as you know I have continued to make changes to our clinical and regulatory organization along with Dan Carr. This includes new personnel, both internal and external resources. These new team members have gotten off to a productive start, as we focus on delivering our clinical results on time. The Dylojet pivotal Phase III trial, our second pivotal trial in the orthopedic model, is 90% enrolled. We remain on track to submit a high-quality NDA for Dylojet next year.

In addition, we are on track with our observational, open label safety study, which we announced in our last call to increase the total number of patients in our US safety database ahead of Dylojet's NDA filing next year.

As for PMI-150, intranasal ketamine, I am pleased to remind you that we initiated our pivotal multi-dose efficacy study back in June, and the trial is already 20% enrolled and we are on track to file an NDA for this program also in 2009.

As for Rylomine, as you know late in 2007, we announced the results from our first pivotal Phase III program. However, we are engaged in discussions with potential partners, who are interested in licensing that asset and we will likely partner this asset in lieu with commencing the final pivotal study ourselves.

On the financing front to build on Steve's points, as many of you know during this quarter, we executed a registered direct offering and raised on a gross basis $27.5 million. We had been approached by existing and interested investors, on a reverse inquiry basis, who had believed in our Javelin portfolio and our new strategy and felt that we could consummate successfully these strategies.

As a result, this offering was oversubscribed and I am pleased that we were able to attract several new well-known domestic and international specialty healthcare investors, as well as several of our existing shareholders.

As a result, as Steve mentioned, we finished the second quarter with approximately $45 million in cash. We believe this cash will take us through a transformational partnership and additional significant clinical and regulatory milestones.

In terms of partnering, as I am sure many of you are interested in, the number of partnering discussions that we are engaged in for our products has increased markedly since our last call. This includes both European and US marketing rights for Dyloject and intranasal ketamine. Interest in Rylomine has also been competitive. In fact, the interest in our product portfolio for commercial licensing has never been greater in Javelin's brief history.

It is important to realize that we had to make several changes to our operation and strategies, to implement these, to increase our prospects for product partnerships that reflect the value we feel we should command for our shareholders. I have said on the other side of the table, and I know what pharma firms typically require for effective partnerships. So I set out with a team here over the past few months to strengthen our operation in these areas that are important to the pharma firms.

An example of this effort and the fruition is the recent completion of the Dyloject supply agreement for Europe with Baxter Healthcare. This was an important agreement to put in place for partnerships for the improved margins for the European product in the future and the increased supply capacity, as well as a redundant supply capacity.

Another example in this strategy to accelerate or enhance our partnership discussions is to accelerate an earlier filing for multiple European countries. Taken together, these actions have increased partnership interests.

Increasing commercial success in the UK and broadening Javelin marketing registration filings for Dyloject across Europe provides confidence to me in the European validation of our fruitful concept. All these facts have increased the number of potential partnering candidates and could bode well for Dyloject.

The broadening of the indications for PMI-150, its late stage development in the US, with a potential US NDA filing in 2009, and our intensified partnering outreached interest around these assets had brought more recent and significant partnering interest in PMI-150.

Further, I think you all know there appears to be a demonstrative demand in the marketplace for non-opioid analgesics, which, of course, include Dyloject, an intranasal ketamine. Our posture in limiting our round of fund raising that we did back in May reflects what I and my fellow directors believe to be achieved over the coming months and we feel confident in this decision as we move forward.

I hope you can see that I am changing the way Javelin does business, emphasizing the accountability and thinking like the shareholders that all of us at Javelin are.

To summarize this call, since becoming your CEO, working with my team here, we have added several new employees in key positions, including a new head of Business Development, a new head of clinical operations and program management. We have changed our commercialization strategy to include global commercialization partnerships for our portfolio. We brought in many external resources to help us prioritize and successfully complete our partnership activities.

We have optimized and added resources to our current organization, and I am going to make additional changes to our clinical and regulatory organization to expedite our trials and meet our timelines. We have accelerated our regulatory filing strategy for Dyloject across the European theater. We will move forward on a strategy to file in multiple countries versus a sequential strategy. We believe this increases the potential partnership value for the asset.

We have expedited the commencement of the first pivotal trial for intranasal ketamine. We added an observational safety study to bolster our safety database for Dyloject to over a 1000 patients and add greater potential to the acceptable filing of a high-quality NDA in 2009. We fostered an environment of prioritizing how we allocate our capital. We want to focus our capital on the priorities I have described for you. When and where we want to optimize our CapEx versus the priorities, we are focused on doing it in an efficient manner and I hope you see in our second quarter financial performance that that is the case early on.

We are raising our offering on a net basis more than $25 million. This has allowed us greater flexibility in our partnering discussions and strategies. I will also mention that insiders in this company, including myself, have invested twice in the company since in these five months.

I will mention what I am focused on as the deliverable bodes for you, our shareholders for the remainder of '08. I am focused on a priority basis on executing a transformational partnership. We will continue to deliver on our clinical trial timelines. We will have accountability around that aspect. We will continue to examine our current deployment of resources in capital to ensure that it is focused on these priorities, and that we are being as efficient as possible in our use of cash in all aspects of the business.

We will think like the shareholders we are. We will continue to be action-oriented. We are going to prioritize our activities. We are going to be accountable. We are going to focus our capital expenditures to create sustainable shareholder value.

I thank you for listening. We will now welcome your questions.

Question-and-Answer Session

Operator

(Operator Instructions). We will take our first question from Edmund Kim with JPMorgan.

Edmund Kim - JPMorgan

Hi, great. Thanks for taking the questions. You talked about 25% penetration among 190 gold accounts. At what percentage, do you start to then shift your attention more toward increasing the sales trajectory?

Martin Driscoll

Kevin, it is a great question. We have already begun that where we are starting to focus on the pull-through, but I would say would be intensely more so in the early part of the fourth quarter. That is our current plan. However, I have to emphasize Edmund as you know in a hospital product marketplace you have to get the hospital formulary approval first before we can generate the pull-through that is our intense focus. I will also mention, as I said before, an interesting aspect of the UK marketplace is, we could not even call to scheduled off the formulary presentation until we had our price.

So we could not begin that process until the first part of the year. So formulary approvals right now intensely focused, the pull-through really starts to ramp up in the latter part of the year.

Edmund Kim - JPMorgan

Then with the extended supply agreement with Baxter, you talked about a 40% improvement in the margins. When do we really expect to see that improvement on the margins, on the P&L?

Martin Driscoll

To be very specific, when I say 40%, it is more than 40%, that is specifically when you compare the cost of the Dyloject, the manufacturing material from Baxter versus the current material. The effect is a little bit lower on the total gross margin, but the current one, the principal drivers of course is the manufacturing product. We will begin to as soon as we gain approval for the Baxter material, which we hope to be, in a not too distant future and probably the early part of '09 we hope.

With that material, we will then work it in to the channel and work off the material that we have from the present supplier. However, the beauty is we now have a redundant supply at that time. We can meet greater supplier and the Baxter material, of course, improves the margin.

Edmund Kim - JPMorgan

Great, and just got two more questions. Thirdly, you talked about concurrent multiple filing in Europe, are we still talking about the big five countries, that is including UK or are we talking about additional European countries?

Martin Driscoll

Yes, Edmund. We will file in multiple countries. At this point, we are still determining the specific countries. It will be greater than 10 and it will include the major, what we call the other G5, which will be Germany, France, Spain and likely to be Italy. However, we will likely file in more than 10, what we call concern member states. The specific numbers, specific countries we are still working with some new groups that I brought to the company to advise us on the best process.

Edmund Kim - JPMorgan

Finally, with the increased interest in the partnership discussions then, are you more positive that you could see something materialize before the year end? Then with along the same line, particularly in Europe, since you are doing multiple European filings, is the likely partner than someone that has more experience or organization that is based in Europe?

Martin Driscoll

Well, first to your point about the timing. Certainly, it is my top priority and we would like to complete it in the near future because I think it is important. Naturally it is important to the company and I want it to be important to the potential partner. Partners from my experience like to get involved in your strategies. They like to get involved in your label updates. They like to get involved in the strategies in rolling out to multiple markets. So, we are compelled to get this done as quickly as possible.

Then in terms of, who the partner might be, we have multiple discussions going on and certainly we are going to do the transactions it is in the best interest of the brand's long-term and the best interest of shareholders.

Edmund Kim - JPMorgan

Hey, great. Thank you.

Martin Driscoll

Thank you, Edmund.

Operator

We will take our next question from Gary Nachman with Leerink Swann.

Gary Nachman - Leerink Swann

I have a couple. First Marty, could you give us some anecdotal feedback, the Dyloject, people that are using it in the UK, are they finding it that differentiated from Voltarol?

Martin Driscoll

Well, I think the important evidence to that is the formulary acceptance because our principal message is focused on the pharmacoeconomic value versus Voltarol, and of course that based on the clinical differentiation that it being a IV rapid bolus injection versus Voltarol. Given the greater than 90% acceptance rate, Gary, I think that is the best evidence I can give you of the market acceptance.

I would say that we also are seeing what we expected that there is a good degree of use in the day surgery environment, because it is a rapid bolus injection and allows flexibility to the anesthesiologists. As you know, there is a good growth in day surgeries both in all the western markets, both Europe and the US.

Gary Nachman - Leerink Swann

Okay, and you talked about comparing the product to Dynastat, how big was Dynastat in the UK at its peak?

Martin Driscoll

At its peak, as you know it is a Cox-2, it was introduced in 2002, got off to a great in '02 and '03 and then Cox-2 difficulties began I believe in '04.

Gary Nachman - Leerink Swann

For the first coupe of years, how big did you guess it?

Martin Driscoll

I can provide that to you, but I believe in the second year, its sales were greater, roughly about 10 million I believe, but I have to confirm that for you, Gary.

Gary Nachman - Leerink Swann

Okay.

Martin Driscoll

I was focused on unit sales. Gary, units are the best proxy used when you see uptake for a product.

Gary Nachman - Leerink Swann

Okay. Do you have any sense who the reference country would be for the pan filings in Europe?

Martin Driscoll

We are having that discussion, we will make that decision shortly and then I will mention that to you publicly. There is a good strategy associated with that and I just want to confirm that shortly.

Gary Nachman - Leerink Swann

Okay.

Martin Driscoll

I am not prepared to reveal that right now because we are very close to making that decision, but we have not made yet.

Gary Nachman - Leerink Swann

Okay, and then typically, what is the timeline like, when you have that bigger filing? It gets approved first in the reference country and then it approves subsequently country by country, correct?

Martin Driscoll

No, it is done by the mutual recognition process. You do it in a wave. It is generally approved in all the markets at a similar time point. That is one of the reasons that I want to do this, is to accelerate forward, all these multiple countries. So when you file the wave one under the mutual recognition process, you are filing for all the countries, and generally the approval can come at a similar time point for all those countries where you file.

Gary Nachman - Leerink Swann

Okay, and does it usually take one year, three years, what would be the average time frame?

Martin Driscoll

No, the mutual recognition process is typically shorter than that. I do not want to get into the prediction game here, because I do not want to get into predicting, the regulatory authorities do not work for me. I do not want to predict the specific timeline, but it is certainly less than a year.

Gary Nachman - Leerink Swann

Okay. That is helpful. Then, on Dyloject, when should we see the data from the second Phase III in the US? When will the additional safety study be completed? Is that a rate limiting step for filing; what can you actually submit the NDA and then submit the additional safety study after? Thanks.

Martin Driscoll

Well, first to your question, the second pivotal trial for Dyloject, we call it the 005 study. As I indicated in my prepared remarks, we are more than 90% accrued, we are on track, borrowing any other difficulties we could have the top line results at the end, into the first part of next year. It is not the getting factor for the filing of the NDA, it should not be, and that would be the completion of the observational safety study.

We have signed on the CRO for the study. We have already begun all of the introductory work for that. I am optimistic. We should be under the plan dosing our first patient in that trial in this fall. The timing is such that we believe we can file the NDA, later next year.

Gary Nachman - Leerink Swann

Okay, last time the cash burned, is the target still about $10 million per quarter? Do you think you could manage that down a little bit or there some expenses that you can fish out? Thanks.

Martin Driscoll

Well, we did actually. If you look at these financial performances that Steve articulated for you, our burn was less than $10 million per quarter in the first two quarters of the year. I believe the burn in total was $18.4 million in the two quarters combined, so on an average little over $9 million. In the second quarter, the burn was lower by more than $1 million versus the prior quarter.

I do not believe you ever cut your way to success in a development company. That said, as I said in my remarks, we are focused, I have been very focused with Steve and a team here on insuring that our use of capitals linked to our priorities and we are looking for efficiencies in the business without impacting the timelines we have set. I think the second quarter revealed that the early results of that effort paid off in full.

Gary Nachman - Leerink Swann

Okay. Thank you.

Martin Driscoll

Thank you, Gary.

Operator

Thank you. We will take our next question from Elemer Piros with Rodman.

Martin Driscoll

Hello, Elemer, how you are doing?

Elemer Piros - Rodman & Renshaw

Hi, how are you? Thank you for holding this call. Would you be prepared to give an estimation of how long the currently available cash would last year, a year and a half?

Martin Driscoll

I think that you look as we reported we have $45 million in cash in the second quarter. Well, as for the first two quarters of the year, I do get burn with a little over 18. So take it from there.

Elemer Piros - Rodman & Renshaw

Okay.

Martin Driscoll

However, I can assure you we pay close attention to it. We are going to manage our business appropriately.

Elemer Piros - Rodman & Renshaw

Thank you. You mentioned 56 gold becomes roughly 25% of your target.

Martin Driscoll

Actually Elemer, it is 45 gold accounts and the balance is what we call silver accounts.

Elemer Piros - Rodman & Renshaw

Silver. Okay.

Martin Driscoll

They are the last party, they came along with some of the, as our very effective UK group tells me is, some of the former approvals are for trust. You may have a gold institution and it has a couple of silver hospitals within that trust or within that hospital consortium.

Elemer Piros - Rodman & Renshaw

Okay. What could one account, an average good account could use per year? Roughly, what is the range, what is your goal to achieve once you get to the pull through to state?

Martin Driscoll

Frankly, Elemer, it is too early to tell. It is simply too early to tell. It is driven by factors such as. Does the institution do more day surgeries versus multi-stage? Does the institution do a lot of orthopedic surgeries versus other types of surgeries and so forth? So you can be sure we are paying close attention to that and when we have more market time, we will provide that to you.

Elemer Piros - Rodman & Renshaw

Okay. How many different partnerships or licensing deals are you working on at the moment? I mean Rylomine is on the table, Dyloject in Europe, we do not know whether you are talking to someone or someone's for the U.S. territory. We do not know much about 150. There could be multiple transactions here in the offing. Am I correct in assuming that? Could you please shed a little bit of light of what is you current priority?

Martin Driscoll

The answer what the number is multiple discussions. Our priority is the transformational partnership that I talked about many times since I have been in this job. We have multiple discussions going across multiple fronts. We have my team here working very hard. I have got external groups working us on this. The best way I can answer it Elemer with is the same we are trying to do a transformational partnership that really accentuates the value for the shareholders. I will mention in terms of a priority, we are focused principally on intranasal ketamine and Dyloject.

Elemer Piros - Rodman & Renshaw

Okay.

Martin Driscoll

Because they have the greater market value.

Elemer Piros - Rodman & Renshaw

Right. Now, do you think that the same party could be interested in more than one product here?

Martin Driscoll

Correct. Yes.

Elemer Piros - Rodman & Renshaw

The worldwide deals could also be conceivable?

Martin Driscoll

It is conceivable, yes.

Elemer Piros - Rodman & Renshaw

Okay. Keep up the good work, Marty. Thank you very much.

Martin Driscoll

Thank you.

Operator

Thank you. We will take our next question from Ram Selvaraju with Rodman & Renshaw.

Ram Selvaraju - Rodman & Renshaw

Hi, thanks very much for taking my question. Just two very brief question if I may.

Martin Driscoll

Yes.

Ram Selvaraju - Rodman & Renshaw

Firstly, with respect to the NDA filing for Dyloject, would that be submitted on a rolling basis and would that be under the fast track designation from the FDA?

Martin Driscoll

No, I do not indulge in a rolling filing at all. It will be in the NDA filling. In terms of whether it gets a standard review or priority review, at this point I do not envision us seeking or gaining for Dyloject a priority review to the NDA filing. Certainly, we have many months left in examining our data. However, let me mention that you do not seek that designation until you fill your NDA and then the agency has a number of days and I believe it is 75 days under the regulation before they have to give you their designation.

However, first an answer to you question. No, this will not be a rolling application. Secondly, I do not envision this being getting a priority or re-designation. We have never said that publicly. I do not believe that. I can not envision that being the case, but I can assure that this organization is working very hard under everyone's leadership to generate high-quality data for a high-quality NDA filling at the earliest point.

Ram Selvaraju - Rodman & Renshaw

You did not say that this could potentially be in the second half of 2009, the actual filling.

Martin Driscoll

That is correct.

Ram Selvaraju - Rodman & Renshaw

Okay. Just a question regarding your comments on the transformational partnership for Javelin. We unified what potentially could be the terms of such partnership with respect to Javelin's specific products. What is your overall opinion of a partnership like the one that was signed between King Pharmaceuticals and Pain Therapeutics? Would you consider that too have been a transformational event for Pain Therapeutics?

Martin Driscoll

Ram, I must tell you, I have looked at certain aspects of that transaction. I do not know all the elements because I only know what is quoted publicly. Every transaction has different meaning to the individual companies. Whether Pain Therapeutics uses it as a transformational program I would know because I do not know what their internal strategies and needs are. However, certainly as an outsider looking at, I thought it was an attractive transaction.

Ram Selvaraju - Rodman & Renshaw

Okay, thank you.

Martin Driscoll

Welcome.

Operator

(Operator Instructions). We will go to Juan Sanchez with Ladenburg Thalmann.

Juan Sanchez - Ladenburg Thalmann

Good afternoon, guys.

Martin Driscoll

Juan, how are you?

Juan Sanchez - Ladenburg Thalmann

Pretty good. I would love if you just take on the competitive environment in United States. Do you think the fact that Kevinon Pharmaceuticals products are formulation of acetaminophen that hit market before yours, which could affect your potential in market, Dyloject's potential in the US market?

Martin Driscoll

So, Juan, was that about Kevinson?

Juan Sanchez - Ladenburg Thalmann

Yes. Kevinson.

Martin Driscoll

First off, obviously based on somewhat publicly, it appears though they got some good news in the discussions with the FDA. I think generally that is good for products in the pain area in development. I think it generally bodes well from the regulatory environment standpoint. In terms of the competitive nature, we will have to see how the data pan out.

Once the data become more available, you can understand how you can position your product relative to other potential competitors. I know as I look at Dyloject, I am first focused on timing or positioning relative to the current and future competition. I think we are certainly focused as we have said with our product that we are focused on the moderate to severe pain marketplace.

I think most of the literature indicate that diclofenac, which of course is Dyloject has the highest intrinsic efficacy in the class and we think that is going to be very important in the modest to severe pain marketplace, where multi-modal therapy continues to grow and whether these traditions are one of your experience. So we believe that a product with highest the intrinsic efficacy and a good safety profile will be very meaningful in the moderate to severe marketplace, where we plan to compete versus the zidometacin which I think most would agree has a more milder effect.

Juan Sanchez - Ladenburg Thalmann

Thank you, Martin.

Martin Driscoll

Sure, Juan. Thanks.

Operator

Thank you. We will take our next question from Steven Raphael with Merrill Lynch.

Steven Raphael - Merrill Lynch

Hi, Marty.

Martin Driscoll

Hey, Steve, how are you?

Steven Raphael - Merrill Lynch

Okay. How are you?

Martin Driscoll

Fine.

Steven Raphael - Merrill Lynch

I was able to make it. I love what you are doing so far. I love the fact that you are thinking like a shareholder. Lots of shareholders on this call are unhappy with the general status things, the general status things being the capital markets; our stock has been trading sloppy as you know.

Martin Driscoll

Yes.

Steven Raphael - Merrill Lynch

We are all on the same page in terms of maximizing shareholders value. My question is that, and I have asked you this before, but you are further long in these discussions now than you were before in terms of the partnership, searching for transformational partnership. I you are successful in this partnership venture, does not that hurt your ability to sell the company some time in the future? In conjunction with that question, I would like to know if any of these potential transformational partners have expressed in just buying the whole company.

Martin Driscoll

Well, to the last question, Steve, it would not be good for me to negotiate in public.

Steven Raphael - Merrill Lynch

Right.

Martin Driscoll

And reveal the specific aspects of our discussions. However, to the first question, you have my assurance to the CEO of your company that I am going to maximize value for the shareholders. That means that the best value for the shareholders is the broader transaction. We are certainly going to look at the very seriously and I will do that with my Board and we will take it very seriously if that is the case, if some of the parts, if you will, is more valuable to shareholders versus individual partnerships.

Steven Raphael - Merrill Lynch

However, again my question is, if you do an individual partnership, does not that hurt your ability at some point in the future to possibly sell the company in terms of limiting yourself to a smaller group of buyers or getting yourself indeed with one transformational partner, the competition out there might not want to get involved with?

Martin Driscoll

Certainly, if that is the case and we feel, again I go back to my point, if we feel that is the case and if that inhibits shareholder best value, shareholder value, then certainly we will take them into account. However, let me mention, we can do individual partnership discussions, we will re-retain co-promotions we have retained value for the asset to potential companies that we are not partnered with.

Steven Raphael - Merrill Lynch

Right.

Martin Driscoll

So, believe me I have that in mind as we contemplate all of these and we have these discussions and it is one of the reasons why I am not going to do a deal, just for the sake of doing a deal. We are going to do one that is in the best interest of the shareholders both in the near term and the long term. That is why all these factors have to be taken into account.

So, I am not certain that an individual your product partnerships transaction can inhibit the broader if that is what the best for the shareholders, particularly if you have these mechanism, we still have the capability to promote, to call in on promotion so forth which I am very mindful of.

Steven Raphael - Merrill Lynch

Great answer. Great job. Thanks Marty.

Martin Driscoll

Thanks, Steve. Thank you for calling in.

Operator

Thank you and at this time, there are no additional questions. I would like to turn the conference back over to Marty Driscoll for any additional or closing remarks.

Martin Driscoll

Thank you everyone for listening this afternoon and your support. We will continue to focus on building the value. Again I thank you for your participation. Have a wonderful evening.

Operator

Thank you. This will conclude today's conference call. We do appreciate your participation. You may disconnect at this time.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Be the first to comment on this article! See below...

• Five Biopharma Companies Drop on Negative Drug News  »
• Amylin, Lilly: Another Case of a Panic Driven Sell-Off  »
• Drug Safety Updates For Elan, Biogen, Amylin, and Lilly  »
• Amylin Shares Gain Ground on Outlook for Byetta  »
• ViroPharma Incorporated Q2 2008 Earnings Call Transcript  »