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The Medicines Company (NASDAQ:MDCO) Investor & Analyst Day Conference Call October 9, 2013 8:30 AM ET


Michael Mitchell – Head-Global Communications

Clive A. Meanwell – Chairman and Chief Executive Officer

Edgar H. Haug – Frommer-Lawrence & Haug, LLP

C. Michael Gibson – Harvard Medical School

Stephanie Plent – Senior Vice President

Peter Wijngaard – Vice President

John Maraganore – Alnylam

Brent Furse – Senior Vice President

Robert Robbins – President and Chief Executive Officer-Texas Medical Center

Alan Levy – Senior Vice President

Jan Ohrstrom – Senior Vice President

Adam Sharkawy – Senior Vice President

G. Ralph Corey – Professor-Medicine and Infectious Diseases-Duke University Medical Center

Kenneth T. LaPensee – Senior Director-Outcomes Research

Glenn P. Sblendorio – President and Chief Financial Officer

Cees Heiman – Head-Europe and Middle East

Sanuj Ravindran – Vice President-New Business Ventures


Umer Raffat – ISI Group

Jason D. Kantor – Credit Suisse

Adnan S. Butt – RBC Capital Markets LLC

Louise Chen – Guggenheim Securities LLC

Jonathan M. Eckard – Citigroup Global Markets Inc.

Steve Byrne – Bank of America Merrill Lynch

Traver A. Davis – Piper Jaffray, Inc.

Ed Arce – MLV & Co

Marshall Gordon – ClearBridge

Joseph Schwartz – Leerink Swann & Company

Akiva Felt – Oppenheimer & Co.

Michael Mitchell

Good morning, everyone. Good morning and welcome everyone to The Medicines Company’s Investor & Analyst Day. I’m Michael Mitchell, in Investor Relations & Communications with the Company. And we are pleased to have you all here this morning to meet your needs as investors and analysts. But before we start, I’d like to point out that we will be making forward-looking statements that involve a number of risks and uncertainties. Those statements are identified by use of words like believes, anticipates, plans, expects and similar expressions, we’ll ask you to – referred to our recent SEC filings, understand the risks associated with those statements.

So we do anticipate three and a half hour session today. You will note on Slide 4 in your program book or if you’re listening on the webcast today. That today’s program is set in five parts. Each have a question-and-answer session after them. And we have panels of expert set up to answer your questions.

We’ll start with an introduction and a discussion of the Angiomax Intellectual Property situation. We’ll have a special Q&A following that. Once we get that out of the way, we’ll review our acute cardiovascular care portfolio, have a Q&A. We’ll go to surgical and preoperative care, another Q&A, and then we’ll take a break. Our break is planned for about 10:45 AM and during the break if you have any logistics question at any point, we have several people from The Medicines Company here to help you.

And after the break we will pick up with our infectious disease care portfolio, have another Q&A, and we’ll finish with a financial and business development discussion and a wrap up Q&A at that point.

So notes on the questions-and-answer sessions that will be conducting today. First, of course today’s meeting is being webcast and if you have any questions for our panel, please ask the question into a microphone that will be handed to you, and certainly introduce yourself with name and affiliation. For those on the webcast, you will also have the opportunity to lob questions to us and those will be delivered to us and we’ll look to address them as well.

There are biographies, detail biographies of our expert panel, is in the program book and they are many speakers today. So please feel free to refer to those, and of course silence your phones.

Before I turn it over to Clive here on Slide 5, we just want to set the tone and point out that today is the launch, today is the beginning of a comprehensive Investor & Analyst communications platform that we planned for 2014. Of course, we have the rhythm of our earnings results in February, April, July and October and in between there spread out into the quarters, we plan in Parsippany, New Jersey and our global center to hold detailed sessions to cover our acute cardiovascular care portfolio, surgery and preoperative care portfolio and our infectious disease portfolio.

So we look forward to providing more details on those interaction opportunities and we really look forward to consistent flow of dialog with the street.

And with that, it is my great honor and pleasure to introduce Clive Meanwell, Chairman and CEO of The Medicines Company. Clive?

Clive A. Meanwell

Well, thank you, very much Michael and good morning to everybody in the room and to everybody on the webcast as well. We designed this event today with you in mind and there is quite a lot of input from colleagues and friends in this room. We are of course, even more thankful that you came today to listen and we do understand you’re very busy and that you have pretty pressurized jobs. So we hope that what we’ve designed for you is helpful and please do ask us as many questions as you possibly need to.

We aim to build trust and credibility in this platform session. There will be follow-up sessions through next year, but we also want to convey to you something else, which is our sense of excitement about the next few years. The future of The Medicines Company has never looked brighter as far as I’m concerned. Since I founded the Company I can tell you, I had watched every day of it and this is one of the most exciting days we’ve ever had. So welcome to that, and again thank you, for coming.

Introducing you to our strategy for growth for the coming years, our specific objective is to describe our situation, our plans, our assumptions so that you can analyze our outlook and perhaps convey your viewpoints to others. But as a forward to the main program today, we’d like to deal with this. The elephant in the room, which is namely the intellectual property issues, which will inform not whether but rather how long Angiomax will grow in the United States and who better to do that for us than our friend and colleague, Edgar Haug, Esquire our outside counsel who some of you have even seen in action in the courts recently.

Ed is the founding partner of Frommer, Lawrence & Haug, a nationally renowned IP trial lawyer and lecturer. Ed is of course very familiar with the Angiomax patent situation and he is here to explain the status to you respecting of course the due process of ongoing litigation, and Ed will also be happy to take your questions. So Ed, welcome. Why don’t you come up here and tell us the story. Thank you.

Edgar H. Haug

Good morning, everyone. Thank you for the kind introduction, Clive. I was never going to refer to as a white elephant, but I’ll accept that, better than some other animals that come my way. Anyway, I am Ed Haug. I have been working with The Medicines Company now for a good number of five, six years on their intellectual property, and of course which gives a lot of focus on Angiomax and we also are trial counsel for the Company and I’m going to speak about that in a few moment.

Essentially I am going to address the intellectual property that relates to Angiomax and also the current litigation that continue with this product.

So I think everyone is familiar with the "'404" patent that is the basic patent that covers Bivalirudin the composition of matter patent. That patent which was licensed in by The Medicines Company originally was expiring back in 2010 when the United States Patent Office wrongly refuse to extend the patent, so herculean efforts were undertaken really to extend that patent to its rightful term, which were ultimately successful, so that patent now goes out with pediatric exclusivity until June of 2015.

But while that effort is underway, story where we got involved, it really begins in 2008. And in 2008, remember the 404 patent was expiring in 2010, the question was what happens after that patent expires. And so one of the things that the Company and we did is, we looked at all of the research and development efforts done by The Medicines Company and its partners and what we discovered is that there were serious problems that were encountered in the manufacturing side of the product through its manufacturer and they resulted in failed batches of Bivalirudin. And a failed batch could be upwards to $10 million, $12 million, $15 million of loss.

So anyway, what we discovered is, there were problems experienced and The Medicines Company was able to analyze the situation with the help of outside consultants and their own scientists and they discovered a new and improved process for making Angiomax and also discovered a new Angiomax, a new product which basically were batches of Angiomax with an impurity level no greater than 0.6 Asp9. That new and improved process and the new improved product that we developed during that process not only were new and improved, they were patentable and indeed patents applications were filed to cover the process, to cover the new products and they ultimately matured in 2010 into two patents which we referred to as 727 and 343.

These patents, as soon as they were issued were listed in the Orange Book and then we got into the Hatch-Waxman scenario and so indeed, what then happened to us that ANDAs had already been filed by Teva, APP, and Hospira, all of them had to certify against these patents and hence the litigation began.

Now as you can see from this timeline, this is the patent timeline as we go to the next one. You will see here in blue, this is the timeline for the APP litigation and below that in yellow is the Teva litigation, both of those litigations which were in Delaware were settled ultimately and the settlement required involved a consent judgment by both companies, acknowledging the validity and infringement of those patents. In addition, they have a launch date that will not be before 2019 as you can see from the timeline.

Below that there is the Hospira case filed which went for trial last few months. Few words about the trial; the trial we believe was a success, in that certainly the patients if you want to analogize to a brain surgery perhaps, the patients more than survive the operation is doing very well right now. The trial went well. I think that The Medicines Company is in a better position today than they were before the trial and the reason is that we were able to shed light on the key issues in the case; validity infringement.

And on the validity side, one of the big issues for years had been whether or not hold Angiomax and validated somehow the new Angiomax patents and that defense ultimately was not even tried and it was dropped. And so, we feel very good about the case. The timeline in the case is it will be briefed now through the balance of this year and then a decision will be coming sometime in 2014, given the workload of the Judge, Judge Andrews, probably will not have a decision before mid-2014, maybe even Q3 in 2014. And then the next timeline, a few seconds I have left, shows another series of cases, there is a Mylan case pending in Illinois. There are three other cases against Dr. Reddy’s, Sun and ApaTech

all of them are pending in New Jersey, none of those cases even have a trial date at this point.

And so with that I’m running out of time, so I think maybe I’ll stop there and leave it for questions-and-answers, if anyone that they have.

Question-and-Answer Session

Umer Raffat – ISI Group

Thank you. Ed, this is Umer from ISI, quick questions for you. If the Judge ends up agreeing that the definition of “efficient mixing” is more than 1,000 RPMs. Will that – the definition of mixing is not limited to more than 1,000 RPMs, do you absolutely agree with that, how speed our process will infringe?

Edgar H. Haug

Certainly, we think they infringe under that scenario without a question. We also, of course, think infringe even if the Judge does not change the initial interpretation of the patents that says mixing speed should be above 1,000. The reason we believe infringe is because one Hospira had 50 reasons and their intendancy or even 220 leaders. And when you scale up about 220, the mixing speed necessarily will go up and that will bring you into the above 1000. So even with the current claim construction, which respectfully to Judge Andrews, we disagree with. We saw things there is a compelling case of infringement and that’s before you get to what we call the Doctrine of Equivalents, where even if we there is no literal infringement. We believe that will have speared us is the equivalent of what the claim now requires with the mixing speed of about the 1,000. And again to your question, if the court changes that claim construction, which it can, well then its broadening the claim and infringement is also clear.

Jason D. Kantor – Credit Suisse

Jason Kantor, Credit Suisse. You have claim construction rulings that are different in different cases. And I’m just wondering if you could update us on what the effort is to get those now more than mine. And I know you objected to the most recent claim constructions. What are the processes in place there? What are the steps you’re taking is that something that can be remedies?

Edgar H. Haug

Well, certainly it can be remedies. The situation currently is we have three claim constructions because we have cases pending in three different courts. The first claim construction was in New Jersey, they agree with basically adopted our proposed construction, that claim construction is sitting there and will be used if and when we go to trial in New Jersey. We have another claim construction coming out of the Chicago Court in the Mylan case. That one is a little bit of a mix bag, many of our physicians were accepted one was not, but if we can certainly live with that one too that case again is does not have a trial date yet. And then the last claim construction is in Delaware, the case that we just tried. That one we do not agree candidly with portions of that claim construction.

Now, we have three different claim constructions in three different trial courts and federal courts, a lawyer’s dream right okay. But seriously, the remedy, the remedy if required, meaning if we don’t win in trial-court which we are hopeful that we will of course is on appeal and claim construction is one of those things that is what we call de novo review by the appeals court in other words the appeals court really doesn’t give any difference to what the trial judge did.

They will on their own look at the patent and come up with their own interpretation. If the interpretation is different, such as for example in the Delaware case, what will happen is the appeals courts will send the case back for another trial. So the remedy is on appeal or before appeal asking the Judge to change his or her mind which is what we did in the Delaware and Judge Andrews did not change his mind but did make the comment that claim constructions are very difficult thing and I’m not sure I got it right.

Adnan S. Butt – RBC Capital Markets LLC

Hi, I’m Adnan from RBC. So if when the decision comes there is the option to appeal it how quickly can the appeal take place and how long does that process take from a legal standpoint? And secondly in addition to Hospira are you familiar with any other company that that seems to be able to make Angiomax the modern infringe?

Edgar H. Haug

I’ll answer the second question first, no, not aware of any company that makes Angiomax or threatens to make Angiomax that we believe does not infringe. The first question how long would it take on appeal, as I said, if the District Court in Delaware decides the case is to assume mid July of 2014. The typical time for an appeal is about 12 months to 15 months from the time you file your notice of appeal, you do your briefing, you have an oral argument on the appeal and then it typically takes three to five months from when you your oral argument until you have a decision from the appellate court.

So I would say that would bring us into Q3, Q4 2015 maybe even Q1 of 2016 with respect to the Delaware case. As I said the other cases haven’t yet been tried and so the time will run from whenever there is a decision in those cases.

Adnan S. Butt – RBC Capital Markets LLC

I’m not a lawyer and I don’t want get too technical, but it was my understanding that the onuses on the patent holder to demonstrate that as the scale increases, the alleged infringer would enter into the patented RPM range. Is that the case and is that a possibility at all in your mind?

Edgar H. Haug

It is the case that the patent owner, the plaintiffs in this case, the Medicines Company have the burden, the illegal burden to show this infringement. The legal standard is what we call the preponderance of the evidence, it simply means if you take a scale of justice if it just tips slightly more in one way than the other that’s the preponderance to the others.

So here the burden from The Medicines Company is to say it is more likely than not that they infringe. And the argument, the answer to your question is do we think they have carried that burden, yes of course we do. And that is the result of the testimony by the inventors in the case, who testified the trial, the testimony of company representatives as well the experts in the case both The Medicines Company experts which clearly gave the opinion that there is infringement on a variety of theories. And also I would say the cross examination of the Hospira experts which the judge will all take into account simultaneously.

Adnan S. Butt – RBC Capital Markets LLC

Ed, you made reference to precedent were a judge potentially aired in their claim construction, but then remedied that. Could you just give us a few examples of readily come to mind where a judge remedied a claim construction in their opinion.

Clive A. Meanwell

In their opinion, in other words before they went up on appeal?

Adnan S. Butt – RBC Capital Markets LLC

Yes, as far is the ultimate way for remedy is through the field process or is this a precedent for a judge to actually say in reflection I got claim construction rolling and I reversed my decision.

Clive A. Meanwell

There is precedent for trial judges to do that. They are quite rare, I would say because you have to consider now, a trial has just happened based on the courts claim construction. And the claim construction is something all the parties know going into the trial. This is what it says, it’s like, think of it as a contract, court has said, is what the contract means and I am going to decide whether or not there is a breach of contract. So in this instance, the whole trial was conducted based on the courts claim construction. Even with that claim construction we believe we put in a case that proves infringement.

The judge can host trials, change that claim construction. However if the court were to do that, the court would have to consider the prejudice to both sides. And now I have changed the patent after I have had the trial and remember these are fact witnesses and experts who are limited in their testimony to the existing claim construction. So I think if the court has reservations without the claim construction, he may change it, certainly can, but it’s probably unlikely and this would be an issue that will be taken up by a loosing party if you will.

And I also mentioned claim construction on appeal, if you would have looked at the statistics over the last I would say decade, you will see that the federal circuit which is the appellate court reverses, they changed claim construction more than one-third of the time, some statistics are as high as 40%, which goes to the point that Judge Andrew has made, it’s how difficult it is for a trial judge to interpret a patent.

Adnan S. Butt – RBC Capital Markets LLC

Thank you, very much.

Clive A. Meanwell

Well, Ed thank you very much indeed for that really helpful overview and thank you all the good questions, important stuff. And well, now let’s move on. For those of us who founded the Company, there’s a number of people in the room who did. So those of us who have been working to build the firm ever since and for those of you involved as best as an analyst, some of you for many, many years. This is really the exciting time. Yes, it’s the point of inflection, no question.

Now that’s an often overused metaphor but it’s for this company and today we have an opportunity to show that special moment. No matter which way you look at it, no matter which way you look at it, Medicines Company is going to grow. And as you’re going to hear today, it’s going to grow rather robustly in all and any scenarios.

Building on the ground breaking success of Angiomax, with 500 to 600 very motivated, I believe very committed and skilled people, dedicated to a purpose which includes serving the needs of about 3,000 acute and intensive care hospitals throughout the world, and in the next three years, we are going to launch on top of Angiomax, four new products down the same channel drive top line growth in excess of 20%, leverage and build the unique really unique front-line customer engagement capabilities and as necessary as we’ve shown in the last two or three years add more products when we need them, and of course, we are using very distinct and selective investment criteria for those bolt-on acquisitions, not for us the transformative type of deals.

Well, what is that purpose exactly, it’s very simple, it’s to save lives, alleviate suffering and contribute to the economics of healthcare by focusing on those 3,000 leading acute and intensive care hospitals world wide. And what exactly do we mean by acute and intensive care hospital medicines, a lot of people talk about this. As acute care companies what do we really mean about, here is what we mean, it’s the constant complex care for patients with acute life threatening conditions by specially trained personnel in units with equipment and materials to treat and monitor illness, injury or recovery from invasive procedures and surgery. That doesn’t happen in nursing homes.

Well, where are we going with this. We are getting organized around three pathways of care, just like our customers. We are leaders in acute cardiovascular care already and we expect to remain so in the hospitals. We are established and growing in surgery and we hope that will move forward quickly including preoperative care, and we are emerging in infectious diseases in the hospital and each of these hospital pathways for us is a focus where we have development compounds and marketed products which are or have the potential to become segment leaders. We are only interested in products that high value make a difference and can become segment leaders. They are the kind of drugs we have and there is the kind of drugs we want to work on.

And then all down the same overall acute care hospital channel and so an investment in The Medicines Company is an investment in a growing company not just an investment in a growing Angiomax.

Now how we progress over the coming three years is mapped out here and these dates are forecasts for continuing the growth of Angiomax but also of course submitting NDA and MAA applications getting reimbursements, launching at least four new products in the U.S. and Europe and entering partnerships for those products in Asia and Latin America. And the information which follows rest of the day this set up, we do assess your understanding of that sequence of events and hopefully for you to track the progress as we knock off these tasks one by one.

This is constant traded market and is getting more concentrated all the time, the jobs to be done by care givers are changing, as you will hear from Professor Gibson, hospitals will consolidate, critical care beds will increase. As you will hear from Professor Robbins today, economically optimize pathways of care then infections will become more and more explicit, as you will hear from Professor Corey. And that constant complex care for patients with acute life threatening infections will grow at a pace which dramatically outstrips that of healthcare over all. And that’s the investment thesis.

With that, we are going to move on to the first section of our presentation. If I’d like to bring my colleagues up who are joining me for this. Where we’re going to talk about our acute cardiovascular care portfolio and efforts, and just while the panel is assembling, welcome.

I’d like to first introduce Professor Mike Gibson from Harvard and Duke. Mike is a world expert in interventional cardiology as well as being a leading thinker, strategist and teacher, someone who is known for many years and, Mike, welcome to the podium and welcome to the meeting. Thank you.

C. Michael Gibson

Well, thank you, Dr. Meanwell. While I came home the other night, to a party, my wife was having some family over and I walked in, I was late, as usual coming home late from the Cath lab and ‘Mike, I love you’ and took my coat off, exchanged some pleasantries. And ‘Mike, I love you’, I walked over to the table. And I went over that automatic response to kind of open the mail; I did that began to open the mail.

My wife grabbed my hand. She said ‘Don’t – don’t open that’. I said “Why, what why?” Se said “Well, that’s your report card”. That’s from the Department of Public Health, and my daughter said ‘Well, dad gets a report card, wow! Let me know, how dad do?’ But then 15 people are looking at you. So, do you open the report card. And I did mercifully things turned out okay. But, I think everyone was surprise. We’re really under the microscope. We’re getting report cards on mortality, in the hospital, I opened up another report card, and that says, how much it costs to do every one of those cases. Then what were my outcomes compared to my peers.

So I am accountable and I am here today to hold Dr. Meanwell and his team accountable, I’m going to tell you about my unmet needs are in the managed care in the acute care area, in the Accountable Care Organization area.

We are going to hear today I hope in The Medicines Company is to how they can meet those needs. So I’ve received research grant support from all major manufactures of antiplatelets and antithrombins, all my disclosures can be found in your handout.

We’ve done very well over the past few years. We were accountable before accountable school. This is 20 years ago in 1994. I began to work with the Registry over 15 years. We dropped [indiscernible] times by an hour. With all that we did with drugs, devices, processes, we reduced mortality by 5%.

On the right-hand side, you see public data from the CDC. Over the 10 years from 1999 to 2009, we’ve reduced mortality by about 30%. That’s great news; that’s good news. We won the battle, but we still have the war on heart disease.

Bad news is we just tied cancer. Not something to brag about. The other bad news is it costs a lot of money. We’re now being held accountable for how much we’re spending as part of the Affordable Care Act. We have to provide more care to more people at lower cost while preserving quality.

How we’re going to do this, we’re doing through what’s called ACOs or Accountable Care Organizations. We’re all responsible, not just for quality but also cost. So I get report cards, what’s on that report card, mortality. I’m looking for drugs and devices and processes that reduce mortality. That’s why a drug like Angiomax that in one of their studies reduced mortality is important. That’s why drugs like Ticagrelor that improves mortality chronically. That’s why that’s important.

Stent thrombosis. I take this personally. When someone’s stent are [indiscernible] they have about 25% of risk of dying. I’m looking for something that will improve our report card on stent thrombosis and Ticagrelor you’re going to see those that and cangrelor does that quite nicely. Rehospitalization, we can’t have people bounce back.

Finally on the cost side. I look very carefully because I get a report card that says here are so much of the costs, you to do your cases, here’s how much we received in billings. I’m looking at the cost of goods from the lab and I’m also looking at length of stay. Can I get someone out of the hospital quicker? Again, that’s where drugs that you turn off at the end of the case like Bivalirudin and cangrelor come in, and then bleeding. Bleeding costs a lot of money and I need to reduce the cost of my complications.

The days of being an independently employed private practice doctor working at an expensive academic medical center downtown are gone. We are now expanding out into the community. Instead of poor people around me in the room, I have two. Instead of leisurely doing cases with someone hospitalized over five days and seeing them two days before their case, they’re being sent home the same day.

At the [indiscernible] last week there was a 62-year-old pizza manager who came in and said, listen, I’ve got to get back and get back to work later today 7:30 in the morning. He had his procedure done by the radial approach. By the end of an hour later he’s just off the table, recovering for four hours. If he wanted to he could go back to work. That’s where we are in 2013.

The number of these elective cases are declining, but we are invasive cardiologists. We invade. We’re invading other areas. We’re doing more valve cases. We’re managing heart failure patients with assist devices. We’re invading the peripheral arteries. So we’re being true to our name, invasive. We are also going to be invading the preventive space. We’re going to have drugs we give intravenously and subcutaneously and we’re going to be managed doing that because we’re going to be discharging those patients.

Believe it or not, someone has his stopwatch on me throughout the day. How long did it take from when you called you to get in the room, how long till you got the artery open, how long till the patient got discharged. We’ve moved things from about a day down to about six hours at this point. Time is important.

I am looking for drugs and devices that’s going to help me get through the case most quickly and efficiently and safely, and that’s where some of the drugs you hear about today come in. I look at the cost. A bunch of drug alluding stents can I put in one long stent. Later then drugs I have to monitor intensively like heparin. Can I use a drug where I only have to check one ACT.

The old strategy was to give heparin, aspirin, IIb/IIIa inhibitor [indiscernible] and continue all that for a day. Now they’re trying to discharge people the same day. We have to have a different strategy and that is largely turn to Bivalirudin after the end of the case. I do think cangrelor will be very important by turning that off at the end of the case. Some of you might say, well what about giving an oral drug before the case, what about preloading with Clopidogrel, Prasugrel Ticagrelor.

This is what it looks like to me as an interventional cardiologist when someone swallows these pills before the case. They are right in the stomach. They’re not in the circulation. I’m about to blow a balloon up to four times the pressure in your car tire and this patient is about to have the biggest plaque rupture they are ever going to have. That’s not too comfortable seeing those pills sitting there.

We know the trial data says that upstream affect isn’t important in credo and closed, and I’m also very worried if I had to send the patient over to bypass surgery. So we need light switches. We need to match the acuity of the care to the acuity of the situation and that’s again where drugs like cangrelor will be very important.

Stents have evolved. They were very bulky, big, thick tubes, now they are thinner. Now they may even dissolve. We had a motto in the past, which was liberty and just stents for all, it seems appropriate here in New York to show this picture. But our volumes are going down on this table side, but I do think stents will be here to stay, but they may not stay in the body permanently.

Complications, one of the biggest drivers of cost is bleeding. Bleeding cost about $8,500 on my report card. I am interested in procedures and drugs that reduce that. So we are doing more radial procedures through the wrist, that certainly reduces bleeding, but it doesn’t do anything to GI bleeding. Something that kills you is, GI Bleeding. That’s were a drug like Bivalirudin comes in.

All of you know about bleeding, because when you are watching a TV show you can barely get to the show without seeing two advertisements for 1-800-BAD-DRUG. The public has been sensitized to bleeding has really risen in everyone’s consciousness. We are stopping drugs earlier, and earlier and earlier to reduce bleeding. In Europe, they really are being probably more aggressive than we are stopping even earlier after six months of dual antiplatelet therapy.

As our stems gets smaller, thinner, less thrombogenic, we’re going to stop all these drugs, probably sooner and sooner. The other way to reduce bleeding is again, by being less invasive, making smaller holes. Now I tweeted this out to 46,000 of my loyal followers, I said, major heart repair possible without surgeons knife. And this cute little lady from London tweeted back, ‘yeah, you want to see my scar, here is that little red dot, it’s the scar from her radial procedure, very, very different than bypass surgery’.

Now we have drugs that target the thrombin side of things, the coagulation side of things, we have drugs that target the platelet. And there has been a lot of piling on, on to platelet, aspirin, clopidogrel, this drug, that drug. What we are learning is that these two really, really are very important to work together, the thrombin side and the platelet side. Thrombin is the thing that makes your platelet the angriest. Your platelets when they are floating around, they are happy, they are round, but when they get touched by thrombin, they turn into this angry activated clog, and these two really work in concert together.

So treating twice as many drugs or twice as many drugs for the platelet side is not effective. We have to combine the two together. So it’s like in the Jerry Maguire movie, when he turn to her and said, ‘you complete me’, I think that’s what we have here in the pharmacologic world. Biologically these two complete each other.

So rather than they just piling on, on the platelet side, what we really need to do is optimize the thrombin side, optimize the platelet side, that’s going to be the winning combination.

And I think you’re going to hear today from one of the trials we recently did Phoenix, that the winning strategy, it’s the best anti-thrombin with the best anti-platelet. And what we’re seeing on the chronic side, we’re peeling away drugs, we’re peeling away aspirin and other drugs, where less is more. But the remaining players have to be the optimal players in the mix.

When Statins came along, everyone thought that it was going to be the endocrinologists that treated with Statins, of course it turned out to be the cardiologists. Now that we’re going to be giving drugs that are intravenous HDL, it’s going to be something that people who are more invasive are comfortable.

So I think we’re going to become invasive lipidologists in infusion clinics, whereas like an oncology clinic, but we are infusing the drug chronically. Why would a guy like me who puts stents in to pop open arteries, why would I be interested in HDL and LDL lowering?

Well, this comes from a trial that we did in the TIMI study that I was part of the PROVE It study, lower is better, atorva was better than prava and the biggest benefit though, the biggest benefit was on the left hand side in the PCI patient. When we blow a balloon up, we cause a lot of inflammation and everything else, and lipids do more than lower lipids, they also reduce inflammation.

Now when we put a stent in, we treated the one artery that was blocked, that’s the good news. We did nothing to that artery that had a 20% blockage over there, and it’s that 20% blockage that’s rich in fat that’s going to be inflamed and rupture in the future and cause [indiscernible].

The liquid drain that we are going to talk about today, all these other strategies, coronary liposuction whatever you want to call it kind of reverse the curse, that’s very important in the arteries that we did not treat, so it’s good news and bad news. The good news is we have drugs to lower LDL, the bad news is your body has undergone 4 billion years of evolution has produced redundancy. It absorbs more cholesterol when we block LDL and up regulate something called PCSK9 which changes the numbers of receptors and I think approach to those.

Other people are just trying to mop up the PCSK9 in the bloodstream, but if I looked at you, you may have very low levels of it and you may have very high levels of it, but if I give you both the same amount of – don’t worry, he is computing it – but if I gave you both the same amount of antibody, I’d overdose her and I’d under-dose you. The approach you are going to hear about today is not mopping up all that PCSK9 that’s floating around, but turning it down and inhibiting its production, very different strategy than other people.

So in the past, I’ve made money by being a high-volume operator. Now in the future moving forward, I make money being a very high quality operator. I am going to continue being an invasive cardiologists invading other areas; valves, heart failure and now the lipid clinic. I look forward to being an invasive lipidologist and working to improve not just the quality of care, but the cost of care moving forward and I look forward to hearing how The Medicines Company can help me meet those unmet needs. Thank you.

Clive A. Meanwell

Wow, thank you, Mike. About 10 years ago, Mike said to me, we are going to have drive through angioplasty, and I was kind of like you are right, but we have got it and you heard it for the first time here, we are going to have coronary liposuction, I love that term, I hadn’t heard that term before, that was quite an image actually.

Well, good, so now, up about let’s go through the key assets we have on it. We got to start with Angiomax, so here it comes. We are going to continue to invest in Angiomax, because we think it will grow whatever happens and it’s very important that you understand that the quality issues that Mike was discussing, that was something we saw coming about 10 years ago and that’s why this was Harvard Business School pricing case at the very beginning. Isn’t it relevant to us in the way we have developed this product from day one and it’s going to remain very relevant going forward.

Just in case, you didn’t know, this is an injectable blood thinner and anti-inflammatory agent that you give to patients undergoing angioplasty. Because of its superior pharmacology and the incredible value proposition we have now built for it, it has established beyond pretty much any doubt leadership in the market and what is that market? Well, the job to be done here is to open the artery, keep it open and not have thrombosis and bleeding in or around the time of the procedure and this is to main both for Angiomax and for Cangrelor as we’ll be talking.

Now if we go to the bottom of this schematic, I’m not going to go through all of it, you see two ways to open arteries; one is to do cardiac surgery which means you open the chest as well, and the other is open the artery with a balloon and a stent, and that patient population is about 3 million procedures per year worldwide. There is some belief that there is over 1 million PCI procedures a year in the United States, that’s a false belief. Both the AHA and SCAI, the two most important societies have made it clear that double counting leads to a 1.1 million patient count, in reality it’s 750,000.

Importantly, in Europe, it’s about 1.2 million and flat, and in Asia, it’s about 1 million and growing well in excess of 10% per year with about 17% growth rate in China. Now in the United States, it’s complex because clearly the stable patients of [indiscernible] are moving to out patients and appropriate in this criteria meaning that fewer and fewer elective cases are being done, but all the other parts of this market in the U.S. are either stable or growing.

Now into this market, we have grown, grown, grown and it’s well established that the product based on 50,000 patients with a clinical trials, more than 5 million patients treated now, saves lives, reduces lead, improved length of stay and as a consequence save the hospital a lot, a lot of money even after you bought the product, and that’s why it’s going to stay dominant.

Now, how we’re going to keep it there. We’re going to keep it there by investing in important new efforts. Some of those have already being paying off, and I want to talk to three new pieces of information to share with you today. The first, is this paper is about to be published is that the mortality benefit of Angiomax, which is a 44% reduction in mortality at three years, very few cardiology drugs can give you that especially when you have to give them to 40 minutes, that benefit is there irrespective of whether or not you bleed at the time of your procedure.

Why is that important? It’s important because it means that both kinds of patients; the bleeders and the non-bleeders benefit, there is an economic value for both, and frankly, if I was a competitor trying to prove I was better than this, I would find it very, very difficult.

The second piece of news today is that the Angiomax bleeding reduction applies whether you use femoral or as you heard from Mike, the more and more frequent radial approaches. In fact, the combination of radial approach plus Bivalirudin or Angiomax gives you the optimized bleeding risk with a major bleed risk now shown in large datasets here; 500,000 patients in the real world, the bleed rates are about 1.8%. Again try and do a clinical trial to show that you’re lower the 1.8%, you’d be braver than I.

The third news today is about ongoing commitment and readiness to invest in peripheral interventions. Lower limb angioplasty is a huge problem in this country, carotid is also, but I’m going to stick to the lower limb. These data not previously published, on 33,000 patients where we took out 7,500 propensity match patients, showing a 43% reduction in transfusion and reductions in other major outcomes such as amputations, strokes and deaths.

Noticed at the bottom of the slide, how patients given Bivalirudin in this series or Angiomax had a reduction in length of stay and a reduction in cost, just like in the current rate. Now that’s a good reason we think to keep going and to invest in what is the Endomax Trial and today we are announcing the enrollment has begun and is the first and largest ever randomized clinical trial in endovascular procedures, 3,900 patients being randomized to heparin versus Angiomax with the very simple, but very important endpoint of bleeding. We are very confident that this is going to hit its endpoint and it’s going to drive educational programs in years to come. The principal investigator here is Barry Katzen.

Barry Katzen is the world’s number one interventional radiologist. Currently, colleagues are already using Angiomax in the peripheral. We need to get the radiologist on board and that’s why we asked Barry to chair the trial. Now, why does that matter? Well, there is a lot of these patients, somewhere between 500,000 and 600,000 PI procedures are performed each year in the United States, about half of them in your long leg arteries for femoral and behind the knee arteries, and into that, we would expect Angiomax to make a major contribution into growing segments.

Now, turning back to the coronary procedures again, let me remind you that every time Angiomax is used, depending on the severity of the patient and after you’ve phased for the drug, it’s saving between $100 and $1,300. Now this is a high bar for anybody coming to. Doing clinical trials in the cath lab, as we know better than probably anymore, anybody is extremely difficult. The competitors have been struggling.

We’ve had three and now a fourth attempted PCI trial. Sanofi did a couple of studies with LOVENOX and with the Factor Xa inhibitor. The ACS Trial from Lilly, which tried to preload lots of prasugrel before the PCI to knock off platelets even more, failed and was discontinued. In that regard, I will come along with the 13,200 patient trial, which they believe will show superiority for ischemic risk and parity on bleeding, good luck.

Now, as far as the model for growth is concerned, we see this product continue to grow annually at about 6% to 11%. The volume will continue to go up, particularly in the high risk patients. We’ll have to deal with the shrinking market in stable and probably say words about that during the Q&A. Pricing window is big, we can go up in price, where we need to in the high risk patients, and I want to remind you that after December 2014, we will be paying zero, zero royalties to Biogen Idec.

Well, this seems to be a strong franchise foundation. What are the ups and downsides? We’ve listed them here clearly. It is possible that there will be unexpected trail results, but I think the upside for this product continues and we believe it will grow on a worldwide basis. So in summary, for Angiomax, I apologize for going fast, but I know you know this product well. We anticipate a continuing, growing story and we look forward to seeing that happening for some years ahead. And now to augment what I am saying, [indiscernible] many years, Stephanie Plent, we started the company when she was 15, is going to talk about cangrelor, and I am going to stand here, because we see these two products going together. Stephanie?

Stephanie Plent

Thank you, Clive. I won’t really tell you how old I am. Good morning, everybody. I am standing here on behalf of my colleague, Simona Skerjanec. She is the global leader for our antiplatelet strategies and unfortunately she is in hospital today. So it is my great pleasure to present on her behalf, cangrelor, changing the rules of acute platelet management. Why is cangrelor changing the rule? Well, it is the ideal acute platelet management drug. It has astonishing pharmacology, as I’m going to tell you a bit a later, but we have an enormous clinical program with outcome improvement in 25,000 patients, we have filed at the FDA and we will be filing with Europe by the end of the year.

Importantly, this is the same hospital turnoff that we have for Angiox and Angiomax. Now, that’s important because we’ve been in this market for 13 years. We know these customers. We know these patients very well. We can leverage our highly experienced field force that’s been out there for a long time. We also know the unmet need. We know the unmet need in the acute platelet management of PCI across the spectrums of ACS and in the indication of when you are changing a patient from all platelet inhibition and they have to go through surgery, what is the consequences of acute platelet management in the patient. So that gives us another audience. We know PCI and we moved into coronary bypass.

Let’s talk about PCI. As I said, there is still a job to be done here and it may not be from the new antiplatelet agents that you know, Effient and Brilinta. Remember, Professor Gibson’s slide of those tablets in stomach. That – those tablets are not being absorbed and you can see that in this Parodi basis here, that by two hours neither the purple bar of ticagrelor or the green bar of prasugrel, is sufficiently low enough to reduce all the platelets activity that is needed.

So if you are an acute care patient, you’ve got 90 minutes to a stable impact. That is not fast enough for these patients. So you need something much more profound and much more fast. This is the pharmacology of cangrelor. If you look at the magenta line when you start the cangrelor infusion, the platelet activity goes to zero, it stays at zero during that infusion and then when you turn it off, within an hour, the platelets have reached rapid activity in order to go forward.

And how does this translate into clinical performance? Well, across the board, the pharmacology of cangrelor results in improvement in ischemic complication. This is brand new data. You may not have seen before from Gabriel Steg. He is the European investigator. This study – this paper was written by the European, they are really excited to see cangrelor in this market. In fact, it is going to be a very exciting launch globally for cangrelor, because as you can see here, with this combined dataset of 25,000 patients, you have a reduction in the important endpoint of death, big heart attack, QMI, ischemia-driven revascularization, that’s for the go back and have another PCI or another CABG and very importantly stent thrombosis.

When stent thrombosis happens to an interventional cardiologist and I am sure Mike, you can attest it. You don’t forget it. It’s catastrophic. It’s fatal. In one study, the 45% of cases were fatal. And it’s more than double the cost of the PCI. These ischemic complications

do not come at the price of high bleeding. I know how many of you’ve been around in this space, I know Jason you have for a long time, but really in the bleeding rates of 10% or lower when we were looking at these studies.

We do not see this in these studies with cangrelor. What you see is major bleeding rate of less than 1%. Now, we believe there is an increase in the minor bleeding rates, but these are particularly driven by haematoma, which is the bruising and bleeding that you get at the axis type


The other really important news that I want to give today is that we have simple transition from cangrelor to the oral antiplatelet agent. What does that mean? That means that in any situation where you’re giving cangrelor in the acute management of platelets, when you stop up the contusion, you have a choice you can start any of the oral agents after than contusion. You can start Plavix, you can start Effient, you can start Brilinta and you can carry on that chronic therapy as if you would have done before.

That’s PCI, that’s impressive pharmacology and that’s impressive transition.

Now, what about this dilemma in the area of bridging. So if you look at the label, the FDA label for both Effient and Brilinta, what you see is it puts the clinicians between a rock and a hard place. Both labels says that you should if possible decrease the drug, stop the drug prior to doing surgery, because you run the risk of bleeding, if not the bleeding will occur if you keep patients on that. But also the label say if you stop that drug, then you will also run the risk of increased ischemic events. So therefore you are between the rock and the hard place. That is the dilemma that is faced daily as we continue to grow the number of people who are on oral antiplatelet agents.

It’s not a small risk to start some on oral agent. If you look at the Stat Registry, there are 21,000 patients. In those patients that discontinued, remember the labels at five to seven days. In that first seven days, that’s the highest risk is a 37 fold increase in risk of having the stent thrombosis. That is not something to be taken lightly and it’s a difficult choice to make, but cangrelor can solve that problem. If you look at the results from the BRIDGE trial, these are patients going to have to CABG, they are on Plavix, the controlled group just stops the Plavix and you notice the black line rises, platelet activity rises across the threshold, where you enter the danger zone, where you increase your ischemic risk.

By contrast, the magenta line of cangrelor, you can see that there is immediate, as we saw earlier in the pharmacology, immediate drop is sustained, effective platelet activity inhibition throughout the duration of infusions, in some cases went up to seven days, and then if it start up to an hour before the surgery, immediately platelet function comes back, and within an hour, you can do surgery. What does that mean clinically? Well, fantastically, you now have no longer a dilemma. What you can say is okay, I will take this patient observation and I will put them on Cangrelor and they will have consistent platelet inhibition the left.

When I take them off the platelets will come back and therefore you will see no bleeding during the surgery. This is in drugs that is wherever you need it and it’s gone winning on spend.

Where are we ready if you are right, I think I said earlier you – we followed the FDA in June of this year. We anticipate and the advisory committee meeting certainly in the first half of 2014. We will submit to Europe by the end of the year. And we have a lot of ongoing lifecycle activity. But there is one question remaining that I haven’t covered. It’s a really important question, because it’s incredible important market opportunity. And for that ongoing standard asking to tell us about how Angiomax and Cangrelor can work together.

Clive A. Meanwell

Well if you think I’m going to say you complete me to Stephanie you’ve got another thing coming. I think we have the HR group in the back row. Thanks Stephanie.

Stephanie Plent

I like about them.

Clive A. Meanwell

So as you mentioned Cangrelor working together. We see this is a hugely important part of our strategy going forward, because of the combined value of these drugs which as Mike already alluded to, kind of one and one equals three here. These data have not been shown before these data are in our NDA they are about to be published, showing that kind of combination education. And if you look on the right hand side of this chart, you can see the sort of value, that’s created.

Now I can’t absolutely predict for you what the price of Bivalirudin or Angiomax is going to be for the next 10 years. But I can’t tell you that is not going to be independent of Cangrelor in the sense that this combines $1,600 number is a window of pricing for the combination, we feel very confident that we can price Cangrelor into a fairly high part of this and obviously for the room, how we price Cangrelor will depend on how confident we feel about generic competition for Angiomax, one way or the other, we’re going to be making very, very sound financial progress in interventional cardiology.

More critically this combination is going to offer the best value, the lowest lead rates and the lowest boarding rates of anything out there, in the interventional cardiology world at levels which are going to be unprecedented in the last 10 or 15 years.

So we’re very confident about these two products working together, so what is that sort of mean how do we model Cangrelor, but we also have to model the bridging indication that Stephanie pointed out, which I think is more complex and more difficult, this is the way we’re looking at it and this is fine print, and so we’re going to pick this up. So we see the value proposition we mentioned the market PCI, with all the ups and downs that I described to you for the worldwide market for angioplasty.

So remember we don’t have rights for Cangrelor in China, although wish we did, maybe our colleagues Astro [ph] will be able to help us there, bridging wise we’re looking at, initially 10% of patients to ACS go to CABG, got to think of those patients and potential expansion later, because I think that solution that Stephanie put up there will go well beyond the cardiac surgery population.

Major orthopedic surgery, major liver resections you’re going to hear in our surgical section, about the problems of bleeding in surgery, this is not just bleeding in cardiac patients, a very large number of particularly American and European patients are walking around on oral Plavix or Effient or Brilinta, we’ve been helping them, get on Brilinta and those patients often need surgery.

So I think beyond just a cardiac guys, we’re going to be seeing, this bridging strategy used by surgeons, we have had a whole series of compassionate cases used request, in the last six months, as hospitals in the U.S. are beginning to learn that this might be a solution that they needed, dosage wise, you think of PCI being one vial of Cangrelor again the bridging indication, 4 to 10 vials based upon the clinical data, we have so far, other wide range, because as you know often you might use more vials in a clinical trial and less vials in real life.

As we get more data on that, we’ll be able to update you on the reality in the market, target market share, we think we can get a third of the PCI market with Cangrelor, and we think we get at least the third of the ACS patients requiring surgery, and that’s how we have modeled it so far, we have not yet added the upside, though it’s clearly there and finally cost of goods, Cangrelor is cheap as chips compared with making bivalirudin this is an easy one, royalty rates to AstraZeneca blended about mid teens.

Okay, so that’s how to model it, what about the risk and opportunities, well clearly there is competition as Mike said, there is many anti platelet products, but I think there is no IV ones could one along could really make an IV maybe but it’s going to have to have the same exquisite Pharmacology that cangrelor has, and there is absolutely no chance of any of the current molecules having that.

Upside wise, I think market exclusivity extension in the U.S. is there. We’re doing a lot of lifecycle work, and market expansion beyond the ACS world, and cardiac surgery world, we think is something that is quite possible.

And last, but not least, as I’ve already mentioned Angiomax and cangrelor can work together for many years to come. Before we finish, and I hand over to my colleagues for the next presentation, I do want to say a few words about Cleviprex. Firstly, because if I didn’t, you think I was trying to hide it, we are not thrilled with the way Cleviprex was launched. I said that a dozen times, and I’m going to say it again today. But I can tell you that we’re making steady progress, and we are absolutely committed to this asset because of what it can do.

Cleviprex is now being used in about 75,000 patients in the United States, and the initial challenge of not having a value proposition I think has been solved. We’ve shown recently that we save $920 in a preoperative setting because the patients get through extubation and recovery quicker than they do on other acute antihypertensive agents. That’s important, that’s going to help us drive the preoperative space.

The other thing that you might have missed if you weren’t paying attention to this, and I can – some way you might not have been is that, this drug could change the game in the emergency room management of the acute decompensated heart failure. There is a lot of talk about a drug called Serelaxin these days, $600 million, $6 billion market opportunity may be, I hope so, but this product is faster and more likely to cause reduction in basically water boarding patients, patients come in with acute heart failure are very breathless.

We can do it in about 30 minutes with this drug in the emergency room. And finally, announced today for the first time, we have received regulatory approvals for Cleviprex in a whole range of European and other countries, and we believe launching the product into those markets with a different price structure with a different value proposition in the U.S. is going to be quite attractive for us. So don’t give up on Cleviprex just yet, it’s going to be important.

Thanks very much, I’ll now handover to Peter Wijngaard, my colleague, who is going to talk about ApoA-I Milano.

Peter Wijngaard

Thank you, Clive. ApoA-I Milano it is back to the future. We have restarted clinical development earlier this year, and we will present the results to you in the course of the beginning of next year. In the next few minutes, I will talk to you why this product is still a very exciting opportunity. I will also tell you that we have learned so much more about the mechanism of targeting [indiscernible]. And finally, I will talk to you about, as we have overcome some of the major challenges in manufacturing that we’ve had with this compounds in the past.

So Drano for the Heart or coronary liposuction as it’s being called today, that was the type of the Time magazine article back in 2003, and Dr. Steve Nissen presented the results of a small proof-of-concept study that ApoA-I Milano in ACS patients. That study for the first time demonstrated that you could reduce the process of lateral multiple sclerosis. That was unprecedented. Even to date, such data has not been achieved that any other treatment option in terms of its magnitude or speed of the effect.

We still get multiple calls from both physicians and patients who are asking us can we get access to this local, can we participate in your clinical trial. That excitement is shared with us well both [indiscernible] and myself have been working with other companies before. We’ve been working both in developing various drugs in cardiovascular stage as well as other areas and leave the liberty chose to join The Medicines Company to work on this product.

Just imagine if you would be responsible for developing ApoA-I Milano. You have a product that can revolutionize treatment options for ACS patients. If you can reverse the prototype of multiple sclerosis that is a progressive process that we all suffer from in our daily lives and we get many of us will get complications of that data down the line. It would be a paradigm shift to actually reverse that process. Also if we are successful and if we’re developing this, this product would be a long-term revenue driver for growth for the company.

So where we are today with this product? The molecule of [indiscernible] is more population living in a beautiful village in Northern Italy, if you’re lucky to have the mutation, you are characterized by a long life without having the risk of developing a heart attack in that.

Why do these patients not develop after sclerosis? Well, we all know that LDL is bad cholesterol and HDL is good cholesterol and lifestyle changes and treatment options to-date target reducing LDL and trying to increase HDL. Well, for LDL that is true. For HDL the story is a little bit more complicated as you probably know that many treatment options are targeting HDL have failed in the recent times. The reason why ApoA-I Milano works in the natural situation of people that carry the mutation is because it is the function of HDL that is important.

ApoA-I Milano, we’d like to call it turbocharged HDL, it stimulates the process of reverse cholesterol transport. It prevents or eliminates the growth of cholesterol

in your vessel growth that leads to the excess growth of platelets and the vessel [indiscernible] banks. We have shown in our studies, in private and in the ongoing clinical study that we are doing today that a critical pathway of reverse cholesterol

transport, which is the ABCA1-mediated cholesterol efflux of the macro phase having load of the cholesterol taking the cholesterol out is rapidly stimulated venue infused ApoA-I Milano and which dose rates are going to be affecting at a continued effect in the clinic we rapidly saturate that pathway.

So we know today that the positional study, which use to those groups to the lowest dose group is already capable of saturating that particular pathway. So with that data and the understanding of how you have to target the function of HDL we are in a position to develop this drug hopefully very successfully. The periods [ph] on the manufacturing sides, you probably all know that the history of this molecule has been difficult because of the manufacturer. Before we acquired the assets from Pfizer, the yield of the manufacturing was fairly low and the process was non-optimized because it was in early stage and its large, it is small scale manufactured. The result of that was that the cost of goods were extremely high.

Over the last 12 months we have been working on improvement in the manufacturing process as well as evaluating large scale manufacturing options that we need for Phase 3 and commercial and with that we have been able to project not only an increase in the yield that either double at Phase 2 and probably triple at Phase 3 commercial skill, but also in the efficiency in the process we can bring the cost of goods down to the area where it needs to be to make this a commercially viable option.

Now with that, I would like to hand over to John Maraganore who is the CEO of Alnylam Pharmaceuticals, and that’s how we collaborate on the PCSK9 RNAi interference. John is a long friend of the family. As you probably know he was also the inventor and he was advising for bivalirudin. John?

John Maraganore

Well, it’s great to be here today and it’s obviously exciting at one level personally to see the amazing progress that this company has made with Angiomax on the field, a product that I am very near and dear to my heart.

I want to talk in fact about a different collaboration that we have with The Medicines Company around PCSK9 program that we’re very excited about, were there is some important and recent progress that I’ll update you on today. Now PCSK9 I think is probably known to many of you, because of the progress in the field, not only with what we’re doing but also with monoclonal antibodies. But the reason for the excitement around PCSK9 is the target, as I think arguably it’s perhaps the most exciting molecular target in molecular medicine today, because of the exclusively well performed and high degree of genetic validation around this mechanism in this pathway. They were of course were initially gain-of-function human mutations, they were identified for PCSK9 that were shown to be the cause of hypercholesterolemia leading to significant increased risk for cardiovascular disease.

But more recently, few years back now the loss-of-function mutations of PCSK9 were descried at a very elegant paper in the journal by Helen Hobbs and Jonathan Cohen out of UT Southwest, that shows that subjects that had mutations in PCSK9 which are associated with the loss-of-function in this protein resulted in a lower level of LDL cholesterol compared to other age-matched controls, but then importantly, a significantly reduced risk of cardiovascular disease over the course of longitudinal studies that were analyzed.

It is really rare to see this type of genetic validation of a molecular target in medicine where you have both gain-of-function human mutation and also loss-of-function human mutations. But in addition to that, there have even been null mutation described for PCSK9 with individuals with LDL cholesterol levels less than 20 mg per deciliter with no other [indiscernible] observations in those patients. So clearly this is a target that can be knocked down, trimmed off with the expected consequence of having not only reduced LDL cholesterol but an important fact on outcomes.

Now we’re very pleased with Alnylam’s technology which is RNA interference and specifically with our new advances using technology that enables subcutaneous dosing of RNAi therapeutics to now be at the beginning of our development stage subcutaneous delivered small and adhering RNA targeting PCSK9. As Mike said earlier, this approach promises to turn off the facet rather than just mop up the floor. And our development candidate that we are now advancing into pre-IND studies shown here provides with weekly dosing as exhibited here, knockdown of PCSK9 in non-human primates with the expected level of LDL cholesterol reduction in these animals and these are studies performed in the absence of statin. So up to 90% knockdown of PCSK9 with – up to 68% knockdown of LDL cholesterol.

The durability after phasing of dosing is very impressive and notable and something you should look at here and it certainly gives us confidence that we can have a profile of once every-two-weekly dosing and potentially even once every monthly dosing for a subcutaneously administered sRNA targeted PCSK9. This program again is now been declared a development candidate and will very shortly in 2014 we file this IND to initiate clinical studies and obviously take this promising approach forward for the treatment of hypercholesterolemia.

So why do we think, as Mike said earlier, why do we think this approach can be a compelling approach in the context for the competition that’s out there today. We’re certainly impressed with the progress that’s been made by the competitors, but in fact we have a different and importantly different mechanism of action and that’s because as Mike said, earlier, the range of PCSK9 across the general population is actually quite broad. It’s ten fold variation from individual to individual, what that means, when you’re administering a monoclonal antibody, which marks up the floor by its mechanism of actions, is that your dose is adequate for distribution or a component of the population, but it’s an overdose for some subjects and it’s an under dose for other subjects.

In contrast, by blocking PCSK9 synthesis, with an RNAi therapeutic we know that we are giving the right dose to the patients at the right time in every case. We’ve proven that in our Phase I study that we performed with our IV delivered PCSK9 inhibitor shown on the right, which was recently published in the Lancet. So we are very pleased with the progress, obviously having a development candidate towards this target, offers an important component of high planned program both for The Medicines Company, but also for Alnylam and so with that I will sit down.

Brent Furse

Hello John, thanks for joining us today, it’s a great treat to have you here. And we’ll now turn to some questions-and-answers from the floor and I’ll try to moderate this with my colleagues, giving you all the answers.

Adnan S. Butt – RBC Capital Markets LLC

So, Adnan from RBC. First question, Clive on Angiomax, why invest now and why the new Phase III study and when did you see this opportunity first and then secondly what’s the time of the data?

Clive A. Meanwell

Well, the reason, we are invest now is because we are very confident about its growth and we’re very confident about its runway. And we know that if you stop investing in these kinds of products, they stop growing. Our educational platforms are tied very closely to our clinical trials, and the data that we expect to get here will I think change the game for interventional radiologists, not just interventional cardiologists. The cardiologists are doing peripherals and they are using Angiomax, but the radiologists need some more data. So that’s why now. What was your second question Adnan?

Adnan S. Butt – RBC Capital Markets LLC

I think, the timing of the data and the cost.

Clive A. Meanwell

I think, well, the cost we’re not going to reveal, but we can do these trials extremely efficiently. And the timeline is going to be fast. This is a high demand trial and I think recruitment can go quite quickly.

Jason D. Kantor – Credit Suisse

Jason Kantor, Credit Suisse. I guess two questions, first for Clive on Cangrelor, you kind of teased us with the possibility for some kind of life cycle management for Cangrelor, I am wondering if you could expand on that. And then for John on PCSK9, you’ve talked about the competition they are running trials with tens of thousands of patients, is that in the budget for The Medicines Company or are you looking to innovate on the clinical regulatory side as well and have some other past markets.

Brent Furse

Let’s do this inverse. John, last clinical trials of PCSK9 needed how we are going to do them?

John Maraganore

Well, I think clearly substantial clinical trials will be needed for PCSK9 and The Medicines Company has got a track record for doing those and doing those efficiently. There are populations where patients with hypercholesterolemia, where LDL cholesterol will be considered a valid regulatory endpoint and certainly that is a part of the strategy as we work together with our frontier and how we will advance this program to the market. But then certainly for other patient populations, outcome trials will be necessary and ultimately needed, but clearly the pathway and the approach and the target, and the genetic validation around that give us great confidence that that investment will be associated with a significant reward, so it certainly justifies that in the long run.

Brent Furse

And then maybe on the topic of innovation in clinical trial design, which I think it is important, Dr. Gibson, I mean how we are going to do this big trials going forward you think?

C. Michael Gibson

I think we will be looking at a future where we do large simple trials to answer the question definitively and the DSE this year, an example of that was the case study, 7,000 patients enrolled on the backbone of the government registry, the Swedish government has a registry, they randomized people to [indiscernible] or not, got a definitive answer. 7,000 patients, it cost $600,000 to do the trial, a fraction of the cost that usually takes to complete one of these studies, so I think that’s the path forward, large simple studies built from the backbone of registries to answer these questions.

Brent Furse

It’s also kind of back to the future moment if those of you are old enough to remember ISIS-2 which were already Collins ran which put Aspirin on the map for heart attacks and I also like to mention that we are already in collaboration with that Swedish registry group, because we are sponsoring the Prospect 2 trial which is a longitudinal study of lipid profiles of the timing patients, on exactly the same background and I can assure you that’s very low cost as well. So I do see that as a big part of the discussions going forward with John and his team, how we plug into those kind of new methods.

The other question was the question about Cangrelor and Angiomax combination. Stephanie, do you want to handle that?

Stephanie Plent

About the Cangrelor patent, correct.

Brent Furse

Yes, go ahead sorry.

Stephanie Plent


Brent Furse

Basically, we have IP on the combination already issued, that’s one thing to say.

Stephanie Plent

Right. And the other thing to say is that obviously on top of the five years above exclusivity we have filed patents for the Orange Book, that will give us the extra 30 months on top of Cangrelor and there will be the pediatric indication that gives you that seven years that you see on slide and that’s obviously other ongoing lifecycle activity.

Brent Furse

The combination is synergistic in Vitro and Vivo and now obviously in the clinical trials will be shaped in best outcome, so actually quite comfortable about the range of intellectual property we have around that idea.

Louise Chen – Guggenheim Securities LLC

Louise Chen from Guggenheim. I had a question on the PEI opportunity, I was wondering if you could give us a sense of the incremental sales from that opportunity if the data are actually good and then also is that risk adjusted into your 6% to 11% growth targets for the Angiomax franchise?

Brent Furse

I haven’t given any risk adjusted numbers on PEI today. About 600,000 patients, about 30% of them we think will get Angiomax as this trial shows reduction in bleeding as 200,000 patients times one to 2 vials so the math come out about 120 million I think.

Jonathan M. Eckard – Citigroup Global Markets Inc.

Sorry it’s Jon Eckard over here.

Brent Furse

Hi Jon.

John Maraganore


Jonathan M. Eckard – Citigroup Global Markets Inc.

From Citi. I just had a couple of questions; one was on the bridging setting. Could you talk about how many of these portion of these patients are typically in inpatient setting versus an outpatient setting currently and then I have a follow-up question on the PCSK9.

John Maraganore

Jon, like you we are struggling with this model, we are not quite sure how many patients are inpatients and outpatients, we haven’t found a good data source yet, we are starting to work with the premier data sets to find it. The other thing we are struggling with is how surgeons make these decisions, it does really appear to be a matter of personal style almost, if you talk to one surgeon they will say, I don’t ever operate, if I know the patient has PLAVIX onboard, and other surgeons say, its not a problem to me at all.

So it is a rather difficult profile, that’s why our guidance today is to stay with the ACS population where we know that there is a high risk and we know there is a collaboration going between the interventional cardiologist and the surgeon, but beyond that we are still ourselves trying to dig into the data and find out. So I can’t give you much guidance beyond 10% of patients that are going to the Cath lab and who might end up having surgery. Most of those are going to stay in if the patient has ACS, I would say probably 80% of those with ACS would not be sent home if you are trying to bridge them for surgery.

Jonathan M. Eckard – Citigroup Global Markets Inc.

Thanks, and the on the PCSK9, I remember earlier in the year you had said, you might leverage a your position in the hospital setting to run these trials, other developers of PCSK9s indicate that right after surgery and whatnot is actually not enough full time to start PCSK9, because of the inflammation of a [indiscernible]. Is there a registry that was referred to earlier of patients for your therapy that you could actually leverage or are you are going to have to kind of go on the new ground like the other developers of the PCSK9 antibodies?

Clive A. Meanwell

I’m not quite sure I fully understood the question, maybe John did or it was on the boundary…

John Maraganore

Well I think the issue with the antibodies after surgery potentially, it really relates to the potential vasculitis complications that’s been reported, so I don’t – that’s not been something that we’ve seen in our studies.

Jonathan M. Eckard – Citigroup Global Markets Inc.

Perhaps the different approach might alleviate that problem.

Brent Furse

We have a question from middle.

Steve Byrne – Bank of America Merrill Lynch

Steve Byrne BofA. Dr. Gibson, who is issuing you the report card and what initiatives are driving that and then perhaps more broadly Brent can you just talk about across your hospital accounts what portion of them are seeing CMS driven reimbursement cuts?

C. Michael Gibson

Well the Massachusetts Department of Public Health provides me with a report card every year of my mortality and “risk adjusted mortality” compared to my peers, so the state is doing that and the hospital is providing me with a report card based upon my cost and also based upon my outcomes relative to the other operators in the camp.

Brent Furse

Thanks I’m going to – I’m just asking for an actual number of PCI but I can tell you the shift from volume, to value based reimbursement has been dealt across the board, it’s a use challenge and I would say its in the well above 50% are getting hit, and they are struggling with this. Stephanie.

Dr. Stephanie Plent

As you probably know about – over 50% of PCI patients are CMS patients, the issue is that whether that inpatients or outpatients and we are seeing obviously a shift of patients from the inpatient into the outpatient setting that is what we are seeing happening first. And I think that’s the bigger shift that we have seen in the last couple of the last quarters that the increasing pressure to move patients to the outpatient setting, because he doesn’t change the value proposition for Angiomax and in certain cases et cetera. So it’s a shift we see.

Brent Furse

Well with that I think we will wrap up this program. We are just on time thank you very much for your interest. And we are going to call up the surgery and preoperative team have straight into it and try to keep the momentum up thanks.

Robert Robbins

Good morning everyone. I see the clock is running on me already. The rest can get the ball spotted in time. So I am going to move along, I’m Bobby Robbins, I’m President and CEO of the Texas Medical Center. And I thought I would talk first and give you just a little quick overview of the Texas Medical Center. Texas Medical Center is the largest medical center in the world. It’s made up of 54 institutions. There are 7,000 beds located on one campus with over seven million patient visits a year and over 100,000 employees with a total consolidated budget of nearing $17 billion.

Now the institutions that make up Texas Medical Center all have still remains MD Anderson the world’s largest cancer facility, Baylor College of Medicine, Texas Children’s Hospital the world’s largest children’s hospital. And this is a picture of Richard Smalley the Nobel Laureate is the father of nanotechnology. And our vision for the Texas Medical Center is it will establish five strategic institutes that will leverage the multi disciplinary and multi institutional talent to foster innovation discover that to leverage the vast intellectual portfolio, intellectual property portfolio that exist in our member institutions and to try to commercialize that IP.

And then also to do better job of more efficiently doing clinical trials where you currently treat more patients for cardiovascular disease, cancer and do more organ transplants in any one center in the world. For instance the IRB there are 23 IRB’s that currently exist in the Texas Medical Center. We are in the process of consolidating that into one IRB for the entire institution.

My job today is to frame for you from the surgical standpoint some of the challenges and certainly opportunities that exist for things that we as surgeons have control of. And those things we don’t have control of how we make decisions about delivering innovation the choices that we make. And really the guiding principle certainly with all the healthcare changes that are going on is the value proposition of providing more with less – increasing quality while at the same time holding costs.

From a surgical standpoint, the individual surgeon is really focused on the patient selection and the conduct of the operation in the operating theater. And then as the patient moves through the hospitalization, the individual surgeon of course is focused on their own outcomes to reduce complications, morbidity, mortality, while at the same time being more time efficient and decreasing costs. The department share overseas the group of surgeons in that particular discipline whether there be cardiovascular surgery or orthopedic surgery. And it’s really focused on – you can think of the individual surgeon as a physician coach or quarterback coach, department chair’s, the offensive coordinator and the CEO is the head coach. The department chair’s job is to focus on outcomes and processes that affect quality and cost for all the surgeons in that various department. Then of course the CEO is really focused on across the board on all aspects of care, delivering the highest quality care at the lowest cost across the hospital in the system working in conjunction with the surgeons and the other physicians.

There is no questions that surgeons are facing challenges. As the population ages, we are presented with operating on patients that are older, sticker with more mobility. This is just data that shows you that the population is aging. It’s phenomenal how rapidly the elderly population is growing and with better life expectancy where really a surgeon is now suffering from the agony of success. We’re now presented with patients that have multiple comorbidities that challenge us to improve quality when we know that patients that, for instance for diabetes comorbidities are going to have worse outcomes at surgery. So we’re challenged and we’re looking for solutions and help to help us improve the quality, outcome of our operations at the same time holding cost.

The outcomes report card alluded to earlier by Dr. Gibson really started with cardiovascular surgeons with results being published in the newspaper and now by states and CMS obviously is looking into this. What’s happening with that is that surgeons are becoming less aggressive, more risk averse and I think what we’ll see with healthcare reform is really sort of a [indiscernible] rationally of care. We’re not going to be operating on the really sick, elderly patients as we have in the past. And obviously this is driven by the principle that CMS will lead in the – other payers will follow that you are going to be paid for your performance. You’re going to be paid on your quality outcomes.

Additionally CMS has instituted these never events which are really serious preventable adverse events that occur during hospitalization and you can see that Medicare will not pay hospitals for these events. So they are highly incentivized to prevent them also at the individual surgeon level.

These are just a list of some of the surgical specific never events and as you can see there are certain things such as retain foreign bodies that most of them focus on surgical site, wound infections and that balance between regulating, bleeding and clotting with deep venous thrombosis that occurs, for instance after orthopedic surgery procedures. There are more never events that CMS has outlined, which are across the board that are relevant to surgery and most of those are related to, again infection being the vast majority of these never events that are particularly important to surgeons.

So there are opportunities for us to control bleeding. These are things that, no matter if it’s cardiovascular surgery, orthopedic surgery or general surgery, these are principles that apply to every patient that gets an operation. They are bleeding, infection and certainly there is pain and the control of that pain. So what is the reason why that we need to control these issues? Well, of course going back to the guiding principle that we have to increase quality while we decrease cost. Things, that technologies and processes that present themselves for the surgeons to reduce bleeding are very important.

What’s the reason for that? Obviously blood transfusions decrease your immune system and that leads to increased infections. Also if you’re in the operating room and you’re experiencing bleeding, you know that that patient is going to be on the ventilator a longer time and their length of stay and hospital cost are going to be increased.

In terms of infection, I think it’s fairly intuitive that those patients that get major operations, that have infections will have worst mortality statistics that will be more morbid events that occur, patients will stay in the hospital longer and it will cost more money. And as I already pointed out, these severe inhibitor advance that CMS has outlined are really infection related. So any strategies that we can come up with that will decrease infection, whether it be more minimally invasive approaches that will decrease wound infection, paying attention to the pain management post operatively, those are all things that I think will reduce hospital stay and therefore cost.

Now certainly all of you, who’ve had an operation knows that pain is an important part of that procedure. The reason to look for novel ways, whether it be less invasive approaches or new pain management, it will hear about later in this session, certainly will increase the quality of care that we deliver to our patients. It will increase their mobility, there will be less deepening and thrombosis and other complications, and certainly if we can control the pain, then the patients will for a cardiac surgery procedure will be able to be exuberated often times in the operating room. We’ll have less delirium in the ICU. Therefore it could get exuberated sooner. All those things are good because it decreases the number of hospital acquired pneumonias and other things that can effect the quality outcomes of our patients.

So in summary, I would say that the surgeons and hospitals are caring for older, sicker, more complicated patients. Obviously bleeding, infection and pain are major areas of opportunity for us to improve quality and decrease cost, and that really is the bottom line at the end of the day. That we’re all going to be phased with report cards and metrics that are going to force us to provide more of this patients into value proposition of higher quality at a lower cost, while maintaining good customer service.

With that I am going to turn it over to Dr. Levy for the next presentation.

Alan Levy

Thank you, Dr. Robbins. I am going to be talking about a significant advance in treatment of post-operative pain and also why it’s so important that these patients become unfettered. My answer is, transdermal patient controlled analgesia. It’s a compact system, it’s disposable, it’s needless, it’s preprogrammed and preloaded with fentanyl.

The clinical data that I will share with you is based on multiple, successful Phase 3 trials, and numerous publications. And the stability problem that J&J encountered with this product has been successfully solved with our two-part system.

It’s well recognized that patient control is the best way of controlling post operative pain and that’s because only the patient knows the extent of their pain and it’s been recognized that – even following exactly the same surgery, there can be a fivefold difference in the pain that the patient experiences and that’s one of the reasons that more than 50% of patients still today complained that their post-operative pain has not been adequately treated.

Now IV PCA has been a significant advance, but it still continues to have numerous drawbacks and many of them are captured in the photograph of the patients that you see.

As you can see, patient is tethered to that huge pump, she is aligned an IV, so obviously her mobility is severely compromised. It’s complicated, it’s error prone, programming errors, medication errors, pump errors, which again continue to stay, it’s time consuming to setup, it’s costly and because it’s invasive, it’s infection prone. The pumps that line the IV all of that is replaced with IONSYS. And so as you will see, IONSYS retains all the benefit of patient control, but avoids all of the disadvantages of IV PCA. And the number of patients used, there are more than 8 million patients in the United States today receiving IV post operatively.

And outside the United States, in Asia and Europe, again large numbers of patients being treated with IV opioids and the advantages of IONSYS are clear. Although through the safety and efficacy in a moment, but obviously a dramatic improvement in post-op mobility, a significant improvement in patient satisfaction, inner satisfaction and physician satisfaction, totally eliminates pump errors, medication errors, programming errors and reduces the time of setup, there is no setup that reduces nursing and pharmacy time. Multiple successful Phase 3 trials have shown the efficacy, the excellent efficacy of IONSYS in addressing the pain.

From a safety perspective, it shows superior safety with regard to overall adverse events, but particularly severe adverse events. Those related to respiratory depression and those related to events such as the deep vein thrombosis and thromboembolism.

From a manufacturing perspective, we are ready to launch this product and that’s because we acquired from Johnson & Johnson three robotic automated high speed lines that can produce more than 15 million units a year at launch.

The clinical value proposition for this product are, obviously its excellent efficacy, its superior safety profile, the simplicity of the product, minimal assembly, essentially no setup, avoiding all of the opportunities for potential errors. There is no hardware to maintain and the whole system, just in this picture system shows very convenient for the nurse.

The mobility is optimized, which facilitates patient recovery early ambulation and it’s completely disposable so there is no infection risk.

This is also a large economic value proposition. Study was carried out, which compared the cause of IV PCA versus IONSYS looking at the equipment cost, the labor costs and the avoidance of complications and adverse events. And this is significant cost savings for IONSYS. From a regulatory perspective; the regulatory path is quite straight forward. We’ve had multiple meetings with the FDA. We got very positive response to our two-part system.

They agreed with us with no additional safety and efficacy studies are required. We successfully completed the pharmacokinetic and human factor studies they asked us to do. And so early next year we will be submitting our supplemental NDA, and I emphasize that it’s a supplement to previously approved product. So all that’s involved is a CMC review, which is a 4 month review and a 6 month REMS review and these two reviews will be done in parallel, so a very fast review path. And we’ve gotten similar feedback in Europe, no additional safety and efficacy studies are required.

There is a competitor product being developed, but we think that IONSYS had significant advantages with regard to mobility, complexity, ease of use and many others. When we acquired this product from Johnson & Johnson, we acquired a large deep broad pattern portfolio providing protection for this technology out to 2024. Since we acquired it, we filed multiple patterns three of which have issued several more pending, and these will provide significant projection out to 2032.

And I want to emphasize that this is a platform product, what I have been talking about so far is only the first application, clinical studies have been done that shows that this product has applications in areas such as non-surgical acute pain, treating post operative pain in an outpatient setting and allowing the patient to take a device home with them. So you can get them out of the hospital sooner, with good control of their pain.

Throughout the last several years, we’ve continued to do preference studies and the preference study results are extremely consistent. The physician really appreciates the benefits of this product. In this study that we just completed this year, 200 physicians were asked of your last 100 patients that you treated with IV PCA. How many of them would you treat with IONSYS, it was available today, and they said they would use that in more than 60% of those cases.

And even more impressive, when they were asked the last 100 patients that they did not use IV PCA, what percentage of those patients well they have used the IONSYS and they said 45%. And the importance of this indicates that we’re not just going to take share from IV PCA, with this significant potential to expand this market. And so when we look at the number of patients and we look at conservatively at the preference shares, we anticipate worldwide peak revenue for this first application of greater than $800 million a year.

So in summary, this product IONSYS provides important improved control of postoperative pain, which remains an unmet need with a simple, convenient, untethered system. A system that’s cost-effective will generate greater than $800 million peak revenue for just its first application and importantly is a platform technology with multiple applications all projected with a strong patent position.

And now I’d like to the introduce the next speaker, Dr. Jan Ohrstrom who is Head of our Homeostasis Group.

Jan Ohrstrom

Thank you. Thank you very much, Dr. Levy. I get to do the one presentation before coffee time here. There is nothing like being a person who for the first time present successful Phase 3 data, right? That doesn’t come every day. But before we get there, let me talk to you for a minute about how we’re building the surgical hemostasis within The Medicines Company.

I’ve worked with clotting factors at Novo Nordisk Factor VIIa, ZymoGenetics Factor XIII, Factor I, Factor II fibrin and thrombin for a number of years and like Dr. Robbins, I was trained as a surgeon before that. So bleeding is due to my mind and I obviously have spent many, many years taking bleeding episodes.

If you look at the surgical hemostat market, not all bleedings are created equal and just bear with me for a minute. If you find yourself as a spinal surgeon, working under microscope bleeding seems humongous when it bleeds and you need very different tools if you are a liver surgeon where you do manual detection of liver tumor and large bleeding surfaces. So that’s why the market with topical hemostats is segmented as we see on the slides here. You need different type of topical hemostats, not one size fits everybody. There is some subtle differences between the Europe and the U.S., I’ll talk about in a minute, but this is a very attractive market that often goes unnoticed.

About 1.1 billion is the revenue potential for this market right now divided slightly more favorable towards the U.S. than Europe. Subtle differences between European and the U.S. is that in Europe we do not see a single standing thrombin on the market. The European market is based at liquid sealants, which is quite old, very mature technology, something called flowable sealants and then we have this light blue part which is TachoSil, a fibrinogen thrombin pad, very brittle that has had kind of a walk in the park in Europe for many years.

We go to the other slide and look at the U.S. you will see this lever here for about TachoSil is about 5 million, so obviously not much market share over here. What is important here to note is that, when we’re building our backbone for the surgical homeostasis franchise at The Medicines Company is thrombin and the thrombin market is large in the U.S., there are two basically players with, I’d like to say The Medicines Company being most important and that market has been basically in business since 1943.

Apart from that you will see flowable sealants and the more mature technology, the liquid fibrin sealants. Recothrom is actually coming out of my days at ZymoGenetics. So this is like getting the band back together. Recothrom came to life at ZymoGenetics back in 2001 and 2002 when we took Zymo public and hit the market in 2008 and from then on the rest is history, it’s been capturing market share year-after-year and is doing very, very well. It’s the only thrombin on the market that’s indicative for use in pediatric and adults. We’re doing well with it. We’ve 60 people in the field and we’re hoping and very, very clear that the 60 people in the field will get more work very, very soon.

Fibrocaps came to my attention through Bill Slattery who is here today. Fibrocaps is a dry powder fibrin sealant. It’s comprised of thrombin and fibrinogen and those of you who know little bit about thrombin and fibrinogen, you understand that thrombin attacks basically fibrinogen, the minute it sees fibrinogen. And as soon as it does so, fibrinogen polymerizes into fibrin strands and you’ve got the clot formation going.

So traditionally you’d say you’ve got fibrinogen in one bottle and thrombin in another, keep them way separate until you need them. That’s not the case when you do the formulation like we do. As you spray dry thrombin and fibrinogen individually, put it in a vial, they will actually see very, very good neighbors. Room temperature stable product, the powder in the vial is the product. It’s very important to understand that this is it. If you flip the cap, pour the powder directly on to the bleeding surface, the minute the powder moistens, then the microspheres dissolve and thrombin attacks fibrinogen and now with the superficial [indiscernible] concentration, you have the fibrin strands following and the clot formation is working.

You can use it directly out of the vial or you can see our proprietary spray device. If you’re a liver surgeon I would go for the spray device, if I’m a spinal surgeon, I would, do it directly out of the vial that gives you the flexibility. So you’ve already now, you’ve knocked off quite a few issues that are surrounding liquid fibrin sealants, the powder is room temperature stable, so you can cut off what’s needed increasing and other pole chain stories in the pharmacy. You don’t need it’s partners to prepare it because you don’t need to reconstitute it, mix it, blend it, put it in a double barrel syringe. So we’re now down to a time table that is basically less than a minute.

So over the past years, we have gone ahead and developed this product. We started available in 2008, so in less than five years, we’re all the way through with almost submitting NAA, BLA’s. So that must be record time for these types of products.

The Phase 3 is a mimic of Phase 2 and Phase 2 show a very robust superiority for [indiscernible]. So the Phase 3 basically echoed the results of the Phase 2. 65 sites in the U.S. and Europe, total 719 patients recruited and four different types of surgery. Primary efficacy endpoint very well know, is described in the fibrin sealant guidelines by the EMA and the FDA and then some secondary leading endpoints and I am here to say that we hit all the primary efficacy and secondary efficacy haemostatic endpoints and that makes it a winner.

So on a safety point of view, [indiscernible] to thrombin, safely pool the indication and of course we’ve been monitoring very carefully the safety and performance of devices. We know that some of our competitors has big issues with the safety of their devices, we can report that we do not.

Here is the Kaplan-Meier that people usually are asking for. On the Kaplan-Meier, see on the blue, basically just a little bit of blue line, you will see that the patients that follow the blue lines, they achieve haemostatic faster than those on controlled group on the black. And if you just flip across without going into too much detail, you will see that all four indications are four different types of surgery with or without patients on heparin et cetera, et cetera, they all came out with p values of less than 0.0001.

What’s more important is that these stop bleeding in three minutes, almost close to 100%, that’s one of the very good feelings you have when a product can stop your patients bleeding in less than three minutes is quite comfortable to move ahead and close out the patient and be done with surgery.

From a Phase 3 point of view, this is the traditional slide, the efficacy first and the safety well balanced, it’s the two to one randomization, so from the safety point of view with AEs or SAEs not much to report, the main adverse events that’s been reported as a traditional ones, postoperative pain that without bleeding and vomiting basically not here.

So PHOENIX 3, all these primary and secondary hemostasis efficacy endpoints, safety well balanced and the spray device that wasn’t used in more than half of all the patients even some of our spinal surgeons elected to use the spray device because they liked it.

Are we ready for launch? You can brag about your Phase 3 data forever, but are we ready for launch? The short answer is, yes. We have done it before, we can do it again. Fibrocaps is ready for launch because we use the commercial formulation for the Phase 3, so no need for bridging studies, so the commercial production is basically up and running.

We have been working with the spray device over the past year, we have ISO certified that part of the company that needs to be ISO certified to obtain the CE mark, so that’s on track and we are on track just by growth of other products talk about to-date to submit in Europe this quarter, so fourth quarter 2013 and the FDA will receive our BLA in first quarter 2014. We will do BLA submission and File 10-K submission in the U.S. in parallel.

So what about numbers, what’s going to happen going forward? This competition out there, I told you already that I think the liquid fibrin sealants will be a very attractive target for us, the liquid fibrin sealants takes a long time to prepare, needs the cold chain storage, so we assume we will take significant share from that part.

Thrombins, nope, we are not going to try to cannibalize our own product. So thrombin is usually used in mild oozing from capillaries that would not be your choice for Fibrocaps, that’s for mild to moderate bleeding, so slightly more sophisticated and then we would compete also with the flowables and see significant opportunities in laparoscopic surgery.

The market that we will be attracting is in Europe, in large we will be mixing in with the liquid sealants and the flowables and likewise in the U.S. So bleeding continues to be a challenge for surgeons despite surgeons often telling you that their patients do not bleed. We think we have a traditional very, very attractive footprint with liquid form that we can built-on and we are ready to submit and launch viable caps over the coming months and next year. Thank you very much.

Adam Sharkawy

Thank you Jan and with that we’d like to open the floor to questions for our panel.

Traver A. Davis – Piper Jaffray, Inc.

Hi, it’s Traver Davis from Piper Jaffray. Dr. Levy, I was wondering if you could just give us a little bit more color on the REMS, the proposed REMS for [indiscernible] and then also if you could maybe speak to maybe some of the things that the FDA, the agency maybe looking for in that respect and maybe also just touch on the potential for abuse of the product, both in and outside of hospitals that’s able to be removed [ph]?

Alan Levy

Let me start with the rems. We’ve had a number of meetings with the FDA to discuss the REMS and the REMS will be quite straight forward. The product initial labeling will be for in-hospital use only. So the focus will be on only distributing in hospitals that have been certified and the certification will involve making sure that the people within the hospital have been appropriately trained on how to use it and how to prevent it from leaving the hospital. So we expect that to be straight forward.

And as far as what the FDA will be looking for with regard to the CMC what they’ve indicated is comparability to the previously approved product and that’s why we did the pharmacokinetic study, which we’ve successfully completed. And we have successfully solved the stability problem that J&J encountered. And as I said we have successfully done that by simply separating the two components. And as I said with the product in the hospital, the risk of abuse is quite is no different from that than any other opioid that’s within the hospital when they are appropriately trained to make sure that they don’t leave the hospital.

Jan Ohrstrom

And just to add to Dr. Levy’s comments, the REMS program were really only applied to the hospitals that will not be required for patients or care groups.

Ed Arce – MLV & Co

Ed Arce with MLV & Co, just a couple of quick questions on the IONSYS product. You briefly mentioned the competitive benefits over the product, I wish if you could go into a little bit detail around those benefits? And also the $800 million PK revenue estimate that you mentioned, if you could just breakout what you believe that would be in the U.S. and EU? Thank you.

Alan Levy

As far as the advantages, well I think some of the advantages we’ve shown very briefly in that photograph and I don’t want to use it necessarily as an opportunity to pass the competition. But I think some of the things that I talked about obviously this is IONSYS, this is the product as compared to the celarix product which involves nine different components. So the opportunities for complexity are dramatic. The patient has a piece of hardware that they’re tied too that will be tethered to their bed. So this is optimum for mobility. I think there are other advantages related to the fact that it’s a buckled delivery and some of the complexities involved around a buckled delivery versus a very well controlled active skin delivery.

Jan Ohrstrom

And also I’d like to add that the IONSYS product obviously uses fentanyl a very well characterized and well understood by our active I think sufentanil maybe less understood and characterized. The time to PK efficacy with fentanyl is under 10 minutes with sufentanil and may take up to 41 minutes to reach PK efficacy for dose. So I think there are quite a few advantages to IONSYS not just from a use perspective, but potentially from a PK perspective as well


Louise Chen – Guggenheim Securities LLC

Louise Chen from Guggenheim. I had a couple of questions, IONSYS. First question I had was does IONSYS have a PK comparable to the IV administration of opioids even though its delivered through the.

Second question I had was upon approval of your product, if it gets approved, how fast can you launch it because I was kind of curious as to who would get to market first either you or Zalviso? And then last question I had was on, you know, since there is a meaningful amount of morphing that’s actually compounded, do you see this is an opportunity for IONSYS, maybe even just because the pricing and morphing might get more expensive if they have to go back to sort of the traditional manufacturers for the product? Thanks.

Alan Levy

First question about comparing these transdermal delivery versus IV delivery, yes, the delivery, the PK profile is very similar to that of IV fentanyl. And so it goes into the blood stream very quickly, it’s extremely predictable and at least the blood stream very quickly, so it has those excellent advantages. If I remember the second question…

Jan Ohrstrom

With respect to as – the cost of morphing, is that correct?

Alan Levy

That was the second question.

Louise Chen – Guggenheim Securities LLC

How fast you could launch after approval?

Alan Levy

Well, as I went through this is a supplement, so the FDA has told us that it will be just a CMC review which is four months and a REMS review which is six months that will be done in parallel, it’s not a review of the previous clinical safety and efficacy work. So we expect to a rapid approval and then we’ll be ready to launch it very quickly. And last about cost I showed cost advantages and yes it’s some of the issues related to compounding of morphing become more significant that cost differential will only get greater.

Jan Ohrstrom

Also if I could just comment that we’re very excited about IONSYS for many reasons, but it maps very beautifully to the purpose same and the Clive mentioned earlier of The Medicines Company to save lives, alleviate pain and suffering and improve economic efficiency of hospitals. IONSYS from a safety perspective shows excellent safety as compared to the current standard of care IV PCA with lower adverse events. It has shown as Allan has shown one of these diagrams that more patients have rated and achieved excellent pain control with IONSYS versus IV PCA with statistical significance and obviously as he’s shown we’re very bullish on the savings that we can provide hospitals with IONSYS. And maybe an opportunity for Dr. Robbins to comment on the criticality of increased mobility for recovery in the hospital.

Robert Robbins

Certainly, the soon you can get patients up to moving the less chance you’re going to have for adverse complications whether it would be infection from pneumonia or from deep vein thrombosis particularly around some of the orthopedic procedures. One of things that I don’t think has been mentioned is the practicality of trying to transition one from a pump to oral medications the issues around GI disturbances with nausea, vomiting, potential for aspiration. The other thing is certainly constipation and not getting proper pain relief. All those things are going to affect quality and they’re going to effect length of stay and cost. Many patients often ask can I just take this pump home with me. Well potentially one day I think that this will bridge very nicely into maybe alleviating having to take oral medication as you transition out of the hospital and be able to use this at home.

Alan Levy

Thank you Dr. Robbins.

Jan Ohrstrom

One more thing, so just back to the launching and how fast can you get the product out. So we won’t be completely new to this at the point of approval, we plan on using some of the surgical sales force that’s already in place and then expanded from there.

Alan Levy

Thank you Jan. We have I think time for one more question.

Ed Arce – MLV & Co

Greg Matasco from Mantross [ph]. Could you speak just briefly about the $800 million peak potential and relate that to the 15 million unit capacity from the 4 pieces that you bought from J&J. What kind of share does that imply? And does that, would that serve on a worldwide basis?

Jan Ohrstrom

The $15 million capacity was the capacity that J&J had in place at when they launched the product. And that would translate to well over $1 billion a year of proposed market revenue potential. So the $800 million I think would be in conservative. J&J’s estimates were higher and they built it and as I said at launch they have the capacity to produce more than 15 million units which would translate into more than $1 billion in revenue.

Alan Levy

Thank you, Jan.

Unidentified Analyst

[indiscernible] Capital. Dr. Robins maybe you could comment and the company could comment as well on two features of IONSYS. The first is the SOLO nature of healthcare within the hospitals. And what I’m specifically referring to is the enthusiastic review of the product if I would say nurses but yet it is seem as the potential enemy of the pharmacists. And how as a leader of an organization how those trade off will be played out with a product like this? And then secondly just the overall safety of the product and how important you see that as the distinguishing feature as we go forward? And just have a couple of questions for Jan if I could.

Robert Robbins

I think you’re hitting on an important topic in one that many hospitals are focusing on and that’s multidisciplinary, multi-team integration of processes whether it would be Six Sigma Lean whatever you want to look at, how patient flow and how they are managed. I think the overall goal of the team would be to how could you improve quality and decrease cost. And I think that this product is a fantastic bridge between as I said the IV administration with all that potential cost, inspection of catheters, overhead maintenance of equipment to BRIDGE and transition to the oral medication. It’s seems to be fairly safe, but I’ll let others to know more about this then I comment on that.

C. Michael Gibson

Alan, you may have a few thoughts on that.

Alan Levy

Yeah, remember this was a product that J&J launched and launched successfully from a commercial perspective in Europe. So they deal with the issues, the silo versus pharmacy, ultimately it had been approved by pharmacy and they were able to convince the hospitals including the pharmacists that overall this was a cost savings for the hospital as well as providing clinical benefit.

Robert Robbins

The other thing to point out is that patients are now very savvy. They’re going to be warning this. This is a great solution to intend them from an IV pole and the potential for going home with it would be tremendous. So again, we’re trying to focus on a value proposition, highest quality, lowest cost, but also focused on patient centric needs and patients certainly would want to see this.

C. Michael Gibson

And Jan, if you look at the market share slide that you provided for Recothrom and I apologize if I missed this, but it looks like it was on a linear uptake and something appeared to change that in 2011. Would you comment on that? And then specifically are there any strategies that could involve highlighting safety issues around portioning thrombin that would accrued to the benefit of Recothrom. And then final question is on Fibrocaps, you’ve given that it is a powder, yet it is obviously of high value. What do you think are the greatest challenges to educate the market as to the value proposition of this product, but given the fact that it’s a powder?

Jan Ohrstrom

So a quick one on Recothrom, we start from one end and you saw the graph that keeps going up. And I think we all have to realize that usually you won’t have a 45 degree trajectory forever. I think in 2011-2012 there’s been a shift also between BMS and the Medicines Company and there has been a little bit of floor between the two companies in the transition period between for Recothrom when it went from BMS to do with the Medicines Company. I quite frankly don’t think it got enough attention that is just my opinion on it. With respect to differentiating it I have to be careful because there has been quite a bit of dispute going back and forth between the two companies, not the Medicines but before that with Thrombin-JMI. I think it’s fair to say that it’s an easy message to bring out that this is a recombinant product. So there is only recombinant thrombin in the products and that is one of the messages I think that’s well received by users.

So Fibrocaps, yes, it is a powder. I think if you look at how it is utilized, the message has been quite easy to bring across because the first thing is that you don’t need cold chain storage so you cut that one out, you can store it on the shelf, if you don’t use it, there is no wastage, so it simply stays on the shelf whereas with some of the competition you bring it out of the freezer, if you bring it out of the refrigerator and you’re done, you have to use it, you got to pay for it.

The next thing that’s been well received I think is well I should probably ask you about that the squad nurses and the circulating nurses are not needed anymore for this product, they are needed don’t get me wrong because there is no preparation.

You don’t need to heat it, warm it, you would see circulating nurses running around and trying to warm-up Thrombin and Fibrinogen before you mix it in double barrel syringe that measures has gone in quite, quite nicely with some of the staffs, others obviously would see it as a threat towards the job. And last but not least when we got the Phase III data with a very, very attractive time to hemostasis that for the surgeons as at least was an hour moment where they said okay that’s looks like a winner.

I’m not saying here that this is just going to be a walk in the park, never. I’m very humbled by the competition, but I also feel after many, many years working in this field that we have a very strong, very good proposition with Fibrocaps.

Robert Robbins

So just one comment, I know we’re running short on time here, but there is nothing more frustrating than doing a technically perfect operation and then the patient doesn’t cooperate because they’re bleeding and you can’t get them out of the operating room and you’re giving blood products and that’s going to increase infection as we outlined before, but the rapidity and the ease of being able to just essentially take this product off the shelf would be very attractive. Obviously, the efficacy of how well it stops the bleeding will have to be laid, but just the time factor alone all the things that we’ve been talking about improving efficiency this seems to be one that would provide great value to the surgeon.

C. Michael Gibson

Thank you Dr. Robins. I’d like to thank the audience for their questions. And it’s time-out for discussion and back over to you Mike.

Michael Mitchell

Great. Thanks, Adam. So we’ll take a 10-minute break. We’ll return at 11 o’clock to cover Infectious Disease Care and our important Roadmap for Growth session. Thank you.

Okay. Thank you all for settling down after the break. We are going to start off our Infectious Disease Care session with Dr. Ralph Corey as our guest speaker. Thanks Dr. Corey.

G. Ralph Corey

Good morning. I’d like to talk about the challenges and progress in the treatment of MRSA infections. MRSA stands for Methicillin-Resistant Staph aureus. We will talk about all kinds of Staph. Staph is unique. It is the Darth Vader of gram-positive cocci that I once sold the FDA. They just looked at me. But it’s evil. It’s got attachment proteins on the left that will allow it once it gets in the bloodstream to attach to any tissue in the body and it’s got enterotoxins on the right, which are expressed once it does attach to those tissues and destroys them. It’s the only bacteria that can do this. That’s why the FDA gave it a separate indication for Staph aureus bacteremia, evil bug.

And on 1995 we had four children, healthy children in an Indian reservation who developed Staph infections with USA400 and they died. And it got everybody’s attention and then it sort of switched the USA300 and USA300 explored across America and over the next 10 years it went from being non-existent to causing nearly 60% of the infections coming into the – cutaneous infections coming in the years across the country. It’s scary to all of us.

Besides ABSSSI, as the FDA calls it, Acute Bacterial Skin and Skin Structure Infections, Staph can cause community-acquired pneumonia, which is particularly evil especially after influenza, has a 30% to 60% mortality in young adults who have seen this as a duke in students, half is hospital-acquired pneumonia, ventilator-associated pneumonia, bloodstream infections, bacteremia, infectious endocarditis, Staphylococcus, heart valves and bones and joints. It also loves bone for some reason. But it’s a long list of things that Staph can do.

So let’s stick with ABSSSI right now and the spectrum of challenges. Now this is into challenge. This lady has the facial cellulitis. You’d see their Staph or strep. We can treat it with several different products and she’ll do well.

Obviously she doesn’t have complications like involvement of the eye or the sinuses or the bloodstream and she did well. This patient is a little bit different. This woman, 61-year old came in with diabetes out of control. Her blood sugar was over 1,000 and she was in shock. Was she in shock from the blood sugar? Probably not, she was in shock maybe because of this hand. Hand looks red. Stay well.

Just an infection of the hand, give her some antibiotics. Unfortunately some of these infections need more than antibiotics and this patient underwent deep surgery because the infection had extended down to muscle and fascia and really hurt her.

Fortunately they saved the hand and saved her life. This patient, they saved the life, but lost a whole lot of tissue. This is a terrible infection called necrotizing fasciitis. We still have some challenges with Staph to think that this all just a little few little abscesses around that we can drain is not being in the ERs across the United States.

What do we treat this with; well 80% of these deaf infections are treated with Vancomycin. Why? Because we’ve had it around since 1953 when it came in soil from Borneo to Eli Lilly and Indianapolis and was isolated. We’ve had it forever, we are all used to it and it’s cheap, great. If it doesn't work that doesn't help. It works for most skin infections for the heavier duty [ph] infections it’s a problem, its fly, it’s a ponderous molecule, its Vancopotamus [ph] that’s why I’ve put this there. So remember that what it’s really like. It has slow tissue – low – poor tissue penetration; it’s totally bactericidal and it has increasing resistance.

Header VISA, VISA is Vancomycin Intermediate Staph Aureus and then VRSA is Vancomycin-resistant Staph Aureus. Unfortunately we don’t have too much of the VRDA, but we do have lot of the VISA and header VISA and the MICs are growing up. And I’ll show you. Increasing nephrotoxicity as we try to increase the dose of Vancomycin, we enter the kidney more and its up to 20%, 25% now and twice daily infusions and of course trough monitoring which has to be done especially in more serious infections.

How do we improve current therapy? We improved efficacy of course. Enhance the rapidity of onset of action, I think abbreviate the course of therapy. How? Avoiding short hospitalization. What will this do? It will avoid short hospitalizations; it will also avoid needing a central line for 7 or 10 days to infuse antibiotics and having line that’s not much fun, and avoid hospital pathogens. We worked around a lot of bed bugs that do infect patients who are coming in with other illnesses, improve compliance and improve tolerability.

I want to talk about oritavancin, there are three drugs that have finished their Phase III trials and will probably be approved in the next year. Only one drug can you give a single and fusion and it’s effective to treat these patients with acute skin and skin structure infection. The severity and care continuum, just look in this road from a far and we have three or four blocks. First block is this healthy patient comes in and has not the modern infection, get seen its given oral antibiotics and sent home. Some of these patients are compliance and these patients are like me. They get done with about three pills and they say hey I’m getting better and I stop.

I’m stupid, I know that, but I can’t fix it, cortile two the patients are febrile. They are ill appearing, but, they are basically healthy people and what do you do with these people? We usually them IV as a shot, you know an infusion of IV antibiotics and then we send them out on oral antibiotics. Or you can just give them an IV infusion and see how they do; especially they have a long-acting antibiotic.

The third cortile, they come in febrile, they are toxic and they have something else going on, they are either on heart failure or they’ve got cirrhosis, or they’ve got kidney problems, they are not healthy people and that an awful lot of our patients are patients who have underlying diseases, comorbidities and these are people you want a watch.

You have given the IV infusion and you keep him in the ER and you watch them and see well do I need to admit him are they going to respond and after 24 hours you make a decision. And these are people that who along acting antibody might be very useful, especially if you are going to discharge them, but also if you are going to hospitalize them. And the fourth group is the obviously really sick group of couple of patients, we saw with Febrile they have life threatening conditions like the necrotizing fasciitis, there is septic, bloodstream infections or there are risk of losing a limb. Those people get immediately admitted and treated. And I think there are group that you can treat with numerous antibiotics.

The attributes of oritavancin, lets just look at these quickly, three mechanism of action as appose to Vancomycin with one. Two, our key steps inhibiting key steps in cell wall synthesis and one Disrupts Membrane Integrity. How is it differentiated from Vancomycin? Increased in vitro, extended gram-positive spectrum, concentration-dependent killing. I find that one of the most interesting PK/PD parameters and I will show you why. And then long elimination half-life, Long elimination half –life.

One of the MITs [ph] is the lower the better, if you are not a physician which I figure most of you guys know a lot much too much to be a doctor, low is good. So a 0.06 MIC is really good, it’s really impressive. A greater than 16 is really bad that means it’s highly resisted. And oritavancin MITs nearly across the board for Gram-positive cocci is 0.06. 0.12 that its one, two dilution up that’s not important or clinically relevant fortunately.

I think this is where concentration-dependent killing comes in, if you look at the Vancomycin graph, you will see that Vancomycin kills 3.5 logs in 24 hours, it’s not bad. You need 3 logs to be bactericidal. On the other hand, oritavancin kills 3.5 logs in 15 to 60 minutes, it really just stop some of the bugs and that’s very important for how fast the patients would respond in the emergency room can you then after a day well he have responded enough you feel comfortable sending him home.

Clinical studies, this is a solo study. They’re two identically designed double-blind randomized control trials. You’ve seen this with other groups, it’s the same, they’re well designed studies since I help design, very important. They involve patients with cellulites, major abscess and wounds and caused by gram-positive cocci including MRSA. A single dose 1200 milligrams of oritavancin was compared with 7 to 10 days of Vancomycin infused twice a day. Our recruitment was worldwide and we designed a protocol under the guidance of the EMA and the FDA. They’re non-inferiority designed trials of course.

This is another – look at these trials, you can see that at the top oritavancin, there’s a single dose plus either 13 or 19 doses of placebo versus Vancomycin which has either 14 or 20 infusions over the seven to 10 days.

The evaluations are either early at 48 to 72 hours, which the FDA really likes or they’re the traditional seven to 10 days – have seven to 14 days after you finish therapy, which the EMA likes. And then there’s an extra 60 days safety follow-up which is really important to look at the safety of this drug.

Demographics, I just want to look at two things. One out of five patients had MRSA or we were able to culture MRSA from them. It’s very hard to culture from cellulitis and one out of six had SIRS, which is Systemic Inflammatory Response Syndrome, which means you’re sick, basically there’s several steps in the search criteria, but this tells you that they’re not just sitting there with a little infection that these are sick people. And in general these cellulitis had because of the FDA were big.

Over the results, while the FDA primary endpoints, oritavancin 81.2% were cured versus Vancomycin 80.9% and in the exploratory greater than 20% reduction it was so similar, 86.4% versus 84.1%. EMA primary endpoints at 7 to 14 days after we’re, again 81.2% versus 80.2%.

Did they meet the non-inferiority margin of minus 10%? Absolutely, these are pretty tight confidence intervals in these four spots, then you can see these trials were very successful.

And finally for the MRSA sub group, 405 patients, again very similar Vancomycin versus oritavancin. What about safety? Always this is an issue. In past, it’s not an issue now. If you look at the treatment-emergent to adverse events, 55% versus 57%. Treatment related – treatment-emergent adverse events that’s a tough sense that’s 22% versus 28%. This continued because of adverse events, 3.7 versus 4.2, again these are very similar numbers, and they’re sort of boring, you know in clinical trials where you’re looking at non-inferiority, boring is great in the safety population. And deaths, there were two in one arm and three in the other, I’ve reviewed these myself very carefully and none of the five were due to adverse events of the drugs.

So what do we have? It’s a single 1200 milligram dose of oritavancin met all pre-specified objective, it’s clinically non-inferior to Vancomycin, traditional clinical endpoint and at the new early FDA endpoint effective in MRSA infections and similar profile of Vancomycin in the safety arena.

Where do we go from here? I think that we have a look over several options, unfortunately I’m not in charge, Clive is. So he will decide where we go from here, but it’s interesting to me because I love to study bacteremia. I love endocarditis and I love prosthetic joint infection, so any of those are good options for me. Thank you.

Michael Mitchell

Thank you, Dr. Corey. I’m glad you would have told Clive what we should do next. I appreciate that. I’d like to actually take you through a few things this morning here in the next 10 minutes, and first of all, I want to layout for you what we believe the patient population is in aggregate in the marketplace.

Then break it down for you, where we find these patients within the various classes of severity that Dr. Corey outlined, and then talk about the hospitals where we find the majority of these patients, and then outline for you our value proposition that we believe at this point in time oritavancin provides in the institution setting and provides you some assumptions for modeling.

But I think one of the key points that Dr. Corey discussed here was the fact that you can actually now treat skin and skin structure infections with a single dose injectable antibiotics, not only skin and skin structure infections, but those caused by MRSA, which is really a concern for clinicians right now when they treat this infection.

I think you can see on the left hand side, a majority of those points Dr. Corey addressed in his talk, I just like to highlight a couple for you; and one is we do have commercial scale manufacturing in place and we are proceeding with that, we do anticipate even increasing that capacity based on the success of the product, and what you see is also on additional indications. The economic value proposition that we have ranges from about $2,065 to about $7,372. I will go into more detail in the presentation a few slides.

I think Dr. Corey already outlined the potential indications, prosthetic joint infections bacteremia not that it would be a single injection for a prosthetic joint infections, but as you know that treatment just consist of about 8 to 10, maybe 12 weeks of daily IV therapy. We certainly believe what the pharmacokinetic profile of oritavancin, we maybe able to treat this infection with far less administrations of antibiotics. And finally, we have filed for QIDP approval and we’re waiting to hear from that, that would give us a exclusivity for oritavancin all the way to May of 2025.

So let’s take a look at the patient population. There are lot of data sources out there that describe the population, some do it by ICD-9 code, some do it by DRGs some take a look a hospital records if you will, and they go in and they project what that population will be.

We’re taking a look at probably about 1.8 million patients and these patients are cellulitis abscess, your trauma patients that would come in through to the hospital through the ER and be treated with antibiotics. So as we define that market now, we go into where these patients kind of fallout in those classes that Dr. Corey just outlined. And the good news is for folks like Dr. Corey, we couldn’t give them oritavancin since they’re not compliant with oral therapy, so we do have some use in that area. But a majority of the area we believe is going to be in that two and three and even some in that class four type patient.

Now when you take a look at that, we assume about 900,000 patients if you will, in that class two and three. We came up with that data by looking at an article that was written in 2009 by [indiscernible], really looked at a more serious infection in a way if you will, bacteremia with or without endocarditis. And what they found in that study was about 50% of those patients clearly were treated on an outpatient basis.

We’ve also conducted some market research of our own with infectious disease physicians, hospitals and the ER physicians about 130 of those physicians and we found that from their perspective about 67% of the patients they see actually fall into that class two and three. And obviously there is an opportunity for us in that class four patients and in our research physicians were telling us that they see oritavancin used in those patients because as you saw from Dr. Corey’s presentation, especially in the MRSA patients, they’re 20% lesion reduction was quite substantial versus Vancomycin. So physicians are actually seeing the lesions and the infection being reduced, which is one of the clinical diagnosis if you will, they take a look at and what they do with that patients next.

We also did research in 2011 with about 409 physicians in Germany and the U.S. infectious disease physicians and surgeons and also with pharmacist about 106 of those, department heads and clinical pharmacists, and we ask them in the treatment of skin and skin structure infections, whether some of your needs that aren’t being answered, and some of these overlap with Dr. Corey. What we found out is they really want to eliminate the delay in eradicating the infection. I think as you see that 20% reduction that is certainly being met with regards to oritavancin therapy, and they want to reduce the frequency of antibiotics, I don’t think we can get much lower than one shot to treat them.

We also want to reduce the rate of healthcare infections. One of the ways to do that is by not admitting patients to the hospital or getting them out as quickly as possible so that they don’t even spread the infection to other people as well.

And finally with healthcare as it is today, the reduction of 30-day readmissions is critical and a product like oritavancin being used in the emergency room without admitting patients can fit very well there. The last question we ask the pharmacist and the physicians is, if you had an antibiotic that could be given once to treat this infection, how likely would you be to use it. And as you can see that the data out there, 80% of the pharmacists and 77% of the physicians indicated they would be extremely or very likely to use a product like that, but oritavancin was not mentioned, it was just in general.

So we have the market. We’ve identified the needs. We now have a pretty good idea of the number of patients, where they fallout in the classes, now we have to bring the product to commercialization. At this point in time, we are on plans to submit in the fourth quarter of 2013. We’re on target for that commission with our NDA.

As I mentioned to you before, we have already applied for QIDP. We have met with the MMA in some pre-registration meetings and we anticipate submission for centralized approval in 2014 in the first quarter. As I mentioned to you before, we have manufacturing in place. We’re expanding our capacity not only for the success of oritavancin and skin infections, but also for future lifecycle opportunities.

So let’s take a look now where we see the value that oritavancin plays in this infection at this point in time. I think you see on the left hand side the various initiatives that occur with patients as they’re treated with vancomycin in the hospital. There’s a hospital stay, there is a drug itself, there is a pick line that needs to be inserted and these costs confirm published data that we’ve quoted here or from audits that have been done.

So as you can see to treat a patient on an inpatient basis right now for vancomycin, it’s about $7,787, okay. You see that II and III and IV Class that we talked about previously. Now Class II, if you remember, we said that patient is going to begin to given an injectable antibiotic and not admitted to the hospital. They will be discharged from the ER. So you have an ER visit charge and then you have a follow-up consults where the patient would have to go as they normally would for any antibiotic therapy to their physician. So as you can see there, just if you take those costs and I know you’re not seeing I mean oritavancin cost in here, but I think you can see there that the fact of the matter is a treatment release versus an inpatient stays of savings of about $7,372.

If you go to Class III, we have an observation stay of two days. There is a savings of $6,150. And finally, if the patient is admitted, there is actually a value opportunity there for us of $2,065. Now, what I’m not saying is we’re going to charge $7,000 for oritavancin, but what I’m saying is that this is the value if you will, the window of value that we provide that we’ll be looking at as we go out and do pricing studies and talk to our customers.

So where are these patients? Well, I’m pretty sure you’ve all seen this data before from other companies but a majority of these patients, 80% of the patients really comes from about 1,850 hospitals in the U.S. at this point in time. So they’re very, very focused if you will. If you take a look at that last 20%, it’s a 4,000 hospitals. So the coverage really needs to be in 1,040 hospitals to 1,850. I think if you take a look at where we currently are as a company we’re in the same institutions with our current product portfolio.

So some of the assumptions we made for modeling, once again the patient population between 1.5 million and 2 million. We see a 1% growth per year. It’s a 1,200 milligram of IV dose and we are assuming about a 19.8% penetration across all the classes and if you can see the value base pricing that we just talked about. Our revenue peak, we see more than $400 million per year.

So in closing, I would just like to say once again, I think this compound gives us tremendous opportunity to change our patients who are treated for skin and skin structure infections. They don’t have to be admitted into the hospital. We will be on target for us submission for our approvals; we do believe we provide real value to the institutions at a time in place and foreign infection right now that could be very helpful for our customers.

At this point of time, we’ll open it up for panel discussion.

G. Ralph Corey

We have time for some questions. We have a questions right here.

Marshall Gordon – ClearBridge

With respect to the – oh hi, Marshall Gordon from ClearBridge, with respect to the hospital or the payer dynamics, one thing you don’t addressed is the hospital dynamics. Could you just talk a little bit about number one, the inpatients stay is a savings to a payer of 5500, but it’s a loss of revenue to the hospital or something similar. And then second, could you talk about in which cases you could actually get ASP+ 4% or 6% versus it coming out of a DRG?

C. Michael Gibson

Sure, I want to have Ken LaPensee who is in our ERA Reimbursement Group to help you that.

Kenneth T. LaPensee

To address the revenue question, the revenue obviously comes from third-party payers reimbursement and the biggest payer is Medicare, we’ve did an analyses internally showing that the majority of our customers a good solid majority lose money on the reimbursement from CMS or most of the cellulites and skin structure related DRG’s.

On the ASP question, we obviously are hoping that the drug will be used in the emergency room under the scenarios that Mike, just outlined. Many of these patients will not be admitted to hospital and in the ambulatory setting the hospitals will be receiving an ASP+ 4% to 6% depending on how CMS sets the rates in the coming year or so.

Marshall Gordon – ClearBridge

Good morning it’s Bill Slattery [ph], Question for Dr. Corey, if we contrast the SOLO clinical experiences with the Phase II development of oritavancin; we get somewhat of different pictures. So, I was curious this benign safety profile that you described and the SOLO experience is contrasting it with the Phase II, what would you attribute some of the differences in safety and tolerability. And then, one as we anticipate regulatory action, if you think about risk mitigation, because this is somewhat of a One and Done treatment, how would you recommended it to the company they purse following these patients and recommendations to the FDA in terms of advise programs.

Glenn P. Sblendorio

Let me answer the second question first, I do think the initial concern of all us when we heard about these drugs was long-term safety and I think that’s why we went to this trial to an extra length 60 days, but I think that having some type of follow-up in a slight group of patients for much longer, a year follow up for instance in patients receiving oritavancin after approval simply by phone calls and finding out why the people develop serious infections, serious other complications would be indicated, but we have no evidence with that right now, but don’t get me wrong.

Just going back to the first question, we looked very carefully at the previous trials and their safety profile and that’s the reason we setup the trial like we did to look at all these safety issues, first of all on the macrophage issue where this drug was concentrated in macrophages and did it cause macrophages function which would let them lead to the infections that macrophages handle such as tuberculosis and fungal infections and we didn’t see any evidence of that, that’s the main reason we went out to 60 days to see if we found any evidence of that, we saw none, zero.

And in Brad Spellberg’s article in CID, he showed how he looked at the macrophage function in these patients who had concentrated oritavancin and those macrophages actually killed staff much more effectively than with oritavancin, so somehow the oritavancin in the macrophage helped the macrophage kills Staphylococcus aureus.

As far as the liver toxicity that was worried about, we didn’t see any evidence of that. Of course you have patients [indiscernible] that have hepatitis C or HIV positive or drug users. In a 2000 patient trial, you can’t help that and you solve the toxicity. On the other hand, the vast majority of it was pre-existent and it was balanced between the two groups, so you soon know excess of liver toxicity in the oritavancin group.

As far as heart’s toxicity, they did a thorough QT study, the company did that before starting the trial and as far as EKGs [ph] in all patients at the peak orita concentration, again saw no evidence of QT prolongation and no worrisome advance and I really looked at all the events, serious adverse events in this trial in both arms.

And finally line related problems; that was an issue with the prolonged infusion, that’s not an issue at all, so I think looking at the safety issues all the way down the line very carefully, I don’t see any of that worry me in the slightest, however following up on these patients in a selective population, I think would be very reasonable and important. Thanks.

Marshall Gordon – ClearBridge

And Matt, do you maybe working on the NDA and sitting down with the FDA with regards to the REMS and if you can shed any light on it and also having been a previous Deputy Director at the FDA from your perspective?

C. Michael Gibson

Yeah. At this point we’re still putting together our final plans, we don’t have any specific current with any specific concerns based upon the data we’ve seen and as would normally be the case, if the FDA will like REMS, some sort we will negotiate with them on that at the appropriate time.

Jonathan M. Eckard – Citigroup Global Markets Inc.

Hi this is Jon Eckard from Citi. I was wondering Dr. Corey first question is for you. In the Class 1 and Class 2 patients at your facility, could you explain what information like cultures what not goes into the decision of what you do with the patient and who makes a decision is that ER doc or the early ID doc and went to a company Cubist seems to have made some headwinds repairs with regards to pharmacoeconomics for their drugs, have you done any kind of comparisons with the economic advantages versus Cubist?

C. Michael Gibson

The person makes the decision is generally ER doc of the ID doctors only called in usually for the Class IV really, really sick patients they can help what goes into those decisions, I think there are several issues the patient and how he looks what the physical exam shows how deep the infection is the laboratory test showing a high weight count or the patient is acidotic in going into shock et cetera and often if we are worried about deep infections taking the patient immediately to MRI or even to the OR.

So I think the decisions for deciding what to do with Class III, IV is harder than II and III and you mentioned II and III I think those are easier decisions you watch the patients, you see how they’re responding, you watch the size deletion whether the fever is coming down, whether the wake up is coming down, but at mostly you watch the patient.

Peter Wijngaard

With regards to your question on Cubist and Cubicin a majority of the product issues on an outpatient basis to treat this infection actually a number of times patients that started on vancomycin and transition to over to daptomycin since vanco’s twice a day and was once a day, but I think may be Ken can comment we’ve seen data that actually in some cases the outpatient treatment of these patients can be just as costly as the hospitalized section.

John Maraganore

I would say particularly if daptomycin is used that would be the case I think since we are not comparing directly head-to-head two daptomycin, but vancomycin the drug that’s actually stabilizing the patient in the inpatient setting. We wouldn’t need patient getting stabilized on vancomycin wouldn’t need a long string of post discharge outpatient treatments which is Cubicin’s bread and butter. And we would get say one infusion after discharge which would take care of any remaining treatment program pathway that the patient would need to go through. So the expenses probably would range around $5000 for the post discharge care [ph] treatment with Cubicin all of that goes away with the exception of one infusion of oritavancin.

Robert Robbins

I think we have time for one more question.

Adnan S. Butt – RBC Capital Markets LLC

It’s Adnan from RBC, so first question I think you said ED docs will be okay figuring of which patients are best – drug like that. Are they also able to prescribe these newer longer acting antibiotics and then secondly how many emergency of orphans have an observation unit setup where you can dose the drug like this and what is the observation period. Thanks.

Robert Robbins

Yes, they can prescribe any antibiotic that’s not our problem most ERs have several rooms that they can use for whole people usually that the length of time they hold them is 24 hours and 24 hours we have to make the decision whether you are going to send them out or admit them, it is just you could hold them longer there legally or whatever but you need to be seeing other patients in that ER and you need to get people out and move people in. So, I think it’s a reasonable length of time to make a decision on if the patients going to respond or not or you feel comfortable keeping longer than that they’re not getting this closed observations they were on the wards they need to be admitted or they are getting better or they need to be discharged.

Edgar H. Haug

To answer your question on observation, there can be an observation unit or quite frankly any bed can be an observation bed as is designated. So, you don’t have to have a unit for observation beds. We don’t have a unit even in our huge ER we just use the bed there in.

Adnan S. Butt – RBC Capital Markets LLC

Okay thank you Dr. Corey, it will ask five seconds perfect. So thank you very much to your infectious disease care panel. And we are going to move on to our roadmap for growth section, which the discussion will be initiated and led by Glenn Sblendorio, our President and Chief Financial Officer. Glenn?

Glenn P. Sblendorio

Well thank you, Michael and thank you everybody for joining us today hope this has been a productive day. After break, we spoke the side by our infectious disease they wanted to know why the CFO is wearing the yellow tie. And if it was relevant to next year’s budget and on the record I just want to tell you my wife – out the tie.

Today I hope you enjoyed the presentations by all the teams and the diversity of the portfolio. And I would also ask that as you leave today to be sure that you won’t take with you either the large book or the gift, which is obtained with the flash drive on it. So that as you reflect on today’s discussions and all the data the rich data and we did talked about this as MEDCO by the numbers that would help you build your model.

Today, I’m going to talk about three topics. The first relates to the activity we had this year around our acquisitions. They are three of them and our license so far that we’ve completed this year and we get a lot of questions around amortization in taxes. And although may not be the most exiting topic today. I think it maybe helpful for some of you. Especially, as it relates to the building of your models or even more importantly discussions that we have on our quarterly call.

The second very important is the result of all those discussions and assumptions today, what is it mean in terms of long-term projections for the company. And the third and finally business development, which has been the catalyst for our growth thus far this year and will continue to be the catalyst. And it wasn’t by design that we ended up in these three categories give you little color on that more importantly we were taking that.

So the first topic GAAP versus non-GAAP reporting beginning in the beginning of this year January 1, we supplemented our statutory GAAP reporting by adding a presentation adjusted net income what we do this.

To provide investors and also as this management with supplemental information relating to the operating performance and I think that’s operated for in trends that facilitate comparisons between periods. The simple math, which is the numbers or the text of the right hand side how do you do this. We start with GAAP income, we had back non-cash items which are stock options and if you remember last year, we did a bond offering that has significant non-cash interest.

We had back deal amortization and CDRs and those of you that don’t know what CDRs are the contingent value rights hit back one-time items less the tax effect and that gives you adjusted net income. Let’s look at it from the Medco perspective and what it means for us. Here I have two presentations both 2012 which we didn’t do adjusted net income and also 2013 six months which we did. If you look at the second column the year-end 2012, we reported GAAP net income of $51.2 million, the largest single adjustment there was $20.9 million and that was stock options and about half the year of non-cash interest, that was the major items, the little bit of amortization related to Targanta.

And if you come to the adjusted net income number of $71 million, up 39% higher, in essence what that is with certain adjustments it’s operating cash flow and I think that’s really the key point here as we look at the business, when we look at the core operations, what’s the acquisition and other things that we do that’s the number to focus on.

Roll that forward now to the six months 2013 with GAAP net income of 6.5, we’ve been very active, we’ve done a major license with Alnylam, which is reflected in the number at the bottom of 40.5. We’ve had a lot of deal related cost, we still have our non-cash items up above and when you look at that number the adjusted net income that’s about $47.2 million. Look at 2012 where the number was $28.7 million to 2013 $47.2 million on an adjusted basis, that’s about 65% increase and that’s really the point here.

Down below, we get a lot of questions about taxes and our effective tax rate. Second column last year we finished with an effective tax rate, I’ll explain why in a moment the effective rate is higher 40.6, the actual cash that we paid was 6%. Roll that forward to 2013, we provided guidance on taxes right after we finished ProFibrix acquisition that number – the effective number increases to 55% to 60%. However the cash amount is about 7% that’s we are underpaying. So, why is that and things to look forward to in the out years, two things I want to just bring some attention to and as time goes on and we present numbers will guide accordingly.

First on the amortization, expect us to increase significantly as we approach significant milestones related to the acquisitions that we’ve done with incline with the IONSYS product, ProFibrix and also the option on BMS. All of our deals have back-end structures, where we pay the significant milestones on the approval and in certain cases the sales milestones for these products so that generates the amortization.

On the tax side, I assume that the effective tax rate will remain high and the reason being the explanation for the difference between the cash and the tax is really the different treatment from a tax perspective and an accounting perspective. Cash taxes will increase as a percentage as we continue to utilize our NOLs and tax credit it will go up, but in no way will be as high as the effective tax rate and we also get a lot of questions have you thought about the future and tax structures, the answer is yes and we put many tax efficient structures in place, specifically outside the U.S. and Europe. And we expect to take advantage of those in the future as that organization becomes tax profitable.

ProFibrix the recent acquisition and other things that we’re considering we in fact probably will domicile overseas and be able to sharing that benefit. So that’s the boring part of the presentation I want to move to something a little bit more exciting here and talk about our revenue projections. Couple of takeaways from the side, these are projections 2013 through 2018. Let’s talk about the key assumptions here. Earlier today Clive put up a number of launch assumptions. If you look to the far right of this graph, those are listed there for cangrelor, oritavancin, IONSYS and Fibrocaps. The other key assumption in this number is that Angiomax exclusivity continues through 2019.

And finally, I should mention that all of these numbers are non-risk adjusted. So that line of that funnel that goes up to the right hand side, I’ll leave you with three important messages on this slide and I think this is probably the most important part as we put all these assumptions together.

Number one, the business has a compound annual growth rate on the top line of 20% to 24% over this period. If you look at the circles at the bottom to the far left where we are today, our business is largely cardiovascular, so about 87% of the business is generated from that area of care, 13% from surgical. If you move to the right the transition shows true diversification, 54% cardiovascular, 39% surgery and 16% in infectious disease.

And the third point here, probably the most important, which is not spelled out here clearly, but it is the most important diversification. The company no longer relies on one product to drive our revenue sources. We have multiple, in fact eight products driving our revenues over this period. So a little bit about BD, a lot of discussion about BD this year. We’ve done a number of transactions, but just to go back the strategy that we have in place wasn’t the strategy that came about over the last couple of years. It really started early on with Angiomax back in 2001, 2002.

The bright magenta box in the middle is the cath lab and that’s where we started. That’s where we just started to develop our knowledge base. If you read the title here it is building around hospital real estate that therapeutic area. So I really should say building around pathways of care. So we started in the cath lab. The natural place for us to expand the business in the hospital would be to the ICU or CCU upstairs. The emergency department is obviously an obvious place in surgery.

We then decided that the next logical step would be to add products. During 2001, 2002 we were successful in licensing first cleviprex and then cangrelor from AstraZeneca. If I roll that forward to – can I go back one place, 2006, 2007 still anchored firmly in the cath lab with Angiomax, but clearly seen the need to extend in pathways and we timed our investment criteria at that point to look for late-stage assets or marketed products, recognizing at this point that we could potentially have a cliff with Angiomax in 2010 and that we need to bring more products into the organization.

In 2007 we finished the acquisition or reacquisition of Angiox from Nycomed in Europe, which gave us another source of revenue and also established our footprint in Europe. If I roll forward to 2008, 2009, we expanded our investment criteria now with Angiox in hand to global opportunities to areas where there are clear cut or franchise fits. We talk a lot about leverage and I think that was an important point there that we had existing front facing people in the cath lab. We are able to leverage that and also at that point to look at creative deals. The balance sheet of the company back in 2008, 2009 wasn’t where it is today and we clearly recognized that we needed to do deals with upfront money, but also to de-risk them with back-end structures. That led to three more transactions in that period and that was Curacyte, Argatroban and ApoA-I Milano.

2009, recognizing that we gained a lot of experience in both the cardiovascular pathway, started to gain experience in the surgical pathway, we have an asset that came up as a possible target, Targanta, which fit our profile perfectly. And the reason I have all the boxes highlighted here is because serious infection although a patient may enter through the ED is a problem throughout the entire hospital. Oritavancin which came through Targanta, fits the profile perfectly was a late-stage asset that global opportunities. It had a modest upfront, had a back-end structure in terms of CVR and we acquired that asset for $42 million in 2009 and added it to the portfolio.

I’ll stop here because that was really a point of infection in 2009 for us in terms of the business development. We now had three lines of business from the established cardiovascular, surgery and preoperative and infectious disease. And if I roll that forward to another slide that we presented earlier today, this is the portfolio that the Company has today. In cardiovascular Angiomax, our collaboration with AstraZeneca, with Brilinta and by the way perfect example of leverage that we are able to take that opportunity on and utilize the existing field force, products and development in NDA cangrelor, Cleviprex, the long-term opportunities really what we think are potential blockbusters in ApoA-I Milano.

You heard from Peter today. You heard about PCSK9 from John. This second category surgery, which is an area of business development for us, quite active. We have Recothrom, we have Cleviprex, we have Argatroban RTU in the United States, with added dialysis [ph]. We’ve added Fibrocaps recently. And the product, we didn’t talk about today, but quite exciting ABP-700 is our novel anesthetic agent, which is a collaboration between Mass General, Atlas Venture and The Medicines Company. There’s some good news possibly coming on that that could be in patients very soon.

The third column Infectious Disease, we talked about that today. There is a blank in the market. We hope that oritavancin fills that, but obviously an opportunity for business development.

So I’d like to sum up by going back to the slide I just showed you on revenue on the three key takeaways; significant growth opportunities of 20% to 24% over the period. In addition to that the BD organization, our strategy is well entrenched. We have a strong team. There are about 10 people in this group today with vast industry experience that are able to continue to execute on opportunities and we are very active.

We’re focused in the channels I talked about. We recently raised more capital in August, $190 million to further strengthen our balance sheet, which have a strong cash position to begin with and the deal flow, I can tell you is quite strong. Based on that math that we put up, which we’ve been showing for many years we get tremendous opportunities in down opportunities all the time that we’re looking at.

And finally this group provides us an opportunity, the capacity to continue to fill these pipelines with opportunities. ENDO Angiomax growth does not continue beyond 2015. I think we have an opportunity with this group in the existing products to fill that gap.

So I’d like to thank you and bring up the final panel, which is a general Q&A and I would like to introduce as they walk up. Cees Heiman, who is our Head of Europe joined us from Pfizer about a year and a half ago and Cees in running a big business in Europe. I think it’s one, 100th the size that we had before. Brent who is our Chief Customer Officer, I think you all know Brent who spent many years, Sanuj, one of our Vice Presidents in Business Development and Clive.

And Michael, I’d like to open it up.

Unidentified Analyst

Thanks Michael. Hey, Glenn question for you actually on the slide you put up on the revenue projection. So if Angiomax go through 2018, 2019, is 20% to 25% revenue growth is that risk adjusted or not?

Glenn P. Sblendorio

No, that’s not. So the 20% to 24% is non-risk adjusted.

Unidentified Analyst

Okay. Could you provide any color on a risk adjusted basis maybe and then also on the bottom line?

Glenn P. Sblendorio

The bottom line not at this point, I think we’ll delve that as time goes on. And what we did today again the reason for the book and as you could imagine in cases heading up with some efforts with the launch dates. There is a lot of pieces to them and I think we’re in a position at this point to give bottom line guidance. Gross profits obviously as Clive said will improve post 2014, so we have a lot of opportunity on the gross profit line. As for the risk adjustment, we don’t have that today and I think the non-risk adjustment is the way to do it right now.

Joseph Schwartz – Leerink Swann & Company

Joseph Schwartz at Leerink Swann. I was wondering if you could talk a little bit more about the revenue projections on slide 127 and in particular is that just the projections from the existing products? And secondly, it implies an acceleration in the top line growth. What do you expect, what sort of spending do you expect is going to be required to drive that? And how proportionate of an impact do you expect on the bottom line and for simplicity sake maybe just assume pre-tax.

Glenn P. Sblendorio

Yeah. So, Joe, I’ll try to break that down first the revenue projections that are on the chart are our existing products, meaning products in the portfolio, so it’s the four that we have in the market here in the U.S. Angiomax we got from Argatroban, Cleviprex. It also includes on the chart and I believe 127 as the chart to the right, the products with Phase III data that we expect to launch incorporating those launch dates into that.

I’m going to ask phase and then I’ll come back; you’ll try to work down the P&L, but to comment a little bit about what we’re dealing which gets to the same question on the commercial side preparing for those launches. And also mentioned I want to come back to the concept of leveraging. We talked today about field forces being in place but putting additional resources in place. But there is a tremendous opportunity in these three channels to leverage resources. Cees?

Cees Heiman

Yeah, I think that’s right away the most important point, Glenn you bring up because as we prepare for the rollout of these launches, we clearly very much intent to capitalize on the existing synergies between the various products where we look at the cardiovascular portfolio or the surgery imposed of processes of care portfolio and then separately on oritavancin. Now, clearly, if one looks at the commercialization of these products, the launch of Cangrelor, we will be able to fully benefit from the existing knowledge, not only that we have in the [indiscernible] also the presence and I can now say presence throughout the U.S. as well as Europe.

In the U.S. we already as you know have a team supporting Recothrom that will combine extremely well of course with Fibrocaps. We intend to set up similar team and a similar kind of structure in Europe as we go forward. And the question is often asked well what you’re going to do to support oritavancin? And I think the answer there very much is that based on the profile of the product as you have seen it today, this is a product that absolutely warrants having its own field force whether it be in the U.S. or in Europe.

And the last point to address is the area outside the U.S. and Europe, and of course especially focusing on Japan and on China, and that’s where we currently are very much focused on bringing the product to the market with the – through the existence of a partnership, and maybe I can ask [indiscernible] recently been in Japan to give you a little bit more of an update on that as well.

Glenn P. Sblendorio

Sure. Thanks, Cees. I think as most of you know, we’ve been pretty active in business development on the inbound side, but there is an element that is also outbound and particularly with the regions like Asia-pacific, Japan, China, Korea and India, where we have a bit more of a lean infrastructure.

With regard to Japan, in particular, we’re furthest along with regard to IONSYS. That was process that already began before we acquired the Incline Therapeutics, and just came back from a recent trip there and we continue to have a lot of traction and pretty late stage with the number of parties, but what also came out of that latest visit was indications of interest around our broader portfolio, which make a lot of commercial sense in Japan.

And that wasn’t too surprising, but what was more interesting was the fact that a lot of these Japanese companies initiatives to Japan based on their geography have a significant interest in other parts of the Asia, including Korea, China, India and in Southeast Asia. And so we’re pretty excited about the potential in that part of the world.

G. Ralph Corey

To your last question about building the P&L beyond the revenue line, I think, for today in the assumption that we provided, that’s where we’re going to go. Obviously, as we progress, learn more about what these launch teams will look and the investment, we’ll provide guidance accordingly. But I think the important point today is look at the tremendous opportunity for revenue growth across a diversified portfolio of products.

Unidentified Analyst

What kind of field force do you need to sell oritavancin in the U.S. and Europe? And are you looking at other antibiotics just around that infectious disease platform?

G. Ralph Corey

That was an excellent question clearly. Again, the first step, of course, that needs to happen, we are in the regulatory process. We need to get an approval on all regulatory fronts with U.S. and Europe. And we – as Mike outlined, we have very good expectations in that sense.

So the next step indeed is the commercialization, and currently, we are looking at a number of scenarios and that is operating through our own field force or potentially working with partners, and the let’s say, tradeoff maybe is the best way to use, between going in alone or doing it with partners is just to see what an partner could – how a partner could add value and at what cost. So those analyses are currently ongoing. If we were to think about an estimate of a size of a field force for oritavancin, the number we currently thinking of is clearly not a final number, but to give you our current thinking in that area is between 75 and 125 reps within the U.S. and about 70 to 80 in Europe.

Cees Heiman

I would just add to that. It’s currently with all market products we have just a 140 reps to cover on the top – in the U.S., to cover the top institutions. All have the same formulary committees and while oritavancin is a bit of a different animal, hospitals are beginning to become systematized, they’ve become much closer working together, driving care from the top down and we’re well organized to address at that way and we think we can continue to get leverage of the team we have with adding some key pieces.

Glenn P. Sblendorio

Steve to answer your question on the additional product side, we’re certainly building a pathway of care and infectious disease. So what we have, what we believe is to be a leading gram-positive antibiotic. As we look at other complementary products and perhaps we’re at negative space or even other products that are closer to the market that can help or offset some of the commercial burden that you mentioned.

G. Ralph Corey

Yeah, Steve all three of those areas I think we’re active on the business development front, some assets delivery certainly been acquired, we did obviously look at those and we continue to look, Jason.

Akiva Felt – Oppenheimer & Co.

Hi, it’s Akiva Felt from Oppenheimer. Just another question, so thinking about the IONSYS on ApoA-I Milano at the time that you did the deals what made you confident that you could workout the manufacturing challenges and you look at complex manufacturing as a parallel of this that track when looking for new opportunities.

Glenn P. Sblendorio

Sanuj why don’t you talk about IONSYS and Clive and I can probably talk about ApoA-I Milano?

Sanuj Ravindran

Yeah, thank you. In terms of IONSYS, we spent quite a lot of time during the due diligence a better understanding the manufacturing issue that have plagued J&J previously looking through the solutions that were employed to solve that problem. You bought an external experts, engineering experts, CMC experts, we went and visited all the facilities that are involved in the production of this product and through with this analysis we feel very comfortable that we have a robust manufacturing solution for today and for scale up in the future.

Glenn P. Sblendorio

And on ApoA-I Milano the untold story of Angiomax was that we brought the cost of goods down tenfold before we did Phase III or Phase IV trials in that respect in that case. It is a hugely important part of real development, manufacturing every presentation today deliberately had a slide on manufacturing without that you’ve got no product. So I think we take that absolutely seriously as you say.

And as you move into the market, trying to move a product toward evermore robust, high quality and lower cost platform is the thing you have to do post marketing as well. So yes, it’s a huge area. ApoA-I Milano, when we look to that we have a integration because we took a bit of a flyer on that, we realized a lot of work to do.

I think the team has done an outstanding job so far. And I think we already new that the value proposition if it works, it would bring enough for a high cost of goods. As the cost of goods comes down as the team shows, this is a saturable channel, which needs a lower dose, the margins get extremely attractive.

Clive A. Meanwell

So just one other piece Peter today showed a slide on ApoA-I Milano showing more than a doubling of the yield. One of the things that we did work on during the diligence and then subsequent was to keep the relationship with Lonza on that.

As far as I didn’t track this math on lot of the capabilities and we had to put a lot of those back together. So working with Lonza has enabled us to get to where we are today. The other important point which was the last slide on the slide is that capacities of 5000 leaders up to 30,000 leaders that capacity existing.

We’re not looking at breaking ground to build the new plant. And I think as we move that forward into Phase III, there are opportunities to take advantage of existing capacity, which is important.

Last question on business development part of the business development team today has manufacturing expertise. If I was to prioritize the top three efforts in business development obviously safety clinical being some of the highest, manufacturing is right there as well. So we have a whole team of manufacturing people internally that are part of the BD team.

C. Michael Gibson

We have time for one last question, Steve came out from San Francisco, I’ll let him the last.

Akiva Felt – Oppenheimer & Co.

Hi, all right, a couple of questions on guidance, could you the long-term guidance? Can you give us some idea of what the contribution the Acquis business is on that growth also, are you including the early stage programs PCSK9 or ApoA-I Milano, did they factor it in all at the back end of that and what can you say about gross margins over that period?

C. Michael Gibson

Okay, so, I deal with the ApoA-I Milano and PCSK9, Jason they not in there they are beyond the period of 2018. In terms of margins where we are today is in the –I think they will be around the 68%, 69% that will dramatically improve over time, I’m not going to give you specific numbers because it is a mix of products, but that’s a major opportunity in terms of contribution and the distribution between the U.S. and Europe we think cangrelor be a major product in Europe.

We think oritavancin has got opportunities, we are not going to give distribution but I would say, 18 of majority of those, majority is probably still U.S. based.

Akiva Felt – Oppenheimer & Co.


Clive A. Meanwell

Well listen, we try to get this done on time we are eight minutes over, but I hope we can get out of here just briefly. Thank you, for coming we needed you here, we want to tell you the whole story. But I learned something today too, I’m sitting down there, and I’m – on the first panel it’s me, its Brent, it’s Stephanie, it’s Professor Gibson. We’ve been literally working on this stuff for 15 years on and off together, arguing about it, moving it forward, and that’s regarded as the franchise, that’s the old one, and it’s working well, and there is more legs in it.

And then what I watched was a group of people come up Alan, Adam, Young [ph] people we met relatively, recently who are experts in the surgical device drug combination kind of set up, and there you saw it emerging and growing surgical business. And then thirdly, we get a panel up four infectious diseases. Professor Corey who we met a couple of years ago thanks to one of you in the audience by the way to introduce us to help lead Phase 3 programs on oritavancin.

Mike Mcguire, from Roche, who I already knew, but Cees Heiman from Pfizer, Vernec from Pfizer, people who have launched major anti-infective drugs not only in the U.S. but also Europe, and that was very thrilling to me to see that progression from an established core business to two new core business groups growing up and that’s what I’m disclosed this story.

At the end of the day it’s a company of people you are investing in and I don’t mean to get all mushy about it because I know that Wall Street doesn’t enjoy that but you also know us well, many of you have followed this Company for many, many years. This group of people who are dedicated and committed, they are going to get things done. They’re going to take on adversity, what come, what may.

So your investment in this company if you have one or if you contemplate one, is not an investment in Angiomax. It’s an investment in certainly all the products certainly Angiomax is part of it, but is investment in a company and that’s the message we want to you to go home with.

The growth that Glenn is showing is real, it’s coming and even if we don’t grow Angiomax after 2015, it is still very substantial as he mentioned. We are very confident about 2019, very confident. Ed Haug was here today so that you could speak to him. We don’t want any show game here, it is challenging to work in intellectual property issues. Don’t tell me, I know. I’ve had that elephant in my office for about eight or nine years and believe me I’m ready to kick it out.

So, thank you, again for coming, I hope it was helpful. Certainly it was to me, we call it a day.

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