U.S. Markets open in 2 hrs 33 mins

Edited Transcript of ALDR earnings conference call or presentation 8-May-18 9:00pm GMT

Q1 2018 Alder Biopharmaceuticals Inc Earnings Call

Bothell May 22, 2019 (Thomson StreetEvents) -- Edited Transcript of Alder Biopharmaceuticals Inc earnings conference call or presentation Tuesday, May 8, 2018 at 9:00:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Ashwin Agarwal

Alder BioPharmaceuticals, Inc. - VP of Corporate Strategy

* Eric G. Carter

Alder BioPharmaceuticals, Inc. - Former Interim Chief Medical Officer

* Larry K. Benedict

Alder BioPharmaceuticals, Inc. - Former Executive VP & Principal Accounting Officer

* Paul B. Cleveland

Alder BioPharmaceuticals, Inc. - Chairman of the Board

* Roger K. Cady

Alder BioPharmaceuticals, Inc. - VP of Neurology

================================================================================

Conference Call Participants

================================================================================

* Alexander Lim

Mizuho Americas Llc - MD & Head of Investment Banking

* Brian Corey Abrahams

RBC Capital Markets, LLC, Research Division - Senior Analyst

* Danielle Catherine Brill

Needham & Company, LLC, Research Division - Former Senior Analyst

* Geoffrey Craig Porges

SVB Leerink LLC, Research Division - Director of Therapeutics Research, MD & Senior Biotechnology Analyst

* James William Birchenough

Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst

* Matthew W. Luchini

BMO Capital Markets Equity Research - Analyst

* Michael Vincent Morabito

Crédit Suisse AG, Research Division - Research Analyst

* Sumant Satchidanand Kulkarni

Canaccord Genuity Limited, Research Division - Analyst

* Yuko Oku

JP Morgan Chase & Co, Research Division - Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good afternoon, and welcome to the Alder Biopharmaceuticals First Quarter 2018 Financial Results and Business Update Conference Call. (Operator Instructions) Please be advised that the call is being recorded at the company's request. At this time, I'd like to turn the call over to Ashwin Agarwal, Vice President of Corporate Strategy. Please proceed.

--------------------------------------------------------------------------------

Ashwin Agarwal, Alder BioPharmaceuticals, Inc. - VP of Corporate Strategy [2]

--------------------------------------------------------------------------------

Thank you, operator. Good afternoon, and thank you for joining us. Just after market close today, we filed our Form 10-Q for the first quarter of 2018 with the Securities and Exchange Commission and issued a press release supporting our first quarter 2018 financial and operating results, both of which are available in the Investors section of our website at www.alderbio.com. You may listen to a live webcast and listen to a replay of today's call on the Investors section of the website, where you may also access a downloadable set of slides that will be referenced on today's call.

Today, on our call, we have Paul Cleveland, Interim President and CEO; Larry Benedict, EVP and Principal Accounting Officer; Dr. Eric Carter, Interim Chief Medical Officer; and Dr. Roger Cady, Vice President of Neurology.

Before we begin, as referenced on Slide 2 of our presentation, I would like to caution you that during today's conference call, we will be making forward-looking statements regarding future events for the future performance of the company. Actual events or results, of course, could differ materially.

We refer you to the documents that Alder files from time to time with the SEC and, in particular, the company's quarterly report on Form 10-Q for the quarter ended March 31, 2018, which was filed with the SEC today. These documents, which are available on the SEC's website, contain and identify under the heading Risk Factors important factors that could cause actual results to differ materially from those contained in any forward-looking statements. With that, let me pass the call over to Paul.

--------------------------------------------------------------------------------

Paul B. Cleveland, Alder BioPharmaceuticals, Inc. - Chairman of the Board [3]

--------------------------------------------------------------------------------

Thank you, Ashwin, and welcome, everyone. I'm starting on Slide 4. I'm pleased to join you today to discuss the significant progress we made in the first quarter against our key milestones as we advanced eptinezumab toward commercialization. Alder is committed to transforming the treatment paradigm for migraine prevention to benefit the millions of underserved patients living with migraine.

Existing treatments, even if effective, may take weeks to months to achieve meaningful clinical benefit, with challenges to safety and tolerability. Eptinezumab, Alder's lead investigational product candidate for migraine prevention, targeting calcitonin gene-related peptide, CGRP, has the very real potential to bring meaningful change to the lives of patients, if approved.

The clinical data from our PROMISE 2 Phase III study in chronic migraine patients and the new clinical data from our PROMISE 1 Phase III study in episodic migraine patients further underscore our belief that eptinezumab's clinical profile is highly differentiated and sets a new standard for what can be achieved in migraine prevention.

Following a single quarterly infusion in both episodic and chronic migraine patients, eptinezumab has consistently delivered predictable results for rapid, effective and sustained migraine prevention and it is the first and only anti-CGRP therapy to achieve this level of efficacy while also maintaining a good safety and tolerability profile consistently across all eptinezumab studies.

I recently had the opportunity to sit down with several thought leaders to hear firsthand their feedback on eptinezumab's differentiated clinical data. These physicians were particularly excited about eptinezumab's day 1 onset of effect and the magnitude of its efficacy, including its 75% and 100% responder rates.

Their positive feedback on our clinical data supports our confidence in Alder's ability to transform the current treatment paradigm for migraine patients.

Moving on to Slide 5. Since the beginning of the year, we have continued to deliver on our development milestones and achieved robust clinical data results in our PROMISE 1 and PROMISE 2 studies in episodic and chronic migraine patients, further differentiating eptinezumab from other anti-CGRPs in development.

In January of this year, we presented top line data from our PROMISE 2 study, which met all primary and key secondary endpoints with high statistical significance. When compared to other anti-CGRP therapies in development and Botox, eptinezumab demonstrated superior results, delivering rapid, effective and sustained migraine relief.

Last month, at the 70th annual American Academy of Neurology meeting in Los Angeles, eptinezumab was the subject of 8 scientific presentations. Highlights of the meeting included new 12-month PROMISE 1 data, which demonstrated that episodic patients experienced long-term and further reductions in migraines following the third and fourth quarterly infusions, and the selection of our PROMISE 2 data for the prestigious Clinical Trials Plenary Session. Dr. Roger Cady, our Vice President of Neurology will be talking more about this in a moment.

Since I was appointed Interim CEO in March, I've spent a significant amount of time working with the leadership team as part of a comprehensive internal review of key activities related to Alder's ongoing development and commercialization readiness activities. This included a review of the resources, activities and timing related to our biologics license application, or BLA. We have updated the timing of eptinezumab's BLA submission to the first quarter of 2019.

Importantly, all key clinical and CMC study milestones remain on track.

Our primary goal is the submission of a high-quality BLA to support a successful commercial launch for eptinezumab. To support these efforts, we have appointed Dr. Eric Carter as interim Chief Medical Officer and have engaged additional outside resources to complement our team. Eric brings more than 20 years of experience as a key executive in the pharmaceutical industry and has a proven track record of success with clinical development and the approval of major drug candidates.

I'm moving on now to Slide 6. We also strengthened our balance sheet with 2 financings during the first quarter, with $278 million in net proceeds received from an offering of convertible senior notes due 2025 and $98 million in net proceeds received from a committed equity financing with Redmile Group LLC. As a result, we have a strong cash position, with $587 million as of March 31, 2018.

As always, we remain focused on being disciplined and prudent with our capital deployment and our spending continues to prioritize eptinezumab's BLA submission, commercial supply and commercialization readiness.

Larry will discuss this in more detail during his remarks. As a reminder, at the beginning of the year, we received a nonexclusive license to Taylor's CGRP patent portfolio, which clarified Alder's freedom to develop, manufacture and commercialize eptinezumab in the U.S. and globally.

We continue to build out Alder's team with talented, highly experienced leaders to ensure eptinezumab's successful progress toward BLA submission and commercialization readiness activities.

In addition to our interim CMO, Dr. Carter, in April, we appointed Erin Lavelle to the newly created role of Chief Operating Officer. She brings to us 20 years of cross-functional experience, leading strategic and operational initiatives in the biopharmaceutical industry.

Further, we appointed Jeremy Green, the founder and portfolio manager of Redmile Group, to the Alder Board. We believe his strong health care expertise, both as an investor and a former sell-side analyst provide the board with additional insights and perspectives as we enter our next stage of growth and development. With that, I'll now turn the call over to Dr. Roger Cady.

--------------------------------------------------------------------------------

Roger K. Cady, Alder BioPharmaceuticals, Inc. - VP of Neurology [4]

--------------------------------------------------------------------------------

Thank you, Paul. I'm going to start on Slide 8. As Paul mentioned, we are very pleased by eptinezumab's strong clinical results. In both the PROMISE 1 trial in episodic migraine patients and the PROMISE 2 trial of chronic migraine patients, eptinezumab has demonstrated differentiated and predictable efficacy while also maintaining a good safety and tolerability profile consistently across all eptinezumab studies. Specifically, for both eptinezumab (sic) [episodic] and chronic migraine patients, the risk of having a migraine was reduced by more than 50% versus baseline within the first day following a single infusion.

This represents a compelling benefit to patients, as it will possibly allow them to experience migraine prevention within 1 day of treatment compared to the weeks or months other therapies may require.

In addition, the eptinezumab PROMISE 1 and PROMISE 2 trials demonstrated levels of benefit that went beyond the current standard of 50% response rates for efficacy associated with migraine preventive therapy.

Approximately 1 in 3 patients achieved a 75% response rate, meaning they experienced a 75% or greater reduction in monthly migraine days through the first month of a single infusion that was sustained for 3 months.

Further, an average of 17% of patients in PROMISE 1 and 15% of patients in PROMISE 2 had a 100% response, or 0 migraines, for months 1 to 3.

These results demonstrate a level of efficacy far beyond the current standard, while also maintaining a good safety and tolerability profile consistently across all eptinezumab studies.

Moving to Slide 9. Paul already mentioned, Alder had a strong scientific presence at the AAN meeting last month, where eptinezumab was the subject of 8 scientific presentations. We are particularly pleased that our PROMISE 2 Phase III data was selected by the AAN Science Committee as one of the most noteworthy clinical trial presentations. The presentation was delivered by Dr. Richard Lipton and was the only migraine presentation featured in this exclusive plenary session of the meeting and that was attended by thousands of physicians.

This recognition highlights the importance of our PROMISE 2 data and reflects the neurology community's significant interest in new migraine preventive treatments.

As part of our scientific presence at AAN, Dr. Steven Silverstein delivered a platform presentation of our new 12-month PROMISE 1 data, which demonstrated that patients experienced long-term and further reduction of migraine, following the third and fourth quarterly infusions. I will review these results in more detail momentarily.

It is a well-known hallmark of migraine that between attacks, there is a return of normal baseline function. However, as the frequency of migraine days increases, the time for recovery between attacks, known as the migraine-free interval, decreases significantly.

At AAN, we also presented PROMISE 1 data demonstrating that patients achieving a 75% or greater response rate experienced increased migraine-free intervals.

The median migraine-free period for these patients was 32.5 days, meaning that half of this population experienced an even greater period of time between migraine days following a single quarterly infusion.

By comparison, the time between migraine days at baseline for this population was 3.9 days. This remarkable 8-fold improvement in consecutive migraine-free days was also associated with improved quality of life outcomes.

In addition to our numerous presentations and publications at AAN, Alder had a medical affairs presence, which included a booth in support of physician education and scientific exchange of information. We are pleased with the very positive feedback we continue to receive from the physician community regarding eptinezumab's differentiated clinical profile and the opportunity for Alder to redefine physician and patient expectations for migraine prevention therapy.

Turning to the specific data we presented, on Slide 10, we are looking at the 12-month results from our PROMISE 1 Phase III clinical trial in episodic migraine patients following the third and fourth quarterly infusions of eptinezumab. As you can see, the reduction in migraine risk experienced with eptinezumab continued to increase following both the third and fourth quarterly infusions.

We can see that after the first infusion dose, more than half, or 56%, of patients achieved a 50% or greater reduction in monthly migraine days. This exceeds the current efficacy standard for migraine prevention. What I would really like to point out is that after the fourth infusion, you can see that the -- that on average, 72% of patients, nearly 3 out of 4 patients, achieved a 50% response rate. These results are unique to the eptinezumab program, and this level of efficacy has not been achieved with any other migraine prevention drugs, either approved or in development.

On Slide 11, we can see that after the first infusion dose, 30% of patients achieved a 75% or greater reduction in migraine -- monthly migraine days, which is a higher efficacy standard. By month 12, after the fourth infusion, you can see, on average, that more than half of patients achieved a 75% or greater reduction in days from baseline.

No other anti-CGRP in development has presented data showing this level of efficacy at 12 months.

We are excited by these clinical results, which continue to underscore eptinezumab's differentiated clinical profile and potential to set a new standard for what can be achieved in migraine prevention. We look forward to sharing additional clinical data with you in the future, including our PROMISE 2 second infusion 6-month data. With that, I will now turn the call over to Larry to review the financials.

--------------------------------------------------------------------------------

Larry K. Benedict, Alder BioPharmaceuticals, Inc. - Former Executive VP & Principal Accounting Officer [5]

--------------------------------------------------------------------------------

Thank you, Roger. I am on Slide 13. We are pleased with our first quarter 2018 financial results. The majority of our first quarter operating expenses supported our eptinezumab BLA submission, commercial supply preparation and commercialization readiness. As of March 31, 2018, we had $587 million in cash and cash equivalents, short-term investments and restricted cash compared to $286 million as of December 31, 2017.

In the first quarter, total operating expenses were $86 million, consisting of R&D expenses of $74 million and G&A expenses of $12 million. And we had a net loss of $118 million or $1.73 per share. R&D expenses decreased from the same period last year, primarily due to lower manufacturing costs driven by timing of expenses, which can fluctuate from quarter-to-quarter. We expect our manufacturing costs to increase in subsequent quarters in preparation for commercial supply.

2018 R&D expenses included a onetime payment of $25 million under our settlement and global license agreement with Teva. As Paul mentioned, we completed 2 financings during the first quarter. In January 2018, we raised $98 million of net proceeds from the sale of convertible preferred stock in our committed equity financing with Redmile.

The convertible preferred stock appears on our balance sheet recorded separately from stockholder's equity. Under applicable accounting standards, we also recorded a deemed dividend on the convertible preferred stock of $29 million in our statement of operations. We are also carrying an accrued 5% dividend on this convertible preferred stock of $1 million. We plan to settle accrued dividends with the issuance of additional shares of convertible preferred stock.

In February 2018, we raised approximately $278 million in net proceeds from our public offering of 2.5% convertible senior notes due 2025. These notes now also appear on our balance sheet with a carrying value of $173 million. Under accounting standards, we separately accounted for the embedded conversion feature of the convertible notes by allocating the proceeds between the liability and the equity component.

The value of the conversion option recorded in stockholders equity, or approximately $110 million, created a debt discount, which will be accreted over the 7-year life of the notes and will increase the carrying value over time to equal the original issuance amount. Please refer to the notes in our financial statements for details regarding the accounting treatment of these financings.

We anticipate that our full year 2018 cash investment will be in the range of approximately $300 million to $320 million. Our spending remains focused on eptinezumab's BLA submission, commercial supply and commercialization readiness. We estimate having sufficient cash to meet projected operating requirements into 2020. We will need additional funding to execute commercial launch of eptinezumab. With that, I will turn the call back over to Paul.

--------------------------------------------------------------------------------

Paul B. Cleveland, Alder BioPharmaceuticals, Inc. - Chairman of the Board [6]

--------------------------------------------------------------------------------

Thank you, Larry. Turning now to Slide 15. As I previously mentioned, all key clinical and CMC study milestones remain on track. Moving to Slide 16 now. In support of our goal to transform the treatment paradigm for migraine prevention, we have made significant progress in the first quarter against our key milestones. We continue to focus on submitting a high-quality BLA, preparing for commercial drug supply and ensuring commercialization readiness.

We believe that Alder is uniquely positioned to redefine physician and patient expectations for migraine prevention therapy and capture the large U.S. market opportunity for eptinezumab. With that, we'll now open the call to your questions. Operator?

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) And our first question comes from Brian Abrahams with RBC Capital Markets.

--------------------------------------------------------------------------------

Brian Corey Abrahams, RBC Capital Markets, LLC, Research Division - Senior Analyst [2]

--------------------------------------------------------------------------------

I'm wondering, what did you determine during your review that led to the delay in time lines for the expected BLA filing?

--------------------------------------------------------------------------------

Paul B. Cleveland, Alder BioPharmaceuticals, Inc. - Chairman of the Board [3]

--------------------------------------------------------------------------------

Brian, thanks for your interest, it's Paul Cleveland. Well, as I said we would when I first took this position, we have engaged in a pretty thorough review of the BLA process. And luckily, we were able to appoint Eric Carter here as our interim CMO to lead that review. The result of that review of key activities was the determination that the best prediction we had for a quality BLA filing was Q1 of 2019. It was not a single event that led to that conclusion but, rather, there was the review of the large number of interdependent activities that all had to happen in roughly the same time frame. And with the arrival of Dr. Carter, with all of his experience and with a renewed focus on what actually had to happen among all of those activities at the same time, we concluded that the more accurate forecast was Q1 of 2019. But I want to emphasize that all of our key clinical and CMC study milestones remain on track. There wasn't any single gotcha that led to that resetting but, rather, a review of the overall requirements and, in particular, the number of interdependent activities happening in approximately the same time frame.

--------------------------------------------------------------------------------

Brian Corey Abrahams, RBC Capital Markets, LLC, Research Division - Senior Analyst [4]

--------------------------------------------------------------------------------

Got it. So would it be fair to say it was more a matter of just the different -- differing judgments in rereviewing things rather than any particular things that emerged or had changed versus previous?

--------------------------------------------------------------------------------

Paul B. Cleveland, Alder BioPharmaceuticals, Inc. - Chairman of the Board [5]

--------------------------------------------------------------------------------

Yes. I think, that is fair. And I think on top of that, I'd also like to say that, as time goes by, it's natural that our sense of accuracy about a forecasting, we -- as we get closer to the end, we have a better sense of the timing here. But your statement is true.

--------------------------------------------------------------------------------

Brian Corey Abrahams, RBC Capital Markets, LLC, Research Division - Senior Analyst [6]

--------------------------------------------------------------------------------

Got it. And then what's your level of confidence that a BLA filing will be achievable in the first quarter of 2019? Has everything really been extensively audited at this point in terms of the operational elements? Is there anything that could lead to a potential time line slippage beyond that?

--------------------------------------------------------------------------------

Paul B. Cleveland, Alder BioPharmaceuticals, Inc. - Chairman of the Board [7]

--------------------------------------------------------------------------------

And I'm looking at Dr. Carter here, but we have a high degree of confidence in our ability to submit the BLA in Q1 of 2019. And your -- the latter part of your question, just to be complete, is, is there anything that could prevent that? And the answer is, I'm afraid there's a large list of things that might prevent that. But there's absolutely nothing we're aware of now that would prevent that from happening. We just have a lot of things that still have to be done.

--------------------------------------------------------------------------------

Brian Corey Abrahams, RBC Capital Markets, LLC, Research Division - Senior Analyst [8]

--------------------------------------------------------------------------------

Very helpful. One more quick one, if you don't mind, and then I'll hop back in the queue. What sorts of challenges might you foresee in terms of breaking into formularies and that process being now later versus, potentially, later to market versus competitors? What do you foresee needing to do there? And -- or do you think having the IV administration might put you sort of in a separate bucket in terms of formulary negotiations once you reach the market?

--------------------------------------------------------------------------------

Paul B. Cleveland, Alder BioPharmaceuticals, Inc. - Chairman of the Board [9]

--------------------------------------------------------------------------------

No, that's a good question, Brian. It's a complicated environment out there. There's no doubt about it. We will all learn a lot from the launches that we anticipate coming here in the next 12 months from others. I want to emphasize that our belief is that we have truly differentiated not just our means of administration, our mode of administration, but more importantly, our clinical profile, which we think will give us a distinct advantage relative to the other anti-CGRPs. And you heard Dr. Cady talking about some of our data relative to what we see from other drugs under development. And so we believe the essential difference is actually going to be our differentiated clinical profile, but there's no doubt that there's going to be a lot of learning coming out of the launches that we're going to see now in the next 12 months or so.

--------------------------------------------------------------------------------

Operator [10]

--------------------------------------------------------------------------------

And our next question comes from Jessica Fye with JPMorgan.

--------------------------------------------------------------------------------

Yuko Oku, JP Morgan Chase & Co, Research Division - Analyst [11]

--------------------------------------------------------------------------------

This as Yuko on the call for Jessica. Would your comment on your appetite for a partnership? And also, could you explain the PK comparability study and why it is needed for filing?

--------------------------------------------------------------------------------

Paul B. Cleveland, Alder BioPharmaceuticals, Inc. - Chairman of the Board [12]

--------------------------------------------------------------------------------

Sure. So let me start with the second one, PK comparability. That is needed for filing because the manufacturer that we are using for material has changed from the initial studies. And so we need to prove comparability of material. I want to emphasize that the process and all of the other elements of it are not changed, but we are obliged to show comparability when we do that. So that is a necessary element of the BLA filing. And I'm afraid to say, I've already forgotten the first part of your question. Oh, partnership appetite. Thank you. Luckily, I've got people here helping me. So I think, first of all, our key focus right now is executing against the 3 big jobs we have: BLA filing, manufacturing preparedness and commercial readiness. And that's what we're really focused on. I think it's -- we remain in pretty steady dialogue with potential partners out there in the real world, but I would have to say that our focus is really on executing against those 3 big tasks. It may well be that we choose at some point in the future to do a partnership. I think that could make a lot of sense. Luckily, with $587 million in the bank, we have the ability to pick the time and the nature of that partnership to maximize the value for our shareholders, and right now, we're still primarily focused on the operational aspects of those 3 big jobs.

--------------------------------------------------------------------------------

Operator [13]

--------------------------------------------------------------------------------

And our next question comes from Geoffrey Porges with Leerink.

--------------------------------------------------------------------------------

Geoffrey Craig Porges, SVB Leerink LLC, Research Division - Director of Therapeutics Research, MD & Senior Biotechnology Analyst [14]

--------------------------------------------------------------------------------

I have a few questions. I'll leave it to guys to figure out who should answer them. First, I heard you say about 5 times that your goal is to submit a high-quality BLA. And so my question is, well, was the BLA previously low quality with the prior time line? And what are you having to change in the BLA to make it high quality? Secondly, in terms of manufacturing preparedness, are you making final commercial material now? Or if not, when will you begin? And related to that, are you -- do you expect to be able to sell any of the previously manufactured material? Or you're going to have to only be selling commercially the material from the final processing manufacturer? And lastly, the PK study, does that include immunogenicity? So do you have to demonstrate immunogenicity for the new contract manufacturer as part of that PK study?

--------------------------------------------------------------------------------

Paul B. Cleveland, Alder BioPharmaceuticals, Inc. - Chairman of the Board [15]

--------------------------------------------------------------------------------

Okay. I'll probably need help remembering that serial list, too. Thanks, Geoff, this is Paul. First, we always intend to submit a high-quality BLA. My emphasis on that description encompasses 2 pieces. One is, of course, the technical compliance with requirements so that it's accepted for filing and proceeds crisply through the review process. And the other, though, is to obtain the best possible label to ensure commercial success, of eptinezumab. That's what I mean by high quality. And I'm emphasizing that simply because when we have brought up time lines in the past, I've heard concerns that we might just be trying to go as fast as we can, and we are balancing speed with the need to do both of those things. And that is part of what went into the thinking when Eric and the team here reviewed the time lines and went over the, as I said, all of these interdependent activities, and we really felt that Q1 was the more accurate prediction of when we were going to file. Regarding manufacturing, I think your first question was, Geoff, do we have material -- are we making material now. And the answer is, yes, we are making material now that is usable for commercial purposes. And we will continue doing so until all the way up to launch. And so that was that one. And then you asked about the PK study, does it include immunogenicity, and the answer is, yes, it does. And that study is ongoing and on track to read out the second half of this year.

--------------------------------------------------------------------------------

Operator [16]

--------------------------------------------------------------------------------

And our next question comes from Matthew Luchini with BMO Capital.

--------------------------------------------------------------------------------

Matthew W. Luchini, BMO Capital Markets Equity Research - Analyst [17]

--------------------------------------------------------------------------------

So it sounds like, with regards to the delay in the BLA, that this was a fully internally driven decision. Can you confirm that assumption, that there was no guidance from FDA on any part of the application you were thinking about submitting? And then coming back to the question on partnership ...

--------------------------------------------------------------------------------

Paul B. Cleveland, Alder BioPharmaceuticals, Inc. - Chairman of the Board [18]

--------------------------------------------------------------------------------

I keep on forgetting the compound questions, so let me answer that one right off the bat. That is absolutely true, Matthew. There was no external communication that led to this. This was entirely a more comprehensive review with the experience and judgment of Dr. Carter here applied to it as well. And additional information was simply how things are going. But there was no -- there was absolutely no guidance, no external factor taken -- that was -- that required this reset.

--------------------------------------------------------------------------------

Matthew W. Luchini, BMO Capital Markets Equity Research - Analyst [19]

--------------------------------------------------------------------------------

Okay. And then following up on the earlier question about potential partnership, can you just provide a little bit more color on, sort of, the current tone of those conversations? Is it -- are there any, sort of, gating steps that might preclude a deal in terms of, say, having the BLA actually successfully submitted and accepted? Just any more color on the state of those conversations such as they are will be appreciated.

--------------------------------------------------------------------------------

Paul B. Cleveland, Alder BioPharmaceuticals, Inc. - Chairman of the Board [20]

--------------------------------------------------------------------------------

Sure. So first of all, I'm not going to make a habit of commenting on the individual give-and-take of potential partnership discussions. But having said that as an introduction, I hope you're hearing me emphasize that our focus for the near term is on executing against the 3 big jobs in front of us. And we remain in dialogue, and we will remain in ongoing dialogue with other people. And over the long run, it probably is going to make sense to have a partner, but that's not our focus in the near term.

--------------------------------------------------------------------------------

Operator [21]

--------------------------------------------------------------------------------

And our next question comes from Sumant Kulkarni with Canaccord.

--------------------------------------------------------------------------------

Sumant Satchidanand Kulkarni, Canaccord Genuity Limited, Research Division - Analyst [22]

--------------------------------------------------------------------------------

I have a few. So when can investors expect to know about whether your scale-up is successful? The reason I'm asking is because if you look at your 10-Q filed today, things like your current agreements do not have product enough, even for clinical trials. Is that right, as an assumption? That's one of -- that's the first question.

--------------------------------------------------------------------------------

Paul B. Cleveland, Alder BioPharmaceuticals, Inc. - Chairman of the Board [23]

--------------------------------------------------------------------------------

Yes. Good. As you all are aware, maybe you'd better stop with question number one and take them in order. So, that's not correct, first of all. We are manufacturing commercial material and stockpiling it and we do have a viable plan to produce material that we need to be able to satisfy commercial demand.

--------------------------------------------------------------------------------

Sumant Satchidanand Kulkarni, Canaccord Genuity Limited, Research Division - Analyst [24]

--------------------------------------------------------------------------------

Sure. So following up on that, if scale-up is not achieved successfully before the results of the PK comparability study, would you guys be able to ascertain that? Or do we have to wait for the results of that study?

--------------------------------------------------------------------------------

Paul B. Cleveland, Alder BioPharmaceuticals, Inc. - Chairman of the Board [25]

--------------------------------------------------------------------------------

Sumant, I'm a little -- you've mentioned the phrase scale-up twice. It's not -- it's kind of a -- it's not quite -- and I'll just pause and say I'm not quite sure that that's an accurate description of what's happening now. We are engaged in commercial manufacturing lot production now. We do have plans -- we've been intentionally a little vague, we haven't identify our CMOs. And we will continue to not identify them, but we have a manufacturing plan. It does presume that our comparability study comes back and demonstrates comparability. So one of the things that -- I mean, if that doesn't happen, we will have to reset our planning accordingly. Let me ask Dr. Carter if he can respond further on that.

--------------------------------------------------------------------------------

Eric G. Carter, Alder BioPharmaceuticals, Inc. - Former Interim Chief Medical Officer [26]

--------------------------------------------------------------------------------

Sumant, this is Eric Carter. So we have made, and we are continuing to manufacture, commercial lots and we've used some of these lots in our PK comparability study, comparing them, obviously, with the material that was used for the pivotal clinical studies. So there's no scale-up risk as such. It's just demonstrating that we have that comparability between the -- as to be commercialized material with the material that was used in the clinic -- in the pivotal clinical studies.

--------------------------------------------------------------------------------

Sumant Satchidanand Kulkarni, Canaccord Genuity Limited, Research Division - Analyst [27]

--------------------------------------------------------------------------------

Got it. Thanks for clarifying that, because I was reading the Page 42 of the Q. My last question is, on your slide with the potential addressable population, it now has 5 million to 7 million patients, relative to 5 million previously. But your peak sales estimate remains the same. Has anything changed there? Is it conservative due to pricing or share? Or is that simply a function of those assumptions being derived in 2016?

--------------------------------------------------------------------------------

Paul B. Cleveland, Alder BioPharmaceuticals, Inc. - Chairman of the Board [28]

--------------------------------------------------------------------------------

Yes. I don't think there was any intended message in that, Sumant. I think those are considered comparable, and we continue to be comfortable with market estimates that we've provided before.

--------------------------------------------------------------------------------

Operator [29]

--------------------------------------------------------------------------------

And our next question comes from Jim Birchenough with Wells Fargo.

--------------------------------------------------------------------------------

James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [30]

--------------------------------------------------------------------------------

A couple of questions. I'll ask them one by one. I guess the first one, Paul, is maybe an update on a search for a permanent CEO. Are there any time lines you have for that? And what's the pedigree or phenotype of a CEO that you're looking for?

--------------------------------------------------------------------------------

Paul B. Cleveland, Alder BioPharmaceuticals, Inc. - Chairman of the Board [31]

--------------------------------------------------------------------------------

Sure. Jim, that is ongoing and active. We've seen some very interesting candidates. I mentioned when we kicked it off that it's a matter of months, but exactly how many, I can't say. And I'm afraid I still have to give you the same answer. It's a matter of months, and exactly how many, I can't predict at this time. Getting to the -- so it's underway and active, and we've had some very promising candidates, but I can't give you a better time line than I have already said. As to profile, I think we are very focused on an experienced -- a CEO. If you think about the reason for the transition, it was to prepare this company for a bigger and more complex life as a pre-commercial, then commercial, company. So as you would expect, we're looking at seasoned CEOs who have taken companies through that process and have managed in a larger, more complex organization. There are lots of skills that could be useful, but they're not all essential, so we each have, probably, a slightly different emphasis on elements of people's backgrounds. But that's the general profile.

--------------------------------------------------------------------------------

James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [32]

--------------------------------------------------------------------------------

And then maybe getting back to the PK comparability. Just wondering how much agreement do you have with the FDA on what constitutes comparability? How much of a risk is that? And I ask that because that underlies a lot of the challenge of biosimilars in showing comparability. And we all remember when Myozyme had to de novo studies with the same manufacturer, Genzyme, not able to convince the FDA of comparability from one scale to another. So as you look at your commercial lots, what degree of agreement do you have with the FDA? And what gives you confidence that this won't be a risk step?

--------------------------------------------------------------------------------

Paul B. Cleveland, Alder BioPharmaceuticals, Inc. - Chairman of the Board [33]

--------------------------------------------------------------------------------

Well, we have the study that's underway that will form the part of the BLA filing was reviewed with the FDA. And they have signed off on the design and endpoints for that study. So I don't think we're going to have an interpretive what does comparability mean discussion or risk there. And the study, for -- it's ongoing, it's on track, it's on time. We expect the readout to occur later this year. And we have no reason to believe we're not going to show comparability. And on the other hand, until you do the study, you can't be certain, because we just haven't done the study. So the data we have, which is not a full-blown study like this, supports the idea of full comparability. We're not aware of data that would undercut that -- the comparability at all. But we haven't finished the full-blown study.

--------------------------------------------------------------------------------

James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [34]

--------------------------------------------------------------------------------

And maybe just one final question. This used to be asked a lot. We haven't asked it for a while. But where are you guys at in terms of a subcu formulation? It certainly seems like you've got a highly differentiated IV. But where are you at in terms of the line extension with the subcu?

--------------------------------------------------------------------------------

Paul B. Cleveland, Alder BioPharmaceuticals, Inc. - Chairman of the Board [35]

--------------------------------------------------------------------------------

Yes. I think what we've committed to do and remain committed to do is to re-examine that mode of administration as a potential line extension. But not until after we get our BLA filed. I think, we're really prioritizing the IV FD program that we've been talking to you about here. Because of the data we're getting, that just has to be our priority. And it remains a potential for line extension, but we're not going to be really focusing on that hard or putting resources of significance into it until we get our BLA filed.

--------------------------------------------------------------------------------

Operator [36]

--------------------------------------------------------------------------------

And our next question comes from Vamil Divan from Crédit Suisse.

--------------------------------------------------------------------------------

Michael Vincent Morabito, Crédit Suisse AG, Research Division - Research Analyst [37]

--------------------------------------------------------------------------------

This is Michael Morabito on for Vamil. I wanted to know, as competitors launch their products, what you'll be looking for that you would find encouraging or worrying depending on how those launches go.

--------------------------------------------------------------------------------

Paul B. Cleveland, Alder BioPharmaceuticals, Inc. - Chairman of the Board [38]

--------------------------------------------------------------------------------

Yes. Well, we have a lot to learn from these launches, I think. It will be an interesting teach in some ways to see. I keep emphasizing, we do believe we have a differentiated clinical profile. So I don't think we just automatically assume that whatever they do happens to us, either in terms of pricing or in terms of reimbursement or contracting or some of the other elements of the commercial launches. But I think, as a class, if the anti-CGRPs become widely accepted and available to be covered by insurance or reimbursed, I think that's a net positive for the category, for sure. And of course, it will be a very interesting and dynamic environment for the first couple of years. So I'm afraid I'm being very general, but I would say, if there's good uptake of anti-CGRPs, we'd regard that as a very promising sign for our own program. But I don't think we believe that some of the intricacies of contracting and pricing will read through directly on kind of a one-to-one basis to our own program. And we'll just keep a very close eye on all of that, as I'm sure all of you will, over the next year, 18 months.

--------------------------------------------------------------------------------

Michael Vincent Morabito, Crédit Suisse AG, Research Division - Research Analyst [39]

--------------------------------------------------------------------------------

And for the 12-month study, the data that you provided on this call, at the 12-month time point, what was the number of patients that were included out at the 12-month time point? And can you give a rough estimate of how many of the patients that were responders at 12 months had been responders the entire time versus they were responders that month?

--------------------------------------------------------------------------------

Paul B. Cleveland, Alder BioPharmaceuticals, Inc. - Chairman of the Board [40]

--------------------------------------------------------------------------------

I'm going to pass that one to Dr. Roger Cady.

--------------------------------------------------------------------------------

Roger K. Cady, Alder BioPharmaceuticals, Inc. - VP of Neurology [41]

--------------------------------------------------------------------------------

Yes. I don't know if I can give you all of those answers, Michael. But what I can tell you is we had quite low dropout rates with the study. Obviously, over a 4-month study, that does occur, and we had perhaps about 10% to 15% dropout rate through that study. And also, you are correct. The way that we did our analysis was to look at these monthly intervals. It's not looking at people who were individual responders for the entire 48 months (sic) [weeks]. So when we report out on these results, we're talking about either a period of 1 to 12 weeks or 4 weeks that they were analyzed and that was the responder rate that they achieved. What you see, however, if you look at this data critically, is that, through time, internally, what people are doing is moving from lower successful response rates to higher. In other words, you see an enrichment of 75% responders, 100% responders as we continue with repeat infusions. And so we find that very, very encouraging as a way we look at our data.

--------------------------------------------------------------------------------

Paul B. Cleveland, Alder BioPharmaceuticals, Inc. - Chairman of the Board [42]

--------------------------------------------------------------------------------

Just to clarify quickly, Roger meant 48 weeks, not 48 months.

--------------------------------------------------------------------------------

Roger K. Cady, Alder BioPharmaceuticals, Inc. - VP of Neurology [43]

--------------------------------------------------------------------------------

Sorry about that.

--------------------------------------------------------------------------------

Paul B. Cleveland, Alder BioPharmaceuticals, Inc. - Chairman of the Board [44]

--------------------------------------------------------------------------------

And I don't know if -- Michael, I guess we could follow-up. If you need the numbers, I'll ask Ashwin if he can put a note down and just get back to you with the number of patients, which is, clearly, easily attainable. We just don't know it sitting around the table here.

--------------------------------------------------------------------------------

Operator [45]

--------------------------------------------------------------------------------

(Operator Instructions) Our next question comes from Danielle Brill with Needham.

--------------------------------------------------------------------------------

Danielle Catherine Brill, Needham & Company, LLC, Research Division - Former Senior Analyst [46]

--------------------------------------------------------------------------------

I was -- kind of a follow-up to the previous question asked. I was wondering if in PROMISE 1, with the follow-up out to 12 months, if you looked at immunogenicity data, and if there was an increased presence of the neutralizing antidrug antibodies with repeat administrations? And also, if there was any impact on efficacy.

--------------------------------------------------------------------------------

Paul B. Cleveland, Alder BioPharmaceuticals, Inc. - Chairman of the Board [47]

--------------------------------------------------------------------------------

I think I'll throw that one to Roger, too.

--------------------------------------------------------------------------------

Roger K. Cady, Alder BioPharmaceuticals, Inc. - VP of Neurology [48]

--------------------------------------------------------------------------------

Yes. We had about 10% to 12% occurrence of antibodies, with one -- less than 1% being neutralizing antibodies. We do still have some studies looking at antibody occurrence in PROMISE 2, but so far, that's what we've seen.

--------------------------------------------------------------------------------

Danielle Catherine Brill, Needham & Company, LLC, Research Division - Former Senior Analyst [49]

--------------------------------------------------------------------------------

Was that relatively steady throughout the trial? That 10% to 12%? Or did...

--------------------------------------------------------------------------------

Roger K. Cady, Alder BioPharmaceuticals, Inc. - VP of Neurology [50]

--------------------------------------------------------------------------------

Yes. Actually, what we see is that we may have some early antibody production, and then with time, some of that actually resolves.

--------------------------------------------------------------------------------

Operator [51]

--------------------------------------------------------------------------------

And our next question comes from Difei Yang with Mizuho.

--------------------------------------------------------------------------------

Alexander Lim, Mizuho Americas Llc - MD & Head of Investment Banking [52]

--------------------------------------------------------------------------------

This is Alex, actually, on for Difei. I -- so you spoke a little bit about partnerships earlier. Can you maybe let us know how you're thinking about ex U.S.? Any color there would be appreciated.

--------------------------------------------------------------------------------

Paul B. Cleveland, Alder BioPharmaceuticals, Inc. - Chairman of the Board [53]

--------------------------------------------------------------------------------

Sure. Well, first of all, we've spoken -- the regulatory time line we're talking about here, obviously, is an exclusively U.S. regulatory time line. I think, clearly, this is a worldwide market, but we are, ourselves, focused on the U.S. aspects of it, just because of resource constraints here. I think that would be a very natural place to be looking for partners to provide additional commercial value for the program, and you can expect that that's part of what we're thinking about when we think about the value of a partner. Because I do not believe that this company is going to have the resources to do worldwide launches, and that would, obviously, be something we'd be looking for a partner to be helpful on.

--------------------------------------------------------------------------------

Alexander Lim, Mizuho Americas Llc - MD & Head of Investment Banking [54]

--------------------------------------------------------------------------------

And then one last quick one on commercial readiness. Can you just give us some color on the sales force? Are you currently looking at candidates, actively involved in that process right now?

--------------------------------------------------------------------------------

Paul B. Cleveland, Alder BioPharmaceuticals, Inc. - Chairman of the Board [55]

--------------------------------------------------------------------------------

We're going to -- I think for competitive reasons, we're going to be a little vague about the exact nature of our preparations. I would say that, though, we'd spoken earlier that what we need is a specialty-sized sales force. So we're talking in the range of 75 to 125 people. Typically, the vast majority of those are hired in the couple of quarters leading up to launch. So I will give you that sort of general guidance, but I think we're going to be avoiding detailed numbers or detailed hiring time lines or that sort of thing for competitive reasons.

--------------------------------------------------------------------------------

Operator [56]

--------------------------------------------------------------------------------

And that concludes our question-and-answer session for today's call. Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program, and you may all disconnect. Everyone, have a wonderful day.

--------------------------------------------------------------------------------

Paul B. Cleveland, Alder BioPharmaceuticals, Inc. - Chairman of the Board [57]

--------------------------------------------------------------------------------

Thanks a lot.