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`FOCUS - 52 Results - (onychomycosis or terbinafine or NM100060) w/60 (nexmed or mediquest or novartis)
`
`
`Copyright 2009 CQ Transcriptions L.L.C.
`All Rights Reserved.
`Copyright 2009 CCBN, Inc.
`All Rights Reserved.
`FD (Fair Disclosure) Wire
`
`July 8, 2009 Wednesday
`
`TRANSCRIPT: 070809a2318118.718
`
`LENGTH: 1944 words
`
`HEADLINE: NexMed Announces Decision for AntiFungal Product - Final
`
`BODY:
`
`Corporate Participants
`
`* Linda Burns NexMed, Inc. - Senior Director of Corporate Relations * Vivian Liu NexMed, Inc. -
`President and CEO
`
`Conference Call Participants
`
`* Mark Greenstein Financial Concepts - Analyst
`
`Presentation
`
`OPERATOR: Greetings and welcome to the NexMed investor update. At this time, all participants
`are in a listen-only mode. A question-and-answer session will follow the formal presentation.
`(Operator Instructions). As a reminder, this conference is being recorded.
`
`It is now my pleasure to introduce your host, Linda Burns, Senior Director of Corporate
`Relations for NexMed. Please go ahead, Ms. Burns.
`
`LINDA BURNS, SENIOR DIRECTOR OF CORPORATE RELATIONS, NEXMED, INC.: Thank you, Diego.
`Good morning. I am Linda Burns, Senior Director of Corporate Relations. On the call with us
`today are Vivian Liu, our Chief Executive Officer, and Mark Westgate, Chief Financial Officer,
`and Vivian will lead the discussion. Before we begin, I will read the forward-looking language
`statement and then turn the call over to Vivian. Following her remarks, we will open the call for
`your questions and comments.
`
`Just a reminder to everyone that during the course of the call the management team will make
`forward-looking statements regarding future events or the future financial performance of the
`Company. Please keep in mind that such statements are predictions based on current
`expectations and actual results could differ materially. You should refer to our most recent
`filings with the Securities and Exchange Commission for additional discussion on factors
`affecting our business.
`
`Now I will turn the call over to Vivian.
`
`VIVIAN LIU, PRESIDENT AND CEO, NEXMED, INC.: Thank you, Linda, and thank you, everyone,
`for joining us this morning. Yesterday we announced the termination of the licensee agreement
`was Novartis for our anti-fungal topical nail solution NM100060. As many of you may recall,
`Novartis had licensed the global rights to our product in September 2005 under which they
`https://www.lexis.com/research/retrieve?_m=bc9a001bb3f15aa3e776806097170f75&_browseType=TEXTONLY&docnum=21&_fmtstr=FULL&_startdoc=21&wc… 1/4
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`CFAD v. Anacor, IPR2015-01776 ANACOR EX. 2181 - 1/4
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`FOCUS - 52 Results - (onychomycosis or terbinafine or NM100060) w/60 (nexmed or mediquest or novartis)
`4/1/2016
`assumed all clinical development, regulatory, manufacturing and commercialization
`responsibilities for the product.
`
`The decision to terminate was mutual and amicable and was based on various key
`considerations. The primary reason for termination was that the product had not clinically
`performed up to their expectations. In the three Phase III trials conducted by Novartis, the
`product showed an excellent safety profile. However, while the efficacy was comparable to the
`currently marketed topical treatment Penlac and Loceryl, the study results were insufficient to
`support filing for marketing approval.
`
`Based on various discussions with Novartis, we know that the protocol for the Phase III studies
`deviated in some areas from what we had done in our US and China studies. Certain parameters
`which we view as less favorable had been built into the design and execution of the study.
`Ultimately we believe that certain assumptions may have contributed negatively to the product's
`clinical performance.
`
`We are currently in the process of reassembling a clinical team of internal and external experts
`to work with Novartis on transferring the data and knowledge gained and also to reposition the
`product for potential licensing discussions.
`
`These were very hard lessons learned not just for us but also for Novartis. They do believe that
`with the insight gained from the studies, a viable product can still be developed but it would no
`longer be a strategic fit for them. When they signed the agreement in 2005, we understood that
`they were looking for a second-generation Lamisil product in a topical form which they could
`quickly ramp up to $500 million in sales.
`
`At that time, they were one of the leaders in dermatology. However, due to the patent
`expiration of the oral Lamisil tablets and other internal priorities, their presence in the field has
`eroded significantly.
`
`Even with the launch of the generic oral terbinafine product, the fungal market in 2008 was still
`about $1.5 billion. The competitive landscape for the development of a viable topical treatment
`remains about the same since 2005. As far as I know, we still have the most advanced product
`in development. And equally important, the clinical results continue to validate NexACT as a
`safe, efficacious and patient friendly drug delivery technology.
`
`We concurred with Novartis that the best option for us was to terminate the agreement in order
`to regain the rights and control of the relicensing efforts with support from Novartis. The
`alternative would have been to allow Novartis to control the entire process of relicensing the
`product and our major concern was that the product would have languished under that scenario.
`
`In addition to regaining the product rights, we also obtained a very expansive intellectual
`property dossier that includes and issued US patent which provides product coverage to April
`2026. We also gain a clinical dossier of about 2000 patients who have been tested with the
`product. We know a lot more now than we did in 2005 when we licensed the product to Novartis
`before we had completed our Phase I trial in the US.
`
`The lessons learned from Novartis's clinical efforts will help fine tune the development plan
`going forward and we believe that ultimate market entry is lower than the threshold that
`Novartis has set for the product.
`
`So what's next? The first step is to reach out to companies who we think will have an interest in
`continuing to develop this product. During the past few months, we received several inquiries
`for companies who are focused in dermatology and who expressed interest in the product in the
`event that Novartis decided not to pursue the program.
`
`The market is still very wide open for a topical treatment for nail fungus that is more patient
`https://www.lexis.com/research/retrieve?_m=bc9a001bb3f15aa3e776806097170f75&_browseType=TEXTONLY&docnum=21&_fmtstr=FULL&_startdoc=21&wc… 2/4
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`CFAD v. Anacor, IPR2015-01776 ANACOR EX. 2181 - 2/4
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`FOCUS - 52 Results - (onychomycosis or terbinafine or NM100060) w/60 (nexmed or mediquest or novartis)
`4/1/2016
`friendly and/or has greater efficacy than the currently marketed products. We believe that with
`the right partner and a well-designed clinical program, our product could fulfill that void in the
`market. We also believe that if we are successful in developing a superior product to the
`currently available topical treatments, it still has the potential to generate about $100 million in
`sales annually.
`
`It's our job now to convince potential licensing partners of that opportunity based on the work
`done by Novartis.
`
`With regard to the current financial status of NexMed, not much has changed since our March
`31, 2009 Form 10-Q that was filed. Our current cash reserve is about $2.8 million which should
`provide us with sufficient cash to fund our operations into 2010. Our current overhead burden is
`about $250,000 per month which includes $50,000 per month received from Warner Chilcott as
`they continue to use our facility for the manufacturing of the Vitaros product samples.
`
`As previously indicated, Warner Chilcott will use our facilities through September 15, 2009 but
`can extend on a month-to-month basis upon our mutual agreement for an ongoing monthly fee
`of $50,000 a month.
`
`We are continuing to cut costs and are actively trying to sell our facility so that we can further
`reduce our monthly operating expenses. Finally, as we discussed on our last conference call in
`May, we were working with FTN Equity Capital Markets as our financial advisor to assist us in
`valuating our ongoing operations and explore possible value-added strategic business
`alternatives.
`
`Our top priority remains to be to regain the Company's value and maximize our shareholders'
`return on investment while continuing to position ourselves as an emerging drug delivery
`company offering our core NexACT technology to the dermatology sector within the
`pharmaceutical industry.
`
`This concludes the formal presentation and at this time, I'd like to ask Diego to open the call up
`for questions from the conference participants.
`
`Questions and Answers
`
`OPERATOR: (Operator Instructions). [Mark Greenstein], [Financial Concepts].
`
`MARK GREENSTEIN, ANALYST, FINANCIAL CONCEPTS: Yes, well the question is what is going on
`with Femprox and do you have any partners that are interested?
`
`VIVIAN LIU: Well actually we do have -- we have had fairly extensive discussions with potential
`partners for that product. Because Femprox, regulatory wise has certain challenges that are
`comparable to the ED program, the potential partners are waiting as well for the upcoming
`meeting with the FDA that Warner Chilcott is in the process of scheduling and that is related to
`the transgenic mouse issue that the FDA had expressed a concern.
`
`We think that -- we believe at this point in time based on input from our experts and also
`talking with Warner Chilcott, that we believe the meeting will go well because the evidence
`shows in terms of additional testing that was done in other type of long-term carcinogenicity
`models clearly show that the mixed data generated in the transgenic mouse model was an
`anomaly.
`
`So, but of course the final decision rests with the FDA and that meeting we hope will take place
`sometime in September. The FDA had committed to once they receive the assessment package
`that is being finalized by Warner Chilcott that they would schedule a meeting within 60 to 90
`days.
`
`https://www.lexis.com/research/retrieve?_m=bc9a001bb3f15aa3e776806097170f75&_browseType=TEXTONLY&docnum=21&_fmtstr=FULL&_startdoc=21&wc… 3/4
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`CFAD v. Anacor, IPR2015-01776 ANACOR EX. 2181 - 3/4
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`FOCUS - 52 Results - (onychomycosis or terbinafine or NM100060) w/60 (nexmed or mediquest or novartis)
`4/1/2016
`So once we kind of get that obstacle out of the way in terms of the ED product which will enable
`Warner Chilcott to move forward on the ED program, we believe that we will then be in a
`position to essentially -- hopefully move forward on the ongoing discussion for Femprox.
`
`OPERATOR: (Operator Instructions). [Bob Delucia]. (Operator Instructions). Ladies and
`gentlemen, there are no further requests for questions at this time. I'll turn the conference back
`over to Vivian Liu for closing remarks. Thank you.
`
`VIVIAN LIU: Well, thank you for joining us this morning and I look forward to sharing new
`developments with you as they occur. And as always, please feel free to contact us directly if
`you have any additional questions. Thank you.
`
`OPERATOR: Thank you. Ladies and gentlemen, this concludes today's teleconference. You may
`disconnect your lines at this time. Thank you all for your participation.
`
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`LOAD-DATE: July 13, 2009
`
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`
`CFAD v. Anacor, IPR2015-01776 ANACOR EX. 2181 - 4/4
`
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