Alder BioPharmaceuticals Inc  (NASDAQ:ALDR)

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Q4 2018 Earnings Conference Call
Feb. 25, 2019, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, and welcome to the Alder BioPharmaceuticals Fourth Quarter and Full-Year 2018 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open the call up for your questions. Please be advised that this call is being recorded at the Company's request.

At this time, I'd like to turn the call over to Michael Schaffzin of Stern Investor Relations. Please proceed.

Michael Schaffzin -- Investor Relations

Thank you, operator. Good afternoon and thank you for joining us. Just after market close today, we filed our Form 10-K for the full year 2018 with the Securities and Exchange Commission and issued our financial results and corporate highlights press release, 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.

Today on the call, we have Bob Azelby, Chief Executive Officer; Dr. Eric Carter, who very recently stepped down as our Interim Chief Medical Officer; and Carlos Campoy, our Chief Financial Officer; John Latham, Chief Scientific Officer;and Dr. Paul Streck, who just joined as Alder's Permanent Chief Medical Officer are also on today's call to respond to any questions.

Before we begin, I would like to caution you that during today's conference call, we will be making forward-looking statements regarding future events or the future performance of the Company, including statements about possible future developments regarding clinical, regulatory, commercial, financial, and strategic matters. 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 Form 10-K for the year ended December 31, 2018, which is filed with the SEC today, February 25, 2019. 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 Bob.

Robert Azelby -- Chief Executive Officer

Thank you, Michael, and welcome everyone. As many of you know, our mission at Alder is to forever change migraine treatment and give patients their lives back. 2018 was a very successful year as we achieved a number of significant milestones that move this closer toward the commercial launch of our lead investigational product candidate, eptinezumab, and advanced our preclinical candidate, ALD1910, which targets the PACAP pathway for the treatment of migraine.

Our momentum has continued into 2019 with the completion of another major milestone just last week, our BLA submission for eptinezumab. I'm going to talk about that first and then we will review our 2018 accomplishments, the migraine landscape and market opportunity, and our recent progress with ALD1910.

Last Thursday, February 21st, we submitted our FD BLA with the FDA. This is the combination of the hard work and dedication of the entire Alder team and we are confident that we have submitted a robust high-quality BLA supported by strong clinical trial data and a robust CMC data package. I'd like to thank our employees as well as the thousands of patients, physicians, and clinical trial investigators, whose efforts have enabled us to reach this important milestone.

Now turning to 2018, this was a seminal year for us as we demonstrated strong execution with the completion of key milestones. Let me remind you of all that we accomplished throughout the year and you'll understand why we feel so confident about where we believe our momentum will take us. It started in January with our announcement of positive top-line Phase III results for PROMISE 2, which consistent with results from our earlier trials demonstrated the rapid, effective and sustained efficacy of Epti in chronic migraine. In April, we presented new PROMISE 1 and PROMISE 2, Phase III clinical trial data, which highlighted the strength of Epti's clinical profile by showing efficacy, sustained or increased following subsequent administrations of Epti. In the second quarter, we completed our one-year safety study of Epti, which demonstrated a favorable safety profile consistent with previous studies. In October, we announced positive results from our PK study, which substantiated our comparability evaluation of the clinical supply for Epti and its planned commercial supply.

We are also pleased to strengthen our leadership team with the appointments of Carlos Campoy as CFO, and Dr. Paul Streck as CMO. They bring decades of experience that will help us build a fully integrated biopharmaceutical company with comprehensive commercial capabilities. Further, we significantly expanded our commercial infrastructure across functions including marketing, market access, medical affairs, data analytics, and commercial operations. Regarding our commercial supply, we recently entered into an amendment to our existing eptinezumab supply agreement with Sandoz, which dates back to 2015. This supply agreement and its amendments provides for the manufacturing of eptinezumab drug substance for a five-year term running through to 2023 and will allow us to meet our forecasted supply needs at launch and beyond. As we have previously mentioned, we have already begun building commercial inventory. In summary, last year was an exceptional one for Alder. We are particularly excited about the consistency of data across Epti and our clinical development program, where have seen rapid, effective and sustained responses combined with a favorable safety profile.

Turning to the current migraine landscape and why we are so confident in Epti's ability to capture distinct segment of the market. There are 30 million people in the United States who have four or more migraines for months, which means they are eligible for preventive therapy. Before the launch of anti-CGRPs in May 2018, only about 3.5 million of them were being treated prophylactically. This low 27% treatment penetration rate underscores the large unmet need and enormous opportunity for new innovative migraine therapies.

As we have discussed previously, preventive therapies both approved and in development including other anti-CGRP therapies if effective may take weeks to months to achieve meaningful clinical and quality of life benefits. I am always surprised when people ask me why speed is important in a chronic disease? Keep in mind that in our PROMISE 2 clinical trial, our patients averaged 16 migraine days per month or four migraines per week. Imagine having four migraine days a week. These patients experienced not only extreme pain, but also sensitivity to light and sound, they have bowel issues, impaired cognitive skills, and they are anxious and depressed because of their disease. I think it's really important that we continue to educate the market on the disability associated with migraine, because it goes to the significant need to bring new innovative therapies to the market and improve the lives of these patients.

Our market research shows that patients who are highly impacted by migraine and in need of preventive treatments want products that provide a rapid onset of prevention with deep sustained responses and limited side effects. Nearly 90% of patients surveyed would choose a product based on effectiveness and 80% of them would choose a product based on speed of prevention effect. Importantly, we understand there is a large segment of patients that prioritize relief of their disabling symptoms over convenience of administration. This was further supported by our market research that showed over 50% of patients who choose an infusion product would at least demonstrate clinical profile over a subcutaneous preventive therapy.

Now, I will talk briefly about Epti, which has demonstrated a clinically differentiated profile that includes day-one onset to prevention and robust 50%, 75% and 100% response rates with a safety profile similar to placebo. If approved, Epti will be the first anti-CGRP therapy for migraine prevention to be administered by quarterly IV infusion resulting in a 100% bio-availability. This means that the full dose administered is immediately available to block CGRP. Combining Epti's 100% bioavailability with its very high specificity and binding affinity to the CGRP ligand, has led to rapid, effective and sustained responses.

We hear directly from doctors that while they are excited with the recent launches of the new anti-CGRP subcutaneous products, they view these products as being fairly comparable to each other in terms of their performance. They tell us they are looking forward to Epti's highly competitive clinical profile and a differentiated IV mode of administration. Our position in market research aligns very well with this feedback, which in addition also estimated Epti's share of the anti-CGRP market to be in the range of 20% to 30%. It's clear that these physicians see Epti as being a meaningfully differentiated and an important part of their treatment armamentarium because of the potential benefits for their patients.

From the commercial payer perspective, we've had numerous meetings and discussions with a number of payers to gauge their their view on Epti. The feedback on Epti's clinical performance has been very consistent. These payers see Epti as being differentiated due to its 100% bio-availability, high response rates and speed to prevention, as well as the potential for enhanced compliance due to its quarterly IV administration. They also highlighted Epti's patient reported outcomes data as strong alignment with the early onset of prevention data seen in our Phase III clinical trials.

We are really excited that Epti's ability to compete in this market, which we believe to be a large and significantly unmet. An early signal in this uptick of anti-CGRP subcus, since entering the market back in May, over 200,000 patients have been prescribed one of these products in less than eight months. This underscores our view of the market opportunity and value and we remain confident in Epti's ability to garner a significant share of that market. It is against this backdrop that we are so excited about Epti's differentiated profile and its potential to create long-term value for patients, physicians, shareholders and stakeholders.

Looking into 2019 and beyond, we recognize that there are multiple ways to address migraine. Keep in mind that migraine is a heterogeneous disease, which means there are multiple mechanisms that can be involved in this disease. This highlights the need for further innovation and development of new therapies with alternative mechanism. At Alder, we have focused on finding a treatment for every single migraine patient. We are therefore exploring other pathways beyond CGRP to treat migraine. With this in mind, we are excited about the recent progress we've made advancing ALD1910, which targets PACAP, an alternative pathway believed to be associated with migraine. Dr. Eric Carter will talk about this in more detail as well as Epti's clinical data and BLA submission.

With that, I will turn it over to Eric.

Eric Carter -- Interim Chief Medical Officer

Thanks, Bob, and good afternoon, everyone. Today, I'm going to talk about why we're so excited about Alder's recent milestones, including our first BLA submission, Epti's differentiated clinical profile and ALD1910, our anti-PACAP monoclonal antibody. You'll remember in my remarks last year that I said that we want to ensure a high-quality BLA submission that would present our compelling data package in the best possible way to facilitate the FDA's filing acceptance, review and subsequent approval with a differentiated label. We believe that we've achieved this. Thanks to the dedicated hard work of the Alder team and the excellent support of our partners.

Essentially, you can appreciate submitting a high-quality, well-supported BLA is a significant achievement for Alder, and we do so confident that following approval, Epti will play a major role in helping patients effectively manage their very real burden that the migraine illness represents. Before I discuss ALD1910, I'd like to review key aspects of Epti's clinical data and highlight why we continue to believe its clinical profile is so compelling.

As Bob noted, Epdi's intravenous mode of administration with 100% bio-availability at the time of the infusion results in a differentiated clinical profile due to the rapid, effective and sustained suppression of migraine as demonstrated in our clinical trials. With respect to speed of onset, we believe that Epti will uniquely enable physicians to provide patients with a potential for prevention within 24 hours. And so a physician will have a pretty good idea if a patient will benefit from Epti the following the first administration. Our clinical data has demonstrated rapid onset of prevention on day-one post infusion that lasts for 12 weeks. In other words, patients have the potential to receive the full benefit of the medicine one day after administration perhaps compared to weeks or months for other preventive treatment.

With respect to efficacy for both episodic and chronic migraine patients, Epti reduce the risk of having a migraine by approximately 50% within the first 24 hours after treatment compared to baseline. Further, our clinical trials demonstrated that Epti delivered unsurpassed 50%, 75% and 100% responder rates sustained for three months following one administration. So, we observed that approximately 55% to 60% of chronic migraine patients achieved a 50% or greater reduction in migraine days by month-one that was sustained through three months after a single quarterly infusion.

And perhaps even more striking was that approximately one-third of patients achieved a 75% or greater reduction in migraine days by month-one, also sustained through month-three after a single quarterly infusion. In short, this means fewer migraine days per month for more patients. Additionally, we noted that these responder rates continue to be sustained or increased after the second, third and fourth quarterly administration of eptinezumab.

Finally, Epti's impressive efficacy data are associated with what we believe is a very good safety profile. The most common adverse reaction observed in our clinical trials with an incidence of at least 2% and at least 2% greater than placebo and the only one meeting these criteria was nasopharyngitis. Taken together, we see Epti as having a very favorable benefit to risk profile with a significantly differentiated clinical profile in terms of speed and efficacy.

Now turning to ALD1910, which, as Bob mentioned, is a preclinical candidate with the potential to establish and extend Alder's leadership in the migraine space. While the launch Anti-CGRP promises to provide significant benefits for a large proportion of patients suffering from migraine, it's clear that some patients will not fully benefit from therapeutic antibodies that block CGRP biology. Migraine is heterogeneous disease and patient responses to various treatment suggested other mechanisms are involved in the disease.

ALD1910 is a high-specificity, high-affinity, neutralizing monoclonal antibody with reactivity to PACAP or pituitary adenylate cyclase-activating peptide. PACAP-38 has emerged as an important signaling molecule in the pathophysiology of migraine and represents an attractive novel target for treating migraine. Importantly, new evidence indicates that PACAP may represent a unique and distinct pathway associated with migraine. PACAP and its three known receptors, PACAP1, VPAC1 and VPAC2 are expressed in the regions of the brain known to be associated with migraine symptomatology. By blocking the ligand, ALD1910 prevents the signaling of PACAP by all three receptors since they're all associated with migraine symptoms.

We recently completed additional preclinical work that shows ALD1910 was very effective in blocking the effects of endogenous PACAP in a dose-dependent manner in an animal model of neurogenic vasodilation. Animal toxicological study is a good predictor of what the human response will be also indicate that ALD1910 has the potential to be a safe compound. This further supports our view in developing new therapies that blocking the ligand versus blocking only one involved receptor is likely to be a more effective approach to treating migraine disease.

The totality of our preclinical data gives us the confidence to progress this candidate toward initiating a first-in-human clinical study by the end of 2019. We are excited about the potential of ALD1910, and as we extend our leadership and innovation in this space, we believe it could become a very large market opportunity.

With that Carlos Campoy, our Chief Financial Officer, will take you through our financial results.

Carlos Campoy -- Chief Financial Officer

Thank you, Eric, and hello, everyone. During the fourth quarter and full year 2018, our Epti program drove a significant portion of our R&D and G&A expenses in support of our commercial readiness activity. As of December 31, 2018, we reported $412 million in cash and cash equivalents, short-term investments, and restricted cash, compared to $485 million as of September 30, 2018, and compared to $286 million as of December 31, 2017. Please note that we will provide brief fourth quarter results on this call and refer you to our period-over-period operating results detailed in this afternoon's press release and Form 10-K filed with the SEC.

In the fourth quarter, R&D expenses totaled $64 million. G&A expenses were $13 million, and our net loss was $81 million or $1.19 per share. These figures represent increases over the same period last year, reflecting our commitment to advance the Epti program and position the Company for commercialization.

With respect to our financial outlook, we expect that our full-year 2019 net cash used in operating activities and purchases of property and equipment will be in the range of $285 million to $315 million, much of this spend is focused on ensuring that we are prepared for the potential launch of Epti in the first quarter of 2020, including advancing its supply chain, building commercial inventory, continuing to build out our commercial footprint, and other pre-launch market readiness activities.

We estimate our available cash, cash equivalents, short-term investments, and restricted cash as of the end of 2018 will be sufficient to meet projected operating requirements into 2020 and the anticipated launch of eptinezumab.

With that I will turn the call back to Bob.

Robert Azelby -- Chief Executive Officer

Thank you, Carlos. 2018 was a tremendous year for Alder, marked by a number of significant milestones, and 2019 is off to a great start with our first BLA submission last Thursday. We remain focused on Epti's commercial launch targeted for the first quarter of 2020 and we are confident in the team, resources, and plans we have in place to ensure that we will go to the market successfully. Importantly, we continue to believe that Epti has the potential to make a significant difference in the lives of people living with the debilitating effects of migraine.

As you look deeper into 2019, we are committed to finding relief for all migraine patients and building an integrated biopharmaceutical company not just for the short-term, but for the medium and long-term as well. It is with this view that we are moving forward with ALD1910 and optimistic about its potential to further transform the migraine treatment paradigm. We are very pleased with where we are today and are very optimistic about Alder's future. I look forward to sharing our continued progress as we advance toward Epti's potential commercial launch in the first quarter of 2020.

With that, we'd like to open the call to your questions. Operator?

Questions and Answers:

Operator

Thank you. (Operator Instructions) Our first question comes from Brian Abrahams of RBC Capital Markets. Your line is open.

Beau Miller -- RBC Capital Markets -- Analyst

Yes. Hi, this is Beau Miller on for Brian. So two questions for me, one commercial and one maybe more clinical. I guess, first on R&D priorities for 2019 and maybe Paul or Eric, you could offer your thoughts here as well. I'm just curious, if you have any more color on additional research efforts planned for the upcoming year that could augment the label and commercial opportunity for Epti, like a potential switching study or any updates on plans for a subcutaneous formulation.

Robert Azelby -- Chief Executive Officer

Sure, sure. You know what, I'll take that Beau. First of all from R&D priorities, we set at the end of last year and as Brian knows we went through an exhaustive lifecycle management program for eptinezumab and we ranked the whole bunch of different studies and we are very excited about the opportunities we have to continue to invest in eptinezumab, to continue to differentiate their product in the marketplace. But I would tell you, we're not ready to share that yet because we're working through our feasibility work, as well as the commercial opportunity work and so that will come later this year.

Additionally, I would say we get asked quite a bit about subcu. When we -- subcu was very much in that conversation, however, it fell lower on the list because we thought resources were better spent on things outside of subcu. And we sit here today saying, we're really excited about being the first quarterly IV administration for having the fourth subcu on the market.

Beau Miller -- RBC Capital Markets -- Analyst

Okay, great. And then my second question is just on manufacturing. I guess what is your current manufacturing capacity? And what further scale up do you anticipate will be necessary when you launch next year?

Robert Azelby -- Chief Executive Officer

So, first of all, this past summer we sat down as a team and actually discussed what our long-term manufacturing strategy was going to be, because we sat down, we thought, hey there is 13 million people in the US who suffer from this disease, and then there's that many -- as many of those globally. And so we wanted to make sure when we sat down and put together our manufacturing strategy, we would not only be able to meet the needs of our launch forecast in the United States and beyond, but we able to supply the globe as it relates to people who would benefit from eptinezumab and so we're very, very excited about the five-year deal that we went into with Sandoz as that puts us in a great position to produce high-quality supply and be able to meet our forecasted needs not only in the US, but also in the rest of the world. As it relates to your question on specific capacity, we're not going to share that, but we're very very confident in our ability to the meet our forecasted demand.

Beau Miller -- RBC Capital Markets -- Analyst

Okay. Thanks, Bob. And congrats on the BLA filing.

Robert Azelby -- Chief Executive Officer

Thank you so much.

Operator

Thank you. Our next question comes from Paul Matteis of Stifel. Your line is open.

Paul Matteis -- Stifel -- Analyst

Great, thanks so much and congrats on the progress. A couple of quick questions. On the commercial side, you guys have continued to affirm that you think you can target this market with a small specialized sales force and we noticed in the K that you've actually taken the range down from 75 to 125 to 75 to 100. Can you comment on your confidence that this is enough sales reps to target the core group of physicians that will maximize the size of eptinezumab? And then I have follow-up. Thanks.

Robert Azelby -- Chief Executive Officer

Sure. Thanks, Paul. Thanks for the congratulations on the BLA. First of all, we've been saying that we think this is a specialty marketplace and we continue to believe that. With the latest data we have, we've been now tracking the concentration curves associated with the anti-CGRPs that launched this past May and throughout the year. And there's roughly 3,100 physicians that represent 80% of those anti-CGRP prescriptions and is about 1,500 accounts that represent 80% of the prescriptions and so therefore we became more confident as we kind of hone our commercial footprint to be between 75 and 100 representatives to target that marketplace, what we call the 3,000 proceduralists we've been talking about. So we become more and more confident about that every day.

Paul Matteis -- Stifel -- Analyst

Okay. Thanks, Bob. And then on PACAP-38, we saw like you did and we talked about this before about the failure of the Amgen program. Can you talk about the key biological differences between your asset and theirs, just in terms of the Epti of whether it's ligand or receptor, and if there's anything about their development program itself that you might do differently here that you think can lead to a different result? Thanks again.

Robert Azelby -- Chief Executive Officer

Sure. I'll turn it over to John but just let you know, obviously, we're a company that focus on the ligand. And we think that is a great approach in this migraine pathway and so let me turn it over to John, who the architect of our ALD1910 program.

John A. Latham -- Chief Scientific Officer

So, Paul, the first thing we know is that if I infuse PACAP into migrainers that's what causes the migraine. So that's actually the first thing to take out of the gate. And as Eric shared, our asset ALD1910, it blocks all the pharmacology of PACAP against the three receptors that have been described to-date for use in the response to happens. And we really do feel strongly, as Bob said, if we bought the ligand, we the block the biology that's going to happen with PACAP. We've conducted a number of preclinical studies to get ready to make those bets and there are a number of models that we believe are very relevant to the migraine pathophysiology. And in fact, we have impaired our PACAP antibody versus the PAC1 antibody in those particular systems specifically to see what was going to have happened. And in our hands, with those particular preclinical models, we believe are important for the migraine biology, the PAC1 antibody was ineffective. So, the ALD1910 worked as we expected and is very much align that the PACAP side is clearly causing the pathophysiology in which the folks in Denmark have established and when we look collectively as we've talked about today between the preclinical data that we have as well as the toxicology data to get ready for first-in-human we feel very bullish about moving into man.

Paul Matteis -- Stifel -- Analyst

Okay. Okay. All right. Thank you very much.

Thank you. Our next question comes from Jeff Hung of Morgan Stanley. Your line is open.

Jeffrey Hung -- Morgan Stanley -- Analyst

Thanks for taking the questions. Can you talk a little bit about your payer conversations with regards to whether they have expressed any interest in performance-based contracts?

Robert Azelby -- Chief Executive Officer

Sure, Jeff. So thanks for the question. So we've been very active over the last -- since the start, but I've been personally very active here year over the last few weeks where we had NAD (ph) Board, I also went out visiting three of the largest payers. I'd first start off by saying they have -- they have very similar feedback that our patients, as well as our physicians have. They are excited about the 100% bio-availability. They like the high response rates, as well as the rapidity of which eptinezumab works. And then the other key element is they really do like the quarterly infusion because they think it enhances compliance, and as you know, payers love the fact of only paying for a product that once it's in the system, and so obviously when IV (ph) a patient, a payer would not be billed until it's in the patient's blood stream. And so with that being said, they really like the clinical profile.

Number 2, I would suggest to you is, when they talk about our IV mode of administration, they see that separate from the pharmacy benefit versus the medical policy benefit and they do like that have access to provide access to patients on those different modes of administration. And then finally, they did encourage us to think about a value type of contract. However, you get mixed opinions on that because there is a ton of work that goes into managing those contracts on the payer side, but they said that they would like to see what that may look like, and obviously with our speed of the fact, especially at day-one, month-one and week-12, we're going to be active in putting that together. But I don't see that as being a huge driver.

Jeffrey Hung -- Morgan Stanley -- Analyst

Great, thanks. And then how should we think about the R&D expenses in 2019, like should we think of the 4Q level as kind of the baseline going forward? And maybe can you talk about the contributors in 4Q that might have made a little bit higher than 2Q and 3Q? Thanks.

Robert Azelby -- Chief Executive Officer

Sure. So, I'll take the first part. I think we've articulated that in 2019, we will be spending between $285 million and $315 million and obviously a lot of that is going to prepare ourselves for the commercial launch, whether that be build in the commercial footprint externally, building the infrastructure we need internally, making sure our supply chain is ready to go as well as building inventory, and so I think we've given you a pretty good look at that going forward, but Carlos, you want to just highlight some of the differences between Q4 and Q3?

Carlos Campoy -- Chief Financial Officer

Yes. Primarily around securing our supply chain for Epti and initiating the manufacturing of commercial grade products, and as you look at 2019, you will see a profile that's also slightly larger in that area as we look to reserve all the capacity that we need to produce sufficient inventory to be ready for launch and beyond, and over time, you wouldn't see those early expense levels drop to lower levels.

Jeffrey Hung -- Morgan Stanley -- Analyst

Thank you.

Operator

Thank you. Our next question comes from Jessica Fye of JP Morgan. Your line is open.

Jessica Fye -- JP Morgan -- Analyst

Great. Thanks for taking my question. Maybe just following up on the prior question on spend and manufacturing spend. I think the case as in 2017, there was about an $80 million increase in R&D spend due to manufacturing and then in '18, it declined by $10 million or $15 million. So I guess can you speak to just what proportion of that 2019 cash burn is going to be producing product sort of manufacturing spend and also help us think about growth in SG&A, as you kind of embark on these smart commercial prep and building out that sales infrastructure?

Robert Azelby -- Chief Executive Officer

Sure. So, when we think about 2019, Jessica, obviously, we've stated between $285 million and $315 million, all going for commercial infrastructure and we're not going to break out our expenses under the R&D line between manufacturing and research and development. Obviously, most companies in our space don't do that. On the other side, on the SG&A side, we've spoken about a field force of 75 to 100 people, which we expect to have one in the back end of of 2019 to make sure we're prepared to launch in the first quarter of 2020, and then obviously, we're building all the other internal infrastructure required including IT, HR, finance, order to cash, those types of elements to make sure we're in a good position to launch in the first quarter of 2020.

Jessica Fye -- JP Morgan -- Analyst

Okay, great. And then just a couple others I had, with the US BLA in, can you talk about your latest thinking around kind of Ex-US (ph) strategy and potential for partnership.

Robert Azelby -- Chief Executive Officer

Sure. So one, again, huge milestone for Alder for submission last Thursday, I would say, we're very, very excited about that and the team did a wonderful job in executing and hitting all the timelines. And so what that means, we now, as we stated in the past, we believe that our clinical package combined with our CMC package is robust enough to submit to the MAA and so, our team is now actively working on an MAA strategy and looking to submit that package in Europe as well, although we haven't provided timelines on that, but we immediately start to pivot toward that.

Additionally, as we said at JPMorgan, we were active with large global organizations to help us potentially take eptinezumab around the globe and so we've had good discussions with that. But obviously, if a deal was to be had there, would have to make sense to make sure we would access a large number of patients and would have to make sure to meet the needs of our shareholders and therefore too early to opine any further on that.

Jessica Fye -- JP Morgan -- Analyst

Okay, got it. And just the last one is, as we think about eventually prevention data coming from the oral players, can you talk about your view on whether those products will compete in the prevention market for chronic migraine, for frequent episodic migraine or both or neither?

Robert Azelby -- Chief Executive Officer

Yes. So what we would say -- I get asked that question on a regular basis about the oral anti-CGRPs and what I would say is, before we can really opine on that, I'd love to see additional data, right. All we've seen is from one of the competitors on me monthly migraine day reduction and episodic migraine but no 50%, 75%, 100% response rates. We haven't seen the time of which they actually occurred. The other competitors shared some data in a post-talk analysis on -- in chronic migraine, which didn't seem to meet the threshold of which we see in with eptinezumab in the chronic migraine space. And so what I would say to that is, I was that -- we need to see more data to see how relevant they will be in not only the episodic migraine space, but also the chronic migraine space.

Jessica Fye -- JP Morgan -- Analyst

Do you have an expectation based on what you've seen so far?

Robert Azelby -- Chief Executive Officer

Based on what I've seen so far, I would say, I have no determination because I haven't seen enough data.

Jessica Fye -- JP Morgan -- Analyst

Okay, thank you.

Operator

Thank you. Our next question comes from Jim Birchenough from Wells Fargo. Your line is open.

Yanan Zhu -- Wells Fargo -- Analyst

Hi, thank you for taking the questions. This is Yanan on for Jim. So first of all, would you be able to share your thoughts on pricing as well as promotional strategies? Thanks.

Robert Azelby -- Chief Executive Officer

So, first of all, we will start off with from a promotional strategy perspective. Based on all the feedback we're learning from our Phase III clinical trial, we think that the speed to prevention and the durable responses not only are we getting greater than 50% reductions in migraine, on day-one, but that's consistent through week four and then through week 12, and so the speed and the depth of response is really going to be a clinical differentiator for us and that's what we're going to play on, and the feedback we get from patients, physicians and payers is very consistent in that light.

Additionally , we're focused on the 3,000 or so proceduralists who also are excited about the fact that you get enhanced adherence or compliance with the quarterly IV administration, it fits right in their business model as it relates to procedures and so that's going to be our our target market as we go forward. And then finally, to your question on speaking about pricing, we believe it's too early to be discussing pricing and we continue to monitor the uptake of the anti-CGRPs and how that's playing out in the payer space.

Yanan Zhu -- Wells Fargo -- Analyst

Got it. That's very helpful. And also just curious question could there be a scenario where patients or doctors opt to try to use the IV drug together rapid response, but later they may switch to subcu, how do you anticipate such a scenario?

Robert Azelby -- Chief Executive Officer

Sure. I would go back to -- really understanding the chronic migraine patient, number one, right. So, again, in our PROMISE 2 data, these patients averaged 16 migraine a month, that's four a week. I mean, I think we just step back and think about if you are suffering from four migraines a week and then you got this IV eptinezumab, which had a dramatic impact for you, right, and it makes you go back every quarter that we do not believe in the research that we do with patients because what we're told is 90% of them say I'm just going to continue to chase as much efficacy as possible. So, if there is any likelihood that a patient is going to go back, meaning get worse, we don't find that to be in attractive alternative for patients, nor for their physicians.

Yanan Zhu -- Wells Fargo -- Analyst

Got and that's very helpful. Thank you and congrats on the progresses.

Robert Azelby -- Chief Executive Officer

Thank you very much.

Operator

Thank you. Our next question comes from Geoffrey Porges of SVB Leerink. Your line is open.

Geoffrey Porges -- SVB Leerink -- Analyst

Thank you very much. Most of my questions have been answered, but a couple. First, I just want to come back to this question of R&D, because I think most of us were expecting that with the PROMISE trials being completed that there might be some reduction in R&D. But if we just look to 2020, if we assume then that you don't have to continuing to pay for inventory because at that point you'll be running the manufacturing expense through cost of goods line and you won't have pivotal trial, should we be modeling a significant step down in R&D in 2020 and in future years? And secondly, perhaps slightly revised that on the PACAP program. Could you confirm whether or not it's produced in the same e-system as Epti and if so, do you have a process already that you can scale? Thanks.

Robert Azelby -- Chief Executive Officer

So, Geoff, let me take the first one. Obviously, we articulated what we're going to spend in in 2019 between $285 million and $315 million and a from a manufacturing perspective, as you know, we're really, really excited about the five-year agreement we've done with Sandoz, because it puts us in a position for high-quality supply to not only meet our forecasted launch, but beyond and again, not only to be able to deliver supply in the US, but to deliver supply globally. And so we feel really good about that. There are some costs in the 2019 number, that's associated with us reserving capacity over that five-year program and so I would not use 2019 as the foundation for manufacturing spent in 2020 and beyond. And then to your second question on PACAP whether that's in the same e-system, we haven't provided any context yet on our ALD1910 program and we're keeping that in-house for now. So we're not going to provide more detail on that.

Geoffrey Porges -- SVB Leerink -- Analyst

Okay, Thank you.

Robert Azelby -- Chief Executive Officer

Thank you, Geoff.

Operator

Thank you. Our next question comes from Difei Yang of Mizuho. Your line is open.

Alexander Lim -- Mizuho -- Analyst

Hi, good morning guys. Good afternoon, this is Alex on for Difei. I had a question on manufacturing. Could you give us a bit more color on how many CMOs will you be using to manufacture eptinezumab and are you expecting FDA inspections at each of these CMOs?

Robert Azelby -- Chief Executive Officer

So. As we stated in our -- as I step back and again just highlighting our five-year agreement with Sandoz just puts us in an excellent position to meet the demand going into our -- our forecasted demand in 2020 and beyond, and again, not just in the US but globally. And so, they are our supplier as we as we go forward. And then as it relates to FDA inspections, we would anticipate a post-approval inspection that will occur after if and when our file is accepted by the FDA and then sometime after that we would an anticipate inspection at our CMO partner.

Alexander Lim -- Mizuho -- Analyst

Okay, great. And then could you also highlight the major remaining milestones with respect to the BLA process and do you anticipate an outcome meeting will be required? Thank you.

Robert Azelby -- Chief Executive Officer

So, the next major milestone would be at the 60-day mark from last Thursday, February 21, that's when the FDA would tell us whether or not they they accept the file, then it would officially be filed and then from that end we believe it will be a 10-month clock and we do not anticipate us getting priority review.

Operator

Thank you. Our next question comes from Matthew Luchini of BMO. Your line is open.

Na Sun -- BMO -- Analyst

Hi, this is Na on for Matthew. In terms of reimbursement, can you put a little bit more color on what the puts and takes are in the discussion with payers in the context of value based contracting?

Robert Azelby -- Chief Executive Officer

So, first of all, I start off by saying our engagement with the payers over the last three to six months has been outstanding and again they provide very, very similar feedback on the clinical differentiation associated with eptinezumab in terms of speed of response and depth of response. They also loved the 100% response rate and the quarterly IV infusion based on compliance. And so from that and they say, hey, you're in the IV world, you're in medical policy rather than the the pharmacy policy and therefore we like to provide our patients with different modes of administration. So from a coverage perspective, we feel really, really good about that. As it relates to the puts and takes on value contracts, can I just say should provide a little more detail, I don't want to infer what you mean by that question.

Na Sun -- BMO -- Analyst

I just think you know -- with the discussion on -- there's been discussion on, for example, recently reimbursement based on outcomes and what -- how the manufacture views the value that they bring to the table versus like what sort of -- quantitative or qualitative bar do you see as in bringing to the discussion that would convince payer?

Robert Azelby -- Chief Executive Officer

Sure. So, I think when we've had discussions with payers on the value that eptinezumab would bring relative to the other preventative therapies on the marketplace, we're going to start off by just talking about absolute response rates, especially in the chronic migraine world where the costs associated with chronic migraine patients is greater than episodic migraine patients, and so they like to to focus there. When you look at the depth of response that we're getting, such as 60% of the patients in the PROMISE 2 trial, got a 50% response and roughly a third of patients got a 75% response. And when you team that relative to our competitors in the marketplace, they see a higher percentage of patients having a positive benefit.

The other element, which they are excited about is which -- the speed of which eptinezumab works with day-one prevention, meaning, it starts the prevention within 24 hours for those patients that going to benefit, right. So, you can imagine if a patient is benefiting tomorrow rather than week-four, week-eight, week-12 or beyond, there's direct medical costs associated with that. And finally, I would just say, the payer has highlighted our hit six data, which is patient reported outcomes data and they love the fact that they saw a significant impact in patient reported outcomes at week-four, which ties to all rapidity of prevention that they seen in the PROMISE 2 data. And so, those two pieces from a payer perspective, they said, hey, we like your data and we love the fact that the patients who we're covering are seeing benefit and it's helping them in their daily living.

Na Sun -- BMO -- Analyst

And one more follow-on for PACAP, could you just talk a little bit more on the overlap between ALD1910 and Epti or how many more incremental patients who accept ALD1910 to bring into the migraine population?

Robert Azelby -- Chief Executive Officer

So, I think if you just step back and we believe as we've been stating here on today's call that eptinezumab has fantastic robust data, and I just shared with you that we believe the data suggests that we get 60% of patients to a 50% response and that's top of the class from an absolute perspective. Now, imagine 40% of those other patients are getting less than a 50% response, right? They would need some additional opportunities in order to manage their disease. We think ALD1910 has the enormous opportunity there going forward, because the anti-CGRPs no matter how good they are there's still enormous number of patients that would still benefit from new innovative therapies.

Na Sun -- BMO -- Analyst

Thank you.

Operator

Thank you. Our next question comes from the Vamil Divan of Credit Suisse. Your line is now open.

Ray -- Credit Suisse -- Analyst

Hi, this is Ray (ph) for Vamil. Just some clarity on a couple of questions, you indicated that you don't anticipate a priority review, I'm just wondering whether you are asking for one or have you asked for one already? That's first question. And second question, do you still think the 1Q launch -- could elaborate on it, whether that would be a full launch to essentially the whole market or will be sort of staged and will you I guess have sufficient productivity if it is a full launch? Thanks.

Robert Azelby -- Chief Executive Officer

Sure. So to the first question as it relates to priority view, the likelihood of us getting a priority review is very, very small because there's three other anti-CGRPs on the market. And so we're not anticipating that moving forward. As it relates to a Q1 launch, if everything goes well, February 21, you assume a 60-day review by the FDA, and then a 10-month clock that would put us into launch mode roughly in that; yes, let's call it late February, early March of 2020. And we fully anticipate to be ready to go with supplier to be able to meet the forecasted demand needs in the United States and so we don't think we'll have any inhibition as it relates to being ready to go to the market and trying to help as many people and patients as possible.

Ray -- Credit Suisse -- Analyst

Thanks.

Operator

Thank you. Our next question comes from for Serge Belanger of Needham. Your line is open.

Tan -- Needham & Company -- Analyst

Hi, congrats. This is Tan (ph) actually on Serge. I just have a question. Teva actually recently reported that 10% of their weekly Rx for AJOVY is actually from the quarterly dosing. So do you kind of expect this number to be a good proxy for your future demand for Epti once it becomes available?

Robert Azelby -- Chief Executive Officer

Yes, we saw that number as well, but I don't think that's a great proxy. I think when you look at the eptinezumab data and our clinical profile and really when we talk about the speed of response within day-one and our depth of response, we think we're going to be clinically differentiated. However, I would say it's good news for us when patients enjoy quarterly administration rather than monthly subcu. I think we're going to align very well in the marketplace. I would suggest you for those patients that are highly impacted with migraine, a very, very high percentage of them see their clinicians on a quarterly or even more frequently. And so the quarterly infusion fits right in line with how these patients are engaging their healthcare provider. And so we're very, very confident in our ability to there.

Tan -- Needham & Company -- Analyst

Got you. Thanks.

Operator

Thank you. Our next question comes from Danielle Brill of Piper Jaffray. Your line is open.

Danielle Brill -- Piper Jaffray -- Analyst

Hi guys, thanks for the questions. So, Bob, I am curious based on interactions with doctors, do you have any sense what proportion of the 200,000 patients that have started subcus are non-responders or poor responders? And then for those patients how willing are doctors to try another CGRP?

Robert Azelby -- Chief Executive Officer

So, I don't have a great insights out of the number of the 200,000, how many are non-responders or inadequate responders. What I can tell you, the feedback has been enormously consistent that the subcu anti-CGRPs are performing very similar to the way they performed in the clinical trials, right. And so if you take that they're getting about 40% to 45% of people to a 50% reduction in migraines and we hear that very, very consistently from the marketplace. We've also heard regularly from the marketplace, we do have a medical affairs team out doing scientific exchange understanding what's taking place in the marketplace and we hear regularly that physicians, if patient has an inadequate response or a toxicity issue or something else going on one subcu, they have -- the physicians have not been reticent to move to another subcu.

Danielle Brill -- Piper Jaffray -- Analyst

Got it. Thank you.

Operator

Thank you. Our next question comes from Bill Morgan of Cowen & Company. Your line is open.

William Maughan -- Cowen and Company -- Analyst

Hi. Congrats on the BLA. So for doctors who aren't currently affiliated with an infusion center, is there anything you're planning on doing to facilitate their access to IV centers or you do rely on the differentiation of the product to bring them in any way they can find? And then second question, do you believe that the CGRP mechanism of action and the Botox mechanism of action are additive or are they more treating discrete populations of migraines? Thanks.

Robert Azelby -- Chief Executive Officer

All right. Very good. First -- on your first question as it relates to clinicians who may not have infusion capabilities in their office or their hospital. Obviously, IV access is widely available, right. And so it's not really challenging for clinicians to get a patient whether that be to a free standing infusion center to a hospital outpatient, many times they send it over to even the oncology world where they're doing standard infusions. And so we're going to work to build an infusion network, but not really barely just to make sure that we have it identified, but we do not believe that IV access is going to be a rate limiter for us going forward. As it relates to the CGRP mechanism of action and the Botox mechanism of action, I'll defer to John as it relates to the difference between those. And I do think it's actually -- I just defer to John on or Dr. Carter.

John A. Latham -- Chief Scientific Officer

Yes. So, hi there. So I think given the migraine the consequence of sensitization to no susceptive and vasodilatory signals within particular regions of the brain the trigeminal vascular region. The thinking is that is the botulinum toxin plays a role in impacting that sensitization, which in some patients leads to migraine, as does CGRP. In the absence of really looking at these two medicines side by side, it's difficult to tell whether or not they would be additive or whether they would be acting in a discrete -- in the purely discrete manner. I would anticipate that they do probably act somewhat discretely but perhaps with a a final common pathway. What we do know of course is that our efficacy data with Epti is significantly more compelling then the Botox data, and so obviously dealing with different -- probably different at the end of the day, different mechanistic approaches here. I don't know -- I just don't know whether or not people are using subcu CGRP in patients that are having an inadequate response to Botox. I imagine that in clinical practice, people -- doctors will try pretty much anything given how burdensome migraine is for the patients.

William Maughan -- Cowen and Company -- Analyst

Thank you very much.

Operator

Thank you. Our next question comes from Carter Gould of UBS, your line is open.

Carter Gould -- UBS -- Analyst

Thanks. Good evening. Congrats to Bob and team on the filing. I will start with a clarification question, I guess, the first question you got (inaudible) activity is that you kind of we're working through and you weren't ready to share them at this time. Can you at least commit that we will -- those activity -- some of those activities will start this year? And then Bob, wanted to get your latest thoughts on the need to potentially provide free drug when you launch, I know in the past you've kind of downplayed that notion to but wanted to get your latest take on that front. Thank you.

Robert Azelby -- Chief Executive Officer

Sure. So first of all on your question on the lifecycle management and we were excited about the different alternatives we add to continue invest in that being continue to differentiate it. What I would tell you is, we put a nice list together, we have a plan to execute again. But we got to make sure the feasible, right. And then we got to make sure that there is a good commercial opportunity associated with it. I can tell you that once we jumped through those two hurdles, we would execute against them as quickly as possible, but I can't sit here and tell you that they've definitively true to happen because we still have to do as any biopharmaceutical company does. We have to (inaudible) in terms of the feasibility assessment as well as the commercial opportunity. And so -- but I will tell you, once we jumped through those hurdles, we would like to move as quickly as possible. So that's one.

Number two, on your question on free product, when we look -- when we've seen since the launch in May of 2018, all three companies went out there and gave quite a big amount of free products, although, as you see and how all three competitors spoke about that the number of prescriptions that are being filled now are paid for, two of them said 50%, one said it's 60%, so your are starting to see the marketplace starting to settle. And what we anticipate 12 months from now that medical policy and payer coverage will be established; the priority review and those types of things will be established and so we don't see the year anticipating that we're going to have to go out and give 12 months of free products to actually allow this marketplace to get going and to settle and basically in our engagement with the payers, they did a team that we should be doing that as well. And so never say never, but as we sit here today, we don't see that as a real probability.

Carter Gould -- UBS -- Analyst

That's great. I guess just one or two more. Can you also provide an update on kind of where you stand on the CCO hire and then just one last clarification, obviously, we saw the Lilly, Teva IPR is there any chance that down the road if Lilly continues to win out that potentially impacts your downstream payments to Teva?

Robert Azelby -- Chief Executive Officer

So, let me talk about the CCO hiring. So, first of all, let me talk about our current CCO, which has done a phenomenal job and continues to be engaged and working as hard as she ever had and so, I do want to give a chat out to a little bit because of her leadership and her engagement and, we're still getting every nickel out of her that she's doing. With that being said, we are very active on our Chief Commercial Officer search. We're actively engaging what I see as very, very strong candidates and I'm optimistic that we're going to be able to secure a CCO that's not only going to enable us to compete very effectively in the marketplace but also one that's going to help us build this organization into a fully integrated biopharmaceutical company. As it relates to the IPR and the patents, we're going to refrain from speculating on how that's going to play out.

Carter Gould -- UBS -- Analyst

Thank you for taking the question.

Operator

Thank you. Our next question comes from Sumant Kulkarni of Canaccord. Your line is open.

Sumant Kulkarni -- Canaccord -- Analyst

Thanks for taking my questions. First, now that you have your amended drug substance deal with Sandoz in place, could you give us a sense of what COGS might be and more importantly, the gross margin to Alder on eptinezumab after the royalty due to Teva?

Robert Azelby -- Chief Executive Officer

Yes. So, Sumant, first of all, great to hear from you. As you know, we have a standing policy that we don't comment as it relates to what our COGS are actually going to be. What I would say from a high level perspective, our success is going to be determined by our commercial effectiveness in the marketplace and not by our COGS and we feel confident where our COGS are going to end up. But we're not in a position to give you details on that.

Sumant Kulkarni -- Canaccord -- Analyst

Sure. And then assuming eptinezumab is approved and launched, how do you expect the lack of a specific procedure code in 2020 to impact the ramp of sales if at all?

Robert Azelby -- Chief Executive Officer

Yes, we don't anticipate that the lack of procedure code. In fact, we believe a procedure code does exist for IV administration, but I'll go back into a little bit more homework on that particular element, but infusing codes is not usually a problem, let me go back and confirm that.

Sumant Kulkarni -- Canaccord -- Analyst

Thank you.

Operator

Thank you. I'm showing no further questions at this time. Ladies and gentlemen, this does conclude today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.

Duration: 64 minutes

Call participants:

Michael Schaffzin -- Investor Relations

Robert Azelby -- Chief Executive Officer

Eric Carter -- Interim Chief Medical Officer

Carlos Campoy -- Chief Financial Officer

Beau Miller -- RBC Capital Markets -- Analyst

Paul Matteis -- Stifel -- Analyst

John A. Latham -- Chief Scientific Officer

Jeffrey Hung -- Morgan Stanley -- Analyst

Jessica Fye -- JP Morgan -- Analyst

Yanan Zhu -- Wells Fargo -- Analyst

Geoffrey Porges -- SVB Leerink -- Analyst

Alexander Lim -- Mizuho -- Analyst

Na Sun -- BMO -- Analyst

Ray -- Credit Suisse -- Analyst

Tan -- Needham & Company -- Analyst

Danielle Brill -- Piper Jaffray -- Analyst

William Maughan -- Cowen and Company -- Analyst

Carter Gould -- UBS -- Analyst

Sumant Kulkarni -- Canaccord -- Analyst

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