Q4 2019 Earnings Call
Standby confidence will begin shortly thank you.
[music].
Ladies and gentlemen, thank you for standing by welcome to the ceiling pharma was sold for the Fourg <unk> off 2019 conference call. At this time, all participants I didn't listen only mode. After the speaker presentation. They wouldn't be a question and answer session to ask a question. During this session you will need.
A press that one on just telephone and wait for your name to Vietnam.
I must advise you that this confidence is being recorded today and now I would like to have the confidence over one I'm just because to be.
Well then please go ahead.
Thank you for sale and thanks, everybody for joining today welcome to the wind farm is conference call for without a full year 2019.
Participating in today's call or even CEO, Emmanuel Black and Chief Medical Officer Adams Ginsberg.
Our CFO, Matt Dallas had plans to participate however, due to recent developments related to their Corona virus, Congrats and international travel. It was decided late last night that Matt should return to the U.S. from Denmark immediately.
So we just for this Emmanuel will provide both business and financial highlights from the full year 2890 in the period that's there.
Adam will follow with updates from our R&D programs.
After the prepared remarks, we'll open up and take your questions. You can find annual report for 2019, the related company announcement and additional information on our website at sea on pharma Dot com.
As a company headquartered in Denmark, our financials are reported in Danish Crown also referred to as corner keep figures may have been converted to U.S. dollars for convenience.
On page one I will point out that we will be making forward looking statements that are subject to risks and uncertainties.
Statements are valid only as of today and the company assumes no obligation to update them, except as required by law. Please refer to our recent filings for a more complete picture of risks and other factors.
And with this I would turn the call over our CEO Emanuel.
Thank you, let me [laughter] and thank you everyone for joining today.
Before turning to all 2900 results and business highlights and because it relates to is even from operations.
Wanted to provide an update on the situation with the corner robbery sudden break.
As a responsible company we also doing the Dinesh health authorities recommendations.
And on how to reduce the risk of diary spread.
This implies travel restrictions, allowing piece workers to work from home and organize work at the you know to further reduce contamination risk when police that works you know laboratories.
We are actively monitoring the situation and proactively implementing specific measures to ensure business country nichey and mitigate net impact.
We continue to be in a close dialogue, we've all clinical trial sites in Europe, and U.S. and putting in measure in place measures to address potential local restrictions that are implemented to address the core narrow corridor outbreak.
[noise] that's it for these.
Now please turn to page three.
Where do you see that the many milestones that made the 2019, a transformational year fuzzy lymphoma.
I would like to highlight some of our achievements from the state wide Eyed then we'll speak to open later in his presentation.
First.
It was a major accomplishment to complete the phase three programs what does it you're going to treat TV rapidly senior.
Results from several phase three studies consistency supported the potential as it does it get when I put on risk you Ben as it starts treatments for Didier I perceive yet.
These results provide a strong base for our application to the FDA.
We are on track to submit the NDA by the end of the smoke.
Our agreement with Alex John to develop peptides therapies for complement mediated disease was a big milestone secured early in 2019.
This partnership we have an industry leader.
Increased visibility for applied platform throughout the <unk> community.
What giving us an opportunity to develop pick tight budgets for even more patients.
[noise] acquiring and cycle was the first time company story that we had invested in external innovation to strategically expand our pipeline.
The acquired outside full but that's seven integrase inhibitor ads exciting new opportunities for our research and development teams to work in additional Gee I disease, as well as possibly for developing peptide therapeutics taken orally.
Finally.
We secured funding to help us accelerate to build the U.S. operations to prepare for company first product launch anticipated next year.
Stability in commercial and medical operations is the final step to all transformation.
In the second half was 29 team we successfully on boarded key personnel selected the sites in the Boston area too complex to complement on the offices.
And commenced the early build although our infrastructure.
The momentum of these activities.
As carried into 2001.
Where we continue to execute fast paced plan to ensure our U.S. organization is fully operational but your and.
On page four.
These achievements are part of the exciting journey that didn't understating.
We have a clear strategy and successful execution of strategy, we are poised to deliver on our commitment to improving patients lives by providing leading the tightrope it takes.
We have made achievements throughout the four strategic areas supporting our vision.
Oh peptide platform was expanded through a strategic acquisition, what additional candidates progressed into pre preclinical studies.
We remain focused on developing therapeutics that address CBR medical needs for patients with guests went to you know and metabolic disease.
In 29, Jim we took big steps towards our mission to become a fully integrated biotech with R&D operations, and the medical and commercial organization and infrastructure in the U.S.
Turning to page five.
You see the major milestones that we expect to achieving 2020.
By the end of this year.
Zillions transformation into a fully integrated biotech company will be compete.
We will be typical us taking up on products from discovery to development and through registration and commercialization.
We will be prepared to institute for exciting launches planned over four years.
Beginning with the first the anticipated launch in 2021.
Now it didn't seem to page six I will cover for CFO, Matt that us to review financial results for the full year 2019.
On page seven.
You see the unions income statements for fiscal year, 2019, and how it compares to 2090.
To 28 Im sorry.
The net result for financial year 2019, it was a loss.
Of 571.5 million corner.
Further development of the late stage clinical programs an expansion of the early pipeline combined with pre commercialization efforts. So that does he couldn't why put terrorists, Japan and driving the cost base for the season.
All driving because piece was even these factors have resulted in an increasing R&D expenses of 123.2 million.
Corner and an increase in G. any expenses 24.3 million compared to 28 gene.
The 2018 operating result was mainly due to an increase in other operating income as a result of the sale of future milestones and royalties related to the Sanofi license, having a net gain of 1.1 billion calendar in the period.
That's for reference.
Page eight illustrates our financial position and ability to support our clinical programs.
Led to operating expenses shown on the left.
Were 628.9 million corner for the year.
Estimated guidance for 2019 with exceeded due to the increased level of support needed in internal staffing as well as professional advisors and external service providers has the company prepares for product launch and subsequent commercialization.
On the right of the slide.
You can see that our cash position remained strong.
As of December 31st 29, Jim cash cash equivalents and securities amounted to 1.4 billion 1.38 billion corner.
For $206.8 million.
The increase in cash and cash equivalence is mainly due to the net proceeds from the issue of shares into your of 683 million corner and the upfront cash and liquid investment the company received a $40 million from the situation of the partnership program with our action Pharmaceuticals.
Moving to page nine.
You see guidance for 2020.
Net operating expenses in 2020 are expected to be within the range of seven to 792 810 billion corner.
This is an increase compared to 2019 and is due to the rising demonstration and Mr. keep expenses as we prepare for the product launch and commercialization of the does he critical hypothalamus Japan.
It is further due to the clinical development cost associated with phase three programs for typically died and does your capital for congenital hyperinsulinism and did you all artificial pancreas.
Zenon does not provide guidance on revenue from current or potential partnership agreements due to the uncertainty in terms of the loans and timing.
Now going to pitch then.
I will turn the call over to add them to discuss highlights from R&D.
Okay.
Thank you and I know.
So on page 11.
You will see an overview of sealants bust the pipeline, reflecting the significant progress we had with all our programs in 2019.
Also a shaft earlier in this call by him and will we expect 2020 to be and news flow itch yeah.
With submission of our first NDA to the FDA.
Continuous progress across our other programs.
Turning to page 12.
You can see.
The treatment modalities that we have to ensuring that basically work on beyond the hydropower rescue pin.
And driven by.
Our ambition successful management of type one diabetes and reduce the burden of living this serious condition. We are working with visa bionics to develop that you can look on for the use in the island.
And bionic pancreas.
We believe that the results from the phase two study and announced in Q2 last year demonstrated unprecedented sumit control by the five normal pilot compared to the into the only setting.
And the continued to make good progress with the FDA interactions and look forward to that people pivotal phase three trial that is expected to stop later this year.
Our Sir that's you grew up on program aims to check the life for children and their families living with congenital hyperinsulinism.
In our first phase three study with children, aged fee month to 12 years recruitment has continued to make strong progress.
And now we expect patient enrollment to be completed in Q2 this year.
The second phase three trial with up to true CH I children from newborns two one year were initiated last year.
We could see results from this year data in Twentytwenty as well.
Finally.
As announced in our Q3 coal we are evaluating the potential for me doses of basic look on as a novel treatment for patients with hopefully add essentially hypoglycemia and we're happy to announce that the completed patient enrollment into this phase two study in February this year and expect results from this.
Clinical proof of concept dose finding trial within the coming months.
On page 13.
Yes summarize.
The results from the three phase three studies with it actually look on how does how risky open for treatment of severe hypoglycemia in diabetes.
The median time to plasma glucose coloring from hypoglycemia was only 10 minutes from injection across all studies.
Importantly, the same dose of open six milligram, especially grew up on issues, both in pediatric patients and adults.
And we believe that time to rescue is going to be at very important factor for patients and caregivers when considering rescue solutions for severe hypoglycemia.
And we're looking forward sharing more results from our programs at upcoming scientific conferences.
With the clinical program concluded last year I'm very happy to report remain on track for submitting the new drug.
Application to the FDA by the end of this month.
Moving to page 14.
Yes, we review our clinical programs for treatment of short bowel syndrome.
Heckard side is that went on activity of the two analog with potential for BP administration in an auto injector.
And we expect to complete enrollment for the pivotal phase three study by the end up this year.
So I expect it in the first half of 20.
21, and we are continuing to work to worsen empty a submission in late 21.
CP 70, 570 is a unique I think you want you to agonist with.
Which we believe represents the next innovation in the treatment of short bowel syndrome.
We expect to have results from the single ascending phase one.
Side.
Twentytwenty and plan to initiate a phase one be multiple ascending safety and Tolerability type data this year.
With page 14, I will now turn the call swim and well for his closing comments.
Thank you Adam.
So it's 16.
Ben 16 shows the anticipated news flow around achieving major milestones for didn't in Twentytwenty.
We will continue to see the strong technical progress although late stage program.
We also look forward to providing updates as our U.S. organization becomes fully operational.
And ready to support the launch of the rescue pen.
Yes.
Turning to conclude yes space at this.
The prepared remarks, and now we would like to open up your question.
No Priscilla if you can please open the lines.
Thank you so much ladies and gentlemen, as a quick quick reminder, please press star one under telephone and wait for your name to be announced.
Please standby when we compiled by Q1 Q.
Again please.
If you wish to ask a question pests that one and two concerns you everquest past the husky. Thank you so much.
On the first question comes from the line of Thomas Bala, Sometimes Keybanc. Please go ahead.
Yes. Thank you very much a couple of questions from me here. So so firstly just to kick off with the revenue guidance.
So so you do expect some some additional revenue.
And I'm just wondering aside from this 22 million euro milestone from from B. I on the face to start so is there any other potential reimbursements as is the C. Three program starting phase one.
Anything else that that could materialize in Twentytwenty and didn't maybe secondly, just remind me on December we'll see a 50 million USDOT us.
Payment is that cost Philly also something that could be trigger so for this fiscal year and then second question just.
On your Opex guidance. So I'm just wondering on dividends has chico along those still pending of course, but but but could this one have impact on your guidance. All is somewhat included in your in your current a current outlook.
And then just lastly on the pipeline or just a question onto onto you will hold on pump.
Could you maybe to just a little color on where you are right now with the FDA dot on the face redesign and maybe also how should we think off of additional non exclusive deals is that still something that we shoot could expect here in new into its 20. Thank you.
Thank you Tom.
So I'll take your first a question regarding the revenues. So in 2020, we expect revenue from existing license agreements. However, since a these revenues are uncertain in terms of amounts and timing, we don't guide on revenues ex such revenues.
We.
And your your question was relate to the fact, whether or not it's baked into our numbers. It is not because again, we are actually a wheel.
Well, we'll actually put that into in the guidance when when when it's happening so.
The other part but talking about my question was more related to if that is because we have caused our way off the 20 million euro milestone from from burning off when when the phase two stocks, but but I'm just wondering if you'll see all the potential milestones in numbers, which potentially could be treatment also just on than in regards to also the sanofi.
Payment that we also are expecting.
I think it's almost like me to say that that could be other milestones, but it is but we don't guide on it but.
That could be.
Okay. Thank you.
And.
And then over there to us just on the Opex.
Yes, so the but it just is actually a process is ongoing.
No the timelines the current payments with acquisition is that on March 12, a the did that it was a bit deadline for other interested bidders.
So today.
And so much sixteens bids will be consumed as a as meeting the qualification for bidders. So Ah. We are we are actually equation, but Peter that we don't know about any any others.
And and on the until you know from the 16 to the 20 sets will be the auction fine and a on the 20 basically the that's will be the auction completion, if theres any other bidders if there's no other bidders basically.
We will know.
By today, and we will know as Vicki we're moving forward with that read this acquisition on that.
Okay. So so if you are human so to take over their test will that have an impact on on the current a 20 outlook.
So right now we are two different two separate companies. So our opex is actually a including built of the commercial U.S. entities from scratch. So that's actually are our.
Opex.
So once we once we access the veritas or we see balance sheets and revenue lines. Then we'll have to integrate that into our own you know strategy and revenues, but it will you of course.
Some revenue coming from their their product line sales and as well the expenses that we will have to align and deduce from our projected.
Investment for the deal to the U.S. organization, So and we expect a these to be clarify that would say probably few weeks following this.
A final.
Integration or acquisition.
Okay perfect.
Yes.
So do you have little questions one of the dual almond pump and maybe other than we will take this one.
Yes.
So what I can say that we as you know we are collaborating in a nonexclusive collaboration with Peter Bionics.
And we're making good progress with the interactions with FDA has also been communicated to both bionics, but also by US then it's about a slow start an insulin only study first so that is the first study that you will see.
Okay.
And then we will follow with hormone studies together with his advice.
Is that we.
In five discussions on the median time discussions on the phase three design, which developing very positive.
Okay preparing for an interface to meeting with DCH to align on this important.
You can say drug development activities that will be needed for approval. So all that so.
Is it better to be concluded this year and then.
Also as I have the phase three trial started.
As you also have again by late last year.
Same see breakthrough designation under device, where you have under specifically mentioned. So these are of course also things that we are pursuing.
This year.
Okay. So so there's nothing.
Right now that surprising you in regards to a two the length of to study. So it's still believe that it's going to be fairless with the automotive with all the data you already have compiled from from the other trials.
Yeah from that no change in what we have said so fine I think we had continuing it along the same lines it seems to be quite limited study.
That could.
And now.
Then just raised this product.
Okay and just finally on the on all the longest do this deal. So that's something that potentially could be treatment at old could happen here also inventory just wednesday or.
Yeah again these are things that cannot guide on I can say, what I can say that be devices to tie that we are pursuing this with as a first you can say.
Nonexclusive us of course and beyond dialogue with other device companies I think.
There was also released yet not yet a lot of companies have kind of started to two to consider how this could.
Have indicated for their future business.
We cannot types.
Happened.
Hi, This is a core perfect. Thank you very much I'll jump back into queue.
Thank you Tom.
Thank you so much on the next question comes from the line of David level.
On a standalone. Please go ahead.
Thank you very much for taking my question.
I would you characterize the market opportunity for does it go God just within the context hypo power rescue pen versus the opportunity in the dual pump.
Oh.
I mean, very very different buckets or even though they are both spring in the same send book So I would see type one diabetes. Thank you David for your question. The the a rescue pen markets to date in the U.S. is a highly undeveloped so others you know there's been this.
Okay kids market not marketed by you know to be companies.
They will be injection of new products. So we've seen the approval us to new products last year, and ER and the finding of the risk Japan.
We expect to this market to transform.
From a sleepy undeveloped market to a fast growing markets right now the market is growing by 20% and and there is still I think around probably 500 to 600000 patients who are buying these solutions for a route roughly a 6 million patients in the U.S.
Ah potential so and these patients are buying on average two kids too. So that they can you know have one at home and what have won their bags or one into schools or sports club. So so that's actually very vast market for us, but I as as I said its undeveloped.
As you know it takes time to develop pockets.
And and we are.
Small company. So we have to make you know we have to put on vision, you know where where it would mean so for US. This is a great opportunity we have a very differentiated product we believe.
We don't have meets you know what the patients needs and require for the situation. So.
Looking forward. We are we're fairly positive at same time, I would say that it's not going to be a multibillion dollar market fell from its actually.
So so I would say if you want to model that you should I would say take low expectations into short term and.
Increase your expectation in the longer term and when I mean is that for me. The dual almond pump is a massive opportunity to transform the type one diabetic market and management of patients.
We see that to date in the us out of 1.3 million type one diabetes patients around a 500 thousands are defined as pumpers. They are using an attempt.
To manage their diabetes.
And so are these off for us the abuse again Lewis.
Hanging fruit for patients that would be looking at the du lman pump, but with the with the penetration of we believe that he closed loop pumps, the close monitoring with the CGM as well as the availability of the pump that can work on the highs and on the loads as well.
And being more patients in target and allow them to be more aggressive on their or their numbers and the more aggressive on there on lowering their numbers for for a blood glucose level and be more in ranch without any human intervention I think we believe its has the potential to transform.
The management of diabetes, and I wouldn't be surprised to see a lot more.
Patients adopting pumps beyond the 500000 or out of 1.3 million. So right now 40, 45%.
I think it's going to grow fast.
So that's why and Thats chronic treatment. So crummy 20 demand for four or does it could go is very substantial opportunity for for us.
Oh being that its chronic treatment how would that.
We looked at differently from.
A modeling perspective.
So again, Rick you tend to me, it's a it's a bit like mimicking the 80 10, so it's like any uptick you know.
Any patients can have an attack and any attacking can be suddenly so you'll have to a quick yourself you utilization, though is actually a very difficult to measure exactly who is actually using these bands.
How frequently are they using them, but at least they need to have one to prevent any event.
On the on the chronic use I think right now you know as you look at the incident, you know use I think the patients will be using around two countries a week.
I will be shown changing countries agree to three days.
For life. So that's that's a substantial utilization there.
Okay of course, that's incident from does it together, we still have to define it's probably less it's probably less use less volume I would say a then then incident, but we see how do we collected define it indeed faced the phase three will actually be telling but.
Thank you for that's very helpful.
I mentioned is an incident.
Thank you so mark and the next question comes from the line of it said that the from Guggenheim. Please go ahead.
Great. Thanks for taking my question I'm just quickly if I wondered if you could maybe just talk about sort of expectations for sort of to read outs that we could get in 2021 for the congenital hyperinsulinism wondered if you could maybe discuss.
What what the clinical benchmarks, we should be thinking about to interpret the results. Once once we get them and then and maybe just in terms of the bariatrics surgery hypoglycemia, what what that market is like.
And what the market opportunity would be for for desk Luca gone with with the sort of that.
The phase two read out expected.
Upcoming months.
Thanks. Thank you for the question, maybe I can start by addressing them and if I suppose Patrick.
Surgery Hypoglycemia then.
As you correctly said, we started this study you treat ikea and have been growth aspirations in February and expected results within the next month or so.
I would say what is important for this indication is also and what you have to pay attention to is that we are using a minute those 10.
So that is actually a net product that we have an active development right now.
So and why is that important that is you could actually even consider such.
Solution being used in other indications if you speak again too.
I can't give us in patients with type one diabetes.
As a shoes desire and option that could give me doses.
If you look on to correct.
Moderate hyperglycemia in situations, where you can actually not just.
And you can see the situations where.
It is throwing up just off the exercise et cetera, where it could be.
Not a preferred solution, suggesting additional carbohydrates are actually in possible. The reason that we started postbank hydroflow.
First I certainly hypoglycemia is because the unmet medical need here is extremely well.
We have patients have undergone biotic surgery for obesity and a fraction.
A portion of these patients they didn't develop this condition meeting that every time they need.
Few hours after that they will develop.
Very serious hyperglycemia and here it simply is not a solution to eat again, because then they hypoglycemia will just get even worse.
So for these patients.
We havent miserable that they have to.
To.
Some will have to have essentially we've done so we installed the normal intestinal system and others trying to be managed by.
Eating very small deals and so on so that's a very clear unmet medical need for these patients and we would expect it to be very small program that could allow for products would be registered two to support. These patients then once the product has been I guess that in this indication we could expand into the latter use in type one diabetes, which.
Of course will require dacha studies and this is also then putting it into the lightest the dual homeowner sufficient pancreas, which together with what we're doing and Postbank century, well established a chronic use a static work on different patient populations. So yes, as you rich I think grew about opportunities asset portfolio.
Alex that actually supported each others in both the regulatory and development perspective.
In in pulled back surgery hypoglycemia, you also and in any need those condition. We recognize that it has to be a simple solution. So thats why we are focused on making a need those pen and it's easy to use for the patients. It's also not an option in our minds that you actually get yourself tries to overcome hyperglycemia and thats actually where they provide a better.
Okay and move to be very interesting and what I would hope to see if it goes batty hyperglycemia studies is that a single injection was which is what we test it allows us to correct. The hyperglycemic events in these patients. So that is what I would be looking for and then of course, if we are able to keep them out of the series.
Hypercalcemia.
Chr.
Which is a very different condition, where patients by themselves produce too much in Susan.
Current study, which is in patients aged three months to 12 years.
Have included patients who have.
A significant number hyperglycemic events every week.
And the primary endpoint books into our ability to reduce that.
And.
You can say my mind any reduction is important but I would be looking for numbers of at least a 30% more adoption.
If you do into also you can see it isn't sacrifice a cup of tea secondary endpoint is the ability to fast and many of these patients families will have to wake up every night and see them every second our.
She preventing developing hyperglycemia. So if we can extend the period whereby they can stop and he ever say any our town, but imagine if you could take it in two hours to four hours for six hours that would completely changed the life. These patients their families.
So so.
So thats, what I would benefit level of response that I would be looking for.
In the in the CHF <unk>.
Great. Thanks, that's helpful.
[music].
Thank you and then next question comes from a line of just that.
Got Carnegie. Please go ahead.
Thank you very much.
Just first question on capital. So we have 1.4 billion in net cash spike.
And just remind us just internally how many years of cash you expect to have and also when looking forward to have an internal thresholds on the cash position.
But the minimum 500 million or the like.
That's the first person the second one just.
I appreciate your comments on cobot nights.
No, it's very uncertain times and all that.
Okay, just a just perhaps give some color on a so it so whats programs are the most exposed throughput potential delays and also particularly looking at the political size taste, we read out where say results in each 121.
I assume that its Q2 and set up Q1, and what's the what's the uncertainty or probability that it could move into for example, Q3 I know, it's only a few months in a few quarters, but it's just just kept me somebody or some color that there will be very helpful. Thank you.
Thank you so maybe I can I can start there.
We were owner Iris.
Flavor and any minimal.
Follow up another Kevin So question, but so as we stated that we have implemented and that we have cost following.
Health authorities and government guidance, so as a company we other rating. According to those guidance is we don't see any impact when it comes to our clinical studies, what we have ongoing right. Now is the phase three studies appetite across 37 sites in Europe and do it then we have to CHF <unk>.
It is across seven to eight sites in Europe, U.S. and one side in Israel.
So.
What we can say so fires that so far has been no implications with regard to two to the virus outbreak in our studies, but we are of course monitoring this very closely and of course this is down to local.
Focus as well.
Now when you have a country like.
Easily that it's completely closed down that is adequate time to recruit patients and and of course. If you have very stressed healthcare systems. You you could be in a situation, where you would see some implications on patient recruitment, where you would make sure to too.
You will basically be demanded by clinical sites to to be focus on such activities. Our FFO was if that would happen of course is to secure drug supply and.
Heaving patients in this study.
So far we have not seen any implications and it would be highly unlikely that it would be all sites or whatever that would be affected.
So that could be one to a few sites, who which would have to scale down on recruitment and polls services and that we will monitor closely.
The economics eight hour update then we will go right into the markets, but right now they are not because there.
We have not seen any indications yeah.
I think kind of just.
Sure.
Please peaceful.
Okay. So so I've seen until it gets whilst that you have some sites in Italy. So I think that you haven't seen those sites being impact, though is that because to have.
Yes.
[laughter].
Good case are those factors that they already with yet.
But.
[laughter].
If you decide that has not been activated so that is of course, both good and bad but in this situation is pretty good.
Thank you.
Okay.
Thank you and the next question comes from the line of Alankar from Needham. Please go ahead.
Hi, Thanks for taking my questions.
One on see China.
The dual club with respect to see CCI program, you've got a couple of trials.
It sounds like the first one and the older kids coming along side what.
Any other details on the second trial I think you hinted that you might be able to have data by the end of the year, but can you elaborate on that and.
What's your what's your thinking on.
It's needed for for registration Deeni Oh.
And on the dual pump what else is gaining to starting that that phase three trial other than.
Wrapping up this into phase two discussion with FDA. Thanks.
Good to start with dual all of them I think from for me the key thing.
The key new story, there now we'll be looking for it wouldn't be SURVIAC announced.
The incident only phase three study because that means that they are ready from a device perspectives on phase three trials that is a major thing and I am very certain that we will fast after that follow with a dual on one study. So that is that is what I can say from a drug perspective.
And I think also with interactions with FDA will be ready. So that is that is what I would be looking for and that is something we expect to happen.
Of course, we're in.
The coming months.
And.
Somehow or whatever the cap.
So I think Thats, a key thing, but I think we are on track. That's that's how we see right now.
It's after the after they finish it right.
No I mean things that have been recoup and go into will not wafer results update but Dave was that they will get the recruitment started and.
With the incident on first.
I think it's also find than we get some learnings before we got to do a normal study.
So that actually outflow without.
And if it for the second study of CCH I in units up to one year. We have the first side you will see that activated and ready to two to three children. When the I phone, but this is a study where you need newborns, which I have to come in two to the sites.
We will have kind of 11 hours at six or seven sites recruiting for these 12 patients. So.
It is of course extremely hot to guide on when to expect.
And then how to expect enrollments are having these studies, but in reality. It is a few patients for each side.
And it's a very short stories, so thats why we feel.
Quite confident that we will have to patients enrolled and also results in this year.
We look at the normal rate of patients appearing at these sites with this condition.
Yes.
And the good any thoughts on this year.
The.
Of course, you know we are we are depending on a more patients being won.
With DCH high congenital, but I must say as well the good thing for them is that the unmet medical need being so high I mean this I mean this distribution, we're offering is a very very attractive to them. So the sites in which we are in complex weve are very eager to actually a initiate patients.
On on does it again.
You need any data from both of these to submit summit in Sndk or are in India.
Thank you need the neonatal.
Two.
It's a very good place in our base case has been both studies, but I had.
I'd also say that once we have the results from the first phase three trial, we have to evaluate if we could certainly judgment that dataset.
Thank you.
You know, it's an open label study and people they are rolled into the extension study and what we see is that I think all but one has decided to enter the extension study and that that suggest that there's this actually something that that's what I said our inability for these patients so.
And as him and worth it.
Then on such a need that if this first phase three trial comes out very positive and we had to have a dialogue with the FDA.
Just based on one sorry Oh.
Okay.
Thanks for taking my questions.
Thanks, So much and then next question comes from the line of.
Clothing Tong from Jefferies. Please go ahead.
Hi, there thanks for taking my questions I've got a couple phase firstly on I was wondering if you could give us.
Guidance on your Opex outlook intensive and the split between administrative expenses R&D and then within R&D.
How to think about split between the different programs and secondly, and if you could give us some guidance as to the potential cost or anticipated cost of the phase three program for the artificial pancreas.
And then finally, just having that this kind of prescription data.
This is.
Cheesecake.
Product.
The launch is perhaps not as exciting as as it could have been I wonder if you have any landing so what youre taking from from that launch and then in preparation theory launch. Thank you.
Yep related to the a the splits if you go back to.
And.
The of the debt we have actually provided a an income statements where you see a details of royalty expenses research and development expenses and majority of expenses. So you'd have the ski there Oh thats for 2019 related to 2020, there's actually.
Some changes of course, because the studies kinko's studies, our phase three are different.
And the a and as well the increase in expenses related from 1920 is mostly due to to the built of the U.S. operations. So basically you have.
These meaty speech here the only a with Sig continue spend between 19 and 20, which is flat is 300 type study, which is running through as well failure.
So so I think this is this is the details on the on the split.
As far as we communicate today.
That's helpful. Thank you.
You had you had another question though.
No.
Yeah I. The second question was just on potential anticipated cost for the phase three artificial pancreas.
Then.
The second question related to this.
The Zara launch.
And maybe on the.
Well on artificial Pancreas act as human well say said that the biggest single cuts in ideas of caustic later phase. Three study then we have CHP I, which also a ficos and then.
I would say the respiratory studies meeting computing.
Concluding.
The last payment in the single ascending divest European program some of those coming boost into this year and the do you have 70 570 and the rest of research.
Activities, they would carry a substantial out as well so but clearly the biggest one tier.
Loans, I think and then well he will he can he is better yeah, two to two care that but again I guess about preparedness.
Yes, I think it's about it's a it's an aggregate of of factors that are in puts too there is in this situation.
I think it is yeah. It is the pointing it the I think it's a it's a mixed factor of of being ready being ready ahead of time. It takes a long time to secure access with Payors and and we've known that for some time.
It takes a sometimes to have pulled in the field knocking they'll territories, knowing where the the prescribers are he doesn't you know necessary come out from only that today's when you have for example, the big prescribers of inserting assuming that these big prescriber, Vincent I'm going to prescribe massively as well glucagon one risk.
You mentioned some of these prescribers don't see reps.
Some of these prescribers. So do you work with other companies all the only work with companies. They have known for few weeks a few months. So you you can expect to enter an office and just get prescription. So it takes time and it takes a lot of learnings. So I think readiness is one factor.
The access is a big factor I think in terms of.
Positioning as well.
You have to actually have the we'd see a product that meets patient expectations and and something. That's example vaccine. He has done really well during their launch is to promote the ease of use and ready to you you know effect, which patients won't you know they want something in these critical time.
Which is very stressful.
In addition, being in the coma a under these circumstances can be rescued by someone third person who is highly stressed next suzanne with something which is ready to use and simple to use so I think they've pushed this very much I.
I don't think he was very clear on the other side of the communication.
So not having people ready I'm expecting that you know you feel is going to pick you up.
I think.
Communication is very important.
And and the on top of that I think you have to the good label I think the labels for the product has to be a allowing you put it to be used and distributed India, India into into welding. The vast majority of these situations, but the patients are facing and so I think a combination of all that food.
There is in a difficult situation.
Helpful. Thank Keith.
Thank you. So my Tenda next question comes from the line of Michael and all that some notably please go ahead.
Yes, Thanks, a lot it's Michael from there.
Just a bit of follow up to the Larry chess or follow up questions.
And Thomas' question around the deal can you just get a feeling.
When you implement these costs are going to do some adjustments to wait to your own built.
But maybe just to get us feeling whether this is gonna be.
King Opex.
<unk> million higher 200 billion higher than what you are guiding now or whether we could see within the range of where you are guiding down and then secondly also on on the narrative acquisition and.
Revenue stream getting it because it's obviously a product that was sort of suffering.
Say.
It's a company that had problems with manufacturing and sourcing of their manufacturing. So can we expect that revenue stream, you're going to focus sort of 6% of what they were booking in the first nine months always had close to the nine months now just to get a speeding up where are we in the next month when business potentially closing thanks a lot.
So I'll first take the Veritas, so battery to US is again, a a process. It's a companies right now in this chapter 11 process. We are we have access to some information, but not the tool.
Information.
They have had some combination of low cash.
Lower revenues as well as you know issue the manufacturing, which put them in situation.
When we went forward with.
This in this making this before it to the equity for the acquisition of battery types. We had two conditions attached to it one of them was that they had to fix the manufacturing issue.
And ER and the other one is that they can retain you know.
Certain number of employees, 75% of the employees.
And these are walkaway conditions would be meaning like if this is not met we can decide to walk away.
So far.
As we know the manufacturing.
Issue that they had which was related to actually acidification nicking assistance to seek creation criteria was linked to the change in the manufacturer of.
One piece of the devices that they had.
So they identified this issue.
They.
Reverted back to the produce a manufacturer of the of the device and it looks like the fixed it. So that's one condition, which has gone.
The other condition is the retention of 75% employees, we Archie right now running the again the beaten the after school, we don't know where it's going to finished and we don't know when it's going to finish and if there is there will be any other bidders, but it looks like you know again this is something which.
He is actually a I again I I have strong expectation that this is going to be met as well.
We'll see but this is going into very good directionally right now.
So that's it for battery to the other thing on the guidance is right now our guidance them into guidance we expect.
We'll be within 790, and 810 million ranch. So again this increase.
Compared to 29 cents is due to our increased confidence and our rise in administrative expense to the to the preparedness for the commercial launch are rising confidence came from.
The fact that we delivered better than expected results on the risk Japan.
With storage condition and reproducibility of the results in the phase threes that we had and this actually gave us more I would say confidence in this into potential of this program. That's why we decide to invest more on the commercial launch.
We have as well initiated late last year. This many ddos media dozing approach into DH, we've not to do spend that has multiple indications and so as a result, we have you know as will increase our our investments into our device platform, because we think it's really worth it and that.
So but the guidance. We gave you is the best guidance, we have to date Oh, there's no not at Yale steep funded.
No I fully understand that but I think both Thomas I sort of looking for an answer regarding.
Well you, though let's say you complete the blood test acquisition, you take all the employees and just to get a feeling that you don't come back to the market in May and say, okay. Now the operating expenses going up 1.2 big.
Instead of 810 million to just get a feeling of how much does this guidance.
In fact.
Incorporate.
The the buildup so are you gotta.
The increase substantially I know, you're gonna have less of your own internal built up but just to get a feeling of the number how it looks in may when they still got them again.
I get it I get it sorry, I think the the eye to to be Frank I don't know numbers I have no numbers right now because we don't have access to the food balance sheet, what I would I am guessing is that we will have we have the deal in our in our balance sheet, which is basically almost the delta between 2019 and 22.
Which is a commercial deals and so I think we'll have to do some of that.
From the cost of the commercial structure battery to US and then we'll have to we'll have to add on top of that the the revenues whatever revenue will be generated by this product in 2020.
And so that will give us the final number to date I don't know what number it's going to be.
My.
Again, my gut feeling is that it will be more because we are spending right from now instead of building slowly.
But I think the benefit of that and it's more it's it's more to eat smart investment potentially but the benefit of that is.
We will be ready and we will be mapping the territories and we will be doing avoiding the mistakes that some others have done.
The big benefit, we see with and that people forget with the launch of Maxcv is that really has had you know people in the field weve relationships with contracts with payers knowing the they have territories really well and so busy with Veritas. This is what we are acquiring we're acquiring you know team who has been calling in.
This field for eight years now they know their prescribers they know the territories. They know their competition and so that's actually very very helpful for us.
Got it thanks.
Thank you and the next question comes from the line of Craig.
Now there from Goldman Sachs. Please go ahead.
Hey, good morning, gentlemen, a good afternoon. Thanks for taking my questions Congrats progress.
Several questions some of it.
Back to the questioning around Ur cobot, 19 or potential implications and thanks for the comments you provided earlier, but I just wanted to get asked Tom maybe not so much the clinical trials that might be impacted.
Can you, perhaps give us a sense of whether there is exposure.
From a perhaps drug 80, I or parts for the pen device for domestic Luca gone.
That could be impacted.
And what if any plan is you had in place in terms of redundancy. So that's that's my first question.
And then my second question has to do really more from a commercialization perspective and clearly.
The timing of when you might be able to launch I think on rescue panic still some time away, but could you perhaps give us a sensitive if this tends to be more pro long situation, where you know.
Sales reps are not able to go out and do the traditional selling and marketing and promotion can you give us a sense of what kind of other marketing or or selling tactics couldn't be implemented to kind of you know.
We used instead of the traditional selling that were used to buy Salesforce and then my last question, which is really more on a pipeline perspective, a really intrigued by the herbicide 70 program, because just remind us where we are not program and when we like data there. Thank you very much.
Thanks, Larry maybe I can start addressing the corona and deferred so as you also chat and the dato as well she had been.
The impact on our business to best see any impact on our business.
Grown of hours right now and.
With regard to Apiay drug product devices, and so and we of course discussed this over the last few weeks. We also do not see that we at that would cause any issues.
We believe we are.
We are not very exposed here. So that is that it's why we can see and.
So we are not being affected by now what we are intimating right now is procedures to make sure that we try to support the days society and others as to the government.
Dictation that we could help containing the virus or doesn't spread.
Country and other countries.
And on the hydropower knows our approval, we as I said, we will submit.
Okay. Later this month and then.
Accordingly, we can we can loans.
Our next year.
And I perspective.
75 seventies, we expect to have this also the single ascending phase one study.
As long as that is progressing there is a good sign as you know because its a.
Decided that those higher higher and we expect to have it was also that phase one study.
Here and then start assays to be thing with any Muslim ascending dose study.
It is also a program that we fine.
Hi interesting S. as you.
In the sense that we believe that we could take management of STS patients to the next ever be on what a single.
Guilty to equities can do.
Maybe I'll hand over to him and low now to to try to the tactics around using potential salesforce before that.
Well, Yeah, I mean again, we don't expect right now delays in reviews from the 50 amidst the of Diego's you know shuts down for four corner robberies, you know duties, but everything right now he's magic 20, Keith for many years, it's been the finding is our electronics. So I think the FDA can manage its probably.
The from you know being working from home as well just like you.
Most of the countries are gaining right now I mean stay home and so I think this should be the on the ft. Aside there shouldn't be delays on our side instances quality of the file we're very confident that's you know with the clarity of the datasets allows us to be.
Highly confident that we have met the criteria for the FDA to a two to meet a.
So we don't expect delays in case of delays you were asking any other strategies that commercial using actually not really there's no real strategies. The only advantage. We may have in this situation in is that there is other generating revenues from from Veritas if the.
Deal goes through that will be actually won one supports.
To offset the cost of the structure and keep the people you know busy in the field.
You read these delays on take more than you know few weeks and then as well because we have lucky shorten goals and one of them you see a child, which is just behind we talked about CHF <unk> potentially being even like a surprisingly accelerated if the results show you know a huge.
Medical meeting the unmet medical needs of this patient population.
I don't be surprised that this is a product that could be fast tracked right now we we have no indication for that.
So it's only speculative but in this type of Blue Ocean rare disease no. Other therapies are there and having an agent which does exactly.
Sorry, we have some technical problems, we wouldn't pick back with you.
Thank you.
Thank you for standing by and due out in the main from again. Thank you.
All right. So I'm sorry for that we were disconnected for tax reasons.
So I think you know this is the only you know a great. The only strategy you know that Vicki you offset your your your salesforce by giving them something else to chew on but but of course. The I think you know as you know you can you can use the coming soon now is well within a short to this time no.
During a that you will be approved so there's a lot of actually strategies, we would be a using a with the salesforce to offset potentially the delays.
Right now I don't I don't expect that.
Okay. Just a quick follow up if I may the final.
Adam's comments about 75, seven day I don't think.
Thank you said that the phase one single ascending dose.
Safety study would read out this year and then you you said assuming.
Positive data there.
I would go into your phase to be is that something we could expect for this year or next year. Thanks.
I think we can is expected to initiation of phase one be so the multiple ascending dose study.
And and then phase two activities the ask them if.
Things goes okay.
Thank you.
Thank you so mark and the next question comes from the line P. Ted.
Suggested from.
Hello, Hello, Hello that isn't banking, sorry, so that when those function. Please go ahead.
Thanks.
Josh.
Yeah.
Four or five questions.
Just before just give us.
Yeah.
System.
Okay.
Second question relating to.
The ships.
Sure.
Some flavor.
Sure.
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Correct.
Potential.
Milestone payments over the next couple of years.
Second question.
That's true.
Sales force size that you need.
Hi.
I guess the numbers.
You know a function of prescriptions.
Price at the prescriptions.
Function of how many physicians.
Sure.
The function of how many.
Since that you're going to visits.
And as a function.
People.
On the fields.
Good providers.
Numbers.
Calculation.
And secondly with respect.
Yes.
Q.
Yes.
They had roughly 20% in manufacturing 75.
Sure.
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Yeah.
So those.
Did you want.
Could you just.
Give us.
Manufacturing people.
Sure people that you want.
Okay.
The final one is basically I guess.
And then Michael's question sort of.
It's very simple.
In your guidance.
The cost.
Do you have any cost from the acquisition.
[music].
Okay. So Adam you should take the timelines.
But do you have to home on timelines with the phase three study, we actually have communicated we anticipate that that will start.
And make the data this year.
It's at six months to the primary endpoint and then we expect another six months follow up saw for four to collect the safety data. So I see so the duration of the full study is one year and then it will take some time to recruit.
And then I mean that is of course the question Mark was that take three months, we'll take one year and that is so that's something we still need to work on on our guidance that we don't guide on on when we.
Right now we have.
Also in this study.
So.
But.
Our models, it's the timelines for the clinical studies that define for this clinical study that defines when you can submit the NDA.
On the election partnership we are making very good progress.
With election and.
Since if their product now and we of course.
I was working tight.
I think together it is actually up to them when we can communicate on the carquest, but we are hopeful that we can provide more flavor on the progress later this year.
And as you also know with this deal it actually provided the opportunity for next year and to work with cedent on three additional targets within complement.
Each of those opportunities if they selected to trigger then would carry milestones.
So we got all clear on that but of course within the next few years, we'll expect.
Another milestone from this program.
And then that would handover to an annual over the last.
Good.
On the.
I will force you know size and number of physicians targeted to launch the risk Japan. We these are these are I mean, one thing competitive intelligence. So we will not provide that you know and at the same time I can tell you that we have numbers, but they are not refine yet. So we have numbers of for example.
David bridges to our you know prescribing incident as I said before.
Hi, prescribers, we have numbers, we have and names addresses and ER and volumes of prescribers of existing kids.
And we will see the same information for vaccines and converted units agents on on on the risk because these are ready information that you can buy and you can aggregate that.
That's the work we haven't done yet is you need then to agree the aggregate these data into that that these and you know really manage.
Well field information to be able to know if these doctors are effectively prescribers or if these are patients are being referred to them by other doctors. If these doctors are seeing reps and so there's a lot of qualities you have to add to that to be able to really refine your targets.
And define the and define your your efforts, but roughly right now we believe that you know the existing field force that we would be in everything from Veritas would be roughly sufficient to do what we're supposed to do.
So we are we are not looking too we are there will be some adjustments, but I think we will not necessary.
Expand much more than what we have.
On the.
On the battery types, you know, 75% employees I want to be clear actually this was a condition for us to go forward with the.
Acquisition, but it's not what we are going to do we did not this is a minimum number. This is not a what we want to retain so basically we are interested by the veritas structure so structure system.
Governance processes people payroll finances.
Field medical affair.
Access team dot.
Compliance.
Legal so all the all the would say the front of fees. So the field people, which are around 90.
Total as well as the some of the back offices to support this operation, but again the back office, we have a lot in the India, Copenhagen office, and the and that's where I think we have made some I would say synergies in terms of in terms of choosing.
Who will retain and who we are.
Century has overlaps and double counting so, but that's that's where we are but again.
These numbers are not public because they don't exist because we're still to date two different entities on the to judge will actually basically decide by the end of this month you know if we are a successful on the acquisition on that.
And on the cost you know again the cost guidance. We gave the 2020 is our of cost with the food intelligence of what we know we are going to spend in 2020, So we cannot speculate beyond that but the but we haven't actually the 20.
3 million dollar acquisition cost that we said we will pay for four Veritas is actually a embedded in this in terms of projected spending so we have that in our in our account.
But not the not the operational cost because we don't have access to this information yet.
Thank you if I could just.
This is sort of.
All the projects and the pipeline.
But.
<unk>.
<unk>.
Oh I mean this year, we all have different so I.
I think is different to choose between your kids.
So my favorite ones is the next one because we are launching.
Something which is real it's a rescue Penn has very clear differentiated profile and it's a and I can tangibly no ticket in my hands and see it. So it is actually a really exciting for someone with a commercial background like me.
If you asked my CFO he loves the CHF <unk>.
Because he knows that that's where the unmet medical need is the largest and we have met with patient associations instead shy and I can tell you that he gave US a lot of energy to work even harder to help them in their daily.
Challenges.
And I think you know from the get go we are all extremely excited by the dual on pump and I know Adam you know has been the one who when I was actually doing my duties and some of the company will convince me to join the company when he actually explained knew how revolutionary this dual among bump was going to be for type one.
Diabetes management.
So I think it's I'm, giving you an answer which is not an answer because I like all of them and my background in commercial is on rare disease.
And I was at Shire, when we acquired NPS, So I wouldn't leave behind Glip magnetite, which to me is the next best thing for these patients you know something that allows them to reduce the burden of treatment and you know you potentially improve the outcome improve compliance.
That's actually a an amazing product for them.
So yeah, sorry for this answer.
You covered all of the basis should do thank you.
[laughter].
It was not the trapped there was a good question I Love. This question.
Thank you so Matt on the last question comes from the line I guess that so from Carnegie. Please go ahead.
It was just a follow up on the capital and that tests. So how many years you expect to have and whether or not you have in southwest salt can be cold weather answered. So just a you can extend again thank you.
Thank you Mr. again, we yes, we we have a cash position of 1.38 billion a bunch cone.
This position is as of December 30, Onest and excludes potential development milestones coming in from partnered programs.
And then we actually guided that all net operating expenses in 2020 are expected to be within the 792 810 million ranch.
This which gives us roughly 18 months of cash a if you make this calculation. So so I think that's that's it.
So so 18 months or so just so so you do expect some kind of revenue right. So it was just whether you have two years for three years.
The.
A base case, yes.
Yes, I mean.
Again, the potential you know a non dilutive cash from partnered programs. We don't you know put that in our numbers because we don't we don't know when it's going to come and how much. So that's why it's not it's not in the numbers no.
Okay. Thank you Nick yes, it could be new fields as well so yes.
Thank you no further questions at the moment. Please go ahead.
All right I think I don't think everybody to stay on the line.
Well, one but hopefully.
Hey session hopefully law.
With that.
The call.
Thank you very much thank you very much.
Okay, Great thing.
Thank you very much that does conclude our confidence for today. Thank you for participating jamil disconnect.
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No.
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