Thank you for standing by, welcome to the Medical Developments International FY 2024 Half-Year Results. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question via the phone, you will need to press the star key followed by the number one on your telephone keypad. If you wish to ask a question via the webcast, please enter it, enter it into the Ask a Question box and click Submit. I would now like to hand the conference over to Mr. Brent MacGregor, CEO. Please go ahead.
Thank you, good morning, everyone, and welcome to today's investor briefing, for the Medical Developments Half-Year Results. I am Brent MacGregor, I'm the CEO, and I'm joined today by Anita James, our Chief Financial Officer. Today I'll share with you an overview of our results and our key achievements in the first half. I'll pass over to Anita, who will run you through the financials in more detail, before some closing remarks from myself.
I assure you there'll be plenty of time for questions at the end of the presentation. We'll move past the next slide, the notice and disclaimer, and we'll go to slide three, the executive summary. This is the overview of our half-year performance. I'll go through this more fully on the coming slides, but just first, some opening remarks.
What's highlighted in the performance and the milestones achieved in this period is what we feel strongly is positive momentum that we are generating. First and foremost, demand for Penthrox continues to grow. Secondly, our respiratory business, despite seasonally weaker demand in some markets, has delivered very robust growth in the U.S. Third, we have delivered $6 million per annum earnings improvements through pricing and efficiency.
Something we mentioned back in August we were going to do. Both underlying EBIT and operating cash flows are improving. We now have much greater clarity on how we intend to unlock greater value in Europe, and also on the next steps for us on the path toward eventual U.S. market entry. Overall, we are pursuing the priorities we outlined back in August. I'll speak to each of them in the coming slides.
First off, let me share with you the headlines of our financial performance through the first half of the fiscal year, and that's on slide four. Overall, our progress is encouraging. I know there's some numbers here that you may think otherwise, but let me give context. First of all, group revenue is up 9% to $58.1 million, and that has been driven by stronger Penthrox pricing and continued underlying growth in demand.
In that regard, Penthrox revenue was up 26% to $9.6 million through the first half. Respiratory revenue overall was down, but this is due to challenging demand conditions in Australia that were resulting in a market contraction and the timing of inventory stocking in our ROW markets, in particular in Italy.
In our target market, the U.S., we actually generated another strong result with our revenues up almost 50%. Last point to mention, our underlying EBIT improved by AUD 300,000. Anita will give more context to that shortly. Our reported statutory NPAT was an AUD 10.9 million loss. Now, this includes a material non-cash adjustment, which we have detailed in the appendix to the presentation.
Anita will explain that more fully in a few slides from now. Lastly, and importantly, free cash flow improved by AUD 3.5 million. That's a great result that illustrates improved earnings, a more disciplined working capital management, and overall lower capital spend. Now, we move to slide five. These are some of the operational highlights and some of the things we spoke about back in August.
In August, we spoke to five key priorities for the year. They include the priorities that are highlighted on the slide here, in addition to advancing U.S. market entry, which, as I said, I'll speak to shortly. Now, I can report that we've made good progress on each of these priorities. First, our margins. Our margins have continued to improve. In August of last year, we had committed to delivering AUD 6 million per annum through pricing and efficiency improvements. I'm pleased to report that this has been done.
In fact, AUD 2.8 million of this amount is reflected in the half-year results. In addition, we will deliver further efficiency savings of AUD 3 million per annum in FY 2025. Of this figure, AUD 2.3 million is already underway and has been implemented.
On our expansion strategy into the hospital emergency departments in Australia, we are making progress, albeit it's modest at this stage. We saw volume growth of 4% in the period. Obviously, we'd like to see faster growth than that, but that's the growth we've seen, unit growth, through the first half of the year. What I can say, though, is we've made good progress on some of the foundational aspects.
What I mean by that is we have Penthrox on protocol at 44 additional hospitals, and we have 46 new hospitals purchasing Penthrox. This progress bodes well for more, more robust growth in this large segment in the future, but it does also show that this will take, this will take time.
Now, in Europe, we last spoke of revisiting our operating model following the removal of the direct field force and our regional management team, along with, of course, the sizable cost that had been associated with it. We had grown the business in France, but the cost associated with that growth was not sustainable, and hence we took that decision.
Now, since then, we have supported our European sales through our team in Melbourne. What I want to share with you is our volumes through this period have remained quite steady, which strongly affirms the stickiness of Penthrox. Now, longer term, we believe, we believe that in-market promotional activity will really be needed to drive growth. The market potential we believe exists in France remains significant.
It is a population, in fact, that's the same as the U.K., but at this state, has 1/3 of the volume. Granted, the licensure of Penthrox in the U.K. precedes France by some years. We completed a detailed review of our European go-to-market model, and we now have much greater clarity on how to unlock value here.
In this regard, we are pursuing a partner-supported strategy, and in fact, we are in the late stages of negotiations with prospective partners in France, in Switzerland, and potentially in Germany. In our respiratory business, we're focused on driving growth primarily in the U.S., where we still have essentially a small share of a very large market. We continue to have great success on our strategy here, and as I mentioned, our revenues for the U.S. were up by 48%.
Speaking of the U.S., let's move to slide six. Our final priority for FY 2024 was to progress our activity toward U.S. market entry for Penthrox. On this, we have reached a meaningful milestone. In October, the group had a positive meeting with the U.S. FDA, where the regulatory agency provided us guidance on next steps, including a few things in particular.
One, was the non-clinical studies that we are required to do, pre-phase III, to include women of childbearing potential, ultimately in the trial. Secondly, there was support for the group's proposal to use its next generation device, something we've always called Selfie. Support for our proposal to use our next generation device in the phase III clinical trial. Thirdly, the pathway to using existing clinical trial data in the new drug application.
By that I mean, normally you're required to do two pivotal studies for licensure in the U.S., and we are hoping to be able to use an already pre-existing clinical study that we did in Europe as one of those two. We have a greater clarity on the pathway to do that. This guidance should enable us to broaden the phase III trial population to include all adults, and potentially remove the need for a second pivotal trial, resulting in a reduction in time to registration and cost.
Ultimately, of course, broadening the trial population should have a positive impact on the eventual product label at market launch. Now, completing these non-clinical studies will actually take around 18-24 months, but it will enhance the value proposition of Penthrox. At present, the group is exploring funding options for these studies.
Over the last 12 months, we've deepened our understanding of the U.S. market potential, sales channels, potential partners, and opportunities to maximize value. While partner funding may be an option, it may not provide the best long-term outcome for shareholders. In this regard, we'll keep you informed of our progress. What I'll now do is I'm gonna turn over to Anita, who will walk you through some of our results in greater detail, starting on slide seven. Anita?
Thank you, Brent. Good morning, everyone. Firstly, to recap on the headlines of our first half performance. Revenue was up 9% to $15.1 million. Underlying EBIT improved 4% to $7.8 million loss, with higher gross margin and cost efficiencies. Underlying adjustments were a net loss of $5.1 million. This related to a share-based payment expense adjustment, arising on the transition to new CEO remuneration arrangements. This is a non-cash accounting adjustment only.
Does not reflect the benefit received by the CEO. Further details of this adjustment are included in the appendix to the presentation, as well as the notes to our financial statements. Reported EBIT and NPAT were down on the prior year due to underlying adjustments. Moving ahead to revenue in our Pain Management segment on slide eight. Here, we saw growth of 26%.
Pricing was improved, with average prices in Australia up on the prior year, following the price rises implemented midway through FY 2023, and price adjustments implemented in several partner markets. Volumes were up in all regions. In Europe, underlying demand was up 16%. This included growth in the U.K. and Ireland of 18%, where we continue to see encouraging momentum, particularly in hospitals. Volumes in the Nordics, Central Europe, Switzerland, and Belgium were also up.
Volumes in France, as Brent mentioned, was steady, a great result reflecting strong product stickiness following the withdrawal of promotional activity at the end of last financial year. In Australia, volume was up 4%, with growing penetration in emergency departments and procedural segments. Demand from ambulance has remained strong.
Volumes into other markets were in line with the prior year, with higher volume into New Zealand, South Africa, and Mexico, offsetting the impact of lower volumes into Canada, following inventory stocking for the relaunch of Penthrox in the prior year. Moving now to respiratory, to our Respiratory segment on slide nine. Here, revenue was down 10%. In Europe, inventory stocking in the prior year adversely impacted demand in the current period, with revenues in the half well down.
In Australia, we saw softer underlying demand. This trend is attributed to seasonal variations and a lower incidence of respiratory ailments. The downturn is evident not only in the demand of our spaces, but also in fewer prescriptions of pMDI, the medication utilized with our product. While the market has contracted, our market share has remained stable, continuing to hold leading positions.
In the U.S., our growth trajectory continues to be robust, with ongoing increases in market share in the retail segment and good progress in establishing a presence in institutional accounts. A 48% rise in revenue highlights the ongoing effectiveness of our growth strategy. Moving now to slide 10 and the key changes to underlying EBIT in the period.
As Brent has already mentioned, we are pleased with the pricing and efficiency benefits we have delivered. Pricing increased earnings by AUD 1.6 million in the period. This reflects the price changes I mentioned for Penthrox in Australia and some of our rest of world partners. Efficiency benefits improved earnings by AUD 1.2 million. This mostly reflects lower costs in Europe following the scale back of direct marketing support.
This included our field resources, which were reduced in July, and regional management activities, which were transitioned to our team in Melbourne in October. Penthrox volume growth improved earnings by $0.4 million, while the lower revenues in respiratory adversely impacted EBIT by $0.1 million. Penthrox commercial costs were higher, mostly reflecting costs to the Australian field team that was appointed midway through FY 2023 to drive expansion into hospitals.
Other costs and revenues, revenue changes were $1.6 million adverse. This included non-capital project costs relating to the operating model review in Europe and U.S. market entry work, lower milestone income following a true up in the prior year, and general inflationary impacts. Moving now to slide 11 and our balance sheet and cash flow. Our closing cash balance is at $16 million.
Free cash flow was improved by AUD 3.5 million in the period. Operating cash outflows were AUD 7 million. This included payment of the U.S. commercial market assessment we completed in FY 2023, in addition to contract termination payments relating to the scale down of investment in France. Excluding these payments, operating cash outflows were AUD 4 million, a AUD 5 million improvement on the prior period.
This reflects improved cash earnings of around AUD 1 million and a significant improvement in working capital. Our working capital to sales % improved from 22% in the PCP to 15% in the current period, a very pleasing result that reflects great work across our supply chain. CapEx was well managed and lower than the prior year at AUD 1.2 million.
We expect total CapEx for the year to be around $3 million. We are acutely focused on improving our free cash flow and are pleased by the improving trend we have observed over the last six months, and expect this to continue. That concludes my comments on the financials. I'll now hand over to Brent to close.
Okay, thanks, Anita. This brings us to our final slide here on our tight presentation. In summary, we expect, you know, the positive operational momentum of the business to continue. We've delivered $6 million per annum earnings benefits from pricing and efficiency already. As I mentioned, we expect to deliver a further $3 million per annum in FY 2025.
These improvements will help to deliver on our target of positive operating cash flows by the end of FY 2025. We have a deeper understanding of the U.S. market, and following the positive engagement we had with the FDA, we have greater clarity with respect to our next steps on the pathway to U.S. market entry, and the non-clinical studies that will allow us to undertake the phase III in the most efficient way possible.
As I mentioned, we are exploring funding options for these studies. Finally, to our outlook. The company expects underlying EBIT in FY 2024 to be strongly improved on FY 2023, driven again by these higher average Penthrox prices and lower costs overall in our operation. On that, I want to thank you for coming on the call today. What we can do right now is open things up for questions.
Thank you. If you wish to ask a question via the phone, you will need to press the star key followed by one on your telephone keypad. If you wish to ask a question via the webcast, please type your question into the Ask a Question box. Your first question is a webcast question from Andrew Anderson, who asks: Employee benefit expense is $14,928. Beyond the one-off $5.1 CEO option adjustment, what is being done to reduce this expense?
Brent, do you want to speak to the, the cost- out program?
Yeah, I mean, the first... You know, we determined that the, you know, the narrative for us right now is that the growth aspiration we had two years ago when we commenced our investment, is an aspiration that ultimately was too aggressive. With the learnings we've taken over the last two years, what we are doing now is we are resizing or right-sizing our organization to reflect, reflect a growth aspiration that we believe is more realistic now.
When I talk about the AUD 3 million, that's in addition to the AUD 6 million that we already mentioned in August, that's what it's about. It's about doing a right- sizing. It's going to involve the organizational restructure, organizational sizing. It's going to also, you know, at different levels of spend in some of our projects.
So this is what we're doing, and, what, what we're in the throes of doing right now, as you mentioned in the presentation. It will contribute strongly to that, that, target we still have, which is to be operating cash flow positive by the end of FY 2025.
Thank you. Your next question is from Dan Haran, who asks: Are 1H operating costs reflective of what can be expected in H2?
Yeah, I can speak to that, Brent.
Yep.
No. We d o expect operating costs in the second half to reduce, Dan. Couple of factors behind that. We spoke-- I spoke to the, the changes we've made in Europe. Now, there was a scale-down activity through the first half, with final transition, and, and exit of, of our European regional team really in October. We'll see, see half on half improved costs in Europe in the second half.
We also had some one-off costs in the first half relating to the work we've done, in, in Europe around the operating model review, and the work we've done just working through, discussions with, with advisors regarding, partner opportunities in the U.S. There's probably $500,000 there that we won't see in the second half also.
Some of the, the efficiency program that, that Brent spoke to just now, some of those initiatives have already been, implemented, and so we will get some benefit from that, albeit not, not a, not a full, full period impact, in the second half as well.
Thank you. Your next question is also from Dan Haran, who asks: Is the U.S. respiratory sales reflecting any wins with the major distributor, distributors or retail groups?
Yeah, the... I'll take that one, Anita. Dan, if the, if, if, if you're asking whether it reflects Walgreens and CVS, the two biggest retail chains, the answer is no. We are not in either of those channels, in either of those chains, should I say, just yet. It certainly reflects continuing growth in our relationship with Walmart, with select GPOs, that we, where we've opened up relationships and with some of the regional retail chains. We're not yet in the two big guys, CVS and Walgreens.
Thank you. Your next question is from Dan Haran, who asks: What are the cost time implications of being able to use existing clinical trial data in the NDA?
The cost time implications. Well, I'll see if I'm answering... Give another question, Dan, if I don't answer this one correctly for you. The other, the second pivotal trial we're looking to have, you know, counted, shall we say, by FDA, is the study that we did in the U.K. The study in the U.K. is done and dusted, right? That's got existing data.
Basically, what the FDA said to us is, our ability to pool the data from a different patient population in the U.K., with the data that we will eventually generate in the U.S., will be a key success factor to them counting that study. The other will be demonstrating the bioequivalence between our current device, which was used in the U.K. study, and the new device that will eventually be used in the U.S. study.
We are not, we are not yet embarking on the non-clinical studies that I mentioned in the presentation. There's gonna be a cost associated with doing the pooling and with some of the bioequivalence, but it will pale in comparison to what the cost would be if we had to do a second pivotal study. I don't know if that answers your question or not, Dan. If not, please ask another one in follow-up.
Thank you. Your next question is from Dan Haran, who asks: Can you talk to the outlook for any further distribution partners?
Yeah. I mean, the outlook we have right now regarding further distribution partners, we are focused on, on France, and we're in the final throes there. We still have some other details to iron out. Same for Switzerland. Germany, we are in not as late a stage of discussion as we are in France and in Switzerland. Those are the three we're focused on right now.
Otherwise, as far as our partners overseas and in other markets, we are focused certainly on continuing to grow and develop our relationship more closely with our biggest partner, which is Galen, in the U.K., Ireland and the Nordics, with Medis Central and Eastern Europe. The most recent one that we've signed, and in fact, I'll be visiting with them shortly, Paladin in Canada.
Beyond that, we do not have other partner relationships that we are currently working on in other markets.
Thank you. Your next question is from Andrew Swaffer, who asks: Please provide some additional detail regarding the AUD 3 million of additional analyzed efficiency savings, of which you've already implemented AUD 2.3 million p.a.
Yeah. It is around organization. In effect, we've, we've reduced our headcount, Andrew, and that's the primary driver. We're also looking at all of our buckets of spend on initiatives and other projects with a view to scaling back there as well. The primary, the primary driver of the AUD 2.3 million up until now is related to personnel.
Thank you. Your next question is from Andrew Anderson, who asks: On current cash burn, it looks like there will be a need to raise cash again. Is there a fast pass to reduce cash burn, or will you be looking to raise funds again?
Yeah, hi, Andrew. Sorry, Brent?
Go ahead. Go ahead, Anita.
Yeah, hi, Andrew. look, we, we, we do see a pathway to, to, to cashflow breakeven, in, in, you know, really by the end of FY 2025, and certainly as we stand today, our, our expectation is that we would not need a capital raise, to support the underlying business.
It obviously does need, you know, an improvement from, from the run rate that we've had, over the last, you know, six to 12 months. We certainly have levers that will, that will deliver that change. you know, one is the, is, is the cost out that, that Brent was just speaking to, where, where that will change, costs in FY 2025 by, by $3 million. We'll deliver more pricing changes.
We've spoken of the pricing improvements we've, we've had in Australia as well as in, in other parts of the world. We, we do expect to, to continue that with an annual pricing strategy now in place, and so we'll get more price benefits come through in FY 2025.
As I spoke to Dan just earlier, our second half, even from the run rate we've had in the first half with respect to cost, should also be improved with some step change in efficiencies there and, and some one-offs we had in the first half that won't repeat. And then over- overriding all of that is certainly an expectation of, of continued volume growth.
You know, our, our expectations in Australia remain reasonably modest, but, but we do expect to see the, the growth rate there accelerate as we've, we've got more time in the field there. The underlying volume growth, we've, you know, we've demonstrated in Europe over the last couple of periods, we would expect to see continue. In the respiratory space, obviously a, a, a difficult half, you know, in Australia.
If you look back, you know, really to FY 2022, as opposed to FY 2023, our revenues in Australia are, are, you know, slightly up on that. They are seasonal issues there. And, and we think we're probably at the bottom of that contraction. You know, in the U.S., we've had, had a number of periods now with consecutive growth there, and we would expect that growth to continue.
Thank you. Your next question is from David Parkinson, who asks: Do you have any sales into the Ukraine?
We do not have sales into the Ukraine. We do not have sales into the Ukraine currently.
Thank you. Your next question comes from Liam Collins, who asks: To achieve FY 2025 break-even operating cash flow as targeted, your sales seemingly need to grow astronomically. How much will revenue need to grow by to achieve break-even cash flow, as 10% is simply not going to get you there?
Yeah. Hi, Liam. Hopefully in the, in the, the previous question I answered, there are a number of levers at play here, so it's not just, you know, it's not just about growing volume. You know, price, price is an important lever, particularly as those price changes, you know, drop, you know, drop straight through, and, and improve our, our margins, and we've obviously got a cost story at play as well. Volume, price, and, and efficiency really is, are, are the three levers that will get us there.
Thank you. Your next question is from Ryan Evans, who asks: Your cash balance is less than half of what it was 12 months ago. Operating and investing cash burn of over AUD 8 million is more than half the remaining cash of less than AUD 16 million. Can you please explain how you think about managing this? When do you plan to get to free cash flow break even, or will you need to raise more cash via debt or equity before then?
Yeah. Look, yeah, I think I have answered that. You know, we, we do, do have a pathway to be operating cash flow break even by the end of FY 2025. We certainly hope not to require a capital raise to do that and, you know, are acutely aware of the need to change the cash burn rate that we've had, you know, over the last 18, 12 to 18 months. I think, you know, strongly we have, we have levers at play that will do that. You know, over the last six months, we have seen improving trends. Those trends will continue into the second half, then, then further into FY 2025.
Thank you. Your next question is from Liam Collins, who asks: How much will it cost to have Penthrox registered in the U.S., all including clinical and non-clinical work? You must have a best estimate in order to enter into a proper informed partnership negotiation.
Yeah, I can... We, we're, the non-clinicals that we're talking about currently, would cost somewhere in the neighborhood of AUD 6 million-AUD 7 million. All in, we're probably looking at somewhere, test me on this one, Anita, somewhere AUD 50 million-AUD 60 million, to get Penthrox ultimately licensed in the U.S. I think it's about the right number overall, capturing not only the clinical, the non-clinicals, market prep, but once again, you know, this will ultimately be a number and a cost that will be part of a discussion that we would expect to have with a partner down the track.
Thank you. Your next question comes from Steven Agnew, who asks: How do you see adoption of Penthrox by U.K. Ambulance Trust moving over the next 12-24 months?
Yeah, it's been in a bit of a stall, even though the volumes, the volumes continue to increase with Galen Ltd. in the U.K. I think a key, a key thing we're looking forward to having to achieving in the next 12-24 months is to get the pediatric indication. We're a couple of months away now from submitting our dossier to lower the age indication for Penthrox from 18 years down to six years of age.
Our partner in the U.K., well, Galen Ltd., U.K., Ireland, and the Nordics, has, has always been strongly of the view that some of the bigger ambulance trusts, particularly those in Greater London, have been reticent to use the product for fear of using it off-label.
Once the, once the age indication was down, it would open a much larger addressable market. That's, over and above continuing to work closely with Galen as a partner, in a tactical way. That will be the single biggest lever over the next. Well, not over 24 months. Hopefully, this one is more 12 to 18, that we get our submission, there's a 12-month review, and that we get a good outcome. That's, that's the biggest lever we're looking forward to that can help to really unlock other ambulance trusts and, more broadly, the market in general in the U.K.
Thank you. Your next question comes from Dean Kelly, who asks: Do you believe the European Penthrox pricing to be competitive, given that it looks that Entonox is reportedly about a third of the price? What actions are you taking with regards to price competitiveness to enable greater uptake and distribution?
Yeah, I mean, pricing for Penthrox was always gonna be challenging if it was compared to... I think you were probably thinking of Entonox, which isn't used in every European market. Entonox or let's say, inhaled fentanyl or, or other, other, fast-acting analgesics relative to Penthrox. If we're just looking at a dose-per-dose kind of basis, and nothing more, we're never gonna compete against those offers.
The reality for us, and it has always been, the entire value proposition represented by Penthrox. That includes, I think, a number of the benefits that you've heard in the past about rapid onset and offset, the fact that it's a non-opioid.
More recently, the studies that have been done, particularly in the U.K. , that have demonstrated the greater efficiencies that using Penthrox, particularly in the ED setting, offer. Meaning that it can increase the likelihood or reduce the amount of time an individual presenting to an ED spends in the ED because Penthrox can be used quickly.
It either becomes a bridge to being admitted to the hospital, or more importantly, hopefully, the issue upon which the traumatic event is based can be addressed, like a shoulder being reset or what have you, without the requirement to admit admit the patient to the hospital. The long and short of it is we don't see, and our partners don't see, by the way, an expectation to reduce the unit price of Penthrox in their markets.
Instead, it's mainly a question of being able to explain to prospective customers the entire value proposition that Penthrox represents relative to all those other all those other competing products in the space.
Thank you. Your next question comes from Steven Agnew, who asks: Can you expand on the drivers behind seasonality in respiratory sales in Australia?
Yeah, I mean, we've seen a contraction in the market this year in Australia, and the way we look at it is the reduction in, in the surveillance on respiratory conditions, I think Anita made a reference to this, has reduced the script writing for pMDI, so for the puffers, for the Ventolin, and that, that directly impacts the sales of our products since our products are used, you know, in complement with that.
I think as Anita mentioned, we are seeing... We are of the view that the contraction associated with this kind of activity is hopefully bottoming out. I mean, the good news for us, even though a contracting market in and of itself isn't good news, the good news for us at least, is we've held our market share. We have the leading share.
We've held our market share in the market in the face of this contraction, but that's really what's driven it. When you see a reduction in scripts for pMDI, there's a direct impact on our sales as well. What we're hoping, although it's hard to project, of course, with respiratory conditions, we're hoping we've seen the bottoming out of the contracting market here in Australia.
Thank you. Your next question comes from Andrew Swaffer, who asks: You've done well to achieve Penthrox RWO sales, roughly in line with PCP, where last year you had big revenue from Canada. You've called out stronger volume in New Zealand, Asia, et cetera. How much of the sales would you see as a one-off versus occurring?
I can take that.
Yeah, I think... Yeah, go ahead. Go ahead, Anita.
Just, just to bear in mind, the sales to Canada we made last year, we had a shipment in the first half as well as even, an even larger shipment in the second half. We're not cycling the entire amounts to Canada. Rest of world, our rest of world partners, some require only one shipment a year, so they are a little, a little up and down.
Look, I think the first half reasonably represents, you know, you know, what, what the rest of world markets generally will require. If we think about the second half, around, you know, what, what volumes in that space will look like, it's, it's probably similar to the first half.
Some of those countries that may have taken in the first half won't take in the second, but then we have other markets that will.
Thank you. Your next question comes from Justin Smith, who asks: Can you provide more detail on the funding options for U.S. trials and the potential shareholder impacts?
Yeah, there's a few options we can, we can consider. Obviously, you know, one would be, one would be to identify a partner, much as we've talked about in the past, who would actually fund the non-clinicals as well as the clinicals. With the advisor that we've had, you, you recall, I think we mentioned in August, we had, we had retained an advisor to help us in this regard.
The view that we came to with our advisor was, it might not be in the best interest, it might not be in the best interest of shareholders, if we tried to find a partner to fund the non-clinicals as well. That it might, that they might extract too much value, relatively speaking, and it might not be in the best interest of value maximization for the shareholder.
That's one option, of course, but it's not one we're pursuing currently. Another option, of course, would be to maybe do a raise in that regard. It's not something we're undertaking now as well. Then the third would be that we just take our time and are more deliberate about the U.S. activity, and that we get to a place where we can generate enough cash to fund it ourselves. Anita, anything you want to add to that?
No, I don't think so. You know, I think a, a point to make with respect to the U.S., and, you know, obviously, the work we've got in the underlying business is, there's plenty of opportunity in the underlying business to deliver growth. You know, that, that is a priority.
As I've, I've mentioned, you know, generating and improving our cash flows in the underlying business is a priority. We'll be deliberate in what we do with the U.S., you know, number one focus for us is, is, is very much about, you know, driving cash flow improvement in the underlying business.
Thank you. There are no further questions at this time. I'll now hand back to Brent.
Okay. Well, look, Just in closing, I'd like to thank everybody for coming on the call today. In particular, thank you all for the questions that you asked. Of course, if you have any additional questions beyond today, please, please feel free to reach out, and we'll do our best to answer them as quickly as possible. On that note, I'll let you get back to your day. Thank you again for being with us, and we'll talk to you again soon.
That does conclude our conference for today. Thank you for participating. You may now disconnect.