Ladies and gentlemen, welcome to the Cosmo Pharmaceuticals Full Year Results 2019 conference call. I am Alessandro, the Chorus Call Operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register more questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to the management team of Cosmo Pharmaceuticals. You will now be journeying to the conference room.
Good morning, everyone. I am Alessandro Della Chà. I'm the CEO of the company. Thanks for joining our conference call, and thanks for taking the time in this difficult moment. The first thing that I would like to convey, the first message that it's important that reaches out everyone, is that we are in good shape. Cosmo is in very good shape, I would say. Cosmo, as a pharmaceutical company, first of all, is exempt from business shutdown provisions in Italy. We are continuing business as usual. The production is up and running. Our drugs are being shipped everywhere in the world because the supply chain has so far suffered no disruptions at all. All items needed for our activities are being received. Not only we regularly ship our products, but we also regularly receive what's needed for their production.
Notwithstanding this, we had decided quite some time ago to hold stocks of API excipients and materials to enable the continued production for quite some time, even if the regular supply of this material should be interrupted. Again, something that we're not foreseeing will happen. Our employees are present where necessary. All the policies required by the governments of the countries in which we operate have been put in place to protect the employees' health and welfare. All non-production related personnel, to the extent that this is made possible, is working remotely from home. I think that under this setup, we can continue to operate as usual.
Of course, this pandemic is having worldwide effects and worldwide impact, we are assuming that this coronavirus crisis will significantly slow down or stop clinical development and/or the FDA activity at least for part of 2020, therefore this year will necessarily be a different year from the year that we were envisaging. Anyway, we want to point out that we have significant cash and equity resources available to withstand this storm, moreover, that as a result of the action that we have taken in 2019, on the assumption of the FDA approval of BYFAVO remimazolam, we are announcing that we're going to be back to operating profit in 2020. Let me just tell you what Cosmo looks at a glance.
Our market cap right now is a little less than CHF 1 billion, but our net cash in EUR at December 31st was EUR 268 million. In the financial year 2019, we've had revenues for CHF 62.5 million. We have a 45% stake in Cassiopea, and at the IPO price, that's the one I'm looking to at the moment, was valued CHF 153 million. We have a 19.6% stake in RedHill, bought at cost at $42 million. 14.1% stake in Acacia at cost of EUR 21 million. An 8.2% stake in Paion at cost of EUR 10 million. We have a loan to Cassiopea of CHF 12 million, and we have treasury shares at cost of CHF 46 million.
I think that if you add up the net cash to the value, at least the cost of the investment that we've made so far, plus the loan to Cassiopea, you have the sense of what the market is currently valuing the overall business. Which is the business that most of you know. We have three marketed therapeutics on the market, LIALDA, UCERIS, and Aemcolo. We have two marketed MedTech products, Eleview and GI Genius. We have a very nice development pipeline, and we have the stakes that I've just mentioned in other pharma companies. Let me just recap what happened in 2019, because I think that really a lot has been done to reposition completely the company after the delay of Methylene Blue MMX.
I assume that most of you must have seen the news that was disseminated yesterday that we have filed the complete protocol and statistical analysis plan for Methylene Blue MMX second confirmatory trial in the U.S. to the FDA. Starting from the very last event that occurred, we have sub-licensed BYFAVO to Acacia Pharma Group. We have received a CHF 10 million upfront payment. We made an investment of CHF 10 million, resulting so far in a 14.1% stake in the company, which is assumed to increase because we are bound to receive an additional EUR 20 million in Acacia Pharma shares on the approval of BYFAVO and for sales, plus up to CHF 105 million on achievement of BYFAVO commercial milestones. In October, we had licensed Aemcolo to RedHill Biopharma for a high 20% royalty plus regulatory and commercial cash milestones over CHF 100 million.
We had, in the meantime, invested $36.3 million in the company, resulting in Cosmo taking a 19.56% stake in the company. You've probably all seen the most recent news coming from RedHill. They have had their product Talicia approved. They have entered into an agreement with AstraZeneca to purchase Movantik, a very significant drug in the GI space for the treatment of opioid-induced constipation. They've entered into CHF 115 million royalty financing agreement. They have launched Talicia. We expect that they will deliver their promises. Our Aemcolo phase II proof of concept study in IBS-D is progressed in the meantime. We're expecting this to end by the end of this year. The reason why it's taking so long is because recruitment of patients in European centers is extremely slow and will probably also be further slowed down because of this pandemic.
As said, we made significant progress with the FDA in relation to the Methylene Blue MMX phase II trial, to the point that we have announced it yesterday, the submission of the protocol. We expect the FDA to answer between 30-60 days. They had promised a very expedite review, and we hope that this pandemic will end as quick as possible and so that when things will return to normality, we will be able to start the new trial. In the meantime, we are waiting for the marketing authorization for Methylene Blue MMX in Europe. The deadline now is set around the end of June. Therefore, we will know whether the product will be approved or not by that timeline. Still, in 2019, we had announced our revolutionary artificial intelligence device, GI Genius, for the detection of the lesion during colonoscopy.
We have announced it simultaneously to the signing of a deal with Medtronic for worldwide distribution. A deal that should look to everyone as a very significant validation deal. We've further expanded our collaboration with Medtronic in the artificial intelligence field. Actually, there's quite a lot of things on which we're working on together with Medtronic right now. We have entered into a distribution agreement for Eleview with Medtronic for U.S.A., China, South America, which was subsequently expanded to the whole world with the exception of Canada, Japan, and South Korea. We have filed the IND for our new chemical entity, CB-03-10, new oncologic product IND, which was accepted by the FDA. BYFAVO NDA was accepted by the FDA. We have completely eliminated our U.S. cost base with the dissolution of Aries, which turned into a significant reduction of operating expenses.
Health Canada has approved Eleview, which will be commercialized by Pharmascience. Our associate, Cassiopea, has filed the Winlevi NDA with the FDA, and the PDUFA date is set on 27th of August. In the meantime, we have also announced very positive results of the Breezula full phase II clinical trials. I don't think that I need to walk you through the features of the RedHill Biopharma deal, although they are recapped here in the presentation so that we can go quickly through it and possibly leave more time to Q&A. The Acacia deal was fully disclosed in press releases. It is recapped here in the presentation, and I'll return back to it only if there are specific questions coming in the Q&A section.
It's more important that I give you a quick update on the products and also, unfortunately, on the impact, what we should expect will come from the pandemic on some of them. In the case of GI Genius, we have announced that we have received also the Australian regulatory approval. The U.S. trial required for the FDA approval has commenced. We had shipped devices to the sites. Some sites had started recruiting patients. We have to say that right now, all clinical trial activities are on hold. This started with the U.S. hospital not allowing externals to enter their facilities, which started to make the installation of the devices and the setup and the training of the personnel quite complicated. Now the whole thing is on hold. We had scheduled to finish this trial at the end of first half of 2020.
We're not in a position to say how much the delay will be, and I think understandably, so you will also have noticed that there's a shift of timing in countries reaching peak for the pandemic. The U.S. is projecting the peak between end of April and May. Nobody knows exactly. We will have to wait for things to go back to normality in order to resume our clinical operations. The sales in the U.S. were expected to begin immediately after the U.S. approval. Therefore, it is very difficult that we will be able to see sales in 2020. Sales in Europe had commenced at the end of 2019, and more precisely, at the end of October. We're not seeing yet sensible results as it has been communicated by Medtronic as well.
It is taking on average between five and six months to get an agreement signed by European hospitals. Therefore, this is all coming also to a hold as a consequence of all hospitals right now concentrating on the coronavirus pandemic and dedicating all the resources to this. Which means that also the European sales should be expected to be delayed in producing sensible results. In terms of Aemcolo, we have progressed our IBS-D phase II clinical programs. We have commenced three investigator-initiated studies in uncomplicated diverticulitis, minimal hepatic encephalopathy, and SIBO in the U.S. As a consequence of travel restrictions and bans, we should expect that Aemcolo sales will be adversely affected in 2020. We're not in a position to assess the potential impact, but we're assuming that an impact will come. The PDUFA date for BYFAVO from April 5th was moved to July 5th by the FDA.
We don't see this as a problem at all. This comes from the fact that the original formulation of BYFAVO contains an excipient, which is not part of the U.S. Pharmacopeia, though it is widely used all around the world. The FDA therefore requested additional information and additional tests, which were all performed. The FDA simply told us that it would've needed more time to peruse all this new data, which is why the PDUFA date was delayed three months, which is the normal time for a delay. As I said, again, I'm going to stress this point, we don't see this as a problem at all. Eleview sales are also likely, unfortunately, to be impacted by the pandemic.
All promotions have either been put on hold or slowed or moved online, which is definitely a less efficient mean, and we're not in the position to assess the impact here as well. On FDA, I have updated you already. We're all looking now at the end of June to see what the EMA will say in respect of our request for approval. Cassiopea, which is 45.1 owned by Cosmo, has announced the positive results of the phase III acne open label safety study evaluating Winlevi, something very important, not just in terms of safety, but also in terms of overall effect. We have announced, as I say, the very positive 12-month results for Breezula. We have filed the NDA with the FDA. We have started the phase II proof concept in women. Therefore, Cassiopea is proceeding along our expectation.
One thing that has to be mentioned in respect of Cassiopea, which may not be yet known to everybody, Cassiopea as an Italian company, is not allowed to operate with negative equity, which means that once losses have totally consumed the available share capital, the company needs to be recapitalized. A lot of jurisdictions don't have these problems. In the U.K., a company can operate with negative equity. In the U.S., a company can operate with negative equity. In Italy, they cannot, and therefore, the alternative to a recapitalization is the liquidation of the company, which is certainly not in sight. Therefore, we're setting up a small capital increase, maximum of CHF 20 million, that will be executed within June, either through a rights offering to all shareholders or private placement to selected investors.
Given the current state of the share price, I can venture to say that it will be a rights offering to all shareholders, given that the price is now significantly below the IPO price, and we are only six months away from the PDUFA. Cosmo has stated that it will not only subscribe its stake, but it will eventually subscribe all the unopted rights. If the market does not want to participate to this capital increase, it doesn't matter. Cosmo will do that. Important to notice, the FDA had originally scheduled the visit for the inspection of the Lainate facility, which is the one that will manufacture Winlevi, originally in March, then moved the visit to May 2020 because of the outbreak of the pandemic in Italy. This site visit is necessary as a complement to the NDA.
We do not know yet whether the May visit will be kept or will be further shifted. We just have to be aware that if, for whatever reason, the FDA decides to shift and move forward site inspections, this might have an impact on the PDUFA date as well. I would like now to pass the word to Niall Donnelly, our CFO, to walk you through the 2019 financial review. Thanks, Niall.
Thank you, Alex. Moving to slide number 22. We had revenue in 2019 of CHF 62.5 million, compared to CHF 65.6 million in 2018. Our net expenses reduced by 9% to CHF 74.8 million, of which CHF 14.6 million relates to our U.S. organization. This organization's been completely eliminated at the end of 2019, and therefore, these expenses will not reoccur into 2020. We had an operating loss of CHF 12.3 million versus CHF 16.6 million last year. Our net financial expenses were CHF 3.9 million, compared to net financial income of CHF 4.6 million in 2018. The main reason for the movement here was the imputed interest on the convertible bond of CHF 8.2 million, of which the cash coupon is CHF 4.4 million.
This is partially offset by net gains on investments and net FX gains. Our loss after tax for the period was CHF 24.5 million, compared to a loss of CHF 18.1 million in 2018. This, of course, includes our share of Cassiopea loss of CHF 5.1 million. Moving to more detail on our revenue. Our LIALDA/Mesavancol revenue increased by CHF 1.1 million to CHF 21.8 million in 2019. Our UCERIS income was CHF 9.3 million, compared to CHF 17.5 million in 2018. Net sales by Bausch were $66.1 million in 2019, compared to $96.7 million in 2018. This reflects the full year impact of the launch of the generic midway through 2018. Our Cortiment income was CHF 3.9 million, compared to the same figure in 2018.
Net sales by Ferring were CHF 16 million, compared to CHF 15.1 million in 2018. Our upfront fees and milestone includes CHF 11.5 million relating to the Aemcolo/Oratane deal. Our Eleview revenue was CHF 2.2 million, compared to CHF 6.8 million in 2018. Medtronic are selling Eleview direct now, and we've eliminated the sales force costs associated with this. Therefore, even though we have a reduction in income, we also have a big saving on our cost base as a result of the elimination of the sales force. Moving to slide number 25 in terms of our statement of financial position. In summary, we have cash equivalents, and investments in funds of CHF 268.2 million at the end of 2019. This compared to CHF 325.8 million at the end of 2018.
We have other current and non-current assets of CHF 317 million , compared to CHF 250 million at the end of 2018. We have liabilities of CHF 191.4 million , compared to 180.8 million CHF at the end of 2018. The liabilities mainly consist of the liability components of the convertible bonds at CHF 158.2 million , and the other liabilities are listed here on the slide. We're in a healthy cash position. Moving to our cash flow then on slide number 27. We had a net outflow from our operating activities of CHF 18.8 million , which includes a CHF 9 million working capital outflow.
We had capital expenditure in the period of CHF 2.2 million, investments of CHF 15 million in intangible assets, and net outflows in relation to the investment in our disposal of financial assets of CHF 21.7 million. We advanced a loan to Cassiopea of CHF 10 million, which will be converted to equity, as Alex mentioned earlier on the capital raise. We had cash outflows from investing activities therefore of CHF 48.7 million in the period. Moving to cash flows from financing activities. We paid interest on our convertible bond of CHF 4.4 million. We had repayments of interest-bearing loans and borrowings of CHF 1.8 million, and we purchased treasury shares to the value of CHF 25.3 million. We also paid out CHF 3 million as part of the acquisition of the remaining 40% stake in Linkverse at the start of 2019.
Overall, we had a net decrease in cash and cash equivalents of CHF 102 million in the period. On that note, I'll hand back to Alex, where he will discuss the outlook and key priorities for 2020.
Thanks, Niall. Also the beginning of 2020 was quite rich in terms of events. On January 10th, we had announced the transaction with Acacia for the sub-license of the U.S. rights. On January 21st, we had announced the alignment reached with the FDA on the second phase II study for MB-MMX, which has translated in the news of yesterday of filing the final protocol with statistical analysis plan. On February 20th, very importantly, we have announced the very successful outcome of the first investigator-initiated study of GI Genius. That really was a great news that we were waiting for. It's important that investors keep in mind that one of the endpoint of this investigator-initiated study, the APC, which is the adenoma per colonoscopy, which is the new metric that the FDA is pushing through for this kind of studies, is actually the primary endpoint of our study for GI Genius.
It was relieving for us to find out that an investigator-initiated study, meaning a total independent study, had already found a very, very significant increase in the APC when using GI Genius. On February 28, we have announced the regulatory approval of GI Genius by the Australian authorities. Most importantly, we have announced, and we are restating today, that we are expecting to return to operating profit in 2020, subject to the FDA approval of BYFAVO, which we assume will occur. You have all seen that there's been a significant shift in strategy going forward in 2019. So far, we have implemented all the actions that we wanted to execute in order to implement this strategy change.
The idea was to cancel our U.S. organization where we were trying to pursue direct sale, instead to enter into partnership with selected players in exchange of equity stake and/or milestones, royalties, or a combination of both. We have allocated our medical devices, GI Genius and Eleview, to Medtronic. We've entered into a GI partnership with RedHill for Aemcolo, we have entered into a strategic alliance for remimazolam with Acacia Pharma. What we intend to do is that we intend to develop new product opportunities with partners. Let me tell you the following. This pandemic, this coronavirus crisis, I think will leave a very deep impact on every business, especially, I believe, on the pharmaceutical business.
It will be increasingly important for companies to have reliable partners, to have partners with good standing, to have partners that have invested a significant portion of their resources to have and set up facilities that are up to date, that have the most advanced control system that can grant the highest quality. We are seeing this already happening with companies seeking partnership with Cosmo. We expect that this will increase significantly in the future. In terms of going forward, again, we reiterate that we have no long-term strategic objective for Cassiopea. For us, Cassiopea is a financial investment that will have to be monetized in due course. We understand that we have to wait for the PDUFA date in order to take away also, which we believe is minimal, the residual regulatory risk.
We are entertaining talks with all the main players in the derm market and beyond because we believe that Cassiopea is an investment that we should divest from at the right conditions. We think it's important that we find someone to partner with to make sure that Cassiopea can smoothly access the US market without having to step into too much risky operations. Clearly, upon this shift of strategy, and hopefully upon a strategic transaction for Cassiopea, we will reassess our need for cash in medium term and will consider option for the eventual excess cash. Slide 33 is just a recap of our development pipeline. Slide 34 points the upcoming milestones. We're waiting for, as I said, by the end of June for the answer by the EMEA on Methylene Blue MMX.
We have been told, according to our sources of information, that the EMEA is not experiencing actually any delay in its activity. Therefore, they are working on track. In Q3, starting with the 5th of July, we're waiting for the U.S. approval for procedural sedation. Clearly, we would like to see the start of the second phase III required for the U.S. approval. In Q4 also, we were envisaging U.S. trial completion for GI Genius and phase II IBS-D results for Aemcolo. These are our key priorities for 2020. As I said, it is very difficult for us to say how these milestones will be potentially influenced by the pandemic. I would say not so much influenced in the outcome, hopefully, but influenced on the timing that really we can't say.
If I move to slide 35, where we're giving our guidance. We're stating again that the virus pandemic has the potential to interrupt Aemcolo sales and significantly delay our clinical trial. Notwithstanding current circumstances, we continue to operate our manufacturing facilities. We continue to ship the product. Our guidance is based on obtaining the FDA approval for BYFAVO because this is going to trigger the milestones that will be paid by Acacia. We are giving ourselves the possibility of projecting revenues that have some ranges because we can't be precise as we would like to be. We're projecting revenues between CHF 52 million to CHF 56 million . We're projecting expenses between CHF 48 million and CHF 50 million, it's important to notice that of these, CHF 7.2 million would be ESOP cost and CHF 6.4 would be depreciation and amortization cost. These would be items that don't produce financial disbursement.
We are assuming an operating profit between CHF 2 million and CHF 8 million. In conclusion, what I want to say is that we've worked very hard in 2019 to execute a complete repositioning. I would say that we didn't lose one second of the time because we started the repositioning of the company immediately after we received the outcome of the last appeal that was filed to the FDA within the formal dispute resolution procedures following the CRL on Methylene Blue . We have achieved the goals that we had set ourselves, namely, finding partners for all our assets. Therefore, after the deal with Medtronic, with RedHill, and Acacia, we are back to our business-to-business model.
It's true that the current environment is unexpected and very challenging, but we worked very hard in the past to set up our facilities to the highest standards to build ample cash and equity resources to advance a fully fledged pipeline of products. We believe that we are in a favorable position when the situation will normalize. It will take time, but it will normalize. Therefore, business opportunities will arise and company will look for solid and reliable partners, and Cosmo at that point will be there for them. These are the reason why we're looking at the future with optimism. Thank you.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Anyone who has a question may at this time. The first question comes from Henrietta Rumberger from AWP. Please go ahead.
Yes, good morning. I have three questions, please. One would be, you mentioned the stockpiles and that they will last for quite a while. Can you actually say, for how long do you expect your stockpiles and stuff to carry the business on? Secondly, with Cassiopea, do I understand you correctly that you're intending to sell your stake at some point? If so, what are your price ideas for this? Thirdly, if you have two sentences, or put in a nutshell, how would you describe your new strategy or the difference to your strategy before 2019 or before you started to sort of switch gears? Yeah, thank you. That's it.
Thanks for your questions. Well, in terms of stockpile, several months. It is not exactly the same length depending on each product, but I would say several months. I think that you can take six months as an average. In respect of Cassiopea, we don't have a specific idea in terms of price. I think it would be a very bad negotiation strategy to state right now at what price I will be willing to sell. Maybe this is something that we have to keep for ourselves. Yes, we're stating that this is for sale because we believe that entering into the market and taking care of the commercialization of a new product in the U.S. is not just going to be an expensive exercise. The issue is not this being expensive.
The issue is that it's a difficult exercise where you need to have people that possibly have done this already and organization that do have an experience. Clearly, the more experienced people, the more trained the organization, the less risky the exercise. This is why we're not keen to do it by ourselves. Yes, the stake is for sale at the right condition, or not necessarily for sale. We're happy to discuss any sort of combination with reliable partners that can create growth opportunities and reduce the overall risk. I believe that the pipeline of Cassiopea is extraordinarily exciting, and I can think of many companies that we're already talking to that find this portfolio of opportunities very compelling. I think that if we combine the forces together, and they have already an up-and-running commercial organization, which I don't have, that's just perfect.
They will be leveraging their commercial organization on our asset, and you can then think of a deal that will be a win-win for both. You mentioned what's the difference in strategy. Well, that's very simple. Methylene Blue was the intended backbone of our commercial infrastructure in the U.S. All products were rotating around the idea that Methylene Blue would have been the glue that was giving a full synergy between all the products. With Methylene Blue being delayed, we thought that it would have been wrong for us to continue to bear the overheads of a very expensive U.S. commercial organization with products that together were not any more synergistic without Methylene Blue. This is the reason why we have decided that we would have gone back to a business-to-business strategy.
Okay. May I just ask a quick follow-up? With Cassiopea, could you say that because you mentioned that going to the U.S. and having a strategy for the U.S., is it a bit that, after the Methylene experience that you shy away from the US market?
No, absolutely not. We continue to believe that this is the main market in which we have to play. I think that if you look at the transactions that we have done with both RedHill and Acacia, they really give you the sense of what we're thinking of. It makes way more sense for us to add Aemcolo to RedHill and become their largest shareholder, rather than do the things ourselves. Actually, I don't believe very much in net present value. If you want to run yourself some figures, you will quickly discover that the deal that we have done with Aemcolo is probably more profitable over time if things go well than if we would have kept Aemcolo all by ourselves and set up a commercial organization all by ourselves. The same thing is for Acacia.
You have to consider, for instance, that remimazolam requires an hospital-based sales force, whereas Aemcolo requires a general practitioner and less GI-dedicated sales force. These sales force are two completely different sales force. Therefore, to keep Aemcolo and Remy under the same roof would have not made a lot of strategic sense. It is way better to be the largest shareholder in RedHill and also to be the largest shareholder in Acacia.
Okay.
The next question comes from Paul Verbraeken from Research Partners. Please go ahead.
Yeah, good morning. Four questions, if I may. The first one is about Methylene Blue. I was sort of expecting a decision in Europe, in February. Now you mentioned June. Is this also due to corona delay? That would be the first. The second would be on the revenue guidance. You're saying around CHF 52 million-CHF 56 million in 2020, but that would sum CHF 20 million for the BYFAVO approval that you would receive from Acacia. Can you confirm that? In your expense guidance, does that then also include the milestone that you would need to pay to Paion for the approval for BYFAVO? The third one would be on LIALDA. I noticed revenues were up quite a bit in the second half after falling in the first. Will this trend continue? My last one, if I may, is on GI Genius.
You had around CHF 1 million of revenues in the second half. Does this reflect the sale of the devices to Medtronic? Does it also include already some rent income? That's all. Thank you.
Thank you very much. The first question is if the revenue guidance contains the milestone from Acacia Pharma, and the answer is yes, and this is why we have stated that this guidance is contingent on BYFAVO being approved. In respect of the Paion milestones, answer is yes. In respect of LIALDA increasing, yes, LIALDA is increasing significantly. We are expecting also a significant increase in 2020, and this is very good news. We also have received news that shares are really continuing to ramp up and we are owed a royalty as well. The LIALDA franchise, yes, it is expected to increase. I may say also from certain standpoint that this is a good sign because you see, we have received. I'm making an example, but there's logic to this. We are receiving requests from patients.
They're telling us that they would like to access directly LIALDA because their doctors put them on the generic, but they don't feel any relief if they take the generic. Of course, we can't provide directly LIALDA to anyone, but this is giving you a sense that patients may recognize that when they're moved to the generic, they don't feel the relief that they would like to feel, and then they shift back to the branded product. We don't find this surprising because we know that the generic is not necessarily identical to the originator. If the originator works and works well as LIALDA does, patients want to continue with the originator even if that may cost them a little bit more. This is, I believe, why I think LIALDA is increasing, and we hope that it continue to do so.
In respect of the CHF 1 million of GI Genius, you're totally correct. Those are the revenues stemming from the sale of the devices to Medtronic.
The next question comes from Bob Pooler from valuationLAB. Please go ahead.
Good afternoon, gentlemen. First of all, thank you for providing a 2020 outlook despite all the uncertainties due to the coronavirus. That's already a compliment. Just on that, how do you see UCERIS developing? We saw LIALDA is probably going up again there. UCERIS, do you see that decline going or sort of leveling off?
Thanks, Bob. Good morning. We're seeing it leveling off. We don't expect a protracted decline. It looks like the market has been shared between the generic producers, and we're seeing that hopefully stabilizing. Ferring has had a year of a bit of a lull, especially because there has been significant shift we've seen probably due to parallel imports. People purchasing more in countries that have a lower price and then re-importing in countries with a higher price. The franchise keeps growing steadily. Just a couple of ago, we've been announced that UCERIS has been sorry, Cortiment, that's the brand name outside the U.S., that Cortiment has been approved in Indonesia as well, which is a very, very large country. We believe that Ferring is doing an exceptionally good work that will continue to produce very good results over time.
Okay. Clear. Just on Methylene Blue , the U.S. second phase III trial, could you provide a bit of color on the trial duration, the number of patients, and the cost under normal circumstances? Of course, we hope that that will happen then later in the year.
Assuming, as you rightly said, normal circumstances, one of the things that we have agreed with the FDA and on, of course, we'll confirm full agreement once we have the protocol formally accepted. These are all things that have been discussed in the past and also minuted after the meeting that we had with the FDA at the end of December 2019. This trial is going to have some features which are different from the first one. First and most relevant, I would say, is the fact that the FDA agrees that it's no longer needed a confounding arm. Just to remember to you, the first trial was 1,250 patients, 500 on Methylene Blue, 500 on placebo, and 250 on a lower dose. We have agreed that the lower dose is not necessary anymore. This is good because this means less patient, less time, and less cost.
Number of patients will be lower. I think that we will be around probably the 800 patient, which is a good thing also in terms of time and cost. We are expecting an overall cost of the trial, which should probably be around CHF 10 million-CHF 12 million. This is what we have in mind. In terms of execution, I think between six and nine months.
Okay. Six months. Very clear. Just on your strategy, you mentioned now the development of new product opportunities with partners. The question here is, will this remain in the GI space? Are you also going to look outside of GI? gastrointestinal. You have, for instance, the artificial intelligence, which also can be used very broadly. What are your sort of ideas there on these new product opportunities?
I'm sorry that I can't say much because Cosmo would like to say things when things have happened already. We're not keen in saying we're thinking of doing this and thinking of doing that, and maybe that doesn't materialize. I'm sorry that investors will have to wait for the news. We are working right now on a number of potential partnerships that we hope will bear fruit. Yes. We will not venture in areas which are completely unknown to us. When it comes to drugs, it has to be something that has to be connected with gastrointestinal delivery.
Put it that way. Of course, as you rightly pointed out, the artificial intelligence has a whole lot of areas in which it can further develop because, I don't know how much this is understood by the market or not, but what we have been set up is not so much only a product for the detection of lesion, is more of a platform.
Yeah.
Exactly. Once this is validated in the endoscopy field, this can quickly constitute a platform to go in other sort of areas where object detection is needed.
Yeah. Probably you could also add like administrative things, because when you do a colonoscopy, the operator has to do a lot of administration afterwards. With the AI, potentially those reports could be generated more or less automatically, which would take a huge burden away from these people. That in the future, you would have these updates coming through the platform.
No. Well, you are reading our minds because this is exactly also another area in which we are producing significant R&D results. You're right. Think of writing the report, think of classifying the lesion, think of issuing all the documentation that's needed for administrative reasons. That's exactly another area in which a lot can be done and in which we're doing a lot.
Okay. Sorry for spoiling that potential surprise in the future then. Thanks very much for your questions. Stay safe and healthy.
Thank you.
The next question comes from Barbora Blaha from Credit Suisse. Please go ahead.
Hi. Congrats to the results. Thank you for taking my question. I have actually three questions. One is on BYFAVO. Do you expect an Advisory Committee meeting before the approval or before the PDUFA date? Will you manufacture this? If yes, do you expect an FDA pre-approval inspection in Lainate? A question on the FDA inspection of the Cassiopea. How much in advance must this pre-inspection be in order to not have an impact on the PDUFA date?
Okay, thanks. I've listed two questions, and I don't know whether I might have missed one. You asked the first one, if for BYFAVO, some sort of Advisory Committee is expected within the FDA process. Is that correct?
Yes. Mm-hmm.
No, the answer is absolutely no. No. Nothing is expected.
Okay.
It's a pure shift of the PDUFA date due to the significant amount of additional information that we have provided. No committee of sort. No, nothing.
Mm-hmm. Will you manufacture?
Excuse me?
Sorry. Will you manufacture BYFAVO, and do you expect a pre-approval inspection by FDA?
Okay. No. BYFAVO is not manufactured by us. Currently, the manufacturing chain works as follows. There's a company, large company that's called Cambrex, that manufactures the API. There's a very large company that everybody knows about that's called Patheon, that manufactures the product, and Cosmo is just in charge of the secondary packaging. All inspections in all sites, including Cosmo for secondary packaging, have already been conducted. Therefore, BYFAVO is in no need of additional inspections of sort. Okay?
Mm-hmm. Okay.
That's all done.
In respect of Cassiopea, we have seen in the past that inspections may take place also at the very last minute. It's not an issue. The department that's in charge of the inspections in the FDA is different from the department that has the NDA in charge. The only important thing is that the department that makes inspection delivers the conclusion to the NDA FDA team timely. We have seen this happening. I can give you an example. We've seen this happening at the very last minute, for example, for Aemcolo, where the manufacturer of the API, which is for us a Korean company, was inspected just a few days before the approval of Aemcolo. This turned out not to be an issue, and the PDUFA date was respected. The inspection can take place at the very last moments.
Keep in mind that Cosmo S.p.A. as a factory, as a manufacturing facility, is really top of the art, is constantly inspected by the FDA and by all health agencies around the world. We don't foresee any problem there. We just hope that this is going to happen in a timeframe that will not cause any shift of the PDUFA. This is completely up to the FDA and their internal organization. We have no means to control this at all. It can take place also at the last minute.
Okay. For Winlevi, will you produce the API as well as the final-?
No.
Product and packaging, or which part will you produce?
No. The API of Winlevi is manufactured by a Spanish company. It is shipped to us. What Cosmo does is Cosmo manufactures the cream and does the packaging.
Okay. Maybe one last question to RedHill Biopharma and Blue, commercial partner in Europe.
We don't have a commercial partner yet. We are in discussion with several partners for the potential opportunity, but we want to remove all hurdles in terms of the approval. Therefore, this is something that will become a hot topic once the product is hopefully approved. We're keeping all the fingers crossed.
Okay. Thank you.
The next question comes from Christian Glennie from Stifel. Please go ahead.
Hi, good morning. Thanks for taking my question.
Good morning.
A couple on Aemcolo and then one on LIALDA , if I may. First on Aemcolo, can you give a bit of a sense maybe for sales progress so far, in the U.S. and Europe? Obviously, I assume it's been starting to be rolled out in Europe. You will receive royalties there. Your progress to date so far, obviously with RedHill Biopharma now in the U.S. and expectations for 2020, given restrictions on travel and so forth.
In respect of Aemcolo, we have developed a very conservative plan in agreement and coordination with RedHill in respect of the U.S. We had seen them starting making sales in December, which was more or less the moment they launched it. As I was mentioning, we're also seeing a halt. They were expecting to have gross CHF 10 million in 2020. As I said, it is very difficult to say whether that is something that will be reached. I'm dubious. You have to consider also that it's not just the fact of travel restrictions and travel bans, it's also the fact that this is something that they're experiencing for Talicia as well. You cannot do any more right now, the promotion and the marketing the way you used to do it. Sales reps are not going anywhere.
They're contacting people by phone or by email or by video conference, which I'm not sure is a completely effective way. That in mind, same thing is for Relafalk, which is Aemcolo under the brand name of Falk. They have started the sales in Germany on the end of 2019 in December, they should or should have enrolled other European countries in the course of 2020. This, I think, is going to be a lull year in all respects.
Okay, thanks. That's helpful. Sorry, just to be clear on Aemcolo, on the prescriptions that we might see in IQVIA, are you aware that is reflective of the market? Sometimes you have to be a bit careful of IQVIA data, particularly in launch phases.
Yes, of course.
You think what we're seeing in IQVIA will be reflective of what is without taking the market?
I don't know whether that will be completely reflective. I don't know.
Okay. That's fine. The other follow-up on Aemcolo, the IBS-D trial. From memory, I think that's the trial that's been slipping a bit. Is the target to complete the end of this year, is that already inclusive of some expected delays in trials that are obviously impacting the industry?
I wish I could answer precisely there. We had in mind to have it completely by year-end. This is what we continue to have. You see, one of the tricky thing is that today you just know that there will be delays, but it is very difficult to figure out what that will be. My simple answer is.
With a follow-up recorded patient visits and endpoint.
No. Over there, keep in mind that we have followed a very simple strategy because our clinical protocol is identical of the one that had been used by Salix for the very same indication. The fact is that, this is the reason why it's taking a lot of time that European hospitals, because our phase II is called the European, are not so keen in diagnosing IBS-D as the American hospitals are. They go through a lot of checks before assessing whether a patient really has IBS-D, this is why It's taking a lot of time. Keep in mind that IBS-D is not even a disease that you can so easily diagnose. It's more of a sequence of symptoms that sometimes overlaps with others as well.
Sure. Okay. Thank you. That's helpful. If I may, on just a follow-up clarifying LIALDA. The outperformance there, you're saying that was really from strong performance in Japan? The U.S. sales look like they're stabilizing, but they're still in decline. You'd expect a continuing decline there, but obviously it's being strongly offset by Japan, or is there anything in your sales of products in the U.S. that's been lumpy in 2019 that maybe masks some trend?
No, sorry. I'm not sure I understand the question.
Just to understand the dynamics within the LIALDA sales number for 2019. You would expect the U.S. sales to continue to decline and therefore your portion of those revenues to decline. I presume, is it all just Japan that's offset the U.S.?
No. What we're seeing was a slow decline in the U.S., a ramp-up in Japan and a nice increase in Europe. Because of the new forecast, we're seeing that the U.S. will begin to increase again. The main reason I think is probably the one that I had mentioned. I believe that there's a growing number of patients that recognize that they receive a more effective treatment with the originator.
Do you have a market sales number for the U.S.?
No, not precisely.
Okay. Thank you.
We have a question from Michael Christof from The Market. Please go ahead.
Yes. Hello. Thank you for taking my question. Just a question according to guidance, sorry, I participated the con call late. I am not sure if you already answered this question, but you mentioned total expenses in the range of $48 million-$50 million and the revenue in the range of $52 million-$56 million. That means the expenses are much less than you had last year, 2019. Perhaps you can explain why you expect so much less expenses. Thank you.
Well, sure. This comes mainly from the fact that we don't have any more U.S. organization. You have to consider that in order to shut down the U.S. organization, we had to bear severance costs clearly, right? This is something that had an impact in the P&L, therefore you could not see the full impact of the elimination of the U.S. infrastructure within 2019. Now you're seeing the full effect in 2020.
Okay. That means more or less CHF 20 million for the U.S. organization or?
Exactly.
Okay. Thank you very much.
Thank you.
Next is a follow-up question from Paul Verbraeken. Please go ahead.
Yeah. Thanks. I had one more question about the European regulatory process for Methylene Blue . I was expecting a decision there in February, but you've mentioned it's going to be June. Is that related also to corona or did you have to supply additional data or can you elaborate?
Yes. Thanks for the question. That gives us the opportunity to clarify this better. The mechanism for the European Medicines Agency approval is different from the one from the FDA. When the European Medicines Agency asks you questions, there's something that they call the stop clock. Whatever time they've given them in order to give an answer doesn't include the time that it takes the company to answer to whatever query they had made. They had made very extensive queries. We wanted to take the necessary time to answer to this in the most exhaustive way. Therefore, this has produced a series of stop clocks and that's the reason why we are now scheduling approval by the end of June because we have exhausted the part in which we have to answer to queries.
Okay. All fine. Thank you.
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Well, I thank you all very much for your time and thanks for the very good question. Again, I want to convey the message that we're very optimistic about the future. We have what it takes not just to overcome this situation, but hopefully to be in a very good position while things will go back to normal. Thanks again, and you all have a good day, and please stay safe.
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