Earnings Call: H1 2021

Jul 29, 2021

Thank you very much. Welcome, everyone, to our half year reported 2021 conference call. I hope the presentation is visible for you all. Let's start with a quick introduction and a recap on where we stand. Currently, our half year is ending with €28,400,000 revenues, $15,200,000 of which is related to manufacturing of our own products and related services and $5,800,000 in the manufacturing of generic products and other related services, we have cashed €2,400,000 of royalties and received €4,000,000 in license fees. The operating profit is €8,000 currently. The loss after tax is €5,700,000 the cash inflow from operating activities is 12.7%, which I want to point out is significantly higher than H1 2020 as we are hopefully moving to a situation in which we we have a stable operating profit. €2,300,000 in cash, bond and fund investments, you will see where we will break down the detail that the difference in respect of what we have at the end of 2020 is essentially due to payment that we have done to complete the acquisition of our company dealing with artificial intelligence and having GI Genius within its assets and the purchase of own shares, which we have continued to execute throughout the whole first half of this year in accordance with the stock exchange rule that do not allow ourselves to purchase more than 20% of daily volumes. Equity stakes in other companies currently is around €300,000,000 which is €30,000,000 less than at the end of 2020 because of market valuations. Treasury shares and loans, loans haven't moved because our loan of Acacia to Acacia of €25,000,000 has remained stable. So the difference from 72.5%, which you can see is the increase that I was mentioning in the purchase of our own shares. And equity of €371,000,000 versus €400,000,000 at the end of 2020, which is all due to the difference in the valuation of the equity stakes in our companies. The situation in respect of our that product has significantly changed because as you all know, on the 12th April 2021, GIG news has been approved by the FDA. So now we have 2 marketed medtech products, 1 approved therapeutic, Metlin Blue MMX for Europe and 3 marketed therapeutics and we believe a rich development pipeline. Let's quickly go through the key events and update for 2021. As I was mentioning, the most important news of all was the approval of JYGENYUS by the FDA. The AgileGenius was approved on the 12th April and Medtronic has launched the product more or less 1 month after the approval. So you have to consider that all we're saying now about GIGNU basically covers only 1 month and a half, so namely from the half of May to the end of June. The reception of the product has been very, very good. There's been a lot of attention. Everybody is super excited about that. And I'll walk you through some data in a moment. But in the meantime, a lot of other things have happened in this first half, which I think deserve being mentioned. First of all, we've had the successful outcome of our Phase 2 proof of concept for rifamycin 600 milligram in IBS D. We have licensed the European rights plus Switzerland, U. K, EEA countries, Russia and Mexico for Lumebleu at Alpha Sigma SPA. You will remember that we had licensed LumiBlue for China to China Medical Systems only and the beginning of December 2020. Now it was the churn for Europe with Alpha Sigma. Very important event also just a a couple of days ago, our associate Casiopeia SBA has announced the signing of license and supply agreement with some Pharmaceutical Industries for Winleve in U. S. And Canada. And further on the manufacturing side, we've entered into an agreement with RedHill Biopharma to manufacture 3 very important products for them, Movantik, which is the one that's currently selling more, RHB-two zero four, which is their new drug against pulmonary infection and opagunib, which is a very, very promising antiviral drug that is now being tested for COVID-nineteen and we're waiting for the results of the Phase twothree trial at the beginning of August. Just keep in mind that in the intention of RedHill, if opagunib is successful in the Phase twothree, they will immediately ask for an emergency authorization sorry, an emergency use authorization. And they're very hopeful that this is going to be a substantial driver in their increase of value. If we go into a little bit more detail, GI Genius, In April 2021, as I said, the FDA approved this revolutionary device for lesion detection during colonoscopy using artificial intelligence. And this is really a breakthrough. I'm not sure that the market has understood at all the potential of GIG news and what this really means. It's just sufficient to say that this is the 1st device of its kind to obtain the FDA approval through the de novo application. The de novo application is deserved only to devices that introduce substantial innovation to the landscape. The assessment of the effectiveness of GI Genius was done from a multicenter perspective study that was executed in Italy, which actually was not controlled by us at all because it was an investigator initiated studies performed by 3 completely independent physicians over 700 subjects between 40 80 years old. And this study showed that the adenoma detection rate with GI Genius was 55.1% compared to 42.0% in Stargardt Colonoscopy, so a net increase of over 13% in absolute terms, which was deemed extraordinarily significant. Now in this month and a half since the moment that the product was officially launched in the U. S. We have delivered 261 devices to Medtronic. We're planning to clearly deliver much more. We are manufacturing consistently. We're receiving significant orders and we plan to be in a position to inform the market more thoroughly about what is happening from the financial side later on in this year. This is also due to the fact that because of the agreement that signed, we cannot really make upfront communications on the financials, which are not pre agreed with Medtronic. So we need to communicate only data which had been pre agreed with them. But I think But if you consider 261 devices in a month and a half, this is quite a significant number, which allows us to be very optimistic about what is going on. Besides, we're receiving feedback from physicians and centers and there's a lot of excitement around this. Just keep in mind that Europe, Australia, Israel, United Arab Emirates have already approved the product as well. So we have sales starting there as well. But keep in mind that the sales activity in Europe, which began at the end of 2019 after the official presentation of the device at the UEGW in Barcelona was then practically stopped because of the pandemic. Just one important thing to mention in the first line of this slide, you see sales are expected to commence in the second half. And this is because in the vast majority of the cases when Medtronic deploys the device to a client, it gives it together with a 60 days evaluation period. So basically, starting from mid May with the first devices being delivered to client, the evaluation period stops around mid July, this is why you will technically see sales commencing in the second half. But it's important that you remember that this device is being sold through a subscription service and there will be a subscription fee for a year, which will be lower than an average $40,000 per year, but every single device is contracted for a minimum of 3 years, which means, therefore, that once you see the sale, the subscription fees that will be generated for that sale will cover not just 1 year, but 3 years. And this clearly gives a completely different level of security in respect of the revenue flows. I'll be happy to answer after in the Q and A session to any further question that you may have. But I would like you to understand that we have seen the deployment of a tremendous marketing effort from the side of Medtronic. Medtronic has a completely dedicated structure that's taking care of these sales. Medtronic is producing to a very significant reason marketing material, marketing videos, symposia, meeting with KOL. So there's a tremendous marketing activities going on, which is precisely what the marketing activity that you should expect from a player, the caliber of Medtronic. And I wanted to show you and this is also one of the reason why we're having this video call. I wanted to show to you 2 videos. And I think that these videos are very telling, not just because of what you will hear and see within the videos. But because of the quality of the video and the thoughtfulness with which the videos have been crafted, I think that's very insightful on the marketing effort of Medtronic. So It is my pleasure to show it to you because I don't think that they could have done any better so far. The first video is a general video of introduction on the colon cancer issue. The second video is specifically dedicated to the product. So I would kindly pass to Moira please to let the first video start and I will make a brief comment at the end of the first video. Thank you, Moira. I was diagnosed with stage 3 colon cancer at age 38. I was just now your standard 30 something year old trying to focus on my career, worked hard, traveled a lot all Around the country meeting with clients, I woke up one morning, went to the bathroom, looked down and saw that I had blood in my stool. A cold called a gastroenterologist and she said, you are not too young for colon cancer. It happens. It's happening to young people. And so we scheduled a colonoscopy 4 days later. When I woke up from my colonoscopy, I saw All the gastroenterologists 10 feet away and her expression was very troubled. And I knew in that moment that my Life had changed forever. The way that I coped with what was Happening to me was learning as much as I could about it. I wanted to find out who are the top G leaders who are the top doctors, where is the research happening, what research is happening. And so that kind of led to Learning about AI and all of the new things that is happening in the AI space, that led me to GEO's LinkedIn page. When I learned about GI Genius, it was just the beginning of really understanding how colonoscopies These really work. The team sent me the VR game where for the first time I got to pretend to be a I got to go into the endoscopy suite. What I learned in kind of playing that game was That polyps are really hard to see. Having a little technology assist really makes a big difference. I'm planning on Asking my doctor if they have it available and encourage them to be first on the list to get it. Colon cancer As a disease needs a total PR makeover. It's huge disease. It's deadly. It's growing in young people. It's crazy underfunded and it's preventable, totally preventable. I am on the Board of the Colorectal Cancer Alliance and I'm helping them put Together this large scale prevention effort that will seek to position colon cancer in a much more positive light in a way that we can all Talk about without feeling awkward and squeamish and we can celebrate the people in our lives who are getting colonoscopies and getting screened and getting protected. I'm going to spend the next decade of my life focusing on this issue. Our goal is to save 100,000 lives by 2,030. Okay, thank you. Well, we wanted to show this video first. You see this is a very passionate story about a colorectal cancer patient, but it's important for you to notice that The testimonial that you have seen in this video is also an eminent component of the colorectal cancer alliance, which is the most influential body in the U. S. To support colorectal cancer patients and to promote the adoption of technologies that can improve the quality of colonoscopy and help saving lives. So I think it is extraordinarily important that Medtronic has secured this joint venture with the colorectal cancer alliance in such a way that they will be supportive of the wide adoption of GI Genius as the golden standard for colonoscopy and the way to deliver highest quality to the patient. Now let's have a look at the second video, which is way more informative on the feature of Medtronic that's used by Medtronic to promote the product. But before I start, I wanted to mention one thing. You have seen her at a certain point, she was wearing a mask and she was using certain tools. Well, That is a specific virtual reality tool which has been created by Medtronic to help understanding how GI Genius works and to help the training in the use of J GENEUS, you can basically see the colon and maneuver the scope as if you would be doing a real chronoscopy, which is not clearly the case because you would just experience a virtual reality session. But it's important because this allows any physician and anyone who's interested to immediately capture the benefit of JI Genius without having to test it on a proper procedure. So let's start with the second video, please. Okay. Is the audio back? Yes, sir. Okay. So thank you. I think that this video was also very telling. Again, I would like you to appreciate this in terms of effort. I think the message was very clear was resounding very well and this is why this is being so much appreciate it. I want to reiterate something that I said in the aftermath of the approval immediately after Medtronic received 152,000,000 contacts on their social media, so people interested in understanding more about GIG and it's 9,000 emails of people asking information on the product and how to purchase it. So far things are playing out the way we were hoping for and we remain confident that Medtronic will deliver exactly what we are expecting. I would like to move to the next slide now. And okay, this is an update on CASSIO Pea. In July, just a couple of days ago, well, it was Monday, I think, our associate has announced that it had signed a license and supply agreement with some pharmaceutical industries for Winleby in U. S. And in Canada. Let's spend a couple of words, first of all, on Sun Pharma. Sun Pharma is not just one of the largest generic player in the world, if I'm not mistaken, is the Indian, the largest one. But it's also, and I suppose that many of you don't know it, It's also the 2nd subscriber in the U. S. For derm product. So it's the 1st in class in derm sales. And as most generic manufacturers, because the drugs that can be genericized are sharply declining and quickly declining in numbers, they have to find replacements and the replacement that they're looking for is drugs that will allow them to turn into specialty pharma companies. So a generic manufacturer normally try to save the dime in the development of their own genetic. They try to save as much as possible. They don't want to do clinical trials, they don't want to do testing, they don't want to do development. It is in this context that you have to see the €45,000,000 upfront payment, which is very large by itself, but it is particularly large if you think that it comes from a generic manufacturer. And it's also particularly large because I really need everyone to remember that we're talking about an acne drug and we're talking about the acne market. So we're not talking fortunately or unfortunately about an oncologic drug or about a cardiovascular drug that have completely different sales potential and completely different earnings to file. This is an acne drug and $45,000,000 upfront for an acne drug is a very high payment. I think it is in itself the proof of the commitment of some to make it big. The royalties are Standard Royalties, but we have commercial milestones which will go up to 190,000,000 on sales target that we all believe can be easily achieved. And most important of all, although we were not allowed by Sun clearly for competition reason to disclose the details. But Sun has committed substantial promotional and marketing expenses according to an agreed commercialization plan, which is part of the license agreement. So not only we've seen the commitment in the payment of the upfront, but we're seeing the commitment in terms of sales force and marketing spend and marketing promotion. And I'm aware of the fact that CASSIPEA has evaluated many potential transactions in this period and this was by far and large the most convenient being simultaneously the less risky. If Casio Ber would have tried to set up its own commercial organization. Our estimate is that it would have needed no less than €80,000,000 to set it up, which would have needed to be raised on the market with subsequent very significant dilution of all existing shareholders and with risk and executional risk profile extraordinarily high. Not to mention that CASSUPEA would have been for quite a while with only one product to be sold, which is known to make sales force inefficient because in order to have a sales force efficient, you need to have at least 2, if not 3 products. So not only we believe that the return on this will be very good, we also think that we have done it with the right partner that we'll be able to deliver. The license agreement will be effective once the parties have received the antitrust clearance, which we don't expect to be problematic given the size of the deal and the size of the relative operations of the 2 company, it is estimated that this will occur by mid September. Because we own 46.6 percent of Casiopea, Casiopea will book a significant profit by year end and a portion, 46.6 percent of this significant profit will also directly impact our 2021 result, which is the reason and I'm anticipating what you will see at the end in the guidance. I'm anticipating that because of this COSMO will finally go back to full profit in 2021. I'm saying full profit, which is not a technical expression just to differentiate this from the operating profit with which we closed our 2020. So not any more operating profit, but finally back to full profit. Quick update on AIM. Colo. In January 2021, we have announced a successful outcome of Phase 2 proof of concept. We're moving with our licensees right now. We are having joint steering committees and we're advancing as quick as possible the deployment of the development plan so that we will be able to engage the regulatory agencies as soon as possible. In the meantime, we have progressed to investigator initiated studies for minimal hepatic encephalopathy and small intestine material overgrowth. Unfortunately, the trial on uncomplicated acute diabetes because of all the COVID related complication has not been able to start yet. And unfortunately, as you can imagine, because of all the travel restrictions and bans, the NColo sales continue to be adversely effect in 2021 for the traveler's diarrhea indication. In respect of the methylene blue MMX update, good news, as I mentioned before, is that in December, we licensed to CMS and in February, we licensed to Alpha Sigma. We're expecting the European launch by Alpha Sigma in Q1 2022. In the meantime, CMS in China has filed for approval with the regulatory If it is, it is estimated that it might take a year to get Chinese approval for this and we're all looking with interest and hope to the opening of this new market for lumna blue as well. We have also progressed and keep progressing the discussion with the FDA to prepare the 2nd Phase 3 trial for the U. S. Approval and subject to reaching the final agreement on the protocol, we're still hoping to be able to commence the trial by the end of 2021 pandemic permitting. I would like now to pass the word to our CFO, Niall Donnelly, that will walk you through the H1 twenty twenty one financial review. Thanks, Niall. Thank you, Alex. So in the first half of twenty twenty one, our revenues were $28,400,000 as compares to $25,900,000 last year. We'll come to some more detail on that on the next slide. Our net expenses increased by $5,200,000 to $28,400,000 There's an important note here, and that is that in Page 1, 2020, we had a gain of $5,300,000 which is booked through other income, Which netted against our net expenses. And this gain related to the out licensing of by Fable to Acacia. And we also had a fee paid to us by Acacia for a debt equity swap. So excluding that one off gain last year, our net expenses are in line with last year. Our operating profit for the period was €8,000 versus an operating profit of €2,700,000 for last year. We generated a cash flow from operating activities of €12,700,000 And this compares to €1,800,000 for the same period last year. Our net financial expenses were €1,900,000 And this includes computed bond interest of 4.3 percent, which was offset by interest receivable on the our loan to Acacia Plus some FX gains. We had a loss after tax for the period of 5,700,000 and this includes our share of KCP as a loss of 2,800,000 Which as Alex has mentioned, we expect that to be reversed now with the booking of that $45,000,000 upfront from the Sun deal in the second half. So some more detail on our revenue. Our Lealda revenue increased slightly up to 11,800,000 Your service income reduced to 1.8 from 2.5 and net sales by Bosch reduced to 13.6 compared to 16.3 as we see the ongoing impact of the generic in the market. Quarterly income was €1,000,000 in the period compared to €2,300,000 last year. And I want to highlight that we've moved to a per tablet payment for Courtemans deferring now and which incorporates supply price and royalty. So we had 1 shipment of product in the first half and we expect 3 shipments to occur in the second half. So we will see a clawback of this deficit unit that we saw in the first half. We booked GeoGenius revenues of $2,100,000 in the first And this is on the sale of the machines to Medtronic. So when we supply the machines to Medtronic, we build them for that. And on top of that, we received subscription income once they deploy that out into the hospitals and ASCs. So we saw, as I said, euros 2,100,000 from that revenue source. Our upfront fees and milestones represent a €4,000,000 payment It's just a recap of the income statement on Slide 18. In terms of our balance sheet then, we had cash and investment in funds of 203,100,000 At the end of June, we had other current and non current assets of $360,000,000 and this includes our stakes in Acacia, Haiyan and Red Hill, which totaled €91,700,000 at the end of the period. So we did see some reduction over the 6 months period related to the reduction in the share prices of Acacia and Reitio. Our investment in Acacia is included here and is currently at 133,400,000 We have intangible assets on our balance sheet of 26.9 and property patent equipment of 29.1. On the liability side of our balance sheet, the main component here is the liability element of our convertible bond, which is 164 point $3,000,000 at the end of June. So moving to some more detail on our cash flow for the period. We generated, as you mentioned, a cash flow from operating activities of $12,700,000 in the first half. Overall, there was a reduction in our cash balance of 9.7%. So during the period, we sold one of our investments and we had a stake in Volition, which we uploaded over the course of the 1st 6 months. We realized $3,100,000 of cash from that. We paid deferred consideration to the former LinkFirst shareholders and this of 2,600,000 and this relates was triggered on the FDA approval of the device. We purchased 8,000,000 of treasury shares in the period. We paid out €2,200,000 of convertible bond interest. We had capital expenditure of €1,900,000 We advanced a further $6,000,000 to Casiopea for to support Casiopea, which we will now recover Once they receive the upfront from Sun and we capitalized $1,600,000 of development costs. We made lease repayments of 2.2 and paid tax of 3. So overall, from the total net cash flow, you can see here that the underlying business is generating cash And the main outflow was the purchase of treasury shares and the loan out to Casiopeia. So we closed our position at €203,100,000 So I hand back to Alex now for the key priorities and outlook. Thank you, Niall. I'm not sure that I have control over the slides. Moira, can I have the control back? Thank you so much. Key priorities for 2021, well, 1st and foremost, ensure that GIGENAS performs in the U. S. Market by providing Medtronic with all the necessary supply and support or actively in frantically manufacturing devices. But as you can imagine, there's also a wide net of support that we need to give to Medtronic in respect of technical assistance, solving eventual problems on the devices, which again are computers, as you might recall, grant ourselves total control over our own supply lines. And in the past months, we've had a few hiccups, as you can imagine, with the global crisis on chips and semiconductors. Now everything's gone back to normal and we're not expecting any particular issue from our supplier, the most sophisticated components. One of our priorities also, as I had mentioned in a couple of occasions, is to replenish our pipeline and we are now programming an event hopefully in Zurich between September October, where we would like to present our new pipeline and our new development opportunities. We quickly also want to progress the development of Enco in IBS D and be in a position to have our partners start the Phase 3 as quick as possible. I'm specifically mentioning our partners because according to the agreements that we have signed, the development of the Phase 3 will be in the hands of RedHill and Doctor. Falk. So we are not supposed to bear any financial consequence or bear any cost because of that. And then hopefully maybe also commenced the METALINBLUE confirmatory phase trial, which is required for U. S. Approval. We are maintaining our guidance following the approval for J. A. Genious. We're also assuming an increase in the cost associated with the deployment of J. G. Muse machines to Medtronic and into the market. So we are expecting revenues still in the range of €60,000,000 to €64,000,000 and an operating profit in the range of €3,000,000 to €5,000,000 Now as I mentioned at onset, because of the agreement that Casiopeia has closed with Sun, there will also be a very significant impact on our P and L ultimately because we will benefit the portion of the result of Casiopea, we're therefore expecting Cosmo to deliver profit before tax in 2021 in the range of €4,000,000 to €6,000,000 Again, this is very important for us and a much sought for outcome because we know that we've had a few bad years. We've had some bad years in 2017 as a consequence of the investment that we made into Ares and we've had 2 bad years in 2018 2019 as a consequence of dismantling areas in the aftermath of the delay of the U. S. Methylene blue development. In 2020, we were finally back to operating profit, but now thank God also back to full profit. So this is something That is very welcome and we thank all our investors and shareholders for the patience now. We just have to wait a little bit more and hopefully collect the fruit that will come from the massive investments that we've done in the past 2 years. So thank you very much and happy to answer to any question you might have. Thanks. We will now begin the question and answer session. Webcast viewers may submit a question or comment also in writing via the relative field. Anyone who wishes to ask 21. The first question is from Bob Pooler from Valuation Lab. Please go ahead. Good afternoon, gentlemen. Thank you for the excellent presentation. A few questions, if I may. First with GI Genius, You mentioned there is a 60 days trial evaluation period and then there is a 40,000 fee subscription fee per year and it's contract for 3 years. So when does Medtronic book these sales? And actually when do you book the sales? So there's a little bit of a lag there. So basically the question is When do you expect significant sales to kick in? Thanks, Bob. Hi. Well, precisely, As you said, Medtronic will start booking the sales once they sign the agreement with the center. So the signing of the agreement is not the beginning of the evaluation period, but is the end of the evaluation period when the institution, be it the hospital or the ambulatory surgical center actually signs the agreement, which is not even necessarily, as you can imagine, the sheer end of the evaluation period because then there's back and forth with contracts and agreement. We're seeing the first the contract has actually been signed only as of now and most evaluation periods are of the machine that we know have been delivered to centers are still ongoing. So effectively, there is a lag, which was totally expected. But Medtronic Yes. So you first you get excuse me. Please. Yes. So, of course, you actually you ship the machines and book the sales there and then with a lag then you get Actually, then the subscription fees. And that would probably be on a patient by a patient where these are booked And then you get the royalties based on that? So it's not like a lump sum of $40,000 each year? No, no, no. Actually, this is not on a patient by patient basis. It's on a subscription by subscription basis. So this means that just to make myself more clear because I understand it might not be easy to understand. So first of all, there is a sale of the device to Medtronic. We sell the device to Medtronic. We make a small gain there, which is not actually the interesting part of the agreement, and then they formally become owners. Then they give the machine to each single center and an evaluation period starts. When the evaluation period which is the center will, and there's not a given timeline for that, will sign the agreement. Once they will the center will sign the agreement, they will book it as a sale and therefore they will inform us that an agreement has been signed. And from that moment on, they will start receiving on a monthly base the subscription fee, which is going to be around $3,500 per month, totaling 40,000 per year. And then each time that they receive what they're supposed to receive by their final client, they will give us back our share of the revenues. Okay, that's clear. Is basically as being paid a royalty on the sales. And as with royalty payments, you don't really mature that immediately. You have to wait for agreements to be signed and reporting and then reporting to be made. So there will be even maybe a substantial lag between all the sequence of events. But I think that the most important thing that one has to keep in mind is that each contract is worth 3 years. So the moment you sign it, you know that we will receive our share of revenues not just for that year, but also for the 2 subsequent years. Very interesting business model there. Just a question on how far ahead are you of the competition because This is, of course, a platform technology and competition will come in. But I haven't seen actually I've only seen experimental machines in the colonoscopy market at the moment. And you're right. We're definitely way ahead of the competition. But there's also one very important feature that you have to keep in mind, which is precisely the reason why Medtronic eventually opted for us. The difference between what we're doing and what everybody else will be doing in the future is the following. The competition will be the scope makers, but they have to sell scopes. We don't. This is a key element. You follow me on this. We're just deploying at a very small cost a device that it is compatible with all endoscopes. Therefore, we are providing the necessary update and upgrade to all stim simultaneously without any need for the hospital to invest in new very expensive scopes. And I think this is a very important difference. We don't have When we do when Medtronic does the sale of GI Genius, it doesn't have any second thought. Is not looking for anything else rather than providing this fantastic upgrade for each colonoscope, whereas the others need to consistently sell new scopes, which are way, way, way more expensive than our system actually. Yes, that's a bigger decision for the hospitals to make there. Then just on the colonoscopy market, of course, that was impacted by COVID-nineteen. We're now in July, almost August. Do you see improvements there? And when do you expect that to resume to, Yes, sort of pre pandemic levels. Medtronic is saying in 2023. You have seen the data on the decrease of procedures. Of course, now they're finally picking up again, But Medtronic is saying that back to normal will be in 2023. Okay. And then now on LumaBlue? Yes. Apologies if there is such a lag. On LumaBlue? Yes. On LumaBlue, what are your expectations for the EU launch? And how much effort will AltaSigma push behind the launch? And then, of course, when do you expect sales For LumaBlue and the to record LumaBlue sales in the EU? Well, Alpha Sigma is foreseen launch at the beginning of 2022. And actually, we're expecting them to provide us with the forecast that's needed for the production within October, September October, which is consistent with their with the launch that they are programming. In our expectation, and especially if I think back on what was the expected pricing in the U. S, you should expect LumiBlue to be placed in the market somewhere around 10% of the U. S. Price. So I think probably could be between €20,000,000 €25 This is what Alfa is thinking of. And you might recall that LumiBlue was projected to be sold in the United States between $2.50 $2.75 per pack, so roughly 1.10. This is more or less what we have in mind. And market wise, I'll just remember that the EU market is probably around $10,000,000 to $11,000,000 procedure per year, whereas the U. S. Market is €15,000,000 to €16,000,000 So slightly smaller market and definitely different price. But I just would like to remember the audience that the price of Cortimant, which is the European Nucyrus is 1 20th of the U. S. Price. So LumaBlue is better than Nucyrus. Is only 0.01 And then just a final before going back to the queue. What are the final bottlenecks for the 2nd U. S. Trial to start? What is the FDA still focusing on before you can start that trial? The main point of discussion with them is what kind of PrEP should be used for the preparation. You might recall that when we did our trial, the first trial, very successful trial, we had agreed with the best key opinion leader in the world that the ideal prep would have been the 4 liters before the day before the procedure. Now what the FDA would like us to do is to basically test it with any kind of PrEP and basically leaving the site the discretion on which PrEP to use. But this is not acceptable for us because it introduces a level of randomness that makes the proper deployment of a statistical plan practically and impossible. So I need to know what's going to be the schedule of administration because I have to measure my sample size on that. And as you can imagine, this is a clear requirement that because we don't want to do a trial, which would be a jumping the unknown. We need to do a trial on a solid statistical on a solid statistical plan. Besides, the difference in the regime of each column break is particularly impactful in respect of the quantity of liquid that you need to assume. Now we know that metal and blue warts take certain amount of liquids, but we also know that it might not work if you don't take liquids at all, put in the column to push the tablet forward to dilute to die and to help the staining. So if you tell me, look, there's a prep that provides for no liquid to be intake, then I would need to say, but then we cannot use MetalinBlue with that. There was a precise reason why we had opted for the 4 liter prep the day before, because according to our information, way more than 50% of the U. S. Market continues to use it. So this misplaced effort by the FDA to try to cover every possible rep is not on the just not manageable from the statistical standpoint. It also doesn't make much sense from the commercial standpoint because in the U. S. They continue to use the 4 liter. And actually, we would have been content with a label covering only at onset the 4 liter prep because there's a very, very sizable market there anyway. So until we define this with the FDA, we will not be able to have a viable development plan. But I'm confident that we're going to find an agreement here. I hope I've been clear enough, Bob, maybe this was very technical. I tried to make it as simple as possible. Very clear, very clear there. So thank you for asking the question answering the questions, Dan. I'll go back into the line. Thank you, Matt. The next question is from Paul Verbraeken from Research Partners. Please go ahead. Hi, good afternoon. Good afternoon. I have a question also regarding GI Genius. So did you deliver any units Into the EU in the first half, that's the first part. And then the second is, I mean, GI Genius is, of course, Artificial intelligence, but you also need a device for it. And what's your production For these devices now? And how fast can you ramp them up? Well, put it that way, just to answer the last one first. And we don't have a problem there. We've entered into an agreement with a 3rd party manufacturer, who's a very large Italian company that deals with aerospace equipment, and it's one of the main supplier of the Italian Ministry of Defense and NATO. Week for military equipments, we don't have an issue there. Actually, the only thing that was really worrying us was the shortage of the main components, and this is why I was mentioning the microchip shortage crisis, this was the only thing that was really worrisome for us, especially because we have one main supplier of motherboard who's Taiwanese that was experiencing some issues. Now thank God looks like these are all gone and we have just very recently been supplied with everything that we had asked. So we do not foresee any issue there. So we don't have a problem in terms of capacity and we are manufacturing the machines, the devices as orders flow in and they're flowing in consistently. In respect of the European market. Well, you have to keep in mind one thing which is very important. The market dynamic in Europe are completely different. Basically, all hospitals are public and the process to let's say the bureaucratic process to deal with public institution throughout the whole of Europe is very long. We are consistently delivering devices for Europe as well, but the scale of the European operation cannot really be compared with the U. S. One. And first of all, the device will be sold at different prices. Actually, in Europe, it will be cheaper. Sorry, I said sold, but I still mean subscription still means subscription fees. They will be basically cheaper, probably half of what is done in the U. S. More or less. But it's also that European hospitals where the promotion and marketing activities in the European hospital was basically put on hold before the pandemic and hasn't gone back to normal yet. So we see it lagging there, whereas we're seeing this picking up very quickly in the U. S. Okay. And then one on Elefue. You didn't mention Elefue at all. Did you generate any sales there? Or are they also Hindered by the drop in colonoscopies generally? They're significantly hindered by the drop of colonoscopy because we have here Multiple factors coming at once. When we terminated the agreement with Olympus. Olympus was left as a consequence of the termination with a significant portion of inventory. And so we have experienced from one side the dramatic drop in the procedure and on the other side, Olympus having significant inventory that would have continued to deploy through its ordinary channels. So we're expecting this hopefully to go back to interesting levels and we're discussing with Medtronic on ways to relaunch it and try to sell it together with GiGenius, meaning sort of not really a kit, but using also Elavu to support the GIGNU sales. So hopefully, and 2022, we will see Elaview producing significant revenues as well. Okay, clear. Thank you very much. As a reminder, webcast viewers may submit their questions via video conference by clicking on the video Q and A button or submit them in writing via the relative field. The next question is from Barbara Blaha from Credit Suisse. Please go ahead. Hi and thank you for taking my question. I have a follow-up question on this MetELINBLUE Phase 3 trial. So Do you already have clarity of how many subjects should be recruited and how long you think it will take you to do the whole study? Thank you, Varvora. And this is precisely why we haven't yet solved the issue because depending on the outcome, the final outcome of the discussion on the track that we need to use, that has a direct impact with in terms of patients' size and population. So if we would have been allowed, let's go back to the original trial, the FDA agreed with us that it was not necessary anymore to use a confounding arm. You might remember than in the METALINBLUE trial originally. We had one arm, 500 patients with the full METALINBLUE dose, 500 patients without Medleyn Blue and 250 patients using a half dose of Medleyn Blue just for confounding reasons. The FDA, thank God, they have agreed that it doesn't make any sense anymore to use a confounding arm actually didn't even makes sense at onset. But also this means that if we agree on one prep only, then around 1,000 patients is more than sufficient. But then depending on how many other kind of prep we need to use, then we have to adapt the sample size. And this is precisely why we haven't been able to start the trial yet because if we don't reach an agreement first, what kind of preps we need to use, it is not possible for us to craft a statistical plan and therefore to determine what is the necessary sample size. Okay. And how many colonoscopies are done with this 4 liter prep? Is this about This 50% or This is our understanding of the market, yes. By the way, I will tell you something, I'm just repeating something that has been said already, but people might have forgotten. The reason why we had the 4 liter in the first trial was because we were not able to find on the market, another agreed standard on how to administer split dose. So what we know is that methylene blue works with split dose as well. But of course, it depends on which kind of split dose. You cannot say split dose. You have to say which kind of split dose. Is it a split dose of 2 liters the day before, 2 liters in the morning? Is it 3 liters the day before, 1 liter in the morning? Is it 1 liter and a half and then 1 liter and a half, what is that? And is it and then what kind of liquid? Are you going to use PEG liquid? Are you going to use Gatorade? Are you going to use tea? All of this, as you can imagine, have a significant impact. So we cannot go into a trial blind without knowing how the patients will take their breath because we have a precise schedule of administration that we have to adapt to a different PrEP. So we need to know at onset what the PrEP will be. But the others, they don't have like these standard doses and time lines? Well, depends on not just on the brand, but we had actually submitted to the FDA survey that explained that actually in each single center, the nurses, they have instructions that they provide to patients in which they suggest and administration regimen of the PrEP, which in many times is even completely different from what the labeling of the PrEP says. So this is why we did when we said to the FDA, look, but you should stick with the 4 liters and let us do the trial with the 4 liters. And why would you worry? Make it a labeling issue rather than a review issue because first we will show again that it works perfectly with the 4 liter and then we can move to other preps. So this is kind of a discussion that we're having. You have to take into account that everything was also exceptionally delayed by the pandemic because of the fact that this is not something which has is seen as a priority by the FDA. So they continue to have a lot of their employees working from home. And because this is not priority, it just it takes ages to answer to your question. This is not affecting us. It's affecting everybody else that's not doing trial that's deemed urgent for any reason. Yes. Okay. And then you also once said that you plan to pay dividend again once you become profitable. This is still True. And when could we expect then the first dividend payment? Well, listen, I think that the task of management is in general terms to make shareholders happy. And I can hardly imagine anything that can make shareholders happier than a dividend or a buyback. And so I'm if things go as we hope that they will, 2021 will close as we have said. But in 2022, we should see the results of all the efforts and specifically coming from J. A. Genus and coming from in Levi. So let's hope that this plays out as we think it will. Okay. And then maybe last question. Could you also imagine to sell GI Genius completely to Medtronic? This is a very good question. The whole venture of GIGENius has been crafted from a corporate standpoint in such a way that if we want to detach it from the group, we can do it easily and tax free. I believe that if Medtronic or anybody else would be interested and they would be offering a very nice price, this is certainly not our core business. So we will consider that, of course. I think that everything should be foreseen at the right price. Okay, interesting. Thank you. Thank you. We have a follow-up question from Bob Pooler from Valuation Lab. Please go ahead. Thank you. Alex, just on selling on GI Genius, what are your plans with your investment Look, Bob, as I mentioned before, I think that this is a that the deal that Casiopeia did is actually a very good deal. So we can it is true, I don't want to deny that, it is true that we had in mind in our plans to divest from Casiopeia. And this was clearly in the context of a takeover or the context of a combination with other companies. And given the fact that there just were not there. The conditions for such a takeover or for such a combination, I think that Casiopeia for in the foreseeable future will be a very nice royalty company that should receive the proper satisfaction from the deal. Just bear in mind that Casiopeia will be receiving standard royalties. Now Casiopeia has not been allowed by Sun to disclose royalties. So the market will be able to see the royalties in the financials of Casiopea when Casiopea will start reporting sales. But what I want to point out is that if Winleve is not the innovation that we think it is and that the innovation that all dermatologists believe it is, and it is just going to be instead just a me too that's going to sell like another me too drug, then you can foresee fixed sales around €300,000,000 right? And if Casiopeia receives, let's say, a standard royalty of 20%, out of $300,000,000 net sales, CASSIPEA will then make a profit of $60,000,000 which I think is a very nice profit actually, isn't it? Definitely. I think it is. And if I have 46% of of Casuvia that I will be making 46% of the EUR60 1,000,000 profit. And this is a totally passive position. So I think it would be a very nice complement to whatever we do. Sure. And then they have Briesela also for alopecia that's also close to market. And the only you're 100% right. And this is the only very important thing on which the market should concentrate that CASSUPEA has not given up 1 inch of BRLISOLA. BRLISOLA is still there And therefore, Casiopeia is still a very good candidate for corporate transaction having retained 100% of those rights. The deal pertains to Win Levy only, and I might add, U. S. Only actually. So whether there will be a potential or not in the rest of the world, how CASSIPEA will explore. But I urge everyone, as I was saying before, to remember that we're talking about acne. So we're talking about an area that's not the fanciest in healthcare, right? Not the fanciest in terms of returns, in terms of pricing, in terms of peak sales, we're not talking about well, just to be on the news, we're not talking about a COVID-nineteen vaccine, right? We're just talking about a cream for acne. So everything has to be put in the right perspective. Agreed. Just then one final question on Emekoro. Again, you said that Redhill and Doctor. Falk, they will decide on the Phase 3 when that will start. Do you have any idea where they are? Have they finalized the trial design? And are there any measures that you could? This is currently a work in progress. It's not that we don't have a say in that. So it's not that we're in the hands of somebody else's. This is just I'm just mentioning this because this is a complex exercise that requires coordination between 3 different parties, a portion of the trial in Europe has to be done by of the fall, and then the portion of U. S. Trial will have to be done by but it's not something that it takes 3 minutes to arrange. But it could be they're making progress and it could be that next year we have a full team that's working on this. And this is also priority project for ours. So we would like to see this moving into Phase III as quick as possible, but we also would like to see Casaubia moving briselda into Phase 3 as quick as possible. Okay. Well, thank you for answering the questions and good luck in the second half. Thank you very much. Thanks, Bob. We now have a written question from the webcast. Manuel Bottinelli from AMG Funds for Paltung AG He's asking next to the positive financial result impact, could you please provide some information about potential production [SPEAKER CARLOS GOMES DA SILVA:] And license agreements with Casiopea from Lund Levy. What contribution do you expect from that? The kind of contribution will depend on the volumes. I think that COSMO as the ultimate manufacturer of Winleby has a very good agreement with Caso Biak. Clearly, this agreement was 100% vetted by Sun in the due diligence process. So Cosmo will be manufacturing with Levy with the full agreement of Sun. Actually, To be completely fair, we have already started the manufacturing of the product and we are currently in the process of manufacturing the samples. Sun wants to move very, very quickly and it might be good for the audience to know that Saksan Pharma has an impressive track record with launches of new drugs. So it will give us a very significant contribution to our 3rd party manufacturing activities, provided that Winleby will sell according to the plans. There are no more questions at this time. And then if there are no more questions, I just wish Everyone, a good afternoon and thanks for your time and hopefully talk with you soon after the holiday break. Thank you.