Earnings Call: H2 2020

Mar 26, 2021

Ladies and gentlemen, welcome to the Kosmos Pharmaceuticals 2020 Results and 2021 Outlook Conference Call. I am Alice, 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 and A session. This conference must not be recorded for publication or broadcast. At this time, it's It's my pleasure to hand over to the management team of Cosmo Pharmaceuticals. Please go ahead. Good afternoon, everyone. This is Sandro Delacada, CEO of Cosmo and on the call with me also Niall Donnelly, The CFO, thanks for joining. 2020 has been a very Interesting year for Cosmo. Notwithstanding the pandemic, we have had major advancements on Basically, all fronts, we've seen a streak of approval. We've seen the return to operating profit, And we have seen the return to positive cash inflow from operating activities. So our Outlook now looks very different from 2019, and we're very happy that we've been able To reach these achievements through hard work and also throughout the pandemic, which has disrupted many business and has been impactful for everyone on many fronts. Just to give you an example for what pertains more strictly to COSMO, While our manufacturing activity has not been impacted at all and we have continued to supply seamlessly all our partners And clients, clearly, the introduction of very drastic travel restriction has been very impactful on the sales of Encolo as the sharp reduction everywhere and in the U. S, especially of all elective procedures, including colonoscopy, has been impactful on the sales of Colonoscopy related products and has been impactful for our specific case in sales of ELEVUE. If you look At the overall clinical trial activity that has been impacted throughout whole health care Sectors access to hospitals has been challenging. Most clinical trials have been basically put on hold unless those that were COVID-nineteen related and we've been no exception in this. And Furthermore, also the interaction with the public agencies and specifically the FDA in this case has been Dramatically slowed down by the pandemic with everyone working or not working smart From home, so we've experienced significant delays in feedbacks and regulatory advancement. So If you look at these results in this setup, I think they are remarkable and at least We're very happy with those. So revenues of €60,900,000 of which €32,800,000 coming from manufacturing of our own products and €10,800,000,000 the manufacturing of generic products and products on behalf of third parties, including related services, $8,500,000 of royalties and $7,500,000 in license fees upfront and milestones. Our operating profit has been €6,900,000 our loss after tax, €7,900,000 mainly impacted by what happens below the line of operating profit, namely the interest that we have to pay on the convertible bond and The share of the results of the associate, Casiopeia, this is what actually the 2 items summed up make the loss after taxes. The cash inflow, this is the positive news. Clearly, the cash inflow from the operating activities now is positive by €10,000,000 And later on, you will see in the presentation a very precise breakdown on how our cash has been Deployed throughout 2020, I think you'll have the chance to appreciate that basically all the cash that we have been deployed Has been deployed in investments and not in the financing of standard Operations. So you will see that the money has gone into the purchase of shares of Acacia in the context of the Acacia deal that we did in January 2020, In the financing of Acacia, because within the agreements, we had provided for €25,000,000 loan, the subscription of the capital increase of CASSIOPEIA, This really these three items together, as you will see in a couple of minutes, Summed up together makes all the or almost all the cash deployment of the company. So we have increased our Cash position in respect of the expectation because of being cash positive from operating activities. Now Cash at the end of 2020 is €212,000,000 €213,000,000 The equity stakes in other company now are worth €339,000,000 Treasury shares and loans, we have a €25,000,000 loan to Acacia, as I've said, It's $72,500,000 and we have an equity position of $400,000,000 Again, in this context, what I think is highly remarkable Is that if you put together and sum up cash, bonds and fund investments, equity stakes in other company and treasury shares and loan, You have reached a figure that if I'm not wrong is around CHF 624,000,000 which is roughly CHF 680,000,000 Swiss francs out of a market cap of €1,200,000,000 which means that the business of the company is currently valued by the market Around €600,000,000 So I let everyone decide whether this is A good valuation for the business or not. What I think is important in understanding Cosmo, whose complexity is growing that our is that our aim and our scope has always been to diversify as much as possible and decrease the overall level of risk about our activities. So I think it is in this context that you have to understand that we have stakes in multiple companies. We have stakes in We have stakes in RedHill, we have stakes in Acacia, we have stakes in Taion and simultaneously we've entered into Commercial partnership deals with many different partners from one another. So the medical device Are entrusted with Medtronic. The antibiotic is entrusted with RedHill. And Doctor. Falk, the Sedation agent by FAVO is entrusted with Acacia. LumaGlu, which has been approved by The EMA in decentralized procedure is now in the hands of Alpha Sigma in Europe, Russia and Mexico. It's in the hand of China Medical Holding systems in China is in the hand of PendoPharm in Canada, and we have an approval hopefully scheduled in Canada of LumiBlue around the end of May. The company has 2 marketed medtech products as one approved which is Elavu and GI Genius for Europe, One approved therapeutic, which is MedlineBlue MMX. In Europe, 3 marketed therapeutics already, Lialda, Euceris And Enkolo, a very interesting rich development pipeline that is being replenished, and I'll tell you a little bit more about this. And again, market capital CHF 1,300,000,000, CHF 1,200,000,000 and net cash of CHF 212,000,000. This is a very brief description on Ion's share sorry, Slide 7 now Of the breakup of our stakes in other companies and as a result of spin offs, together we have the financial investment, As I said, this sums up to €624,000,000 I think this is a very Remarkable portion of our current market cap and we should look at the business of Cosmo having an understanding of how much Business and how much is now financial assets and financial investments in other company. So I think if I'm not mistaken, Niall, that the part in key events will be covered by you, right? So I'm passing you the word. Thank you. Thank you, Alex. So the key events during the year were the sub licensing held by Sabre to Acacia Pharma in an equity for product deal. We took in €30,000,000 in shares in Acacia shares over the course of the year in various milestones. And we Release the intangible on our balance sheet into the P and L. So we had a net gain on that of €4,000,000 We had very positive results from The first investigator initiated trial of GI Genius and this demonstrated a significant increase in adenoma detection rate and also At a number per colonoscopy in the GR Genius group compared to the control group. GR Genius is already approved in Europe, and we had further approvals In 2020 in Australia, Israel and the United Arab Emirates. Of course, Baisebo received FDA approval during the year and that triggered a milestone and inflow from Acacia and the former shares. The protocol and related statistical analysis plan for methionine blue has been filed with the FDA for final comment, and we're hopeful that that trial will commence In 2021. Our associate, Casiopea, received FDA approval for Winleve for the treatment of acne. Methylene Blue, as Alex mentioned, was approved in Europe for the visualization of colorectal lesions during colonoscopy. And the Japan's Pharmaceuticals and Medical Device Agency approved Elavu. We expanded our license agreement with Doctor. Pfalz to include the new 600 milligram formulation in IBS D. We Licensed our China rights for methylene blue to China Medical Holdings. And we had announced a successful outcome of a Phase 2 Proof of concept for mcolo in IBS D. In February of this year, we licensed the EU rights For methylene blue to alpha Sigma. In relation to the Acacia Pharma deal, We've touched on that already. We now hold 19.66 percent or 19,600,000 shares in Acacia. We're entitled to a further $105,000,000 based on the achievement of Bifavor commercial milestones. And as Alex mentioned, we have a loan to Acacia with a 5 year And then 11% interest rate. Methane in blue, I'm on slide number 15. We have Coverage covered those points. And in terms of AIMcolo, we've already discussed the successful outcome of the Phase 2 proof GI Genus, our U. S. Trial is ongoing. And sales in the U. S. Are expected to begin immediately after, hopefully the product is approved in the U. S. So we're hopeful that that product will receive approval for that product So in terms of the financial review, Our revenues for 2020 were €60,900,000 and this compares to €62,500,000 last year. Our expenses came down by €20,800,000 to €54,000,000 And this was mainly as a result of the closure of a U. S. Organization during 2019. So we're seeing the full year impact of those savings flow through into the 2020 P and L, And these were approximately €16,000,000 The net reduction expenses also includes the €4,000,000 gain on the sublicensing of Baisebo. And we should point out that these expenses include non cash e sub cost of €9,000,000 and depreciation and amortization of 6,000,000 We're back to operating profit with a profit of €6,900,000 and this compares to a loss of €12,300,000 in the prior year. We generated a cash inflow from operating activities of €10,100,000 as Alex mentioned. This compared to an outflow of €17,600,000 in the prior year. So really the core business is in good shape now. Our net financial expenses were €8,900,000 and this compared to net expense of €3,900,000 in the prior year. This includes an imputed convertible bond interest of €8,400,000 and the actual cash that we paid out on the bond to bondholders was 4.4 Our loss after tax, therefore, was €7,900,000 and this compares to a loss after tax of €24,500,000 for the prior year. And this includes a share of Casiopea's loss of $4,900,000 In terms of more detail on our revenue on Slide number 21, Our Lialda sales increased by $5,900,000 to $27,600,000 mainly as a result of orders from Shire in the USA. Our UCERIS income was €4,900,000 This compared to €9,300,000 in 20 19. Net sales of UCERIS Reduced to €34,100,000 from €66,100,000 So we're seeing the impact of the generic on NUCERIS. Quarterly income was €6,700,000 and this was up from €3,900,000 in 20.19 and net sales referring were €18,100,000 compared to €15,000,000 in 2019. We had upfront fees in milestones of €7,400,000 and these mainly relate to the out licensing of the China rights for LumiBlue to CMS and also to the amendment of our eryfomycin license agreement with Doctor. Fogg. In terms of our balance sheet on Slide number 23, our total equity is €400,000,000 We had cash and investments in funds of €212,900,000 at the end of the year. And the non current and other current assets include our shareholdings in Acacia, Pay on RedHill, which totaled €114,500,000 Our investment in Cassiopea was traded at 136,100,000 The market value of that stake at the end of December was €225,000,000 We had intangible assets of 26,600,000 Property, plant and equipment of €29,300,000 and trade and other trade receivables of €57,900,000 This includes the €25,000,000 loan to Acacia. On the liability side of our balance sheet, the main liability there is the liability component of the convertible bond, Which is at $162,200,000 Moving to Slide 25, some more detail on our cash flow. So we had a total net cash outflow of €55,400,000 over the course of 2020. What you see from the detail that we generated a positive cash inflow from our operation. In relation to Acacia, We made a €20,000,000 equity investment and advanced a €25,000,000 loan. So €45,000,000 out of the €55,000,000 outflow related to The funding of Acacia. We purchased treasury shares to the tune of €5,700,000 We paid convertible bondages of 4,400,000 We incurred capital expenditure of €4,100,000 and we participated in the CASSIOPEIA capital increase and advanced a further €4,000,000 for that. We had capitalized development expenditure of €4,000,000 and we made lease repayments of €1,800,000 We received a tax refund of €2,900,000 And we had other inflows of 749,000. So Alex, I'll hand back to you for the key priorities and outlook for 2021. Thanks, Niall. So let's see what's going to happen in this 9 months of 2021 Ahead of us. Main overall priority is for us to complete the trial of J. A. Genes and start sales. We are hopeful call. This is going to happen within the first half of this year, so that the second half will be already dedicated to sales. And clearly, our second priority Is to have Casiopeia enter into a strategic deal to launch with Levi. Here, I have to open a bracket And explain the following. The environment in the U. S. And especially the environment in the derm market It continues to be extraordinarily challenging. There are large companies such as the business, the derm business division of Bausch, who has all of the sales force, this has gone through the whole Sector with several companies active in Durham cutting their commercial infrastructure and commercial organization in Durham, Access to cabinets and visits with patients is still very challenging. So in this tough environment, Casiopeira, who is the owner of the product, has the luxury of not having to rush into a launch, But select the best deal because no matter who the final partner for the product will be, there's frankly no need To rush into anything because the environment is highly challenging. This is a view that is largely Shared that every month operates into the market. So Casiopeia is currently having multiple discussions with multiple potential partners, and I trust that they will be able to come up with the best possible deal. In respect of Cosmo, we will be happy whatever deal occurs, especially a deal that produces immediate results. And the reason why A deal that produces immediate results will be nice for Cosmo is because Cosmo has to book its share of results of the associates. And therefore, If CASSIPEA makes a very nice profit because it enters into a transaction that generates a profit, then Cosmo would have to book 47 Percent of this profit within its own P and L. So this is something that we're looking at with great level of attention because we certainly take the largest part of whatever result is generated by Casio Piava. We are hopeful because we have information on how those negotiations are proceeding, and I think they're proceeding well. So I'm optimistic. The important thing in this context is to have optionalities, and I think that CASSUPEA as all the optionalities that are needed at this point in time. Maybe I should add something more upon request of investors, but this Certainly something that's going to be covered by your questions afterwards. In respect to the sales of GI Genius in the United States, as I said, I hope that they will begin In the second half, but it's very, very difficult for us now to make any specific forecast Because we don't know how much access will be provided To the Medtronic reps and how easy it's going to be for them to enter into hospitals, make the promotion The way you need to do it. As you can understand, one thing is to have Teams or Zoom meeting with someone you're very well acquainted to and you just have to give Updates and check how things are going versus meeting someone for the first time for making a sale of a very sophisticated Equipment that needs to be tested live and seen in real procedures. So if there's limited access there, This will necessarily be impactful on sales. So when we will come to the guidance, we have been extraordinarily cautious Simply because we do not know how that is going to play out. I hope as everybody that things will clear up in the course of the year and that we will be able to have a lot of visibility. But when we have given the guidance that you have seen already in our presentation, we have been Very, very conservative. I hope the guidance is not going to disappoint anyone because the guidance is showing that we will continue being With an operating profit, and it will continue to be cash positive. But fact is that we don't know, and I think that Anyone, unless someone has got a crystal ball, can exactly say how 2021 will play out. We all thought that because of the pandemic, 2020 would have been a transitional year and now it looks like 2021 will be a transitional year as well because The impact of the pandemic is certainly more protracted than originally expected. The 3rd priority Is to commence the methylene blue confirmatory Phase III trial required for the U. S. Approval. Again, here, This largely does not depend on us because the interaction with the FDA has been extraordinarily Slow down by the pandemic to the point that at certain moments, we had to wait for months before For getting an answer. So I'm hopeful that we're going to get the green light soon, but I have to tell Our audience, even if the approval and the okay from the FDA would come tomorrow, It is very unlikely that we will be able to start any clinical trial, not just the methylene blue trial because there's very limited access To hospital. As an anecdote, I can tell you that as an example, not even the Medtronic People and technical people were allowed to access the hospitals and the sites where the clinical trial was ongoing. So they basically had to drop the box containing the device To the reception of the hospitals and then everything else, including installation, had to be done with phone calls. And therefore, something that would have taken 3 minutes to do it in presence and all of a sudden become very cumbersome exercise because the box went here and there And had to be retrieved through phone calls and all this turned into the thing being enormously more complicated. 4th point as a priority is finalize what's needed with the FDA and our partners to start the Phase III clinical studies for IBS D. As you will recall, And if you don't recall, I'll say that again. Because of the license agreement that we entered into with both Doctor. Falk in the new amended version And RedHill, when we did the transaction and the deal with them back at the end of 2019, we have completely shifted The financial responsibility and the regulatory responsibility of conducting this Phase III trial to our partners, Now the cost of this will be allocated 75% to RedHill and 25% to Doctor. Falk. So the nice thing is that Cosmo Just have to coordinate the activities of the partner, but further development in IBS D will come at no cost for us. 5th point is progress our product pipeline. And I have as I have already said to The investors I've spoken to, we are in the progress of replenishing very materially Our pipeline and we intend to announce a new pipeline in due course, which we would expect would occur After the summer break, we are now in the process of doing a lot of preliminary testing and crafting The intellectual property protection that's needed to be in place before we can announce to the market what we're doing, I think that you will see a Significant boost in the pipeline. We have identified a lot of areas with great unmet needs in GI. We intend to work Overall, with ATI, which are already approved for other indication in order to Shortened significantly the development pathway and have a faster track in terms of Safety in terms of safety data, we will announce it, as I said, in due course, but our expectation is around September. And what we're thinking of is about organizing an R and D day in Zurich where we would presenting all this. Now how much All this milestone, as I said before, will be potentially influenced by the pandemic, I can't say. This is just reflected in the following slide on Page On Slide 20, where we have been issuing, as I said, a Very conservative outlook. Again, I hope no one is disappointed. I would like our audience to understand that when you look at our expenses, Significant portion of those €57,000,000 to €59,000,000 is actually non monetary items such as Cost of the EASA for the cost for depreciation and amortization, which totaled together close to €13,000,000 So it's a significant items, but they're non monetary ones. And again, This is a point I want to stress. Guidance for operating profit doesn't take into the account the outcome of a potential Casiopeia transaction because this will occur Clearly below the line of operating profit specifically, let me just make an example. Just imagine that Casiopeia is going to do a licensing deal and gets I'm shooting from the hips just for the sake of the example, It's going to receive €50,000,000 down payment, which would be hefty or then 46%, 47% of this would be impactful and positively impactful on our account As a result of the share of results of the associate. So we will see how that will play out. But again, consider that Many of our different pieces are likely to continue to be influenced By the pandemic throughout 2021, so we need to make to provide a guidance in light of what we really think is going to happen. And again, In this specific range of revenues, the impact of GIGENius is Very, very limited because we cannot yet predict nor can Medtronic to this extent Predict what exactly is going to happen in 2021. So I think that this is all for now. So thank you very much and happy to Answer to any question you may have. We will now begin the question and answer session. The first question comes from the line of Bob Pooler with Valuation Lab. Please go ahead. Good afternoon, Alex and Niall. Thanks for the excellent presentation. Just a few questions. First, starting with Mettler and Blue. Just on the brand name, you have MethyleneBLUE MMX and LumaBlue. Are these regional brand names? And where Do you use LumiBlue? Where do you use MethylenBlue? Well, Bob, thanks. Actually, LumiLou has always been the name that we wanted. Clearly, because of the setback with the FDA, a name has not been decided yet, but That has been chosen by us a long, long time ago. This was immediately approved by the EMA and therefore we're using LumiBlue We're using Luma Luma Blue because Luma Blue is the registered trademark. So when we refer to Metylene Blue MMX, That's just the product name, but it's not the branding. When we refer to LumaBlue, that's the brand. And we hope that also in the United States, We'll be able to call it LumaBlue. Clearly, there are some advantages in having a global brand name. Okay. Thank you. That's clear. Just on again on Lumenbleu, when do you expect the EM launch to occur By your partner? Within months from now. But for the very same reason, We haven't planned together with Alpha Sigma. We haven't planned a launch date yet. So we're in the process of refining the Forecast, we are waiting for them for indications so that we can organize the Supply, we're really at the first stage because the first thing that you have to Achieve in order to allow them to make planning is the transfer of the marketing authorization, which has not occurred yet. Has not occurred yet because we're in the process now of obtaining a grandfathering for the U. K. Indication because U. K. Now is out of the EU and therefore we need to grandfather In the U. K. Before we can transfer the marketing authorization of you. Otherwise, if we would be transferring the marketing authorization straight away To Alpha Sigma, they would lose the chances of grandfathering in the U. K. And because the U. K. Is going to be a large market, we want to make sure that first We get the grandfathering and then we transfer the marketing authorization. So this is why the process is taking a little longer. But again, Even if that could be transferred tomorrow, issues in respect of promotion and access to doctors will be more or less the same. So This is not going to be ultimately impactful. Okay. And then just on the U. S. Phase III trial, when you start there, Are you already tackling maybe additional precautions due to COVID-nineteen? And will that have an impact potentially on the trial duration and cost? No, no, no, no, no. That's not the issue. The issue is simply that If we listen to the data that is coming and the information that's coming from Medtronic, the drop In the number of colonoscopies in the U. S. Is massive, massive. This is true for all elective procedures, but it's particularly impactful in terms of colonoscopies because This is what we know better. And therefore, even if we would be getting the green light from the FDA tomorrow because of the condition of the market and because of the restriction of access to hospital is very unlikely that the trial will begin. But once that will begin again and therefore activities for screening and surveillance will resume to normal levels or close to normal levels, No specific precaution will be required. Okay, great. Do you see somewhere Medtronic, do you see somewhere maybe Sort of pent up demand for colonoscopy because a lot have been delayed now, but maybe in 2022 that you might have a spike of colonoscopy No. No. No. No. No. No. Oddly enough, they're not expecting that. And actually, I had the same question this morning. And apparently, no one is What they expect instead is that they will the number of colonoscopies will go back to normal in 2020 3, but you're not going to see a gigantic spike in 2022 because of the backlog. What they're projecting is simply that people that had Scheduled for their screening or surveillance colonoscopies simply would skip it. And this means that you would unfortunately have Like in many other diseases like oncologic diseases or cardiovascular diseases within 3, 4 or 5 years, you will see The severe impact of not having done the screening and surveillance activities in the patient's population throughout all diseases for a couple of years. I don't think that people have yet realized the self inflicted damage, if I may say, that has occurred because of certain Choices that have been made throughout all countries, but there will be an Evitol down the road. Anyway, no one is expecting a specific Spike in 2022, but rather an increase in respect of 2020 and A little increase in 2021, another increase in 2022 and back to normal in 2023. Okay. Very clear. Just two more questions on your products. On Ooyala, the growth, which is generic now or facing Where is this growth coming from? It's still that people prefer Liala over the generic version? Precisely. Okay. Precisely, which is something that, by the way, we would expect should occur for Uciras as well. Yes, that was my follow on question, especially also for Youssef. You had a sharp decline, of course, but do you see this now bottoming out maybe this year? This is the information that we have that we should have plateaued now and that therefore we should expect a rebound. We will see whether this is going to happen Or not, but that's the expectation. Okay. Thank you, Francine, for any questions. Good luck with all the moving parts. Thank you, Bob. Thank you. Thank you so much. Thank you. We have a question coming from the line of Philippa Gardner with Jefferies. Please go ahead. Hi, there. Alessandra, I wonder if you could maybe sort of outline for us, I guess, I mean, you sort of touched on this talking about the pipeline. But I guess, sort of your longer term vision for Cosmo, you've obviously got the manufacturing, you've Investments in companies and in addition to replenish the pipeline. So I guess, when you look at POSMA in sort of 3 to 5 years' time, what do you How do you see the company sort of shaping up? Thanks, Philippa, for the question. Well, First of all, I would need to say that I'm expecting a lot from GI Genius and I'm Kind of surprised that the market hasn't seen it yet coming because if it has seen it, This is not reflected at all into the share price. And sometimes I suspect that if Cosmo Artificial Intelligence Ltd, which is the company that's fully dedicated to AI would be listed separately and autonomously because of the validation coming from the deal of Medtronic and because of the Very close FDA approval, I suspect that it might have a value, which would be probably higher than the value that The market is currently given to our business. So what's going to happen in 1st of all, in the next 3 years is that we will position ourselves As a highly significant player in this field of AI and I don't think that people as also yet understood That we have really developed as not so much an artificial intelligence device in a standalone basis, but it was more of a platform. So there are a lot of indications that we're already working on that can expand significantly the use Of our device into other areas, not to mention the fact that within the business model of Medtronic, normally They buy out the product once the product produces certain sales. They don't like the impact Of royalties or other outflows that they have to pay to their partners. And in our specific case, Because we've entered into revenue share agreement whose terms are not allowed to disclose, the outflows from Medtronic to us would be Pretty significant. So my first piece of answer to your question would be you're going to see AI taking a very Important role and be hopefully a significant source of revenues. In terms of the most traditional pharma activities, As you will see when we will present in due course the new pipeline, our intention is to concentrate on very early stage Projects, so namely preclinical and Phase 1 of known APIs that we will reshape and use for previously not tested indication. And we have quite an array of opportunities there. And the nice thing, which is going to be an integral part of our This model is that we intend to start from the earlier phase because that is precisely the phase where you can create More value with the lower investment. It's true that you create a lot of value when you do, for example, a Phase 3, But it's also true that a Phase 3 is the most expensive of all clinical phases. What we will be doing instead is that we intend to play on multiple tables by running simultaneously several preclinical and Phase 1 activities on different compounds for different indications all within the GI space because that's where we have the know how. And the good thing of this Is that each of this program will have a very low deployment in terms of CapEx because that initial phase is the least expensive and the intention would be to gather Early efficacy signals and early activity signals soon as possible, so that by the end of the Phase 1, which would be relatively rapid, We can then partner up with other companies and other players for the subsequent phases. So this is how I see the next 3 to 5 years, and I hope that this answers your question. That's very helpful. Thank you. Gentlemen, there are no more questions at this time. If there are no more questions, then I Sorry to interrupt. We have a follow-up question from Mr. Pooler from Valuation Lab. Please go ahead. Sorry, Alex, for dialing so late. Just on the strategic deal for the launch of Winnebby. Do you have any preference Susan, how and how far you may be involved with that? Yes, of course, it means a lot of value for Cosmo as well. How is that process working? Well, thank you for the question. As you know, we're not really part of that process because Casiopea Is run independently by independent directors. What I think I should say in this respect that I'm relatively agnostic in respect of the kind of the deal that will be Eventually chosen. So I don't have a specific preference. The only thing that I think CASSIOPEIA should not do Is try to pursue the setup of a commercial infrastructure by itself because that would not be Economically and financially convenient would expose the company to a very high risk when there are a lot of other people sorry, Entities there or companies that you can do combination with that already have the infrastructure. So this is the only thing that I am Frankly, against to the creation of a stand alone organization with a single product that I would not be Supportive of unless, of course, clearly, unless this would come in conjunction with some other partner. But when I say standalone, I mean, CASSIOPEIA just by itself, then I would not be Supportive of that. And when it comes to licensing agreement, I think that even if the even licensing agreement would be okay if this is done in the right If this is under the right conditions, because that could be very convenient. Again, what I think that the market should understand Is that no matter what the performance of Winleve will be, If there has to be a wild card, the wild card is Briesela is not Winleve because Winleve has a very high potential, But in the U. S. Only, because that's where you can do most of the money if you have an acne product, Because that's the place where acne products are reimbursed. Whereas an alopecia product, yes, that's not a disease, that's a Cosmetic product, it will be a cosmetic product that needs to be prescribed because you will need to have the prescription, But that is a global product. It's a product that you would sell in China, you would sell in India, you would sell in South America. So if that is successful in the end, well, that is Casciopeia's wildcard Way more than when Levi. So if CASSIOPEIA should enter into licensing agreement that doesn't entail any consequence For Brasilat, then CASSIOPEIA would be comfortably sitting on a high revenue producing Licensed with Bylevi, which would mean no further capital need for Casiopeia at all that could concentrate on the advancement of the other product And namely, BRISOLA having unfettered rights to that product and then therefore the capacity Of selling the company with BRIZULA IN and the other product at any time. So this is why I'm basically agnostic. Even a licensing deal Would work at least for Cosmo because it would put the company in a perfect track, would make it completely independent in terms of Financial needs would make it highly profitable over the years and with all the money that's need to advance To breeze with the program as quick as possible. Okay. Yes, that's very clear. It seems you're in that respect are we aligned which caused it after yesterday's call. So I think that's going very well. So fingers crossed for a good deal for them there. Thank you. Thank you. With you so much with of course, it's also a breakthrough product for acne. So That should feed some interest from companies, I think, there as well. No. Well, in respect of Winlevia, I think we are Registering a lot of enthusiasm from potential stores. So this is good. And again, what people need to understand is that What you have in acne is always a poly products approach. So there's not going to be in any given case Just one product that will be prescribed for acne. And because this is brand new, it has a brand new mechanism of action. It will be very highly sought for. And on this specific point, well, basically all stewarterers Agree. And this is the reason why they want it. They know it will be prescribed because it is very new and it works and it works on the actually On the factors that generate acne, so it makes perfect sense to use it together with other products. And just a question, when would you consider then reducing your stake in Casiopea? What would trigger that? Well, if there's a transaction in terms of combination, well, probably our stake would be automatically reduced By a fact of the combination because we would be diluted. So I think we'll have to see What comes next, I'd be also if any Casiopeia decides to enter into a license agreement, I'd be very curious to see How the market will react. What I know for sure is that CACIOPIA has run very efficiently. So my expectation is that even if they would enter Into a licensing deal, this licensing deal in terms of net present value would probably absorb a very, very significant portion of The overall value of Casiopea. So as long as this is what's going to happen as a shareholder, I'll be happy. And if Casiopea becomes highly profitable, Well, I don't know whether I will want to immediately divest. Let's see, right? Because If I have a 46% stake in a highly profitable company and I have the luxury of booking As a profit, the profit that this company makes, well, this is going to be advantageous for us as well. Yes. I agree. Okay. Thank you. Thank you. There are no more questions. Okay. Thanks, everyone, for your time, and we're happy For any of you to reach out to us if at any moment you want to have further clarifications or information. Thanks again. Have a good afternoon. Ladies and gentlemen, the conference is now over. 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