Earnings Call: H2 2019

Apr 3, 2020

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 and A session. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to the management team of Cosmo Pharmaceuticals. You will now be joining to the conference room. Good morning, everyone. I am Alessandro Delacan. I'm the CEO of the company. Thanks for joining our conference call, and thanks for taking 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. Therefore, 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. So 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 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 nonproduction related personnel to the extent that this is made possible is working remotely from home. Therefore, I think that we under this setup, we can continue to operate as usual. But of course, this pandemic is having worldwide effects and worldwide impact. So 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. And 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 and moreover that as a result of the action that we have taken in 2019 and on the assumption of the FDA approval of bifavo, remimazolam, we are announcing that we're going to be back to operating profit in 2020. So let me just tell you what Cosmo looks at a glance. Our market cap right now is a little less than CHF 1,000,000,000, but our net cash in euro at December 31 was EUR 268,000,000. In the financial year 2019, we made revenues for EUR 62,500,000. We have a 45% stake in Casiopea. And the IPO price, that's the one I'm looking to at the moment, was valued CHF 153,000,000. We have a CHF 19.6 million stake in RedHill bought at cost at $42,000,000 14.1 stake in Acacia at cost of €21,000,000 an 8.2 stake in Payone at cost of €10,000,000 We have a loan to Casiopeia of €12,000,000 and we have treasury shares at cost of €46,000,000 So 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 CASSIOPEIA, you have a sense of what the market is currently valuing the overall business, which is the business that most of you know. We have 3 marketed therapeutics on the market, the ALDA U series and Aimcolo. We have 2 marketed medtech products, Elavu and GI Genius. We have a very nice development pipeline and we have the stakes that I've just mentioned in other pharma companies. Now 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. And 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 METALINBLUE MMX, a second confirmatory trial in the U. S. To the FDA. Starting from the very last event that occurred, we have sublicensed by Fable to Acacia Pharma Group. We have received the $10,000,000 upfront payment. We made an investment of $10,000,000 resulting so far in a $14,100,000 stake in the company, which is assumed to increase because we are bound to receive an additional €20,000,000 in Acacia Pharma shares on the approval of Byfavo and for sales plus up to €105,000,000 on achievement of Byfavo commercial milestones. In October, we had licensed Aimcolo to RedHill Biopharma for a high 20% royalty plus regulatory and commercial cash milestones over $100,000,000 We had, in the meantime, invested $36,300,000 in the company, resulting in Cosmo taking a $19,500,000 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 Mobantik, a very significant drug in the GI space for the treatment of the opioid induced constipation. They've entered into €115,000,000 royalty financing agreement. They have launched TALICIA, and we expect that they will deliver their promises. Our AIMCOLO Phase II proof of concept study in IBS D is progressing 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 patient in European centers is extremely slow and will be probably also be further slowed down because of this pandemic. As said, we made significant progress with the FDA in relation to the METALINBLUE MMX Phase III trial to the point that we have announced it yesterday, the submission of the protocol. We expect the FDA to answer between 30 to 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 METALINBLUE 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 time line. 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. And 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 Elavu with Medtronic for USA, China and 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, CB0310, new oncologic product IND, which was accepted by the FDA. By Fable NDA was accepted by the FDA. We have completely eliminated our U. S. Cost base with the dissolution of Ares, which turned into a significant reduction of operating expenses. Health Canada has approved Elavu, which will be commercialized by pharmascience. Our associate, Casiopeia, has filed the Wilevie NDA with the FDA and the PDUFA date is set on 27 August. In the meantime, we have also announced very positive results of the BRISULA 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 and A. Also, 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 and 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 J. GENIUS, we have announced that we have received also the Australian regulatory approval. The U. S. Trial required for the FDA approval has commenced. Therefore, we had shipped devices to the sites. Some sites had started recruiting patients. But we have to say that right now, all clinical trial activities are on hold. This started with the U. S. Hospitals 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. And now the whole thing is on hold. We had scheduled to finish this trial at the end of first half of twenty twenty. Now we are not in a position say how much the delay will be. And I think understandably, so you will also have noticed that there is a shift of timing in countries reaching peak for the pandemic. The U. S. Is projecting the peak between end of April May. Nobody knows exactly. So 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 5 6 months to get an agreement signed by European Hospitals. And therefore, this is all coming also to a hold as a consequence of all hospitals right now concentrating to the concentrating, sorry, on the coronavirus pandemic and dedicating all the resources to this, which means that also the U. S. Sale sorry, the European sales should be expected to be delayed in producing sensible results. In terms of Aimcolo, we have progressed our IBS D D Phase 2 clinical programs. We have commenced 3 investigator initiated studies in uncomplicated diverticulitis, minimal hepatic encephalopathy and SIBO in the U. S. But as a consequence of travel restrictions and bans, we should expect that AIMCOLO sales will be adversely affected in 2020. We're not in a position to assess the potential impact, but we are assuming that an impact will come. The PDUFA date for ViSable from April 5 was moved to July 5 by the FDA. We don't see this as a problem at all. This comes from the fact that the original formulation of Bifavo 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 test, which were all performed. This was clearly translated in an additional significant set of information and the FDA simply told us that it would have needed more time to peruse all this new data, which is why the PDUFA date was delayed 3 months, which is the normal time for a a delay. As I said again, I'm going to stress this point, we don't see this as a problem at all. Elaview 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 a 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 EMEA will say in respect of our request for approval. CASSYOPEIA, which is 45.1 owned by Cosmo has announced the positive results of the Phase III acne open label safety study evaluating Winlady, 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 BRISOLA. We have filed the NDA with the FDA. We have started the Phase II proof concept in women. And therefore, CASSYOPEIA is proceeding along our expectation. One thing that has to be mentioned in respect of Cacioppaea, which may not be yet known to everybody. Cacioppaea is 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, company can operate with negative equity. In the U. S, company can operate 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 small capital increase, maximum of €20,000,000 that will be executed within June either through a rights offering to all shareholders or private placement to selected investors. And given the current state of the share price, I can venture to say that it will be a right offering to all shareholders, given that the price is now significantly below the IPO price and we are only 6 months away from the PDUFA. Cosmo has stated that it will not only subscribe its stake, but it will eventually subscribe all the un opted rights. So 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 with Levi originally in March, then moved the visit to May 2020 because of the outbreak of the pandemic in Italy. And 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. And 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. Thank you, Alex. So moving to Slide 22. We had revenue in 2019 of CHF 62,500,000 dollars compared to $65,600,000 in 2018. Our net expenses reduced by 9% to $74,800,000 of which £14,600,000 relates to our U. S. Organization. And this organization has been completely eliminated at the end of 2019, and therefore, these expenses will not reoccur into 2020. We had an operating loss of €12,300,000 versus €16,600,000 last year. Our net financial expenses were CHF 3,900,000 compared to a net financial income of CHF 4,600,000 in 2018. The main reason for the movement here was the imputed interest on the convertible bond of £8,200,000 of which the cash coupon is £4,400,000 and this is partially offset by net gains and investments in net FX gains. Our loss after tax for the period was €24,500,000 compared to a loss of €18,100,000 in 2018. And this, of course, includes our share of Casiopea loss of 5,100,000. Euros So moving to more detail on our revenue. Our Lealandmezzavancol revenue increased by £1,100,000 to £21,800,000 in 2019. Our Euceris income was £9,300,000 compared to £17,500,000 in 2018. So net sales by Bosch were $66,100,000 in 2019 compared to $96,700,000 in 2018. And this reflects the full year impact of the launch of the generic midway through 2018. Our Courtemid income was €3,900,000 compared to the same figure in 2018. Net sales by fairing were £16,000,000 compared to £15,100,000 in 2018. Our upfront fees and milestone includes £11,500,000 relating to the AIM colo retail deal. And our Eleview revenue was $2,200,000 compared to $6,800,000 in 2018. So we're now 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. So moving to slide number 25 in terms of our statement of financial position. In summary, we had cash, cash equivalents and investments in funds of CHF268,200,000 dollars at the end of 2019. This compared to $325,800,000 at the end of 20 18. We have other current and non current assets of $317,000,000 compared to $250,000,000 at the end of 2018. And we have liabilities of €191,400,000 compared to €180,800,000 at the end of 2018. The liabilities mainly consist of the liability components of the convertible bonds at €158,200,000 euros and the other liabilities are listed here on the slide. So we're in a healthy cash position. So moving to our cash flow then on Slide 27. We had a net outflow from our operating activities of €18,800,000 which includes a €9,000,000 working capital outflow. We had capital expenditure in the period of €2,200,000 euros investments of €15,000,000 in intangible assets and net outflows in relation to the investment in our disposal of financial assets of €21,700,000 We advanced a loan to Cassiopeia of €10,000,000 which will be will be converted to equity, as Alex mentioned earlier, on the capital raise. We had a cash outflows from investing activities therefore of CHF 48,700,000 in the period. Moving to cash flows from financing activities. We paid interest on our convertible bond of €4,400,000 We had repayments of interest bearing loans and borrowings of €1,800,000 and we purchased treasury shares to the value of €25,300,000 We also paid €3,000,000 as part of the acquisition of the remaining 40% stake in Lingfors at the start of 2019. So overall, we had a net decrease in cash and cash equivalents of €102,000,000 in the period. So on that note, I'll hand back to Alex, where he will discuss the outlook and key priorities for 2020. Thanks, Niall. And also the beginning of 2020 was quite rich in terms of events. On January 2010, we had announced the transaction with Acacia for the sublicense of the U. S. Rights. On January 21, we had announced the alignment reached with the FDA on the 2nd Phase 2 study for MBMMX, which has translated in the news of yesterday filing the final protocol with statistical analysis plan. On February 20, very importantly, we have announced the very successful outcome of the 1st 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 for colonoscopy, which is the new metric that the FDA is pushing through for this kind of studies is actually the endpoint, the primary endpoint of our study for GI Genius. Therefore, 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 J Genius by the Australian authorities. And 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 Bifavo, which we assume will occur. You have all seen that there's been a significant shift in strategy going forward in 2019. And 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 sales, but instead to enter into partnership with selected players in exchange of equity stake and or milestones, royalties or combination of both. We have allocated our medical devices, GI Genius and Elavu to Medtronic. We've entered into a GI partnership with RedHill for Aimcolo, and we have entered into strategic alliance for Remnazolam with Acacia Pharma. Now 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 and 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're 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 Casiopea for Ask Casiopea as 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 the residual, 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 CASSOPIA 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 we can smoothly that CASSOPIA can smoothly access the U. S. Market without having to step into too much risky operations. And clearly, upon this shift of strategy and hopefully upon a strategic transaction for Casiopeia, we will reassess our need for cash in medium term and we'll consider option for the eventual excess cash. Slide 33 is just a recap of our development pipeline. And Slide 34 points the upcoming milestones. We are 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 and therefore they are working on track. In Q3, starting with the 5th July, we're waiting for the U. S. Approval for procedural sedation. And 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 Encolo. These are our key priorities for 2020. But 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 say. If I then move to Slide 35, where we're giving our guidance, we're stating again that the virus pandemic has the potential to interrupt AimCOLO sales and significantly delay our clinical trial. But 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 bifavo because this is going to trigger the milestones that will be paid by Acacia. Therefore, we are giving ourselves the possibility of projecting revenues that has some ranges because we can't be precise as we would like to be. Therefore, we're projecting revenues between $58,000,000 We're projecting expenses between $48,000,000 $50,000,000 but it's important to notice that of these dollars 7,200,000 would be ESOP cost and $6,400,000 would be depreciation and amortization cost. Therefore, these would be items that don't produce financial disbursement. And we are assuming an operating profit between EUR 2,000,000 and EUR 8 $1,000,000 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 Metaline blue. And we have achieved the goals that we have set ourselves, namely finding partners for all our assets. And therefore, after the deal with Medtronic, with RedHill and Acacia, we were 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 we'll be there for them. And these are the reason why we're looking at the future with optimism. Thank you. We will now begin the question and answer session. The first question comes from Herlietta Rundberger from AWP. Please go ahead. Yes, good morning. I have three questions, please. So one would be, you mentioned the stockpiles and that you have 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 Cascio Pea, do I understand you correctly that you're intending to sell your stake at some point? And if so, what are your price ideas for this? And thirdly, if you have 2 sentences, how would you actually 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? Yes. Thank you. That's it. Thanks for your questions. Well, in terms of stockpile, several months and it is not exactly the same length depending on each product, but I would say several months. I think that you can take 6 months as an average. In respect of Casiopeia, we don't have a specific idea in terms of price. And I think it would be a very bad negotiation strategy to state right now at what price I would be willing to sell. Maybe this is something that we have to keep for ourselves. But yes, we're stating that this is for sale because we believe that entering into the market and taking care of the commercialization of the 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. We're not keen to do it by ourselves. So yes, the stake is for sale, is for sale of 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 Casiopea 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. Metylene Blue was the backbone was the intended backbone of our commercial infrastructure in the U. S. And all products were rotating around the idea that methylene blue would have been the glue that was given a full synergy between all the products. With Metaline 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 Metylene Blue. And 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 because with Casi Pei, could you say that because you mentioned that this going to the U. S. And having a strategy for the U. S, Is it a bit that after the methilane experience that you shy away from the U. S. Market? No, absolutely not. We continue to believe that this is the main market in which we have to play. And 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 Aimcolor to RedHill and become their largest shareholder rather than do the things ourselves. Actually, I don't believe very much in net present value, But if you want to run yourself some figures, you will quickly discover that the deal that we have done with Incolo is probably more profitable over time if things go well than if we would have kept Incolo all by ourselves and set up a commercial organization all by ourselves. And the same thing is for Acacia. You have to consider, for instance, that remimazolam requires a hospital based sales force, whereas Aimicolor requires a general practitioner and less GI dedicated sales force. These sales force are 2 completely different sales force. Therefore, to keep AIM COLO and REMI 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. Yes, good morning. Four questions, if I may. The first one is about methylene blue. I was sort of expecting decision in Europe in February. Now you mentioned June. This is also due to corona delay. That would be the first. The second would be on revenue guidance. You're saying around €52,000,000 to €56,000,000 in 2020, but that would some €20,000,000 for the Bifavo approval that you would receive from Arkesia. Can you confirm that? And in your expense guidance, does that also dilute the milestone that you would need to pay to pay on for the approval for BYFARVO? And then 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? And then my last one, if I may, is on GI Genius. You had around $1,000,000 of revenues in the second half reflect the sale of the devices to Medtronic? Or does it also include already some rent income? That's all. Thank you. Thank you very much. So the first question is if the revenue guidance contains the milestone from Acacia and the answer is yes. And this is why we have stated that this guidance is contingent on bifavo being approved. In respect of the Payone 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 continue to ramp up in JV are owed royalty as well. So the Rialda franchise, yes, it is expected to increase. And I may say also from certain standpoint this is a good sign because you see we have received I'm making an example, but there's a 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 provide directly Lialna 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 it surprising because we know that the generic is not necessarily identical to the originator. If the originator works and works well as Lealda does, patients want to continue with the originator even if that may cost them a little bit more. So this is believe why I think Lialda is increasing and we hope that it continue to do so. In respect of the $1,000,000 of GI Genius, you're totally correct. Those are the revenues stemming from the sale of the devices to The next question comes from Bob Pooler from Valuation Lab. 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 complement. Just on that, how do you see new shares developing? We saw Yale is probably going up again there. Do you see that decline going or sort of leveling off? Thanks, Bob. Good morning. No, we're seeing it leveling off. We don't expect the protracted decline. It looks like the market has been shared between the generic producers, and we're seeing that hopefully stabilizing. Fairing is at a year of a bit of a lull, especially because there has been significant shift we've seen probably due to parallel import. So people purchasing more in countries that have a lower price and then reimporting in countries with a higher price. But the franchise keeps growing steadily. Just a couple of ago, we've been announced that Euceris has been sorry, Cortiment, that's a brand name outside the U. S. That Cortiment has been approved in Indonesia as well, which is a very, very large country. So we believe that Ferring is doing an exceptionally good work that will continue to produce very good results over time. Okay. Fair. Just on methylene blue, the U. S. Second Phase 3 trial, could you provide a little bit color on the trial duration, the number of patients and cost under normal circumstances? Of course, we hope that, that will happen later in the year. Well, assuming, as you rightly said, normal circumstances, one of the things that we have agreed with the FDA and of course, we'll confirm full agreement once we have the protocol formally accepted. But 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. 1st 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 12.50 patients, 500 on Medline 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. The 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 $10,000,000 to $12,000,000 This is what we have in mind. And in terms of execution, I think between 6 9 months. Okay. 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, so 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? No, I'm sorry that I can't say much because Cosmo would like to say things when things have happened already. So when we're not keen 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, but we are working right now on a number of potential partnership that we hope will bear fruit. Yes, and 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. And 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. And there's exactly. So and 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. Yes. And probably you could also add like administrative things because when you do a colonoscopy, the operator has to do a lot of administration afterwards. But with the AAI, potentially those reports could be generated more or less automatically, which would take a huge burden away from these people. So that you're in the future, you would have these updates coming through the No, well, you are kind of reading our minds because this is exactly also another area in which we are producing significant R and D results. You're right. Things of writing the report, things 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 spotting that surprise, potential surprise in the future then. Thanks, Beren, for your questions and stay safe and healthy. Thank you. The next question comes from Barbara Blacher from Credit Suisse. Please go ahead. Hi. Congrats to the results and thank you for taking my questions. I have actually 3 questions. One is on Baipavo. Do you expect an ADCOM meeting before the approval or before the PDUFA date? And will you manufacture this? And if yes, do you expect an FDA preapproval inspection in line out there? And then a question on the FDA infection of the cardiotherapy. How much in advance must this pre infection be in order to not have an impact on the PDUFA date? Okay. Thanks. I've listed 2 questions, and I don't know whether I might have missed one. You asked the first one if for by Fable some sort of ad committee is expected within the FDA process. Is that correct? Yes. No, the answer? No, no, the answer is absolutely no. No, no. Nothing is expected. This is a it's a pure shift of the PDUFA date due to the significant amount of additional information that we have provided. So no committee of sort, no, no, nothing, nothing. Will you manufacture? Excuse me? Sorry, will you manufacture BISAVO? And do you expect any pre approval infection by FDA? Okay. No. ISAVOR 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 PATHION 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, Baifavo is in no need of additional inspections of sorts, okay? That's all done. In respect of Cacio Pea, we have seen in the past that inspections may take place also at the very last minute. So it's not an issue. The department that's in charge of the inspection in the FDA is different from the department that has the NDA in charge. And the only important thing is that the department that makes the inspection delivers the conclusion to the NDA FDA team timely. We have seen this happening. I can give you an example. We have seen this happening at the very last minute, for example, for AIMcolo, where the manufacturer of the API, which is for us a Korean company, was inspected just a few days before the approval of Aimcolo. And this turned out not to be an issue and the PDUFA date was respected. So the inspection can take place at the very last moments. And keep in mind that Cosmo SPA 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. So we don't foresee any problem there. We just hope that this is going to happen in a time frame 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, But it can take place also at the last minute. Okay. And for Vilebi, will you produce the API as well as the final product and packaging or which parts will you produce? No. The API of Win Levy is manufactured by a Spanish company and it is shipped to us. And what Cosmo does is that Cosmo manufactures the cream and does the packaging. Okay. And then maybe one last question to Michelin 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. Okay. Thank you. The next question comes from Christian Glenny from Stifel. Please go ahead. Hi, good morning. Thanks for taking my question. A couple on Encolo and then one on Lialda, if I may. First on Encolo, can you give a bit of a sense maybe for sales progress so far in the U. S. And Europe? Obviously, you assume it's been starting to be rolled out in Europe. You will receive royalties there. And your progress to date so far, obviously, with RedHill now in the U. S. And expectations for 2020, given the restrictions on travel and so forth? In respect to AIMCOLO, 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. But as I was mentioning, we're also seeing a hold. Now there were expecting gross $10,000,000 in 2020. But as I said, it is very difficult to say whether that is something that will be reached on MW's. So you have to consider also that not it's just not just the fact of traveler restrictions and travel bans. It's also the fact that this is something that they're experiencing for Talicia as well. You cannot do anymore right now the promotion and the marketing the way you used to do it. So 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. But then in mind, and same thing is for Germany and sorry, for Rella Falk, which is Aimcolo under the brand name of Falk. They have started the sales in Germany on the end of 2019 in December, and they should or should have enrolled other European countries in the course of 2020. So this is I think it's going to be a loud year in all respects. Okay. That's helpful. And sorry, just to be clear on EMCOLA, on the prescriptions that we might see in IQVIA, Are you aware that, that is reflective of the market? Sometimes you have to be a bit careful of IQVIA data, particularly in launch phases? Yes, of course. But you think it's what we're seeing in IQVIA will be reflective of what's the uptake in the market? I don't know whether that will be completely reflective. I don't know. Okay. Okay. That's fine. On AMCOLO, the other follow-up on AMCOLO, 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 obviously impacting the industry? I wish I could answer precisely there. We had in mind to have it completely by year end, and this is what we continue to have. But 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 sincere answer is, I think, with a follow-up recorded patient visits and endpoints? No, over there. And keep in mind that we have followed a very simple strategy because our clinical protocol is identical is identical of the one that had been used by Salix for the very same indication. The fact is that and this is the reason why it's taken a lot of time that European hospitals because our Phase 2 is fully European are not so keen in diagnosing IBS D as the American hospitals are. So they go through a lot of checks before assessing whether patient really has IBS D. And this is why it's taken a lot of time. And 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. And then if I may, just a follow-up clarifying Lialda. The outperformance there, you're saying that was really from strong performance in Japan because the obviously, the U. S. Sales look like that. I mean, they're stabilizing, but they're still in decline. So you don't expect a continuing decline there. But obviously, if 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's maybe masked 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. But presume is it all just Japan that's offset the U. S? No, no. Well, what we're seeing was a slow decline in the U. S, a ramp up in Japan and a nice increase in Europe. Now because of the new forecast, we're seeing that the U. S. Will begin to increase again. So and 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 Griesdorf from Demarcket. Please go ahead. Yes, hello. Thank you for taking my question. Shops, a question according to guidance. Sorry, I participated the call late. I'm not sure if you already answered this question. But you mentioned total expense is in the range of €48,000,000 to €50,000,000 and the revenue in the range of €52,000,000 to €56,000,000 So the needs 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. And 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? And so this is something that had an impact in the P and 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. So that means more or less SEK 20,000,000 for the U. S. Organization or? Exactly. Okay. Okay. Thank you very much. Thank you. The next is a follow-up question from Paul Verbraeken. Please go ahead. Yes, thanks. I had one more question about the European regulatory process for methylene blue. I mean, 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 in for the EMEA approval is different from the one from the FDA. When the EMEA asks you questions, there's something that they call the stop clock. So whatever time they've given them in order to give an answer, it 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. And therefore, this has produced series of stop clocks, and that's the reason why we are now scheduling the approval by the end of June because we have exhausted or the part in which we have to answer the queries. Okay. All fine. Thank you. There are no further questions at this time. Well, then I thank you all very, 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. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call,