Calliditas Therapeutics AB (CALT) 2020 Q2 法說會逐字稿

Ladies and gentlemen, welcome to Calliditas Therapeutics Q2 2020.

(Operator Instructions)

Today, I am pleased to present CEO, Renee Aguiar-Lucander; CFO, Fredrik Johansson; and CSO, Johan Haggblad.

Please go ahead with your meeting.

Thank you very much, and welcome to this Q2 call.

I'm going to start on Page 3 and just take you through the summary of key events for this quarter, Q2.

So in June, we completed an IPO on NASDAQ Global Select Market in the U.S. The gross proceeds of the offering was $90 million.

And we actually were the first ever kind of Swedish life science company to actually raise capital in an IPO on the NASDAQ Select, which we think is pretty exciting.

And the process itself was there was a brief kind of like a 4-day roadshow, which now all of you who have seen what's happened in the kind of capital market due to COVID-19 has become quite the standard.

The offer was multiple times that were subscribed, and we're very excited to welcome a lot of high-quality U.S. investors into the company.

The deal was upsized from initial size of $75 million to $90 million due to demand, and 90% of the offering was placed with U.S. investors.

And this, as we've communicated before, is obviously part of our long-term focus on the U.S. and our plans to commercialize NefIgArd, subject to positive data in the U.S. on our own.

And this is obviously then part of the strategic plan to build a sustainable presence on the basis of NefIgArd and an expanded pipeline.

In April, we also appointed Dr. Richard Philipson as Chief Medical Officer.

He most recently came from Trizell and has over 16 years at GSK.

He was also head and acting CMO of GSK's rare disease unit for over 4 years.

We're very excited about welcoming him to the team and to be able to benefit from his extensive experience in the orphan area.

Also in June at the AGM, we made some changes to the Board, and Molly Henderson joined the Board of Directors.

If you turn the page.

In these times, obviously, no update would be complete without mentioning COVID-19.

And as we are all aware, we had a brief mention of COVID-19 in our last quarterly report.

Unfortunately, things have not really gone in the right direction since then.

At that time, we quoted that there were about 4 million cases globally.

Today, this is in excess of 20 million cases.

And the death toll, again, has obviously grown significantly since then.

In the U.S., in particular, unfortunately, there is today over 5 million cases and a significant death toll.

It is still kind of battling the health care community, to a large extent, this virus.

But obviously, as we are all aware, there's been enormous amount of focus, both across the entire health care arena as well as government institutions, academic institutions, et cetera, companies to try to move forward and battle this virus.

We turn the page and look at then the actual impact in Q2 of COVID-19.

I'm happy to report that we still have very, very limited impact on COVID-19 on our clinical trials in our business.

Our Phase III study continues to be on plan.

To remind you, it's a global trial with over 146 clinical sites in 19 countries.

And the Part A was fully recruited in December last year.

And as it is an oral medication with somewhat limited interaction with the health care system, we have due to our successful implementation of the strategy that we work together with both our CRO and our national coordinators to implement, seeing limited impact to date on this trial.

In terms of Part B, as we reported also already in Q2 -- I mean in Q1, we could see initial impact, and that's clearly been the case, but we can also see that everything is kind of going in the right direction, particularly in Europe and Asia in terms of the development.

This means sites opening up, access to sites being more freely, admitted patients being able to come to hospitals, et cetera.

So we are seeing significant improvements there.

And so completion of the treatment of Part B, we still believe is possible before the end of the year with the contribution from China, as we've always discussed.

However, obviously, the ongoing situation in the U.S. related to COVID-19 is still a concern, and it remains uncertain, obviously, for that reason.

If we turn the page to Page 6. In the post-quarter event, we had a partial exercise of the greenshoe, which resulted in additional capital infusion of $6.9 million.

And obviously, towards the end of July, we also saw additional research coverage on the company initiated by Citi, Jefferies and Stifel in the U.S. And for those of you who have not read it, I would say that it makes for excellent reading.

One of the things that we have announced this morning by way of a press release is that we have entered into an agreement to acquire a controlling stake in Genkyotex, a French publicly traded company, which will be followed by a mandatory simplified tender offer, subject obviously to closing of this controlling stake.

The total consideration for the stake is EUR 20.3 million, and that represents 62.7% of the company as based on outstanding shares as of today.

In addition to the upfront payment, there is agreement for contingent rights amounting to up to a total of EUR 55 million.

This is related to regulatory approval either in the U.S. or in Europe of setanaxib, the lead compound of game Genkyotex.

And on 100% acquired basis, that would result in EUR 55 million to be payable, as is laid out on this Page 6.

And so as I mentioned, following the closing of this control transaction, the -- it's envisaged that there will be a simplified cash tender offer launched on the same terms for the remaining outstanding shares.

And based on kind of indicative timetable that we have, we would expect to be able to hopefully close this deal no later than early October of this year.

It is subject to a 30-business-day review period by the Ministry of Economy and Finance, and this is due to the fact that biotech as of last year was included in a group of important and -- potentially important asset category in -- for France.

And since this is a foreign kind of investor, that approval is required.

Obviously, there will also be the preparation of the offer documentation that will take place in that time.

And so we believe that this is a really exciting opportunity for us.

We believe that we can bring our late-stage development, our regulatory expertise to bear.

We believe that we have a very proven execution capability at the company.

And I think the combination of that with Genkyotex's rich IP estate, team, an exciting and broad opportunities to build a franchise.

We will obviously be working with the team in this interim period to refine the kind of possible routes forward in terms of the clinical plans, which we'll be happy to share with you at a slightly later stage.

But with that overview, what I want to do is I want to hand over to our Chief Scientific Officer, Johan Haggblad, who will -- for those of you who might not be familiar at all with Genkyotex or the assets or the actual -- kind of this new drug category of NOX inhibitors, we thought it would be helpful just to give you a very brief overview of that, which Johan will take you through.

Thank you, Renee.

Thanks.

So if you turn the page to the NOX enzyme slide, please.

I'll provide a brief scientific intro to this drug target class.

So the NOX enzyme or NADPH oxidases are critical mediators of both physiologic and pathophysiologic processes in our bodies.

They catalyze NADPH-dependent generation of reactive oxygen species.

And these are basically oxygen-containing molecules that react with our own molecules, and they include superoxide and hydrogen peroxide.

They are, in total, a family of 7 enzymes, and these are isoforms.

And the functionality is to amplify or modify, you could say, other signaling pathway we have in our bodies.

The drug target of setanaxib, one of the assets in the Genkyotex, is NOX1 and the NOX4, and these are involving inflammatory and fibrotic pathways.

So in summary, you could look upon these enzymes as being modulators.

And what we do with these inhibitors is to modulate the modulators.

This is a perfect way of controlling disease pathways.

So if you flip the page on the next slide, please.

I'll tell a little bit about the NOX enzymes and drug development and the work these enzymes inhibitors do.

What we're handling here is oxidative stress, and that is when you have an excess of reactive oxygen species production in compared to consumption of these ROS.

Oxidative stress is involved in pathogenesis of very many different diseases.

But on the normal conditions where you have appropriate concentrations of the ROS, they serve essential functions in cellular signaling processes.

All kinds of different types, proliferation, differentiation, migration, vascular tone, immune response, et cetera.

But if you have enhanced ROS activity, this may cause your signaling systems to overreact and drive pathogenic inflammation and fibrosis [processes].

And here is where the NOX inhibitor is coming.

The NOX inhibitors like setanaxib, these are new class of very promising experimental new drugs in what we call redox pharmacology.

And for instance, the subtype profile of setanaxib is to interact and inhibit NOX1 and 4, and these are very relevant therapeutic agents for treatment of inflammatory disease and fibrotic diseases, which we all know is our target area and an area of a very high unmet medical need.

In addition, NOX pharmacology is an emerging field, and there are, if you check PubMed for instance, approximately 1,500 publications over the past 10 years or so.

So in a summary, this is an emerging field of pharmacology.

It is applicable in our target disease area.

And therefore, it's a very important new platform for Calliditas.

Thank you.

I'd like to hand over to our CFO, Fredrik Johansson.

Thank you, Johan, and good afternoon, everyone.

I will present to you the financial overview for the first 6 months of this year, and all numbers will be presented to you in millions, as usual.

To start with, we reported limited revenue in the period of SEK 1.5 million (sic) [SEK 0.5 million] , and this is due to the delivery of Nefecon to China to be used in the Chinese arm as part of the license agreement with our partner, Everest Medicines.

Our total operating expenses for the period amounted to SEK 139.4 million compared to SEK 95.6 million for the same period last year.

And out of the total operating expenses, the cost for research and development increased by SEK 40.6 million to SEK 102.5 million, and this to be compared with SEK 61.9 million for the same period last year.

The increase in R&D expenses originated both from the increase in clinical activities in the NefIgArd trial as the number of patients participating in the trial for the period have increased compared to the patients participating in the same period last year and also from the product development as we advance the preparations towards a potential filing next year.

The sales and administration costs amounted to SEK 36.8 million for the period to be compared with SEK 28.8 million for the same period last year.

The increase of SEK 8.0 million between the periods is mainly related to increased costs for pre-commercial activities in the U.S., including personnel expenses and the preparation of the initial public offering and the June listing on NASDAQ.

And this leaves us with an operating loss of SEK 138.9 million for the period compared to an operating profit of SEK 42.7 million for the last period -- last year.

And this is because we had SEK 138.2 million revenue included last year from the China upfront.

The cash flow used in operating activities for the period amounted to SEK 85.8 million compared to SEK 108.7 million for the same period last year.

And the improvement in the operating cash flow for the period is due to the Q1 payment that was received from Everest for the 2019 Q4 IND milestone in China.

And the net cash received from financial activities was SEK 777.7 million.

And this is, of course, due to the U.S. IPO in NASDAQ, where we before -- the deduction of transaction-related cost rates, as Renee said, SEK 828 million.

And the greenshoe also mentioned was exercised after the close of the period, and that will be recognized in the third quarter.

So at the end, our cash position was SEK 1,459.6 million at the end of the period.

So we have a very solid cash position going forward.

That was all for me.

And now back to you, Renee.

Thank you, Fredrik.

So if we just turn the page to the Page #10.

These are just, again, the kind of anticipated milestones that by now you're probably familiar with.

We continue to deliver on our plan.

This transaction that we just raised today, obviously, makes up part of that strategic plan.

We believe that we now have a very exciting period ahead of us with a focus on the readout of our pivotal trial in Q4, which, as I stated previously, remains on track and on plan to read out in Q4 of this year.

And on the next page really is a summary of our investment highlights.

And so as you recall, we are uniquely positioned as a leader in IgA nephropathy, really kind of focusing on the origin of the disease to be disease-modifying; and now as part of that plan, a transaction as well to deliver on our statement to create a broader pipeline and a broader footprint with a view to have a bigger portfolio which we can commercialize in the U.S.

So with that, I think that was the end of our presentation for Q2, and we're now happy to take any questions to the extent that there are any.

(Operator Instructions) Our first question comes from the line of Maury Raycroft from Jefferies.

My first question is just starting based on exclusion criteria for the Phase III.

So I think the Phase III exclusion criteria is stringent with regards to the baseline type of conditions compared to the Phase II, plus you're enrolling more severe IgA nephropathy patients both on the [EPC] and eGFR measures.

Do you think this could result in more variability in patient type?

And I guess, how do you think this could play into the Phase II outcomes?

Yes.

So the changes that we made in terms of inclusion/exclusion criteria between kind of the Phase IIb and Phase III really resulted from 2 reasons.

So one, obviously, when we started the Phase IIb trial, there were no KDIGO guidelines published, and the advice we got from our KOLs at the time was to have an inclusion of 0.75 grams per -- of proteinuria.

And so in between these 2 trials, obviously, there were the KDIGO guidelines indicating that 1 gram of proteinuria is that the kind of the level where patients really are at risk of ending up in end-stage renal disease.

And so that's why we -- obviously, we align with those guidelines and made that adjustment.

We did go back to, obviously, the data that we had in Phase IIb.

The majority of patients in Phase II were actually above gram already.

And we did an analysis and could see no kind of -- no impact related to the baseline with regards to the reduction in proteinuria or the efficacy of the drug.

So from that perspective, we saw the same relative decline, whether patients came in on 0.75 or 3 grams of proteinuria.

So based on that assessment and the information at hand, we do not believe that there will be any significant impact in terms of making that change.

Another change that was made is actually to reduce eGFR from kind of cutoff from 45 to 35 ml per minute.

And that really was also again based on really from input from our key opinion leaders, our advisory board who really felt like it wasn't a necessarily high cutoff point that we have had in Phase IIb, but there was no reason to not believe that we won't be able to go slightly further down and, therefore, benefit a larger patient population and patient group there, which is still quite a long way from the kind of dialysis type kind of area of 15 or so mls per minute.

And actually, we also did go back, obviously, look at our data in that respect as well.

And even if it was not statistically significant, the trend or the indication was actually that those patients in Phase IIb with a kind of higher impact, so a lower eGFR, if anything, tended to show up a higher benefit from dosing with Nefecon.

So those are the kind of the major changes that we did.

And from the access to the data and real information that we have, we do not believe that seeing the slightly sicker patient population would have a negative impact in terms of the outcome of the study.

Got it.

That's very helpful perspective.

And then just as a follow-up, for the eGFR change at 9 months, maybe if you can just talk about expectations for that data point and if you anticipate seeing a meaningful different results at placebo.

Yes.

So I guess one of the things that we've said, and I think this is something that's been very clear as well from the FDA that they have not communicated to anyone in this field any kind of specific numbers or specific cutoff points, they are kind of looking at making their decisions in this on the basis of the totality of the data.

And in terms of our expectations, I guess, we would like to obviously kind of see something that's similar to what we saw in the Phase IIb.

We went from 150 patients to 200 patients.

So there's not a significant difference in terms of the overall size of this trial compared to the Phase IIb.

The actual protocol is very, very similar apart from the 2 minor adjustments that we just covered.

It's the same endpoint, same dosing regimen, same kind of duration.

And so from that perspective, we believe that we have done what we can as humanly possible to kind of reduce any kind of variation and try to have something that will be as close to the Phase IIb outcome as possible.

So yes, I think that's probably the best way that we can kind of express what we might kind of would like to see and what we hope to see in Q4 this year.

Next question comes from the line of Anna Samimy from Stifel.

Just following on some of the questions regarding what the FDA is looking for.

So in dealing with -- was actually dealing with some other companies in final stages who are seeking to use accelerated filing strategies, it doesn't seem like FDA sees the strategy as set in stone, meaning it seems like they want to see more long-term data.

I was just wondering if you could again review the commitments that FDA has made to you or any communications that you've had on how certain an accelerated filing strategy is for an indication where, clearly, you need more long-term data to understand the impact on kidney function.

So it just seems they're waffling a little bit, and I was just wondering if you had any sense of whether your accelerated filing strategy is pretty clear and set in stone.

So I would answer that in 2 ways, actually.

So I think that one of the reasons why the FDA, I believe, is not going to be drawn on just providing a number is that, obviously, they would -- proteinuria as a symptom and even if there might be a very significant impact on proteinuria in the short term, they are somewhat reticent to assume that, that kind of may not be an acute effect on proteinuria that may wear of fairly quickly and, therefore, not potentially have an impact on the underlying kidney function.

I think that in our case, one of the parts that was recorded in the Phase IIb, which I think was very appreciated and I think, again, we need to remember that this is the only data set that actually exists by anyone in this kind of indication.

So obviously, it's a little bit easier maybe to have a discussion and debate on the basis of real data.

And what we actually delivered was then a 1-year eGFR readout as a secondary end point with 9 months, obviously then was followed through as a kind of 1 year as there was a 3-month follow-up.

I think the work that the FDA has done, if you look at the kind of the paper, actually, where Aliza Thompson was the lead author in 2018, that followed the workshop that FDA actually organized with National Kidney Foundation, EMA, et cetera, where there was a lot of work done in CKD in general.

And I think that's something that the FDA finds very helpful actually to -- and that in that paper, where they -- the information that they would get from 9 months or 1 year, whatever kind of eGFR data is predictive according to themselves and in that paper of what you are likely to see on a longer-term basis over kind of a 2-year eGFR debate.

So I think the benefit that we have with regards to this is that we will be able to present the data relating to eGFR in our readout that we're doing this Q4.

And obviously, we already have a data set that's quite significant that also contains that.

So we feel fairly comfortable with how the FDA is looking at things in this indication.

However, I don't think that we shouldn't be -- one should never be too certain about what the FDA will and will not decide to do.

And I think it's obviously exciting for us and exciting for them because this readout will obviously be the first time that they will have an opportunity to potentially decide on an accelerated approval in this indication and for a nephrology indication overall.

So -- but I think that on the basis of the information that we have already generated plus the information that we will be able to give to the FDA in Q4 this year, we feel that we have as a complete set of data as can be expected in order to support a conditional approval.

But at the end of the day, obviously, it is up to the FDA how they look at the totality in the data and what decisions they choose to make.

Okay.

And if I could just follow up since you did actually acquire a majority stake in the company today.

Maybe you can give us a sense of how you might be splitting responsibilities on the development programs and which you will be prioritizing and maybe how that changes the priorities of the programs that you have in-house.

And I'm referring specifically to the continued development of budesonide in your liver conditions and also the in-licensed products.

So does that change any of your priorities there for your own early stage development programs?

Yes.

So this is something, obviously, that we will be reviewing over the next kind of couple of weeks and months between now and closing of this transaction.

It will probably not have that much of an impact necessarily on our plans or progress related to AIH.

But obviously, with regards to PBC, there has obviously been already kind of a study and there's been ongoing conversations between, again, Calliditas and regulatory authorities, which are still ongoing.

So once those are kind of completed and completely clear, then I think it will be easier for us to kind of make those decisions, but it's clearly something that we're going to look into and ensure that we pursue the route that creates the best possible route forward from a patient perspective and also something where we believe we have the best kind of risk/reward profile with regards to really kind of getting a drug onto the market.

Next question comes from the line of Erik Hultgard from Carnegie.

The first one is on setanaxib and the Phase II study, which to my understanding didn't hit the primary end point of statistical significance.

I was wondering if you could elaborate a little bit on your view on the reason behind this.

And how you expect -- how that impacts your assessment of development risk for the product?

And then secondly, relates a little bit to the previous question on how the acquisition fits with, in particular, Nefecon in PBC.

Is there a room for where you see that you could position both drugs side to side in PBC?

Or will you basically pick 1 of the 2 to go forward with?

Okay.

So with regards to the Genkyotex reported out Phase II trial, this was a -- it was a 2-dose trial.

So there was 400-milligram once a day, 400-milligram twice a day.

And it was over 100 patients in PBC.

The endpoint that the company had chosen to use was Gamma GT, which is a slightly more, I guess, unusual endpoint than what a lot of other companies have chosen to pursue in this indication.

The kind of -- there is a validated surrogate marker, ALP, which tends to be the most common kind of endpoint that companies choose in these type of trials in PBC.

Because of the perceived, obviously, difference, it is not a bit of anticholestatic agent, this is much more of an antifibrotic anti-inflammation agent, I think that was as far as I understand, one of the basis for choosing to go the different endpoints.

And that endpoint has shown -- the drug has shown effect on that endpoint in a shorter, kind of smaller trial that the company had pursued previously.

But that endpoint, obviously, is a slightly different one than what most companies are choosing to do.

So I think that they did not kind of -- didn't reach the endpoint of Gamma GT.

I think that it did have effect on ALT in the Phase II, but these are some of the choices and consequences in life sciences.

You kind of stand with kind of your design and your choices.

And I think it's difficult to say much more than that.

But we think that the drug has shown clear clinical activity.

It has shown a very interesting impact on fibrosis by measure of fibroscan and other markers that are kind of well recognized and defined for fibrosis.

So we think that this is a very interesting platform, an interesting drug category where we believe that it's very consistent with our strategy in terms of having late-stage assets with a focus in orphan, with proof in patients and.

So we're excited to work together with the team at Genkyotex to really find the most -- the best way forward to get a drug on the market with setanaxib.

In terms of kind of the decision around PBC, as I said, I think we are going to -- we'd like to kind of try and await the final kind of information from the FDA with regards to regulatory pathways for setanaxib in PBC.

And I think on the basis of that, we will have the information that we need in order to kind of try to make a decision.

I think that it would probably be more likely at this stage that we would choose to go forward with 1 compound rather than with both compounds.

But I guess, one could also potentially see if there would be any basis for having any kind of combination therapy.

But I guess, from where we're sitting right now, I think it's probably more likely that we will choose a candidate to go forward with in PBC.

The next question comes from the line of Samantha Semenkow from Citi.

This is Samantha on for Ygal today.

Just first question, I understand that the FDA talks are still ongoing for the assets, the Genkyotex assets.

What -- why did you make the decision to go ahead and acquire the majority stake now?

What gives you confidence ahead of final clarity there that gave you the confidence to actually make a decision now versus perhaps waiting and then you could have maybe have more information about what you were going to do with PBC?

Just any additional comments you could make would be helpful.

Sure.

So I think that the -- as I kind of alluded to a little bit before is I think that there is, obviously, data from the Phase II.

I think that shows clear activity, very strong in terms of fibrosis.

I also think that it's very clear from the data that was presented on the Phase II that there was statistically significant impact on fatigue, for example, in PBC, which is a huge issue, obviously, for the patients there.

And I think that as a class of drugs, I think that we can see this being potentially applied in a variety of different indications.

So it does give us access to large markets where we believe that we could potentially build a very significant franchise, including IPF, PSC.

There are other kind of inflammatory fibrotic type of indications, particularly in the orphan space, which we think potentially could be very, very exciting and interesting to explore and see what we could achieve in those areas.

And they are kind of very close to our heart in terms of in the renal space, in the hepatic space and lung space, et cetera.

So from that perspective, as a general, what we had seen from the profile from the drug and the activity of the drug, we believe that there is certainly an opportunity here to build an interesting franchise with or without actually PBC.

Obviously, because of the fact that there has been a trial in PBC and there's been, as far as we understand, very kind of pragmatic, good, positive interactions with regulators, that in itself would obviously be another -- or an obvious kind of route forward to pursue subject to finalization of those discussions.

Got it.

That's very helpful.

And then just actually maybe Budenofalk, can you -- do you have any updates on your conversations with the FDA and maybe your plans for pursuing AIH there?

Yes.

So we are in conversations with the FDA there as well.

And it is one of these -- this year, it's obviously one of these years when the FDA has been fairly busy with other things and around COVID.

And so I think we are -- some of those kind of conversations or interactions are taking a little bit longer than maybe normal or what we were expecting.

But we are in conversations and hope to be able to be in a position to communicate the outcome of those interactions before the end of the year.

Next question comes from the line of [Rami Capita] from Lifestyle Capital.

Congrats on the update.

I guess looking at the Genkyotex deal, where do you envision setanaxib potentially sitting in the PBT treatment landscape given recent news from competing programs?

So I think that in terms of -- I think the kind of the differentiating or one of the kind of differentiating factors potentially with setanaxib is this kind of very, very significant impact that's been shown on fatigue.

And in terms of at least the information and the data that was published on the Phase II, there was no kind of negative or any kind of negative impact at all in terms of pruritus either.

So there's no issue with regards to making that worse, which is obviously one of the problems that we are well aware of in terms of OCALIVA, for example.

And so I think having the kind of the tolerability profile was very good in the Phase II.

And I think having a drug then who -- with -- if that's the kind of profile on a hypothetical basis, having a very good tolerability profile, having a significant impact on fatigue, something that you could dose on top of both anticholestatic agents as well as fibrates, I think that it makes for a very versatile and very kind of -- from a patient perspective, a very attractive alternative and drug.

And I guess if you could then also obviously show that there might be -- you could actually stop or even reverse fibrosis in -- with regards to the kind of antifibrotic effect of this drug, I think that this would be a very, very valuable drug in the kind of -- for physicians to actually use in a broad population of PBC.

Got it.

That makes sense.

And as you mentioned, NOX inhibition has potential in a wide range of inflammatory and fibrotic diseases.

Will you prioritize liver and kidney indications given the synergies with Nefecon?

Or are you looking to expand beyond that?

I think that we would try to kind of be as objective as possible and really look at what is the best way forward where we think that we can -- have proof of concept or address really a medical unmet need in a rapid and efficient way.

And I think that's where we benefit from a very strong and experienced team internally, very kind of used to late-stage development and regulatory.

So I think that's one of the things where I think we will try to be open-minded and see what the best way forward is to create value from this platform.

But obviously, we do have very, very strong relationships with key opinion leaders in certain areas.

And so I guess, there's certainly might be somebody who's coming from that even if we try to be very open minded.

But I think that's at least the goal that -- we should be objective and open-minded and try to really leverage this asset in the best way possible.

(Operator Instructions) Our next question comes from the line of Dylan van Haaften from Bryan Garnier.

This is Dylan from Bryan Garnier.

Congrats on the efforts on keeping the trial on track.

Most of the things have been asked, so I just wanted to get a bit deeper on setanaxib.

And I was just eager to sort of find out, you already said something about the biomarkers.

Just anything in the GGT, ALP, the fibroscan data that you saw that convince you particularly on the efficacy that you could share?

So we have looked at quite a lot of different things.

I think that we're not necessarily in a position right now to share that in any greater detail, but it is something that we're going to kind of continue to work on, and hopefully, we'll be in a position to share a little bit later when we've also had an opportunity to work a bit more with the team at Genkyotex.

But I think that there are some of the things that might be interesting to share once we've kind of worked through it properly.

And then just my final question.

There's also investigator-sponsored studies in IPF and DKD.

And I was just wondering if this is factored into your research on the company and if you have any view on when this data might arrive considering it's investigator sponsored.

It is very difficult to say.

As you well know, investigator-sponsored trials are a little bit more opaque generally in terms of understanding exactly kind of where they stand and when the data will be delivered.

I think this is one of the things that we also we'll be working with and understanding better and hopefully being able to support those investigator-initiated trials and see if there's anything that we can do to support those trials or enhance them and try to give more clarity around how that would contribute to the value creation of the company.

Our next question comes from the line of Ingrid Gafanhao from Kempen.

On the statistical plan for the ongoing trial.

Am I correct to remember that you had a more stringent threshold for significance in the Phase IIb?

And just how is that looking out for the Phase III?

Do you plan to repeat that again?

I'm not sure that I completely understand it because you're saying that we had a -- just to make sure I understand the question.

Are you saying that we had a more stringent level of statistical significance you mean in the Phase IIb?

Or...

Yes, it's right.

No.

I mean I think it was kind of what I'd say a normal kind of statistical significant calculation that was carried out in the Phase IIb.

I don't think off the top of my head that there was anything that was unusual with regards to that.

I think it was just a one-sided test rather than a 2-sided test.

But I think, actually, from a kind of statistics perspective, it works out the same in terms of kind of level of significance.

So I don't think that there was anything kind of unusual with that kind of -- with the way that, that statistics was set up.

I think that the other thing, obviously, to just mention is obviously that the statistical significance on the Phase IIb was obviously extremely high.

And so I think the -- from that perspective, we're not expecting any issues with regards to statistical significance, really, in the Phase III either.

I think that this is probably more something that relates to clinically relevant rather than a fairly statistically significant due to the fact that we -- the power of this trial is very, very high.

So we don't really expect statistical significance to be an issue just as it really kind of wasn't necessarily an issue in the Phase IIb.

Is that helpful?

Yes, sure.

Our next question is a follow-up question from Erik Hultgard from Carnegie.

And it's a financial one.

I wonder if you have any comments on your cash position and how long you expect it to last given your current commercial plans for Nefecon in the U.S. and in Europe and also in the light of the recent expansion of the pipeline.

And second to that, do you see an opportunity to expand the pipeline further to in-licensing or acquisitions?

Or do you think that you have sort of a good balance between cash at hand and pipeline at the moment?

Well, I can take the last part of that, I guess, in terms of expansion.

So I think that we will probably continue to be opportunistic.

We do have a strategy of wanting to continue to build if and when we find assets which we believe are a good fit with our strategy.

However, we are very aware of the fact, obviously, that we do want to balance kind of our cash reach and our kind of risk profile.

So I think that, that's something that we will have to be -- we are and I think we have been and I think we'll continue to be selective.

I don't think that we will spend huge amounts of money on highly risky assets.

I think we prefer to try and be a bit more cautious and take it kind of step by step as we have done also in this transaction.

But I think we -- I don't think we want to rule out the fact that we might continue to build and find interesting and attractive assets, which we think fit with our strategy.

But as I said, I think we'll be aware and make sure that we don't overreach.

And I can answer the cash reach question.

So with the commitment as of today in the Genkyotex deal, we do not see any material effects on our cash reach and our ability to commercial Nefecon.

And I think that what we had communicated most recently in the IPO is that with the cash that we have, we can see it go through...

Through third quarter of '20.

Exactly that, through the third quarter.

Our next question comes from the line of Ludvig Svensson from Redeye.

It is related to the acquisition that you announced today.

And I wonder to what extent you believe you could leverage prospective sales force in the U.S. with setanaxib in fibrotic diseases.

And how well does it fit commercially with Nefecon for IgA nephropathy?

So I think that, that obviously will kind of depend on 2 things.

I think, obviously, one of the areas that we are going to investigate with regard to setanaxib is, obviously, to what extent there might be a renal disease, which we would choose to pursue.

So if that is the case, obviously, the overlap would be complete.

I think that with regards to other orphan indications, which are then kind of in a different indication area, obviously, liver versus renal, I think that, that would probably have a separate sales force to a large extent or at least in terms of numbers.

I don't think we can necessarily leverage that completely.

But obviously, to the extent that those indications are significant, I mean I think the market opportunity both in IPF and in PBC are very, very large, very significant.

And so I think that based on kind of the value of those markets, we would obviously portion the sales force appropriately.

But I don't think that we can sit here today and say that we could necessarily leverage the entirety of that sales force that we're having in the renal space, also in the hepatic space.

There might be some overlap and some benefit.

But obviously, in terms of general overheads and other things that you end up having to do from just kind of running a commercial operation, there will be significant synergies.

With regards to the actual field sales force itself is probably something that we'd have to look at when we are a little bit closer to that potential commercial opportunity.

Our next question comes from the line of [Bethune Delsuc].

Yes.

I was wondering if you would be in a position to say if you would go after traditional endpoint in PBC for setanaxib as of today.

Or if you...

I'm sorry, you dropped off there, would pursue -- we'll probably some -- we'll probably pursue what, sorry, in PBC?

I'm sorry, I didn't hear.

Yes.

I try -- do you understand me better now?

Yes?

Yes.

Yes.

Okay.

I was wondering if you would pursue traditional endpoints in PBC for setanaxib as of today or if you would seek, let's say, more flexibility in terms of endpoints for the Phase III.

And also if you could provide a color of the current level of alignment between the FDA and the EMA with the current discussions given that the end of Phase II meeting has been completed and that (inaudible) advice has also been (inaudible).

Sure.

So with regards to any kind of ongoing discussions with the regulatory authorities, that I really would like prefer to leave up to Genkyotex.

They are the ones who are in charge of those conversations.

They are a public company, and so they would be the ones who would be able to inform you on the status and the alignment of those kind of discussions.

With regards to -- from our perspective, if we were to kind of launch kind of a trial in PBC, I think that in a Phase III, you obviously need to have an endpoint which is validated and accepted by the regulator.

You obviously don't have as much flexibility as you would do potentially in a Phase II.

So I think with regards to any phase the rein PBC, I think we would be limited to an endpoint that has already been validated and is supported by the regulators.

And I think that's kind of a limitation of just running a pivotal trial.

And so I think that would be that we would have to follow.

I think there's obviously secondary endpoints or other markers that one could explore and one can measure and publish and that might be supportive.

But with regards to endpoints, whatever endpoints are available and validated would be the ones that we could choose from at the time.

Next question comes from the line of Maury Raycroft from Jefferies.

I just have a quick one on pricing for Nefecon.

And so you're guiding to 55,000 to 80,000 per year.

I'm just wondering if you can talk more about your latest assumptions behind pricing and potentially discuss some scenarios and how those assumptions can change based on the data outcomes.

Yes.

So the market research that we've carried out as you correctly point out that point to between 55,000 and 85,000.

The actual kind of treatment or the way that the reimbursement agencies would treat the product is they're pretty indifferent.

So that is kind of as of now based on the information that we have and the market research that we've done is what we are assuming.

And I think it's also been very clear in the market research that they would cover this on the basis of an accelerated and conditional approval.

And they would not wait for anything else after that because as I'm sure you're aware, there's also quite a lot of oncology programs that follow that route.

With regards to any kind of scenario plannings around pricing, I guess that there would always be the -- there's a potential opportunity, I guess, to the extent that we can really see extended real kind of disease modification in the follow-up.

I guess that, that would be significantly added value, and that is something, obviously, I'm sure that the reimbursement agencies would value.

So I guess whatever we can kind of provide or do in addition to what we've kind of shown in the Phase IIb would obviously provide us with a basis to potentially further enhance that kind of -- the pricing assumptions.

But I think that it's probably a little bit early as of just yet to go into exactly what that might look like or where we might then end up as there probably would be a bit of a negotiation with the reimbursement agencies.

But we are -- obviously, that's part of that kind of pre-commercial work that we're doing in the U.S. We're having the sales up there.

We're talking actively with nephrologists.

We're getting good information with regards to kind of the medical side.

And obviously, we will also be engaging with the reimbursement agents.

And as we kind of continue to get information from that.

We will certainly be passing that along next year as we get more information through those interactions.

There are no further questions registered, so I hand back to the speakers for any closing remarks.

Thank you.

Well, thank you very much, everybody that participated on the call.

We're very excited that you're hopefully excited.

We're looking forward to an interesting period coming up for the company.

And we look forward to speaking to you again when we have an opportunity to give you our review of Q3.

So thank you very much for participating.