Molecular Partners AG (MOLN) 2020 Q4 法說會逐字稿

Ladies and gentlemen, welcome to the full year results 2020 conference call and live webcast. I am Alice, the Chorus Call operator. (Operator Instructions) And the conference is being recorded. (Operator Instructions) The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Seth Lewis, Senior Vice President, Investor Relations and Strategy. Please go ahead.

Thank you, and welcome to the Molecular Partners 2020 Full Year Results Conference Call and Presentation. My name is Seth Lewis, Senior Vice President of Investor Relations. And I'm joined here this morning by members of our senior management team, including Michael Stumpp, Chief Operating Officer; Andreas Emmenegger, CFO; and Patrick Amstutz, CEO.

If you have not already, I would direct you to the full year press release issued this morning and available on our website. Management will make a short presentation this morning, and then we will take your questions. Please note that management will be making forward-looking statements, and I direct you to refer to our website for the most recent and accurate updates regarding our programs. It should also be noted that any reference to our fictional subsidiary, Molecular Partners, would be made entirely ingest and should not be taken seriously.

For those of you listening to this recording on a presentation, this presentation was held on February 5, 2021. And at this time, I will pass the call over to our CEO, Dr. Amstutz. Please go ahead.

Thanks, Seth. Thanks for the nice introduction and also for the little fun bit there. As I also pointed out already at the R&D Day, I think to have some humor and some fun is very important in these global crisis times of a pandemic, working from home. And so I very much enjoy that.

So warm welcome from my end to our full year results 2020. And it was such a forming and transforming year for us that I will start off with a few slides just on the general platform, how we're going about that, and then hand over to Andreas for the financial highlights. And before going into the Q&A, share some data on the COVID-DARPin. I think that's maybe the most relevant for now, and that's where we guess most questions will lie.

Next slide is the disclaimer. Seth nicely covered. And so let me kick off with the highlights for 2020. And keep in mind, 2020 was not only a nice year. We actually had to digest the setback on abicipar with a complete response letter. And grateful to my team for the huge effort and also the opportunity in the COVID space, we could create a lot of value and could move out of this year very strong. That's what I have boxed here with opportunity.

We have the first and only multi-specific candidate in the clinics, ensovibep. We maintain activity on all the variants in mutations, and we'll come to that later. We took us from the idea to the candidate stage only 12 weeks for a tri-specific 5 domain DARPin and then into the clinics in 8 months, and that without any support from large partners.

We now have a large partner, that's Novartis. And we are very thrilled about that collaboration as that will allow us to go add scale into manufacturing and to a global reach.

The blue execution box here, that's really the steady state, that's oncology, that's where we have been and are active. We expanded the research pipeline. We'll come to that later.

We have brought the first immuno-oncology asset 310 to the highest dose and are generating very interesting data there. And on the research side, we are strong on the next-generation T-cell engagers and peptide-MHC binders with T-cell engager likely to be nominated in the first half of this year as next candidate for clinical development.

On that recognition, let's call that financing side. We increased the cash balance by USD 155 million. There's always a bit convergence rate Swiss franc U.S. dollar in 2020. $90 million of that came of a capital raise on the back of the complete response letter and then the $65 million from the Novartis collaboration, and we continue to strengthen the team as we went along.

On the next slide, that's one way to look at our pipeline. And I think you all know that the company is built on the therapeutic modality called DARPin. I will not go into detail what DARPins are. But what we have now done is we've built therapeutic platforms from specific DARPin benefits and features. And these we are applying in oncology and now also in virology.

But I think it's healthy to take a platform view because that's what we are a platform company, applying a technology to specific therapeutic areas to specific problems in a given disease setting. We have a whole set of assets in localized activity, that's 310, 317 and the CD3 axis we're doing. And that means we're not, call it, active throughout the body. But we have created products, or switch approaches to get local activity to open a therapeutic window.

We have the tailored molecular grip. That's what we use for peptide MHCs. I will not focus on that today. One of the therapeutic platforms I will look into today is escape prevention. The idea here is simple. You use multi specificity to target several targets on a tumor cell, on a virus, different growth factors for 250 to prevent the system to escape by upregulating, by mutating whatever it needs to escape.

And if you block the escape routes, you have a much deeper and more -- a longer, more pronounced effect. We're using that in 250. We also have that in the CD3, next-gen CD3 space, plus in 420 and 423 in virology.

The molecular handcuff, it's an allosteric blockage of target proteins. That's again a feature and application, a therapeutic platform that we use repeatedly in 274 to block HER2 to then induce apoptosis. And on 423, this is a steric blocker of the spike protein leading to a freezing, leading to blockage of infectivity.

And you see the theme here is that we establish such a therapeutic platform, and then we can reuse it wherever we think this will help patients. And then we can also see mostly oncology, but also now this year, most recently opening a new therapeutic area, virology that was an opportunistic move by us. That was obviously a COVID situation. But it shows us that the platform holds a lot of value beyond the core focus oncology.

The more conventional view of our pipeline, obviously, is this chart. You recognize the lower arrows. Those are the basic part 250, 274. For us, those are obviously the most advanced ones. These are either partnered or less of a focus. So we're not investing our cash there.

AbbVie is investing in a basic part. They are really investigating how to move the product forward. But the lower part for us is really the validation for the upper arrows. You see we have the arrows in oncology, and we have now new ensovibep and 423. And especially enso is going to be part of the discussion that we have today. And we -- if you're interested, you can check out our presentation at JPMorgan or even the R&D Day, where you get a much deeper insight into our pipeline and how we are approaching this.

Now on the right-hand side, you see, we are also open to partnerships, as we cannot leverage the full platform and activities alone. So with AbbVie in ophthalmology, with Amgen for 310, and that's a combination with T-cell engagers, hopefully, in the future, and then Novartis for ensovibep and 423, we have a line of partners that really strengthen our activities and also cross finance what we are doing internally.

And so before I now kind of move to ensovibep, I will hand over to the financial update by Andreas. Andreas, stage is yours.

Thank you, Patrick. So with that, I run you through the last year's financials and give you the guidance for this current year. So the result 2020 is, formally speaking, still preliminary and unaudited. However, I don't expect any changes until we will publish the full annual report on February 26. I will focus on some key figures. They're all stated Swiss francs million. But the details can be found in the press release and as well as also on our website, much more details. And of course, the deep dive into the numbers will follow also in the financial statement, which will come out as part of the annual report later this month.

I now move to Slide 7 to the financial highlights. The financial highlights for the past year in a few bullets. So it's, as Patrick was saying, the financial position is very strong, almost CHF 174 million in cash, including short-term deposits with no debt. There's -- we have -- in terms of cash flow, excuse me, we had a net cash out for operations in the amount of CHF 29 million.

P&L-wise, we incurred an operating loss of CHF 58.3 million and a net loss of CHF 62.8 million. And with the CHF 174 million in cash at hand, we are funded into 2023. And this all excludes any potential payments out of our R&D partnerships. That would all come on top.

So the numbers are of no surprise. It's part -- it was also in line with our planning and the latest guidance I gave to the street also over the course of last year.

Slide 8. We have a bit more detail, some key figures. So I will not go into the details. We recognized CHF 9.3 million revenues, which all stemmed from our collaboration with Amgen, which is the collaboration of our lead IO as MP0310. So that didn't -- revenue total, that's about half of what we recognized last year.

Total operating expenses were CHF 67.7 million, which is CHF 10.6 million more than the year before. And this includes noncash effective costs in the amount of CHF 7.1 million. So this increased investment is a natural consequence of the progress. of our pipeline and the general expansion also of our workforce, including now also virology.

That resulted in an operating loss of CHF 58.3 million compared to CHF 36.7 million the year before. In the P&L, we incurred a net financial loss of CHF 4.4 million, which is virtually all driven by unrealized translation differences on our U.S. dollar and euro cash position. So nothing -- almost nothing realized.

Bottom line, net loss was CHF 62.8 million. As I said before, cash flow -- net cash outflow, CHF 29 million, again, repetition. And our cash balance went up by CHF 95 million to CHF 174 million, driven by the capital raise and the collaboration, the money came coming from Novartis as well as also a mid- to single -- mid- to high-single-million sum from the Swiss government in the course over last summer.

Through the end of 2020, we had 145 FTEs, which is 10 FTEs more than 12 months earlier. I move to Slide 9, showing our balance sheet to the end of 2020.

It continued to be strong, again, dominated by the cash, CHF 174 million and the solid equity position of over CHF 107 million and no debts. The contract liabilities of CHF 45.9 million will be recognized into revenue or credited to expense until about the middle of 2020 (sic) [2022], always subject to the progress and costs of the underlying collaboration and programs with Amgen, Novartis and Swiss government.

In other words, these are no financial liabilities, but part of the balance sheet until they go into revenue or as minus expense, and they are all nonrefundable. Other assets and other liabilities are mostly related to lease and pension accounting as well as some equipment and general working capital positions.

Page 10 gives you the development of our accounting revenues over the past 5 years split up in 2 from where it has been coming from, from which partnership. Our income mainly stems from fees and milestone payments for giving access to our technology and in the recent time, mainly from product out-licensing to our partners.

While cash-wise, this has, of course, an immediate impact on the balance sheet. Accounting-wise, this can look much different depending on the nature of the contract, and some times are booked or recognized in revenue over certain times and are spread over a certain time period, depending again on the nature of the collaboration.

And yes, I said earlier, the entire CHF 9.3 million last year instead, it has been coming from the collaboration with Amgen. Slide 11 please.

Here this time -- but this time regarding the operating expense. We continue to increase our investments into R&D pipeline, reaching close to CHF 68 million last year. Again, that's in line with our planning and the guidance and the main drivers behind that were our investments into the 2 COVID assets in biology, both for preclinical and clinical work, investments into our 4 more advanced candidates in oncology and of course, in the growing R&D workforce, including our small office in Boston, where Seth is sitting together with a colleague, Shai.

CHF 7.1 million of that or a bit more than 10% were noncash effective costs for share-based payments and pension and accounting and depreciation, and 83% of the total expenses were investments into R&D and 17% went into G&A-related efforts.

With that, I'll come to my last slide, #12, for the financial guidance for this year. We are setting up our organization for growth. We are convinced with the positive progress of our pipeline, and we have the confidence to do so.

In terms of P&L expenses, we guide for CHF 65 million to CHF 75 million, of which around CHF 7 million are noncash costs. Cash flow-wise, we expect a gross cash burn of CHF 85 million to CHF 95 million, which includes the CHF 20 million payable to Novartis for the manufacturing of commercial material.

Andreas, can you still hear me?

I can hear you, Patrick. I can't hear Andreas.

Yes. So I think he was on Slide 12. So I guess I could take over for Slide 13.

Yes, go ahead.

Okay. And then we can also give him in the end if he wants to recap Slide 12 again, but I think I'll take over here until Andreas comes back. So thank you, Andreas. You might not hear me, but thanks for the nice overview of the financial guidance, the full year to '21. Also the update on the last year. And obviously, I'll just recap.

So kind of total expenses, CHF 65 million to CHF 75 million. And obviously, a lot subject to progress and changes in the pipeline. So on the next slide, I'm now on Slide 13. That's kind of the intro. And I would like to really take one program. I think that's the obvious one is that where we just have news. And obviously, before going to questions, and then open for questions to all programs.

But I want to give you a short heads up on where we are in the COVID one and start with a recap of our 2 candidates.

On Slide 14, that's a nice picture of the 3D model, if you want, really, a picture of ensovibep. Enso, as we started to call it for '20. What you see is 3 DARPins binding the spike protein in the RBD side, so the topmost domain. And we expect the high cooperative binding for highest potency and protection to viral drift. And today, I can share some data that this actually works. And this idea of cooperativity of working as a team, to create a lot of binding strength, it really holds up.

We have a long half-life with the 2 HSA binders. So that's going to be in the 2 weeks range, at least. And we can produce in microbial and with a small size and high solubility, we're aiming for a bolus or at least -- or ideally a subcu injection.

On the next slide, you have 423. Here, we kind of, call it, recycle one of the RBD binders, but we add an NTD and an S2 binder. So these are other domains on the spike protein. So while both DARPins are 5 domain DARPins, they have a very different way of binding the spike protein.

And obviously, should have also over -- or not overlapping activities when it comes to mutations. On the next slide, Slide 16, that's why you see an overview of the variants. And you see here on the left-hand side, that's a spike protein. It's a trimer and one subunit is highlighted darker. And you see all these little blue dots, and each of those dots is the mutation we have tested.

And you recognize in the blue shading the RPD DARPin, let's call it epitope or domain, where we expect DARPin -- the RPD DARPins to bind. That's where also the antibodies bind. Then we have the entity side, that's in green and then a putative. That's why we guess we have not solved the structure. We expect the S2 DARPin to bind.

And you see in the triple RBD, we'll have 3 of the blue ones, while in the 423, it's one each.

On the right-hand side, that you see the variance we have tested. You see the U.K. variant and you see the South African variant. Obviously, those mutations in the RBD, those are the ones to focus on, the 501 and 484 mutation.

Now on the next slide, and this is a very busy slide, and I will not go through all details, but just kind of highlight a few things. Here you see we have tested now in virus -- pseudotype virus neutralization assay, the IC50. So how much protein does one need to inhibit 50% of viral activity. And in the light shade, in the green shade, you see the wild-type the South African and the U.K. variant. Obviously, these are variants that we have built. So the exact sequences are on the right-hand side.

There's a few more mutations coming and also depending where you have the cut off, there is some change there. And you see that 420 is active really in the range of all of the 3 strains and blocks them all. 423 is also in the activity. We have a cut of 100, above 100. We would say this is not therapeutically active anymore. But you also see that on the U.K. variant, we're losing a bit, and we actually think that's because of the deletion, not in the RBD, obviously, but more in the S2 domain lower down on the stem.

We also added the Regeneron antibodies that we built. And I think the numbers we present here are very close to what actually Regeneron has published themselves. Now on the first block, you also see additional mutations. And the 417, especially, is one that is also in the Brazilian variant, and we have not included in the South African variant there. That's why you see that the one Regeneron antibody loses activity. This has been described. So it's not a new finding. But it also shows that our DARPins are not losing on any of those mutations.

Just to point out, the Regenerons are given as a mixture. So as long as one of the Regeneron antibody works, they still have protection, albeit they lost half of the dose because of a reduced binding. Then we went into other mutations.

And then the lowest block, I think that's the one I would also like to point out because these are a bit special mutations and especially the 486, which is the one which is above 100 for 420, obviously catches our eyes. And that's a mutation in the RBD that really kind of dilutes or diminishes the 420 activity.

Luckily, this mutation also diminishes the binding to the Phase II receptor. So if the virus mutates here, it is itself unfit and with that, will also not progress well and not survive well out there. So it is a negative mutant, if you want. It's sort of a control in this experiment, but we're not expecting that mutant to actually survive as it is unfit.

What is also nice to see is that even if that RBD binder is blocked, the 423 shows activity because the S2 and the NTD domain still are active and you recognized 423 is active. So if you think of 420 and 423 as a combo, you nicely see in this table how they even synergize each other.

On the next slide, and this was interesting and important for us to see. We took MP0420 and dissected it into the individual domains. So now it's not tri, but it's 3 monovalent DARPins. You also see here, they are not all the same that was expected, as these are not the same DARPins. And you see that some lose more than others in some context.

But what is really striking, if you take the South African line there, we have no loss of potency. While some of the in vivos are already losing quite a bit. And this losing potency of the individuals, but then not seeing that as a tribinder, as a tri-specific binder, that's what we call cooperativity because they can help each other and make up for an individual loss as they are working in concert as a team.

And I think this data really underlines that we, with our technology, are that stands more suited to viral drift, better protected as we have the synergy, as we have cooperativity over mixtures, where it's more a binary event. If one loses, it's gone. The next one loses, it's gone. So we believe we have a broader range and are better protected for the drift, and that's exactly what we start to see here. And that's what really gives us kind of a verification of our approach for COVID, for future COVID programs, but also for other viruses that this concept really holds true and holds value.

On the next slide, that's just a bit a brush up, an outlook of what's ongoing also with our partners Novartis. We're still in the Phase I healthy volunteer study. Then we have 3 blocks to the right. One is really the registrational trial. That's the one Novartis is running with our help or will run. It's going to start up the end of March, early April, we believe, with the idea to get emergency use for the next pandemic seasons or next fall.

Then we have additional supporting trials, so we will go towards subcu injections. We'll go for infectivity. So testing, can we block the spread. So can we block further spread of the virus and a few other ideas we have there. And we're in active discussions with ACTIV and other consortia that can use our approach to go forward in those platform studies where there are master protocols, and they can test that in different settings that are -- maybe not covered in our setting.

The gray box, it's not to be kind of overlooked. That's the manufacturing part. It's really the development. There's a lot of work going on, and we are very happy with what Novartis and Sandoz are doing there as this is really a logistic kind of masterpiece to bring all of that together and create as many doses as we can in as little time as we have.

Maybe just a comment there. I think we -- with the data, we really see that we have activity on these mutants. And given that these mutations are coming up, I think there's also always a question mark, how long and how strong will the vaccines hold up, even new vaccines we will have to see as the higher virulence of these strains and the higher infectivity might also pose a higher bar for vaccination.

And while we definitely hope that vaccines will be active, we have to also prepare that maybe the protection is not always in the 90% range, but could actually drop on some of these new strains. And that's where we come in with the high potency on so far all mutants and strains.

Good. I will now end the presentation with Slide 20. That's the outlook. So what are we looking forward to? What are we looking out to in 2021?

We have a very packed year. We have a lot of data from ensovibep. We have, obviously, the proof of concept. We have first-in-man 423, and we will continue to monitor the activity on all the variants coming up.

Then we have Amgen 506 or MP0310. There, we presented biological activity. So we can show that we reached the tumor. We accumulate there. We can show that we activate the right immune cells. But we also have to see that we find the right dosing to have a sustained effect because the effects that we have seen are only measured after one dose. Now we have to make sure that we can sustain that effect longer.

That's going to go on in the first half of this year, data this summer. But hopefully, the combination trials or a goal from Amgen could come as early as the second half of this year.

317 is going towards the clinic. So second half of this year. And then we're very excited about the T cell engagers, where we want to select the first candidate to go forward. And peptide-MHCs, that's about finding the right targets, and they were also open for doing that not only alone, but possibly with a partner.

All of that is 2021. As Andreas pointed out, we are well funded into 2023. And keep in mind also proof-of-concept with enso would bring another CHF 150 million or USD 165 million. So we are in a very good position to move on, to speed up, to even grow. And I think that's really the mantra for us. Not slow down, but actually speed up, go fast, grow and apply these DARPins to work where patients need them most.

With that, I would end this presentation, ask if Andreas has rejoined. And if he has something to add on his slide or then open for questions. And thank you for your attention. Andreas, are you back?

Yes. I am back. The only thing -- apologies somehow, I lost connection. The only thing I wanted to add is, and you just stated it, the -- there's a quite a near-term potential milestone payment, large from Novartis if they access the option to become licensee, and that's CHF 150 million. So $165 million that could come on top of the balance sheet in the course of this year. That's all.

Thanks, Andreas. And so with that, I will want to thank my team. I want to thank our partners for all the hard work, my team, my direct reports, but the entire company, our partners, AbbVie, Amgen, Novartis. But also the collaborators, the Swiss government, Swiss Army and the University of Boatwright, all helping us on the COVID program.

Good. I think we're right on spot, 2:30 my time and opening for questions. And I invite also Seth and Michael to join the Q&A. Michael, maybe just one word there. He's also leading the COVID program. So he's the expert on all mutations and mutants and variants and how the clinical trial is going on. Very good.

(Operator Instructions) The first question comes from the phone and is from Mr. Ken Cacciatore with Cowen and Co.

I guess just a couple of questions. First, on the COVID-19 programs and enso specifically. Can you just help us frame what the efficacy threshold that you'd like to see as this progresses through the clinic to make this competitive? So maybe just let investors know what we're hoping for and what do you think is kind of the minimum threshold?

Obviously, there's a lot of evolution here in terms of the different strains, but it would be great if you could frame that. And then you talked somewhat in detail, Patrick, about the manufacturing. Novartis is step up here in manufacturing investments. I just like to know what have they invested to date? And can you be a little bit more specific. Would they be ready to commercialize the products if everything goes in the right direction here by the end of the year? And then lastly, on this program, just on the subcutaneous formulation. You mentioned it, but do you think we'd be going to market with the subcu formulation or do you think it would be IV?

Yes. No, thanks. These are all great questions. I will quickly lead in almost tease and then hand over that Michael can give a bit deeper dive on all 3. On the efficacy side, so I think there's 2 things to look out for. One is really this efficacy in this in vitro assay. So here, we're talking about IC50 nanograms per ml. And there, we're just looking for sort of a cutoff. And if you're below, we believe you're in the therapeutic range or not. And so you monitor all the mutants, all the variants, and you check if you believe you are in the active range.

This is an ongoing process, and we keep on doing that. And obviously, then there is -- the next level would be an in vivo in animals. You would want to see activity in an in vivo setting in a test animal. Likely this is hamsters, and that's data that we will also be doing. So we'll be testing in the hamster setting. And in the end, you'll go for the in vivo in human trial.

And in, in vivo in human trial, obviously, you will not be able to stratify all the variants. You will get all variants in one and maybe post hoc being able to kind of dissect, if you were more or less active in one or the other strain. And I can tell you that from our planning, we'll also have sites in South Africa, and this is a real global trial. So we expect to have patients with the different strains in our trial. And obviously, we hope that we will see activity throughout the trial and throughout the strains. But I'll leave Michael for a bit deeper dive there.

On the manufacturing side, it was great to see -- so Novartis came in. And obviously, they with Sandoz. And they have a huge background there, and they are ramping up as fast as they can. I think the bottleneck we are experiencing, I think most are experiencing is really the resins and the hardware you need for manufacturing. So they're kind of buying all of that and putting that in place.

And because that was, let's say, also not as fast as one could have hoped for because of the global shortage, Novartis is also engaged with our manufacturer, AGC, to also book additional slots where we are already producing. That's where we have everything ready. So we will get roughly as much as we can also out of the existing manufacturing slots.

And I think maybe Michael can give also some details there. As is for the subcu, we will run the first trial. So the registrational trial will be an IV trial, and we will then work also on the subcu formulation and subcu trials. I think it's really the question how much material do we have when, for which application. And it's -- so it's not if it's just a when. And also how easy you can bridge from one to the other. That's an ongoing discussion.

But the idea is in the end to have the subcu formulation, but to get, I guess, the first registration with the IV formulation. I think that's the plan today. That's kind of where things are set up, and then move and bridge to subcu as we go.

Michael, that was my, let's say, maybe superficial stuff, but happy if you can add a bit more flesh. And if you have additional points to that, Ken, please follow up.

Yes. Thanks, Patrick. Thanks, Patrick. So great questions, Ken, and we probably don't have time to go into all the details. Just one addition to your first question. We would like to see endpoints in the range of where our competitors have already reached.

So for an outpatient trial, you probably know the numbers for hospitalized life trial. So I think this molecule should be in range. If we are better and sure that will be good. But as you know, the variants are working against us.

I think on the manufacturing side, Patrick, you said it all. So ideally, I would love to have more manufacturing capacity coming online over time. But it's exactly, as Patrick said, constrained by global supplies. I'm not so hopeful anymore that the pandemic will disappear any time soon. So we are really planning for the long range. It will be probably with us globally for another, say, 2 to 3 years. And that's what we have to manufacture for us, that we will probably able to deliver, say, 1 million doses per month at the peak time.

And last but not least, also exactly, as Patrick said, we would like to launch everything as soon as possible. But IV formulation is easier, our concentration. So initial studies, IV. We have started with subcu formulation. It's not bad, but we would like to optimize it and then do the clinical study, which also depends on the final dose needed. So hopefully, we will be in the lower range. So a single subcu injection would be lovely. Otherwise, maybe 2 injections, but not something like 10 or 20 milliliters. We'd like to really make it convenient for, hopefully, end user self-injection. Love to sit down with you next time and talk in more detail so far so much for now.

Thanks, Michael.

So we have questions in the webcast as well. So I will consolidate those by topic as best as possible. The first 2 would be related to ensovibep in the clinic and Novartis and their licensure of the program when they would enact that.

So to start. First, you say Novartis wants to start a Phase II study soon. Does that mean that they will exercise their option or when at the latest do they have to exercise it? And on top of that secondary, is there a possibility to get emergency use authorization in early-stage Phase II for MP0420?

Michael, do you want to directly dive in?

Okay. So I think Novartis, like us, wants to see clinical proof of concept. So we need to start these patient studies, accumulate sufficient data points and then, hopefully, have the data that convinces us and Novartis that this is now ready for filing.

Depending on how the pandemic develops, how the virus strains go, how our profile looks into various trade -- sorry for that. So depending on how the pandemic goes, this may be earlier or later, but we need to gather sufficient safety data as well like everyone else.

So I cannot make exact predictions will really depend on many things. And I think Novartis is in a good position to then execute very quickly, scale up than the others. Patrick, over to you.

Yes. So I think the other part of the question I can take with the time point of licensing. So when, I guess, it's the interest of when would we see the money.

And I think we have defined it at proof of concept, and that's a rather open room. And I think it's also -- I mean, I think it's clear as soon as this goes towards registration, we will get a milestone and when that exactly is, we don't know yet. Keep in mind, we did this deal very fast. So it's around proof of concept. It's around when we go towards emergency use application. That's when we expect the milestone to come.

We are working as one team. I was actually today in a call with the Novartis leadership, and this is really just kind of both teams working in one. And we agreed, you sort of don't even know who's on which side at this point in time. There's no sides. It's one team, and we're all working hard to get this one to the patients and to the market.

Good. Seth, other questions? Or is somebody online for asking questions. Both works.

(Operator Instructions)

Sure. Thank you. And following up on the webcast for the team. Two more specific questions about the variants and mutations. First, into the virus mutate. Now its effect is reduced with the British variant. Are you looking to replace it with another candidate, which would be more effective?

And then another question to that, just in consolidation. Would it be correct to say that the F486V mutation was created by you in the laboratory, but has not actually been observed in the real world?

Michael, I'll hand it over to you. I think the first one.

I was waiting for you to hand it over. Thanks. I think it's too early to drop one candidate because it's only a small loss. And remember, 420 is fully active. So if there was a predominant U.K. variant somewhere, 420 would be, of course, then the drug to use.

We don't know how the pandemic will evolve. We don't know how it will go. So right now, 423 is the second molecule. And we are working on future molecules. Who knows how quickly the virus goes where, and we have to play catch-up for a while until maybe we can overtake the virus.

I'm not sure now about the second question. Patrick, what was the second question?

Yes. The 486 variant. Yes, that's one that was kind of predicted. Maybe Michael, you can go ahead and explain. Obviously, this is one we made in the test tube, yes.

Yes. So whenever, as a protein engineer, you look at your structure, of course, you see where the molecules bind. And then almost there's a negative control, just to confirm your experiment works. You try to hit it at the core just to see does the assay tell me what I want.

And luckily, other researches this time, it was a group in China. They already had profiled which of these surface residues are survival relevant for the virus. This was one of those which brings the viral infectivity to the very bottom.

So it's exactly, as you say, this does not come out of a circulating virus. This comes purely from lab research. That's why we are not at all worried. It's a confirmation that the whole setup works as it should.

And we knew that when we started the program. So this was one of those areas where we took a bit of cluster risk for 420. These are different binders, but that is one residue that they sort of share.

But we knew that this was an important one for the virus that is not easy to escape for. Then maybe just to add on what Michael said on the 423. So as long as one of both works, I mean, that's kind of the whole trick for us. I mean then we have an active compound.

And who tells us that in the next iteration, maybe 420 looses, but 423 is actually still active. So as long as we are in that situation that both are still covering everything out there, I think we will also move both. But as Michael said, this is a great moment in time to rethink and also build the next series of DARPins. Keep in mind, it took us 6 weeks to make the first series, now almost a year later, obviously, we know much more. Our next series would be better than the first. And as Michael said, we're not expecting this virus to vanish any time soon.

Worst case, it actually gets even worse and overcomes even vaccines. That will be obviously a global worst case. And for that, we want to be prepared that if the virus would become much more virulent, maybe to a level where simple antibody titers don't do the trick, that we then already with maybe even a next-generation DARPin.

Thanks, Seth. Very -- yes, very clear.

And the sign of the times, we're obviously more prone to webcast than phones, so I will keep going. The next question is more of a translatability of data question in the sense of what is your experience regarding DARPin efficacy between in vitro and in vivo? Was abicipar same effective as it was in vitro versus in vivo later, or perhaps historically across programs, you can comment, in general?

Yes. I think I can take that. So if you ask for translatability, that's really always asking a very clear mode of action question. And for abicipar, I mean block VEGF, and VEGF has the same activity in a rabbit eye, in a mouse or rat eye as it has in the human eye. So the translatability was very, very high.

So for a virus that, in our case, infect cells and we know in the hamster model where we see the activity, the mode of action is exactly the same. So we expect this to translate really easily and well.

And then let's take the other extreme, like local agonists, 310. I mean does it work in a test tube? Does it work in a mouse? Does it work in vivo in a human? That's a bigger step. And even there, we saw it work exactly as it does.

Same true for 274. So we can say, so far, every DARPin we have tested did what it was set out to also in humans. Did it always translate then into viable marketable drug? No, we know that, for different reasons. But the mode of action so far, we have 100% hit rate. So I think that's what gives us this strong belief that we will see the same also with the COVID approach. Patrick?

Yes. And then there was one last question, just simply asking about what about U.S. approval, easy enough just to summarize the strategy that we have with Novartis and the clinical study being designed today, the Phase II/III is a global study and obviously, getting this approved in every territory as quickly as possible is important. But this would have the U.S. approval in mind, including with the interim results from the early Phase A, portion of the study, which will give us around 400, 700 patients worth of data, which might be if emergency use is still an option, potential to file exceptionally early with the full understanding that a 2,000-plus component of that study is still ongoing for fully available data for full biological license application.

I will say that from -- Patrick, please go ahead. But then I'm just going to hand it back to you for final comment anyway. So we're all set.

I think, Michael, you go -- I think you also have another one for the mode of action. I mean, you're the expert in the virology space. So please take that first and then go to the U.S. approval.

And if I heard correct, then we close? Or do we have additional questions? Then we close.

All set from our side. So please go ahead and finalize your thoughts. Thanks.

Thanks. Just following on what you said, Patrick, before. It's a mode of action question. And connected to this, patients are different. Luckily, in virology, the virus is sort of the same in all of us. But in oncology, they can be very, very different. Every tumor is different. So that's why virology, relatively speaking, we're dealing with one disease-causing agent. And then there is a complexity, of course, how comorbidities leading to a cure or not.

But oncology is probably 1/4 of let me say, more complex because tumors are so versatile. Then the second question, regulatory, this will be a very interesting sort of a race. Maybe you're aware in Europe. MHRA was very quick with approving vaccines. Actually, Switzerland was relatively quick with giving even a full approval, and the U.S. was leading with emergency use authorization. So we will try to submit whenever the data allow so to say, simultaneously, there will be probably a bit of staggering.

I think almost every authority allows so-called rolling submissions. So whenever documents are ready, data ready, we can submit. And hopefully, the course of the pandemic can be followed. So if it's still worse, say, in the U.S., let's try to make sure we can launch there first. If however, maybe the U.S. is not so bad anymore, but another country looks really bad, like the U.K. around Christmas, we will try to go there first. And so far, our regulatory experience across the board was excellent and very helpful, very good dialogue with the authorities. So we will try to do the maximum to make this available as soon as possible after data now this year. Patrick?

Good. Thanks, Michael, for taking all the questions and really relevant answers. And thanks, Andreas, for presentation, and Seth for leading through this call.

With this, I want to thank everyone on the call for your interest, for your support and the questions. And I close that, and see you soon and keep you updated on our progress. Bye.

Thank you, all.