MorphoSys AG (MOR) 2013 Q1 法說會逐字稿

Ladies and gentlemen, welcome to the Morphosys' quarterly call on the financial results of Q1 2013. Please note that for the duration of this presentation all participants will be in listen-only mode and the conference is being recorded. After the presentation there will be an opportunity to ask questions. (Operator Instructions). Now I would like to turn the call over to Dr. Claudia Gutjahr-Loeser. Please go ahead.

Good afternoon and also good morning and welcome to our Q1 2013 conference call. I am Claudia Gutjahr-Loeser, Head of Corporate Communications and Investor Relations of Morphosys.

Before we start the presentation I have to remind you that during the conference call we will present and discuss certain forward-looking statements concerning the development of Morphosys' core technologies, the progress of its current research programs and the initiation of additional programs. Should actual conditions differ from the Company's assumptions, actual results and actions may differ from those anticipated. You are therefore cautioned not to place undue reliance on such forward-looking statements that speak only as of the date hereof.

With me today are Simon Moroney, our Chief Executive Officer and Jens Holstein, our Chief Financial Officer. Simon will start by giving you an operational overview of the first quarter. Before we open the call for your questions Jens will review the financial results of the first three months of 2013. Afterwards Simon and Jens will be answering questions on these topics. I would now like to hand over to Simon Moroney.

Thank you, Claudia, and also from me a warm welcome to the call. We got off to a very good start this year. Our financial results for Q1 are very solid, we successfully completed the divestment of AbD Serotec and, most importantly, our drug pipeline is making excellent progress.

Before we get into the details I'll briefly mention the divestment of AbD Serotec. The sale was completed on January 10 of this year. Completion early in 2013 means that we will carry reporting obligations for this discontinued operation with us for the remainder of the year. This has some consequences for our financial reporting, which Jens will cover in his presentation.

Most importantly for us, with the transaction completed we are now able to focus our full attention on the enormous opportunities we have on the Therapeutic side of the business. This was our primary goal in selling AbD Serotec.

Turning to slide five, I'll start my review of the quarter with the pipeline. Overall our pipeline of Therapeutic Antibodies, both partnered and proprietary, now comprises 80 programs. This is an all-time high and is a net gain of four over the end of last year. I'll go through the most recent developments, starting with our Proprietary portfolio.

On slide six of the presentation, all of the clinical programs are on track to hit the objectives we set for this year. Recall that the Proprietary Clinical portfolio comprises four programs; MOR103 for rheumatoid arthritis and multiple sclerosis; MOR 202 -- 208, sorry, which is in development for B-cell malignancies; and MOR 202 for multiple myeloma. To complete the picture we're also working on three programs in discovery.

Regarding MOR103, our HuCAL anti GM-CSF antibody, negotiations with potential licensees are continuing. As communicated previously, we will not comment on these discussions while they're still ongoing. We realize, of course, that there is great interest in the status of these discussions, but ask for your understanding that we do not want to say anything while negotiations progress. The process is proceeding pretty much as we expected as we work towards meeting our primary goal, which is to secure a partner who has the capability and commitment to develop MOR103 into a very successful drug.

Meanwhile, the Phase Ib study of MOR103 in multiple sclerosis patients continues. Here we're on track to complete recruitment into the trial by year-end and to report data from the trial in the first half of next year. Just to be clear, the conclusion of this trial is not gating for the partnering negotiations that are in progress for the overall program.

Turning to MOR208, our anti-CD19 antibody, the extension arm of the Phase I/IIa trial in CLL and SLL continues. We expect to be able to report data from this arm by mid-year. In the meantime, we've dosed the first patient in the Phase II trial in ALL and expect the second Phase II trial in NHL to commence shortly.

The ALL trial is being conducted at two of the leading centers in the US, namely, the MD Anderson Cancer Center and Ohio State University. We're delighted to have the involvement of the investigators at these institutions, which speaks for the promise of the drug. The fact that we're now running clinical trials both in Europe and, having passed the necessary approval process with the FDA in the United States as well, is another milestone for our development department.

The NHL trial will be conducted at sites across Europe and the United States and will recruit patients in the four main subtypes of NHL, mainly diffuse large B-cell lymphoma, follicular lymphoma, mantle cell lymphoma and indolent NHL. The intention is to identify those NHL sub-types for which MOR208 has the best chances of making a real difference in the treatment of the disease.

In parallel, we're planning a third Phase II trial for MOR208, this time in CLL. While we regard the data we've already seen in CLL patients as very promising, we believe that the greatest potential of MOR208 in this indication is likely to be in combination therapy. For this reason we're considering a trial that would combine MOR208 with an existing chemotherapeutic drug. The start of this trial is a little bit further off than those in NHL and ALL and we'll keep you posted as our plans develop.

Moving on to MOR202, our HuCAL anti-CD38 antibody, here, the Phase I trial in relapsed or refractory multiple myeloma patients continues to advance through the planned dosing range. We are gradually approaching a dose level in the trial at which we may expect to see first signs of a therapeutic effect. Recall that the study is open-label. We hope to be able to publish some clinical data from this study later in 2013, potentially, at the ASH conference in December.

As many of you know, interest in CD38 as a target for multiple myeloma has intensified on the back of clinical data from a competing program. We believe that MOR202 has the potential to become an important part of the armamentarium of drugs for multiple myeloma and may, therefore, be one of our most valuable assets. We look forward to continuing the trial and to updating you with the results as soon as we can.

Turning to slide seven and I'll turn now to our Partnered pipeline. The clinical scorecard here is as follows. Currently there is one Partnered program in Phase III development, seven in Phase II and nine in Phase I. I'll start with the most advanced program, namely, the HuCAL antibody Gantenerumab, which has being developed by Roche in prodromal Alzheimer's disease.

Very recently Roche disclosed some information on a planned interim analysis of the ongoing Phase II/III trial. We learned that the interim analysis is intended primarily to look at safety. We understand that this interim analysis will not look at efficacy and that the analysis will be carried out externally, the intention being to preserve the integrity of the trial.

During Q1 one new Partnered program entered the clinic. As announced yesterday, the HuCAL antibody developed in our collaboration with Novartis in the field of ophthalmology commenced Phase I trials. This triggered a milestone payment to Morphosys, which was booked in Q1.

On slide eight, and to complete my review of the quarter, two announcements illustrated progress with our new Antibody platform, Ylanthia. In January we were granted a US patent which covers the Ylanthia library. The patent has a scheduled expiry date in 2031, not including any potential regulatory extensions.

Then in February the announcement of our collaboration with Heptares, aimed at making antibodies against GPCRs and iron channels, became the second agreement within which Ylanthia would be applied.

That completes my operational review of the quarter. I will now hand over to Jens for the financial review.

Thank you, Simon. Ladies and gentlemen, also from my side a warm welcome to our Q1 2013 conference call. I would like to start with an overview about the most important financial figures for the first three months of 2013.

With the sale of AbD Serotec, which was completed on January 10, we adjusted our financial statements accordingly to the international accounting standard IFRS5. Substantially, all of the AbD Serotec segment is reported as discontinued operations. The remaining part of AbD Serotec, which was not part of the transaction with Bio-Rad, is classified as continued operations, along with the segments Partner Discovery and Proprietary Development.

Total Group revenues from continuing operations for the first three months amounted to EUR16.9m compared to EUR11.7m in the first quarter of the last year. This increase was primarily attributable to licensing fees relating to the sale of the AbD Serotec business to Bio-Rad.

The disposal of AbD Serotec included the sale of a non-exclusive license for the use of our HuCAL technology in the market for research reagents and diagnostics, a business activity that was already part of AbD Serotec in the past. Total operating expenses from continuing operations increased by 17%, to EUR14.6m. After the sale of AbD Serotec no costs were incurred.

In the first three months of 2013 research and development expenses rose by EUR1.1m, to EUR11m. This was first and foremost due to higher personnel costs and higher material costs. This increase was partly compensated by a reduction of costs for external laboratory services and intangibles. Compared to the first quarter of 2012, sales, general and administrative expenses increased by 44%, or EUR1.1m, to EUR3.6m, primarily due to higher expenses for personnel and for external services.

In the first three months of 2013 the EBIT from continuing operations amounted to EUR2.5m compared to a negative EBIT of EUR0.7m for the same period of the previous year. A net profit after tax of EUR1.9m was generated by our continuing operations in the first three months of 2013, compared to a net loss of over EUR0.3m in the first quarter of 2012. With the sale of AbD, Morphosys has been able to book an additional EUR6m profit after tax and, as a consequence, the total net profit of Q1 2013 amounted to EUR7.9m

Turning to slide 11, let's have now a closer look at our two business segments. The Partnered Discovery segment generated revenues in the amount of EUR16.9m in the first three months of 2013, compared to EUR11.1m in the previous year. The revenues of the Partnered Discovery segment comprised EUR16.5m from funded research and licensing fees, up from 10.7m in 2012, and success-based payments remained unchanged at EUR0.4m. Operating expenses increased by EUR1.2m versus Q1 2012, to EUR6.1m.

In the Proprietary Development segment no revenues were generated in the first quarter of 2013, compared to EUR0.5m in the first quarter of 2012, as the joint development activities with Novartis had been abandoned. Operating expenses were stable compared to the same period of 2012.

As mentioned before, the sale of AbD Serotec to Bio-Rad was completed on January 10, 2013. During the first 10 days of the year the segment generated revenues of EUR0.6m, compared to EUR0.5m in the first full quarter of 2012. Total operating expenses amounted to EUR2.3m, including transaction costs connected with the sale of the business segment. The directly-related transaction costs in Q1 have been EUR1.8m.

In connection with the deconsolidation of AbD Serotec we have been able to book a disposable gain of -- a disposal gain of EUR8m, resulting in profit before taxes from discontinued operations of EUR6.3m. The net profit of the discontinued operations amounted to EUR6m.

Turning to the balance sheet, on slide 13, on March 31, 2013 Morphosys' cash, securities and interest bearing assignable loans amounted to EUR177.4m compared with EUR135.7m at the end of 2012. This amount does not include a cash amount of EUR4.7m that is currently placed in an escrow account in connection with the sale of AbD Serotec.

Coming to slide 14, before we open up the call for your questions we would like to reconfirm our financial guidance for 2013. For 2013 Morphosys anticipates total Group revenues between EUR48m and EUR52m and an EBIT of between minus EUR18m and minus EUR22m. This guidance does not include a successful out-licensing of any of the Company's Proprietary Development programs, which could lead to an out-performance of this guidance. Investment in Proprietary product and technology development in 2013 will be approximately EUR32m to EUR37m.

Ladies and gentlemen, that concludes my review for the first three months of 2013 and I'll now hand back to Claudia for the Q&A session. Thank you.

Thank you. We will open up the call now for your questions.

(Operator Instructions). The first question comes from the line of Gary Waanders from Nomura Code Securities. Please go ahead.

Hi, there, just a couple of questions on the outlook for the year. Could you tell us how you think the costs will be spread across the year, I guess, the revenues as well? Should we just assume a straight line, in which case we need to adjust, given the AbD revenue that you booked in Q1? Yes, any thoughts on that please?

And then, secondly, the EUR4.7m that's in the escrow account, is that likely to be released at any point? Could you give us any guidance on that? Thank you.

Yes, thanks very much, Gary, for the questions. Maybe coming to the guidance topic first, in terms of R&D spending it's certainly expectable that the costs will increase, reflecting the fact that we start two Phase II programs -- or we have started already one and the second one will start very shortly in -- for MOR208. So certainly the costs for that R&D part will increase, whereas, many of the others rather have a stable sort of development.

In terms of the revenues, it's true that the license fee which we have received from Bio-Rad certainly has to be taken out of the first-quarter figures. In terms of the total revenue figure, I think that we feel that the guidance of EUR48m to EUR52m is still a valid one and should be assumed for your models.

Coming to the second question, the escrow account, yes, indeed we expect that the escrow account will release one day and that will be around mid of 2014.

Okay, thank you.

We currently have no questions coming through, so, as a reminder, (Operator Instructions). The next question comes from the line of Sachin Soni from Kempen & Co. Please go ahead.

Good afternoon, everyone, my question is regarding commercializing of the Ylanthia platform. Can we expect more deals coming in the second half and, if so, what magnitude would that be? Is it going to be as big as the one you signed with Slonomics, or it could be smaller or lower than that?

And the next one would be MOR202. What's the first point when you would be saying something about this candidate during this year? Is it going to be ASH or earlier than that? Thanks

Thanks, Sachin. So first of all, regarding Ylanthia, we are in discussions with interested parties regarding commercialization of Ylanthia, but at this stage we prefer not to give any guidance about what kind of deals are in discussion in terms of scope or, indeed, timing. This is simply consistent with our policy of not commenting on ongoing discussions and negotiations, so we'll have to ask you to bear with us while those -- while that process continues.

We do believe we have a great new technology here. It's been put to use in our Novartis agreement. You will recall that we defined the terms under which that could be used within the Novartis agreement towards the end of last year and we're looking forward to using it in other collaborations as well, but those discussions are continuing.

Turning to MOR202, it's an open-label trial, of course, and we would expect to release data at such time as we see anything that really is worth reporting in the clinic. At this stage we're assuming that the earliest point would be the ASH conference. If indeed there is something worth reporting prior to that we would do so, but at this stage our best guess is that it would be ASH. But we would certainly pre-empt ASH if necessary based on promising data that we may see in the clinic.

Great, thank you.

The next question comes from the line of Gunnar Romer from Deutsche Bank. Please go ahead.

Yes, good afternoon, everyone, it's Gunnar Romer from Deutsche Bank. First question would be on your understanding for the interim readout of Gantenerumab. Could you share your thoughts on when this is going to happen?

And then, secondly, on -- back again on R&D. You're now trailing slightly below what is implied by your guidance and coming back to the question of Gary. I was just wondering is it going to be back-end loaded, significantly back-end loaded, or should we think about the remainder of your R&D budget being roughly equally split over the quarters?

And then, finally, on MOR103 I appreciate that you're not commenting on ongoing discussions. I was just wondering whether you could share with us your confidence level for partnering bios) still this year. Thank you.

Thanks, Gunnar. Let me take your questions one and three, and Jens will up on the second question. Regarding the interim readout for Gantenerumab, our information on this is based on a call that the head of CNS at Roche held a few weeks ago. And our information -- or our understanding of that is that it will take place this year. But we're not exactly sure when this year that will be, so obviously some time within the remaining, whatever, seven or eight months, but precisely when we're not sure.

Regarding MOR103, yes, we feel good about this. The discussions are, as I said, proceeding pretty much as we expected. We're happy with the quality of the partners -- potential partners at the table. And it was always our goal to do a deal this year and I continue to be hopeful that that will be the case. But, as I said, we don't want to jeopardize, or endanger, or in any way influence those negotiations while they're still ongoing. And I'm sure you'll understand that.

Yes. Then coming to your second question, Gunnar, on R&D expenses, it is certainly the case that the second half will show higher costs than the first half, again, just being -- reflecting the current development of our investments in the Phase II trials in MOR202, which one has started just recently and the other one will start very recently.

So out of the fact that we have those Phase II trials ongoing for two quarters, in the second half and only, basically, one quarter in the first half, the impact will be that the total R&D guidance which we have given, of EUR32m to EUR37m, will, rather, take place in the second half. And then we also have the third trial in CLL which also will kick in some costs, so therefore -- and I think its worth to take a higher share of the total costs in the second half for this year.

Okay. Thank you, that's helpful. And maybe one follow up. On your announcement yesterday I think in the press release you indicated five potential additional clinical milestones in the current year. Could you remind us of what those potential milestones would be?

Yes, this relates to Proprietary and Partnered programs moving from one phase of development to the other. I can't off the top of my head give you the precise transitions and which programs that refers to, but we can get back to and that if you need to know those exact programs.

But it's basically across the board? It's not indicating potential Phase I initiations?

Yes, exactly, I see what you're getting at now. That represents transitions, let's put it that way --

Yes.

-- either from pre-clinic into the clinic, or from Phase I to Phase II and so on.

Yes, and maybe -- so to clarify that, Gunner, on that respect you should be aware that we have some partners for which we get payments for a move from a Phase I and a Phase II. But we will have, to great extent, also partnerships where we don't get any payments from Phase I into Phase II. So you can't reflect any total payments -- milestone payments for 2013 based on that information.

Okay. But maybe if all of them would actually happen what would this mean roughly in terms of milestones? Which -- would this already bring you to the upper end of the revenue guidance, just to get a feeling for it?

We don't want to destroy your feelings, Gunnar. No, we weren't commenting on this type of details here. And it's -- yes, as you know, it's to a great extent also very difficult to predict. It's not that we're not willing, but it's really difficult to predict which -- exactly which program will make it and which of the programs which we have in mind will not make it in this year.

So I think what always do is that we'll try to somehow evaluate the potential of the various programs and look at them. Partially, certainly, we have risk adjust them, because we have also seen some years where we had extremely good outcome and some years where the outcome was not so strong. So we'll have to carefully evaluate what do we take into guidance and what we do not take into our guidance. And we have reflected what we believe is realistic in the EUR48m to EUR52m.

Okay, much appreciated. Thank you.

The next question comes from the line of Mick Cooper from Edison. Please go ahead.

Hi, just one question regarding MOR202. Given the interest in CD38 -- or your competitive CD38, can you give us an update on what your strategy is with the product? Is it to hold onto it and develop it as far as you can? Or is it, actually, maybe do an earlier out-licensing deal to accelerate development?

Yes, thanks, Mick. There is indeed a lot of interest in this target right now. And we have been approached by a multitude of pharma and big biotech companies who are interested in this program and we are listening to what they have to say.

So our default plan, if you like, for all of our Proprietary Clinical programs have been to go to proof of concept and then look to partner as per MOR103, for example. This case has maybe created an interesting new situation just given the level of interest because of the clinical data we've seen in another CD38 program.

So at this stage we're simply listening to what these interested parties have to say and haven't made any decision yet about what impact that may have on our strategy for MOR202. Overall, the most important thing is that we want this program to move forward as fast as possible and we will do whatever we need to do to make that happen.

Thank you.

The next question comes from the line of George Zavoico from MLV & Co. Please go ahead.

Hi, good morning from New York. Good afternoon in Europe. I'm very pleased to see the progress you're making since the solution of your -- from the shedding of your -- of AbD Serotec. I have a question more in general, because what this seems to be leading to is an overall transition and evolution from essentially a service and commercial company to a more traditional standalone biotechnology/pharmaceutical company.

In that regard, and some of the former questioners have alluded to this, ultimately, to get the best value from your pipeline in your Discovery programs you will have to commercialize and sell on your own, mostly likely. Is that part of your plan? And are you looking to do that -- to make that transition more in the earlier, say four- to five-year timeframe, or later on, say, seven- or eight-year timeframe, depending on how the partnering -- your Partnered programs provide revenue and how your Proprietary programs progress?

Yes, thanks, George. That's a good question. And it really -- our strategy for the individual compounds is a case-by-case strategy. So if we look at MOR103, for example, which we think is a huge opportunity in a big indication such as rheumatoid arthritis, it was always clear to us that the best thing to do for that was to get it into the hands of a partner whose capable of making the most of it in that very large indication. And so that was always going to be something that we weren't going to develop all the way to market ourselves.

When we look at a couple of the programs coming behind that, such as the cancer programs 202 and 208, one can think about those a little bit differently. So, there, our thinking is perhaps that those represent opportunities for us to stay involved longer and, indeed, to hang on to even more of the upside and maybe even participate in the selling of those compounds in one form or another.

So, you're right, it's -- and it's a kind of an evolution. We've evolved as a company from a pure, if you like, service business which we were several years ago, which has been extremely lucrative for us and has produced this fantastic Partnered pipeline. But as those programs mature in the other market and as that Partnered business generates more and more cash flow for us, we're able to think about investing more of that cash flow in our Proprietary programs and retaining more value, which, ultimately, is in the interests of the shareholders, of course.

So it's a progress of evolution. But I think we're approaching a very interesting stage for the Company, where we can indeed be viewed more as a classical and maturing biopharmaceutical company than a pure fee-for-service business. But the decisions around the individual programs will be made very much case by case, based on the merits of the individual programs.

That sounds like a good strategy in the sense that the particular value of each individual asset will drive your decision going forward. And you certainly have, as you mentioned, due to the lucrative nature of the partnering, position -- you certainly have the cash position to not to have to rush anything.

Second part of my question -- second question is regarding the new technologies. The Antibody field, of course, is maturing some more. And just straight-on antibodies are making way for antibody drug conjugates, bi-functional antibodies, you name it. There's any number of opportunities there for engineering antibodies, as well as target discovery, rather than just using -- making better antibodies for existing targets. What are your views ongoing in those two directions?

So we have some effort in -- we have some exploratory feasibility work in the bio-specific area going on right now. Where that leads to we will have to see. It's very early stage, but this is one alternative format that we currently looking at a little bit. The biggest effort at the moment is ongoing in the area of targets, particularly GPCRs and iron channels. This is the basis of our partnership with Heptares.

We believe that if a solution can be found to the challenge of making antibodies against these difficult target classes, which we know to be extremely important therapeutic classes, that that would represent a major breakthrough. And we know that there's huge interest in the industry to this approach.

No-one has cracked this yet and that's why this is something that we're putting quite some effort into to figure out a way, combining our antibody expertise, the Ylanthia technology, with Heptares' target presentation technology to figure out how to consistently make good antibodies against these difficult, but very important, targets. So that's something that's a major focus for what's going internally at the moment and which, if we can solve that one, I think would be incredibly valuable.

Terrific. I wish you the best of luck in that regard and look forward to any presentations as you make progress at scientific meetings. Congratulations and thank you for taking my questions.

Thanks, George.

Next question comes from the line of Thomas Schiessle from EQUI. TS. Please go ahead.

Thank you, Thomas Schiessle, Frankfurt, speaking. Two questions, if I may, to Simon. One on the new way of getting the FDA approval for the [base route] designation. Will that have any implications or consequences for your own work and your efforts towards the FDA approval so far? What is your thought about that fast track -- new fast-track lane in the US?

And the second question is on the ceasing of the project with Absynth Biologic on an infectious disease pre-clinical target. Will that jeopardize your activities in the indication of infectious disease, for example, with Galapagos? Thank you.

Thanks, Thomas. I think I missed a little bit of the first question. You were referring to the fast-track designation for the other anti-CD38 antibody, the competing one. Is that right?

No, not the specific fast track. No. It's the new policy in the FDA, this fast-track registration path --

Right.

-- called breakthrough designation or something like that.

Yes, right. So in general we're very interested in moving programs forward as quickly as we possibly can. And we look at any and every means possible to have our Proprietary programs move as quickly as they can. And to the extent that any new FDA or existing FDA policies can be applied to our existing programs, we will certainly look to take advantage of those.

So, yes, this is -- our experience and exposure to the US regulatory scene is relatively new, but we are well advised here and I think have growing experience here and will certainly look to take advantage of whatever tracks there are to accelerate programs.

Turning to your question regarding Absynth, indeed, we stopped that program that was one of our Discovery activities, which can happen, of course, during Discovery. We look to rationalize programs when it's necessary. We take those programs forward that we think show the most promise. If a program doesn't show promise then we may choose to stop it.

It doesn't impact our commitment to infectious diseases. In fact, we do have a different program ongoing in the same field, mainly MRSA, so that continues that other program. So that shows you that that particular around the Absynth program has nothing to do in general with our interest in infectious diseases.

So it's a very specific reason for stopping this project?

Simply based on the data that was generated in that particular project.

Yes. Okay, thank you so far.

We have a follow-up question from the line of Gary Waanders from Nomura Code Securities. Please go ahead.

Yes, hi there. Just a quick one on the MOR208 plans. That trial that you've hinted at in CLL with combination chemotherapy, just give us an idea of when that might start. Would that be this year?

Yes, Gary, we hope so. We're currently talking to the principal investigator about the details of the design of that trial, the combination partner, which will be a small molecule whose identity we haven't yet finalized, so we're working out on some of those details. But we do indeed hope that that trial could start this year.

And not in the US, then, I take it?

Probably indeed in the US.

Okay. All good, thank you.

Thanks.

The next question comes from the line of Victoria English from Publication MedNous. Please go ahead.

Yes, Simon, thank you for taking my telephone call. You have described the sale of AbD Serotec and the fact that that's cash generating. Is there -- are you open to the possibility of in-licensing molecules, bearing in mind that MOR208 was, in fact, an in-licensed product? Are there things out there that might very well complement what you're doing right now?

Yes, thanks, Victoria. Indeed, we're interested in in-licensing candidate compounds. We continue to scour the landscape for interesting, primarily, antibodies in early-stage development. And to the extent that we can identify something similar to a MOR208, for example, which we think was a great transaction and has been a great addition to our Proprietary portfolio, to the extent that we can identify candidates such as that, then we'd be very interested in in-licensing them.

We have the wherewithal to do that. We have the cash to be able to do that. We have the development organization to be able to take compounds forward. So that continues to be something that we're looking at very actively.

Thank you.

(Operator Instructions). Thank you. We have no further questions coming through, so I will hand back to Simon Moroney to wrap up today's call.

Thank you. To complete the call I'd like to remind you of the main takeaway messages.

First, the financial results reflect a quarter of solid operational performance. Second, our Proprietary portfolio of clinical assets is progressing according to plan. And, finally, news on Gantenerumab, plus a new clinical program from Novartis are symbolic of excellent ongoing progress in the Partnered pipeline.

That concludes our call. If any of you would like to follow up with us we are in the office or the remainder of the day. Thank you for your participation on the call and goodbye.

Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for joining and have a pleasant day. Goodbye.