Valneva SE (VALN) 2017 Q3 法說會逐字稿

Thank you. Good day, and warm welcome to Valneva's analyst call on our 9 months financial results and general operational update.

On this call, I'm joined by 2 of my management board colleagues, David Lawrence, our Chief Financial Officer; and Franck Grimaud, President and Chief Business officer.

Highlights for the first 9 months of our business included strong financial performance and a major R&D progress combined with an encouraging upcoming news flow. Our financial performance is driven by excellent rate growth and improved business productivity resulting in strong EBITDA and positive operating cash flow leading to an upward revision of our 2017 EBITDA guidance. Major R&D progress includes our ongoing Lyme Phase I and forthcoming Phase I initiation in quarter 1, 2018, for our Chikungunya and Zika programs, which I will later explain in detail. With this short introduction, I would like to hand over to David to give us the financial report.

Thank you, Thomas, and good day to all of you who've called in. And I think by now I can see I've met several people who are on the call, which wasn't the case when I had the chance to do the half 1 results. So really I want to build on what Thomas has said. I'm going to the some of the financial numbers. This next slide, which is Slide 5, I believe, talks our 9 months results and this is similar picture to the one that we showed in H1. And what we're doing here is basically bringing a lot of focus on to the main value drivers of the company, and those being our 2 products, DUKORAL and IXIARO for Japanese encephalitis and Lyme disease R&D asset. So what we can see here is that those 2 products, DUKORAL and IXIARO, make up about 85% of total revenue, and we've had good product sales growth and as I'd said last we intended and planned. Furthermore, that we also see ongoing margin improvement, which is something we've -- I talked about before. Gross margin year-to-date is almost 60% and that compares favorably with the H1 number, which was about 56%. So really in keeping with the story that I told before at H1, we've strong product sales growth and ongoing margin improvement. And as Thomas said, this is giving us a phenomenal performance. And the product sales have grown 20% year-on-year for the 9 months, which is fantastic. And I'm much indebted to the whole team and our commercial team for that performance. Secondly, related to the margin, of course, there's an ongoing fantastic performance our sites. And that ongoing operational productivity is driving the upward revision in EBITDA guidance, which I'll come onto in a second.

Just moving on to the next slide. I'm going to draw attention to a couple of things here. The first one is that, we're focusing on the 9 months results. And as many of you know, and indeed many of you have discussed with me that, Valneva has 2 strong products, but these are driven by combination of timing of U.S. military orders, for example, and seasonal sales. Therefore, it is our intent in order to make the numbers as meaningful as possible to start to report only the year-to-date numbers and in this case, the 9 months for this year so far. And we believe that's in keeping with the feedback that I'm getting from analysts and equity capital markets folks, and it helps see a better trend in our business comparing -- trying to compare quarter-to-quarter. So looking at these -- looking at the numbers, revenues almost EUR 80 million for the year-to-date, great performance, we're tracking really nicely as intended. And the other number, I'm going to pick up here, is the R&D expenses have moved up since the 6-month numbers, about now EUR 15 million, and I wanted to emphasize, again, that we do see and expect and anticipate growth in the R&D expenses in Q4 and in future as we advance our key programs. And we will come back just to reiterate that later in the presentation. But a combination of the ongoing sales and operating performance as therefore leading us, and I'm very pleased to say, to increase our EBITDA guidance to EUR 10 million to EUR 13 million and that's up from previously EUR 5 million to EUR 10 million and that's been the main headline that I'm going to finish up with. And I'm going to hand on to Franck to talk more in detail about the excellent sales performance that's ongoing.

Thank you, David. Good afternoon, gentlemen -- ladies and gentlemen. So if you go to Slide 10, you will see that the revenue of our Japanese encephalitis vaccines rose to EUR 45.9 million in the first 9 months of 2017. The growth was mainly driven by the extension of the U.S. Military recommendation to the Navy and an increased penetration in key traveler markets including Germany, U.K. and Canada. Approximately 2/3 of our JEV sales are now generated through our commercial infrastructure, and we will continue to increase awareness in key markets, which should further develop market penetration. As you may have seen, we also announced at the beginning of the week the signing of a contract with the U.S. Military worth of USD 239.6 million. This contract supplements the initial one signed in March 2016 since we reached the maximum quantity of dose in the world earlier than expected. We will supply the dose over 1-year period and first delivery are expected to commence in the coming weeks. In terms of full year guidance, we confirm our outlook of around 10% growth in IXIARO revenue compared to 2016 so with the target around EUR 60 million for the full year. Now moving to our cholera/ETEC vaccine DUKORAL on Slide 12. We recorded a substantial growth of 34% in the first 9 months of the year compared to the same period last year with revenues reaching EUR 19.9 million. In addition to Canada where more than 50% of DUKORAL global revenue are generated, the vaccines benefit from strong sales in the U.K. market in particular.

Looking at the full year, we reaffirm our DUKORAL revenue guidance of approximately EUR 27 million compared to 2016 with the Canadian and U.K. market as key driver of the growth. We will continue to focus on geographic expansion activity to unlock future growth in Europe and the rest of the world. So with that, I hand over to Thomas for the rest of the presentation.

Thanks so much, Franck. Yes, so let me start with an update on our R&D programs and our R&D activities. And here, I would like to first start with an update on our C. diff candidate. By way of reminder, we developed this program successfully to enter Phase II under a specific partnering and licensing agreement with Novartis Vaccines and Diagnostics. With Novartis Vaccines becoming part of GSK, GSK opted out on this program ahead of our Phase II data. Since then, we completed the program's Phase III readiness and has been seeking partners to potentially take this program into further development, while we have decided to focus our R&D resources on our vector transmitted disease vaccine programs, most importantly our Lyme program. It is, however, fair to say that potential partners are hesitant about the level of Phase III investments required and the investment risk proposition in this while encouraging but also challenging indication, an indication, again, by way of reminder that is supposed to tackle a very high unmet medical need, namely healthcare-associated diarrhea, which is an increasing threat to elderly and hence, vaccines are desperately needed. We have, therefore, reconsidered our approach and have decided to go for a new development and partnering approach. We will wait for the first vaccine candidate against C. diff to be approved, and thereafter consider a head-to-head non-inferiority Phase III on the basis of an immunological correlate. This approach, as you will certainly understand, is expected to substantially improve the investment risk proposition for our own or partner development to market, which we will consider at that time. By way of reminder, also, it is important to remember that we consider our program non-inferior compared to the other ongoing Clostridium difficile vaccine programs based on the comparable immunological profile as we have seen based on published data at the end of Phase II and, of course, our good safety and tolerability profiles that we have in our vaccine program, which even may have potential distinct comparative advantages on industrialization and further manufacturing and hence a huge commercial value even if serve to market.

Let me hand over now to Lyme. We are very proud of our Lyme program, as you all know, which is the only active clinical program right now in the market in an area where the disease is increasing steadily and its severity is, without any question, something that justifies the development of vaccine in a vaccine preventable disease. And we know that lyme is a vaccine preventable disease because there have been prior lyme vaccines, specifically one in the United States. But our approach is unique because there are many different serotypes of Lyme borreliosis across the globe, and we're tackling with our vaccine, which is a multivalent, protein subunit-based vaccine, all the different serotypes and the outer surface protein A borreliosis. And with that, we will have a vaccine that is suitable for both sides of the Atlantic. We have completed our operational Phase I conduct. We're now in serological testing, hence we expect Phase I data in quarter 1, 2018. We have succeed -- received FDA contract designation and based on that, we will immediately start the Phase II initiation after the availability of first Phase I data in quarter 1, 2018. The respective preparations for the Phase II, including the necessary consultation processes with regulators have been initiated. With that, I would like to move on through our 2 mosquito transmitted disease vaccine programs. And I would like to start with our Chikungunya vaccine. We have reported before that different to Lyme where we are alone in clinical development. In Chikungunya, there are multiple parties working right now on a vaccine development in a disease area of high unmet medical needs. The disease outbreaks have shown high attack rates and those infected have experienced prolonged symptoms or long-term sequelae. So, therefore, there is a justification to develop the vaccines. And our vaccine may have a differentiation potential compared to others currently going -- undergoing different developments. The differentiation is that, we believe that our vaccine has the potential to be a single shot vaccine. And by way of reminder, our vaccine candidates -- candidate is a monovalent single dose live attenuated virus vaccine, in which the infectious clone was attenuated by deleting a large part of the gene coding alphavirus replicates. We're expecting to initiate Phase I in the United States in early 2018 and this Phase I is expected to evaluate safety and immunogenicity in approximately 120 subjects and to confirm antibody persistence beyond the 6 months horizon. As you know, the primary target population for this vaccine will be travelers to endemic regions and military, but also public endemic markets and emergency stockpilings as secondary target populations. And especially here, the differentiated single shot vaccine may have huge potential. The third program that we have currently active in our R&D pipeline is a vaccine against the global threat of Zika. As announced earlier in the year, Valneva and Emergent BioSolutions have joined forces to accelerate the development of this vaccine candidate. Our vaccine candidate is a highly purified inactivated vaccine, developed using Valneva's proven and licensed inactivated JE vaccine platform from IXIARO. The preclinical testing has been completed and demonstrated excellent purity in-vivo neutralization and overall a biological, chemical and physical profile comparable to IXIARO. Our preparations for the Phase I are ongoing. And the Phase I will evaluate safety and immunogenicity. We'll start the Phase I also the early 2018, and we expect data in 2018. The co-development deal with Emergent BioSolutions includes an opt-in post Phase I and upon this potential opt-in by Emergent, we will receive milestones and royalties of almost up to EUR 50 million altogether and later royalties on sales. We are very happy with the collaboration, and we believe that by joining forces, we will be able to provide a vaccine that will be safe and effective in an area of very high unmet medical need.

With this short update on our work R&D programs, I would like to move on to the outlook for the rest of the year. And I would like to point you to Page 20 of the presentation where we summarized one more time the key financial performance indicators. Comparing it to 2016 and to the full year outlook of 2017. Total revenues are expected for the full year in the guided range of EUR 105 million to EUR 115 million, which means a 17% -- up to 17% growth compared to 2016. Franck and David have already talked about the sales performance of our 2 proprietary commercial products, IXIARO and DUKORAL. And we will see a 10% to 15% product sales growth on IXIARO and approximately 10% sales growth for DUKORAL till the end of the year. David already explained that compared to our initial guidance of the year, which was EUR 21 million to EUR 23 million for R&D, we will invest EUR 23 million to EUR 25 million mainly driven by the acceleration of our Lyme program and the respective resources that we need in order to bring the program faster throughout its development chain. Despite of higher R&D expenses, we have been able to revise our guidance for EBITDA, and this shows to you that we're not performing very, very nicely on our top line, but also on the overall business productivity. Looking ahead and talking a little bit about the upcoming news flow. Of course, we will continue to expand our commercial infrastructure to support sales growth and we will look into territory expansions alongside with a key growth drivers that Franck has already explained. I mentioned the upcoming Phase I initiations for Chikungunya and Zika both early 2018. The Lyme results that will come in quarter 1, 2018, followed immediately by Phase II initiation. And we will hold a Lyme-specific R&D Investor Day towards the end of the first quarter 2018, early second quarter 2018 a; of course, to present data, but also to give a prospect of the future development to licensure and the medical need and market access for this desperately needed vaccine candidate. And according to our base business model, we will continue to see additional EB66 and IC31 a licensing agreements, which are expected to support our bottom line in a business sector where we're literally not investing and therefore, all top line incomes end up primarily at the bottom line. With that, I would like to conclude our update. Once more, we feel very proud of what we have achieved thus far. We're thrilled about the forthcoming news flow, and we are now happy to take your questions. Thank you so much.

(Operator Instructions) We do have our first question from Max Herrmann from Stifel.

Just a few questions around the financials for David and then one on the implications of fast track designation on Lyme disease program. So just in terms of on the financials. There seem to be a very significant gross margin improvement in the third quarter. And I wonder whether that was a reflection of some unwindings of some of the elements that you talked about previously with products and manufacturing. And with regards to that, where do you think the gross margin could go the longer term? And then just in terms of grant income seems to be nice element of grant income in the third quarter. And I wondered what that related to and what the outlook was for grant income going forward. And then finally just on the Lyme disease program. Just in terms of fast track designation. How do you expect the time lines to be given in the fast track designation in terms of developing this through Phase II and Phase III?

David, so you start with the financials, please.

Yes. Max, Thanks for the questions. And you are quite right, the GM is good in Q3. There is a combination of effects in there. One is that, I think, in the half 1 results we reported some write-offs and those obviously depressed the margin for, I think, one but we didn't see anything like that impact in Q3. So that's one of the drivers. I think the second driver in terms of the nonproduct sales revenue, including grant income but also -- and that was by the way for CHIKV. We recognized some grant income for CHIKV. But we also got some revenue recognition for Zika in the quarter, and that tends to flow straight through to the bottom line actually. And that's one of the reasons why we try to lean. And we're now trying to focus on the product sales and what we control and that, kind of, sustainable growth that we believe we can have. And Max, you may, I'm sure, you'll have looked to the company presentation that is available on our website. So what we published there is that, we target 70% GM for -- gross margin for Japanese encephalitis and you may remember in the H1 that we said, we'd actually achieved that in several quarters in the targets to make that sustainable. And then secondly, we have a gross margin target for DUKORAL of 55%. Clearly those are the only ones we can talk about because the -- in terms of what's in other, that whole mix of R&D, tax credits grants, deal revenue, et cetera. And you can't really guide in the margin as such for those, but we anticipate that we're in very good shape to meet those corporate targets of getting towards 70% for JE and 55% for DUKORAL.

Okay. So Max, I'm going to answer, as good as I can, to your question around the Lyme and the fast track. I mean, as you know, fast track designating is granted by the FDA to products that are under development for serious conditions and have the potential to fulfill high unmet medical needs. This is the reason why our Lyme program qualified for it. The fast track program is designed to facilitate and expedite the review of not only development strategies, but also later ongoing submissions in order to get programs faster to the market. We're at this point in time preparing the route to licensure, let's put it this way. Starting with an agreement on the Phase II design without going too much in the details, we have now Phase II design that allows us to proceed into Phase III with a single combined Phase II that would be suitable for Phase III entry both in Europe as well as in the United States. Then when it comes to the specifics of the Phase III development, we will have this discussion with the agency early next year, and only thereafter we will be able to, I would say, reliably talk about the final plan to licensure. And this is another reason why we have announced already today that we're going to hold a Lyme-specific R&D Day later quarter 1 or early quarter 2. And during that meeting, we expect to also present the final route to licensure.

We will now take our next question from Samir Devani from Rx Securities.

Just in relation to the U.S. contract award yesterday. I'm just wondering if you could, perhaps, just give us maybe some qualitative commentary around volume, pricing and maybe whether you're seeing more booster doses in this contract than previously.

Franck, do you want to comment?

Yes. So again, to the extent we can give information. So first regarding the pricing. As you know, in U.S. we're a legal commitment to propose to the U.S. Military pricing, which is at least 24% below the private price market -- yes, the private market price, sorry. So that gives you a guidance on the pricing. Regarding the volume, we do believe that we will see more an effect of the U.S. Navy new recommendation to be vaccinated, which was the last crop, which -- to take this recommendation and all other part of the U.S. Military already adopted this recommendation a bit more than 1 year ago. So we expect that to be the main driver. And the key that most of the troops deployed in Asia come from the U.S. Navy. So it will be the main driver.

Okay. And then just couple more questions. One on the R&D. Should we be thinking of a significant step-up for next year and I don't expect you to give us exact guidance. But you've highlighted, obviously, the raise this year, again. So just wondering how we should be think about maybe next year's R&D. And then the final question is on the C. diff change in strategy. Perhaps you can just outline what do you think sort of non-inferior, call it, a protection study looks like from a patient -- number of patients and cost prospective, just to give us some insights into how cheaper that study might be?

Okay. So where do you want to start. So let me talk about -- let me talk about C. diff, and I will leave the other questions for my colleagues. But maybe I can answer both. So on C. diff, it is very difficult at this moment in time to basically describe in detail how big of a study this is going to be because it depends on the results of those vaccine candidates, the final Phase IIIs, the level of efficacy that they're going to see, and the potential correlation with immunological data, most meaningfully toxin utilization and general antibody retarders. I would expect that, that such a trial could be at a level of 40% to 50% in terms of total subjects compared to a field efficacy at max, right. So this means -- this means also that you can really ballpark assume that it's probably going to cost half of what pivotal field efficacy trial is going to cost. All the other Phase IIIs -- Phase III requirements like lot-to-lot consistency or postmarketing cost, et cetera, will, of course, be the same. In terms of total R&D spend for next year, yes, there will be an increase compared to this year. But how big it will be? I mean, it's not going to be a 30% increase compared to this year. So it will be higher, but I would say that the real peak will come when the Phase III preparations and then the Phase III conduct for Lyme is going to take place. And this will be 19%, 20%, 21%. So if you for yourself always assumed 10% to 20% increase max, you would be possibly on the safe side.

(Operator Instructions) We now have our next question from Thomas Guillot from Kepler Cheuvreux.

2, if I may. Just to go back on the gross margin. Could you give us the speed between IXIARO and DUKORAL as you used to do so in your previous report in order to have some more color on the speed between the 2 products -- both products? Also how do you see the season of DUKORAL for the Q4 or how do you see that so far? And last question, if I may, on R&D expense. What could we expect for the Q4 following your increased guidance? And the last question, if I may, on the military contract. What do you expect to sign in the future -- would it be 2 years contract or one-on-one year contract?

So let me start with your 2 last questions. So first of all, R&D. I mean, you saw the numbers that we reported at the end of the third quarter. And you see as we gave a guidance between EUR 23 million to EUR 25 million. And this delta is exactly the delta for the fourth quarter, right. The reason why R&D expenditure peaks in the fourth quarter is because the cost for the finalization or the final cost of Lyme Phase I come primarily into the fourth quarter and the start-up cost for the 2 Phase Is for Zika and CHIKV. So when we talk -- then 1 comment before I hand over to Franck on the seasonality pattern to the military. It is very difficult to predict how the military translates their demand into contracts. One year, they may decide to go for a 1-year contract, the next year, they may decide to for 2-year contract. There are multiple examples, where they do one or the other. So for us the important thing is that, it is a mandatory vaccine for the troops. We know that there is still expansion potential in the nonarmed forces. And, of course, there may be additional growth potential, if the number of forces in Asia will be increased for whatever political reasons. So for modeling purposes, we're always considering that we have reached already a very high level of IXIARO sales in the U.S. Military and that there's moderate growth, if any, in those segments and the major growth and by a way of reminder, we expected, as we have said earlier, a continues double-digit growth for IXIARO, is coming from the travelers segment. Franck, do you want to say a few words about the seasonality of DUKORAL first quarter and so on and so forth.

Yes. So on DUKORAL indeed, as you can see, we expect to generate EUR 7 million in the quarter 4 of, technically, 27% in quarter 4. It's always driven by Canada where DUKORAL is in Canada's roughly 70% to 75% of the revenue -- yearly revenues are concentrated in Q1 and Q4 when Canadians are looking for fun in the Caribbean. So we expect this year to be the same than usual.

Just to go back on that. So you expect a slightly lower side than the last season, right?

So roughly in December, [pass count] roughly.

Okay. And about the gross margin?

Yes, so and Thomas, it's a fair question noting that we've done it before. So just to fit it in context, I have talked in the presentation, the first, a target 70% for JE and 55% for DUKORAL. For the year-to-date, we're running at 66% for Japanese encephalitis, so that's IXIARO and 47% for DUKORAL year-to-date. And we would obviously -- we're going to expect to see those and be influenced by strong sales performance in Q4. Firstly for the reason they're strong because the line, DUKORAL and secondly that we expect to see further U.S. sales of IXIARO in Q4.

(Operator Instructions) We do have our next question from Jean Le Fur from Natixis.

Just to come back on the DUKORAL in Q4, follow-up on the previous one because last year you had Q4 income right close to EUR 9.9 million and you just said that this year it will be on the same ballpark. But if I have my maths are good, EUR 27 million to the full year lead to more EUR 7 million in the Q4 this year compared to the EUR 9.9 million last year. So I'm a little bit disturbed there. Could you just clarify it, please?

So indeed, you're right. There is a bit lower, but what I was saying is that the main driver was Canada, and in Canada we expect basically the same kind of number for DUKORAL, which at the end of the day for the rest of the country where some phasing last year as compared to this year. But overall you have seen that we have significant growth year-over-year. But my comment was on the ballpark was mainly dedicated to Canada.

Okay. If I may, an additional question on IXIARO and military contracts, if I may say. Could we be sure that for the next, let's say, 3, 5 years, you will have such type of contract each year or every 2 years depending on what you just said. Just to be sure that IXIARO will continue to be supported by this military contract in the next, let's say, 3 to 5 years?

Look, maybe, I have not been clear and sorry for that. So it is a mandatory vaccine for forward deployed troops to Asia. And for as long as there is no other licensed vaccine against Japanese encephalitis in the United States, it will be us and it will be our vaccine that will be bought by the U.S. Military.

So if I well understood you, let's assume you will not have any new competitor in next 3 years. Each year, you may have this type of contract with the military?

Possibly, yes.

We will now take our next question from (inaudible) from Kepler Cheuvreux.

I have a quick question on C. diff strategy. What would be the cost of such development and will you have propriety cost in other -- before the launch of this (inaudible) C. diff. And the second question, again on C.diff, do you really think that there is a enough room for 3 players because even if your head-to-head study is positive, your drug or your vaccine will reach the market after Pfizer on the Sanofi.

Yes. Let me start with the last part of your question first. I think it -- the market for primary prevention of C. diff infections is certainly a very, very big one. And there is no doubt across the globe that such a market would clearly exceed the threshold that is always used for blockbusters, meaning above USD 1 billion annually. And when you have -- and there are many, many similar examples in the vaccine space where you have 3 vaccines against the same indication in the marketplace. And every single one has its place. We may have with all our vaccine a competitive advantage in terms of pricing because our vaccine, based on its technological profile, can be produced relatively cheap compared to technologies others are using, which may be leveraged as part of our serve-to-market entry strategy. As such, we believe that, that there will still be a positive return on investment even if serve to market. Secondly, to your point about what will it cost. It is absolutely impossible at this point in time to predict that because, as I said, you will not even see any kind of predictions that the 2 mentioned Pharma companies are giving their cost to licensure because also they are both in Phase III and there are different numbers circulating what is Phase III cost. Some people talk about EUR 200 million, other talk about EUR 250 million Phase III cost for the single pivotal Phase III trial. There are still other Phase III activities or maybe -- or even Phase IV activities which are not clear. And the size of the head-to-head trial will depend on the final efficacy data and the power that they're going to see at the end of this outcome. And therefore, any -- I mentioned earlier, that in the maximum case, you possibly would get along with 50% of the cost of pivotal efficacy, but it could be also lower than that, but it would not be professional and serious to throw in a number at this point in time.

Okay. But the aim is to find a partner for -- just to be clear, you will go further alone and then, after you will find a partner or you will just design clinical trial, and then try to find a partner?

Well, I would say, first of all our primary objective is still to find a partner, right. And let's not forget we had many, many partners interested. And as I mentioned earlier, they have been hesitant because of risks investment profile and let's just not forget the potential partners that we have been able to contact are not the big vaccine companies because they have all their own programs, right? And so basically that's one point. Well, I mean, this is going to be a few years down the road and let's see where Valneva stands at that time. And maybe if we are very successful, we may even have our own resources to invest or co-invest into such a Phase III trial. But at this point in time, our primary strategy is still going to be partnering.

(Operator Instructions) We have our next question from Christian Orquera from First Berlin.

I have few follow-up questions on sales. Just to clarify, you mentioned that your key goal is still to find a partner, but considering that potential results from any of the products from the competitors, meaning Sanofi or Pfizer, maybe a few years on the road. How can we figure out this relationship or this search over the next 1 or 2 years? And then another question on this. How -- and you mentioned that, the profile of your product is comparable to the competitors' product. But you mentioned also that, your product may have some competitive advantages regarding industrialization and future manufacturing. Maybe you can elaborate some more details on this factor. And then last question on study C. diff, it would be -- you lowered the value of intangible assets to adjust for this change in strategy on C. diff by EUR 3.6 million. Could you share with me -- with us the value that you had on your balance sheet for C. diff before the adjustment?

Okay. Christian. So let me start first part and then David is going to answer specifically on the impairment side of things. So let me first of all reiterate the development and strategy idea, right. And this is not something new, this has been done many, many times before in the vaccine space. So today, there are 2 major risks associated with a potential Phase III of C.diff vaccine candidate. Number one, no one knows today as to whether or not C. diff is a vaccine preventable disease, yet to be proven. And to be proven via a field efficacy trial. And this is what that 2 leads pharmaceutical companies that you mentioned are currently doing. How long will it take to reach those results? Well, I mean, you can all look into trial.gov and can see the time lines that those companies are guiding for. I will not make projections on those pharma time lines. But what I can say is that, we will wait for this results because only this results will then allow to design a head-to-head trial. And only with this design and those results, the potential acquirer of our program can say there is not any longer the scientific risk around the basic prevention of CDI by vaccination. But there is (only) the development risk and this change in risk investment profile will by the end of the day attract potential partners to invest into the sector. What I said in terms of competitive advantage, what we have said on the immunological data, again, comparing our end of Phase II data compared to the published end of Phase II data from others as -- and the reference is seen in our company presentation is that, both in terms of toxin neutralization against the 2 relevant toxins, A and B as well as the general kind of seroconversions and immunological responses we see a similar profiles to the others. As such we consider our program currently non-inferior, non-superior to others. (inaudible) where do we see our competitive advantage is, we have a single recombinant fusion toxin, a very small fusion toxin that we call [CpAB] because it includes the C term that parts of A and B. And the single protein (inaudible) can be expressed in E. coli can be manufactured extremely cheap compared to toxoid approaches, which has significantly higher cost of manufacturing. And this different price point impacts gross margin, profitability and potential market access.

Thanks, Thomas. And basically, I can just build on what Thomas said, the first point is that, I think it's clear there are number of uncertainties and a number of factors with our control. And very simply when we look at that from an account perspective, from the liquidity, the cash flows -- (inaudible) cash flows then our conclusion was that we should take an approach, which was aligned with this range of uncertainties. And that's the first point. And the second point is very simple, Christian. And we only had EUR 3.6 million left in the balance sheet and that balance, therefore, is now 0. So there is no further downside potential from C. diff, only upside potential for the future.

(Operator Instructions) It would appear there are no further questions at this point. I would like to turn the call back to our speakers for any additional or closing remarks.

Thank you so much for joining today's call. Thank you so much for following us and your excellent questions. And we are looking forward to continuous fruitful dialogue. And with that, I would like to close out and wishing you also a very nice afternoon and rest of the day. Thank you. Bye-bye.