Idorsia Pharmaceuticals Ltd

Dear ladies and gentlemen, welcome to the IDOSIA conference call. At our customer's request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode, and after the presentation, there will be an opportunity to ask questions. If any participant has difficulties hearing the conference, please press star key followed by zero on your telephone for operator assistance. May I now hand you over to Andrew Weiss, who will lead you through this conference. Please go ahead.

Good morning, good afternoon, everyone, and welcome to today's conference call slash webcast. My name is Andrew Weiss. I'm the Head of Industrial Relations and Corporate Communications here at Eidosium. We are here to discuss our full year 2020 results, performance, as well as give you an outlook on 2021. With me on the call are our CEO, Jean-Paul Closel, and our CFO, André Muller. They'll be presenting in the first part of this session. For the Q&A, we will also have our Chief Commercial Officer, Simon Joes, join us. So let's dive right in. Next slide. As customary, I need to remind everybody that we will be making forward-looking statements. We have therefore been adequately warned about the risks and benefits of investing in IDORSIA. Next slide. We're now on slide three. Jean-Paul, the floor is all yours.

Thank you, Andrew. So good morning and good afternoon to everyone. 2020 has been a very bizarre year and quite a dangerous one if we think about this terrible epidemic. But despite these very difficult and tough conditions, Eidosia has done extremely well. And I have to say, much better than many would have expected and that personally I would have expected. It's very rare, as you will see, to have met nearly all our goals and fulfill all what we were expecting for 2020. So, next slide. Just let's have a look at the highlights. Clearly, in 2020, we have announced positive pivotal results for diuretics in insomnia. And we have been able at the beginning of this year to file this NDA, which has been submitted to the FDA. We have been able in 2020 to obtain very positive results for the two registration studies, which are required for the approval in Japan. What we have done also in 2020 is to strengthen our liquidity, and we have been able to raise 865 million Swiss francs. What we have also done in 2020 was to establish U.S. commercial operations under the leadership of Simon Jones. And also, just we happen to know very recently, we have won the case against the previous Axovan shareholders who were requesting the payment of the milestones after the G&G acquisitions. Next slide. What makes really the engine of any biotech company is, of course, the pipeline. And these slides summarize our pipeline, which is comprising 12 products without mentioning the T-channel calcium blocker, which is now being licensed, which has been licensed to Neurocrime and which is in phase two. of clinical development for rare form of epilepsy. But as you can see, our pipeline from daridorexant already submitted to four and three additional phase three programs, and clearly now with selatogrel, which is very soon, which is going to start the phase three very soon, and of course, Senerimod, where we are waiting the results before starting the final pivotal trial. You see that this pipeline is very rich, is also not only having late phase product, but also phase two products and early project, and we have been able to start new clinical developments of some very new innovative drugs. But we will today focus on the later phase program, which are going to bring new products to the market within the next three years for Aidosia. Next slide. So Dari-Durexan for insomnia. Dari-Durexan is quite a unique product. Because as an orexin receptor antagonist with a short half-life, we have been able to show that this drug could improve the sleep, but also could improve daytime functioning. And this improvement of daytime functioning has been measured using a validated instrument developed in collaboration with the FDA. So as I mentioned, the NDA has been submitted in January of this year, and we are going very soon, in the coming months, to submit the market authorization for the EU. And we are planning to be able to launch Dairy Dorexan in the U.S. in Q2 of 2022. and hopefully in Europe for the end of 2022. Next slide. So, clazosantan has done also extremely well. As you know, this endothelin receptor antagonist, it's a selective ETA receptor antagonist, has been able to show in the two-pivotal study, pivotal trial study in Japan has been able to show that it could prevent the cerebral ischemia, sorry, it could prevent the vasospasm and its clinical consequences following cerebral ischemia post-subarachnoidal hemorrhage. So the two studies, one was in patients treated with surgery or clipping, and one, with a patient with coiling, so without surgery. Both studies showed nearly the same very strong effect and a prevention of not only the vasospasm, but its clinical consequences. So we are planning in the coming months to file Clazozentan in Japan, and we are also pursuing in Europe and in U.S. Another study which will be required for the fighting in U.S. and in Europe, this study is called REACT, and we are halfway through the recruitment. This study is the one from all our programs which is suffering most of this COVID crisis because all the patients are treated within intensive care, And a lot of intensive care units are extremely busy with the COVID crisis and situation. But we hope to be able to finish maybe this year or first half of next year, finish the recruitment within REACT. Next slide. So, lucerastat. Lucerastat is an oral drug. which is distributing extremely well within the whole body. It can penetrate the tissue, and it can particularly penetrate the CNS, central nervous system, and prevent the buildup of lipids within this central nervous system. And as you know, within Fabry, there is an accumulation of some of this lipid and this accumulation within the nerves in particular is producing neuropathic pain. A lot of also consequences of the Fabry disease is the accumulation of this lipid within the heart, within the kidney, within the gastrointestinal systems. So by having a drug which distributes everywhere in the body, we think we have a drug which is going to have a major clinical effect on the disease and on its symptoms. And the main symptoms, which is a primary endpoint of the study, which is now going on and where we have finished the recruitment and we have the result in the second half of this year, this study called MODIFIED, is evaluating neuropathic pain with a patient-reported outcome, evaluating the complaints about the pain from the patients. Next slide. So, abrocitantin is a neural endothelin receptor antagonist, and we are evaluating its effects in patients which are non-responsive to most of the generic anti-hypertensive drugs. So the patients who can not be controlled with existing anti-hypertensive drugs are included in the study called PRECISIONS. And once we have shown that these patients are true resistant hypertensive patients, we are testing on them afrocitantin at two doses. And we are also evaluating the long-term effect on blood pressure of afrocitantin during an eight-month chronic treatment. At the end of these end months, we are doing a randomized withdrawal to be able to show that the drug is still very effective after nine months of treatment. So the study is going extremely well. We are finishing the screening and the inclusion of the patients will be done in the coming months. And the results are expected in the first half of 2022. We already had, I think, five review of the safety committee. So the safety, which is very important in this very severe patient, is extremely, seems to be posing no problems. And we are very optimistic that this drug is going to fulfill a very high medical need. As you know, a lot of patients, because of diabetes, because of genetic background, Because of obesity, in the U.S., there is an increasing number of patients which are not controlled for their blood pressure, and a new drug effective in these patients is going to be very important. As you know, Janssen will have the rights, commercial rights about this drug, and we will get royalties. Next slide. Thelatograv. Thelatograv is also, I would think, a revolution in cardiology because it's a self-injected device where you can, the patient, in case of a recurring myocardial infection. So these are patients who already got a myocardial infection. And once they have another pain, and therefore they are at risk of a second myocardial infection, they can inject themselves with the seratogrel and then be protected for four hours, which gives them the time to call an ambulance and to go to the hospital where they will be treated. The drug is not long active, so once they are within the hospital, Every intervention, every treatment can be done without the risk of an interaction with a . I think it's very important, and we have seen that in the time of COVID, for example, ambulances delay is a huge problem in New York. Patients have to wait sometimes three, four hours to get an ambulance to be hospitalized, and such a drug would be extremely useful and will be extremely useful. The clinical program phase three is going to be initiated within, I would say, the first patient of this program are going to be treated in the second half of this year, but we're already contacting the centers and preparing for this phase three program, which has an SBA, which means that we have agreed with the FDA of the program and its endpoints. Next slide. SceneryMod, so SceneryMod is the third generation sphingosine 1-phosphate receptor modulator. This drug has been selected not only because of its selectivity, its potency, because of a very specific interaction with the S1P1 receptor, which leads to really a very good safety profile And I think that with this drug, SceneryMod, we'll be able to show that we are avoiding some side effects of the first generation or second generation S1P1 receptor. It received a fast-track designation from the FDA. And the study, the first pivotal study called CARE, which is also a dose response, but which has a clinical endpoint and therefore can be used if it's positive as a pivotal trial, this CARE study will have its recruitment completed by the end of February, and we will get this, we get the results before the end of the year of 2021, and we are planning to have basically a discussion before the end of the year with the FDA in order to start in 2022 the second pivotal trial. Next slide. So as you see, we are at an infection point. Aidosia is really, because of this fantastic 2020 year, we are in a very good situation. We are going to see many, many important milestones crucial for the company. In 2021, you have seen that we have five dairy directions in FDA, soon with the MEA. Cladocentan will be filed also soon in Japan. Ceratogrel phase three will be initiated. Lucerastat results, phase three results, final phase three results will be available second half of this year. And Cenarimod also, SceneryMod results we know will be available before the end of 2021. But also in 2022, we are going to have crucial results, crucial milestone, hopefully with the approval and the launch of Daridorexan, of course, in the US, but also with the results of Aprocitantan, also the launch of Clasodentan in Japan, and the results of Clazozentan in the, sorry, in Clazozentan in Japan, that was in Japan. Sorry, Andrew, I don't see the slide anymore.

Yeah, I seem to have a network problem. I don't have the slides up on the screen anymore. Okay.

I just can go to slide 13, but it doesn't really, I don't know.

It's the building of the commercial organization.

Yes, it's a building, but do people see? I don't know if the people know. They'll see it. They will see it. Good. So just what is also important is the buildup of the commercial organization. Simon Jones, within 2020, has been able to gather a team of very experienced people who and also not only in the central position in Asheville, in Switzerland, but also we have the team complete, the U.S. team complete to be ready to launch in 2022 Dari de Rexand, and with Patito as the president of U.S., we have the complete team now, and most of the pre-launch teams and the preparation of the launch operations is ongoing now in the U.S. We have been also, within 2020, to engage with key partners such as Cineos for the medical representative, Omnicom for the branding, advertising, and also for the public or the PR activities. So, finally, next slide. What is, of course, has been extremely important is the raising of cash. And you will hear what is our financial situation and also how our financial means have been evolving in 2020. So, Andre, please, can you? That's your turn.

Yeah, thank you, Jean-Paul, and good afternoon or good morning to everyone. Thank you for your continuous support. Maybe before jumping to this slide, giving you some color on the full year numbers published this morning, I would say that 2020 numbers were globally in line, even slightly below our guidance updated last October. So I would say the full year 2020 was almost uneventful until the 1st of February and the adjustment of the arbitral tribunal regarding the acts of unlitigation. You know, call it intuition or precaution, I asked my team to draft three versions of financial statements. First one, if no final award would have been granted before publication. Second, worst case scenario where the claim would have been granted to the claimant. And the third one, which is published this morning, the scenario that eventually materialized where the claim was dismissed. So now we can move to slide 15, U.S. GAAP net results. As usual, we start with this waterfall showing how U.S. net results came about. First, on your left-hand side, you see 72 million revenues. the collaboration we entered into with for the calcium channel blocker, so 50 million. We had also 11 million deferred revenue from the collaboration with regarding and the remaining 11 million was 6 million with the research collaboration. Moshida with in Japan, and Santera 2 million for the assignment of the option to license . Then you see, and we come back to the 444 million non-GAAP operating expenses leading to a non-GAAP operating results of minus 372. With DNA of 19 million, stock-based compensation of 19 million, the U.S. GAAP operating results amounted to 411 million. There is a quite unusual amount below EBIT of 35 million, which led to 445 million U.S. GAAP net results. The reason for the 35 is mainly due to the financial results with U.S. gap of net financial loss of 39 million and non-gap financial expense of 18 million. So the 18 million were mainly relating to the foreign exchange loss that we have on our U.S. deposits And the reconciliation between non-GAAP and U.S. GAAP are relating to the accretion expense on the J&J convertible bonds, 8 million, and a relatively significant amount, 13 million, on the loss of the mark-to-market on the 1.7 million shares of Santera that we hold. Of course, we did not pay for these shares. We get them from the different deals that we entered into with Santera. And some of the shares, or most of the shares, are blocked until the results of Van Rollen. But of course, in US GAAP, you value these shares at the market price. So now we can move to slide 16, non-GAAP operating expenses. The non-GAAP R&D expenses amounted to 355 compared to 412 in 2019, so a significant decrease in R&D here. you can see how these R&D expenses broke down. Research slightly below at 107 million with biology, chemistry, pharmacology, and preclinical activities. You see a development if you exclude the 9 million and the inventory builds that are also included in R&D, but development was really impacted by COVID-19 and the delay in some of the clinical trials. And you see that we went, we had 212 million compared to almost 300 million in the previous year. The 9 million milestone, you may recall that we acquired some of the Axovan claims from non-claimants for less than one-third of their faith value in June 2020, so 9 million. And we started to build in the drug substance and drug products we started to build inventory in preparation of the launch that is expected in 2022. And as you know, as long as the drug is not approved, you can't book it as an inventory, so it hits your P&L in the R&D line. And this was 26 million. For the SG&A, as anticipated, we had an increase out of the 90 million you see here. You have 63 in G&A and 27 in selling. So, 444. less than the previous year, 470, less than what we expected. Even if we move to the next slide, which is slide 17, you see on a quarterly basis that we spend much more in Q4 with 142 million. And you really see the impact of COVID in Q2, because if you exclude the 9 million milestone in Q2, you see that we spend as less, I would say, than 77 million. So, a catch up in Q4, as we expected. which also gives you a clear fit on what will happen and will even increase in 2021. But we'll come back to the guidance a little later. So if we move now to the slide 18, the cash flow, we started, we entered the year 2020 with $739 million liquidity. As we discussed, we spent 444 million non-GAAP operating expenses. We cashed in milestones, 61 million, so that's the cash part of the milestone, not all recognizing the P&L. But in the 61, you have, of course, the 50 million of Neurocrine, you had the 9 million Swiss franc, equivalent Swiss franc with Moshida. And you had also 2 million from Roche in connection with your research collaboration. Limited CapEx, 9 million. Other means working capital requirements increasing by diminishing by 10 million. And as Jean-Paul already alluded, 843 million cash raised via net amount of the two equity raise made in 2020. So we end up with a really round number, easy to recall, 1.2 billion liquidity. And the next slide, so slide 19, This is a breakdown of this liquidity. On the left-hand side, you see the cash deposits that aim to decrease the negative yield on Swiss deposits and also benefit from the U.S. yield curve on our U.S. deposits. Right side, you see in terms of the breakdown between the main currencies, mainly Swiss francs, 927. and 268 million U.S. dollars, which are aimed to cover our foreseeable expenses, which are denominated in U.S. dollar, of course, with U.S. organization that will grow in order to properly prepare for the launch of the . But also for expenses in U.S. denominated in U.S. dollars, namely, primarily for clinical trials. Now we can move to slide 20 and the guidance. Before going into the numbers, I must say I'm really happy to mention that the guidance excludes, as usual, the unforeseen events, but I'm more than happy that we could remove the language around any potential payment in connection with the acts of an arbitration. This is behind us, as we already mentioned. because the final award from the arbitral tribunal removes a serious Damocles award above our heads. Because the claim alleging a change of control with the acquisition of Actelion by J&J and the concurrency merger of from Actelion that would have led to an immediate payment of outstanding milestone for . this claim was dismissed. So the total amount would have been quite substantial, close to $100 million if you include also the late payment, statutory interest on the late payment. And frankly, this $100 million will be better used to fund 2021. So you see the non-GAAP OPEC of $640 million. I will start with the easiest one, 5 million milestone, because of the very positive results of in Japan. We will find the dossier with the relevant authorities in Japan, and to this extent, we'll pay this 5 million milestone to Roche. We will continue to build an inventory. But as long as the drug is not approved, it hits the PML for around 35 million, mainly with , but also for in Japan. And which means that we will have around 600 functional operating expenses of which, 370 million with R&D expenses. So we will actually on R&D spend a little more than what we spend in 2020. The reason for it is not so much on the fixed cost base. Even with this broad portfolio, we will need to increase our headcount in R&D and in clinical, pharmaceutical, mainly pharmacovigilance, drug safety. But more importantly, we will also increase the cost for study cost. In late stage, the line share is, of course, for the late stage. Here, that will go down. We, because of some delay with the REACT trial with and also even if the enrollment is now well on track as Jean-Paul mentioned, we will more or less suspend what we had in 2020. is more or less the same, but the main driver for the increase will be . with this integrated drug device developed with Antares in the U.S. and where we should get the results of Phase IIb by the end of this year, 2021. And of course, as you've seen, we have a rich pipeline with Phase I and Phase II assets. That's the advantage also for having a very productive drug discovery engine. And we also plan to spend a little more on phase one and phase two, phase two assets. And among others, the single rectin receptor antagonist that we want to investigate in binge eating disorders. So, that's the reason for increase of R&D expenses. And of course, the most significant increase is in SG&A. And for this, of course, it's all about the preparation for the launch of in the U.S. and in Japan. There's a significant amount, around 90 million, really only product related external spend. And as you can imagine, maybe with . The rest is, of course, to gear up the commercial organization with marketing, selling, access, medical affairs, supply chain. And GNA will increase both in the affiliates where we see a support function, but also at headquarter. notably with IT assistance because we need to be ready for launching these drugs. So, this gives you the reason for this 640 million non-GAAP operating expenses. On top, we have planned for roughly 20 million DNA, slightly higher stock-based compensation with 25 because of a larger organization. not only in Switzerland, but mainly in the U.S. and in Japan. So, U.S. gap OPEX should be around 685 million. Let's move now to the next slide, so which is slide 21, sorry. We do not guide on revenues. I say it depends primarily on existing collaboration, let aside the new ones, mainly outlicensing the deals that by essence are not predictable. You know, looking ahead to 2021, we could have various sources of revenue. With Moshida, the next milestone is the first patient enrolled in the Japanese phase three trial. With Roche, regarding the R&D collaboration, which was actually extended until end of 2021. With Santera, depending on the clinical results of the in the MD, which are expected by the end of H1 2022. And of course, . As you know, Ponesimod was developed by the Actelion teams almost to the end and taken over by the Janssen team. And now, of course, it belongs to J&J according to the merger. But with the NDA and NAA submitted in the U.S. and in Europe by Janssen in March 2022, we can reasonably expect the PDUFA for Ponesimod in MS. And with this revenue sharing agreement in place, i.e., granting us 8% of the annual net sales, this is very likely to become a first recurring revenue stream. And which brings me to the next slide, slide 2022, which is actually my last slide. I don't see our revenue model moving forward. We'll be actually a duo. On the one side, you see it on the left-hand side, we'll have revenues coming from NetSale, from our own product developed in-house, and that we will commercialize with our marketing and selling organization. And it means that our commercial organization will market GP products, using when needed partners, e.g. Cineos in the U.S. or Moshida in Japan, often products like and also specialty products like and . So we will hopefully in different ways load these products and get a very diverse source of revenues. is not a single asset company by far. And on the other side, and you have it on the right-hand side, we count also on milestone and royalty stream coming from , we just alluded to it. Hopefully also tiered royalty between 20 and 35% on . with J&J, and hopefully beginning of 2022, we'll get the results of CFA3. And regulatory and phase myosin, as well as variety on our T-channel type calcium channel blocker from Neoprene if, of course, the studies are positive. So with this, I hand over for the conclusive slides to Jean-Paul. Jean-Paul, the floor is yours.

Thank you. As a summary, I just wanted to say that this, and thank you, André, first, but clearly the year 2020 has been key, has prepared for a very exciting 2021. I know I am going to repeat, but you know, first of all, this strong balance sheet is really helping us a lot, because we have to do a lot in 2021. So not only we have five, and we should five, daridorexan and clazosantan this year, but we are starting the celatogrel phase three, and we will wait for the results of lucerastat and Cenarimod, and if these two drugs and basically it would mean that we would have six phase three assets within Eidosia in 2021. So you see that this strong balance sheet was very important. We are in good shape, and I hope that now this presentation has given you a reason to believe even more in the future success of Eidosia. Maybe Andrew.

Thank you, Jean-Paul. So with this, this concludes our session without prepared remarks and opens the door for the Q&A where Simon Joes is going to join us. Before I open the lines with the operator, I also want to remind that it's possible to reach me via email, andrew.weiss at idorsia.com if you prefer to send your questions through like this. Operator, please open the lines.

Ladies and gentlemen, we will now begin our question and answer session. If you have a question for our speakers, please dial 0 and 1 on your telephone keypad now to enter the queue. Once your name has been announced, you can ask a question. If you find your question is answered before it is your turn to speak, you can dial 0 and 2 to cancel your question. If you are using speaker equipment today, please lift the handset before making your selection. One moment please for the first question. And the first question is from James Gordon. J.P. Morgan, your line is now open. Please go ahead.

Hello. Thanks for taking the questions. James Gordon from J.P. Morgan. A couple of questions, please. One was just in the release this morning. There was a comment about recruitment in the CARE study for the scenario model and the modified study for the serostat, how it had been impacted by COVID. But then you'd made some adjustments in consultation with health authorities, and so you'd adapted the enrollments. So the first question was, what were those changes? How have you changed the enrollment? The second question looks like a big readout for this year, phase three data. I'm not aware that we've got data on this particular endpoint previously, the neuropathic pain primary. So just how are you thinking about the risk profile there and other, even if you haven't already got data on neuropathic pain, is there other things you've seen before that makes you encouraged? And then just a third and final question, to redirect that, I think we know where we are in terms of Western and Japan plans, but what about China? When does that flesh get that fleshed out? And what will you consider doing yourself in China versus letting a third party have a go?

Okay, James, thank you for all those questions. I think the comment on the trial design at the end point, Jean-Paul, and then we can refer the diary to Simon.

But maybe there is about the recruitment of also of scenario mode. This was another question. So I take that. So I think that first for Lucerastat, you know, we have finished the recruitment. We didn't change the number. In fact, you know, because we had discussion with the FDA during the year. to slightly modify the endpoint and, in fact, to really be able to get a more precise evaluation of the pain, especially with time. So we got an agreement with the FDA, and this would have allowed to – in fact, decrease the number of patients needed in the LuceraSAT study. But we have been able in the last coming months to recruit a very big number. In fact, I think we are going to have more patients than what we anticipated. And therefore, we really have tried to optimize our chances. And we will have with the pain for the pain PRO, we'll have more patients what we had anticipated. And now you ask me, of course, we don't know, we have never shown an effect on pain. What tells us, what is giving us some optimism? And of course, it's a blinded study. The fact is that I think nearly 100% of the patients who have been offered to go into the open-label study have decided to go into the open-label study, which shows that at least patients like the drug, at least. But also what has also given us some, I think, some help was some anecdote from the first phase two, and some patients seem to have benefited. But, of course, it was not It was, it's just anecdote. So really, for Lucerastat, I think we need to wait until the last moment to really know if this drug works on pain. So that's four scenario mode. We have decided, and in fact, we will have enough patients to really not modify our program. We had just discussed with the FDA what they really needed to see. And in fact, you know, the main change in the program of SceneryBot is the fact that after the six months, which is the primary endpoint, we are going to follow the patient for one year. And this is in the fast track program. situations. It is really to be able to have more patient long-term evaluation in order, in fact, to do a smaller phase, second phase three, and to be able to register with enough long-term data so that the FDA agreed and we are continuing to treat the patients after having evaluated the primary endpoint for safety reasons. That's And so we will get the results and hopefully it will be very interesting to see if we have a lupus drug. So for daridorexant in the, yes, we are going to file in Europe and in the U.S. and in China we have done the first evaluation and maybe Simon can give his, a little bit his opinion.

Sure. Hi, James. Yeah, we're looking at China very carefully, actually. I think for Clazo and Lucy, with the recent changes of the regulatory process and the potential to sort of file off the back of foreign approvals is something that we're looking at. And certainly with Clazo Centauri and sublet with hemorrhage, that is quite common, as it is in Japan. For durexan, it looks to be a very, very big market in China. I think we're looking at like 140 million people. And even if you simply look at the number of people that are in the outpatients in the large hospitals, there's 26 million, which is more than we've got in the U.S. So it's a big market. Benzodiazepines are the standard of care, so there's a big opportunity there. We haven't yet decided and determined the degree to which we'll go ourselves and use a partner. which we're working through, but we are looking at China carefully and see a big opportunity there.

Thank you all. Thank you, Simon. Operator, next question, please.

The next question is from Rajan Sharma in Deutsche Bank. Your line is now open. Please go ahead.

Hi. Thanks for the question. Firstly, just on the lateral, and I was wondering if you're able to kind of further disclose any detail on the design of the phase three. Just specifically how you can ensure recruitment of the correct patient population given the strategy for administration and also how you can ensure correct use of the device. Secondly, just on Dirodurexan and if you could just expand on your prelaunch strategy for that one and maybe any observations from the competitive Devigo launch in the U.S. and any feedback on that launch that may inform your plans for Dirodurexan.

Thanks. Yeah, so I think that I will take the clinical development of Stelatogrel and Simon will answer about Devigo and the prelaunch. So just for selatogrel, it's a very good question. In fact, you are hitting a very good point. We have an SPA. So the endpoint is really basically, I don't want to go in detail, but it's basically to do the patient, how many patients who took our drug, selatogrel, compared to placebo are dead, got a severe myocardial infarction, a small myocardial infarction, or nothing at all. So we looked at what are the consequences of this second pain and this second crisis. And, of course, also we are looking at the long, I would say long-term, so semi-long-term after one month and three months. That's a secondary endpoint. But can we prevent with, we said that, okay, can we prevent the occurrence of heart failure? This would have a major, of course, impact. because is for the life of the patient. And if you could, by giving one drug in one day, prevent the long-term consequences, that's a huge economical impact. So the question, as you are asking, is how do we go for the right patient? The right patient is not difficult. They might have a myocardial infarction. The diagnostic of myocardial infarction today is quite simple. So they must have a myocardial infarction plus A second risk factor can be diabetes. It can be renal failure. All what is increasing market is the chances to get a second myocardial infarction. So we want to have a number of events sufficient to be able, a little bit like you see with the vaccine, to be able to take a conclusion. And, of course, we will have many more events than what is done with the two-day vaccine, but it's the same principle. I think we need about 500 events, and we count that maybe two-thirds of the events will not be because the patient diagnosed himself is pain, and we know that maybe two or maybe three times over four, the pain will not be a myocardial infarction. But one over four times, it will be a myocardial infarction. The patients are high-risk patients. They need also to be able to remember that they have an auto-injector. We're not going to treat patients with Alzheimer's unless, and this is also what is done, there is somebody next to this patient, somebody, a caretaker, which can guarantee that in case of a very second infarction, this patient can inject himself. with the help of the caretaker. So there will be within the study a sort of test that before entering into the trial, every patient should show that he can inject himself. It would be with a placebo, of course, but he will use the auto-injector, and he has to demonstrate that he can really inject himself. He's not afraid of the pain, and he doesn't have a psychological problem, which would prevent him to inject himself. So that's the way we guarantee that we are taking the right patient population.

Maybe go to the director? Yes, Simon? Yeah, sure. Let me start with Devigo. I think the Devigo launch has been, at least seen through our eyes, disappointing. They've got, in the first six months, 6,000 prescriptions, and if you compare that to Suvarexant at the same time point, they had 28,000. The degree to which that is the profile of the product due to the long half-life, whether it's launching COVID or or the priority it's receiving, you know, in a portfolio company is hard to tell. And obviously, you'd need to address that to Esai. But I certainly think it's been a disappointing launch. In terms of our own activity, we are now rapidly sort of building and moving forward with our preparations for launch. We will build and own what I would call the core commercial capabilities ourselves of pricing, access, marketing, medical affairs and supply chain, but obviously, as you know, we're partnering with Cineos to build the U.S. sales force. So, we'll control the strategic elements of that and we'll work with Cineos as a partner to get to the primary care market where there's about 60% of the volume. We see this as a very strong consumer play. I mean, it's obviously a prescription product, needless to say, but nonetheless, we believe that activating consumers and being very focused on consumer channels, digital channels is going to be very important for the launch, and we're very focused on that and building that as we speak. And finally, obviously, over the course of the next several months and during the course of the year, we'll be engaging with the medical community and critically with the payer organizations to make sure that we're prepared for the launch when we turn into that in Q2 of next year. Thank you, Simon.

Thank you, Raj, for the question. Operator, next question, please.

The next question is from Greg Stavanovich, Goldman Sachs. Your line is now open. Please go ahead.

Great. Good morning, good afternoon, and thanks for taking my questions. I have two, please, perhaps the first more strategic for JP. Jean-Paul, when you look at the pipeline, it's quite diverse, and so from a strategic perspective, if you could help us get a view as to how you're thinking about which assets that you're developing are perhaps more appropriate for IDORCIA to commercialize on its own versus potentially outlicensing opportunities or partnership opportunities? So that's my first question. And then my second question, with key readouts in the second half of this year for the Sarasot and the Naramod, Could you give us a sense of what that threshold for success might look like in those trials? You know what we considered. What would you consider to be a Successful outcome in terms some of the metrics that we should be looking at.

Thank you very much Yeah, so let's discuss about the strategy the strategy is very clear We have an incredible drug with dairy directions, you know to have a drug which can make you sleep better and can you really improve your day performance? Which drug improves your day performance? Everybody dreams of having the possibility to improve how you feel, what is your mood during the day, how you function. So we have an incredible drug, and this drug by its own, with a 15-year, I think, with a 15-year long patent life, is sufficient to ensure a very big success for Eidosia, which should lead us to profitability alone with this drug. This is really justifying to set up the commercial organization, and we have decided to really not share, except maybe we do it in Japan, maybe in some countries, but in the main countries, really we want to launch it and to keep the most of the value of this drug. So that's the key for Hydrosia. But on top of it, we have the chance to get hospitalized and orphan drug type of drugs, which are going to increase our margin and which are going to not, once we have a commercial organization already in place, we are, of course, don't need to set up another organization. So all the revenues will come with increased marketable margin and not mentioning that The addition as a third wave of revenues of the milestones and the royalties of the, which we'll get from Apocitan Tan, from also Ponesimod, of course. So you see, we have this week, and in fact, the strategy is going to be, in fact, to reinvest The fantastic revenue, I think it's going to be massive. These revenues, we will have to have other drugs to ensure the growth because we will be a very big revenue. And I can tell you, you will ask at one stage to say what next after . One day people will ask what next because it will be very big and we will need to grow. And this is where and of course are coming. This is a second wave of growth, and this should really ensure the growth of the company for the many years to come. So I think that's for the strategy. The other question was?

The other question was what looks good for.

Yes, sorry.

Thank you.

Yeah, sorry. I think that, you know, for Luceraftat, if we have a clinical effect, if we have a significant effect, that means I think that, I don't know by heart, but we have a very meaningful, this has been statistically calculated, we have a meaningful, clinically meaningful improvement of the PRO. You know, the PRO was designed with the FDA. So it was approved with the FDA. The FDA worked with us to define in patients with Fabry which type of question we should ask about this pain. And we have agreed of a level of improvement, of course, which would make sense. I cannot give you by heart because it's a scale. But if we have a statistically significant effect, it will be clinically relevant. Of course, all the secondary endpoints being effect on gastrointestinal syndromes, effect on the renal function, effect on cardiac functions. All these elements are evaluated, and the beauty, of course, it's COVID has sometimes some advantages of the same because we have been delayed by COVID for this study, but all the patients were continuously treated by Lucerastat. Therefore, we will have an incredible, the biggest study ever in Fabry with more than 100 patients, sometimes follow for two to three years. So it's going to be a mine, a gold mine, if the study is positive, of long-term evaluation, which has never been done, never been seen, and I think it's not tomorrow that you will see such a study. So this is why we are so excited to have finished the recruitment of more than 100 patients patient with Fabry. For scenery mode, we are not only having, we want to see, it's not only efficacy, the safety also, which is going to be very important. We think that we have a very effective drug, but we want to look at the safety and we want to really know what is the optimal dose. And that's going to be our view. I think that it's difficult to compare one study to the other. So I will not say that with our study we are going to know if we have a better drug than Benelasta, but we are going to get a really clear view if the drug is effective and safe.

Thank you, Jean-Paul. Thank you, Greg. I hope that answers your question. Operator, next question, please.

The next question is from Joe Walton, Credit Suisse. Your line is now open. Please go ahead. I'm sorry, we seem to have a glitch. Let's try again.

All right.

Please go ahead. I'd like to ask a little bit about the timing of how these expenses are coming in, particularly as we're moving into the extra expense on SG&A. So I wonder if you can just help us as we go through this year and how we sort of exit the end of the year. And if you can also give us some idea, if you've got any, on the launch costs as we begin to model 2022. Clearly, the expenses that we need to model for 21 are a little bit higher than people have been looking for. And I just wonder whether we should carry that on and really look for, you know, a stonking great launch cost just to make sure that Deridexant gets a, you know, a fantastic send-off into the U.S.

Yeah, Audrey, I think that one's for you.

Yeah, thanks for this very good question, Mitchell. The operating expenses, especially in SG&A, will increase over time, obviously next quarter, so that's very clear. So second half will be more heavy than first half. 2022, you know, even for us, it's difficult to predict, not so much the expenses that we could have in SG&A, at least in the U.S. and in Japan for , but maybe in other countries, depending on the strategy in Europe, in China, as asked by James previously. But the point in 2022, yes, we can reasonably expect that the SG&A will go up, just also because we have the medical reps of Cineos in the U.S. But of course, what we need, what we will also have is growing revenues and starting with . Here, we need to have more visibility also on the label, interacting much more with payers in order to better assess what could be the speed of uptake for the drugs, and mainly . So you have to wait for 2022, but increase spend, but also increase the revenues. We're not launching Jared Excent for Jared Excent not to be a blockbuster.

And can I then just follow up on Jared Excent? Looking at the other similar new launches in that market, to what extent do you think that this is a market where you have to spend a lot of time giving away free product to start with so that the GPs are happy with it? I know that the prescription numbers are light for some of these other products, but is that because of very heavy sampling?

Simon, I think that one's for you. Sure. Thanks, Joe. I think sampling will be important because one thing we know in this category is that the way that the patient responds is going to be critical for the long-term success and growth of the product. So we do expect a sample. I don't think that we can at all look at Suvarexan or Lembarexan as benchmarks because they really, the problem they had was that the products didn't deliver against the promise. So, with Suvarexan, actually, as I said earlier, 28,000 scripts in six months. They got off to a good start, but then it just went flat because patients weren't getting the benefit of the product that they were expecting. principally because the FDA, when they got the approval, they had to go down to a dose that wasn't even studied in the phase three program as their start dose, which didn't differentiate from placebo in phase two. So patients were starting on a low dose because of the E profile at the higher doses and just didn't get the feeling. So we're absolutely clear that patients are going to need to have a good experience and we're very focused on both sampling, but also the way that we communicate expectations with patients that they experience a good first sort of few days and week of the redirects. And in that context, the 50 milligram we believe is also going to be critical to ensure that does happen.

Thank you, Simon. Thank you, Joe. Operator, do we still have questions left?

Yes, we have one more question from Thibault Boutinot, Morgan Stanley. Your line is now open. Please go ahead.

Thank you for taking my questions, a couple. The first one on the in the U.S. market. Our conversations with specialists in the U.S. indicate that they were facing quite a lot of prior authorization barriers to prescriptions for the DORA class. So just if you could comment on that and how you expect to overcome this, in particular since you, I think you said you are targeting marketing to primary care physicians. That's my first question. And the second question, I mean, it's about . I know you obviously outlicensed this drug to G&G, but when I look at consensus expectation for the Bristol drug, for example, Zeposia, Ozanimod, I mean, I see a consensus at $2.5 billion peak. It looks like there is at least $500 million for MS. And it looks like expectations for the GNG drug, I mean, for Ponisimod is not there. And when I look at Ponisimod, obviously, I mean, you had good efficacy data against an active comparator. Safety profile looks good. So just if you could comment on what consensus is missing here.

Thank you very much. Thank you, Thibault. I think we kick it off with Simon on the launch of DARI and prior auth and step edits and priority and payment, I guess, would be all in that same category of questions.

Yeah, certainly. So, thanks for the question. I think what, going back to Subaru Exxon's profile, what's happened in the U.S. is that when you launch a new primary care drug, it's very common, as you well know, that you have step edits if you're launching into generic markets. It's very common that branded products are tier three copay. And I think that in itself isn't necessarily a problem if the product delivers. We know that Subarexant has 90% access, but obviously there's two-thirds of that go through a step edit. Patients and doctors will go through the step edit relatively easily because most of them have been cycling through Benzos, EDS, and Trazodone over the last few years. So, their step edit requirement can be met relatively easily Then you come to Tier 3 copay, and if you then go to a Tier 3 copay, you're asked to pay $30, $50 maybe. And that's okay if the product works, but if the product doesn't work, then the patient will walk away from it rather quickly. So we don't necessarily – clearly, access in the U.S. in a generic market is something that we're very thoughtful about. But it's not solely an issue of access. It's actually about the profile of the product and whether it delivers. And we believe that step edit won't be a barrier. We also believe that if the product works as well as we expect and we've seen in our clinical program, then patients will pay $30, $50 for a Tier 3 copay. And our research does support that.

And just to go back on your very good question about Ponizymol, I think that You know, what we have done and what we believe and with our clinical, Guy Bronstein, our head of clinical development, it's really, and everybody believes that in IGOR-CR and in Actelion, is what is very important is to show the benefit of any drug to the patient. And really, if they can show subjective improvement, if the patient feels better, it's going to be very important. This has been our strategy for daridorexan. This has been the strategy also for ponazimod, because not only we wanted to show with ponazimod that we have the same relapse rate like other drugs, or decrease of relapse rate like the other drugs, but that we could change the main symptoms of multiple sclerosis, which is fatigue. 50 or 60%, or maybe even more than 60% of the patients with MS suffer from fatigue. And we have been, I think, the result, and it's public, Johnson & Johnson has been able to say that the study was, ponidimod was better than Obagio on fatigue. So I think this is going to be very important, and I cannot speak about numbers, and this is a question to Johnson, but I think that Like we do for Lucerastat, like we do also for Senerimod, because I didn't mention, but we have a PRO for pain and fatigue into Senerimod. We want to show that the patient feels better. And I can tell you, if the patient sleeps better, he's going to continue to take the drug. If he feels better, he's going to want to get Ponesimod. If he's less tired, he will like to stick with Ponesimod. And if he has less pain, he will choose first-line lucerastat in Fabry disease. And I think that this is really in contrast with a lot of people like BMS who have chosen as a comparator. No, it was not BMS, but it was at this time Receptos. But the comparator was a drug which is nearly not used anymore, which is interferon. It's very rarely used in MS. And they have chosen the relapse rate as an endpoint. Why we are really looking not only at the relapse, but how people feel. And that can make a huge difference.

Great job, Paul. Thank you very much. Thank you, Thibault. So before we close down the call, I actually did get one question coming in from an investor through the e-mail. concerning strategic positioning of daridurexan going forward and other indications, Jean-Paul. What do you think about how we're going to develop daridurexan in the future over time?

Yeah, I think the strategy of daridurexan was to get the umbrella of all type of insomnia in a way. So, you know, people were asking us why you don't go to insomnia and to depression, insomnia and depression. and insomnia into, you know, neuropsychiatry or whatever. And of course, you know, when you discuss with the FDA of such an approach, they would tell you, you know, what is different to insomnia of depression versus other type of insomnia. And show us then if you want to have an indication, you know, you really have to show an effect on depression in addition to an effect of insomnia. So we agreed with the FDA, so let's go to insomnia. And then what is more important is in phase four, since we will have the big indication, the largest indication that I think we can have, which is insomnia, basically, then we can start to look at the benefits into subclasses. But I don't think we will need to get a label change, but we can really demonstrate the benefit, maybe having it included in some subpart of the label, certainly not in dedication. And we can look at some class of patients being depression, patients with insomnia and depression, patients with insomnia and sleep apnea, patients, of course, we think.

Jean-Paul, you're muted. We can't hear you anymore.

I believe we lost the line. I can try to get him back in.

Okay. Well, I think that concludes our comments anyway. So, I think we've come to, well, we're 20 after 3, so we will exceed our time. So, thank you very much for your interest in IDORSIA. We've come through all the questions that were going to be asked today. So next timed release is gonna be the first quarter 21 results on the 22nd of April. So that leaves you with just stay tuned, expect more. We will be progressing through 2021 with this very exciting story. Operator, close down the lines, please.

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect now.