Idorsia Pharmaceuticals Ltd

Dear ladies and gentlemen, welcome to the conference call regarding the Half Year Financial Results Presentation 2021. At our customer's request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulties hearing the conference, Please press the bar 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.

Thank you, Angelo. Good morning, good afternoon, everyone, and welcome to the iDoors webcast to discuss the first half 21 results published this morning at 7 a.m. Central European Summertime. With me on the call to provide additional granularity on our operational, clinical, and financial advancements over the first half are with me, our CEO, Jean-Paul Cosell, our CFO, Andre Muller. They will be making prepared remarks. For the Q&A session, we will be joined by our Chief Commercial Officer, Simon Joes. Next slide. Before handing over the mic, a few customary remarks, i.e., we will be making forward-looking statements in this call, which may or may not turn out to happen. Hence, you have been appropriately warned about the risks and benefits of investing in Eidortia shares. Next slide. Thus, without further ado, Jean-Paul, the floor is yours.

Thank you very much, Andrew. During the first six months of this year, Eidortia has made tremendous progress to become a fully fledged biopharmaceutical company. Next slide. If I see the main highlights of this first half, you will understand why I feel so confident that we're on the good track. As you have, as we have discussed already with you, has been submitted in the U.S., the MEA has been submitted in Europe, and the submission has also been made with Swiss milk. Ponezimod, which is a drug from Rory sold by Johnson & Johnson, has been approved in the U.S. and in Europe, which shows the quality of the clinical program which was set up by Actelion and by the team which is now within IDORSIA. The Clasodentine NDA has been submitted in Japan and also we have initiated the phase three study with the for suspected myocardial infarction. In addition, within a few months, we are going to get the results of the study, the Phase III study, the pivotal study with Ducerastat and the Phase IIb of Senerimod, where we will get the results of aproxifentan in the middle of next year. But for aproxifentan, all the patients have been recruited. Next slide. So when I mentioned to become a fully-fetched biopharmaceutical company, what does it mean for us? It means mainly to fulfill five strategic priorities. These are the priorities we have from day one of the creation of Adortia, and we have not changed these priorities. So first, we wanted to deliver three products to the market, and I am not counting into these three products polygamous. And you will see in the next slide the progress of the pipeline and why we believe we can reach and maybe be better than this goal. Number two, or the second strategy priority is to build a world-class commercial organization. This task has been given to Simon Jones, and we are progressing extremely well in order to have this infrastructure, which will allow us to market our drugs. Number three is to bring Eidosia as soon as possible to a sustainable, and I would say also to a growing profitability. We are doing everything that in the midterm, we can really become financially independent. Number four's goal is to continue to fuel our pipeline with new discovery from our own research. I always say that drug discovery is the engine of a biopharmaceutical company. It's like in a car. In a car, you can stop the engine and you can continue to run, but you won't run very far. Without new drug discoveries, a company cannot really grow and cannot have a future. This is why it is so important for us to continue to build our pipeline by bringing new drugs within this clinical pipeline. Finally, the fifth goal of Idorsia was to utilize state-of-the-art technologies in every, I would say, department or in every area of the company. So you will see that we are using these new technologies not only in drug discovery but also in clinical development and in marketing. Next slide. So let's look at the pipeline. Our goal was to put on the market three new drugs, and we are really one of the way. Darylorexant, our dual orexin receptor antagonist, has been signed, as I've mentioned. The review is ongoing, and it's going, I would say, very well. Aprocitantan is a dual endothelin receptor antagonist. It is for the treatment of difficult-to-treat or resistant hypertension. And at Roquitentan, the study is fully recruited, and we will get the results in the middle of next year. What I have to say, I think that we've got more than five DSMB review, and we have not heard of any safety concern. Clasocentan is a non-dotating receptor antagonist intravenous. for the treatment of vasospasm and prevention of, sorry, prevention of vasospasm with aneurysm, after, sorry, aneurysm subacnoidal hemorrhage. You have heard that we had very positive phase three in Japan, and we are going to get the results next year of the REACT study, which is, more or less a similar study performed in Europe and in the US. Leucerastat is tested in Fabry disease with a very interesting clinical protocol, which is evaluating not only the effect on the biomarkers, but the effect also on Leucerastat on the clinical symptoms, especially the neuropathic pain, which is the main problem, clinical problem in this patient with Fabry. Stella Togrell has been starting the phase three study, has been started. We had an SPA with the FDA, which means that the FDA agrees with the protocol that we are following for the phase three. and also with the way we are going to evaluate the effect of Sedatogrel in these patients. Senerimod is our drug for lupus. It's a third-generation S1P1 receptor modulator, an optimized S1P1 receptor, and we are waiting the result of a phase 2b, which could, if the study is positive and show consistent results, which could be used as a pivotal trial, which means that if the study is positive, we might have only one more study to perform before the NDA. We have also other drugs which are moving within our pipeline. I just can mention a selective orexin-1 receptor antagonist, for binge eating disorder, which is recruiting in phase two, and some other products coming from our drug discovery, which are in phase one or close to initiate phase two. Next slide. Coming back to garygorescent. I have mentioned and we have mentioned many times that the results were very consistent and showed an effect of the drug during the night, improving sleep, but also showing effects during the day consistent with an improvement of daytime functioning. The drug is now in discussion, so we are answering questions from the regulatory authorities, and I think the process is going very well. And we really should be in a position to launch in the U.S. in the beginning of next year this drug and in Europe and Switzerland later on during the year 2022. Next slide. I mentioned also that Senatogrel I started a study in a very interesting new indication, which is really to give the patient the chance to prevent his myocardial infarction or to have it in a much less severe form. And this can be obtained by having him injecting himself the platelet aggregation inhibitor, which is . It can inject with a device, and after that, it can call the ambulance, it can call the doctor, and then go into the hospital to be treated. But usually, the time between the first pain and the time the patient is treated within the hospital is in average three to four hours, depending, of course, if you are living in a big city or in the country. But it can be, and you can imagine in the United States, especially with very long distances, it can be six hours. So we have agreed with the FDA that we are going to do a treatment, sorry, doing a study where half of the patients will be treated with placebo, half of the patients will get this auto-injector, and will be able to treat themselves while they have the first signs of a new myocardial infarction, because we are dealing with patients who already had a myocardial infarction, so they can recognize a second incident. Next slide. So the second goal of iGrossia is to build a world-class commercial organization. We clearly are putting priorities on three regions, the U.S., Europe, and the main countries in Europe, and Japan. We have established affiliates in the U.S., in Rennes Nord, in France, in Paris, in Germany, in Munich, in Italy, in Milan, Spain in Madrid, in the United Kingdom in London, and for Japan in Tokyo. We have recruited the general manager, and I have to say that I am very happy to see how many top talents we can recruit. And sometimes I wonder why we are able to attract so experienced people who have already launched several drugs, who know the markets, who know the regulatory authorities and who know the processes needed to succeed for launch of new drugs. And frankly, I think that the recent measures being set in with BMS, being annexed on both by AstraZeneca, all these changes have created some opportunities for people to either choose staying within large companies or joining companies like maybe with a little bit more entrepreneurial, maybe a little bit more risk, but certainly with a very different culture, more close to startup. Next slide. Finally, we want to utilize state-of-the-art technologies to drive innovation. And this is, for example, used in drug discovery. Intelligence artificial is used now to select new drugs to help the drug discovery process. We try to make it something that is available for all the different departments in the drug discovery department. It is also Artificial intelligence, for example, is also used in clinical development to be able to best use our data, our data sets, and the millions of data points we have created by doing studies and, for example, chronic studies like . We are trying to use the most modern technology to analyze this data and also We also use this information to discuss, for example, with regulatory authorities. But we are also using modern technologies for marketing. Today, social media have a huge impact. Today, it's possible to address, to select the doctors who are more likely to prescribe our drugs, but we can also inform the patients and select the patient by using the most modern tools which can now allow to have a much better selection of the patient who require the type of drugs which we are developing.

Next slide.

We want to continue to have a permanent inflow of new drugs within our pipeline, our clinical pipeline. And this is really something which is very important. I do believe that with the drugs that we have now in late stage development, we have potential for growth for the next 10 years. But after these 10 years, we need to continue to grow. We need to have this long-term view and the clinical needs to get every year one or two or three new drugs to test if we want to be able to market in the future new drugs in addition to the very rich pipeline that we have already. This drug discovery organization is still based on the single center approach. focus on small molecules, organic chemistry, with a fully integrated research informatics, with multiple therapeutic areas, but focus on few platform of expertise, for example, the G protein, copper receptor, some enzyme, are our key expertise areas. And of course, with a very, very high medical input. We absolutely want to develop drugs for fulfilling high medical needs. Next slide. Finally, as I have mentioned, we want to bring Eidosia to sustainable profitability. How are we going to get there? Clearly, we are in a very particular situation because our revenue, we have two main streams. First, milestones and YST streams, for example, coming from Ponezimod, but also in the future, Aprocitantan, and hopefully from the T-type calcium channel blocker, which has been licensed out to Neurocrime. But we have also our net cells coming from primary care, from for example, for daridorexan, but also for orphan drugs like lucerastat, clazodentam, and specialty drugs like senerimod and selatogrel. So all the organizations that we are setting up now to launch daridorexan and clazodentam in Japan is going to be leveraged when we are going to have the results of the new drugs and we are going to be able to launch all the drugs in addition to the redirects. Next slide. Now, Andre is going to discuss the financial numbers from these first six months of the year. Yeah, thank you. Thank you, Jean-Paul. As you rightly said, the appropriation in Japan are well underway. So let's move operator to slide number 14. The usual slide on how our operating and net results came about. Starting from left, we see our revenue, actually 13.8 million. I would start with the smaller numbers, which is actually 0.4 million corresponding to the 8% revenue sharing of the initial net with the launch of the by Johnson and Johnson in the course of Q2. Another one which is relating to the milestone paid by Moshida in the first half in connection with the first subject, first visit of the bridging study, study in Japan for . 1.6 million was recognized from 8.4 million paid, and also rest, i.e., roughly slightly less than 12 million. where our deferred revenue from a previous collaboration that Adolfia entered into with J&J for , with NeuroClean for the calcium T channel blocker, with Moshida, as Josh mentioned, for and co-marketing in Japan. We'll come back, Josh, in a few minutes to the non-GAAP operating expenses. leading to a non-GAAP operating result of 234. If you add the depreciation and amortization of eight, the stock base compensation of 9 million, you end up at 252, which is our US GAAP operating results. Below the EBIT, you see here a positive number, $8 million, mainly driven by currency exchange gain on our deposit in U.S. dollars. And we ended up with a U.S. gap net result of $243 million. Next slide, 15, please. Here, we provide breakdown of the non-GAAP operating expenses. So, as you can see on the right-hand side, 248. So, going up significantly, mainly in SG&A. And, of course, if you're looking at this 68 million, it breaks down between commercial with 32 million significantly up with the preparation of the upcoming launches and also GMA going slightly up, not only at the headquarter but also in the affiliates. If I go from right to left, in order to launch, we also start to build inventory. in drug substance, drug products, and finished product. We paid a milestone of 5 million in connection with the filing of in Japan, and the developments at 115 million went also up, breaking down between clinical, 74 million, and chemical and pharmaceutical department 42 million. Another way to see it is actually 46 million functional OPEX and really the rest is really chemical assets with 46 million study costs. 40 million drug substance and 10 million drug product. Research went slightly up with 54 million. So as you can see, and as explained by Jean-Paul, it's really all about properly preparing the upcoming launches in the region, U.S., Japan, and it has a much lower impact right now, EU, Next slide, 16 please. Just to mention our cash flow. As you know, we started this year with 1.2 billion liquidity. If you take into account the non-GAAP OPEX we just discussed, The 8.4 million or 1 billion yen paid by Moshida in connection with the initiation of the bridging study in Japan. 17 million capex and 16 million other outflows, maybe working capital requirements. we end up with a liquidity of 927 million by the end of June. Next slide, 17, please. Here you have a comparison of the liquidity with the start of year and the closing of the first half. What is important also is to see how this liquidity is broken down between different currency. 681 in Swiss franc and 237 in US dollars. These dollars are aimed to hedge our outflows in US dollar with the upcoming launch of Dalai Lama in the US. But it's a natural hedge, I would say. It's not a U.S. GAAP accounting hedge, hence, and you were alluding to it, the fluctuation on the currency from one quarter to the other. Next slide, 18, please. Let me finish. with the guidance for 2021. As you've seen, we reduced the guidance by roughly 20 million with functional R&D at 360 million, so around 10 million less than the previous guidance. functional selling and G&A expenses at 220. So another 10 million lower than initially guided. Still an inventory built of 35 million, even if we had only a 6 million in the first half and no other milestone payments except the one already paid in Q1 2021. So with this non-GAAP operating expenses, excluding, of course, unforeseen events, should be around 620 million. If you add 20 million DNA and 25 million SBC, we would end up with the US GAAP operating expenses around 665 million. With this, I hand over to Jean-Paul. Jean-Paul? You're on mute, Jean-Paul. Sorry. Thank you, André. Next slide. So just this slide summarizes the main milestones which has happened and will happen in 2021 and next year. So at the beginning of this year, we had, I repeat, the filing of Davidov-Exxon in the U.S., Europe, Switzerland, we had the finding of cladoxantham in Japan, and the initiation of the SOS AMI trial for selatogrel. Now, in the coming months, we are going to get the phase three, the pivotal trial of luceratat, and we are also going to have the results of the Phase IIb, which can become a pivotal trial depending on the results of selerimus. In the beginning of next year, we are going to launch daridorexams. We are also, we should get the approval and should launch cladodentam in Japan. And in the middle of next year, we should have the results of aprocitentam, in resistant hypertension, and at the end of next year, the result of cladothentam. That means all our late phase products will be, we will have the results of all our phase three products at the end of next year. And as you can see, the company Algorcia will become a very different company. that next year we should be a commercial organization with the launch of daridorexans. But in addition, we will have launched cladodentan in Japan and maybe have positive results with luceratat and cladodentan in Europe and the U.S. Next slide. That means really that our goal to become a profitable company is really approaching. I think it's not in the too distant future where we are going to be able to become financially independent, not only by having the, of course, the ponies in our royalties, but also with our sales of Barry Dorexan and with the sales of Clazodentan in Japan. I do believe that with Dairy Direct Center alone and Clazodentan in Japan taking into account our really strict cost control, we can become profitable with these two products alone. And of course, if Lucerastat is positive and Clazodentan in US and Europe is also giving positive results, this organization, the organization that we are creating is going to be leveraged, and of course our profits will grow, and in the long term, of course the revenues from Asprosy Tentan and Tenerimon and Ceratogrel will really complete this financial stream of revenues, and I do believe that we have a very bright future, not only as a research and development organization, but as a commercial organization with multiple breakthrough and blockbuster products. Thank you. Next slide.

Thank you, Jean-Paul. This concludes our prepared remarks section for today. We have crossed the bottom half of the hour and now can shift over to the Q&A session where Simon Joes is going to be joining us to address them. Operator, please open the lines.

Thank you very much. Then we will now begin the question and answer session. If you have a question for our speakers, please dial 0 and 1 on your telephone keypad now turned to 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 answer your question. If you're using speaker equipment today, please lift the handset if you're making a selection. One moment, please, for the first question. The first question we've received is from James Gordon of JPMorgan. The line is now open. Please go ahead.

Hello, James Gordon, JPMorgan. Thanks for taking the questions. A couple on the late-stage pipeline, please. The first one was just about the readouts. I can see on slide 19 it looks like we're going to get Lucerastat and then Soneramon. Is that right for the order, or is that just illustrative and it could be either way around? So that was the first question, please. The second question was about how you're thinking about challenges and success for the two ones that are coming up, so if the scenario model is there or not. I know scenario model data, we could take some comfort from what we saw on the SLED-I score in the prior study, and the fact that you've got high-dose storage in both arms, and then Lucas has been quite a tough indication for replicating data sets. How are you thinking about that? And then the third and final question was just scenario mode, what's the range of outcomes, depending on what we see in terms of the timelines with which the product will come to market? Because I think I heard that the phase 2B could be pivotal. So if the data is really good, is it potentially pivotal, even as a study by itself, or you still definitely need to replicate it and do another study? And if you did that, would it be similar timelines to the first study? So maybe we'd be talking about like a 2025 approval or something like that. So what's the range of outcomes, depending on what we see for scenario mode, please?

Yeah, James, thank you very much for those questions. I think we're all going to have Jean-Paul answer them. So, number one, timing of lucerostatin scenario models, is our choice of depicting it on slide 19 any kind of indication? What is the success and the likelihood of each of the trials reading out given the predecessor data? And what is the range of outcomes of scenario models? Jean-Paul, do you want to address those questions?

I think just I have to say it's planned, you know, the reading of the results of SceneryMod and LuceraStat within a few days. It's falling like that. But sometimes, you know, you can have one center not answering. So it can be a few one-week delay or two-week delay. But it's basically I cannot tell you which one will come first. But it will be very close. The two studies will be very close. And we have more and more, of course, we will have more and more precisions when we are approaching. But that will be within a few weeks, the two studies. Now, the second question, if I may, Andrew, is about what are the chances of success? How we estimate the chance of success with SceneryMod and Le Serastat? Just for us, you know, SceneryMod, we made a first phase 2B. We now have done a very large study. And, of course, we want to know the right dose, but also the efficacy. I think that we know the safety because the DSMB has reviewed many times this data. So I don't think there is a problem. really a safety problem which would prevent the further use of this drug. Now, I think that we are quite, you know, the team, we are quite optimistic, but you know that lupus is a tough disease, so we need to see the results. But we had some very clear indication in the phase 2a, so that should be reproduced in the phase 2b. For lucerastat, as I have said, we have never tested the effect of the drug on neuropathic pain, which is the primary endpoint. On the other side, now many patients are for more than two years within the clinical trial. I do believe that if the DSMB, which is unblinded and knows if the drug has no effects, I think that if the drug would do nothing, I think that since there are other treatments for Fabry, such as enzyme therapy or some amicus drug, I think that they would have told us to stop the study. But, of course, I don't know. I have no certainty. But I think that the fact that this study is going on for now nearly three years is a very good indication. And the third question is what do we mean for us of a positive study with scenario mode? And I think it's very clear for us that for us really what means positive is not only to get efficacy but also to get a safety which is really acceptable at the dose which gives this effect. Of course, we could see effects and maybe at only at doses which would not be acceptable. But I think, as I have said, we have not been asked by the DSMBs to, for example, stop the high dose. So I think that the safety should be okay. It will be very difficult to compare our trial with other trials because this trial, our trial, has a very specific design for the corticosteroid use. As I have mentioned several times in the past, we have tried to optimize the corticosteroid use before randomization between placebo and the four doses of the drug in order to avoid interference of corticosteroids during the trial. This has not been done too much, I know, in other large phase 2b or phase 3, and therefore it will be very difficult to compare the results with what has been obtained. Now, finally, can this study be alone sufficient for I don't think so. What we have done is really to prolong the study to have also data after one year. This was the request of the FDA, and this is in order to even better use the data of this S2B. I think that really the FDA and other authorities will require another study, confirmations, And of course, I believe that because we will have a very good definition and determination of the dose to be used, this study could be smaller in terms of size than the present study. And we are doing, we are preparing ourselves to be ready to initiate this last study as soon as possible and to interact with the regulatory authorities as soon as possible in order to get what we believe is maybe the best overall drug in lupus, which will come to the market. But let's wait for the results. And of course, we will know much more at this time.

Thank you, Jean-Paul. Thank you, James, for the questions. Operator, next question, please.

Yes, the next question is from Peter Vidal of Citi. The line is now open, please go ahead.

Thank you, Peter Vidal of Citi. Three questions, please. Firstly, just a clarification on SceneraMod. If I look at clintrials.gov, it's saying primary endpoint in July. So I just want to make sure that the data, is the data really coming in Q4? Could it come in earlier? Secondly, for Andre, maybe if you just peek into we've got a growing and progressing pipeline. You're getting ready for the dairy launch. That all requires funding. So just to make sure that we're thinking about this correctly, if I think about Citi and ConsenSys right now, feel that we probably need to be way over $750 million in OPEX for next year to reflect the dynamics across the pipeline and what you're doing from launch preparations. I realize this is not the – the medium for guidance for 2022, but can you just give us some pointers as to how we should be thinking about the R&D and marketing dynamics? And then lastly, on Pomvori, I realize this is a J&J drug, but have you ever shared your perspective of the peak sales outlook to the asset? I'm only asking that in light of what is clearly a very competitive landscape and the fact that you don't have the fatigue data on the label. I just wanted to ask Jean-Paul, whether you could share your views as to what you think the peak sales opportunity of POMBOR is. Thank you. Thank you, Peter.

All right. So, yeah, I think I quickly can address that. Yes, we do see fourth quarter as most likely, and the clinicaltrials.gov probably needs yet to be updated. For Andre's question on finances and 2022 outlook, a bit of granularity, and then POMBOR, Jean-Paul, Walter, do you want to take over the financial question?

Yeah, sure. Since we are, you know, in the middle of the Olympic Games in Japan, I will take an analogy here with the hell race, one hell after the other.

Yes, as you can imagine, we have, we, We have a mid-range plan. That's also why Jean-Paul told you that we are confident with the upcoming launches that we will reach sustainable profitability. No longer a question of if, it's more a question of when. Coming to the OPEX base for 2022, you know, there are so many moving parts. starting with the R&D, will we have costs relating to with Phase 3 following positive results of CFH2B and some other moving parts in R&D. When it comes to marketing and selling, yes, sure. I would say it will continue to grow. especially when the beginning of 2022, we will have the Cineos Salesforce in place in the U.S. So we will, with Q3, update you once again for the year. Q4 would be an additional proxy, a part of the moving parts that I mentioned in R&D with Cineos in the U.S. And globally, you can reasonably expect that the OPEX will grow in 2022. We need to have more certainty on the launch date for clasophentan. Things are progressing well in Japan. We also need to get a better understanding what could be the label in the US. And then, of course, the revenue will compensate for the growing OPEX base in 2022. Maybe I can take also the last one regarding change in . We do not get any privileged information either. Just recall in connection with the J&J Actelion deal. This is a drug owned by Actelion, i.e. J&J. And to this extent, we are entitled to 8% revenue sharing. Jean-Paul, maybe if you want to add your thoughts on Ponvory in CMS space? I think that Ponvory, which has shown also superiority to Baggio, which has published data on fatigue, maybe not on the label, but certainly published. I do trust that Johnson & Johnson is one of the best marketing companies. In fact, Johnson & Johnson is very well known and renowned for its ability to market drugs This drug has very clean and clear data. It's both in the US and in Europe. And it's also, I would say, one of the few new drugs that are now coming to the market for Johnson & Johnson. And it's an area which is completely also open for Johnson & Johnson. I really trust, but I cannot give you numbers, but I really trust that Johnson & Johnson is going to make a success for Pound Glory.

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

The next question is from Rosie Turner of Barclays. The line is now open. Please go ahead.

Hi. Good afternoon. Thank you very much for taking my questions. Just two, if I may. You've spoken quite a bit about how preparations are going with the U.S. sales force. And that all sounds perfectly on track and great. Just wondering how it's going in terms of commercial preparations. Ex-U.S. obviously kind of the European approval of DARA directs and will follow relatively shortly after the FDA approval, kind of all things kind of continuing on the current course. So wondering how that's going. And then just on liquidity, obviously it's getting a little bit tight in terms of the typical kind of 18 months that the market looks at in terms of cash burn. Just wondering what your thoughts are there, what paths could be explored if you wanted to raise some additional capital going forward? Thank you.

Thank you, Rosie, for those questions. So first one, launch preparations, U.S., non-U.S., Simon, I think that'd be one great for you to take. And then on the liquidity cash runways, Andre, please.

Simon? Yeah, sure. Thanks, Rosie, for the questions. I mean, XEOS, the preparation for dairy launch in Europe is going very well. As Jean-Paul said, we've established affiliates in the major markets. We've got general managers appointed in those markets, all of whom have got a lot of experience at dealing with the payer environment and opinion leaders there. The fundamental difference in Europe for us is that we will be the first and likely, I think, only DORA to enter the U.S. market. So the dynamic is very different in that there has been no innovation for 20 years, and the excitement that we're seeing amongst the specialists and the opinion leader community is actually quite palpable because they have all the same concerns and worries over the use of ZEVs and benzos that we see in the U.S., but they've yet to get their experience or hands on a door. So there's a lot of a lot of excitement. And we're working very closely with opinion leaders as we start to develop our strategy. That's all on track. Obviously, it's a few months behind the US just naturally because of the the regulatory timeline. And certainly in Europe, there'll be, as you're well aware, some access work to be done in countries like like France and Spain. Italy is interesting because Italy The insomnia market is self-pay so we can get into Italy earlier than we might otherwise go in because we don't have to go through the reimbursement process. Turning to Japan and to the preparation for the CLASO launch, that's all on track as well. We've got the medical team stood up. We've got MSLs in the field. We're engaging with specialists. A high degree of excitement there. This is a very prevalent condition. It's more than twice the incidence that we see in the rest of the world. So they're sort of acutely aware that they have a very sort of high incidence of vasospasm and SAH. And I think there's a lot of excitement in the medical community there. Because again, similarly, they've had no innovation for I think for Fossaville was 1995 and the evidence of the efficacy of that isn't brilliant. So I think, again, I think we're on track there and see nothing, you know, pending approval to see a successful launch in the second quarter of next year.

Thank you, Simon. Andre, liquidity? Yeah, liquidity. I think I made it very clear over the previous calls that we're not planning to break in and that we should not also want to be against the wall. That's why we would like to have liquidity or cash covering our next 12-month cash burn at least. As you know, we are also exploring all avenues, the classical one, equity or equity-linked capital markets on top of the J&J Credit Facility, which we can grow down at any time, 243 million, short to mention, and maybe some also other routes like royalty monetization deals that advantage of having many assets

that could be eligible to such deals, but at the right terms.

So this means also at the right timing, you would get much more value if the regulatory risk is off the table with the drug approved or on the verge to be approved following positive readout of pivotal trials. And, of course, we have also the out licensing route where we could try to upfront some cash in this type of deals. So we have a variety of instruments available to us.

We remain vigilant to be able to seize any opportunity if one would would be attractive to us.

Perfect. Thank you very much.

Thank you, Andrea. Thank you, Rosie. Operator, next question, please.

The next question is from Greg Sivanovich of Goldman Sachs. Your lines are open. Please go ahead.

Good morning. Good afternoon. Thank you for taking my questions. I've got three, if I could. My first is on Dara Dura Accent and particularly the European opportunity. And while I understand perhaps the opportunity to be the first door on the market in Europe, my impression is one where perhaps the reason why others haven't been able to go there just yet is just reimbursement, pricing, and the market opportunity. So could you provide just your high-level comments on how we should think about the European opportunity revenue opportunity relative to the U.S. opportunity at least in your opinion. My second question just has to do with and comments around what's next assuming positive data in the fourth quarter. You know, I've seen some pivotal phase three programs in the syndication being sometimes as many as 1,000 patients And I'm just wondering how, and while I know it's early days, but if you could provide any high-level thoughts on how you're thinking of what that perhaps phase three program might look like and whether it is just one study and if you would need to have a relatively sizable patient population that phase three study. And then perhaps my last question, well, maybe I'll let you answer those two first and then I'll ask my third. Thank you.

Okay. Thank you, Greg. On the dairy question, I would actually like to split it in two, have Simon address the opportunity, and then shift over to Jean-Paul for the patient need part of it, as we do feel very somewhat puzzled sometimes about how European patients are being treated. And then ScenariMod, can Jean-Paul, you repeat your comments before on the Phase 3 program. Simon?

Sure. Yes, Andrew. Thanks, Greg, for the question. I think those because part of the reason we see such a big opportunity is the unmet need in Europe is just as high as it is in the U.S. It is a generic market, and you're absolutely right. That means we end up with pay scrutiny, but, you know, the generic drugs that these people are dealing with have adverse events. They've got addictive properties. The regulators are really concerned about their use. In fact, most of the labels of the sleep drugs in Europe limit their use to two or four weeks. In countries like Germany, they won't reimburse beyond four weeks. So they're having such a challenge with existing treatments. I think if we have the right conversation with the payers and we're talking about the right patient population, as you know, with the right sort of price point, then I think that the unmet need will allow us to establish a good position in Europe. What exactly that will look like from a revenue point of view is clearly too early to say, but I don't think, I think if we were entering a generic market where the generics were good and well established and people didn't have concerns, which is often the case, you know, in diabetes and other areas, then fair enough, but there is such consternation and concern about the current makeup of the market and that we believe, with the opinion leader backing that we're seeing, that we do believe that these are challenges that are overcomable. Great. Simon?

Maybe I can add to Simon. I think if you take France, you know, you cannot take bed rugs for more than eight days. It's really extremely, you do not have, you know, people forget that we are doing studies with our drugs over a year. And there is no chronic drug, there is no one single chronic drug approved in Europe for more than a few days. So we are going to get a unique opportunity. And I think that we should be very, very careful when we compare deridorexan to other long-acting, I would say, orexin receptor antagonists because the problems of the precedent orexin receptor antagonist was a long outlife leading to somnolence in the morning and the side effects, which in the U.S. have been solved by decreasing the dose and leading to much lower efficacy. So I think that we should really not forget that the very direct time is sort of optimized. And also when you think of the market and you think of Europe, we don't need to get 100% of the market. I would say 20, 15, 20% of the market would be already leading to blockbuster numbers. And this is true in the U.S., this is true in Europe. We don't need to be a 70% market share to be very successful. And that is the beauty of insomnia market. I do believe that we will grow with the redirects and for the next 14 years of market exclusivity that we have because we will never be able to treat all the patients we should be treated with a drug that's very fluorescent. And then maybe I can take over a SceneryMod question, Andrew? Yeah, go ahead. Follow on. And the SceneryMod, you know, we have discussed very carefully with the FDA. We have really followed all their advice in order to be completely in line with them because we know that especially this division is very keen on safety. They know that the lupus patients . And this is why we have done a huge, it's one of the biggest, maybe the biggest phase to be ever done in lupus. And we have more than 400 patients treated in this study for phase two, which, and we are also following the patients for a year. and that was agreed with the FDA to be potentially used as the first pivotal trial, but depending on the results, I think that in order to be able to use it as a pivotal trial, we need to have a clear-cut efficacy and safety, of course. But if this study, which we believe most likely will be positive and really give us the right dose, I think we will be able to have a study only performed with the dose with the same endpoint that we have chosen in phase two. And I think this study will require much less than 1,000 patients as you have mentioned. And this study also will be much easier to recruit in terms of patients because we will then with a drug for this phase three, which will have a very well-known and described safety and efficacy.

Thank you, Jean-Paul. Greg, you had a follow-on?

Yeah, I did. Just on the MS market, I'm just wondering the ideal positioning of your product. You know, there's growing emergence of the anti-CD20 that I'm just trying to figure out if you have a sense of what the ideal or the target patient population is for the product. Thanks.

Jean-Paul, do you want to address that?

As I said, for the MS drug, for which MS drug you mean? For ponedimod? For ponedimod, yeah.

How does its uniqueness with its PKPD profile, rapid onset, rapid off, translate into patient utility? Who is most going to benefit from that?

It's clearly a normal drug, so it doesn't need injection, number one, and I think that the efficacy And I think that the side effect profile has been well characterized in comparison with another very well-established oral drug, which is Obagio. So I think that we have many long-term data also, which are quite unique because I think that the patients have been followed for eight years. And this drug is extremely well-tolerated. So I think there are many arguments to sell such a drug. You also know that this is very fastly reversible. And you can see in terms of, you know, in times of COVID or infections, viral infections, I think it's a very, very big advantage to have a drug where you can stop treating the patients and two or three days or maybe a week after the patient has a normal immune system or close to normal immune system. And of course, if you use a long lasting CD20, you are going to be months at risk of this viral infection or other type of even other type of nocosomal risk of infection. So I think that there are many arguments, and there is a very, very good market position for a drug like Pronezimod, which is, in my mind, an optimized S1P1, which also doesn't need, compared to Fingolimod, the same scrutiny for the cardiovascular effect during the first days of treatment, and which is a much cleaner, I would say, sign effect profile in my mind. So, let's see how Johnson & Johnson can do and can perform.

Thank you, Paul. Thank you, Greg, for the questions. Operator, are they mindful of time? Are there any questions left in the queue?

Yes, we have one last question. It is from of Morgan Stanley. Your line is now open.

Hello, can you hear me? Yes, we can. Okay. Thank you very much for taking my question. My first question is on the U.S. market and the Dora in particular. I mean, since the launch of Daisy Go, we've seen SI has been able to grow that market by about 40% in volume. They have taken around 25% share, so they've done relatively well. I just wanted to add your comments on how you see the evolution of this market, in particular in the context of COVID. I mean, like I said, and your launch direction probably the political situation will have improved a little bit, but just wanted to have your thoughts on the current dynamics and what's playing out right now between Merck and SI. And then maybe just a quick question on . Just wanted to know the context of the discontinuation of the natural history study in disorder and how your thoughts are changing regarding this .

Okay, people, thank you for your questions. Simon, can you address the U.S. DORA dynamics and how you see Davigo and our launch process moving forward? And then Jean-Paul, I would, if you could address Simba Gustav, if we can.

I'm assuming that the comments about the 25% and the 40% sort of growth is maybe looking at that in the context of the DORA subclass, if you will. Yeah, because, I mean, clearly the dual orexin market itself is small. I mean, suvorexan is for about a 1% market share. If you look at the uptake so far of lemborexan, I think one year in, they probably are about a third of what suvorexan was at the same time point. So it's clearly struggling, we would say, and essentially it's not helped really expand the DORA class. That goes back to Jean-Paul's earlier comments about the PK profile of both assets in that they have long half-lives. That is either going to create an adverse event challenge and somnolence in the morning or you drop the dose and then you have an efficacy problem which is what we've seen in the marketplace. We clearly have a very different profile and expect therefore to be in a very different position. In terms of COVID, I think there's two ways of answering that question I guess. One is we've clearly seen an increase in the prevalence of insomnia during COVID times. So I think if anything, COVID has brought insomnia and its prevalence into the forefront, which is no bad thing when you're about to enter that market. And then in terms of our own launch preparation, I think we're in a very good position because we're obviously building our commercial organization and our commercial model from scratch. So we're actually, we don't have to repurpose an existing organization that was built for the old world. And we're certainly very attentive to all the digital channels that Jean-Paul has mentioned, the use of big data, doing things differently. And we're certainly looking to build a commercial organization that is modern and fit for the future and fit for a world where we've seen the world frankly transform into a much more digital place in a very, very short space of time.

And for Simbaglustat, I take the question, Andrew?

Yes, please.

I think for Simbaglustat, we are really just a few months close to the Lucerastat. And if we, Lucerastat is a very good drug. And I think if the study is positive, it will be unique. And, frankly, we are a little bit hesitating. You know, can we expand, for example, the label, the indications in future studies with Dusterastat, or should we start with Simbat-Dustat, which is more powerful, which has some advantages, but which is still within the same type of drugs, number one. Number two, you have seen some negative studies the Sanofi drug, and we need really to analyze a little bit the differences between Sibagustat and, for example, the drugs of Sanofi really in order to really take some lessons from the negative results of Sanofi. And finally, I have to say that we have some drugs coming to the end of phase one, nearly phase two, which has fantastic potential, we are very careful on our costs. We really, and I would like to say that when people think that the clinical development costs will continue to grow, they are wrong. We really want to limit our clinical development costs in order to be also able to invest into our launches. But we, most of our phase three are finishing. And I think that we, as I mentioned, next year, apocytentam, sclerosentam, daridorexant, of course, but also lucerastat will be finished. And basically, the two phase three products will be Cenarimod in a quite limited, I don't believe in a huge study, but it would be Cenarimod and the two phase three products. And we are very careful before starting phase two or phase three with any of the products in order to have a very, very strict cost control. We only want to initiate phase two and three with drugs where we are confident that not only they have a big chance of clinical success, but also they have a very large market potential.

Thank you, Jean-Paul. Thank you, Thibault. Okay, I think we've exhausted our time, operator. We don't have any further questions, I'm assuming.

No, there aren't any further questions.

Okay, so I think we've come to the end of today's call. Thank you very much for your ongoing interest in Idorsia. I'm personally looking very forward into an engaging second half of 2020 or 21 where we prepare ourselves for market launch, move clinical assets forward, reanalyze data, and we live up to our expectation and aspiration to become Europe's, one of Europe's leading fully fledged biopharmaceutical companies. Operator, please close down the lines.

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