Nxera Pharma Co Ltd

Thank you very much for taking time out of your busy schedule to join us today. I am Nomura, CFO, and I will be the moderator. Today, we have Chris Cargill, CEO, Dr. Matt Barnes, President of Paris and Head of UK R&D, and Dr. Satoshi Tanaka, President of Nexera Japan, Nexera Pharma Japan, and Korea. Simultaneous interpretation is provided. Please click on the Earth icon. in the lower right corner of the screen and select either Japanese or English. If you choose off, you will hear the speaker's original voice. Today, we will explain the progress of our business using the material in the first half, followed by a Q&A session in the second half. The presentation materials will be shown on the screen and are also available on our website. If you want a copy, please access the website by selecting Presentation Materials and Video from the Investor Relations tab in the upper right corner of the website. Institutional investors, analysts, and members of the media are welcome to raise your hands and ask questions during the Q&A session. For all others, please submit your questions via the Q&A button. Questions can be submitted anytime during the webinar and will be answered as much as time allows during the Q&A session later. So we will start the briefing. I will first explain the first half financial results, followed by Chris on the overall business update, Tanaka on Japanese and APAC business, and Matt on the progress of R&D. Finally, Chris will explain our FY2024 goals and events. Please turn to page 5 of the presentation.

資料の5ページです。 This is page 5.

This is the summary of the financial results for the first half of FY 2024. Revenue was 12.7 billion yen compared to 2.1 billion yen in the same period last year, while core operating profit was 1.1 billion yen compared to a loss of 2.7 billion yen in the same period last year. This was mainly due to new partnerships and milestone revenues. which were weak in the same period last year, including new partnership with Behringer and Milestone Revenues from Neurocrime, Sentessa and Abdi in 2024. Operating profit on IFRS basis, including non-core, was loss of 3.6 billion, a slight improvement from last year's loss of 4.1 billion. We continue to invest for future growth, and with cash and cash equivalents of 50.9 billion yen at the end of June, we have sufficient capacity to support these investments. Slide 6, please. This overlaps with the summary I just explained, but the left side shows revenue and breakdown and changes in operating profit and poor operating profit, and the right side shows the factors behind these changes. As an addition from the summary, revenue increased as pivot sales contributed from the beginning of this year, whereas last year the contribution came from the second half of July, after the acquisition.

So this year, the revenue increased accordingly.

In terms of costs, in addition to R&D and SG&A expenses, 1.6 billion yen non-cash cost of sales charge relating to Pivot's inventory, in other words, a one-off increase in costs of 1.6 billion yen up to Q2 as a result of the M&A accounting process has a particularly large impact on operating profit and loss. This fair value assessment impact is expected to disappear during Q3 as the inventory from the acquisition will be fully shipped out.

Slide 7, please.

Full-year guidance on R&D and SG&A expenses remain unchanged from the beginning of the year, as evidenced by the option-to-license transaction with Behringer Ingelheim announced in March this year, which was a large upfront payment of 14 billion yen, including options that may be exercised next year. we will continue to increase the value of our pipeline by advancing our in-house R&D to Phase 1B rather than pre-clinical. In terms of SG&A expenses, we will also continue to promote pivots in Japan and carry out activities to commercialize daridorexant in Japan and prepare for launch of pivots in South Korea. That concludes my brief summary of the first half financial results. Chris will now update you on the business. Chris, please.

Thank you, Nomura-san. Good afternoon, everyone. I will now take the operational highlights for the first half of this year. Please turn to slide nine. So our first six months have been robust. with a focus on implementing our five critical goals that are aimed at setting up the company for sustained growth opportunities. Number one, we're targeting to continue the impactful launch and uptake of PIVLAS to exceed 8 billion Japanese yen in NHI sales. Now, with an impressive 6.5 billion Japanese yen already achieved in the first half, We anticipate further growth post the successful KOL event in June, which drew an attendance of over 1,400 key opinion leaders. Number two, our goal is to obtain Japanese NDA approval for Daradar Accent. Progress is on schedule, and we expect to receive updates in the latter half of this year. Number three, We're also aiming to acquire or in-license at least one advanced stage therapeutic for the patient population in Japan and APAC, excluding China. Negotiations are well underway as we are engaged in serious talks with potential in-licensing associates. Number four, notably, we entered an exclusive option to license agreement with Böringer Ingelheim concerning our GPR52 agonist. and started the new Phase 1 trial with our in-house EP4 Agonist program. Number five, following the acquisition, we've effectively introduced our rebranded entity, Nexera Pharma, and are advancing our investments in various new technological systems and applications, enhanced decision-making processes, operational effectiveness, and to facilitate future expansion. Please turn to slide 10. We've made substantial progress in the first half across all stages of our business, achieving important milestones both independently and with partners. Investment continues in our target identification and validation efforts, aiming to discover novel targets essential for maintaining a robust pipeline. Notably, broadened our partnership with prestigious or targets in autoimmune disease. The latest includes our expansion into autoimmune disorders research after six CNS disease campaigns, utilizing Precision Life's AI platform to uncover unique disease insights and patient application biomarkers. In pre-discovery, our collaboration with AbbVie on the NextWave platform successfully delivered multiple GPCRs associated with neurological disease, resulting in $10 million of milestone income received. Two proprietary molecules were advanced thanks to our Next Wave campaign, reclaimed sole ownership of our GPCR antagonist program, previous out-licensed to GSK. In early clinical development, she has seen three of our programs commence phase one trials. Our proprietary EP4 agonist for IBD, a collaborative orexin-2 agonist for narcolepsy with Sintesa, and a muscarinic M1 preferring agonist for the symptoms of neurocrisis. Additionally, our alliance, borrowing at Ingelheim, a license agreement for GPR-52 agonists for which we've received €25 million up front, with potential further milestone income amounting to €670 million plus royalties. Our leading program, the selective muscarinic M4 agonist Neurochrome, included a long-term obstacle system triggering 15 or worse milestone increases, with phase 2 data anticipated later. After all, our portfolio has significant advancements through both internal developments and strategic partnerships. I want to emphasize our significant involvement in the most rapidly advancing field in the pharmaceutical sector. In neuropsychiatry, let's recall that our collaborator, Neurocrin, is heading the development of the world's most extensive portfolio small molecule muscarinic agonists. An important phase two outcome for the M4 agonist, MBI568, is anticipated later this year. Additionally, we've progressed a cutting edge oral small molecule GPR52 agonist into phase one trials targeted at schizophrenia and other related disorders. We finalized an exclusive option to license agreement with Boring and Ingelheim concerning this groundbreaking compound. Targeting GPR52 might offer advantages against future schizophrenia treatments by possibly addressing not just sensitive symptoms, but also enhancing cognitive functions. Within metabolic disease, it's noteworthy that top pharmaceutical firms are intensifying efforts to enhance their portfolios, including the pursuit of convenient once-daily oral therapies for patients. Such treatments would offer a cost-effective alternative to today's complex peptide injectables, promoting quicker global adoption. Hence, our innovation is instrumental in aiding Pfizer and Lilly in their discovery of novel and next-generation oral small molecules aimed at type 2 diabetes, obesity, and potentially expanding to other distinct diseases such as heart, liver, and kidney diseases in the future. Regarding sleep disorders, the development of orexin agonists is poised to target the cause of narcolepsy type 1. There are revolutionary treatment strategies that improve patient outcomes in NT1, narcolepsy type 2, and possibly other sleep-wake disturbances. Nevertheless, there is a remarkable developmental void in orexin agonists due to their intricate medicinal chemistry. For this reason, our NextWave structure-based drug design capabilities are empowering Centessa Pharmaceuticals to fulfill these needs through our collaborative orexin-2 receptor agonist, ORX750, which is actively moving through Phase I trials. In sum, with these swiftly evolving sectors of medicine, neuropsychiatry, metabolic diseases, and sleep disorders, our strategic associations have placed us in an ideal spot to advance potential therapies for patients. Please turn to slide 12. So as illustrated here, our strategy involves an integrated approach to drug development lifecycle, encompassing the initial stages of drug discovery all the way to clinical trials and now the commercialization efforts in regions such as Japan and Korea. And our pipeline is poised for expansion. Nexera holds a leading position in GPCR structure-based drug discovery and is dedicated to ongoing innovation and the identification of new programs aimed at addressing significant unmet medical needs. With the recent integration of Edosia Japan in 2023 and the establishment of our commercial infrastructure in Japan, we are positioned to address the challenge of drug loss in Japan. Our strategy includes in licensing foreign medicines for development and distribution to the Japanese market. Nexera is determined to be the preferred partner for international technology firms looking to introduce specialty hospital-based and rare products into the Japanese market, fulfilling our commitment to accelerate the delivery of innovative medicines to patients. Nexera's vision is to lead the next generation of medicine, from Japan, for Japan, and the world. Tanaka-san, President of our Japan Pharmaceutical Business, will now present his highlights for the first half. Please, Tanaka-san.

Thank you, Chris.

So next, please. We'll talk about Japan, South Korea, and APAC, where we stand in our R&D.

As Chris said, sales of Piblots are growing steadily.

It has become the standard of care for the prevention of cerebral vasospasm following the subarachnoid hemorrhage due to cerebral aneurysm. and associated stroke and cerebral ischemic symptoms, with a prescription rate of 60% of eligible patients. As Chris said earlier, SAH Forum was held in June, and this had 1,400 healthcare professionals which was a large scale for an event by one company. We will aim for further uptake going forward. Next, please.

Next slide, please. So this is the

Galidorexant, an orexin receptor antagonist, which has already been launched in Europe and U.S. under the brand name Q-Vivic. An NDA filing was submitted in Japan in October last year, with launch scheduled by the end of this year. The market share of orexin receptor antagonists is increasing year by year and already accounted for 22% of all sleeping pills last year, with a steady increase this year.

Next slide, please.

APAC businesses minimize our own investment as much as possible and reduce risk. For example, in South Korea, we are strong in working with global companies and have partnered with local subsidiary Handok, a leading pharmaceutical company for sales, marketing, promotion, and distribution of pivots. For in-licensing, to make in-licensed products even more effective, we joined and became the representative in Japan and South Korea. This enabled us to gain access to new drug candidates for rare diseases and establish a system to accelerate in-licensing to Japan and APAC. Now, Matt, please.

Yes, thank you, Tanaka-san, and good evening, everyone. My name is Matt Barnes. I'm the president of Next Zero Farmer UK and head of R&D, and I will present our recent progress from the R&D area. So please turn to the next slide. So building on the excellent progress made with key R&D milestones, as summarized by Chris, I would like now to draw your attention to the nine active clinical programs that we have in collaboration with our strategic partners. We are pleased to see two significant milestones in our highly successful partnership with Neurocrine around a suite of muscarinic agonist programs for schizophrenia and other neuropsychiatric disorders. The phase two study to investigate MBI-568, an oral selective M4 agonist, as a potential new treatment for schizophrenia is progressing well. And in April, we received a $15 million milestone payment following the completion of a successful long-term toxicology assessment. Furthermore, last week, Neurocrime confirmed they plan to communicate the output of this phase two study by press release and conference call later this quarter. In addition, in May, we were pleased to see the M1 oral preferring agonist MBI567 discovered by Nexera enter into phase one clinical trials to treat neuropsychiatric conditions in patients. with the two additional muscular programs progressing through phase one clinical trials as planned. And finally, on this slide, we were also very pleased to see the progress of SENTESA have made with ORX750, a selective OX2 receptor agonist for narcolepsy as it entered phase one trials in May this year. So in summary, we have a healthy clinical stage partner portfolio. currently with one phase two program and eight phase one programs. Please turn to the next slide. So in addition to those highly successful collaborations, we have a rich internal portfolio of programs with three clinical stage assets and more than 10 earlier stage programs. I will now provide an update on these three clinical stage assets. So firstly, I would like to start with our novel first in class clinical stage GPR52 agonist program to address positive, negative and cognitive symptoms of schizophrenia. So in March this year, we announced an option to license agreement with Boehringer Ingelheim, where we received 25 million euro upfront payment with further milestone payments totaling up to 670 million euros plus tiered royalties. This slide provides some further context on NXE149, which we believe represents a novel approach to treating schizophrenia. So with the acquisitions of Karuna by BMS and Sarah Bell by AbbVie, neuropsychiatry is attracting a lot of attention right now, and we are pleased to have a clinical stage asset in this space. The unique feature of GPR52 is based on the receptor's co-expression profile with D1 and D2 dopamine receptors in specific areas of the brain, which leads us to a therapeutic hypothesis that GPR52 agonists may offer broader efficacy to address not only the positive symptoms, but also negative and cognitive symptomology also, which are not currently addressed with current antipsychotic treatments. And we have strong preclinical data that supports this hypothesis. NFC 149 was developed using our next wave platform and the phase one study is proceeding as planned. The completion of the single ascending dose study is is now completed and the interim pharmacokinetic profile of the asset is excellent. and in line with our predictions. It has low variability, is approximately dose linear, and consistent with a once-daily dosing profile. So we're really, really encouraged by this data. The multiple ascending dose study, including pharmacodynamic measures, is now ongoing. Please turn to the next slide. So on this slide, I would like to provide an update on our EP4 antagonist program for advanced solid tumors alone or in combination with checkpoint inhibitors. So PG2 or prostaglandin E2 is known to be secreted by some tumor types and through the EP4 receptor leads to the suppression of the immune system and blocking of this response is hypothesized to reverse this immunosuppression and enhance the effect of checkpoint inhibitors. The phase one 2A trial with NXC732 was initiated approximately one year ago in collaboration with Cancer Research UK and is progressing very well and is currently being dosed as monotherapy and combination therapy in cancer patients. With the interim pharmacokinetic profile, the asset is very encouraging and in line with predictions. CRUK are due to provide an update at the European Society for Medical Oncology later this year, and next year we'll also provide a first public chemical disclosure at a symposium on GPCRs and medicinal chemistry in October. Next slide, please. So finally, I would like to provide an update on our GI-targeted EP4 agonist program, which is aimed at promoting mucosal healing in inflammatory bowel disease. So the current standard of care in IBD has a ceiling effect of around 40% response rate, with no approved agents currently aimed at mucosal barrier defects. Based on a unique mechanism of action, EP4 agonists are hypothesized to bring benefits in IBD by both immunosuppression and promoting this mucosal healing, which is supported by our own preclinical data. And previous signals of clinical efficacy but which were limited by systemic safety. We were pleased to announce in March this year that NXE744, an oral GI-targeted EP4-selected agonist, which was identified through our NextWave platform, commenced the first in-human phase one study in healthy volunteers. Dosing in the phase one study is progressing as planned. with the sixth single ascending dose cohorts currently underway and the second multiple ascending dose cohorts due to start imminently, with no concerning adverse events noted to date. In June, we actually held a clinical advisory board where we received significant interest in NXE 744 from global key opinion leaders, providing us with confidence as we move forward in designing further clinical studies to help us understand the potential of this molecule, the first of which we intend to commence in 2025. So in summary, we've seen significant progress across all three of our internal clinical stage assets across a range of therapeutic areas. So that concludes my section highlighting our progress in the UK R&D area in 2024 to date. Now I think it's back to Chris. Thank you.

Thank you, Matt. Can you hear me? Yes. Fantastic. Thank you. Apologies for the network issues that I had earlier, but hopefully the audio is clearer now. So slide 23. As a summary of our 2024 goals, we've secured a significant new partnership and commenced an in-house phase one study. We're moving towards achieving 16 billion Japanese yen in PIVLAS NHI sales, obtaining JNDA approval for daradurexant in Japan, incorporating a late-stage program into our pipeline for development in Japan and APAC, and furthering our post-merger investments in various innovative technologies and applications. Please turn to slide 24. The year 2024 is expected to continue our growth and investment momentum with key developments anticipated in the next six months. We're specifically awaiting the Phase 2 top-line data readout of MBI568, the muscarinic M4 agonist, partnered with Neurocrine for treating schizophrenia, expected this quarter, a positive result would be a major event. Additionally, we are highly anticipating Japan's NDA approval for daridorexant, our insomnia treatment, which could offer another transformative drug to patients in Japan later this year. Thank you. That concludes today's presentation, and we will now take questions from the audience.

Thank you very much, Chris.

We will now take questions. As I mentioned earlier, institutional investors, analysts, and media members, please use the raise hand button to let us know your questions. I will mention your name. So if your name is called, please unmute yourself. We are using an interpreter, so if you could speak at a moderate speed, we would appreciate it. And other members, please use the Q&A section. So please raise your hand if you have questions. Let me name the first questioner. JP Morgan Securities, Wakao-san. JP Morgan Securities, Wakao-san. Please unmute yourself. Thank you very much. This is Wakao from JP Morgan.

I have two questions. First,

So by the second half, M4 Agonist will come 568.

On your IR blog and Neurocrime conference call, this was mentioned.

So first number is... Placebo-adjusted, you are aiming for Delta-8, you mentioned. This 8, where did this 8 come from? I want to know more. Are you saying this in relation with your competitors, or you think this is the goal that you can achieve from the data that you have at hand? So that's my first question. Thank you. So Matt Barnes will answer that question. Matt, could you go?

Yes. Thank you for the question. So, yes. So this delta of eight that you mentioned, which is an eight point reduction in the PAN score, which is the clinical of one of the clinical endpoints for this study. So this is really interesting. been highlighted by our partners, Neurocrin, as a figure. And it's really based, I think, on the competitors, as you mentioned. So if you look at the data from CoreXT and Embraculatide clinical studies, what you'll see there is a range of reductions in the PAN score from 8 to 12, roughly. across various clinical studies. So that delta point of eight is really based on that range of efficacy that's been seen by the competitors, I understand. So thank you for the question.

So just one additional comment from me.

So thank you for reading our blog. This is what Neurocrime said. But in the past, PANS Delta was around 12, Karna Therapeutics, it was around 12. But if you look at the Karna Phase 3, this Delta is now down to 8. This is not that the drug is less effective. Placebo tends to rise. M4 agonist. we don't start from where we don't know if it's effective or not. But now it is a very focused area. That's how the overall category is moving into. So the doctors have higher expectation. And so the effectiveness is high, but the delta becomes smaller. So that's why recently it's down to eight. In our test, in our study, if we can clear this threshold, we can be in a good position vis-a-vis CARNA.

Thank you.

in terms of efficacy. Understood. Patient data is Phase 2, but from your past data, you think you can at least achieve 8? No, that's not the case. No is the answer. Okay, I will wait for the result then. And one more question, if I may. 522. Maybe I am not up to date, but for 522 in Phase 1, I think you had obesity patients. And Pfizer pipeline is just diabetes. And so obesity, no more possibility for obesity? Is obesity gone? And this is because Pfizer's development priority changed? Thank you very much. So first, Matt, could you start? And if Chris could add, if there's anything to add. So Matt, please.

Yes, thank you, Hiro. So yeah, not much to add, I'm afraid. So Yes, we've not really received any further communication from Pfizer about the directionality of 522. Obviously, there's been some recent disclosures around Danuclifron, which is a molecule that doesn't fall under our collaboration. But, yeah, 522, I mean, it's a GLP-1 agonist. So even though it's listed as diabetes, I guess it could have potential in other areas. But that would be for Pfizer to determine in its strategy in the metabolic space. Chris, I don't know if you want to add anything further.

Thanks, Matt. Yeah, nothing further to add. It's currently listed as type 2 diabetes mellitus, but. clearly there would be indication expansion potential like all other GLP-1 agonists. However, Pfizer have not said anything as Matt just explained.

Thank you for the question. Thank you.

So just clarification. So this diabetes has been mentioned. Has it been diabetes all along or... it's diabetes and in phase one, obesity was included in phase one? So from your standpoint, you've heard that it's always been diabetes all along and so no change there? Let me briefly explain that. So regarding the indication, Pfizer decides, and so I understand that there are small differences But we are not focusing on that point when we communicate with them. And to repeat our message, as Chris said, in GLP-1, it's not just effective. We cannot just say it's effective only for diabetes or only for obesity. So this is about a Pfizer internal matter, so it's difficult to comment. But I do not think there is any big change. Understood. Thank you very much. That's all from me.

Now we would like to move on to the next questioner. Diver Security, Hashiguchi-san. Hashiguchi-san of Diver Securities, please unmute yourself and ask a question. This is Hashiguchi speaking. Thank you very much. I would like to ask a question about PIVLAT. Page 14 on the slide, you have shown quarterly status of the drug. And last year, in the first half, against the four-year forecast, 43% was the progress. And this year, against 16 billion in the plan, it's 40% progress rate. And earlier, the comment was that the sales was robust, but It seems so that the progress rate is a bit lower compared to the last year. And can you explain the reason? Please make a comment on the level of probability of achieving the full-year target. I think Tanaka-san should be answering that question. Tanaka-san, over to you, please.

Thank you very much for the question. For the full-year target,

number of patients for a subarachnoid of hemorrhoids, there is no change in the number of patients. A monthly number of patients and the number of patients this year, there has been a change. So it just looks as though that the number is smaller for this physical year. But in reality, for the past two to three months, the number of patients have increased quite significantly. So because of that, the ratio of surgeries is not going to change, and we do believe that the full-year forecast is achievable. I'm not really sure if I've answered to your question. Monthly patients, number of patients on a monthly basis compared to last year has decreased. come down. And the second half, it is possible to catch up. Was that your answer? Yes. Okay, understood. Thank you very much. That's all from me.

Thank you.

So next question. Dion San, Pathology Associates. Dion San, please unmute yourself and ask your question.

Thank you very much. Can you hear me?

Yep, I can hear you.

Thank you. Thank you for taking my question. Congratulations on fantastic results. I just have two quick questions. The one, again, on NBI 568, and much excitement on the neurocrine call around the compound, but they did not elaborate on the dosing that they intend to use. And I wonder if you have any comments on that, just given the extensive preclinical work that NETRA has done specifically regarding M4 selectivity, and what you think about the dosing of the drug relative to competitors. That's the first question. And then secondly, I was just wondering if, as you mentioned, 744, and given the competitive landscape in IBD and how that is really becoming much, much more competitive, Do you think you've got an edge there relative to oral interleukin-23 inhibitors and the likes? And maybe you mentioned mucosal healing. That may be the answer. But just any comments that you may have on that, please. Thank you very much.

Thank you very much.

So Matt, could you go first and then Chris? Thank you very much. Matt, please.

Thank you, Hiro. Thanks for the question, Dion. So taking the first one, it's on MBI 568. So you asked about the doses and the selectivity. So as we mentioned, I think Neurocrine, they laid this out quite nicely in their conference call last week. So They're not really disclosing any details about the trial design, but they will do so. I think the intention is to do so when they press release and do a conference call on the output of the phase two study. So you'll find out more about that at that time. For 744, our internal EP4 GI targeted agonist program. So, yeah, so you're absolutely right. So we see the differentiation here very much around that mucosal healing. So this is not just another anti-inflammatory. So a lot of the agents that are approved in IBD are anti-inflammatories, such as what you mentioned, IL-23, anti-TNFs, Entivio. They're all effectively anti-inflammatory mechanisms. we have uh with ep4 we have dual mechanisms so we have some immunosuppression uh mechanism but the probably the most interesting and different is this mucosal healing so no current treatment really addresses this and it still remains uh uh an unresolved uh treatment area uh which is not really covered off by approved agents so We understand that this is what those global key opinion leaders really got excited about when we discussed this at our clinical advisory board meeting. So, yeah, so that's we would see this very much as a combination agent to some of those biologics or those other anti-inflammatories. So we really want to push that ceiling that I mentioned of around 40 percent efficacy. So hopefully that's addressed those two questions. Thank you, Dionne.

Thank you very much.

Thank you very much for the question. Now let us move on to the next question from Mizuho Securities. Suzuki-san of Mizuho Securities, please unmute and ask a question. My name is Suzuki from Mizuho Securities. Can you hear me? Yes.

Thank you.

So the closing accounts, R&D, S&A are the questions I have. So we have the weak yen, and against your plan, now that the first half is over, the progress rate is lower, I believe. Are you going to the lower limit, or are you going to use it at full and go to the upper limit? That's my first question. So let me briefly explain. In terms of SG&A, as you said, the progress rate is lower than against the four-year plan. We didn't have to spend so much. But in the second half, Dairy Direction is going to be approved, and there will be activities related to that and that there will be increase in SG&A. So therefore, we believe that there will be acceleration of the spending. However, as you mentioned, are we going to go to the upper limit for the full year? I do not think so. I think we'll go closer to the lower limit. R&D has a similar idea. R&D expenses. We do not have an impression that we haven't spent too much. However, we will be accelerating the spending towards the end of this fiscal year, so we'll be in line with the range in our plan. I hope I've answered your question. Yes, thank you. And another question. Now that we are in mid-August, I would like to know the probability of making the business profitable. For your company to become profitable, what do you need, is my question. For example, GPR35, for that to be licensed out, could be an example. It depends on M4 agonist results. So please share with me if you have any scenarios or stories of making your business or the company's performance profitable. So I would like to provide an answer and ask Chris if he has anything to add. And as you said, Our performance is highly dependent on the events. That is something that can be avoided as an R&D type venture. So we cannot avoid that. So as Suzuki-san correctly mentioned, the trigger of milestones, I cannot really say. But as you have imagined, there are some milestones that you talked about, for example, progress of important clinical studies or new collaborations. If we have those events, if it's best-of-best case, RFR bases, consolidated operating income would reach a break-even. That could be a possibility. But as I said, those milestones cannot be controlled, are not controllable. And I said that because I said that the scenario that is mentioned is if everything goes well. So we do not believe that probability is very high. We explained that on page 27, no core cost has increased for this fiscal year to be specific. M&A related one-off increase in cost of goods and integration related costs have already incurred. So on IFR basis, if we include the costs that are not controllable, we believe we cannot, the probability is low. Chris, do you have anything to add?

Yeah, thank you very much. Look, I mean, I feel like sometimes we say the same thing every year. We don't provide profit forecast or profit guidance because a large part of our business model is dependent on partners and Those events are outside our control. So as Nomura-san said, if everything goes right, then there could be a good outcome. However, what we are focused on, first and foremost, is investing in novel programs to create exciting medicines for patients and generate long-term value for the company. Of course, if every partnered event works, that's great. But I think we all understand the probabilities of success in this industry. And so the reason we don't provide profit guidance is because, as I said, a lot of this is outside of our control. But we do obviously hope to perform as best we can when it comes to the things that we do control. Thank you.

Thank you.

Thank you very much. I have one more question I would like to ask, if I may. M4 Angonist, when I listened to the conference call of Neurocrime, it seems so that they're confident about the safety, according to my impression. Phase one, after phase one, you licensed out and you were able to achieve the milestone with long-term tox study. So if you have any additional information about the safety of this compound, please let me know. And they said that they're going to hold a conference call after the data is available, but are you thinking of doing the same? Also, I have two questions. So I think I would like to ask Chris to answer that question. Chris, over to you, please.

Certainly, thank you. I mean, on the first question, You are correct. Neurocrine said on their recent earnings call that they were not aware of any safety or emerging adverse event issues. So from that perspective, it would appear that they are confident. With regard to when the data is released, will we host a conference call? No, we won't, but we will obviously – put out a press release, we have to remember that the compound is now owned by Neurogrid under license. They plan to do a press release and they plan to do a conference call. So we will be informed by the information that they disclose. Thank you.

Thank you very much. Thank you for the questions.

Time is running out, so we want to answer the questions that came in to the comments. Thank you very much for many comments. So first question, Neurocrime Pipeline, Idorsia Pipeline, there's the Scenery Mode and Lucidastat, those have the app in rights and where do you stand in the execution of the opt-in rights? So Chris, could you answer that question?

Yes, certainly. Thank you. We continue to have discussions with Eudorcia and we are also internally working through both of those molecules to assess their development pathway in Japan and also their potential to be effective medicines for patients in Japan. So discussions actually on both are ongoing, and we've got a little bit more work to do, but we would expect that we would have updates for investors by the end of the year. Thank you.

Thank you very much.

I would like to take one more question. On the 26th of August, there was a plan for a regulatory council meeting, and there was a mention about QVB, and please give us an update on that. Tanaka-san, can you answer that question? Yes.

Thank you very much for the question.

As you know, this drug has become agenda of the meeting, which means that PMDA is going to make a report on their evaluation, and they're going to put together a document to be submitted to the ministry. So there's going to be an approval provided. There's going to be an approval. Thank you very much for a very clear answer. So let us move on to the next question.

So thank you. UBS Securities, Sakai-san. Sakai-san, please unmute yourself.

This is Sakai from UBS.

Thank you very much. So I have a question to Tanaka-san, Piblots, and Daridurek-san. In your earlier response, you said that the patients in Japan is not increasing, if I heard you right. On the other hand, the number of surgery is increasing. Is that the right understanding? And on page 14 diagram, there is the seasonality with the subarachnoid I think it tends to increase in Q4 during wintertime. So, Dr. Tanaka, from your observation, from now going forward, this bar graph will flatten. The ceiling will be limited. Should we prepare for that scenario? And for direct consent, August, there's the task force and it passed. And if it will be approved in September and October, Nomura-san, you said that the pre-launch cost is included in the expenses this year. And there's the upfront on page 15. There are the advanced

products. The launch is quite quick.

How do you think of the sales strategy of Dari Direxent? So those are the two questions. Thank you.

Thank you.

So I would like to start off. Thank you for the question.

It's been three years since we started our activity in this domain.

As you rightly said, the number of patients increased during the winter. We thought that was the case. But for last year and this year, I mentioned that the number of patients per month is changing because the seasonality is not very evident The number of patients for the full year remains unchanged, though. The number of operations increase. The number of hospitals that we visit is on the rise, for sure. They're rising, and Piblot's adoption is increasing. And so the number of operations increase, and our number is increasing. So... Now around 30,000 to 35,000 is the number of operations a year.

So compared to that, we think we still have much room to grow. That's all for Pivlats.

I hope this answers your question. Yes, so number of operations. How many institutions are there that can conduct the operation? Around 4,000 facilities. And you have access to all 4,000 sites? Yes, to almost all sites. And they're adopted to almost all of them. Okay, thank you. And to your next question on dairy direction, as Nomura-san said, August 26th to the task force means the approval will be around September 28th. So once the approval starts, the drug promotion can be publicized. So as Nomura-san said, we will basically conduct the promotion activity so that it will be adopted. So as of now, you cannot talk much about the product appeal Well, we did 120 sites did the clinical trial. So we will start to have those 120 sites adopted as the first step. Understood. So it will be those sites mainly. And GPR-5-2, the GPR agonist, I have not looked at the link. I'm sorry. And so maybe my question is not to the point. But as a Phase 1 MAD test study result, the next step, I think, is within sight. So will you go to Phase 2 by yourself? Yes. So if you could share with us your plan going forward. I'm asking you this because schizophrenia is related. So I wonder how you will address this area, including partnering. So thank you. So Matt, if you could answer that question, please.

Yeah, I'm happy to. Thank you for the question. So We mentioned this deal that we did earlier this year with Bering or Ingelheim around the option to license. So our intention and it's consistent with our business model is to try to take our assets internally to at least a phase two ready point of view. And so that's our intention with this particular molecule. And then, of course, as part of that agreement, Bering and Ingelheim has the option to license at that particular stage. So thank you for the question. I hope I answered it.

So it's still, for Bering and Ingelheim, it is still optionality. It's not really confirmed the deal yet.

So it's an option to license deal. So what that means is they pay 25 million euros up front for the option to license it at a later date. And that will obviously depend on some pre-agreed criteria that we generate as part of our clinical development work.

Sorry, if you don't mind me adding, Matt, as Matt has said, Boring and Engelheim has the exclusive option to license. So depending on the clinical data that is generated following the current trial, if they want to license it, they have essentially the first look. And if they choose to license it, they will pay us €60 million further. If they choose not to, then the program remains out. and we can choose to advance it ourselves, or we can choose to find another partner. But Boring at Ingelheim has the first option to execute that license. Do you have any timeframe for that? Yeah, we expect that all going well, we will be through the rest of the current clinical development program by the end of next year. So as we head towards the end of 2025, Boehringer Ingelheim should be assessing the clinical data and coming towards the decision as to whether or not they choose to execute a license with us.

Thank you very much.

Thank you.

Thank you very much for your question. So we did receive many questions on the chat box, and thank you very much for that. But unfortunately, it is now time to conclude today's conference call. For the questions that were not answered, we will provide answers in the official blog. Please give us a little time for us to provide responses. And today's briefing will be available to watch. The video will be available on our website. Thank you, everyone, for joining us. With this, I would like to conclude the earnings briefing for the first half of fiscal year 2024. Thank you all.