Hansa Biopharma AB (publ)

Hello everyone and welcome to the Hansa Biopharma Q2 2024 conference call. Today's call is being recorded. For the first part of this call, all participants will be in a listen-only mode. Afterwards, there will be a question and answer session. To ask a question during the Q&A, please press 5 star on your telephone keypad. I'll now hand the call over to CEO Søren Tulsvold. Please begin.

Thank you, Albreida. Good afternoon, good morning, and welcome to the Hansa Biopharma conference call to review the first half and Q2 results for 2024. I'm Sean Hulsvogt, President and CEO of Hansa Biopharma. Joining me today is Evan Ballantyne, Chief Financial Officer, Matt Chollis, Chief Commercial Officer and US President, and Hitzel Kauffman, Chief R&D Officer. Please turn to slide two. Please allow me to draw your attention to the fact that we'll be making forward-looking statements during this presentation, and you should therefore apply appropriate caution. Now, please turn to slide three and an overview of today's agenda. Today, we'll discuss the progress we made during the first half of 2024 and review our near-term priorities. The presentation should take roughly 15 to 20 minutes, after which there will be an opportunity to ask questions during a Q&A session. Please turn to slide four and then we'll give you our Q2 highlights. I'm pleased to announce we have delivered our third consecutive quarter of solid sales with total revenue of 54.2 million SEC. Of this, 47.1 million SEC can be attributed to IDECORIC sales. The strong sales performance we saw in the second quarter is a result of the team's successful efforts to expand access to IDECORICs for highly sensitized kidney patients across Europe. During the quarter, we secured our first commercial sales in Italy, following achievement of reimbursement status in key regions. To date, we've had commercial sales of Ida breaks in all of the top five European markets. We're also seeing strong momentum in our pipeline and clinical development efforts. In May, we announced that confidus, our pivotal phase three U.S. trial in kidney transplantation, had been fully randomized. This marks an important milestone for Hansa, And following data readout in the second half of 2025, we expect to submit a biologics license application to the U.S. FDA seeking accelerated approval. Matt will cover the status and next steps for the trial in more detail during this section of the call. Our post-authorization efficacy study in Europe is progressing at a good pace in parallel with the continued commercialization of itabrix and as part of our obligation to EMA. data that could further support the adoption of Idafrix as desensitization therapy to enable incompatible kidney transplants, this study offers additional opportunities for important transplant centers to gain experience with Idafrix. Data readout is expected in 2025. Looking beyond kidney transplantation, we have advanced several trials in autoimmune diseases. Our phase three anti-DBM disease trial continues with more than 70% of patients enrolled in the trial. Completion of enrollment expected in 2025 as previously guided, and based on the strong momentum in enrolling patients, we now also expect data from the study in 2025. Our phase two trial in Guillain-Barré syndrome also remains on track, and we expect to share additional efficacy data later this year, following promising high-level data communicated in 2023. Our efforts to advance HANSA 5487, the deep candidate from our Next Generation Enzyme Program, continue as planned, and we look forward to sharing further analysis on endpoints of the phase one trial and the development path forward during the second half of this year. Finally, I'd like to congratulate our partner Surepta on the recent achievement of FDA full approval and expanded label for Elevitus in Duchenne Muscular Dystrophy. While this approval enables more patients the opportunity to benefit from the therapy, Some patients remain ineligible due to anti-AV antibodies, and we're excited to continue our collaboration with Surepta to determine the potential for imifidase to enable gene therapy in these patients. With this, I'll hand it over to Matt for a business and operational update. Please turn to slide five.

Thank you, Sarin. Please turn to slide six for an update on Itasferix launch in Europe. As mentioned, this marks the third quarter of strong commercial sales for Idaferix. We attribute the continued commercial utilization of Idaferix to several things. The first is that we have seen additional centers come on board throughout Europe and continue to progress reimbursement in key European markets. As Surin mentioned, we secured our first commercial sale in Italy in Q2. As of today, we have reimbursement in 14 European markets, including the top five markets. And we have access to approximately 75% of the European transplant market. By Q2, 28 centers gained clinical experience with Itiferix. This is an increase from last quarter, with three additional centers gaining experience with Itiferix. Importantly, 60% of those centers have used Itiferix more than once. And there are over 50 transplant centers in Europe that have the capability to perform kidney transplants in highly sensitized patients. Repeat utilization underscores the growing clinical confidence in Itiferix and clinicians' ability and willingness to identify Itiferix-appropriate patients. Given that we see increased uptake in new clinics in new markets, we believe that repeat utilization could happen at several clinics in the remainder of 2024. While we have full confidence that our strategy is the right one, we recognize the volatility of the transplantation market, particularly with respect to organ allocation. And therefore, we'll continue to broaden our base of opportunity, including the progression of health technology assessment processes in several countries to ensure ongoing expansion of itinerary availability and reimbursement to even more markets and patients. The second reason we believe we are seeing good progress in Europe is that desensitization strategies within the clinical community continue to advance. In fact, the European Society of Transplantation, ESOT, published a consensus paper in April entitled European Consensus on the Management of Synthetized Kidney Transplant Recipients, a Delphi Study. The paper recommends imlifidase as a desensitization strategy for these kidney transplantations in selected patients for whom no other treatment options are available. This follows the organization's publication of the first-ever guidelines on desensitization in 2022, which resulted in idaferic-specific guideline implementation at the national level in key European markets. And finally, Eurotransplant's Desensitization Program is helping identify patients eligible for idaferics. To date, the program has identified and treated five patients with idapherics, including in Germany, the largest market in urotransplant footprint. This validates that participating transplant centers are now receiving idapherics-designated kidneys. Urotransplant is an international allocation system responsible for the allocation of donor organs across eight countries, including Austria, Belgium, Croatia, Germany, Hungary, Luxembourg, the Netherlands, and Slovenia. Please turn to slide seven. Advancing the science of amlifidase in kidney transplantation is also important. To that end, there are two key studies we continue to progress, including a long-term follow-up study, the 17 H. meditis 14 study and the post-authorization efficacy study, PAES. As we have communicated previously, The long-term study has demonstrated that for important endpoints, such as graft survival and overall survival, in lipidase-treated, highly sensitized patients achieve similar outcomes as non-sensitized patients. Both studies are on track, and Hito will share more about them in just a moment. Additionally, a real-world evidence study has been initiated in France to evaluate outcomes in nine in lipidase-treated patients. Through the initial follow-up period, there has been no graft failure and no death, and these real-life data demonstrate that the use of amlipidase to desensitize highly sensitized patients can have an accessible short-term efficacy and safety profile in selected patients. Please turn to slide eight. Finally, we are happy to announce that, confided, the pivotal US Phase III trial is now fully randomized. As a reminder, The CONFIDA study is evaluating amlifidase as a potential desensitization therapy compared to treatment according to standard of care to enable kidney transplantation in highly sensitized patients waiting for a deceased donor kidney. A total of 64 highly sensitized patients on the wait list for kidney transplantation were randomized on a one-to-one basis to either desensitization with amlifidase or standard of care. What's important to know about the study? is the total of 23 sites were enrolled in the trial and can send over 140 patients. Approximately half of these sites, about 11, were responsible for randomizing two or more patients. The sites in the trial represent about 20% of the total transplantation volumes in the U.S. Currently, 13 sites have treated patients within lipidase thus far, which is very encouraging, and we believe further validates that clinicians are recognizing the clinical value and patient-benefit amlifidase in highly sensitized patients. Following full randomization, all patients will be followed for 12 months per the study protocol, and we expect data readout in second half 2025, and followed by submission of a BLA to the US FDA to seek accelerated approval. I will now turn to Hito for an update on the pipeline. Please turn to slide nine.

Thank you, Matt. Slide 10, please turn to slide 10. During the second quarter, we have made progress across our three key therapeutic areas with all trials. Let me orient you to this slide and talk through the progress as well as what's to come in the second half of 2024 and beyond. Importantly, Matt mentioned that we've completed full randomization in the phase three U.S. trial confiders. We now look to follow all patients for the next 12 months for the study protocol and begin to prepare for a BIA submission to the US FDA in the second half of 2025. In parallel, we are also advancing to additional trials in kidney transplantation. The long-term follow-up study, 15H-Med-IDIS-14, is a prospective observational long-term follow-up study of patients treated with emifidase prior to kidney transplantation to measure long-term graft survival in patients who have undergone kidney transplantation after amlifidase administration. The data shows sustained positive outcomes out to five years in the majority of highly sensitized patients who received an amlifidase-enabled kidney transplant. Data were presented at the American Transplant Congress in June, and we expect it to be published in a peer-reviewed journal later this year. And the post-authorization efficacy study, CAES, continues to progress as part of our obligation under the European Conditionally Marketing Authorization. The study will support full marketing authorization, and data retail is expected in 2025. In autoimmune, we are progressing three trials. Earlier this year, we reported initial data for our Phase II study in DBS. The 15-Age Metis O9 study, an exploratory single-arm study, with several efficacy endpoints. We plan to share contextualized efficacy data later this year based on a comparison between the data of the study and a match cohort from the IGOS database. The International Green Barrier Syndrome Outcome Study, or IGOS, is a large-scale global research initiative that collects extensive clinical and biological data from GBS patients to enhance understanding and treatment of the disease. GDS is an acute, rare, paralyzing, inflammatory disease of the peripheral nervous system, usually preceded by an infection or other immune stimulation. Two-thirds of patients have severe syndromes, resulting in the inability to walk unaided. The good IDIS-12 phase 3 trial in anti-GBM disease has enrolled over 70% of patients in the trial, 36 out of a total of 50. We anticipate full enrollment in 2025 and data reach out later the same year. The trial is an open-label, controlled, randomized, multicenter trial across Europe and the U.S. and is evaluating renal function and the need of dialysis at six-month-and-patients with severe anti-GVM disease. We believe Amicidae can have significant potential in improving the outcome of these patients and address the unmet medical need. Anti-GBM disease is a serious and ultra-acute monophasic autoimmune disease affecting approximately 1.6 people in a million. In anti-GBM disease, antibodies are directed against the patient's own organs, causing acute injury to kidney and or lung function, and in worst case, organ failure. Rounding out in autoimmune, the phase 2 trial in AMR has been committed to a peer-reviewed journal and we anticipate that occasion same time in 2024. Moving now to gene therapy. I'm pleased to share that we continue to progress our collaborations with all three partners, Aspio, Genitin, and Sarepta. These collaborations will help determine the potential for imicidase as a pretreatment to gene therapy in those patients with anti-AEV antibodies. With both Aspio and Genitin, we continue to progress preclinical efforts. In May, at the American Society of Gene and Cell Therapy, ASGCT, annual meeting, ASBio delivered an oral presentation on preclinical data as part of the HANSA-ASBio partnership. The data evaluated the potential use of emicidase as pretreatment to gene therapy and demonstrated that emicidase can keep AVs in circulation for a longer time period, thus allowing a longer window for gene therapy transduction. Together with Jensen, we are finalizing our pre-clinical work and have plans to commence the clinical study later this year, evaluating imlicidase as pre-treatment to GMT-003 for patients with Kugler-Major syndrome. GMT-003 is currently being evaluated in a pivotal clinical study in France, Italy, and the Netherlands, and has received prime status from the EMA. I'm also pleased to share that we continue to collaborate with Sarepta and DMV. A phase 1B trial was initiated last December, and we anticipate initial data from the trial will be available in 2025. This is a slight change in the timeline to allow for protocol amendment. In June, Sirepta communicated that it is putting a strategic focus on making their AED-based therapies available for antibody-positive patients. Finally, we are making good progress with next-generation molecules as part of the MINUSER program. Previously, we announced high-level results related to safety and tolerability from the NISA 1 trial with HANSA 5487, the company lead candidate in the NISA program. The trial included a total of 36 healthy male and female adult participants. Further analysis of other endpoints will be completed in 2024, including a decision on the clinical development part. Hunter is developing novel IgG-degrading enzymes with the objective of enabling redosing in autoimmune conditions, oncology, gene therapy, and transplantations where patients may benefit from more than one dose of an IgG-modulating enzyme. I will now turn over to Evan to cover financial performance.

Thank you very much, Vito. Let's walk through the company's financial performance in Q2 and for the first half of 2024. Revenue for the second quarter of 2024 was 54.2 million SEC, including 47.1 million SEC in product sales before a 19.9 million SEC provision. Revenue included approximately 4.6 million SEC in contract revenue, mainly from the agreement with Sarepta. including the provision product sales for the quarter totals 27.2 million SEC. The provision is associated with cumulative sales since the launch of Adiferex in Europe. What's important to remember is that as a new market entrant, establishing the provision reflects ongoing price and volume discounts, and this is not unique to Hansa, nor is it unique to the transplantation market. Excluding the provision, we've delivered our third consecutive quarter of strong and different sales. As we continue to expand our commercial footprint in Europe and other key markets, we expect this to increase. SG&A expense. Oh, please go to the next slide. Slide 13. SG&A expense totaled 88 million SEC in Q2 2024 and 179 million SEC in the first half of the year. SG&A expense have been affected by restructuring reserve of approximately 3.5 million SEC. Restructuring activities have reduced total SG&A expense compared to prior quarters. Non-cash expense for the company's long-term incentive program the LTIP program, were included in the SG&A cost and totaled 16 million SEC for the first six months of 2024. Additionally, R&D expense for the second quarter of 2024 totaled 92 million SEC and 195 million SEC for the first half of 2024. R&D expense included a restructuring reserve totaling 6.6 million SEC. Compared to the same period a year ago in 2023, the decrease in expenses was primarily driven by restructuring activities. As Hito mentioned, R&D expense, including costs associated with the U.S.-confided study, EMEA post-authorization commitments, and anti-GBM Phase III studies, as well as the CMC development for HANSA 5487. Non-cash expenses for the company's LTIP program were included in the R&D expenses and totaled 6.5 million SEC for the first half of 2024. The operating loss for the quarter was 187 million SEC and was driven by lower SG&A expenses and lower R&D expenses offset by higher cost of goods sold. The operating loss for the first half of 2024 totaled 347 million SEC and was driven by lower SG&A expense and lower R&D expense. If we go, please go to the next slide for cash flow, slide 14. In Q2, a company completed direct share offering of approximately 372 million SEC or 34.6 million U.S. dollars. This helped extend the company's cash runway into 2026. Operating cash flow for the second quarter of 2024 totaled 189 million SEC and 378 million SEC for the first half of 2024. The decrease in HODSA's operating loss compared to the first half of 2023 was driven by increased sales and a reduction in overall expenses. At June 30, 2024, cash and cash equivalents totaled 705 million SEC compared to 732 million SEC at the end of December of 2023. I'd like to turn the discussion back to Soren for Q&A in this portion of the call. Soren?

Thanks, Evan. Please turn to slide 15. With this overview, our presentation is now concluded, and we'd like to open the call for questions. Operator, please begin.

Thank you. We'll now start the Q&A session. If you wish to ask a question, please press five star on your telephone keypad. To redraw your question, you may do so by pressing five star again. There'll be a brief pause while questions are being registered. The first question will be from the line of Alexander Tremer from ABG. Please go ahead. Your line will now be unmuted.

Yes, good afternoon. I have two questions. about the sales development in Q2 in light of the additional markets that you have gained in the quarter and also in relation to the post-approval study. Could you comment? The post-approval study did not recruit many additional patients. Could you comment on how you see the patient numbers like evolving based on like also in the context of the post-approval study? That's the first question. And the second question is about the HIFI-7 program, which may be our last data.

Okay. Well, thanks for those questions, or the first question, Alexander. So, the poacher pool efficacy study continues, right? In the last quarter, we had a few additional patients added. You know, some centers are reaching caps and so on, so that plays into that, but we're on track to So, I have that study completed by the end of 2025 per the commitment we have to the EMA. And obviously, as these, you know, post-approval efficacy study centers reach, you know, the caps, they will convert into commercial use of ID4X. And so, that's going to benefit our sales going forward. As to, you know, patient numbers and so on, expect that I can't be more precise, as you know. We had a second question as well around the 5487.

Yes, on the 5487, and that's a question, I guess, either to you, sir, or to HIPTO. 5487, so we will see data soon, so I'm looking forward to that. And my question here would be, when it comes to the announcement of the first indication, if this will come together with the data announcement, or if it will come later? And also, like Monica offered, yeah, that's the question, basically, yeah.

So once we get the data in the second half of this year from, you know, the healthy volunteer study, you know, when we have the full data set, including the 12-month follow-up, we'll, of course, make an assessment, and then we will chart out the path forward, including selection of indications and so on. We're currently looking at a number of different indications that we find attractive and potentially feasible. And so that decision will be taken also, you know, in the second half of this year, whether we will communicate the path forward together with the data or we will first communicate the data and then subsequently the path. I can't say at this point in time. I don't know, Hitzu, if you have additional comments to this.

No additional comments, sir. As you outlined, there's a certain likelihood that we will initially talk about the data and then digesting the data further will inform later about the clinical development part.

Great. Thanks, Alexander. Thank you.

Thank you. The next question will be from the line of Matt Stips from William Blair. Please go ahead. Your line will now be unmuted. Hi.

Thanks for taking my questions, and congrats on the continued execution of the quarter. Can you guys give us a little details on why the disruptive trial results moved into 2025? I think previously you said there'd been some update later this year. And then on 5487, why do you feel the need to have 12 months of follow-up? If I recall from early illipidase data, you know, the immunogenicity response is fairly soon and short half-life of the molecule. Just curious what you hope to see by 12 months and maybe you wouldn't see by six months.

Well, good morning, Matt, and thanks for those two questions. So first on the Sarepta trials, You know, as Hitsa said, the reason why data will be forthcoming in 2025 is because Sorepta has guided that data will be available in 2025, and that follows the implementation of a protocol amendment. Right, obviously, you can have a full data set. You can have a slice of the data. You can have data for first patients and so on. We will let Sorepta, you know, continue to communicate around the timeline here and also the because of the granular aspects of the trial. But we've certainly noticed, you know, with satisfaction that Sorexa is clearly communicating that this is a priority for them and it's more affordable to get data in 2025. On the second question, Matt's 5487, you know, why are we waiting to get a 12-month data? I will let you do so. expand on this, but essentially what we want to see is the ability to short interval redosing, essentially extending the IgG-free window up front, and then also redose later, typically when you have these flares and crisis in a range of autoimmune diseases. And they can appear several months after initiation of the disease or a year after or two years after. So we want to see over the 12-month period the development of ADAS and also the development of ITG. But maybe it's where you have some additional comments here.

Sure, sir. Thanks, Matt, for this question, sir, and you outlined it. Matt, what we're trying to do here in this study is an exploratory endpoint. We are taking samples of patients at the different time points, and then we subject them to in vitro cleavage experiments, which will help us guide to the right indication, and typically in indications where you you get reoccurring acute phases. That doesn't happen very, very shortly after the third acute phase. It happens sometimes six, 12, 18 months later. So what we're trying to do is to cover the relevant endpoints for the diseases that we currently have in mind. And at the same time, we want to get a nice, complete adult profile to test the hypothesis that we have that overall other levels would be lower compared to in this particular

Can I ask one quick follow-up? As you see some of the additional clinical data readout from both the FCRN class, positive and negative trials, and then also non-FCRN degraders, such as from BioAven, do those play a role as you're thinking about indications, or do you feel you're in just a different class compared to those anyways as far as diseases that you're looking at?

Well, thanks for that question as well, Matt. So clearly, We think that FCR inhibitors and also biodegraders are more complementary than through our enzyme. We have a pretty unique profile in the ability to knock down ITG completely and immediately, right? And we don't see any data suggesting that FCR inhibitors or biodegraders should be able to do the same. So we're essentially playing in a different field. Our enzymes potentially could be ideal at the onset of also a chronic autoimmune disease or when you have these crises and flares. Do you have additional comments?

No, just to specify maybe the comparison with FCRN. So if you look at pathogenic IgG level, if you treat with an IgG-cleaning enzyme, you bring them down to something below 5% within hours. for an FCRN type of treatment, you will only ever bring levels down to something like 30 or 40% within weeks after treatment. And that's why we think of it as complementary.

Great. Thanks for answering my questions. Thanks, Matt. Thank you.

The next question will be from the line of Dr. Sao. Please go ahead. Your line will now be unmuted.

Hi. Good morning. Thanks for taking the follow-ups. Just in terms of 5487, I'm just curious that, you know, I understand the rationale for waiting over the 12 months to see potential formation of anti-drug antibodies. But I'm just curious, I mean, given the relatively short half-life, I mean, Would we expect most of the ADAs to have been formed within the first few weeks of dosing?

Here's a way to take this one.

Sure, of course. Yes, that's true. However, as I said, that's probably not the most relevant data point for what we have in mind, very quickly speaking. So we wanted to make sure we cover the data points that are probably most relevant for the indications that we currently have in mind.

And, I mean, can you, I mean, I know you don't want to give too much because you don't want to sort of disclose the indication quite yet, but maybe just give us some examples of types of things that, might be occurring in these latter months after dosing.

Again, I'll pass it over to you. As we said, we will talk more about it at a later point in time, but I just wanted to point out that there are a number of diseases, for example, autoimmune diseases with severe effects on the central nervous system, where unfortunately 90% of the patients have reoccurring acute phases within the first five years after the first occurrence. And that is one group of indications that we're currently having in mind, but there's certainly others as well.

Well, no, no, and I get the reoccurrence and the context of the flares. I'm just curious in terms of the trial results or the data that you're analyzing, you know, is there any sort of biomarkers right now that you're particularly focused on that would be forming or sort of developing in the later stages after, you know, several months after dosing with 5447?

Just as a reminder, we're talking about a study in healthy volunteers at the moment. So the models that we're looking at are ADA levels and the cleavage experiments that I have alluded to before, where you basically take serum samples. of patients that have been dosed once with 5487 at the relevant dose for our phase one study. And then you subject them in the laboratory to a cleavage assay that we have established.

Okay, great. That's helpful. And then just in terms of a question for Evan, so the adjustment to product sales that was done today, that's a one-time event to... account for rebate levels, or is that something that will happen on a somewhat regular basis? Thank you. Just to clarify that.

Yeah. Go ahead, Soren.

I'll hand it over to you, Evan, just to say that, as you know, Doug, in Europe, getting market access is a complex multi-year effort, and we have a stellar team that has been able to achieve access now in in Europe for the majority of kidney transplant patients at a price point that we think reflects the value we're bringing to the table. And they've actually been able to do that ahead of the typical kind of timeline for this. Each country applies its own standards and models and so on. And in some countries, you benefit from special early access programs where you can actually charge a a price upfront that will not be the final price because you're negotiating in parallel. And then once you have achieved full reimbursement, it is with the obligation to then pay the delta between what you charge upfront and then what you have agreed to. That applies in certain situations. And in certain other situations, you have volume-based discounts and so on and so forth. And so we have been making provisions also in past periods, but now we have better and fuller insight as to what the outcome will be in certain specific situations, and that's why there is this material provision in this period. But, Evan, I don't know if you have additional info here.

Yeah, Sean, that was a great explanation. And we look at the provision every single quarter, and as negotiations with various European authorities, get closer to a final price, we will adjust the provision. So we didn't see anything unique in Q1, but in Q2 we felt that we had to adjust it. And then volume discounts, we typically pay those at the end of the year. So if we pass a volume discount hurdle rate and we realize that we're going to have to refund a European authority money, we will increase the provision and reflect that in the quarter. And that's what's happened here.

Okay, great. Thank you. Thanks, Doc.

Thank you. As a reminder, if you have a question for the speakers, please press five star on your telephone keypad. You'll have a brief most of our questions are being registered. And the next question will be from Peter from Carnegie. Please go ahead. Your line will now be unmuted.

Yes, hi, this is Eric Holkart from Carnegie. Thanks for taking my questions. I have two, if I may. First, if you could comment on, it's obviously very nice to see that you have sort of reached a new level for IDF sales in Europe. But I was wondering what your confidence level is in terms of ramping sales in the second half and What would be the main driver of that? Will it be re-treatment or will it be new clinics coming on board? That's my first question, and what disability you have on that progress. And then secondly, if you could comment on the in the quarter and what the level will be in the coming quarters, that would be very helpful. Thank you.

Well, thanks, Erik, for those questions. So, yes, you're right. Obviously, it's nice to see that there is some level of stabilization of sales. We certainly do expect volatility to continue, given the specifics of the sales situation here. But we are seeing, you know, growing repeat usage across Europe, and that kind of will stabilize and increase the growth. So that's very reassuring. Looking forward. Clearly, we expect countries like Italy and Spain that have come online recently to start to communicate more meaningfully. We're happy that we've seen good progress in Germany and the Euro transplant area, and France continues to be a growth engine. Hopefully, the U.K. typically is also a relatively strong conservative market will also start to contribute more meaningfully. It's, as you know, very, very difficult to predict, but we're certainly very pleased with the overall development, and we expect growth to continue. But Matt may have additional comments here.

Sure. Happy to just provide some color commentary around that term, and you have outlined the framework for growth quite well, so thank you. And the comments I would add are that In France, we certainly have a number of centers already, but we are actually seeing additional centers. So, you know, with each center, we have the opportunity for, you know, numerous patients on the wait list, and then it just becomes a matter of organ allocation. So we're pleased with France and believe that there are good prospects for the future there, and I would count that as a driver. CERN had mentioned, and I had mentioned earlier in the call as well, neurotransplant. and Germany in particular, we're pleased to see some momentum there, and we believe that that will continue and that that will very much be a source of growth, particularly given the size of Germany, but also other markets that fall within that eurotransplant footprint. And then Sherna had also mentioned that we are moving towards achieving regional reimbursement in both Spain and Italy. These will be opportunities both for, you know, additional centers as well as further identification of patients on wait lists. So we absolutely see that as a catalyst. And then, you know, finally, I would say that there are continued opportunities in the UK. We'd previously gotten some of our first sales there. And when we continue to see patients get identified in that market, All of this bodes well, knowing that we've achieved some caps at some PAES centers, and we believe that in the future we'll reach the completion of that study. That is another factor that across numerous markets is going to create an opportunity for further commercial sales. So overall, I would say that we're quite confident that we have prospects for growth. in the second half of this year and also into next year. What we can never account for is the volatility associated with organ allocation and how that might impact a particular month or even a particular quarter. But suffice it to say, the base is getting broader, more markets, more centers, more patients on wait lists. So thanks for the question, Eric.

Thanks, Woody. Thanks, Matt. I'll hand over the question on gross margin to you, Evan.

Yeah, so our Q2 gross margin was negatively impacted by our manufacturing. We manufactured three large batches of drug substance in Q2, specifically in June, and that increased the cost of goods sold. Had we not manufactured those batches, cost of goods sold would have improved by approximately 25 million SEC. And we would have had a gross margin if you used the 47.1 million SEC in sales, less the new gross margin after you back out that 25 million SEC of close to 70%. But I should point out that the batches of drug substance we manufactured will last us for the rest of the year. And as sales increase, we won't have to manufacture additional matches. And although we have excellent manufacturing capacity, this will ultimately help us when we enter the U.S. market. Oh, and I should point out, if we manufacture excess drug substance and we don't think we're going to use it, we have to write it off in the quarter or the period that we did that. And that's why you see the increased cost of goods sold in Q2.

All right. So there was some sort of write-offs in Q2, if I understand it correctly, but also that you produced more than So basically, we will have a positive impact on the gross margin in the second half. Is that correct?

That's correct. Yeah, our gross margin will improve in the next two quarters.

So can you say something about the sort of average gross margin that we should expect for the full year, assuming all these factors?

I'd rather not, but I can tell you this, that as we increase sales, as sales increase and we produce more Idiforex in the finished product, our gross margin will improve because we'll have sufficient inventories to cover the increased sales.

All right. Thank you so much.

Thanks, Eric. Thank you. For the next question, please state your name and company. Your line will now be unmuted. Please go ahead. We can't hear you.

As a reminder, if you wish to ask a question, please press five star on your telephone keypad. We'll have a brief pause while further questions have been registered. And the next question is from Johan from Red Eye. Please go ahead. Your line will now be unmuted.

Thank you for taking our calls. Sorry, I was disconnected for a while there. Yeah, some follow-up. What to expect on the cost of goods going forward in terms of manufacturing for batches? Are we going to expect some efficacy gains as the volume increases into 25 and 26?

Evan, will you take this again?

Yeah. So our primary supplier for drug product or drug substance currently manufactures at minimum levels, but levels that we do not fully use or utilize at this stage. So as sales increase, we'll still continue to manufacture at these minimum levels. But more of those will be used in sales, so our gross margin will improve. And then that will be further impacted very positively by entering the U.S. market. when we enter the U.S. market, we'll still have sufficient manufacturing capacity to fund the – to fulfill U.S. illiquidase, drug substance and drug product sales, and also increased sales in Europe. So our expectation is that our gross margin will continue to improve.

Yes, and to some extent, I suppose it will be easier to manage and expect the volume as well. And also, according to provisions and true ups, the core dynamics is, you explained earlier, but it would be interesting to get feel for, presumably you have expected the need to do some true ups and provision revision. Have you planned for the sort of sufficiently right, or have you expected a sort of more substantial revision, if you see my point? I mean, ideally, I guess you would be in a position where you have sort of taken sufficiently height for future revision and then have not so substantial revision.

Yeah, I mean, establishing a provision really is an exercise in estimation and judgment. We use the best available data at the time, including discussions with our pricing committee and discussions with the various European authorities that try to set price. So we monitor that on a quarterly basis, and if we think we need to increase the provision, we will do that. Ultimately, though, once we get to final prices, we won't be making these provisions anymore. We are a new market entrance into the European market, and this is a very common process as you get early access to various European markets.

Yes, so this is mainly a result of sort of a tricky initial launch period where it different regions of market and you have early access and different dynamics in terms of volumes and as you get firm approval and sort of normal reimbursement we should expect well much less relative provisions ahead then absolutely that's fair yeah okay go ahead yes and also clarification then on Sarepta and the protocol and the phase one study. Will that sort of, will you include patients from the revised label as well? Or will they include patients from the updated label?

So this is not something that is, I'm not going to comment on the specifics again of the trial. You have to talk directly to Sarepta, right? But essentially, the patients that are being included in general are those that have too high titers of neutralizing antibodies against their vector. And, you know, that's the trial design going forward. There's been this amendment, and as soon as it's, you know, implemented, we'll start getting the data.

Yes. And also, what to expect from the U.S. once you sort of approach approval and once you're approved? will you expect the initial launch to be targeting the clinics that already are included and patients that have not been given active treatment?

Sorry, what indication are you talking about now in the U.S.?

Now the main indication in the U.S. you have to confide a study and it's fully randomized and you plan to submit in the late 25 and of course it looks like you will have an approval in 26 and a lot of, half of the patients hasn't received active treatment and some centers are included and some center hasn't been sort of given the opportunity to participate but they have been interested. Is this a natural sort of target for the initial launch?

Absolutely, I'll let Matt comment on this, but there's a huge difference between Europe and the U.S. and the fact that at the time of launch in the U.S., we hope, we'll have centers essentially representing, as Matt said, 20% of the kidney transplant volume in the U.S. already having experience and have worked on the basis of protocols and so on. So that's a very, very big difference. from the European scenario where we just had a couple of clinics, you know, in a couple of countries at the time of launch and where the experience, you know, has had to be developed over several years, right? So there's a very, very big difference there. But Matthew may want to comment on this.

Yeah, happily, Cern. And thanks for the question, Johan. It's an excellent one, particularly around targeting. And as Cern said, you know, we'll absolutely have an initial focus on those 23 centers. that have been involved in this study. And of course, those centers, you know, will have familiarity with how to identify the appropriate patients on their wait lists. And, you know, by reviewing and being familiar with our protocol, we'll also be familiar with things like patient delisting that will help enable organ allocation, as well as the incorporation of amlifidase into their treatment protocol. So that's a significant head start when, you know, when compared to Europe. We also understand that there's a sizable number between 50 and perhaps 70 centers in total in the United States out of, you know, over 200 centers that do transplants in the U.S., wherein these 50 to 70 centers have all the necessary infrastructure to do complex immunologic transplantation procedures like treating the highly sensitized patients. And this is a group of centers that have the access to 24-hour immunology and pathology labs. They have access to T-cell and B-cell depletion. Importantly, they have the expert clinical staff in place to take on these complex procedures. that group of 50 to 70 centers will be sort of the total number that we initially put our targeted effort on. And the 23 that we've already worked with are a significant portion of that, but we think there's plenty of opportunities for further engagement here. We'll be doing some other things in the U.S., like working with the right stakeholders for things like U.S. guidelines. And then one other notable advantage of the opportunity or the market conditions in the U.S. when compared to Europe is that whereas it takes quite some time to work through pricing reimbursement and access with European markets, and often much of that work must be done post-launch through health technology assessment and other governmental payer reviews, In the U.S., we have opportunities for pre-approval information exchange with the public and private payers, and that's going to allow us to, you know, review our data and, of course, our health economic value proposition with those payers before, you know, and during the time of launch, which we think, again, will similarly be an opportunity to accelerate things in the U.S. when compared to Europe. So thanks for the question. And, you know, hope that that addresses your area of interest.

Absolutely. And I suspect, Ben, as we should expect your U.S. commercial launching to sort of reflect this ambition and approach already in 2050.

Yeah, I mean, we definitely will be working towards building out the team, you know, into 2025 and into 2026. And, you know, we'll be happy to provide further perspective on this as we get closer to launch.

Great. And finally, not that you're in the business of guiding for milestone support, but just to provide some flavor, I suspect in this situation it's more realistic to expect some support on that side in 2025, for example, relating to Sarepta.

No, we can't be specific around the milestones. So, if you know what the total amount is, Johan,

Yeah, but less realistic to expect that in 44, I suspect.

Evan, do you want to add some comments? Yeah, well, we can't be specific on these milestones. Yeah, we'd rather not be specific on them.

Okay, that's appreciated, and thanks again.

Thank you, Juan.

Thank you. The next question is a follow-up from Eric from Carnegie. Please go ahead, John. I will now be unmuted.

Yes, hi again. Yes, hi again. So I have two follow-ups, if I may. First on your cash position, and you've said that the cash would take you into 2026. So given that the operation of Barn has been more or less constant over the past two quarters and if your cash would take you into 26 that would imply a quite significant reduction in the quarterly burn in the six quarters that remain so my question is basically how much of this will come from cost savings and how much will come from top line growth more or less no sort of exact numbers, but just sort of ballpark where you see this reduced burn will come from. And then secondly, a medical question, obviously your confided study will hopefully get you an accelerated approval. And I was wondering if you know what the FDA will require in order to get to get the full approval in the U.S. Will there be another study, or will it be just more collecting more data from the same study? Thank you.

Well, thanks for those two additional questions, Eric. As far as the reduction in the burn rate is concerned, I mean, you're absolutely right, of course. There are two contributing factors. One is the growing top line. The other is cost savings. I don't know, Evan, if you can provide any Any guidance there? But I think, you know, this is essentially what we can say. But over to you, Evan, on this.

Yeah, I mean, you can see that SG&A expenses have come down quarter over quarter for the last four or five quarters. That's generally the same for R&D, a little more mixed. But we should recognize or realize the full impact of the restructuring activities we took earlier in the year in the third and fourth quarter and then into 2025. So And then, as Thorne mentioned, obviously, we expect sales to increase in 25 compared to 24. So, it's going to be a combination of both those activities or actions.

Yeah. Great. Thanks, Evan. And so, on your second question there, Eric, the fact that if, as we hope, we get accelerated approval, we will need to run a confirmatory trial to get full approval. So that's part of the negotiations and the discussions with the FDA prior to initiating, you know, a trial that could lead to accelerated approval. There is this high-level discussion. But the final outcome of this is something that is subject to, again, alignment with the FDA. So we can't be more specific at this point in time. But we will have to run a confirmatory trial. That's clear.

All right. Thank you.

Thank you. If there are no more questions left in the queue, I will hand it back to the speakers for any closing remarks.

Thanks, Operator, and thank you, everyone, for your time and interest in Antibiotic Pharma today. We look forward to continuing to update you on progress going forward. Thank you.