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Edited Transcript of HMED.ST earnings conference call or presentation 18-Jul-19 11:00am GMT

Q2 2019 Hansa Biopharma AB Earnings Call

Sep 10, 2019 (Thomson StreetEvents) -- Edited Transcript of Hansa Biopharma AB earnings conference call or presentation Thursday, July 18, 2019 at 11:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Donato Spota

Hansa Biopharma AB (publ) - CFO & Senior VP

* Søren Tulstrup

Hansa Biopharma AB (publ) - President & CEO

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Conference Call Participants

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* Christopher Winston Uhde

SEB, Research Division - Analyst

* Ingrid Gafanhão

Kempen & Co. N.V., Research Division - Research Analyst

* Joseph Hedden

Rx Securities Limited, Research Division - Healthcare Analyst

* Zoe Karamanoli

RBC Capital Markets, LLC, Research Division - Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, welcome to the Hansa Biopharma Q2 report for 2019. Today, I am pleased to present Søren Tulstrup, President and CEO. (Operator Instructions). Søren, please begin.

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Søren Tulstrup, Hansa Biopharma AB (publ) - President & CEO [2]

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Thank you, operator. Good afternoon, and good morning in the U.S. Welcome to the Hansa Biopharma conference call on the results for the first 6 months of 2019. Today, we will review the overall progress and highlights for the second quarter as well as the near-term milestones. Our presentation should take about 15 minutes. And after that, we'll take your questions.

My name is Søren Tulstrup, the CEO of Hansa Biopharma. With me today, I have our new CFO, Donato Spota, who recently joined the company. Also, our Head of Investor Relations, Klaus Sindahl, is with us today.

Please turn to Slide 2. Please allow me to draw your attention to our forward-looking statement, which applies to this presentation.

Please turn to Slide 3. Hansa Biopharma's evolution into commercial stage biopharmaceutical company continues to advance. During the second quarter, we continued to make good progress on implementing our strategic agenda as well as increase our engagement with the broader health care community within transplantation, auto-immune diseases and beyond.

In April, we received ethics and regulatory clearance to start a Phase II study with imlifidase in Guillain-Barré syndrome. A new Phase II study in GBS marks a continued expansion of imlifidase outside the transplantation area and into autoimmune diseases.

At Hansa Biopharma, we've always believed that there is significant opportunity for imlifidase to have impact beyond kidney transplantation. And with the initiation of the GBS study, we now have 3 clinical trials in Phase II development for separate indications. We will provide more granularity around the new GBS study later in this presentation.

In mid-April, we sold on our entire equity stake in Genovis. The transaction provided a profitable exit on a noncore asset. The proceeds from the divestment will support the development of Hansa Biopharma's expanding clinical space pipeline as well as our next-generation program for repeat dosing, NiceR.

Our organization continued to expand in the second quarter as we're growing our footprint in both the U.S. and Europe.

Lastly, we have continued to advance imlifidase toward potential Marketing Authorization for enabling kidney transplantation in highly sensitized patients. Currently, in Europe, our Marketing Authorization Application is under review, while in the U.S., we are conducting complementary analysis as communicated in April.

At the recently held American Transplant Congress in Boston, we're very pleased by the high level of excitement around Hansa Biopharma and our projects. Our lead candidate imlifidase for kidney transplantation was highlighted in 3 presentations, and I'll get back to this in a moment.

On the financial side, our cash position stood at SEK 763 million or approximately $80 million, end of last quarter. The cash out in the first half year was partly offset by the divestment of our equity stake in Genovis, which impacted our cash flow positively in the second quarter.

Please now turn to Slide 4. I recently returned from the 2019 American Transplant Congress in Boston, where I noted a very high level of excitement around our technology platform. Our lead candidate imlifidase for kidney transplantation was highlighted in 3 presentations during the conference, most notably the Plenary presentation by Dr. Edmond Huang from Cedars-Sinai Medical Center in Los Angeles. Dr. Huang presented data demonstrating that imlifidase significantly reduces the time to transplant the patients treated with imlifidase compared to matched controls from the kidney transplantation waitlist. The session by Dr. Huang won the ATC's People's Choice Award as the most impactful to the transplant community, which further validates the transformative potential of imlifidase and our technology platform.

Dr. Robert Montgomery from New York University Langone Transplant Institute in New York City, also presented the results and conclusions from the Highdes study during an oral presentation.

Lastly, Dr. Matthew Everly from the Terasaki Research Institute in LA, presented a prognostic drug development tool, which demonstrated that transplant rates could be increased by 25%, if there were a therapy to address the HLA antibody barrier.

Please turn to Slide 5. This past quarter, we've continued to advance our lead candidate imlifidase for kidney transplantation to toward commercialization. Our submission of an MAA accepted by the EMA in February and the regulatory review process in Europe is now progressing. The time line for the EMA review is 210 working days plus clock stops.

Meanwhile, in the U.S., we are conducting complementary analysis with respect to transplantability for the highly sensitized patients who participated in the Phase II imlifidase studies. The analysis compared the imlifidase-treated patients to matched controls from the U.S. transplant registry in order to further illustrate the value of imlifidase in the U.S. health care system. Once completed, we will schedule a subsequent meeting with the FDA, which is expected to take place in the second half of 2019, as previously communicated. Following this meeting, we anticipate to have clarity regarding a path forward for potential regulatory filing and approval of the imlifidase in the U.S.

Talking about the U.S., we're seeing positive signs from the current U.S. administration, which is placing a priority on improving survival rate and quality of life for dialysis patients, while at the same time, reducing the more than USD 100 million expense annually to treat chronic and end-stage renal disease. Increasing the kidney transplant rate and improving equity of access to this life-saving treatment is a key element in this effort. If approved, imlifidase could be an important driver in helping thousands highly sensitized patients get off of dialysis by enabling transplantation.

Now please turn to Slide 6. Beyond imlifidase for kidney transplantation and the recently initiated Phase II study in GBS, we've made solid progress across our pipeline activities in the first half of 2019. Anti-GBM, also known as Goodpasture's disease, is an ultra rare disease, where the immune system mistakenly develops IgG antibodies, resulting in an acute immune attack on the kidneys and in some patients, the lungs.

Our Phase II study with imlifidase and anti-GBM has enrolled 9 patients out of targeted 15. We've added more sites to this study and expect the trial to be fully enrolled by the end of fiscal year. The study aims to evaluate the safety and tolerability of imlifidase as well as assess the efficacy based on renal function at 6 months after treatment.

We're also evaluating imlifidase for the treatment of acute antibody-mediated infection after kidney transplantation. Acute AMR episodes occur in 10% to 20% of patients and remains a significant medical challenge that can lead to loss of graft function. Today, there is no approved therapy for the treatment of acute AMR in heart, lung and kidney transplants. It is our belief that imlifidase has the potential to halt progression of AMR by inactivating IgG and thereby become an effective treatment in acute cases.

In March, we received pivotal trial application approval to evaluate imlifidase in a Phase II study for the treatment of AMR. The AMR study aims to enroll approximately 30 patients at 8 clinical trial centers in Europe, Australia and the United States. It’s a randomized, open-label, multi-center study comparing treatment with imlifidase to an active control arm of treatment with plasma exchange. This study is designed to evaluate the safety and efficacy of imlifidase in eliminating donor-specific antibodies in the treatment of active episodes of acute AMR in kidney transplant patients. In GBS, we also initiated a new Phase II study following CTA approval in April. I will get back to this on the following slide.

Lastly, we have selected a lead candidate for clinical development from our NiceR program, which aims to develop next-generation enzymes for repeated dosing. GMP manufacturing process is now in development and preparations for toxicology studies are ongoing.

Please turn to Slide 7. As we just highlighted, we recently initiated a new Phase II study with imlifidase in Guillain-Barré syndrome. The new GBS study marks the continued expansion of our technology platform outside transplantation and into autoimmune diseases. Guillain-Barré syndrome is a rare, acute, paralyzing inflammatory disease of the peripheral nervous system that affects 1 to 2 in a 100,000 people, annually. It's an aggressive neurological disease with many patients deteriorating despite standard of care of treatment. 2/3 of GBS patients have severe symptoms resulting in their inability to walk unaided and 20% to 30% require mechanical ventilation for weeks or months. We believe that imlifidase, with its demonstrating ability to rapidly inactivate IgG, has the potential to halt GBS progression as well as accelerate recovery and thereby decrease disease severity overall.

In 2018, the U.S. FDA granted Orphan Drug Designation to imlifidase for the treatment of GBS. The study is an open-label, single-arm, multi-center trial, evaluating the safety, tolerability and efficacy of imlifidase in 30 GBS patients in combination with standard of care, IVIg. The recruitment process has recently been initiated at 10 clinics in France, U.K. and the Netherlands. The 30 GBS patients enrolled in the study will be compared to a matched control group of GBS patients from international GBS outcome study treated with IVIg.

Please now go to Slide 8. As depicted on this slide, we have a broad pipeline in both transplantation and autoimmune diseases. In the first 6 months of the year, we had a significant activity level with one product candidate on the regulatory review and 3 active Phase II trials for separate, additional indications.

I will now hand over the call to Donato, who will discuss through the financials. At this point, I'd like to formally welcome Donato as this is his first quarterly call with us since joining the company a couple of months ago.

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Donato Spota, Hansa Biopharma AB (publ) - CFO & Senior VP [3]

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Thank you, Søren. Please turn to Slide 9. As outlined by Søren, our evolution as a commercial-stage biopharmaceutical company continues to advance, but we also invest in our R&D programs. This is reflected in Hansa's financial performance in the first half year of 2019. SG&A expenses amounted to SEK 39 million for the second quarter and SEK 68 million for the first half year compared to SEK 15 million and SEK 30 million, respectively, for the same period of last year. The increase reflects the growing level of activities and expansion of the organizational footprint in preparation for a commercial launch of imlifidase in kidney transplantation in Europe and the U.S. and includes marketing, branding, market access, patient advocacy and congress activities. R&D expenses for the second quarter of the year amounted to SEK 46 million and were roughly on par with the level for the same period of last year. For the first 6 months of 2019, R&D expenses ended at SEK 88 million compared to SEK 76 million for the same period in 2018. Increased level of development activities with imlifidase and transplantation and in autoimmune diseases as well as the establishment of new functions such as medical affairs, led to an increased expense level for the first half of this year.

The net loss for the second quarter amounted to SEK 82 million and to SEK 155 million for the first half year compared to SEK 59 million and SEK 105 million, respectively, for the same periods in 2018. The increase in loss follows the increased expense level and investments we are making in advancing Hansa from an R&D stage into a commercial stage biopharmaceutical company.

Please turn now to Slide 10. Cash flow from operating activities amounted to minus SEK 78 million in Q2 and minus SEK 180 million for the first 6 months of this year. Increased investments in both, development of pipeline and increasing our footprint for potential commercial launch, as described earlier, are the main driver for the development in our cash flow. Compared to the first quarter of this year, the net cash consumption in the second quarter this year was reduced significantly mainly driven by the divestment of our equity stake in Genovis, which generated gross proceeds of SEK 89 million. End of June, our cash position, including short-term investments, amounted to SEK 763 million.

With this, I will hand back the call to Søren to give us final remarks.

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Søren Tulstrup, Hansa Biopharma AB (publ) - President & CEO [4]

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Thank you, Donato. Please now turn to Slide 11. Throughout the second quarter, we've continued to demonstrate good progress, both strategically and across our pipeline. We're conducting a complementary analysis of data from matched controls of highly sensitized patients from the U.S. transplant registry and from the successfully completed Phase II studies of imlifidase. Upon completion, a subsequent meeting with FDA is expected to take place in the second half of 2019. We are also looking forward to continuing our interaction with EMA during the ongoing review process for imlifidase in kidney transplantation, opinion from the Committee for Medicinal Products for Human Use achieved within 210 working days of submission plus clock stops.

In the coming weeks, we expect to start enrolling patients into our 2 Phase II trials in AMR and GBS. In anti-GBM, we've added more sites and expect completion of enrollment in the course of this year.

Lastly, we continue to advance our next-generation program with the development of the GMP manufacturing process for our lead NiceR candidate as well as continuing the preparations for toxicology studies and a clinical Phase I study.

Please turn to Slide 12. With this, we are now concluding today's presentation and are ready to take your questions. Operator, please begin.

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Questions and Answers

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Operator [1]

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Thank you. (Operator Instructions). And our first question comes from the line of Joseph Hedden from Rx Securities.

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Joseph Hedden, Rx Securities Limited, Research Division - Healthcare Analyst [2]

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I just would like to know how the ongoing complementary analysis, the FDA discussions, how they're different to what was presented at ATC? And also just with ATC in mind, how many imlifidase-treated patients were actually in that waitlist comparison? That's the first question. And then secondly, just wanted to kind of dig into -- has the need for the FDA discussion altered plans for the build-up of the U.S. operations and recruitment in the U.S.?

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Søren Tulstrup, Hansa Biopharma AB (publ) - President & CEO [3]

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Well, thanks a lot for the question, Joseph. So first, the data that were presented at ATC are roughly similar to the data that will be included to the FDA discussion, essentially the same data set, there is a couple of additional analysis that, that are being done, but essentially, it's the same. And as what's presented, there was a significant reduction in time to transplant for the patients treated with imlifidase compared to those on the waiting list, not enrolled in our Phase II studies. As far as the number of patients in the analysis is concerned, that number was not presented, it's not part of the abstracts, so I cannot talk to this at this point in time.

The second question you had was whether there were any changes in our plans for building up in the U.S., and there are no changes. Of course, we will build up as we progress our discussions with the FDA. The overall market potential is -- as has been previously discussed. And our plan to target clinics and engage with them is also unchanged. And so the overall assumptions regarding what kind of infrastructure would be needed, it remains the same.

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Operator [4]

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And our next question comes from the line of Christopher Uhde from SEB.

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Christopher Winston Uhde, SEB, Research Division - Analyst [5]

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So just wondering -- first of all, housekeeping question, how long would you say is the cash left to run until? And then in terms of the contingency plan, if the FDA should require another trial, you've previously said that you're not preparing for another study in kidney transplants for sensitized patients or safety sensitization. But I guess, do you -- are you running the risk of losing 6 months then if your plan A fails? And then can you also say what remains in terms of CMC, including timing, please?

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Søren Tulstrup, Hansa Biopharma AB (publ) - President & CEO [6]

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Sure. Thanks for the questions. First of all, I could take your question regarding the need for additional data and trials in the U.S. Just to correct there's a misunderstanding. There is no doubt that additional data will needed to be generated. That is necessary in any scenario. The only question is that will be able to submit the BLA prior to generating additional data to (inaudible)

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Christopher Winston Uhde, SEB, Research Division - Analyst [7]

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[That's what I was --] of course, yes.

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Søren Tulstrup, Hansa Biopharma AB (publ) - President & CEO [8]

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Exactly, a confirmatory trial or will we have to first generate the data and then submit a BLA, right? So what -- so we're clearly planning for that. We're planning for what kind of study would need to be executed. But of course, we haven't initiated the specifics prior to actually having an agreement with the FDA, all right? So we're not running any risk of a delay by not -- obviously, you will not start until you have an agreement with the FDA around what data is needed and how should that data set be generated. And we expect to have that clarity after we have been in the next meeting with FDA, as we've previously communicated.

Then as far as cash left is concerned, we have -- with the current cash level we have runway through 2020, as previously communicated. And of course, whenever there are changes in the situation, we'll review with the authorities and make sure we make the best use of our funds. And as any biotech company, we're always, of course, reviewing our need to raise capital and the opportunities to do so, but we have no need to do that barely short term.

And then the last question was around CMC. And again, it's essentially unchanged. We have everything ready. The commercial-scale product has been developed. It's an [authorized] product. And we are working with a couple of contract manufacturing organizations in Europe, and all of that has been established (inaudible).

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Christopher Winston Uhde, SEB, Research Division - Analyst [9]

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Okay. So that means -- and it's all, GMP grade?

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Søren Tulstrup, Hansa Biopharma AB (publ) - President & CEO [10]

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Sure. Absolutely.

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Operator [11]

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And our next question comes from the line of Ingrid Gafanhão, Kempen.

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Ingrid Gafanhão, Kempen & Co. N.V., Research Division - Research Analyst [12]

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I have 2 questions. So first, are you considering to do any interim release of data for the Phase II trials in GBS and AMR? And the second question will be, to what extent would you be considering having a partner in commercialization, [authorization] in Europe and in the U.S.?

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Søren Tulstrup, Hansa Biopharma AB (publ) - President & CEO [13]

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Thanks for the questions, anyway. So first, there are no current plans to do interim analysis as part of the release -- interim results as part of the GBS and AMR studies at the current situation.

And then your second question, we are not planning to partner for commercial efforts in the U.S. and the key markets in Europe. Obviously, there are some markets where it would make sense to find a partner, but in those situations also we intend to stay in control of the strategic delivery of the messaging and, of course, capture a maximum amount of the upside. So that's our approach.

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Operator [14]

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Our next question comes from the line of Zoe Karamanoli, RBC.

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Zoe Karamanoli, RBC Capital Markets, LLC, Research Division - Analyst [15]

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The first question is about the U.S. regulatory time line. So you're currently conducting the complementary analysis. And once this is complete, you will request a meeting with the FDA before the end of this year. Could you provide more details on the process and the time lines? For example, do you expect to be given a date for the meeting in 2019? And at which point will you update the market? Is it when you have a date for the meeting or after you have had the meeting and the FDA minutes are published?

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Søren Tulstrup, Hansa Biopharma AB (publ) - President & CEO [16]

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So we'll -- we expect to have a date for the meeting in 2019. As we've said, we expect this meeting to take place in the second half of this year. We don't have a specific date yet, but once we have it obviously, we'll start planning around that. We are not going to release specific information unless there is a change to -- a material change to the guidance that we've provided. And in general, it would be unwise to provide any updated guidance until you have the minutes from the meeting in my experience. So that's what you should expect.

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Zoe Karamanoli, RBC Capital Markets, LLC, Research Division - Analyst [17]

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Okay. But it will depend if you have the meeting. So we should hear next once you have the meetings from the committee?

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Søren Tulstrup, Hansa Biopharma AB (publ) - President & CEO [18]

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Yes, that's correct.

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Zoe Karamanoli, RBC Capital Markets, LLC, Research Division - Analyst [19]

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Okay. And the second question on the R&D investment, are you able to provide some guidance in terms of how we should be thinking this for the next year or at the end of this year, should we see a similar increase?

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Søren Tulstrup, Hansa Biopharma AB (publ) - President & CEO [20]

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Essentially, there's going to be gradual increase in R&D expenses as we broaden our pipeline activities. So you expect that to grow.

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Operator [21]

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And our next question comes from the line of [Monica Lusimbani] from [Albacore].

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Unidentified Analyst, [22]

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Just one for me. Could you give us a sense of the cadence of launch for imlifidase in Europe and different European countries, which ones will be your initial target countries after approval? And how soon will you be able to launch in some of the others?

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Søren Tulstrup, Hansa Biopharma AB (publ) - President & CEO [23]

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Yes. So thanks for the question, Monica. Overall, if you look at the time to potential approval, as we've discussed, the time line is 210 working days plus clock stops, right? And these clock stops are typically or can be from 3 to 6 months, meaning that if everything goes well, we could have approval, which then follows, there's an opinion at the end of the 210 working day time line, and then it takes 6 to 7 working days for the commission to make the final decision. And then essentially, you have your approval. So this means that at some point in 2020 things go well, we could have the approval. And then we would roll out the product following the typical sequence you see in Europe, where you have early Northern countries like Germany, Nordics, for instance, coming ahead of later launch countries. So that's going to be kind of spread out over a period of time. And I can't give any specific guidance there, but clearly, you would expect a similar roll out as you see with other similar type of products in our case.

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Operator [24]

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Thank you. (Operator Instructions). Okay. And it looks like there are no more questions registered at this time. So I'll hand the call back to your speakers for your closing comments.

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Søren Tulstrup, Hansa Biopharma AB (publ) - President & CEO [25]

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Well, thank you very much. We very much appreciate your interest and the questions today, and we look forward to continuing the dialogue. Thanks so much, goodbye.

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Operator [26]

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And this does conclude our conference call. Thank you all for attending. You may now disconnect your lines.