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Edited Transcript of PA8G.DE earnings conference call or presentation 12-Aug-20 12:00pm GMT

·37 min read

Q2 2020 Paion AG Earnings Call Aachen Oct 8, 2020 (Thomson StreetEvents) -- Edited Transcript of Paion AG earnings conference call or presentation Wednesday, August 12, 2020 at 12:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Abdelghani Omari Paion AG - CFO & Member of Management Board * James Neil Phillips Paion AG - CEO & Chairman of Management Board * Jürgen Beck Paion AG - Chief Development Officer & Member of Management Board * Ralf Penner Paion AG - VP of IR & Public Relations ================================================================================ Conference Call Participants ================================================================================ * Simon Scholes First Berlin Equity Research GmbH - Senior Analyst of Technology, Biotech, Medtech and Resource ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Hello and welcome to the PAION AG conference call on the financial results for the first half of 2020. My name is Lydia, and I will be your coordinator for today's event. Please note this conference is being recorded. (Operator Instructions) I will now hand you over to your host, Ralf Penner, to begin today's conference. Thank you. -------------------------------------------------------------------------------- Ralf Penner, Paion AG - VP of IR & Public Relations [2] -------------------------------------------------------------------------------- Thank you very much, Lydia, for your kind introduction. And ladies and gentlemen, thank you very much for joining us for PAION's earnings call on the financial results of the first half of 2020. My name is Ralf Penner. I am PAION's Vice President, Investor Relations, and I'll be moderating today's call. I'm joined by Dr. Jim Phillips, PAION's Chief Operating Officer; as well as Abdelghani Omari, our Chief Financial Officer. I have to excuse, of course Jim is Chief Executive Officer. Within the next half hour, we are going to highlight some of the H1 2020 achievements, give details on the financial results, highlight the most important events and provide a pipeline and strategy update and financial outlook. After this initial presentation, we'll be happy to take your questions. I would like to point out that the slides for the presentation can be accessed by webcast in PAION AG's conference call. The webcast details have been on our website and were also given in today's press release. If you have not already opened the webcast link, you may want to do so now. This conference call is being recorded, and a replay will be available later today and will be posted on our website. Before we get started, I would like to remind you that today's call may include forward-looking statements and that actual results may vary from PAION's current anticipations. I would also like to refer to the disclaimer included in the presentation slides. After these initial remarks, I believe that we should now start right on with the presentation. Jim, please go ahead. -------------------------------------------------------------------------------- James Neil Phillips, Paion AG - CEO & Chairman of Management Board [3] -------------------------------------------------------------------------------- Good afternoon, everybody. My name is Dr. Jim Phillips, and, as you know, I'm the Chief Executive of PAION AG. So we're going to start with a brief corporate update and overview for those of you who don't know us so well, then we'll talk a little bit about remimazolam itself and then move to the financials for the half year. I think just to start to say that this year has been a very important year for PAION with already in the first half of the year our first approval in Japan and a lot of progress in other areas that we'll allude to and many things that are now happening in the second half of the year. So to remind you of us, we're an emerging specialty pharmaceutical business. Our focus is anesthesia and critical care. We have many commercial partners now around the world, and the first of those have now launched our product during the second half. So we're very excited about our future prospects. Remimazolam, as you'll hear, our leading drug candidate, has multiple approvals now in Asia in the start of the year and since the end of June also in America and in China. At the end of the first half, we had more than 12.5 -- EUR 12.4 million in cash. And of course, that has been -- since the ending of the first half of the year, has been substantially increased through milestone payments on the FDA approval. Supervisory Board, I don't -- won't dwell on the Board itself but to say there we have a stable and very supportive Board working with us through the last years. Our strategy, this is really to bring remimazolam, as you can now see, to market over these next 2 years. It's really important for us, both to our partners and where we do it ourselves, to build a commercial capability in all the attractive geographies for anesthesia and critical care. And also, we want to make sure the launches of remimazolam go extremely well and in-license complementary medications to our own portfolio to enable us to grow our revenue. Key target for us is to reach profitability within the coming years and become a leader in our field with a very fast revenue growth. In terms of our own commercialization plans, we are mainly conducting in Europe HTA work, that is a Healthcare Technology Assessment work. So we're doing health economic assessments. We're working very hard on preparing all the resources that are required for good pricing discussions with the regulatory authorities post approval in Europe next year, as we hope. We're also looking to build our own distribution infrastructure, but this is important that we do this in a risk-reduced way. So as we can find more products and add them to our portfolio, we will be able to roll out our own commercial enterprise. And we also consider out-licensing for territories where we don't see that opportunity to be realistic. A lot of work also going on this year in supply chain. This is both for ourselves and, of course, for our partners because we are a key API and drug product supplier for most of our partners around the world. So for our partners and for ourselves and the product sales, we need to ensure that that supply chain is robust and capable of delivering the amounts of remimazolam that the market needs. So we have this year been establishing many structures, procedures to get the permits where we need. We now have a permit to supply drug products in Europe, which is good, and this came from the Dutch authorities earlier this year. And we're continuing to build out that infrastructure so that commercial deliveries -- of course, the first have already gone to Japan -- but for other territories are ready when those territories launch. The Management Board, I think there's no changes here. We're all on the call. So myself as Chief Executive; Abdel, our Chief Financial Officer; and Jürgen, Chief Development Officer. And I think what you see now is delivery of the promise of remimazolam just beginning to appear through the concerted efforts of the management team and those who work with us, of course. Our listing, we are Frankfurt listed. We've been Frankfurt listed for a long time. The share price, obviously, is somewhat volatile, especially after the COVID days, but we have been a very liquid share in the last 6 months with almost 50% of our shares traded. Our market capitalization is just under EUR 200 million. And we haven't really issued many shares this year. We've only issued a few where conversion of the convertible loan note from Yorkville was completed. So the shares outstanding is pretty stable at this point. The target of the analysts shows a mean target of around EUR 4.72. So there's considerable upside potential in our share price given where we are today. In terms of what will drive value in the next half year, the second half, the first 2 things which we've already announced are the Japanese and the China commercial launches. The Japanese launch, which we know has been very successful, happened in the last 2 weeks with very, very good preparatory work by our partner, Mundipharma, MKK, in Japan. And Renfu, which is the commercial arm of Yichang Humanwell, has just launched in China. The economics are a little bit different there because they produce their own drug and API. So we aren't supplying them with product, but we still get a good royalty percentage from these sales. So these 2 are really the leaders into the commercial arena. And it's a little bit unusual that Asia is the first market to launch in rather than the U.S. So -- but we're very excited about both these launches and the royalties and revenues they will drive going forward. The next thing that we think will drive value is the European pivotal Phase III studies in general anesthesia. We're expecting to generate headline data over the coming months. As you'll see later on, this study was stopped slightly early because of the COVID-19 epidemic, and rightly so, but it didn't stop us being able to have enough patients through to potentially be able to meet the endpoints in the study. So the statistical powering is unaffected. And then we have 2 other key value drivers in the second half of the year. So the next one would be the marketing approval in South Korea, which we hope will come just around the end of the year. And then that will be followed by a launch by our partner, Hana Pharm, there. And of course, finally, a very important launch in the U.S. market this -- we can't give you an exact date for because Acacia Pharma, our partner, are working with the DEA, so the Drug Enforcement Agency, to get the drug scheduled, which is a critical part of the work prior to launch, and then we would expect launch probably in the early part of Q4. So these things we see as driving value over the coming months of the year. In terms of our reserves, and these numbers, remember, are the 30th of June, so we had cash of just over EUR 12 million at the 30th of June. But since that time, we had an FDA approval milestone of EUR 15 million from Cosmo. We had R&D cash tax credits expected of EUR 3 million to EUR 4 million. And we also have available the EIB loan facility of EUR 20 million. So there is a very good cash and cash reserve available to us of around EUR 50 million, which means that we still have 2.5 to 3 years of runway for the company as we grow our sales. So there is no imminent or necessary need to come to the market to raise cash. In terms of COVID-19 for us, really COVID-19 has had only minor direct effects at our group of companies to date. I'll start (technical difficulty) all through these months. And really, the only key event that occurred because of COVID would be earlier completion of patient referring into the Phase III general anesthesia study. But this was okay for us, as I think Jürgen will explain in a few minutes. The likely budget impact of COVID is really not applicable to us in some areas. We've saved resources. I mean, obviously, we've spent more. So again, with supply chain component parts of our manufacturing have not really been affected. Our schedule for manufacturing, yes, there have been some minor delays but not major delays. So the launch time frames have been able to be met. The other effects of COVID-19, of course, have been in the area of compassionate use. And we now have 2 compassionate use programs, the first in Milan at San Raffaele Hospital, where essentially they approved use of remimazolam for sedation in ICU patients in June. And this has been very helpful for us to help the hospitals short of sedatives and anesthetics during the epidemic. And of course, in Italy now, the stress on the system is much lower. So keep the program open, but we don't expect a need to use it at the moment further. The other was a more national compassionate use program in Belgium. So this was granted post the end of the first half of the year. And it can be used in 2 ways in Belgium. It can be used for sedation of intensive care patients with COVID-19 or it can be used as a substitute for general anesthesia in -- where there are shortages where people need to carry on using general anesthetics. This is limited to patients who have experience with our product in clinical trials. And again, we deliver the product free of charge. It's important for us to both support the hospitals that are treating patients with COVID-19, and of course it's also helpful to the company that doctors are gaining more experience with our product. In terms of the launch sequence, so of course Japan has now launched in the general anesthesia indication. China has now launched in procedural sedation indication. Too early to give you sales figures or feedback on the uptake in the market, but we do know Japan had many university and general hospitals already listing the product for use on the day of launch. So we're very excited about those 2 launches, and then, of course, the U.S. coming through towards the end of the year. Now I'm going to hand to Jürgen to just talk you through the remimazolam slides around the product. -------------------------------------------------------------------------------- Jürgen Beck, Paion AG - Chief Development Officer & Member of Management Board [4] -------------------------------------------------------------------------------- Yes. Thank you very much, Jim. So we have development of remimazolam in 3 indications. And regard to 2 indications, general anesthesia and procedural sedation, we have completed the development work and are now in our marketing authorization and/or launch phase. The ICU sedation is currently not in our focus as a decision on whether and how to continue that is pending. Next slide, please. Okay. So no, that was too fast. If you could go back one slide, please? So yes. We believe that remimazolam combines the best of 2 rather good worlds which are already existing in the market but of course which can be overcome with the better. Propofol is a drug which is very often used, which is characterized by a rapid onset, predictable recovery time. But it has the disadvantage of causing both hemodynamic and respiratory repression. There is no reversal agent, and there is pain on injection. Although the other very often used drug in this field, midazolam, has a lot of advantages. It has very low safety issues. There is a reversal agent available. And during the procedure, less resources are used and needed for supervision. But on the other side, midazolam has a very variable action time, prolonged periods of sedation. There is even, if the reversal agent is used, the risk of re-sedation. And overall, the drug has a slow onset. The good thing about remimazolam is that it combines the advantages of both drugs, as I just outlined, without having the negative aspects like cardiovascular, respiratory depression or variable or prolonged periods of sedation, risk of re-sedation and slow onset. So basically remimazolam offers an opportunity to substitute both midazolam and propofol in an attractive market setting. Next slide, please. So there is a need of improvement in the sedation/anesthesia space. We strongly believe that based on what is known, that the overall safety of these procedures can be improved, especially by the avoidance of hypotension. A reversal agent as we have it available for remimazolam is of a great advantage. The improved hemodynamic stability is a very positive effect. I will come back to that later. There is less requirement for vasopressors, which might address hemodynamic difficulties, but also, of course, are not free of their own side effects. And in particular, we believe that remimazolam is better suited for aging patient populations as we see them more and more in physicians' practices and hospitals. With regard to efficiency, remimazolam has the advantage of presenting a very predictable overall procedure time, which may transform into the advantage of -- for the physician and for the patient to have an improved patient throughput, for example, in the context of a colonoscopy in a colorectal cancer screening. With regard to the patient experience, we have no problem with the amnesia of the procedure. And on the other hand, patients very fast -- recover very fast with regard to regaining their cognitive functions. So the back-to-normal is achieved quicker than with midazolam. And that, of course, as I already mentioned, is improving the compliance to follow-up screening. Overall, it has been reported under remimazolam an improved patient satisfaction and compliance. And as I already mentioned before, an additional economic advantage is provided by the reduced resources which are needed for supervision. Next slide, please. With regard to the chemical class of remimazolam, it is the first in class of an ultra-short-acting intravenous benzodiazepine, which has the advantage that the benzodiazepine is a very well-known group/class of drugs which gives a good safety margin. But again, it's also innovation because it's the first benzodiazepine agent which is so ultra-short acting. With regard to the intellectual property, we have good protection via our patents on the besylate salt, which gives us protection in the U.S. until 2031 at least. On the formulation patent, we have protection until at least 2033 in the European Union. On the dosing patent, protection in Japan until at least 2033. And of course, we work permanently on growing our IP portfolio to secure an attractive period of market exclusivity in the major markets. With regard to the safety, we have currently more than 2,900 volunteers or patients, mostly across patients in our database, which gives us a good grip on the safety of this drug. With regard to the indications, procedural sedation is now in the regulatory phase in the U.S., completed in Europe. It's ongoing. And in China, it's also completed. General anesthesia is, in Europe, at the end of clinical development. In Japan, it's already on the market. And Russia and South Korea are also preparing to go either to submission or to complete the submission. We have, as I also mentioned before, a further potential in ICU sedation, which will need to be evaluated. And that offers overall an estimated market opportunity for more than $500 million globally for each indication alone. The results we have from our development studies today indicate that we have solid efficacy and safety in all study populations. We have a rapid onset and offset of action. We achieve with remimazolam an appropriate depth of sedation. And we have -- and that is in particular a major advantage over propofol with favorable hemodynamic stability. Next slide, please. Now let me go to the individual -- no, Jim, you would like to do that? It's about the U.S. market size. -------------------------------------------------------------------------------- James Neil Phillips, Paion AG - CEO & Chairman of Management Board [5] -------------------------------------------------------------------------------- Yes. I can take this. So of course, for procedural sedation, the U.S. is the largest market in the world. And what drives that market growth at the moment is this very fast growth of colorectal cancer screening, where you recognize the early signs of potential cancerous polyps early and then you can remove them and much reduce the incidence of the cancer. And so it's a very strong health economic argument to do this procedure under sedation. Therefore, it's covered by most of the insurance plans in the U.S. and by Medicare, too. And the dynamics in the U.S. are that more than 4 million patients are reaching the age of 50 every year and become eligible for the screening program and will tend to screen every few years. So it's a repeat procedure which numbers of the order of 20 million per annum, although there are more than 40 million procedures per annum needing procedural sedation in the U.S. But when you look at endoscopy and colonoscopy, it's of the order of more than half of that total. So this gives a very, very attractive population to work with when launching the product. I think I'll carry on, if it's okay, Jürgen. The clinical development program in the U.S. was also done in China, too. And I think what we can see from this slide is that there were 3 main studies, 2 Phase IIIs and a safety study. And what we see in the blue of each of the 3 charts is a very high success rate in procedures using remimazolam. If they got a placebo, obviously the success rate was very low. But with midazolam, too, a much lower success rate (inaudible) completion of the procedure has started. So we can see the advantages of using our products there. And then in the colonoscopy study, you see the business case, which comes around to the ability of both clinics and ambulatory surgical centers to treat more patients in a given time period, whether it be a day or a week. And why is that? Because it's a fast and certain offset. From the time of start of a medication to start of procedure, you're seeing a difference of around 15 minutes, an earlier start with remi versus midazolam. And then from the end of the procedure to being fully alert, there's another difference of around 7 minutes. So you're looking at a saving per patient of around 20 to 22 minutes. And that means you can do extra procedures at a clinic per day and each of those extra procedures effectively both generates revenue and treats more patients for those centers. So it therefore is a very simple economic argument in the U.S. market. Jürgen, do you want to take back now? -------------------------------------------------------------------------------- Jürgen Beck, Paion AG - Chief Development Officer & Member of Management Board [6] -------------------------------------------------------------------------------- Now moving to the procedural sedation in Europe, which is a regulatory procedure now. We've submitted a marketing authorization application to the EMA, which was based on the completed U.S. development program and that submission occurred in November 2019. And that will -- you want to talk about the commercialization, Jim? -------------------------------------------------------------------------------- James Neil Phillips, Paion AG - CEO & Chairman of Management Board [7] -------------------------------------------------------------------------------- Sure. So we've already described a little bit of this, that our plans are -- we're working on health economics at the moment and the HT assessment, getting the dossier prepared and ready for submission. And then building up the distribution structures in Europe is going to really be done once we know that we have other products to add to our portfolio to make running a sales force ourselves feasible and economic. But we'll also look at our licensing for certain territories where it is not economic. And where we're unable to license another product in, then we would consider out-licensing all of Europe in that scenario. But this is an area that the company is working very hard at, at the moment. So now we move to general anesthesia and I hand back again to Jürgen. -------------------------------------------------------------------------------- Jürgen Beck, Paion AG - Chief Development Officer & Member of Management Board [8] -------------------------------------------------------------------------------- Thank you, Jim. Next slide, please. So just giving the framework and indication general anesthesia for the beginning. There is widespread agreement that there is a lot of room for improvement. We have seen in this area little innovation in anesthetic drug development in the recent years. On the other side, we have an ever more aging population with increasing levels of comorbidity and a raise in complicated -- in complication rates, which are associated with general anesthesia and surgery. Which is also linked to the phenomenon that more and more elderly patients receive surgery, which is a new development compared to a situation 20, 30 years ago where this population just did not go to surgery. There is, on the other hand, still a low awareness concerning postoperative complications and mortality related to intraoperative hypotension events. And intraoperative hypotension is, in fact, a strong predictor of myocardial necrosis, leading to a higher 1-year post-surgical mortality. And even short durations of intraoperative hypotension are known to be associated with acute kidney, myocardial injury, cardiac complications and mortality within the first 30 days after surgery. And there is definitely a connection between the intraoperative hypotension and post-operative cognitive dysfunctions. With remimazolam, there is a significantly lower incidence of hypotension in surgical patients undergoing general anesthesia compared to propofol. And therefore, remimazolam offers opportunity to impact patient care and the outcomes of general anesthesia. Next slide, please. Just to give you as an example perioperative myocardial injury, which is a common, silent and very often deadly consequence of hypotension during surgical procedures. This myocardial injury is seen in about 8 million adults worldwide. At first, 93% are without symptoms, but we have a mortality of 4% after 30 days. And overall, 8.5% have in this 30 days period either myocardial infarction, cardiac arrest or death. Next slide. This is just the publication which highlights that; has been published in the JAMA last year. And it shows clearly that also, the depth of anesthesia and postoperative delirium are linked. And on the other hand, it also shows that a reduction in hypotension-related myocardial injury would likely save many lives. And therefore, the choice of the anesthetic dose remains critically important in the context of an aging surgical patient population and the role of good quality, safe anesthesia is as important as ever and we believe that remimazolam comes in here. Next slide. So now let me talk about the general anesthesia study -- Phase III study versus propofol. Jim already mentioned this study we have conducted and which is now evaluated and hopefully we will be able later this year to provide you with the results. Just to give an overview on this study, so we have overall included 424 patients. It was a multicenter, randomized and active-controlled European Phase III trial, undergoing elective surgery in Germany, France, Italy, Switzerland, the Netherlands, the U.K. and Belgium. Due to the coronavirus pandemic, we decided to complete April -- in April this year when we had recruited 424 patients into this study. This was agreed to by the Data Monitoring Committee of the study. And the reason for doing that was that we had already reached a sample size necessary for properly calculating both end points of the study, as well the primary efficacy endpoint as the key secondary endpoint, which focuses on hypotension. And we had oversized a little bit the study and the planning because we wanted to provide additional safety information, more patients for the safety database. And in the complex situation of the coronavirus pandemic, we decided to take this patient from other studies from licensees, which is also an option, so that we could complete the study at the beginning of the pandemic. As already mentioned, the top line data of the trial are expected in the second half of 2020. And the primary objective, just to repeat, is, of course, efficacy, which in this case is noninferiority of remimazolam compared to propofol. You may remember that I mentioned earlier that propofol is, with regard to efficacy, quite a good drug. And the key secondary objective is then the improved hemodynamic stability compared to propofol so to see what our advantage is with regard to propofol as concerns this very critical and essential parameter, hemodynamic stability. Next slide, please. So as already mentioned, we have completed recruitment in April, and our plans are now that once we have received the approval by the EMA for the already submitted procedural sedation dossier, we would file an extension of this dossier to also include general anesthesia as planned. This extension procedure offers the advantage that it's, in general, shorter, because it's an abbreviated application than it is the time line that's needed for a fully new dossier. And therefore, we believe that this extension will be processed faster. Next slide, please. Now just to give you the background data on why we believe that we will have also in this European Phase III study a major advantage with regard to hypotension as compared to propofol. These are data from Phase II/III pivotal trial from Japan, which is -- has been part of the dossier approved in Japan and which, of course, will also be part of the dossier we are going to submit in Europe. You see, if you go for hypotension and you look for patients with a mean arterial pressure under 60 millimeters mercury, that in the first hour of intubation, you have a difference of about 41%. So 41% less hypotension with remimazolam in both dosing groups than under propofol. If you look to what is needed in case you have a hypotension which necessitates treatment, you look for the need of vasopressors, drugs which increase the blood pressure. And here you have a similar result that we can reduce the need for vasopressors, especially in the lower-dosing remimazolam group, by 37%. The lower dosing is what we also apply in Europe. And then finally, we also have a clear advantage -- we have seen a clear advantage in favor of remimazolam as regards the avoidance of too deep sedation. Here again, we are close to 44% less too deep sedation as compared to propofol. Next slide, please. -------------------------------------------------------------------------------- James Neil Phillips, Paion AG - CEO & Chairman of Management Board [9] -------------------------------------------------------------------------------- Okay. I'll take over now. Thank you, Jürgen. So our launch population for Europe when we do get to general anesthesia is going to be very targeted. We're going to look at the high-risk patients, i.e. the older ones who have comorbidities, whom we call the ASA III/IV patients. So whilst there are more than 70 million procedures under general anesthesia per year, you then cut that number down to those who have general anesthesia and those who have -- definitely belong in the higher-risk group, which is actually the majority of the people undergoing general anesthesia, or 50%. The aging population continues to drive that market. And what this really allows us to do is by using the different -- differences between our product in terms of safety in hypotension versus propofol, to pick out the patients who are most likely to benefit from using remimazolam, to show that benefit to the authority through the Health Technology Assessment and therefore to get better pricing to launch the product. So that shows our strategy. We're not going to try and take all the patients in general anesthesia, at least not in the early years, but to work against the high-risk groups and, therefore, show a better benefit to the health authorities and help sales. Going back to the commercial side. So at this point in time, of course we're very reliant on our partners for product launches. And just to come back again to Japan as they've launched first through Mundipharma, MKK, in Japan, launched about 2 weeks ago, but they've had a very effective prelaunch campaign and have many hospital listings where the product can be used easily. So we're very excited about that launch. It appears to have had a very successful first phase, and we're looking forward, of course, to reporting royalties and revenues in due course. Then in China, on the left-hand side of the slide, Yichang Humanwell, so the approval was given recently and was followed very swiftly by Renfu's launch into the market, making available in hospital and pricing as well very quickly. Renfu have around 1,000 reps on the road in China. And so China is potentially a very large market for us. And again, we'll be looking forward to updating you in the future on revenues and royalties that we see from the Chinese market. Then in the U.S., Acacia Pharma, who joined us as a partner in January, and we're very excited to be working with them through to the launch hopefully in, well, Q4 of this year after the DEA, so that's the Drug Enforcement Agency, scheduling of the product as a scheduled drug in the U.S. market. And of course, we'll be updating the market as that continues. And then our other partners in South Korea, Hana Pharm, we're in the middle of the registration process for general anesthesia, and we would hope to see that approval come through before the end of the year. Hana have also added further territories to their license this year, including countries like the Philippines, Vietnam in the Southeast Asia region. So they're a very important regional partner for us. And then the bottom 2: in Canada, Pharmascience, we're just waiting to hear news from them around their intentions to file based on the U.S. approval; and R-Pharm in Russia, likewise using U.S. approval, particularly in some of the MENA countries and Turkey to form the basis for their filings in those regions. So now I'm going to hand to Abdel, who's going to take you through the financials at this point. -------------------------------------------------------------------------------- Abdelghani Omari, Paion AG - CFO & Member of Management Board [10] -------------------------------------------------------------------------------- Thank you, Jim. Good afternoon, everyone. Let me start with the financing agreements that Jim mentioned earlier. The first one is a financing agreement with the European Investment Bank for an unsecured loan of up to EUR 20 million that we signed a year ago. The loan is available until June 2021, and it can be drawn down in 3 tranches. For each of the tranches, specific conditions must be met for drawdown. The first tranche of EUR 5 million is already available, and the other 2 tranches could also become available still this year. We have so far not yet drawn down the loan. The second agreement relates to the issue of unsecured convertible notes with a nominal amount of up to EUR 15 million in up to 3 tranches. The first tranche of EUR 5 million was issued in September 2019. This tranche has now been completely converted into a total of 2.4 million new shares. We are not planning to issue further convertible notes under this agreement. Now let's move to the P&L on the next slide. As you can see, revenues amounted to EUR 3.5 million and mainly resulted from milestone payments in connection with the market approval of remimazolam in Japan just this year, January, and the license extension with Hana Pharm to include additional countries in Southeast Asia that we also signed in January this year. Revenues of EUR 7.5 million in the prior year period resulted from the milestone payment from Cosmo in connection with the submission of the dossier to the FDA. On the upper right-hand side, you can see that research and development expenses slightly increased from EUR 6.2 million to EUR 6.4 million in the first half of this year. The R&D expense is mainly related to the European Phase III study in general anesthesia for which the data analysis is currently ongoing. Compared to last year, SG&A expenses increased by EUR 1.3 million to now EUR 3.6 million. This increase mainly relates to higher selling expenses, particularly in connection with pre-commercial activities and the setup of supply chain for remimazolam, which Jim has explained earlier. In total, we show a net loss of EUR 6.1 million compared to a net income of EUR 0.6 million in the prior year period. The net loss includes tax income from R&D tax credits in the amount of EUR 0.7 million. Now I'd like to move to the selected balance sheet items and an overview of headcount on the next slide. The total assets decreased by EUR 4.1 million compared to the end of 2019. This mainly results from an increase of prepaid expenses and other assets in the amount of EUR 2.2 million as well as an increase of inventories in the amount of EUR 0.4 million on the one hand and a decrease of cash and cash equivalents on the other hand. As you can see on the upper right-hand side, cash decreased by EUR 6.4 million compared to end of 2019 and amounted to EUR 12.4 million. This decrease essentially comes from negative cash flows from operating activities in the amount of EUR 6.4 million. As you can see on the lower left-hand side, equity decreased by EUR 3 million to EUR 11.7 million. This was mainly a result of the net loss for the first half year on the one hand and the issue of 1.5 million new shares in course of the conversion of the mentioned convertible notes. The equity ratio was 56%. The staff development is illustrated on the lower right-hand side. Compared to an average number of 44 employees in 2019, we had staff of 43 employees on average in the first half of this year. Finally, I'd like to give an outlook for the full year 2020. For the purpose of comparison, you can see actual figures for 2019 in the left column. Regarding revenues, we expect these to amount to approximately EUR 20 million, thereof EUR 15 million in connection with the market approval in the U.S., which we will book as revenue in Q3, and the milestone payment has already been received in July. Further revenues relates to the market approvals in Japan and China, our license extension with Hana Pharm and the potential market approval in South Korea. Royalties from commercialization of remimazolam in the U.S., Japan and China are expected in a small amount of less than EUR 1 million. Given the ongoing development activities, including the European Phase III study, we will continue to incur R&D expenses, which we estimate to be in a range of about EUR 10 million to EUR 12 million for the full year. SG&A expenses will increase to approximately EUR 7 million to EUR 9 million mainly because of the pre-commercial activities and the buildup of the supply chain that we mentioned earlier. We expect tax income from U.K. tax credits on part of the research and development expenses in an amount of approximately EUR 1 million to EUR 1.5 million. The amount of up to EUR 0.5 million that we previously guided for 2020 was based on a change in calculation and capping rules that is already enacted. But this change was postponed by a year at short notice. In total, we therefore now expect a positive net result of approximately EUR 0.5 million to EUR 4 million for the full year. Regarding our liquidity, cash at hand secure, cash reach at least into the second half of 2021 based on current planning. Thank you so far. With this, I hand back to Ralf. -------------------------------------------------------------------------------- Ralf Penner, Paion AG - VP of IR & Public Relations [11] -------------------------------------------------------------------------------- Yes. Thank you very much, Jim, Jürgen and Abdel, for the presentation. And now we are ready to start the Q&A session. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) We have our caller that's come through. Our first question comes from Simon Scholes of First Berlin. -------------------------------------------------------------------------------- Simon Scholes, First Berlin Equity Research GmbH - Senior Analyst of Technology, Biotech, Medtech and Resource [2] -------------------------------------------------------------------------------- I've got 2. You just mentioned that you've had a pretty successful prelaunch phase in Japan. I was just wondering to what extent COVID has made -- has caused you problems in the prelaunch -- or caused Acacia problems in the prelaunch phase in the U.S. And then second, you mentioned that the decision on the ICU is pending. Should we make -- should we take pending to mean by the end of this year? -------------------------------------------------------------------------------- James Neil Phillips, Paion AG - CEO & Chairman of Management Board [3] -------------------------------------------------------------------------------- Okay. Simon, thanks for the question. It's Jim. I'll answer. The -- regarding Japanese launch, which is for general anesthesia, obviously Japan has not been that badly affected by COVID. I think that tells the same story. As far as the U.S. goes, I think that the limitation in the U.S. is current. Our approval was delayed a little bit partly because of COVID, we think. But in terms of prelaunch activity, I think that our partner, Acacia, is working very hard on those. They're adapting to a new environment. So I'll give you an example. So all of the data coming out of the U.S. and all of the intelligence around what's happening in the hospital setting in the U.S. is that increasingly, all elective surgery and procedural work is being done outside of hospitals, that whatever is going on is not really being done in the hospital setting. The hospitals are reserved for COVID and other patients. And so the ambulatory surgical centers, or ASCs, are now doing more than 90% of all of the elective procedures, is what I've heard. Now I don't have a valid source to back up that data, but it's coming to me from several different places, that this is one of the effects that's happening. Now you can look at that 2 ways. One, it makes it slightly easier in a way for Acacia to premarket; but on the other hand, they have this problem of not really being able to put reps on the road into meetings. But I think I'd point to Japan again and say that look, the Japanese have done a very, very exciting and very detailed kind of web detailing, web conferencing, and it's been very successful. So I don't think that you can say that Acacia hasn't been working very hard and haven't been able to prepare the market, which is what they're still, of course, doing because we're a couple of months away from launch, we think. -------------------------------------------------------------------------------- Operator [4] -------------------------------------------------------------------------------- (Operator Instructions) -------------------------------------------------------------------------------- Simon Scholes, First Berlin Equity Research GmbH - Senior Analyst of Technology, Biotech, Medtech and Resource [5] -------------------------------------------------------------------------------- And on the... -------------------------------------------------------------------------------- Operator [6] -------------------------------------------------------------------------------- Pardon me. -------------------------------------------------------------------------------- Abdelghani Omari, Paion AG - CFO & Member of Management Board [7] -------------------------------------------------------------------------------- Jim, do you want to answer also the question on ICU and when we are going to... -------------------------------------------------------------------------------- James Neil Phillips, Paion AG - CEO & Chairman of Management Board [8] -------------------------------------------------------------------------------- Yes. So sorry. So the ICU -- so before the end of the year, yes. I mean what we're doing is building a business case, as any company would do. You look at the investment required, the returns on that investment and the life of the product in terms of patents and patent extension as possible. So we're working with our partners to gather all of that data and then make an investment decision before the end of the year. -------------------------------------------------------------------------------- Operator [9] -------------------------------------------------------------------------------- (Operator Instructions) We have no incoming questions at this time. I return turn the call over to you. -------------------------------------------------------------------------------- Ralf Penner, Paion AG - VP of IR & Public Relations [10] -------------------------------------------------------------------------------- Thank you very much for the questions. And to everybody, I would like to say thank you for joining us for PAION's earnings call on the financial results of the first half of 2020. I hope that we have been able to answer your questions. But of course, please feel free to give me a call afterwards. If you would like to listen to this call again, please visit our website, where the replay mp3 will be posted later today. For now, I say goodbye and thank you very much for your continued interest in PAION. -------------------------------------------------------------------------------- Operator [11] -------------------------------------------------------------------------------- Thank you for joining today's conference. You may now disconnect your lines. Hosts, please stay connected.