Cosmo N.V. (COPN) Earnings Call Transcript & Summary

Good afternoon, everyone, and thank you very much for joining our half year results presentation. Let me walk you through our slides very quickly. And let me just, first of all, remind you of who we are and what we do. So we consider ourselves a pharmaceutical company that develops and manufacture innovative products in the field of Gastroenterology, Health Tech and Dermatology. In gastroenterology, we cover gastrointestinal diseases, such as inflammatory bowel disease, colorectal cancer, irritable bowel syndrome in the diarrhea version and infectious diseases. In Health Tech, we cover artificial intelligence applications in endoscopy, we have a device that's currently being distributed by Medtronic was a task of helping detecting lesions during colonoscopy, we have further applications underway. In Dermatology, we have the revolutionary acne drug that has just been launched in the U.S. market, and we are stepping into the Phase III for a drug on androgenetic alopecia. Our business model is based on 3 pillars, and I would like everyone to remind that this is one of the feature that makes Cosmo rather special. We develop and manufacture our own product. We distribute the products through selective strong partnership. And we do drug development and manufacturing also on behalf of third-parties. Now, this model enable us to bear no cost for commercial infrastructure to have a very lean and simple cost base to focus on multiple R&D opportunities, as I believe our accrual products and pipeline proved, but most importantly to increase the profitability and the EBITDA as new products generate revenues, because we have a cost base that does not change much over time. So with the increase of revenues, we do increase our profitability. Now in terms of overview, founded in 1997, listed on SIX since 2007, and market cap at the end of June, EUR 821 million. 292 employees, here you can see the pie showing the distribution. What I would like to outline is that out of 292 people, we have 43 that are focused 100% on artificial intelligence. So the real pharmaceutical business occupies 240-something employees and 43 are completely dedicated to our AI franchise, relatively balanced gender distribution and 15 different nationalities. Now key events and product update for the first one, 2022, it has been the utmost pride that I announced that we have delivered our record best half year in terms of revenue performance, EUR 41.5 million in H1 2022 compared to EUR 28.4 million in H1 2021, which represents revenue increase of 46.1% half year versus half year. In terms of performance, well, a lot has happened in this first half. First of all, a U.S. trial has showed a 50% reduction in missed colorectal polyps using GI Genius versus standard colonoscopy. I would like to see this information not to be neglected or undervalued. It means that when you use GI Genius, you change completely the outcome of colonoscopy, because you're reduced by 50% to missed rate. This is very significant, and it's a complete game changer in colonoscopy. Thanks to our partnership with Medtronic, we have seen a very significant increase in contracts secured by Medtronic, both for clients in the U.S. and the European Union. We have negotiations undergoing for multiple countries and regions for our acne drive Winlevi, following the strong U.S. launch by our partner, Sun Pharma. Our partner, Ferring, has submitted the NDA for Cortiment in Japan, the application has been accepted by the PMDA, which is the Japanese NDA after the successful trial that was run by Ferring in Japan. The review is expected to last a year, and we should be seeing Cortiment on sale in Japan by mid-2023. I would like to remind everyone that Cortiment is an exceptionally good drug to treat ulcerative colitis in its mild form and that Japan is the second largest IBD market after the U.S. Our agreement with Medtronic for the distribution of Eleview has expanded now to all countries except Canada, where it is distributed by Pendopharm. Our core products are performing very strongly, and our development pipeline has significantly progressed. Let me focus, first of all on what we call the legacy business, because I would like to show you all that this is a business that continues to grow and grow consistently. The sales of Lialda, thanks to increasing volumes and the U.S. and Japan have shown an 11% growth half year '22 versus half year '21. You can see the shift here, 11.7% in H1 '21 versus 13% in H1 '22 with the corresponding significant increase in number of tablets supplied. Also, Uceris/Cortiment is performing nicely. In terms of tablet supplies, you can see an increase of 109% H1 '22 versus H1 '21. And a very significant increase in revenue as well, considering that now for the first time, we've reached cumulative net sales of EUR 100 million, and therefore, a significant milestone of EUR 8 million has been paid in the second quarter by Ferring, the next EUR 8 million milestones, sorry, is expected to repay when we will reach EUR 200 million cumulative net sales. The revenue from the drug development and manufacturing on behalf of third-parties is increasing as well, and has moved from EUR 5.8 million in H1 '21 to EUR 6 million in H1 '22, and we expect this to grow further over the course of the next months. Most importantly, our new products are hitting mass markets are starting to deliver. So let's talk, first of all, about Winlevi. Winlevi has now consolidated itself as the #1 most prescribed branded topical acne product in the U.S. Let me remind you all that the U.S. gross market is a $5 billion opportunity. As of today, we already have 10,000 unique prescribers, meaning dermatologists and the top quintiles prescribing the drug. Let me remind you that this has been launched just in November '21. So after 7 months, this is quite a performance. Also, because in terms of prescriptions generated on a cumulative basis to-date, we are already over 258,000, this is really meaningful. Just to mention, we have high double-digit royalties are due to us, and up to $190 million in commercial milestones upon reaching certain sales threshold. But most importantly, in this initial phase, the strong U.S. launch has resulted in a lot of demand for potential ex-U.S. commercial partners. And I'll tell you more about this when we will talk about the key events that have happened after the close of Page 1. As far as GI Genius is concerned, before we look how the business is advanced, I want to remind you all about the size of the opportunity, which is very, very large. The world market is at least 60 million annual colonoscopies, of which at least 19 million are in the U.S. Our device is compatible with all major brands of endoscopy equipped. And so this means that the hospital or the ambulatory surgical center or the practitioner, they don't need to upgrade a very extensive endoscope, they can have a state-of-the-art equipment by just leasing the device from Medtronic, which is exactly what that's happening. And as a main promotional tool, it's more than enough to say that our first U.S. trial, first, because many more are coming out in the very near future shows a 52.2% increase in the adenoma missed rate, which as I said at the beginning, is really mind-boggling performance, and a game changer in the prevention of colorectal cancer. Now let me show you the next slide, how the business is progressing. With Medtronic, we have seen in the first half, a very significant leap in signed contracts. As you can see over here, the contracted devices signed by Medtronic with clients in the U.S. and EU are right now more than 850 over 1.362,000 delivered for U.S. installation and 483 delivered for EU escalation. Probably most important of all is to tell you that we estimate the total of the endoscopic towers just in the U.S. to be 30,000. This would mean that if Medtronic would occupy 100% of the market, it would place 30,000 devices. So far, Medtronic has ordered us 3,000 devices for the U.S., which is equivalent to 10% of the market, but they are entertaining commercial negotiations in the U.S. with clients representing more than 6,000 endoscopic towers, which means 20% of the U.S. market, which clearly would come on top of the 850. Now you should not expect for something very, very meaningful to happen in the -- in a very, very short time frame, because it takes a lot of time to negotiate these deals. The progression will not be linear, because many 100s of devices are dealt with the same institution at the same time. What's important to see here is how this is quickly progressing, especially, if you compare this slide to the slide that we have just recently presented which show no information of this kind. This really is meaningful in terms of giving you an insight on the leap in the commercialization and how fast this is progressing. Just to remind you all, some of the top U.S. hospitals have already installed GI Genius. And it is quite meaningful to see that you have the most reputable academic centers starting to use it, you should expect a top down approach when the most eminent KOL and the most eminent institutions start to use GI Genius that will become the benchmark in a relatively short time. So just to remind you all, Beth Israel at Harvard, Stanford University, Cornell University, New York University, RUSH University, MD Anderson in Texas, Thomas Jefferson University, Einstein Medical in Pennsylvania, The Hospital Corporation Of America, U.S. Veterans Affairs in Virginia, HOAG Medical in California, Northwestern University, Indiana University, and many more, we could have filled 10s of slides with numbers, but I think that this is just sufficient to give you a snapshot on how things are progressing. Our development pipeline is also progressing as expected in our Phase I, in patients with advanced refractory solid tumors for our first incursion in oncology. The U.S. clinical sites are activated, and they have begun to screen patients, and we're anxiously waiting for news about the first patients enrolled. Our drug against androgenetic alopecia, Breezula is about to start the Phase III in males. We're expecting this to occur in the fall. Our new drug against bile acid diarrhea is as of now completing formulation and IP protection, in the coming month, we'll show you more information about the start of the clinical development plan. I would like now to hand over the floor to Niall Donnelly, our Chief Financial Officer for a very quick review on the H1 '22 financial. Please, Niall.

Thank you, Alex. So in the first half of 2022, we reported record revenues of EUR 41.5 million, that's up 46.1% versus last year. The revenue growth is driven by continued growth in our legacy products, plus now the contribution from the new products. We've maintained a very tight control of our cost base, and with the exception of an increase in raw material costs associated with increased product volume. The only other increase in cost was amortization associated with our intangible asset Winlevi, and this is a non-cash expense. As a result, our EBITDA increased to EUR 14.9 million, up from EUR 3.4 million for the first half of last year. Our operating profit was EUR 8.1 million compared to a breakeven position for the first half of last year. Our profit before tax was EUR 9 million compared to a loss after -- before tax of EUR 4.7 million, and that included a share of Cassiopea's losses last year in the first half. Our net cash from operating activities was EUR 12.6 million compared to EUR 9.7 million last year. And we finished the half year in a very strong cash position with EUR 219 million of cash and fund investments compared to EUR 222.2 million as of December. On this slide, it shows a revenue distribution and demonstrates the underlying growth here in both the legacy products and also the contribution from the new products. So Lialda, Mezavant, Mesavancol revenue was EUR 12.95 million versus EUR 11.6 million in the first half of last year. Cortiment, we had revenues of EUR 9.3 million, and that includes the EUR 8 million milestone received from Ferring, triggered an achievement of EUR 100 million net sales by Ferring. Also, we see now Winlevi contributing EUR 5.6 million to the revenue line and also GI Genius continue to perform with EUR 2.7 million of revenue. Okay, Alex. I'll hand back to you.

Thanks, Niall. Well, I would like the audience to understand specifically from the slide, which is exactly the reason why we wanted to give it a very graphic representation, is that, although the new products are starting to perform, this is -- they're really just at the beginning, they are like babies with the first heart beats, their contribution on the overall business is still very low. But we are expecting this to grow significantly, and this should be speaking your volumes about where we expect to go in the future. Now let's look at the events after the close of H1 '22, our key priorities and guidance. First of all, you have probably noticed that on a very tight time schedule and from a certain standpoint, given a little bit too close to the release of the H1 data, which might have diluted somehow the overall effect. We have announced 2 very significant deals about Winlevi. And let me remind you all just for the sake of clarity that this 2 deals have nothing to do with the H1 performance. They have occurred in July and our H1 ends up in June. So what we're talking about right now is adding up to the performance of the H1, and they're not included in the H1 performance. So the first very important news is that we have expanded our partnership with Sun Pharma for making Winlevi available to more patients around the world. This new deal with Sun expands the existing agreements to other countries, including Japan, which you will recall as the second largest pharmaceutical market after the U.S., and then include also Australia, New Zealand, Brazil, Mexico and Russia. This deal is very meaningful, because I have to remind you, this asset is still at a clinical stage in Japan, because in Japan, there is a different population. So whereas some will be able to register and get the marketing authorization in Australia, New Zealand, Brazil, Mexico and Russia relying on the FDA approval. In the case of Japan, some will have to do at their own expense, the further development and bring the product into a Phase III and then upon the success of Phase III, register the product. But this also speaks volume in terms of how much trust Sun is putting into Winlevi, if it is willing to do something that a generic manufacturer does not always do so lightly, which is take over the clinical development of this very important asset for Phase III in Japan. So Sun Pharma has received from Cassiopea, which is now a subsidiary of Cosmo, the exclusive right to develop and commercialize Winlevi in these territories, and Cosmo will continue to be the exclusive manufacturer and supplier of the product. We have received a very nice $7 million upfront payment, and then we have clearly potential regulatory and sales milestones, including customary double-digit royalties on net sales coming over as development and commercialization will begin. The second very important deal is the partnership that we've entered into always for Winlevi with 3SBio in Greater China. 3SBio is a highly reputed Chinese pharmaceutical company with a very, very strong expertise and stronghold in dermatology. They're one of the highest dermatology seller in the whole of China, and this license agreement now covers the whole Mainland China, Taiwan, Hong Kong and Macao, so-called Greater China. They have the exclusive right to develop and commercialize Winlevi in Greater China. And I want to remind the audience also in this specific case in respect of China, because of the different population, this is an asset under clinical development, which will require the Chinese Phase III trial and a very meaningful investments from 3SBio will complete the development with Chinese patients. The agreement includes also a right of first refusal for an exclusive license for Breezula in the territory, which is, again, very meaningful in terms of showing the interest that 3SBio has for Breezula in such a large country. We have received a very nice $6.5 million upfront payment, actually will receive, because the agreement has been signed just 1 day ago. And there is a potential for receiving $63.5 million development and sales milestone plus customary ascending high double-digit royalties on net sales. So I think a very good deal for Winlevi in China, and especially, if you consider that the market potential in Greater China is enormous. And believe it or not, more than 95% of Chinese people are suffering from acne to various degrees, but most importantly, more than 100 million young people aging between 10 and 25 years old suffer from acne in China from -- in 2018. The acne treatment rate in the country is very low, and there's a lack of effective treatment. So if you have read the statement of the representative of 3SBio in our press release, they really believe that Winlevi will be able to provide a new treatment for many, many Chinese acne patients. The key priorities for 2022 and beyond have not changes -- changed except for the fact that now instead of beginning our Phase I study in patients with advanced refractory solid tumors, we actually have to progress, because the Phase I has formally began. Our task is also to initiate the Breezula Phase III trial in males in the second half of the year, I think we're scheduling the fall for the beginning. And clearly, most importantly, under I and II to make sure that both GI Genius and Winlevi receive all the necessary support from us to make sure that they continue to be a resounding commercial success. The company is very solid, as Niall has explained, we are EUR 219 million as of the end of June '22, EUR 54.5 million treasury shares, EUR 39.4 million equity stakes in loans to listed companies for a total of EUR 312.9 million. And again, it might be very simplistic approach, but I cannot avoid comparing the total of our financial asset in respect of our current market cap, and just think that if I subtract this EUR 313 million total from our current market capitalization as of today, well, I believe the whole business comes at a very low price. Our financial guidance for 2022 is reaffirmed. We're expecting the revenue and operating profit to continue to grow driven both by the performance of legacy products and an increase in product revenues, the new product revenues. So reaffirming total revenue between EUR 90 million and EUR 100 million and an operating profit between EUR 20 million and EUR 25 million. I thank you very much for your time, and now we'll open the Q&A session. Thank you.

Your first question is from Harry Sephton from Credit Suisse.

I'll start with 3 on Winlevi, please. And then I'll move on to GI Genius. So could you just touch on which markets you still see partnership opportunities for Winlevi? Clearly, Europe is still a market you haven't licensed to yet. But I understand that the European market for branded acne product is relatively small. So would appreciate your thoughts on the outstanding potential for partnering this product? My second question is that you've signed 2 agreements, which has given you about $13.5 million in milestones for the second half, yet you haven't increased your guidance. Just wanted to understand whether you baked in the milestones in your guidance or whether you would consider those upside? And my third question is, if we were to assume that Winlevi received around a 20% royalty payment in the U.S., we would estimate that the current gross to net is around 75%. Would you say that that's broadly correct? And could you maybe indicate what you expect in terms of the gross to net going through the rest of the year?

They are all 3 very interesting questions. So first one Winlevi in Europe. We're both in talks with potential continental players, meaning, players that will cover the whole continent and regional players that are interested in defined regions within the U.S. What we intend to do, first of all, is that we are entitled to file for the centralized authorization, and that is something that we have already started to work on. So we're expecting Winlevi to be granted a centralized approval by the European Commission upon opinion of the EMA. And whether it's going to be more fruitful for us to go with a continental player or to go with different selected regional players still after discussion. Now, that we have closed deals in respect of those countries, namely Japan and China, that do require clinical activity, we are okay, because that is where the clinical activity can start as quick as follow. We will take the liberty of deciding, which is more convenient for us between the 2 options for Europe, but we're not lacking options. And we will more likely see something happening in this respect in the second half. In our -- second question, in our 2022 guidance, we had considered to some level -- some upfronts coming from royalty -- sorry, from licensing deals. And we don't think that at this stage, our guidance need to be revisited. We think it's quite an aggressive guidance anyway, especially if you consider the revenue in 2021 was EUR 65 million. And therefore, the increase that we're projecting is particularly meaningful. So no need to touch the guidance as of now. In respect of Winlevi, what we're currently seeing, this is the third question. Is that, Sun Pharma is certainly aiming for gross to net as the one that you were mentioning, I don't think they're there yet. The reason for this is the following, as you might know, most of the U.S. acne market is dominated by generic products. And therefore, Sun is facing the competition from generic, and therefore, it has fought the commercial case of Winlevi with extensive copay in order to be as competitive as possible with generic drugs. This clearly puts under pressure the gross to net. I think I have never seen people as screwed as the Sun Pharma guys running their commercial business. So they know very well what they're doing. We are expecting in the near future and possibly starting from the end of the year, we're expecting a decrease in the support that Sun is giving to patients through the copay with the corresponding increase in the rebates as insurance company will kick in and start reimbursing Winlevi. So what you are currently setting in terms of 75% gross to net, there's certainly an objective which might require, I believe, a couple of years to be attained. This is certainly the kind of the time line that Sun Pharma is. I hope that this is answering your questions.

If I could just ask 2 on GI Genius as well, please. You contracted 850 by the first half, which clearly shows good progress. But can you maybe provide some detail on what this number was at the beginning of the year, so the progress in the contracts? And then clearly, contractors doesn't necessarily mean that you're going to see revenue generated from those. So how quickly, on average, could we expect to start see those devices generating revenues? And then just the second one on GI Genius as well. I think it's fair to say that Medtronic is still developing the revenue model for this device. So do you see any risk that Medtronic potentially undercut the economics of GI Genius or effectively uses GI Genius -- not necessarily a loss leader, but doesn't capture the full economics of the device to try and bundle it along with other AI offering. So is there any risk to that? Or is it quite clear in your contract with Medtronic that there is an established revenue model?

Even more interesting questions on GI Genius. Let's to come to the first one, I'm sorry, but we have been asked not really to provide too much details about GI Genius, and the way that this is evolving in the market. Medtronic is particularly interested in not too many information being spread over. So they understand that we need to say, because it's a very important asset for us, but for them, this is a key asset in terms of AI and in terms of AI marketing. If you're looking at the Medtronic pipeline, you will quickly see that the AI they really have is actually GI Genius. So we're not really showing an evolution, because this is an ongoing process. And really the next round of information you will receive when we will release our full year data. But needless to say, in contrary to what you might think, when your device is contracted, the device will [Technical Difficulty]. So we're not going to see the situation in which device is contracted and does not produce revenue. The GI is contracted, so it does generate revenue and it will start generating revenue since the moment it is installed. So that was number one. Number second, no, I don't see any risk that Medtronic under caps economics, first of all, because our agreement is very clear. And second of all, because they have all the interest in trying to make this as profitable as possible and as quickly as possible. Just keep in mind that Medtronic is deploying a very substantial sales force in promoting GI Genius and anyone who is willing to look into the web and can really assess the quality and the quantity of the marketing that they're making. I believe that they have more than 100 people currently working on the GI Genius franchise, which, again, I'll recall you -- it's a product that doesn't belong to us, they have distribution, right. So I'm expecting every possible effort to them to making it as profitable as possible and as quickly as possible.

The next question is from Peter Hasler from Sphene Capital.

The first is about the amortization of Winlevi, the intangible assets. You consider Winlevi is one of the most successful launches, why are you amortizing the wise devaluation of the intention value too high in the balance sheet?

Well, Winlevi, if I'm not mistaken, is amortized at a tune of EUR 6.8 million per year, which translates into EUR 3.4 million every half. I believe that this is very balanced, this is based on projections and forecast over a long time span, because we're expecting the product life of Winlevi to be significantly long and probably longer than anyone would expect. Just keep in mind that there is no such a thing as another topical anti-androgen insight. So this has been consistently discussed with our auditors and our consultants, and we believe that this is the right amortization rate, and we go for that. And in fact, as our CFO has explained before, the only significant -- really significant portion of increase in our expenses in the first half was actually compared to H1 '21 is due to the fact that we have this EUR 3.4 million amortization to account for. The rest of the increase was actually from the raw material as a consequence of the increased production of both GI Genius and Winlevi.

So this is a planned amortization. It's not an extraordinary.

Yes, absolutely. [Technical Difficulty] when the product goes into the market.

Yes, I get it. And the second would be on your financial assets. You have significant decline here in value above all -- at the Red Hill biopharma. You've mentioned that you're closely monitoring the developments there. Maybe you could give us an update on what you feel is going on the most recent development versus biopharma?

Sure. Well, the Red Hill is certainly under pressure, because everyone has seen that their share price is significantly collapsed over the last year. As a consequence, I believe, of the very strong pressure on the whole sector is actually experiencing, and some companies more than others and some companies less than others. They have certainly been hit very hard. Now they have a few interesting assets and a very small commercial organization. And to my knowledge, it must have reached now the breakeven of their commercial operations. They are cutting costs and delaying developments as it seems sensible to do. And I trust that they will be able to go back on the right track as soon as this [ storm ] is over. We continue being their largest shareholder.

And finally, a final question about the supply chain. Are there any supply chain issues that you have right now, which all the other companies are telling us about?

No, I understand the question, but thank god not so far. Last year in '21, between May and July, we had worries as you would remember, subsequently to the global shortage on microchips and motherboard, and that is where we strengthened our relationship with the supplier of this very important component, and we also started keeping components on storage. So we believe that the scare that we had last year was very helpful in helping us prepare to match steeper supply chain, so, so far we don't have any specific for it.

We now move to the questions coming from the webcast. We have Mr. [ Chris Senner ] asking, does Sun have rights of first refusal for the alopecia application?

Very simple answer, Chris. No, they don't.

And the second question from [ Chris Senner ] is will Sun Pharma also manufacture Winlevi?

That's another very simple answer, no.

Another question from [ Chris Senner ] is, why was there such a strong decline in revenues for Lumeblue?

There has not been a decline. There has been increase, because last year, we received EUR 4 million of Alfasigma as an upfront payment, which is not actually treated as a revenue that's just an upfront. The launch of Lumeblue in Europe and specifically in Italy has occurred, I believe, a month ago or something like that. So we will see the evolution on the revenues going forward. But technically, actually, we've had an increase of the revenues, because we don't treat the upfront as a revenue generated by the product.

Another question from [ Chris Senner ] is, what are your plans for Lumeblue for the USA?

We are currently in discussions with the potential partners, and we would like to make sure that we do the sensible thing, meaning that, if we have to move into the final Phase III, we do this with a partner on the side, because it makes sense to do, generally speaking, it may treat on an asset by yourself, if you believe that you're going to market the asset yourself. As said, if you believe that you'll have to market distribute partner, this is our case, because we have decided not to have our own commercial organization, and you need to make sure that you share the clinical development plan with your partner, because you have to build up the trial and run the trial in a way that's going to be consistent with how you will commercialize the drug going forward. So...

And another question from [ Chris Senner ] is, you have 49 persons working on GI Genius, does this mean that they are working on new applications? If not, what do they do?

Well, Chris, we have not hired 49 people just to warm up their speed. As you can imagine, of course, we are working on new application, which will be communicated and released in due course. The deployment of the new application will happen according to the Medtronic commercial and marketing strategy, and many of these new applications are actually already ready in our drawers, but it is up to Medtronic, who was a master in this to decide when exactly to frame the [indiscernible] into the market of the new feature. But I am glad of the question, because this reminds me of telling the audience something which I'm not sure, it's completely understood or I'm not sure, I have been able to convey this with efficient clarity. I need the audience to understand that GI Genius is not a one-trick pony. GI Genius is not a one-off device. This is precisely the reason why Medtronic wanted to have it, because this is a computer that will govern and run the endoscopy room over time. You have to think of GI Genius as you would think of an iPhone. None of you, including myself, would have ever dreamed that the iPhone would have been able to perform all the feature that now we all take for granted. That have nothing to do, nothing to do with just making phone calls. Now you use the iPhone to watch movies, you use the iPhones to do video calls. You use the iPhones to buy your stock, sell your stock, check your investment, check your blood pressure, buy a book, sell a car, none of us would have thought that this would have been possible. I urge you all to consider GI Genius as an iPhone. It's built with a modular infrastructure, which is capable of hosting endless new applications. So from the [indiscernible] diseases to the indication of quality of the colonoscopy to the positioning of the lesion, to the help to the surgeon to perform certain tasks. These are all things that GI Genius will perform that have nothing to do with the pure detection of lesions and actually go much beyond that. You should see the detection of the lesion as the entry point, for something to [indiscernible] is to perform a very necessary task just like the iPhone makes phone calls. But then there's going to be a whole work of applications that will be run on GI Genius. To the point that actually this is going to be something completely new and completely revolutionary in the industry pivotal. Companies like Medtronic have a capacity of view and the capacity of understanding marketing trends that certainly go beyond that of a layman. I urge you all to try to understand why Medtronic [Technical Difficulty]. And this will give you a better view on the asset potential. Thank you. I believe there are no further questions. And unless anyone comes...

Yes, I'm sorry, we have a question from the phone. We have Bob Pooler from ValuationLAB.

Alex, first of all, do you hear me? First of all, congratulations with the excellent first half here. Just following on with Medtronic and the GI Genius related question. They recently bought a company called CathWorks, and it's also an AI systems, it's more for coronary issues. What I read is that they made a $75 million investment, and they have an option to buy the company for $585 million. How do you see that value compared to GI Genius, which is also an AI platform for colonoscopy? Just following on your comments that you had on Chris' question.

I believe we are in a much larger market, because people seem to forget that the colonoscopy procedure is the second procedure in the U.S. in terms of number after the blood test. So you have the blood test and then you have colonoscopy. And sometimes -- and Bob, I'm very thankful for the question, because sometimes, I am puzzled by the questions that I receive from investors, because I have the pressure that sometime tell me, tell me, okay, this is very interesting for colonoscopy, but could you eventually use it for brain tumors? And I then look at the investor, and I say, well, listen, yes, you could use it for brain tumors, but the fact is that brain tumors are 0.0% of colonoscopy. And then why are you worried about me moving into a niche market when I am already in the largest possible market. I understand, if I don't be in the niche market and you would want me to move into a large market, then I would say, well, you are right. I am in the brain tumor diagnosis and I'll try to switch to colonoscopy, because that's the large market. But I am already in colonoscopy. So why do you worry about the brain tumor marketing? Do you follow me on this, Bob?

Yes, sure. I see the platform -- that's why Medtronic is investing.

Sure. So Medtronic is investing $75 million and willing to purchase this company for $575 million, I assume, upon the current -- of certain condition. And I say myself, this is a wonderful news, because I would love all investors to take a look at what Medtronic is doing with this CathWorks, and then start to scratch their head thinking does this likely to happen -- going to happen with GI Genius as well, because this is the question that investors should ask themselves. Now Cosmo is setting on a device that's already working, it's already being placed, it's very impactable for Medtronic in terms of P&L going forward, it's on the largest possible market. Will anybody be willing to do anything with this asset sooner or later? Well, that's the right question.

And then just a final one. Doesn't this with GI Genius -- if it does have that acquisition sort of marginalized Lumeblue? Because just on your analogy with the iPhone, Lumeblue enhances the contrast. So in that respect, GI Genius might be able to see or detect more. But if you look at the iPhone, it has progressed so much with AI, that you can make a picture in the dark without even anything else. The AI actually takes care of that imaging. Would this be similar to GI Genius and Lumeblue, so similar to the iPhone with its night shot?

Well, I am not sure if is an answer for this question that I can really give you a reliable answer to, because the fact is, that I don't see the products cannibalizing one another. I may eventually see them occupying different spaces. Just like you're not going to think that everyone will be using GI Genius all around the world, and that applies to Lumeblue on the same [indiscernible] and on the same token. They're accomplishing 2 different tasks and doing 2 different things while aiming at the same objective. The real difference is that, Lumeblue is there just to help you detect lesions. And the GI Genius is there to perform a lot of different tasks, beyond the pure detection. So I really wouldn't put them in specific competition with one another. They're just doing 2 different things. And one thing you can say for sure is that, if you use GI Genius and then you use a GI Genius -- sorry, if you use Lumeblue and then you use GI Genius, that's going to do you no harm. So it's not going to be impactful in any way or form. So I see them heavily coexisting over time. I don't see a problem there.

And again, congratulations with the excellent first half and let's hope that the second half just continues the way it is doing now.

And there are no further question...

There are no more further questions.

Okay. Then, I thank everyone for your time, and I'm very grateful that you join our conference and I'll be happy to call up with any of you at any time. Thank you. Bye-bye.